Executive Director
Tax Institute

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Upcoming Events
May 20:  How to Challenge Illinois Audit Assessments and Refund Claim Denials  Join Keith Staats and Paul Bogdanski of Reed Smith for this webinar.  Each member of the Tax Institute is entitled to two free registrations as a benefit of membership. The webinar will qualify for CLE and CPE.  Click  Here to register.

June 9:  Save the date.  Join Keith Staats for a webinar - Administrative Rulemaking in Illinois - What You Don't Know Can Hurt You.  By attending this webinar you will gain an understanding of the Illinois rulemaking process. Each member of the Tax Institute is entitled to two free registrations as a benefit of membership.  The webinar will qualify for CLE and CPE.  Registration details will be available shortly.
May 8, 2020

State and Local Tax  
This Week 

Illinois General Assembly

The House and Senate were not in session this week. 

The House cancelled the session days scheduled for next week. The deadline for House Bills out of Committees, which had previously been rescheduled for May 15, has been extended to Friday, May 22.

The House and Senate are not scheduled to be in session next week.  The Illinois General Assembly website does not list a date for the House to return to Springfield.  

The Senate has a May 18 date for the next scheduled session day posted on the General Assembly web site.

No tax-related amendments this week

New legislation
HB 5766 - McSweeney -  Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Reduces the rate of tax under those Acts for a 3-month period to 4.69% (currently 6.25%). Provides that, during that period, with respect to food, medicines, drugs, medical appliances, and other devices that are ordinarily subject to a 1% rate of tax, the tax is imposed at the rate of 0.75%. Effective immediately.

My thoughts on HB 5766:  
Proposing legislation to reduce the basic sales tax rate by 25% would have a material deleterious impact on the state and  local government budgets if the General Assembly and the Governor were to be foolish enough to enact this into law.  The sales tax brings in about 28% of state general funds revenues - so it could be a 25% reduction to 28% of state general funds revenues for the period of the reduction. 
By way of history, the General Assembly did something similar in the late nineties when gasoline prices spiked.  The sales tax on gasoline was repealed for a few months.  Consumers didn't notice a material difference in prices, but it blew a hole in the state budget. 
The legislation doesn't address whether the reduction in the basic state tax rate of 6.25% is solely from the 5% state portion of the tax, or would be a reduction in both the 5% state portion and a proportionate reduction in the 1.25% of the current 6.25% that is distributed to local governments. I suspect as the language is currently drafted it could be from the current 5% state portion.  The reduction of the 1% tax rate on food and medicines to .75% would be borne exclusively by units of local government. Of course, if tax receipts from the state are reduced the locals have to figure out a way to make up for the shortfall.
HB 5768 - Skillicorn -  Amends the Property Tax Code. Provides that, if a disaster is declared by proclamation of the Governor for all counties in the State due to a public health emergency, then the due date for the first installment of property taxes due in that calendar year shall be delayed by 90 days, and no penalties or interest shall accrue during that extension. Effective immediately.

My thoughts on HB 5768:
I think the bill, as drafted, needs some work. To the extent that property taxes have been paid by owners and are sitting in escrow accounts of a financial institution, it doesn't appear necessary to delay a tax installment so that the funds can sit in an escrow account for an additional amount of time
As an alternative to this legislation, to the extent it is determined that the existing provisions of Section 21-40 do not give sufficient authority to counties to address the disruptions caused by the pandemic then perhaps section 21-40(c) could be amended.  Perhaps the concept of a property that is "adversely affected" could be clarified to provide that the concept isn't limited to physical damage to the property as a result of a natural disaster.

The state budget - the latest information on tax receipts 

The Commission on Government Forecasting and Accountability (COGFA) issued its monthly report for the month ending  April 2020.  Base tax revenues fell $2.740 billion from last April.  COGFA indicated that $1.3 billion of that decline was attributable to moving the individual and corporate income tax return due date and payment date to July 15 from April 15.

Illinois Department of Revenue
The Department issued  Informational Bulletin FY2020-33 which provides that the Board of Appeals has issued an order extending the sales tax exemption identification number ("E-number") expiration date and renewal period deadline for affected organizations.

The Department issued  Informational Bulletin FY 2020-22 which provides that taxpayers registered for Illinois Withholding Income Tax can electronically file Form IL-941-X using the Federal/State Employment Taxes (FSET) program. Previously, the FSET program only did not all filings of amended returns.  The Informational Bulletin also provides information on how to participate in the FSET program.

The Illinois Department of Revenue has also issued a series of  Informational Bulletins that outline changes to various sales and excise tax rates effective July 1.

Cook County 
The Cook County Department of Revenue has extended due dates for the February 2020, March 2020 and April 2020 filing periods for monthly Home Rule taxes administered and collected by the county. Returns and payments for February 2020 , March 2020 and April 2020 are now due on or before June 1, 2020. Interest and penalties will also not be assessed on these periods until after June 1, 2020.

The extended due dates apply to monthly filings/payments of the following Home Rule taxes that are currently available on our taxpayer portal: Alcoholic Beverage Tax, Amusement Tax, Gasoline and Diesel Fuel Tax, Hotel Accommodations Tax and Parking Lot and Garage Operations Tax.  The extended due dates also apply to monthly filings/payments for the following Home Rule taxes that are NOT available on our taxpayer portal: Firearm and Firearm Ammunition Tax, New Motor Vehicle Tax, Tobacco Tax and Use Tax. 

The Internal Revenue Service has established a  Coronavirus Tax Relief web page. 

You may be aware that the IRS has been sending out Economic Impact Payments to deceased people.  Apparently, what they have been doing is sending out payments to those who filed federal tax returns and have income below the income limits for EIP checks.  

Earlier this week, I received a check payable to my deceased mother and me as the Executor of her estate.  (She died during January 2018 so I filed a 2018 federal income tax return as her Executor and marked it as a final return.)  

Here is a  link to IRS guidance on this issue which contains instructions at Q. 41 of the FAQs added on May 6, on how to return such payments.

IRS has also updated its FAQs on the Employee Retention Credit under the CARES Act.

The May 8 edition of the Illinois Register was not published by the time I sent out the newsletter. I'll review any rulemakings of interest 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 this week.

As of this morning one new case was filed with the Tribunal this week and that petition was rejected by the Tribunal with leave to refile because it was filed by a corporation without legal representation.

Publications and Announcements
Tax Institute member law firm HMB (Horwood Marcus & Berk) is hosting a series of state tax webinars. Check out the events portion of the link. 

On May 14 I am participating in a panel discussion of constitutionality and implementation of the Illinois sales tax sourcing rules for marketplace sellers at a webinar sponsored by the Chicago Bar Association.  I will be joined on the panel by Brian Fliflet, Acting General Counsel of the Illinois Department of Revenue and Carol Portman, President of the Taxpayers' Federation of Illinois.

The Illinois General Assembly's bipartisan Commission on Government Forecasting and Accountability ("COGFA") issued an analysis of the FY 2021 state capital plan.

COGFA also issued a report on the Financial Condition of Municipal Retirement Systems

The Tax Foundation recently issued a report entitled  Tax Policy After Coronavirus: Clearing a Path to Economic Recovery

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