The House and Senate were not in session this week. The Senate is scheduled to be back in session on March 2.

The Senate Revenue committee met this week on March 3. The following bills were voted out of committee: SB 58 - Munoz - removes the $10,000 cap on automobile trade-ins, SB 81 - Stoller and Koehler - an income tax checkoff for donations to the Ronald McDonald House charities fund, SB 188 - Feigenholtz - amends the TIF Act to allow local governments the authority to use TIF funds for grants, subsidies or loans to businesses in the redevelopment area that have experienced business interruption or other adverse conditions as a result of the Covid-19 public health emergency, SB 217 - Castro - establishes certain exemptions from the parking tax, and SB 280 - Rezin - extends the expiration of a TIF located in Ottawa.

The House Revenue committee met this week on March 4. As in past years, the committee posted bills that had been assigned to the committee by the date the hearing was scheduled and a day or two before the hearing the Chairman provided information about which bills, if any, were to actually be considered. This week no bills were considered.

As I speculated in last week's newsletter, yesterday at the first hearing three subcommittees were established - income tax, sales tax and property tax. Most of the bills that have been assigned to the committee were assigned to subcommittee.

In past years, the Chairman allowed few bills to be considered by the committee until just before the committee deadline. His rationale has always been that until the budget has been developed, bills that affect state revenues should be held. It appears that the Chairman plans to take the same approach this year.

The Chairman announced that no legislation will be considered by the House Revenue committee next week. The committee will receive testimony on state revenues from the Governor's Office of Management and Budget, the Illinois Department of Revenue and the Illinois General Assembly's bi-partisan Commission of Government Finance and Accountability.

The bill filing deadline for both houses has passed.

HB 4009 - DeLuca - Amends the Property Tax Code. Provides that any taxing district shall abate its taxes on property that (i) contains a grocery store or supermarket that is owned by a minority person, a woman, or a person with a disability and offers fresh produce for sale at retail but does not sell alcohol and (ii) is located in an area that qualified as a food desert in the taxable year immediately preceding the taxable year in which the grocery store or supermarket first conducted business at that location. Defines terms "food desert", "minority person", "woman", and "person with a disability". Amends the Counties Code and the Illinois Municipal Code. Provides that counties and municipalities shall waive all fees associated with building permits issued for property that has been granted an abatement under those provisions. Amends the Business Corporation Act of 1983 and the Limited Liability Company Act to waive fees for filing an annual report.

HB 2583 - Murphy, and SB 490 - Stoller - Small Business Asset Purchase Accounts - Amends the Illinois Income Tax Act. Creates an income tax deduction for an amount of up to $50,000 per tax year contributed to a small business asset purchase account and all interest earned on such accounts during the tax year. Provides that a "small business asset purchase account" means an account established by a taxpayer, the proceeds of which are used to purchase property used primarily in Illinois for which a federal income tax deduction is claimed under Section 179 of the Internal Revenue Code. Provides an addition modification for amounts withdrawn from a small business asset purchase account that are not used for qualified purchases. Amends the Uniform Penalty and Interest Act to establish a penalty for improper use of moneys in a small business asset purchase account. Effective immediately.

HB 3033 - Wheeler - Reinstates the Expanded Temporary Storage Exemption from the sales tax. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the exemption for the use or sale of tangible personal property purchased from an Illinois retailer by a taxpayer engaged in centralized purchasing activities in Illinois who will temporarily store the property in Illinois (i) for the purpose of subsequently transporting it outside this State for use or consumption solely outside this State or (ii) for the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into other tangible personal property to be transported outside this State and used or consumed solely outside this State sunsets on June 30, 2022 (currently, June 30, 2016). Effective immediately.

HB 1938 - McCombie and SB 2256 - Wilcox - Modifies the temporary storage exemption so the exemption is not lost if property is returned to Illinois only for purposes of repair, refurbishment or storage. Amends the Use Tax Act and the Service Use Tax Act. Provides that the multistate exemption includes the return of property of an out-of-State lessor or purchaser to this State for storage, repair, or refurbishment, so long as the property is not used by a lessee or purchaser in this State. Effective immediately.

SB 2180 - Sims - Changes the sales taxation of leased property to the lease payments from the up-front cost of the leased item. Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that, for any leased property (currently, for motor vehicles only), "selling price" means the consideration received by the lessor pursuant to the lease contract and includes certain amounts received by the lessor that are not calculated at the time the lease is executed. Provides for an exemption to the extent of any personal property lease transaction tax paid to a home rule municipality. Provides that a sale of tangible personal property shall be made tax-free on the ground of being a sale for resale or lease (currently, for resale) if the purchaser has an active registration number or resale number from the Department of Revenue and furnishes that number to the seller in connection with certifying to the seller that any sale to such purchaser is nontaxable because of being a sale for resale or lease (currently, for resale). Effective immediately.

HB 570 - Carroll - Amends the Tobacco Products Tax Act of 1995 to cap the tax at $.50 per cigar. The bill also provides that distributors are allowed a discount in the amount of 2% of the distributor's tax liability, but not to exceed $2,000 per return.

HB 3034 - Wheeler - Bonus Investment Credit for Small Businesses - Amends the Illinois Income Tax Act to authorize an immediate additional 1% investment credit of the amount of expenses claimed as a federal income tax deduction under Section 179 of the Internal Code

SB 2260 - Wilcox - Amendment of the Uniform Penalty and Interest Act - The bill provides that if a Department audit discloses that a taxpayer has paid at least 95% of the tax required to be shown due on the return for the tax period at issue, or the taxpayer before commencement of an audit discovers an underpayment of tax and voluntarily files an amended return and pays additional taxes in an amount that is no more than 5% of the amount of tax required to be shown due for the tax period, the underpayment penalty that would otherwise be due is automatically rescinded.

HB 3038 - Wheeler - Amends the False Claims Act to eliminate abuses. This legislation creates a new procedure for reporting “false claims” relating to tax matters to the Illinois Department of Revenue (the “IDOR”) and eliminates the ability of private parties to file lawsuits directly against other parties in the circuit courts. Adoption of this legislation will eliminate abusive private enforcement actions, while preserving the true intent of the law.  

HB 3935 - McCombie and SB 491 - Stoller and SB 511 - DeWitte - The proposal will strengthen the research and development credit by modifying the base period calculation for purposes of calculating the required increase in qualifying expenditures. This bill changes the base period calculation to 50% of the average of the 3 year base period.

SB 492 - Stoller - Reinstates the personal property replacement income tax investment credit.

SB 1864 - Barickman - Amends the EDGE credit address Covid-related issues

SB 2257 - Fowler - Establishes a regionalized minimum wage income tax credit.

SB 2531 - Stoller - Federal SALT cap work around for owners of pass-through entities. Amend the Illinois Income Tax Act to tax income of partners of partnerships and S Corporation shareholders at the entity level to work around the federal $10,000 SALT deduction cap.

SB 2142 - McConchie - Revised Uniform Unclaimed Property Act reforms.

SB 2182 - Sims - Amends the Data Center exemption legislation to address implementation issues identified by taxpayers and the Department of Commerce and Economic Opportunity.

The March 5 edition of the Illinois Register contained no proposed or adopted rulemakings by the Illinois Department of Revenue.

The Department of Commerce and Economic Opportunity proposed rules on the Data Center Investment Program. The Department described the scope of the rules as follows:

"Provides rules for companies seeking to participate in the data center investment program, including definitions, eligibility criteria, and application process and procedure. The rules also provide details regarding entering into, and the contents of, memorandum of understanding to be entered into between the Department and the applicant business. Finally, these rules detail the process and procedure applicable to noncompliant participants." 

No new decisions in tax-related cases this week.

No new decisions were issued by the Tribunal this week. Two of the new cases may be of interest: U.S. Bancorp & Subsidiaries v. Department of Revenue and U.S. Bancorp and Subsidiaries v. Department of Revenue.

The cases are protests of refund claim denials. U.S. Bank acquired 11 financial institutions from the FDIC between 2008 and 2010. As part of each acquisition, U.S. Bank entered into Purchase and Assumption Agreements, which included Shared Loss Agreements with the FDIC. Under the terms of the Agreements, the FDIC agreed to pay U.S. Bank a perventaged of the losses that U.S. Bank incurred as a result of the uncollectible loans of the financial institutions that U.S. Bank purchased for the FDIC for a set period. U.S Bank included the payments received from the FDIC in its net income on its original returns. U.S. Bank filed claims for refund on the basis that the payments received by U.S. Bank from the FDIC is not subject to Illinois tax under federal law - 12 U.S.C 1825(a).

The bi-partisan legislative Commission on Government Forecasting and Accountability ("COGFA") released the February 2021 State of Illinois Economic Forecast Report Prepared for COGFA by Mood's Economy.com. The Commission also will hold a hearing on March 9. The hearing will be broadcast with a link on the General Assembly website although it is unlikely the link will be posted before the morning of March 9.

COGFA also posted the Monthly Briefing for the Month ended: February 2021

The Recruitment Manager at the Illinois Department of Revenue asked if I would forward additional job postings: Sales and withholding tax efile expert, sales and use tax ICB conferee and income tax ICB conferee