|
October 23, 2020
State and Local Tax
This Week
Illinois General Assembly
The General Assembly is adjourned until the fall veto session.
New legislation
No new legislation this week.
Illinois Department of Revenue
The Department's annual Tax Practitioner meeting has been scheduled for November 6 and will be held virtually his year. Information about the meeting and registration instructions are available at this link
City of Chicago
Mayor Lightfoot released her budget proposal for 2021 on Wednesday. Here is a link to the various budget documents. The Mayor's press release gives the highlights of the budget proposal.
Here are the tax-related highlights from the proposed budget:
Property tax increases totaling $93.9 million are proposed.
The budget proposes implementing an annual property tax increase tied to the Consumer Price Index beginning with the 2021 levy.
The City has also declared a TIF (Tax Increment Financing) surplus for a total of $304 million.
The proposed budget contains an increase in the "cloud tax" (tax on streaming services) to 9%.
The proposed budget also includes an increase to the Chicago Vehicle Fuel Tax of 3 cents per gallon.
Here are the next steps in the Chicago budget process:
1) The Mayor submitted the proposed budget to the City Council on 10/21,
2) The City Council's Committee on the Budget & Government Operations will hold hearings on the budget through December,
3) The City Council must approve a budget by 12/31,
4) The annual appropriate ordinance (budget) goes into effect on January 1, 2021.
Rulemaking
The October 23 edition of the Illinois Register did not contain any new or adopted rulemakings by the Illinois Department of Commerce and Economic Opportunity or the Illinois Department of Revenue.
Court cases
No new tax-related cases this week.
Tax Tribunal
No new decisions were issued by the Tribunal this week.
Midland entered into a purchase and assumption agreements with the Federal Deposit Insurance Corporation to take over failing banks. The FDIC contributed cash to Midland and guaranteed Midland against certain losses in the form of Shared Loss Agreements. Pursuant to the SLAs, the FDIC was obligated to reimburse Midland for a personal of losses. Midland was required to pay the FDIC a share of any subsequent recovery on losses for which the FDIC had previously reimbursed MIdland.
I'm a bit unclear from the petition, but it appears that Midland's original returns reported the loss sharing payments as taxable. Midland subsequently filed claims for refund contending that the payments are not taxable by Illinois because the payments are "notes" as that term is defined in 12 U.S.C. 1825(a) which provides that "'[a]ll notes, debentures, bonds, or other such obligations' issued by the FDIC are exempt, both as to principal and interest, from all taxation (other than estate and inheritance taxes" and Section 203(b)(2)(J) of the Illinois Income Tax Act which prohibits Illinois from taxing income exempt by reason of the Constitution, treaties, and statutes of the United States.
This is a new issue for me. I've not seen this raised before.
Save the Date - December 8
The next meeting of the Tax Institute will be held via webcast on Tuesday December 8 from 10:00. We will discuss the results of the fall veto session, the impact of the election on Illinois and federal taxes, City of Chicago and Cook County taxes, and discuss the Tax Institute's legislative initiatives for the 2021 spring Illinois legislative session.
Here is a link to the Tax Institute legislative package for 2020. Please let me know your thoughts on re-introducing these proposals, as well as your suggestions for additional legislative proposals to be considered at our December 8 meeting.
| 
