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October 30, 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
The Department recently updated the Leveling the Playing Field for Illinois Retail Act Resource Page to include an Illinois Tax Matrix
Cook County Treasurer
The Cook County Treasurer issued "The Pappas Study" a 20-year property tax history of Cook County parcels. The link will take you a search engine where you can can check property tax history by Property Index Number (PIN), read the study and view interactive maps for the City of Chicago and the Cook County suburbs.
Rulemaking
The October 30 edition of the Illinois Register was not published by the time I finished the newsletter this morning. I'll address any rulemaking of interest either in next week's newsletter or send out an update if anything of critical importance is published.
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. Household Finance Corporation III and Affiliates, v. Department of Revenue is a protest of a denial of a corporate income tax claim denial. The petitioner incurred a capital loss in 2015. For federal income tax purposes, the capital loss did not result in a refund if carried back to 2012 because the petitioner had federal net operating loss carryforwards that offset federal taxable income for that year and the subsequent years. You may recall, that in 2012 Illinois law limited Illinois net losses to $100,000 so the carryback of the capital loss would result in a tax refund for Illinois income tax purposes.
The petitioner filed an IL-1120X requesting an Illinois refund. It appears that this IL-1120X was filed without filing a federal amended return.
The Department denied the refund claim explaining as the basis of the denial that petitioner provided insufficient proof that IRS had accepted the 2015 capital loss and its availability for carryback to 2012. According to the protest, IRS did not audit petitioner's 2014 or 2015 federal returns and did not provided documentation supporting the availability of the capital loss carryback. Petitioner noted that the issue would be reviewed by IRS when 2012 NOL that was "dislodged" by the capital loss carryback is carried forward and used.
On April 19, 2019, petitioner filed amended federal returns for the 2012 and 2015 tax years to carry back the 2015 capital loss. On June 13, 2019, the petitioner filed a 2012 IL-1120-X. The Department denied this claim for refund, again stating that petitioner failed to provide proof of federal finalization.
This is an interesting situation triggered by the Illinois limitation on Illinois net losses that was enacted into law to boost state revenues for a few years during and after the Great Recession by limiting the use of Illinois net losses for a few years and shifting the use of the losses to later years..
Publications
The Illinois Department of Commerce and Economic Opportunity recently issued a report to the General Assembly - Business Development Relocation Survey 2019. The survey, required by law, is a report to be prepared annually compiling answers from businesses as to why the businesses left the state, where the businesses relocated, and what, if anything, could have been done to keep them in Illinois, including offering incentives to stay.
The Department identified 134 businesses that relocated from Illinois during 2019. According to the Department 12 of the 86 companies that were successfully contacted responded to the survey - a 14% response rate.
I'm not sure that such a small sample gives any particularly meaningful guidance, other than people in business have little time or inclination to respond to government surveys..
According to the survey, the top reasons for closing or relocating operations in order are cost of labor, other, workforce availability/quality, state/local taxes, company restructuring, insufficient incentives and workers compensation costs.(I didn't see a definition of "other.")
Save the Date - December 8
The next meeting of the Tax Institute will be held via webcast on Tuesday December 8 from 10:00 until noon. 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.
As usual, the meeting will qualify for CLE and CPE.
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.
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