March 20, 2020
State and Local Tax
Update: As many of you are likely already aware, shortly after I sent out the newsletter this morning Treasury Secretary Mnuchin announced that the April 15 deadline for filing tax returns will be postponed until July 15. Specific guidance from IRS will likely be posted at this link.
Specific guidance from the Illinois Department of Revenue will likely be posted at this link
Illinois Income Tax Act Section 505(a) states in pertinent part with respect to corporate returns:
Except as provided in paragraph (3), corporate returns shall be filed on or before the 15th day of the third month following the close of the taxable year, unless, subject to the provisions of Section 602, the Director grants an extension or extensions of time (not to exceed 6 months in the aggregate) for such filing, or unless the income or loss of a taxpayer is reported for federal purposes on a return with a due date later than the 15th day of the third month following the close of the taxable year, in which case the same due date shall apply to the corresponding Illinois return.
Illinois Income Tax Act section 505(b) deals with extension of time for filing federal return for all taxpayers and states:
(b) Extension of time for filing federal return. When the taxpayer has been granted an extension or extensions of time within which to file his federal income tax return for any taxable year, the filing of a copy of such extension or extensions with the Department shall automatically extend the due date of the return with respect to the tax imposed by this Act for an equivalent period (plus an additional month beyond the federal extension in the case of corporations) if the requirements of Section 602 are met.
Illinois General Assembly
The House and Senate were not in session this week.
The House and the Senate cancelled next week's session on Wednesday. The House also extended the committee deadline (the deadline for moving House bills out of the committee to the floor) from March 27 to April 3. I understand the Senate also plans to extend the committee deadline.
As of this morning, it is unclear when the General Assembly will return to Springfield.
SB 2272 - Castro - Replaces everything after the enacting clause. Amends the Parking Excise Tax Act. Provides that the tax does not apply to: (1) a parking area or garage operated by the State, a State university, or a unit of local government; (2) the purchase of a parking space by the State, a State university, or a unit of local government for use by employees of the State, State university, or unit of local government; (3) a parking space leased to a governmental entity for use by the public; or (4) a parking area or garage owned and operated by a person engaged in the business of renting real estate and used by the lessee to park motor vehicles, recreational vehicles, or self-propelled vehicles for the lessee's own use. Effective immediately.
SB 2433 - Koehler - Replaces everything after the enacting clause. Amends the Motor Fuel Tax Law. In a provision concerning refunds, allows claims for taxes paid for undyed diesel fuel used by vehicles operated by a municipal fire department or a fire protection district recognized by the Office of the State Fire Marshal. Effective immediately.
SB 3199 - Murphy - Amends the Property Tax Code. Provides that, for the purposes of the senior citizens assessment freeze homestead exemption, "income" does not include any required minimum distribution from an individual retirement annuity. Makes changes to the introduced bill to provide that "income" does not include up to $17,500 in required minimum distributions from an individual retirement annuity (in the introduced bill, any required minimum distribution).
SB 3224 - Barickman - Amends the Illinois Income Tax Act. Provides that each individual who serves as a volunteer firefighter or a volunteer EMS provider during the taxable year is entitled to a credit in an amount equal to $500. Replaces everything after the enacting clause. Reinserts the provisions of the introduced bill with changes. Provides that taxpayers shall reapply for the credit on an annual basis. Removes provisions from the introduced bill allowing the taxpayer to carry the credit forward. Provides that the credit also applies to a taxpayer who serves as a volunteer emergency worker. Makes changes to the definition of "volunteer firefighter". Provides that a taxpayer claiming the credit must provide certain documentation with his or her tax return. Effective immediately.
HB 4840 - Zalewski - Amends the Use Tax Act and the Service Use Tax Act. Provides that the demonstration use or interim use of tangible personal property purchased for resale is exempt for a period of 18 months after the retailer or serviceman purchases the tangible personal property for resale. Provides that, if the period of demonstration use or interim use exceeds 18 months, the retailer or serviceman shall pay tax on the original cost price. Removes provisions from the Service Use Tax Act providing that "use" does not mean the interim use of tangible personal property.
COVID-19 state tax-related announcements
The Governor announced on Thursday that 20,000 small and medium-sized bars and restaurants will be granted a two-month delay in sales tax payments to the state and local jurisdictions. He also announced that they are waiving late filing fees and interest beginning today March 20 for those affected taxpayers.
The Illinois Department of Revenue issued
Informational Bulletin FY 2020-23
to provide specifics as to the Governor's announcement about penalty and interest relief to certain businesses.
The bulletin states that eligible taxpayers are those operating eating and drinking establishments that incurred a total Sales Tax liability of less than $75,000 in calendar year 2019.
The Department of Revenue indicates that for most qualified taxpayers IDOR will automatically waive penalties and interest. The bulletin states that qualified taxpayers will be required to file sales tax returns for each month by the due dates even if they are unable to make a payment. The liabilities must be paid on four dates beginning on May 20, 2020.
Illinois Attorney General - Estate Tax
The following was sent by Joan Smuda, Chief of the Attorney General's Revenue Litigation Bureau:
Due to closures related to COVID-19, the Attorney General's Office will be operating with reduced staff. In recognition of this, Estates with returns and payments due between March 16, 2020 and April 15, 2020 will receive a 30 day extension for filing and payment. Please be aware that an extension of time to pay does not waive or abate statutory interest and that payments must be sent to the Illinois State Treasurer. A fillable form for making payment of the Illinois Estate Tax to the Illinois State Treasurer can be downloaded from the
Illinois State Treasurer's website.
Please also be aware that there may not be staff available to receive returns in person at the Springfield office.
Those filing returns in Chicago may access the James R Thompson Center through the Lake Street entrance.
We *strongly* encourage estates to file returns and extension requests by mail. For Cook, DuPage, Lake, and McHenry counties, file with the Chicago office. For all other counties, file with the Springfield office.
Please contact the Estate Tax Section, Illinois Attorney General's Office with any questions or problems:
Estate Tax Section
100 West Randolph Street
Chicago, Illinois 60601
Telephone: (312) 814-2491
Estate Tax Section
500 South Second Street
Springfield, Illinois 62701
Telephone: (217) 524-5095
Messages left on the estate tax lines will be monitored and callers will receive a response as soon as possible.
City of Chicago
yesterday that the City of Chicago is extending due dates for tax payments for the following taxes until April 30:
Bottled Water Tax
Checkout Bag Tax
Hotel Accommodation Tax
On Wednesday, the IRS issued
- Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.
The due date for making federal tax payments up to $10 million for each consolidated group and for all other taxpayers up to $1 million due April 15 is postponed to July 15, 2020. (The $1 million limit is for both individual filers and joint filers.)
The Notice provides that the relief provided is available solely with respect to Federal income tax payments in respect to an affected taxpayer's 2019 taxable year and Federal estimated tax payments due on April 15 for an affected taxpayer's 2020 taxable year.
My thoughts on the impact of the federal announcement on Illinois filers:
Illinois Income Tax Act Section 601(a) is the relevant provision dealing with payment:
"If, however, the due date for payment of a taxpayer's federal income tax liability for a tax year (as provided in the Internal Revenue Code or by Treasury regulation, or as extended by the Internal Revenue Service) is later than the date fixed for filing the taxpayer's Illinois income tax return for that tax year, the Department may, by rule, prescribe a due date for payment that is not later than the due date for payment of the taxpayer's federal income tax liability. For purposes of the Illinois Administrative Procedure Act, the adoption of rules to prescribe a later due date for payment shall be deemed an emergency and necessary for the public interest, safety, and welfare."
Section 601(a) provides that ordinarily payment is due on the original due date of the returns. But see above, for an explanation of the authority for a change in the payment due date in the event the federal due date for payment is extended. IDOR could file an emergency rule today to grant the extension of time to pay state taxes.
I would note that the federal payment extension doesn't extend the payment date for consolidated groups that owe more than $10,000,000 or individuals who owe more than $1,000,000.
The federal notice also deals with estimated payments. From a quick review, it doesn't appear that IITA Section 803 which deals with the due dates for estimated payments doesn't have a provision for estimated payments that takes into account federal delays as does Section 601 for return payments.
The March 20 edition of the
did not contain any new or adopted rulemakings by the Department of Commerce and Economic Opportunity.
The Illinois Department of Revenue filed a new rulemaking to implement the minimum wage credit found in Section 704A(i) of the Illinois Income Tax Act. The Department also filed an emergency rulemaking to implement the credit.
Guns Save Life, Inc. v. Ali
. This case is challenge to the Cook County taxes on firearms and ammunition. The Plaintiffs consisted of Guns Save Life, Inc.,(GSL) a nonprofit membership organization dedicated to protecting Second Amendment rights of Illinois citizen, a retailer of firearms and ammunition located in Cook County and a resident of Cook County and member of GSL.
The First District appellate court upheld the taxes on firearms and ammunition. However, the case is notable in that it upholds the ability of a membership organization to challenge the taxes on behalf of its members. The court upheld the right of the membership organization plaintiff, GSL, to challenge the taxes under the doctrine of "associational standing." Indeed, the appellate court decided that the membership organization, GSL, was the only one of the three plaintiffs who had standing to challenge the taxes.
The Cook County Board passed a $25 tax for each firearm purchased at a firearms retail business located in Cook County. The County Board also imposed a tax on the retail purchase of ammunition at the rate of $.01 per cartridge of rimfire ammunition and $.05 per cartridge of centerfire ammunition.
The plaintiffs filed a complaint for declaratory judgment and injunctive relief challenging the taxes on various grounds.
The defendants moved to dismiss the complaint alleging that the plaintiffs lacked standing and that the complaint failed to state any claim on which relief could be granted.
The circuit court found that GSL had associational standing to challenge both taxes because it alleged that its members paid both taxes. On appeal, defendants initially contended that none of the plaintiffs had standing but conceded at oral argument that GSL had associational standing. The appellate court, without discussion, ruled that "GSL had associational standing to challenge both taxes," while it ruled that neither of the other plaintiffs had standing to challenge the taxes.
This is an interesting case in that it provides that a membership organization such as the Illinois Chamber of Commerce, would have standing to challenge a tax of this type, while individual members might not have standing.
No new decisions were issued this week.
One of the new cases filed last Friday after I sent out last week's newsletter is of interest.-
OptumRx, Inc. v. Department of Revenue
. The case is a protest of refund claim denials. The petitioner is a pharmacy benefits manager (PBM).
At issue is whether the Illinois Service Occupation Tax (SOT) and Service Use Tax (SUT) is preempted by federal law and may not be imposed on prescription drugs provided under a Medicare Part D plan In addition, whether sales of prescription pharmaceuticals under Medicare Part D plans are exempt sales to a government contractor on behalf of an exempt governmental body and whether sales of prescription pharmaceuticals under Medicare Part D plans are exempt as sales to governmental bodies.
Another issue highlighted in the case is the problems caused for taxpayers by virtue of the fact that there is no "deemed denial" provision for claims for refund filed for refunds for the Illinois and local occupation and use taxes. As explained in the petition, the petitioner filed a claim for refund for the period January 2009 trough 2012. According to the petition, the Department has not acted on the claim, even though it has acted on claims for later periods.
In contrast to the occupation and use taxes, under the Illinois Income Tax, if the Department has failed to approve or deny the claim before the expiration of 6 months after the date the claim was filed, the claimant may nevertheless thereafter file with the Department a written protest. (See 86 Ill. Adm. Code 100.9400(g))
Publications and Announcements
Illinois Department of Revenue has established a webpage entitled
Tax Resources During COVID-19 (Coronavirus) Outbreak
. The page explains that IDOR has no phone system agents currently. Taxpayers can check the status of a refund, identify a PIN, or receive estimated payment information through the taxpayer assistance 800 number. The page also contains a listing of emails, by area that a limited number of staff will monitor and respond to emails.
The Cook County Assessor's Office
Suspended Assessment Notice Mailings and Deadlines
. The Assessor's office announced the temporary suspension of assessment notice mailings and appeal deadlines. It was announced that the suspension will remain in place until further notice while the office remains closed to the public.
The Cook County Department of Revenue issued a
The City of Chicago Department of Law
that the Department of Administrative Hearings will not take any adverse action against respondents who do not appear on their assigned court dates effective immediately and until further notice.