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December 23, 2021
State and Local Tax
This Week
I'm taking next week off so no newsletter next week unless something of importance comes up.
Illinois General Assembly
The House and Senate return to Springfield for the spring legislative session on January 4.
New tax-related legislation was introduced this week:
HB 4286- Reick - Amends the Illinois Income Tax Act. Provides that, if the amount of the credit for residential real property taxes exceeds the taxpayer's liability, that amount shall be refunded if the taxpayer is 65 years or older and has a federal adjusted gross income of not more than $50,000. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.
Internal Revenue Service
The IRS issued a news release this week announcing that the filing deadlines will be extended for the victims of the Illinois and Tennessee tornadoes to May 16.
Rulemaking
The next edition of the llinois Register will be published on December 27. If anything of critical importance is published next week, I'll send out a newsletter.
Court cases
One new tax-related case this week.
Deerpath Consolidated Neighborhood Association v. Lake County Board of Review is a property tax case. At issue is whether the Association has standing to pursue a property tax appeal on behalf of individual homeowners. The circuit court granted the Board of Review's motion for summary judgment in which the Board challenged the standing of the homeowners' association to pursue a property tax appeal on behalf of its members. The Association appealed and the appellate court reversed the trial court.
The case has a long procedural history and was at the appellate court level previously, but was sent back down for development of evidence. This decision has a detailed discussion of the concept of associational standing.
The court concluded that the Association had standing to file the July 2017 tax appeal on behalf of the individual property owners. The court reversed the judgment of the circuit court of Lake County and remanded the case for entry of summary judgment in favor of the Association on the issue of associational standing and entry of a writ of mandamus ordering the Board of Review to vacate the dismissal of the tax appeal and docket the appeal.
Tax Tribunal
No new decisions have been posted by the Tribunal this week.
Two of the new cases filed since my last newsletter may be of interest. .
Mitutoyo America Corporation v. Department of Revenue is a protest of a corporate income tax refund claim denial. This case is a cautionary tale about documenting when claims are mailed to the Illinois Department of Revenue.
In this instance, the Department denied the refund claim as untimely. In their protest, the taxpayer asserts that they filed the claim on or before the due date and because of the "mailbox rule" the claim was timely filed. The problem is that the taxpayer didn't send the claim via certified mail return receipt requested, so there is no independent record of when the claim was mailed. According to the petition, the Department either threw away or lost the envelope with the postmark. (The taxpayer also admits in the petition that the postmark was applied by their postage meter.) The taxpayer plans to submit testimony at hearing as to the timely mailing, but in the absence of other evidence I suspect they will have difficulty prevailing.
Napleton Investment Partnership, L.P. v. Department of Revenue is an income tax case is a protest of two notices of deficiency. The taxpayer is a partnership primarily engaged in leasing real estate. The taxpayer received income from rental income from real estate and income from other partnerships in which it was a partner.
Upon audit, the Department asserted that that taxpayer underreported its income because it should not have considered certain like-kind exchanges in calculating its sales factor for the tax year. The taxpayer also protested the Department's change to the sales factor related to the percentage of the gross receipts from the flow-through partnerships.
David Hughes of Tax Institute member law firm Horwood Marcus & Berk represents Napleton.
The National Taxpayers Union Foundation issued an Issue Brief this week entitled Who Doesn't Pay Income Taxes. Based on the most recent data from IRS (2019) over one third of filers owned no income taxes in 2019.
