Senate deadline for House substantive bills to be out of committee.
May 31:
General Assembly scheduled adjournment for spring session
June 8: Tax Institute Quarterly meeting - Legislation wrap up and the law firm of Kupiec & Martin present: "The Top 10 things Illinois Taxpayers Need to Know" 2:00 - 4:00 pm. Email me at kstaats@ilchamber.org to register
May 14, 2021
State and Local Tax
This Week
Illinois General Assembly
The Senate returned to Springfield on Monday. The House returned to Springfield on Tuesday. The House and Senate were in session through Friday.
The Senate returns to Springfield next week on Monday and is scheduled to be in Springfield through Friday. The House returns to Springfield on Tuesday and, according to the House calendar, is scheduled to be in Springfield, including weekends, through May 31.
Discussions on the budget continue. At this juncture, we are continuing the fight to oppose the Governor's so-called "loophole closing" legislation.
The House Revenue committee met on Thursday. The committee considered a number of bills. The full list of the bills voted on by the committee on Thursday is at this link.
SB 2531 - The Chamber's federal $10,000 SALT cap workaround initiative passed the House Revenue committee with bipartisan support and was sent to the floor where it was placed on second reading on Thursday.
Another bill considered by the committee was SB 338, an initiative of the Treasurer, that contains various amendments to the Revised Uniform Unclaimed Property Act. Among the changes, is a new requirement that certain companies that have no unclaimed property to report will be required to file a report stating they have nothing to report. I opposed this provision, as I did when it was considered by the Senate Revenue committee. Requiring businesses to file "negative reports" is, in my estimation, a needless bureaucratic requirement. However, the bill was passed out of the committee to the floor on a mostly partisan vote.
SB 2279 - is a Department of Revenue initiative that was considered by the House Revenue committee today. As I did before the Senate Revenue committee, I testified in opposition to the portion of the bill that would give the Department of Revenue an additional 12 months to issue an audit assessment any time a claim for refund is filed and there is less than 12 months remaining on the statute of limitations period for assessment.
In opposing the bill, I pointed out that the Department of Revenue has sufficient time to audit taxpayers under existing law - 3 years (or 6 in the case of a substantial understatement) under the Illinois Income Tax Act, and 3 1/2 years under the various sales and excise tax laws. I also pointed out that even if the statute of limitations for assessment has run, the Department has the authority to offset a refund claim by any other underpayments for the period up to the amount of the refund claim.
The Department persisted in its baseless justification for the legislation that taxpayers wait until just before the expiration of the statute of limitations for assessment for filing claims for refund. I pointed out that this is simply no true. It makes no sense in light of the Department's ability to offset a claim by any other underpayment for the tax period.
The Department claimed that this assertion was based on their internal data about when claims are filed. In response, I noted that what generally happens in the case of refund claims is that many, if not most, claims for refund are multiyear in nature - for example, a taxpayer understates their research and development credit because a the time they filed their original return they determined mistakenly that certain activities didn't qualify for the credit. What happens in such cases is that the taxpayer files returns for every year for which the statute of limitations remains open. If they file 3 years with of claims, the earliest year will be within 12 months of the expiration of the statute of limitations. I pointed out that using such situations to justify a conclusion that taxpayers wait until the last minute to file refund claims is incorrect.
In any event, after discussion and questions from the Republican spokesperson the bill passed out of the committee on a partisan vote with the assurance from the sponsor, Chairman Zalewski, that he would meet with me and the Department to further discuss this issue.
I reached out to Representative Zalewski and the Department's representative to try to set up a meeting as quickly as possible.
The House Revenue committee also held a subject matter hearing on "Capital Revenues."
The House Revenue committee is scheduled to meet next week on Thursday morning. Among the bills scheduled for consideration is SB 2182 our data center clean up legislation.
The Senate Revenue committee met on Wednesday. The bills considered by the committee at the hearing are at this link.
The Senate Revenue committee is scheduled to meet next Wednesday. Here is a list of the bills currently scheduled for consideration. At the risk of jinxing myself, as of today nothing controversial has been posted for committee consideration.
Amendments with tax-related provisions filed this week:
SB 338 - House committee amendment 1 -Provides that a money order is presumed abandoned if it is unclaimed by the apparent owner 5 (rather than 3) years after issuance. Provides that any instrument on which a financial organization or business association is directly liable, other than a money order, is presumed abandoned if it is unclaimed by the apparent owner 3 years after issuance.
SB 1721 - House committee amendment 1 - In the Property Tax Code: reduces the maximum penalty bids for the annual tax sale from 12% to 9%; and, in provisions about redemption of property, removes changes relating to assessment of penalties.
SB 1794 - Senate amendment 1 - Replaces everything after the enacting clause. Reinserts the provisions of the introduced bill with the following changes. In provisions amending the Local Government Taxpayers' Bill of Rights Act, creates a 7-year statute of limitations for utility taxes (currently, 4 years). In provisions amending the Illinois Municipal Code, provides that a public utility that is an electric utility may not provide customer-specific information. Provides that penalties for failure to respond to requests for information shall be assessed by the municipality, but may be reduced or vacated by the municipality or a court of competent jurisdiction upon demonstration by the public utility that the public utility's failure to provide the requested information resulted from excusable neglect. In provisions concerning a public utility's liability for premises that have been annexed to the municipality, provides that the utility shall only be liable beginning 60 days after the date that the municipality provided the public utility notice of the annexation. Adds provisions amending the Public Utilities Act. Provides that the Illinois Commerce Commission shall not consider: (i) costs associated with a municipal audit; (ii) any court costs, attorney's fees, or other fees incurred under certain provisions of the Illinois Municipal Code; (iii) unpaid utility taxes owed to a municipality; or (iv) any penalties or interest imposed by a municipality under certain provisions of the Illinois Municipal Code to be expenses for the purpose of determining any rate or charge.
HB 3427 - Senate committee amendment 1 - Replaces everything after the enacting clause with the provisions of the engrossed bill with the following changes. In provisions creating the Investing in Illinois Works Tax Credit Act, makes changes to provisions concerning definitions. Provides that for taxable years beginning on or after January 1, 2023 (rather than for reporting periods beginning on or after January 1, 2022) an owner or operator may claim as a credit against the tax imposed under specified provisions of the Illinois Income Tax Act an amount equal to the amount of Illinois income tax withheld from the compensation paid to each qualifying employee and paid to the Department of Revenue, not to exceed (rather than equal to) $2,500 per calendar year for each qualifying employee. Provides that for partners and shareholders of Subchapter S corporations, there shall be allowed a credit under to be determined in accordance with the determination of income and distributive share of income under specified provisions of the Internal Revenue Code. Removes language providing that specified provisions are exempt from specified provisions of the Illinois Income Tax Act. Makes other changes. In provisions creating the Illinois Hazardous Materials Workforce Training Act, provides the findings of the General Assembly. Makes changes to provisions concerning definitions. Provides that within 3 days after an emergency resulting in a failure to comply with the Act, an owner or operator must notify the Department that such an event occurred and provide documentation supporting its claim that compliance with the Act was impracticable. Makes changes to provisions concerning enforcement and reporting requirements. Requires the Department of Labor to consider the gravity of a violation in determining the amount of the penalty for the violation. Provides that if the Department finds that a contractor or owner or operator failed to pay the prevailing rate of wages to construction workers at a stationary source as required under the Act, the Department shall have the ability to recover unpaid or underpaid wages, plus a 5% monthly penalty, on behalf of and payable to the workers. Makes other changes. Removes language allowing the Department of Labor to adopt emergency rules under the amendatory Act. Amends the Illinois Income Tax Act. Contains provisions regarding the Investing in Illinois Works Tax Credit (rather than amending provisions regarding employers' returns and payments withheld). Provides an effective date of January 1, 2023 (rather than January 1, 2022).
SB 508 - House committee amendment 1 - Removes language from the engrossed bill providing that the adjustment shall be made by a supplemental levy.
SB 2182- House committee amendment 1 -Replaces everything after the enacting clause. Reinserts the provisions of the introduced bill with changes. Provides that a "qualifying Illinois data center" means a new or existing data center that, among other criteria, is located in the State of Illinois, is located within a 5-mile geographic radius, and is connected by common infrastructure. Provides that a data center and an associated tenant may enter into an ancillary memorandum of understanding, as prescribed by the Department of Commerce and Economic Opportunity, for purposes of receipt of an exemption. Provides that the Department is authorized to conform existing memorandums of understanding with the provisions concerning data center investments. 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. Modifies the definition of "tenant". Makes other changes. Effective immediately. The Chamber opposes this amendment.
Bills that passed the House:
No tax-related bills passed the House this week.
tax-related bills passed the Senate
No tax-related bills passed the Senate this week.
Illinois Department of Revenue
The Department issued the following email announcement:
Tax Refunds Being Issued for Eligible Residents Who Received Unemployment Benefits
The Illinois Department of Revenue (IDOR) has begun recalculating electronically filed 2020 individual income tax returns and will notify taxpayers who filed before March 15, 2021, of the systemic adjustment of their AGI and the amount of any refund due.
Eligible taxpayers can expect to receive their refund checks approximately two to three weeks after they receive a notification letter from IDOR.
IDOR will also notify an estimated 3,300 paper filers who filed prior to the implementation of the federal unemployment exclusion that they will need to file an amended return to qualify for any refund due.
For taxpayers who filed electronically on or after March 15 and included the unemployment exclusion on their federal and state individual income tax returns, no additional filing changes are required. For taxpayers who filed electronically on or after March 15 but did not include the unemployment exclusion when calculating their AGI, an amended return must be filed to adjust their AGI.
The Department issued a new quarterly newsletter by the Department's Local Tax Allocation Division.
Rulemaking
The May 14 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Department of Commerce and Economic Opportunity.
The Illinois Department of Revenue has one proposed amendment in today's Illinois Register. The Department explained the proposed rule as follows:
The rulemaking amends Sections 151.105 and 151.110 of the Vehicle Use Tax regulations. 86 Ill. Adm Code 151. The Illinois Vehicle Title & Registration Law (625 ILCS 5/3-1001) and rules identify 3 situations where the tax rate is assessed at the rate of $15 per transfer or purchase of a motor vehicle in a private transaction. One situation is when the transferee or purchaser is the spouse, mother, father, brother, sister or child of the transferor. Section 151.105(d)(3). Subsection (d)(3) is being amended to clarify that the tax rate shall be $15 per transfer of a motor vehicle when the transfer is from one spouse to the other spouse in a dissolution of marriage proceeding and the transfer is made no later than 90 days from the date of a final, non-appealable order of dissolution of marriage. Presently, the Law and rules do not specify a date by which a return must be filed by the transferee of a motor vehicle subject to the Vehicle Use Tax. The Law empowers the Department to adopt rules that are reasonable and necessary to implement the Law. Generally, under the Use Tax Act, transaction reporting returns must be filed not later than 20 days after the date of delivery of the item that is being sold, but may be filed by the retailer at any time sooner than that if he chooses to do so. 35 ILCS 105/9. The proposed amendment to Section 151.115 provides that a transferee in a private transaction has 30 days to pay the tax and file a return.
There were no adopted rules of the Department of Revenue in this week's Illinois Register.
Court cases
No tax-related cases this week.
Tax Tribunal
None of the new cases filed this week raise unique issues.
Publications
The Civic Federation issued its Analysis and Recommendations on the State of Illinois FY2022 Recommended Operating and Capital Budgets.
