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September 18, 2020
State and Local Tax
This Week
Illinois General Assembly
The General Assembly is adjourned until the fall veto session.
New legislation
No new tax-related legislation was introduced this week.
Rulemaking
The September 18 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Illinois Department of Commerce and Economic Opportunity.
Today's edition of the Illinois Register contains one new rulemaking by the Illinois Department of Revenue. The Department is amending the Retailers' Occupation Tax rules to add a new Section 130.915.
The Department's "Complete Description of the Subjects and Issues Involved" in the rulemaking states as follows:
"Section 11 of the Retailers' Occupation Tax Act provides that "[a]ll information received by the Department from returns filed under this Act, or from any investigation conducted under this Act, shall be confidential, except for official purposes...." 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."
I don't have any insight into why the Department suddenly found the need to propose this rule. The Department doesn't cite in the rulemaking, and I am unaware of any change in law that triggered the need for this rulemaking. I plan to reach out to the Department to find out the basis of their determination that there is a need for this rulemaking.
Today's edition of the Illinois Register also contains the Illinois Department of Revenue's publication of its index of general information letters and private letter rulings issued during the first and second quarters of 2020. From a quick review, the rulings listed appear to be same rulings that were recently published on the Department's website that I discussed in last week's newsletter.
Court cases
No new tax-related cases this week.
Tax Tribunal
No new decisions were issued by the Tribunal this week.
One new case may be of interest. David MacNeil v. Illinois Department of Revenue is an income tax case where residency is at issue. The petitioner protested a Notice of Deficiency issued by the Department for the tax year ending December 31, 2017 and asserts Florida residence.
In an unusual move, the amount of the Notice of Deficiency has been redacted from the petition and the copy of the Notice of Deficency. I don't recall seeing another petition filed with the Tribunal in which the amount of the Notice of Deficiency has been redacted. The deficiency must be rather substantial because in Count II of the petition which seeks abatement of penalties for reasonable cause, the petition states that the late payment and negligence penalties assessed for the tax year at issue were $1,497,490.
I plan to follow this case to watch the development of the arguments about residency as further documents are filed. Given the amount of tax at issue, it will be interesting to see how the case develops.
Publications
The Civic Federation recently published a blog post that provides a succinct and helpful summary of the recently released City of Chicago Budget Forecast for 2021. The post highlights that the city is facing a $1.2 billion budget gap for the upcoming fiscal year that is a combination of $783.2 billion in revenue shortfalls caused by the COVID-19 pandemic and $383.1 million in anticipated increases in expenses related to personnel pension and debt.
As noted by the Civic Federation "Mayor Lightfoot has said that everything is on the table including, increasing property taxes, the personal property lease transaction tax on computers, using TIF surplus, resorting to layoffs and additional financial support from the federal government." One thing of interest in the Civic Federation blog post is that the advise that the Mayor does not plan to seek a change in state law to authorize a graduated real estate transfer tax. You will recall that proposal was part of the Mayor's original plan to close the current year's preliminary budget gap. The legislation was proposed, but not passed by the Illinois General Assembly.
The Institute on Taxation and Economic Policy ("ITEP") has a new blog entry that purports to show that the current flat rate Illinois income tax "amounts to a tax subsidy for the wealthiest Illinoisans that compounds income and wealth inequalities."
Illinois Chamber of Commerce Annual Meeting
Please see the attached flier for our annual meeting on September 24. We are doing a virtual meeting this year. I would like to give special recognition to Tax Institute accounting firm member FGMK who is a Bronze level sponsor.
We have a great speaker lineup - Tim Crane, President of Wintrust Financial Corporation, Tom Ricketts, Chair of the (soon to be 2020 World Champions) Chicago Cubs, and Charles Evans, the President and CEO of the Federal Reserve Bank of Chicago.
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