The House and Senate returned to Springfield on Monday and remain in Springfield in session through May 31.

As of this morning, the General Assembly has much work to do before the scheduled adjournment on Monday. I will issue special editions of the newsletter over the weekend as warranted and, assuming the General Assembly wraps up the spring session on time on Monday, I'll send out a newsletter some time late Monday night or early Tuesday morning.

In addition to passing the budget for the fiscal year beginning on July 1, the Democratic majority has announced their intention to address redistricting and pass new House and Senate legislative maps. In addition, a new map for the Supreme Court districts has also been proposed.

We have yet to see which of the Governor's so-called "loophole closing" proposals will be included as a part of the final budget. The latest i have heard is that there are three of his proposals that may be included in the final budget - the three year suspension of Illinois net operating losses, decoupling from federal immediate expensing of capital assets (I've heard that they will propose using the old federal MACRS rules for depreciation) and some sort of addback for federal GILTI (global intangible low taxed income) that is currently subtracted for Illinois purposes. We have yet to see language. The Department's Acting General Counsel has advised that language has been drafted, but as of this morning, that language hasn't been shared.

The net operating loss and depreciation changes do not bring in any additional state revenues over the long term. They just shift around money between tax years. The NOL suspension and decoupling from federal immediate expensing will increase revenues for the upcoming fiscal year, a year in which the state will see significant revenues from the federal government, and reduce revenues in subsequent years when the state will no longer receive the additional federal revenues. That doesn't make any sense to me. The folks making these decisions either don't understand this or don't care.

When it comes to taxes, much of my work goes on behind the scenes this time of year as we work to block bad tax policy. Here are some examples:

The Cook County Assessor continues to press for passage of his so-called data modernization legislation HB 860 and his legislation that would mandate taxpayers to provide property descriptions HB 3529. We remain strongly opposed to both initiatives for reasons I have outlined in previous newsletters. I am a part of a coalition of business groups that opposes this legislation. Discussions are ongoing.

As of this morning, I am cautiously optimistic that the Cook County Assessor's so-called "data modernization" proposal in HB 860 will not move forward during the spring session. Based on comments by Representative Zalewski, the Chairman of the House Revenue committee at the Revenue committee hearing on Wednesday, we are watching SB 508 which Representative Zalewski advised would be shelled and used as a vehicle bill for certain as of yet unspecified tax provisions.

SB 2182 - The Chamber's data center clean up legislation as amended by House committee amendment 1 remains on 3rd reading in the House. As I discussed last week, we oppose the amendment.

The amendment provides that within 180 days after the effective date of this amendatory Act of the 120nd General Assembly, all new and existing data centers seeking a certificate of exemption under this Section shall require the contractor to enter into a labor peace agreement with any union representing workers who operate and maintain a critical system or equipment used or maintained by the data center.

We also worked hard this week to oppose HB 1839 an initiative of the Department of Commerce and Economic Opportunity that would establish "corporate good citizen" requirements as a condition of businesses receiving development assistance through programs administered by the DCEO. The EDGE tax credit and the data center sales tax exemption and income tax exemption programs are two examples of the programs that would be affected by this proposal.

This legislation provides an undue amount of discretion to the bureaucrats at the DCEO to determine whether a business is a "good corporate citizen" and may receive approval for participation in programs such as EDGE or the data center sales tax exemption program, or that the business does not fit this definition is not entitled to assistance. We explained the following to the sponsor, the Democratic and Republican staff of the committee and other members of the committee:

The definition of “good corporate citizen” is vague. The statute lists 4 items with which a business must comply, The statute provides the definition “includes but is not limited to” the 4 items,

The statute allows DCEO to impose additional requirements,

The first subsection of the definition of “good corporate citizen” requires that, the business, its corporate officers, or corporate parent or affiliates are not, or have not been, the subject of any criminal charges within 5 years prior to the application for development assistance, or during the term of a development assistance agreement. There is no requirement that the charges be in any way related to business of the applicant for, or recipient of, assistance. Example: A drunk driving arrest of a corporate officer would appear to qualify as a “criminal charge.”

There is no requirement that there be a conviction. A totally baseless charge could cause an applicant or recipient to lose “good corporate citizen” status and as discussed below could cause damage that may not be undone.

 When combined with the broad definition of “related member,” that would allow “related member” designation to a company with as little as a 20% ownership interest, companies could be denied participation in a program, or suspended from a program, because of the actions of others over whom they have little or no practical control.

I also pointed out that it is unclear as to what recourse, if any, an applicant may have if an application for assistance is denied based on a purported failure to comply with the “good corporate citizen” criteria? It is unclear how such a determination be challenged in light of Section 2605.70(d) of the DCEO administrative hearings rules which currently provides that a decision to deny an application for financial assistance may not be reviewed in a DCEO administrative hearing? (see 56 Ill. Adm. Code 2605.70(d))

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The legislation provides that the DCEO may suspend development assistance for purported noncompliance and seek a revocation. I pointed out the practical effect of a suspension, when a suspension is later reversed,

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The following example demonstrates the practical difficulty with the suspension provision.          

A company qualifies for the data center sales tax exemption. The DCEO suspends the exemption for purported noncompliance. 

By suspending the exemption, the business is no longer able to make sales tax-free qualifying purchases. The suspension would also apply to the data center tenants.

If the suspension is later found to be invalid, under current law, there is no way to reverse the adverse effects of the suspension. If a company loses the sales tax exemption, the company must pay sales tax on purchases. If the suspension is later rescinded, the company is unable to file a claim for refund directly with the Illinois Department of Revenue for sales taxes paid to sellers, because by law, only the seller who collected the tax and remitted it to the Department of Revenue may file a claim for refund.

In addition, under existing law, whether to file a claim for refund in such a situation is solely within the discretion of the seller from whom the company made purchases. The seller could, as a matter of law, refuse to file a claim for refund. As a result, a company that was wrongfully suspended from the program would be unable obtain a refund of the sales taxes it was wrongfully forced to pay.

HB 1839 was scheduled for a hearing in the Senate Executive committee on Wednesday. I was prepared to testify in opposition to the bill. Inexplicably, at least to me, the Chicagoland Chamber of Commerce filed a witness slip in favor of this deeply flawed legislation.

HB 1839 was not called at the hearing on Wednesday before the hearing was postponed until yesterday morning. Late Wednesday night, HB 1839 was amended and turned into a shell bill (the substance of the bill was deleted). The bill without any substance was passed out of the committee on a partisan vote to be used as a vehicle bill for some as of yet unspecified purpose. As of this morning, the bill has not been amended again.

The House Revenue committee met on Tuesday. The committee considered a number of bills. The full list of the bills voted on by the committee on Tuesday is at this link.

Included on the House Revenue committee agenda on Tuesday was SB 338 - an initiative of the Illinois Treasurer amending the Revised Uniform Unclaimed Property Tax Act. You will recall that previously, I testified in opposition to the bill because of a provision requiring negative reports by businesses. The Revenue committee hearing on Tuesday involved two amendments to the bill that were unrelated to negative reporting and to which we had no objections. As a result, I did not file a witness slip in opposition to the amendments.

The House Revenue committee met again on Wednesday. The bills considered by the committee on Wednesday are at this link

Included among the bills considered by the committee on Wednesday was SB 2279 an initiative of the Department of Revenue which would extend the statute of limitations for assessment any time a claim for refund is filed by a taxpayer. As originally proposed, the bill would have extended the statute of limitations for assessment for up to 12 months when a claim for refund is filed for a period for which there is less than 12 months remaining on the statute of limitations for assessment.

We met with the Department of Revenue last week to explain why this extension of the statute of limitations in unwarranted and inappropriate. The Department declined to eliminate the extension of the statute of limitations, but amended the bill reduce the extension of the statute of limitations to a maximum of 6 months.

The bill as amended was considered by the House Revenue on Wednesday. I testified in opposition to the bill as amended because of the retention of the extension of the statute of limitations for assessment for 6 months. The bill passed out of committee on a partisan vote with all Democrats voting for the bill, and all Republican members of the committee opposed.

Another amendment to SB 2279 was filed on Thursday. This amendment was primarily technical in nature. In amendment 1 to SB 2279, the amendments to the sales and excise tax laws to grant the Department up to an extra 6 months to issue an audit assessment for any period that is within 6 months of the expiration date of the statute of limitations for assessment, the provisions referred to "taxable year" when they should have referred to "period" because sales and excise tax returns are filed monthly, quarterly or annually depending the sales of the taxpayer.

As a result, SB 2279 remains on 2nd reading in the House until the amendment is adopted.

The Senate Revenue committee met on Thursday. Two bills were considered by the committee at the hearing.

SB 2531 - The Chamber's federal $10,000 SALT cap workaround was back in the Senate Revenue committee on Thursday on a motion for concurrence in a technical amendment in the House that was at the request of the Illinois Department of Revenue. The Senate Revenue committee agreed the motion and sent the bill to the Senate floor recommending a vote in favor of concurrence.

The May 21 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Department of Commerce and Economic Opportunity or the Department of Revenue.

Today's Illinois Register contains a proposed rulemaking by the Property Tax Appeal Board amending its rules on practice before the Board.

No tax-related cases this week.

 No new decisions were issued by the Tribunal this week. None of the new cases filed this week raise unique issues.