Transcript Physical, Attributional and Economic Nexus and Illinois

RECENT DEVELOPMENTS IN STATE AND
LOCAL TAX -2010
LEGISLATIVE DEVELOPMENTS
Illinois Bar Association
State And Local Tax Section Seminar
September 30, 2010
David J. Kupiec
Kupiec & Martin, LLC
[email protected]
William J. Seitz
Fisk, Kart, Katz and Regan, Ltd
[email protected]
Illinois 2010 Legislative Recap
• More than 10,000 Bills Introduced During the
2010 Legislative Session.
• Illinois General Assembly Session Ended May
31, 2009 Without Passing a Balanced Budget.
• Estimated Budget Shortfall Approx. $14 plus
Billion (Deficit for Fiscal Years 2011 & 2012).
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Illinois 2010 Legislative Recap
• Governor Proposed Income Tax Rate Increase
& Business Items to Address Budget Shortfall.
• 2011 Budget Shortfall Impacting Tax
Legislation, Tax Refunds, Tax Audits and Tax
Litigation.
• Budget Shortfall Will Most Likely Not be
Addressed by the General Assembly Until
After the Fall Elections.
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2010 Proposed Tax Joint Resolution
Illinois Constitutional Amendments
• House Joint Resolution Constitutional
Amendment 0027 – Income Tax Rates NonGraduated By Category.
• Senate Joint Resolution Constitutional
Amendment 0038 – Removes A Provision That
Provides That A Tax On Income Shall Be
Measured At A Non-Graduated Rate.
• Senate Joint Resolution Constitutional
Amendment 0092 – Authorizes A Tax On Or
Measured By Income At A Graduated Rate.
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2009 Proposed Senate Bill 2252 –
Not Passed
• 2 Year Temporary Income Tax Rate Increase (2010
and 2011)
• Individual Income Tax Rate Would Increase From 3%
to 4.5% and Earned Income Tax Credit Would
Increase from 5% to 10% of the Federal Tax Credit.
• Corporate Income Tax Rate Would Increase From
4.8% to 7.2% (Personal Property Tax Replacement
Tax Combined Rate of 9.7%)
• Status – Illinois House Voted Against (May 31, 2009).
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2009 Proposed House Bill 0174
(“750”) – Not Passed
• Individual Income Tax Rate Would Increase From 3%
to 5% on July 1, 2009.
• Corporate Income Tax Rate Would Increase From
4.8% to 5% (Personal Property Tax Replacement Tax
Combined Rate of 7.5%).
• Increase Property Tax Credit on Income Taxes From
5% to 10% and Earned Income Tax Credit From 5% to
15% of the Federal tax credit.
• Expand Sales Tax Based - 39 Additional Services.
• Status – Illinois Senate Passed 31-27 (May 30, 2009).
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Proposed Expanded Sales Tax Base
(39 Potential Services)
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Other warehousing and storage
Travel agent services
Carpet and upholstery cleaning services
Dating services
Dry cleaning and laundry (except coin operated)
Consumer goods rental
Health clubs, tanning parlors, reducing salons
Linen supply
Interior design services
Other business services, including copy shops
Bowling Centers
Coin operated video games and pinball machines
Membership fees in private clubs
Admission to spectator sports (excluding horse tracks)
Admission to cultural events
Billiard Parlors
Scenic and sightseeing transportation
Taxi and Limousine services
Unscheduled chartered passenger air transportation
Motion pictures theaters, except drive-in theaters
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Pet grooming
Landscaping services (including lawn care)
Income from intrastate transportation of persons
Mini-storage
Household goods storage
Cold storage
Marina Service (docking, storage, cleaning, repair)
Marina towing service (including tugboats)
Gift and package wrapping service
Laundry and dry cleaning services, coin operated
Other services to buildings and dwellings
Water softening and conditioning
Internet Service Providers
Short term auto rental
Information Service
Amusement park admission and rides
Circuses and fairs – admission and games
Cable and other program distribution
Rental of video tapes for home viewing
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Some 2010 TAX BILLS ENACTED
• PA 96-1012 (SB3658) - Back to School State Sales Tax
Holiday
• PA 96-0888 (SB1578) – Small Business Job Creation
Tax Credit Act
• PA 96 – 1435 (SB0377)- Tax Amnesty Program
• PA 96-1388 (SB0459) – Use Tax Reporting/Amnesty
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Some 2010 TAX BILLS ENACTED
• PA 96-0905 (SB3089) – EDGE Credit Automotive
Manufacturers
• PA 96- 0937 (SB3655) – R&D Credit Extension
• PA 96-0959 (SB3662 )– Budget Implementation
• PA 96-96-1429 (HB5230) – Consolidated DCEO
Reporting
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Some 2010 TAX BILLS ENACTED
• PA 96-0935 (SB3646) – Publicly-Traded Partnerships
• PA 96-1383 (HB5781)– Reciprocal Collection Act
• PA 96-1027 (HB5833) – Payments By Electronic
Funds Transfer
• PA 96-1276 (HB6038) – Low-Income Housing Credit
Extension
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Some 2010 TAX BILLS ENACTED
• PA 96-0932 (SB1826) – Cooperatives
• PA 96-0939 (SB2093) – Star Bond and Angel Credit
• PA 96-0933 (SB2534) – Historic Preservation Tax
Credit Pilot program
• PA 96-1214 (SB3648) – Wrongful Imprisonment
Damages
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Small Business Job Creation Credit
• PA 96-0888 (SB1578) – Small Business Job Creation
Tax Credit Act (35 ILSC 25)
• $250 Tax Credit For Each New Full-Time Illinois
Employee
• New Employees Hired After June 30, 2010
• Credit Only Available To Small Businesses
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2010 Tax Amnesty Program
• PA 96 – 1435 (SB0377)- Amends Illinois Tax
Delinquency Amnesty Act (35 ILCS 745/10)
• Covers All Taxes Collected By Illinois
Department Of Revenue Except Motor Fuel
• Tax Periods Ending After June 30, 2002 And
Ending Before July 1, 2009
• Abatement of Penalties And Interest
• Statutory Restrictions And Limitations
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IL General Assembly - Next Steps
• Legislative Priorities
– Pension Reform (PA 96-0889)
– Revenue/Spending (Lottery Sale)
– Ethics Reform
• Fall Elections
• Fall Veto Session – November 2010
• 2011?
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Questions?
For Additional Information Concerning This
Presentation You May Contact:
David Kupiec
(312) 632-1022
[email protected]
William Seitz
(312) 726-1833
[email protected]
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Circular 230 Disclosure
• CIRCULAR 230 DISCLOSURE - To comply with Treasury Department
regulations, we inform you that, unless otherwise expressly indicated, any
tax advice contained in this communication (including any attachments) is
not intended or written to be used, and cannot be used, for the purpose
of (1) avoiding penalties that may be imposed under the Internal Revenue
Code or any other applicable tax law, or (2) promoting, marketing or
recommending to another party any transaction, arrangement or other
matter.
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