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November 12:
Illinois General Assembly returns to Springfield for the second week of the fall veto session.
November 1, 2019
State and Local Tax  
This Week 

Illinois General Assembly
The House and Senate were in session for the first week of the veto session Monday through Wednesday.  The second, and final, week of the veto session is scheduled to begin on November 12.

We are watching a number of issues.  There was no movement this week in the House with respect to the Cook County Assessor's legislation,  SB 1379, which would require owners and many tenants of "income producing property" to submit financial data to the Asssessor.  The bill remains in the Rules committee in House.  The Illinois Chamber of Commerce is strongly opposed to this legislation.

No language surfaced this week to deal with the problems associated with the sales and use tax legislation enacted during the spring session as portions of  SB 689 (P.A. 101-0009) and  SB 690 (P.A. 101-0031). I expect the Illinois Department of Revenue to propose language during the second week of the veto session to address technical concerns related to administration of the changes and to delay the effective date of the portion of the changes in SB 690.  I don't anticipate that the Department's changes will address the constitutional infirmities associated with the changes contained in SB 690. There may also be amendatory language proposed by the Retail Merchants Association to modify the changes from the spring session, although that language has also not yet surfaced.

House committee amendment 1 to  SB 1608
an initiative of the  Department of Commerce and Economic Opportunity, was filed this morning.  This legislation amends the the Data Center legislation. It my prior conversations with DCEO they indicated that it is there intent only to make "technical" changes to the legislation.  Please review the changes outlined below and let me know if you have any concerns.

The amendment deletes a reference to the Electricity Excise Tax that remained in Section 605-1025(a) as a result of a drafting error when the Electricity Excise Tax exemption was amended out of the original proposal. 

The data center amendmentory language tweaks the language in the definition of "qualfying data center" with respect to the capital investment requirement.  

The subsection dealing with the requirement that a data center must certify it is carbon neutral or has attained certification under on or more green building standards is modified to provide that the certification must be made within 90 days after the data center is placed in service.

The data center statute is amended to provide DCEO with a general grant of rulemaking authority for the data center program.

Section 229 of the Illinois Income Tax Act is amended to tweak the references to certain of federal programs used in determining whether a data center is located in an "underserved area."

The amendment to SB 1608 also includes changes to the New Markets Development Program Act, with regard to the schedule of allocation rounds.

The amendment to SB 1608 also adds provisions related to Illinois Small Business Innovation Research (SBIR) and Small Business Technology (STTR Matching Funds Program to be administered by DCEO.

SB 1608 is currently in the House Rules committee, but we expect it to moved out of Rules when the General Assembly reconvenes for the second week of the veto session.

Legislation passed both Chambers:
SB 1881 -  Creates the Local Government Revenue Recapture Act. Provides that a municipality or county that receives a disbursement of tax proceeds from the Department of Revenue may contract with a third party for the purpose of ensuring that the municipality or county receives the amount to which it is entitled. Provides that no person may engage in business as a third party pursuant without first having registered with the Department of Revenue. 

Legislation passed the Senate
SB 3608 - see description below

Legislation passed the House
HB 3902 - see description below

SB 1042 - see description below

The Senate Revenue committee met on October 28. 
The following bills passed out of the committee:  

HB 3608 - Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. With respect to the manufacturing and assembly exemption, removes a provision that a certificate of exemption is required for each exempt transaction.  The Chamber supports this legislation..

SB 1881 - See above

The House Revenue committee met on October 29. 
The following bills passed out of the committee:

HB 3902 - Bristow -  Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the exemption for materials, parts, equipment, components, and furnishings incorporated into or upon an aircraft applies permanently. Effective immediately. This legislation would revive and extend an exemption that was allowed to sunset a number of years ago through 12/31/24.  Note that the legislation provides any taxpayer that was aware of the sunset of the exemption and paid tax on these items is not entitled to a refund.  I wonder about the viability of this prohibition in the event of a challenge.

SB 119 - Castro - I'm told that this will be a vehicle bill during the second week of the veto session for IDOR clean up legislation.  I don't have information yet on the scope of the changes.

SB 1042 - Extends the expiration date of the Savanna TIF.

HB 3608 - see above

HB 3902 - see above - The amendment provides that the exemption will sunset on 12/31/24, in the originally introduced version of the bill the exemption applied permanently.

SB 1608 - see above.

SB 1857 -  Replaces everything after the enacting clause. Amends the State Designations Act. Provides that Penicillium rubens (rather than Penicillium chrysogenum) NRRL 1951 is designated the official State microbe of the State of Illinois. - I just wanted to see if anyone actually reads the amendments.

New legislation
SB 2271 - Tracy -  Amends the Property Tax Code. Provides that buildings, structures, and improvements that are not permanently attached to the land are not considered property for the purposes of the Code.

SB 2272 - Castro - Amends the Parking Excise Tax Act. Provides that the tax imposed by the Act does not apply to a parking area or garage owned or operated by a city, village, county, township, or incorporated town. Effective immediately.

HB 3924 - Scherer - Amends the Property Tax Code. Provides that a taxing district may establish a program to allow persons who will turn 60 years of age or older during the taxable year to volunteer to provide services within that taxing district in exchange for a reduction in the property tax liability of the primary residence of that person. Sets forth limitations on the amount of the reduction.

HB 3945 - Spain - Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that the term "selling price" does not include the value of or credit given for traded-in tangible personal property (currently, beginning on January 1, 2020, with respect to motor vehicles, "selling price" does include the trade-in value). Amends the Illinois Vehicle Code. In a Section concerning the use tax on motor vehicles, makes changes concerning the amount of the tax. Provides that the tax on motorcycles, motor driven cycles, and mopeds shall be the same as for all other motor vehicles. Effective immediately.

Property Tax Reform Task Force
The full Property Tax Relief Task Force met on Monday.  Each of the subcommittee Chairpersons made a brief presentation to the full committee.  

Representative Davis, Chair of the Assessments and Exemptions subcommittee, summarized the testimony presented to the subcommittee, stated that the discussion about the assessment process will continue, and noted that "there is no silver bullet, no one size fits all."

Representative Carroll, Chair of the Government Consolidation subcommittee, discussed three recommendations of the subcommittee:

1) township consolidation should be left up to the voters and the opportunity should be offered state-wide,
2) consolidation of school districts should be a topic of discussion - 
3) consideration should be given to eliminating the Cook County Forest Preserve police force and giving the Cook County Sheriff's Department primary jurisdiction over the territory within the forest preserve district as would be required by HB 2297.
4) Conduct an inventory of all units of local government because there is no definitive count of the number of units of local government and give the Comptroller more power to enforce reporting of financial data by units of local govenment.

Senator Martwick, Chair of the Local Pensions subcommittee, summarized the testimony presented to the subcommittee and references the proposal consolidate the various local police and fire pension funds.

Representative Walker, Chair of the PTELL (Property Tax Extension Limitation Law) subcommittee, gave an overview of PTELL and a brief history of PTELL.  He noted that a significant number of PTELL counties adopt the maximum increase under PTELL each year.  The subcommittee discussed modification of PTELL to eliminate the incentive to adopt the maximum increase each year.

Representative Kifowit is the Chair of the School Funding and Property Taxes subcommittee.  Representative Kifowit summarized the testimony presented to the subcommittee and put forth a series of suggestions related to school funding and property taxes.

Representative Flowers, Chair of the Social and Economic Disparities subcommittee, discussed the testimony presented to the subcommittee and discussed what she views as various inequities.

Senator Gillespie is the Chair of the TIF (Tax Increment Financing) subcommittee.  Senator Gillespie summarized testimony from witnesses who concluded that the most successful TIFs involved manufacturing, the least successful involved retail, and there were mixed results for residential use TIFs.  (Having listened to the testimony, I would note that you should read the testimony to obtain an understanding of the definition of "success" used by the witnesses.)

Senator Gillespie advised that the subcommittee came up with the following suggestions:

1) consider shortening the time frame for TIFs from 27 years to 10-15 years,
2) tighten up the definition of "blighted" perhaps using objective standards - she gave some examples,
3) require greater transparency around impacts to school districts, etc.

Here is a  link to the Task Force webpage. Many of the presentations to the subcommittee are linked.

The subcommittee hearings have concluded for the most part.

The subcommittee on Assessments and Exemption is scheduled to meet today.  The agenda has been posted.

The November 1 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.

Court cases
Redbox Automated Retailer, LLC v. Department of Revenue. The appellate court issued a decision under Supreme Court Rule 23 which means the case may not be cited as precedent by any party except in certain limited circumstances.

Redbox appealed a decision of the Independent Tax Tribunal partially denying its claim for refund of use taxes to the appellate court.  The Tribunal partially denied the claim for refund because Redbox filed the refund claim more than three years after the erroneous payments were made and after the expiration of the parties' final agreement to extend the statute of limitations.  

Redbox contended that the statute of limitations does not bar its refund claim because Department audits tolled or restarted the applicable three-year statute of limitations period to file a refund claim. The Tribunal disagreed and ruled for the Department.  The appellate court affirmed the decision of the Tribunal.  

Redbox was represented by John Simpson of Tax Institute law firrm member Sorling.

Rasher, LLC and Uber Technologies filed a  complaint in the circuit court of Cook County challenging Skokie's new tax on Uber.  The complaint alleges that the Skokie tax violates various provisions of the Illinois Constitution and requests that the court enter an injunction prohibiting the collection.  Here is a link to an article in  Crain's Chicago Business discussing the Skokie lawsuit.

Rasher and Uber are represented by Tax Institute member law firm Jenner & Block.

Tax Tribunal 
No new decisions were posted this week.  

The new cases filed at the Tribunal this week does not raise any novel issues.

Tax Institute meeting - November 18
The next quarterly meeting of the Tax Institute will be held on Monday afternoon November 18 from 2:00 - 4:00. 

At the meeting we will provide an update on the veto session which concludes the week of November 11. Cate Battin will provide a City of Chicago and Cook County update. Representatives of the Department of Commerce and Economic Opportunity will discuss implementation of the new Data Center sales tax exemption and other economic development efforts of DCEO.  

We will hold the meeting at our offices at 300 S. Wacker Drive, Chicago. I'm also working on a better dial-in option for the meeting. 

Please rsvp to me at

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