The House is scheduled to be in session beginning today through mid-day January 13 for the lame duck session. The Senate is also scheduled in to be in session for lame duck session. The Senate will hold an Executive committee hearing tomorrow.

The House has also announced that the new House will be in session on January 14. As I've discussed in previous newsletters and as I am sure you have seen is press reports, the first order of business in the new House will be choosing a Speaker of the House. At this juncture, the Democratic majority does not have agreement on who will be the Speaker. Until a new Speaker is chosen, no business can be conducted by the House.

The House is meeting at the convention center in Springfield and the Senate will meet in the Senate Chambers.

There has been new proposed legislation filed in the House. There is new also new legislation filed in the Senate. I highlight some of the newly-filed tax-related legislation below, not because I think it is likely that all of it will be considered during the lame duck session, but because the proposals may resurface during the new legislative session beginning January 13. Any of this legislation that is not passed by both houses by mid-day January 13 will be dead and would have to be refiled in the new General Assembly that begins in the afternoon of January 13.

The House and Senate Revenue committees have not scheduled hearings for the lame duck session. Committee hearings in the House will occur on the floor of the convention center. The convention center will not be open to members of the public. No oral testimony will be permitted - only written testimony. It appears that Senate hearings will be held on the floor of the Senate. The Senate has established limited provisions for oral testimony.

It appears that any tax-related legislation that is considered during the lame duck session in the House will either be heard in the House Executive committee or will be moved directly to the floor without a committee hearing.

The House Executive committee is scheduled to meet this afternoon. As of this morning, only one tax-related bill has been posted for committee consideration. SB 1199 amends the Property Tax Code. Yesterday, it was amended to turn it into a shell bill. The version that passed the Senate provided that a taxpayer who has been granted a homestead exemption for veterans with disabilities need not reapply annually if he or she has been found by the Department of Veterans Affairs to be permanently and totally disabled. SB 1608 is also posted for the House Executive committee This bill was also amended into a shell bill yesterday. The shell bill amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code.

I am also watching 5 House tax-related shell bills that were moved out of the Rules committee last Saturday to the floor and are are currently on second reading - HB 570 - 574. As of this morning, none of the bills have been amended to add substantive language.

There is a rumor that there will be legislation to decouple from net operating loss provisions modified under the federal CARES Act. As you will recall, in a newsletter issued after the enactment of the CARES Act, I predicted this might happen. As you know, IITA Section 207 decouples from Section 172 of the Internal Revenue Code and establishes Illinois net losses, except in the case of individuals. As a result, to the extent the CARES Act changes allow individuals to carry back federal net operating losses to prior years and obtain refunds for those taxes paid in prior years, it is my understanding that the Governor would like to decouple from federal treatment and not allow Illinois income tax refunds for carrybacks of federal net operating losses. I haven't seen any language to make this change. I'll forward anything that surfaces.

SB 4006 - Villivalam - Amends the Illinois Income Tax Act. Creates an income tax credit for employers who hire residents of the State if those residents were unemployed as a result of the COVID-19 pandemic immediately prior to the date of hire by the taxpayer. Sets forth the amount of the credit. Effective immediately.

SB 4008 -Crowe - Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that, from August 6, 2021 through August 8, 2021, and from August 13, 2021 through August 15, 2021, the tax imposed under the Acts on clothing and school supplies shall be at the rate of 1.25% (instead of 6.25%). Effective immediately.

SB 4010 - Villivalam - Amends the Illinois Income Tax Act. Creates an income tax credit for an employer who hires a qualified employee to work at a location in the State. Sets forth the amount of the credit. Provides that the credit shall be increased by $500 if (i) the qualified employee is hired to work at a location in a disproportionately impacted area or (ii) on the date the qualified employee is hired, the qualified employee resides in a disproportionately impacted area. Provides that the term "qualified employee" means a resident of the State who is hired by the taxpayer to fill a net new job and was unemployed as a result of COVID-19 prior to the date he or she was hired by the taxpayer. Provides that the term "qualified employee" does not include an individual who was furloughed by the taxpayer. Effective immediately.

SB 4020 - Villivalam - Amends the Illinois Income Tax Act. Creates an income tax credit for an employer who hires a qualified employee to work at a location in the State. Sets forth the amount of the credit. Provides that the credit shall be increased if (i) the qualified employee is hired to work at a location in a disproportionately impacted area or (ii) on the date the qualified employee is hired, the qualified employee resides in a disproportionately impacted area. Limits the total amount of income tax credits that the Department of Commerce and Economic Opportunity may issue over the duration of the program. Provides that the term "qualified employee" means a resident of the State who is hired by the taxpayer to fill a full-time net new job and was unemployed as a result of COVID-19 prior to the date he or she was hired by the taxpayer. Provides that the term "qualified employee" does not include an individual who was furloughed by the taxpayer. Effective immediately.

SB 4024 - Crowe - Amends the Property Tax Code. Provides that a county may, by ordinance, enact a law enforcement officer's homestead exemption in the amount of $1,500 to be deducted from the value of qualified property that is the primary residence of an eligible law enforcement officer. Effective June 1, 2021.

SB 4028 - Rose - Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Establishes the COVID-19 Small Business Relief Program for specified purposes. Provides that from appropriations for the COVID-19 Small Business Relief Program from the State Coronavirus Urgent Remediation Emergency Fund, the Department of Commerce and Economic Opportunity shall provide financial assistance through grants, expense reimbursements, or subsidies to qualifying businesses or a qualified partner to cover expenses or losses incurred due to business interruptions caused by their forced closure or inability to carry out regular functions in an economically viable manner under Tier 3 of the Governor's Restoring Illinois plan. Provides for the adoption of rules. Provides for powers of the Department concerning the Program. Amends the Illinois Administrative Procedure Act to provide for the adoption of emergency rules. Defines terms. Effective immediately.

HB 5870 - Andrade - Amends the Illinois Income Tax Act. Provides that, for taxable years that end on or after December 31, 2020 and end prior to December 31, 2022, there is no maximum amount for the education expense credit if the qualified pupil attends a school that is subject to in-person attendance restrictions as a result of COVID-19. Provides that, if the qualified pupil attends a school that is subject to in-person attendance restrictions as a result of COVID-19, the term "qualified education expense" also includes school supplies, computers and tablets, and increased internet access to facilitate remote learning. Effective immediately.

HB 5871 - Harper - Creates the Economic Equity Act. Provides for programs and amends various statutory provisions for the purpose of aiding economically disadvantaged persons and groups. Effective immediately. The bill amends Section 21-295 of the property tax code to provide in subsection (a-5) that in Cook County each person purchasing property at a sale under the Code shall pay to the County Collector a "non-refundable fee of $80 for each item purchased plus and additional sum equal to 5% of the taxes, interest, and penalties paid under Section 21-240. Section 21-295 of the Property Tax Code establishes the indemnity fund. Section 21-305 deals with payments from the indemnity fund. Other provisions of this article of the Property Tax are amended to make clear that the fee is non-refundable.

HB 5874 - 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 2170 - senate floor amendment 1 - As amended, this is an education bill. Included are amendments to the Invest In Kids Act. Section 10 which deals with credit awards amends subsection (a) to provide that for contributions made under the Act the credit shall be equal to an unspecified percentage of the qualified contributions made by a taxpayer (currently 75%) not to exceed a credit of $1,333,33 (now $1,000,000) per taxpayer. Subsection (b) is amended to increase the cap on the credit (apparently it is meant to increase the cap to $100,000,000 annually but the amendment has a typo and doesn't specify the increased amount). This subsection is also amended to increase the cap by 20% for the next year if in at least 2 of the previous 3 calendar years the applicable aggregate cap is reached. The scope of educational institutions eligible to receive funds through the program is also expanded.

HB 2685 senate amendment 3 - The bill amends Section 21-295 of the property tax code to provide in subsection (a-5) that in Cook County each person purchasing property at a sale under the Code shall pay to the County Collector a "non-refundable fee of $80 for each item purchased plus and additional sum equal to 5% of the taxes, interest, and penalties paid under Section 21-240. Section 21-295 of the Property Tax Code establishes the indemnity fund. Section 21-305 deals with payments from the indemnity fund. Other provisions of this article of the Property Tax are amended to make clear that the fee is non-refundable.

HB 3840 senate amendment 1 - This bill has been posted for a subject matter hearing at the Senate Executive committee tomorrow. The bill amends the Hospital Licensing Act to provide that a hospital that receives a property tax exemption much post the hospital's charity care policy. It’s been a few years since I was representing hospitals in private practice, but it is my recollection that my client hospitals did this routinely because as a condition of qualifying for the property tax exemption they had to demonstrate they had a charity care policy that provided that care would be provided to everyone regardless of ability pay and that policy was communicated to all prospective patients.. I suppose that a failure to comply with this new requirement could be a violation of the Hospital Licensing Act, but I have not idea whether and how that violation would be addressed. There is nothing in the new language that I see that would jeopardize a property tax exemption, in the event there would be a failure to comply.  

Beginning at p. 82, the sales and use tax acts are amended to tweak the 1% sales tax rate for diabetes blood sugar testing materials. Currently, the statute exempts “Urine testing materials” The exemption is being changed to reference “blood sugar testing materials” since my understanding is that these days the testing isn’t limited to urine testing. They are also tweaking the limitation that this material must be for human diabetics. Believe it or not this was a thing. About 20+ years ago I had dog who was diabetic and when I bought needles and insulin for her from Walgreens they were taxed at the 1% rate. IDOR didn’t like that and this became an audit issue and the subject of legislation. This new tweak looks to me to be an attempt to clarify that the stuff has to be used for humans. The existing language is susceptible to the interpretation that because my dog used insulin and needles that were also good for human use, those purchases should have continued to qualify for the low rate of tax. (An argument only a sales tax lawyer defending an audit assessment could love.)

HB 5548 - Illinois Health Care and Human Service Reform Act - The bill has a couple of tax-related provisions. The bill amends the Hospital Licensing Act to provide that a hospital that receives a Property Tax exemption is required to post their charity care policy "in a reasonably viewable area in the hospital’s emergency room.” It’s been a few years since I was representing hospitals in private practice, but it is my recollection that my client hospitals did this routinely because as a condition of qualifying for the property tax exemption they had to demonstrate they had a charity care policy that provided that care would be provided to everyone regardless of ability pay and that policy was communicated to all prospective patients.. I suppose that a failure to comply with this new requirement could be a violation of the Hospital Licensing Act, but I have not idea whether and how that violation would be addressed. There is nothing in the new language that I see that would jeopardize a property tax exemption, in the event there would be a failure to comply.  

Beginning at p. 82, the sales and use tax acts are amended to tweak the 1% sales tax rate for diabetes blood sugar testing materials. Currently, the statute exempts “Urine testing materials” The exemption is being changed to reference “blood sugar testing materials” since my understanding is that these days the testing isn’t limited to urine testing. They are also tweaking the limitation that this material must be for human diabetics. Believe it or not this was a thing. About 20+ years ago I had dog who was diabetic and when I bought needles and insulin for her from Walgreens they were taxed at the 1% rate. IDOR didn’t like that and this became an audit issue and the subject of legislation. This new tweak looks to me to be an attempt to clarify that the stuff has to be used for humans. The existing language is susceptible to the interpretation that because my dog used insulin and needles that were also good for human use, those purchases should have continued to qualify for the low rate of tax. (An argument only a sales tax lawyer defending an audit assessment could love.)

The Department issued Informational Bulletin FY 2021-02-A "Additional Retailers' Occupation Tax Guidance for Marketplace Facilitators as set forth by the Leveling the Playing Field for Illinois Retail Act."

The December 28 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Illinois Department of Revenue or the Illinois Department of Commerce and Economic Opportunity.

The January 4 edition of the Illinois Register contained no new rulemakings by the Department of Revenue or the Department of Commerce and Economic Opportunity.

The January 4 Illinois Register contained two adopted rulemakings by the Department of Revenue and one adopted rulemaking by the Department of Commerce and Economic Opportunity.

The Department of Revenue amended the Retailers' Occupation Tax rules. The Department described the amendment as follows: "The purpose of this rulemaking is to provide that when the Department is engaged in a joint investigation with a law enforcement authority to enforce the Retailers' Occupation Tax Act or another tax Act administered by the Department, it is an official purpose within the meaning of Section 11 of the Retailers' Occupation Tax Act (35 ILCS 120/11) for the Department to furnish information it receives in administering the Retailers' Occupation Tax Act with the law enforcement authority."

The Department of Revenue also adopted amendments to the Municipal Motor Fuel Tax rules. The Department described the amendments as follows: "Implements the provisions of PA 101-604 which authorizes municipalities in Cook County to impose, beginning on July 1, 2020, a tax upon all persons engaged in the municipality in the business of selling motor fuel at retail at a rate not to exceed $0.03 per gallon."

The Department of Commerce and Economic Opportunity adopted rules for the Cannabis Business Incubator and Sponsorship Program. The Department described the scope of the rules as follows: "The rules identify the eligibility requirements and process for Early Approval Adult Use Dispensing and Cultivation Organization Licensees participation in the Cannabis Business Incubator and Sponsorship Programs."

The January 8 edition of the Illinois Register does not have any proposed rules by the Illinois Department of Revenue or the Department of Commerce and Economic Opportunity. The Illinois Register does not contain any adopted rules by the Illinois Department of Revenue. Today's Illinois Register contains three adopted rules by the Department of Commerce and Economic Opportunity.

The Local Tourism and Convention Bureau Program rules are amended and provides for changes in the cash match requirements for grants to Convention and Tourism Bureaus for operating expenses. In addition, these proposed changes include updates related to current grant provisions.

DCEO adopted rules for the Business Interruption Grant Program. The Department described the rules as follows: "The rules implement the Business Interruption Grant Program authorized by PA 101-636, Article 30 [new 20 ILCS 605/605-1050]. The proposed rules provide the administrative framework required for the Department to administer this program which provides financial support to businesses that have incurred expenditures or suffered losses because of the COVID-19 public health emergency. Also provides for technical assistance grants to help businesses in underserved areas to apply for financial assistance." 

DCEO also adopted permanent rules for the :Local Coronavirus Urgent Remediation Emergency (or Local CURE) Support Program. The Department described the rules as follows: "The final rules implement the Local Coronavirus Urgent Remediation Emergency (or Local CURE) Support Program authorized by PA 101-636, Section 3-10 [new 20 ILCS 605/605-1045]. The final rules provide the administrative framework required for the Department to administer this program which provides financial support to units of local government that have incurred necessary expenditures due to the COVID-19 public health emergency."

Cuevas v. Kaegi - This decision is a Supreme Court Rule 23 decision and may not be cited as precedent. As the court explained: "This is the third case brought by Cuevas based on actions taken by the Cook County Assessor to seek payment of additional taxes due to Cuevas’s improper taking of homestead exemptions on rental properties he owned. This court addressed the first two cases in a consolidated opinion, Cuevas v. Berrios, 2017 IL App (1st) 151318 (Cuevas I) The circuit court did not err in dismissing the amended complaint pursuant to section 2-619(a)(4) of the Illinois Code of Civil Procedure on the basis of res judicata."

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

The Illinois General Assembly's bi-partisan Commission on Government Forecasting and Accountability issued its Monthly Briefing for the Month Ended: December 2020.

The Illinois Comptroller recently issued the Traditional Budgetary Financial Report for Fiscal Year 2020.

The Illinois Auditor General issued The State Actuary's Report - The Actuarial Assumptions and Valuations of the State-Funded Retirement Systems. As explained in the report:

"The Illinois Pension Code (for TRS, SURS, SERS, JRS, and GARS) establishes a method that does not adequately fund the systems, back loading contributions and targeting the accumulation of assets equal to 90% of the actuarial liability in the year 2045. This contribution level does not conform to generally accepted actuarial principles and practices. Generally accepted actuarial funding methods target the accumulation of assets equal to 100% of the actuarial liability, not 90%. In addition, the State mandated method produces a contribution that currently results in an expected increase in the unfunded actuarial liabilities if all assumptions are met. Making adequate contributions in the future to fully fund the systems will be challenging. However, Cheiron continues to recommend that the funding method be changed to fully fund plan benefits."

"According to the systems’ 2020 actuarial valuation reports, the funded ratio of the retirement systems ranged from 46.7% (CTPF) to 17.1% (GARS), based on the actuarial value of assets as a ratio to the actuarial liability. If there is a significant market downturn, the unfunded actuarial liability and the required State contribution rate could both increase significantly, putting the sustainability of the systems further into question. Cheiron continues to recommend the systems include stress testing within the valuation reports to better understand these risks."

The Cook County Assessor on Tuesday issued a Report on North Suburban Cook County

Julie Love, the Recruiting Manager for the Illinois Department of Revenue asked if I would again list the following job posting to the Tax Institute membership in case you know of anyone who may be interested in the position:

The  Business Processing Division Manager (SPSA, Opt. 1) position has been posted and is live for applicants to apply.

1. Here is the link to the Business Processing Division Manager job posting.

2. This position is highlighted on the State of Illinois e-recruiting website.

The posting will close on 01/08/2021.