Executive Director
Tax Institute

(217) 522-5512 ext. 231

All Key Chamber Legislation

Upcoming Events
July 15: The next meeting of the Tax Institute featuring Illinois Department of Revenue Director David Harris. RSVP to me at 

August 13:  
The spring session of the Illinois General Assembly resulted in the most significant tax law changes in many years. All Illinois businesses will be affected. In this seminar, veteran state and local tax practitioners Joe Bigane and Paul Bogdanski will go beneath the surface of the new legislation and discuss the subtleties of the changes to the sales tax and income tax laws that you need to know. Register here

October 28:
Illinois General Assembly returns to Springfield for the first day of the fall veto session.
July 12, 2019
State and Local Tax  
This Week 

Illinois General Assembly
The House and Senate have adjourned until the fall veto session.  The first day of the veto session is scheduled for October 28.

The Senate Executive committee subcommittee on special issues has scheduled a hearing in Chicago next Thursday morning.  A subject matter hearing has been scheduled for two bills, including SB 2259.  I plan to attend the hearing and will report back to you as a gather more information about this proposal.

SB 2259 is a property tax bill sponsored by Senate President Cullerton.  The bill amends the Property Tax Code and provides for property tax incentives for newly-constructed or rehabilitated rental property if the owner of the residential real property commits that, for a period of 10 years, at least 20% of the multifamily building's units will have rents that are at or below maximum rents and are occupied by households with household incomes at or below maximum income limits. Provides that the chief county assessment officer of a county with 3,000,000 or more inhabitants shall establish such a program, and the chief county assessment officer of a county with less than 3,000,000 inhabitants shall establish such a program upon passage of an ordinance by a majority vote of the county board. Sets forth application requirements and the amount of the reduction. Effective immediately.

This week I continue working through the details of the recent tax-related legislation.   SB 690 - P.A. 101-0031 contains the Illinois Chamber's Data Center legislation.

This legislation creates a 100% state and local sales tax exemption for the purchasing of qualified tangible personal property for qualifying new and existing data centers.  In addition, this legislation creates an enhanced income tax credit for new data centers built in underserved areas.

The definition of underserved area is the same definition used in the EDGE credit.  Note that the sales tax exemptions apply to purchases of qualifying property by data center tenants, in addition to purchases by data center operators.

Qualifying data centers must meet various capital investment targets, employ a certain amount of people, and meet various energy building standards. 

The Data Center program will sunset after 10 years unless extended by legislation, but any agreement entered with DCEO will continue for the full term of the agreement with DCEO which, by statute may be for up to 20 years. 

The Department of Commerce and Economic Opportunity (DCEO) shall issue certificates exemption from Retailers' Occupation Tax, the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, all locally-imposed retailers' occupation taxes, the Chicago non-titled Use Tax, and credit against taxes under the Illinois Income Tax Act to qualifying data centers. 

Data Centers are defined as a facility whose (1) primary services are the storage, management, and processing of digital data; and (2) that is used to house (i) computer and network systems, including associated components such as servers, network equipment and appliances, telecommunications, and data storage systems, (ii) systems for monitoring and managing infrastructure performance, (iii) Internet-related equipment and services, (iv) data communications connections, (v) environmental controls, (vi) fire protection systems, and (vii) security systems and services. 

"Qualifying data center" means a new or existing data center that is:

(1) is located in the State of Illinois; 

(2) in the case of an existing data center, made a capital investment of at least $250,000,000 collectively by the data center operator and the tenants of all of its data centers over the 60-month period immediately prior to January 1, 2020 or committed to make a capital investment of at least $250,000,000 over a 60-month period commencing before January 1, 2020 and ending after January 1, 2020; or 

(3) in the case of a new data center, makes a capital investment of at least $250,000,000 over a 60-month period; and 

(4) in the case of both existing and new data centers, results in the creation of at least 20 full-time or full-time equivalent new jobs over a period of 60 months by the data center operator and the tenants of the data center, collectively, associated with the operation or maintenance of the data center; those jobs must have a total compensation equal to or greater than 120% of the median wage paid to full-time employees in the county where the data center is located, as determined by the U.S. Bureau of Labor Statistics; and 

(5) is carbon neutral or attains certification under one or more of the following green building standards: (A) BREEAM for New Construction or BREEAM In-Use; (B) ENERGY STAR; (C) Envision; (D) ISO 50001-energy management; (E) LEED for Building Design and Construction or LEED for Operations and Maintenance; (F) Green Globes for New Construction or Green Globes for Existing Buildings; (G) UL 3223; or (H) an equivalent program approved by the Department of Commerce and Economic Opportunity. 

"Qualified tangible personal property" means: electrical systems and equipment; climate control and chilling equipment and systems; mechanical systems and equipment; monitoring and secure systems; emergency generators; hardware; computers; servers; data storage devices; network connectivity equipment; racks; cabinets; telecommunications cabling infrastructure; raised floor systems; peripheral components or systems; software; mechanical, electrical, or plumbing systems; battery systems; cooling systems and towers; temperature control systems; other cabling; and other data center infrastructure equipment and systems necessary to operate qualified tangible personal property, including fixtures; and component parts of any of the foregoing, including installation, maintenance, repair, refurbishment, and replacement of qualified tangible personal property to generate, transform, transmit, distribute, or manage electricity necessary to operate qualified tangible personal property; and all other tangible personal property that is essential to the operations of a computer data center. "Qualified tangible personal property" also includes building materials physically incorporated in to the qualifying data center. 

New and existing data centers seeking a certificate of exemption new or existing facilities shall apply to DCEO. The DCEO shall determine the duration of the certificate of exemption awarded which may not exceed 20 calendar years. DCEO and any data center seeking the exemption, including a data center operator on behalf of itself and its tenants, must enter into a memorandum of understanding that at a minimum provides: 

(1) the details for determining the amount of capital investment to be made; 

(2) the number of new jobs created; 

(3) the timeline for achieving the capital investment and new job goals; 

(4) the repayment obligation should those goals not be achieved and any conditions under which repayment by the qualifying data center or data center tenant claiming the exemption will be required; 

(5) the duration of the exemption; and 

(6) other provisions as deemed necessary by the Department.  
The July 5 edition of the Illinois Register contained a rulemaking by the Illinois Department of Revenue amending the Department's administrative hearings rules. Please let me know if you have any comments or concerns about the rulemaking.

The July 12 edition of the Illinois did not contain any rulemakings by the Illinois Department of Revenue or the Department of Commerce and Economic Opportunity.
Court cases
No tax-related cases this week

Tax Tribunal 
No new decisions were posted this week.  None of the new cases filed with the Tribunal raise unique or noteworthy issues.

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