The House and Senate return to Springfield for the spring legislative session on January 4.

No new tax-related legislation was introduced this week.

The Department issued Informational Bulletin FY 2022-09 Notice of Sales Tax Rate Changes for Retailers of Aviation Fuel in the Collar Counties, effective January 1, 2022. Beginning January 1, 2022, the sales tax rate on aviation fuel sold in the collar counties will decline by .25% because of reduction in Regional Transportation Authority Tax from .75% to .5%.

The reduction was triggered by federal legislation from a few years ago that imposed limitations on local sales taxation of aviation fuel. Pursuant to federal law, the local taxes may only be imposed, collected and used for "airport-related purposes."

As explained by the Department, "[w]hile the RTA has certified that it has an airport-related purpose to which it can dedicate the sales tax revenues it receives from the RTA sales tax on aviation fuel, DuPage, Kane, Lake, McHenry, and Will Counties (Collar Counties) have not certified an airport-related purpose to which they can dedicate the portion of the RTA sales tax on aviation fuel that is distributed directly to each of these counties."

The Department has recently posted some income tax general information letters on its website issued during 2021. As of today, the Department has not published any private letter rulings issued during 2021. One of the income tax general information letters may be of interest.

IT-21-0004 deals with apportionment of income from virtual currency. In this general information letter the Department explains that for purposes of Section 304 of the Illinois Income Tax Act and the Department's regulations bitcoin is considered intangible personal property. Bitcoin is not considered a "patent, copyright, trademark, or similar item of intangible personal property to which IITA Sections 304(a)(3)(B-1) and (B-2) and accompanying regulations would apply.

The Department also continues to publish sales tax general information letters and private letter rulings The Department recently published a private letter ruling dealing with the enterprise zone building materials exemption.

ST-21-0007-PLR provides that "[u]nder the Enterprise Zone building materials exemption, a deduction from Illinois Retailers’ Occupation Tax liability exists for gross receipts from retail sales of materials that will be incorporated, by remodeling, rehabilitation, or new construction, into real estate located in an enterprise zone established by a county or municipality under the Illinois Enterprise Zone Act. (See 35 ILCS 120/5k and 86 Ill. Adm. Code 130.1951(e).) "

The Department explains in the letter:

". . . the fundamental concept of the building materials exemption is that, to qualify, provided that the other requirements of the regulation are met, the materials at issue must also be physically incorporated into real estate."

"The Department has invoked the intention test in the context of letter rulings concerning construction contractors. ST 08-0003-PLR (April 1, 2008) identifies a number of letters invoking the test. ST 00-0156 sets forth the intention test as follows: "

“In determining whether an item is permanently affixed to real estate, a very fact-specific inquiry must be made regarding whether the item is intended to remain with the realty. In order to make a finding that the item is permanently affixed, at least three factors must generally be examined. First, the item must be affixed to the realty. The item must also be applied to the use or purpose to which the realty is put. Finally, the intent of the person affixing the item must be examined. Another factor often examined is whether the item is essential to the use to which the real estate has been put.”

We will begin the meeting with a national State and Local Tax update from the folks at the Council on State Taxation (COST).

This update will cover select legislation and litigation around the country. Speakers from COST will discuss certain issues with sales, gross receipts, and corporate income taxes.

Speakers: Aziza Farooki, Priya Nair, and Fred Nicely

Aziza Farooki is Director of Policy at the Council On State Taxation (COST) where she coordinates and supports COST’s policy and advocacy efforts at state, local, and federal levels. Prior to joining COST, Aziza served as fiscal manager and program coordinator at the Ohio State University. She received her Master of Public Policy and Management degree from the Ohio State University in Columbus, Ohio.

Priya D. Nair is Staff Attorney for the Council On State Taxation (COST) where she is responsible for identifying, analyzing, communicating, and tracking legislation and regulations of concern to COST members. Prior to joining COST, Priya was a Manager in the National Tax Office-SALT of Grant Thornton LLP in Washington DC, and before that she was a State Tax Law Editor at The Bureau of National Affairs, Inc./ Bloomberg BNA. She earned her Master of Laws in Taxation from Georgetown University Law Center and her Juris Doctor and Bachelor of Business Administration from Southern Methodist University in Dallas, Texas.

Fred Nicely is Senior Tax Counsel for the Council On State Taxation (COST) where his role extends to all aspects of the COST mission statement: “to preserve and promote equitable and nondiscriminatory state and local taxation of multijurisdictional business entities.” Before joining COST, Fred served in the Ohio Department of Taxation for four years as Deputy Tax Commissioner over Legal and for the prior seven years as the Department’s Chief Counsel.  Fred’s undergraduate degree in psychology (with a concentration in accounting) is from the Ohio State University. He obtained his MBA and JD from Capital University in Columbus, Ohio. 

The December 10 edition of the Illinois Register did not contain any proposed rules or adopted rulemakings by the Illinois Department of Revenue or the Department of Commerce and Economic Opportunity.

No new tax-related cases this week.

No new decisions have been posted by the Tribunal this week.

None of the new cases filed since my last newsletter raise unique issues.

The General Assembly's bipartisan Commission on Government Forecasting and Accountability (COGFA) published a Special Pension Briefing. According the the report, there was a significant drop in unfunded liability recorded in FY 2021 largely because of exceptionally strong investment performance by the 5 pension systems. According to the report, "[t]his allowed the combined unfunded liability to decrease by $14.3 billion, a 9.9% decline from the previous year, to $130 billion."