For the latest news and updates on Illinois state and local tax
May 6, 2022
Illinois Changes Municipal and County Cannabis Retailers’ Occupation Tax Rate
Effective July 1, 2022, local jurisdictions in Illinois will either impose or amend their Municipal or County Cannabis Retailers’ Occupation Tax rates on the gross receipts of adult-use cannabis (65ILCS 5/8-11-23, 55 ILCS 5/5-1006.8). These taxes are in addition to the Illinois Retailer’s Occupation Tax on general merchandise (6.25%) and any locally imposed retailer’s occupation tax on general merchandise, including sales of adult-use cannabis. Taxpayers must collect and remit at the amended rate as of July 1, 2022. Municipalities will be imposing the tax in increments of 0.25% but not to exceed 3%. Similarly, counties may also charge the tax in increments of 0.25%. The Municipal or County Cannabis Retailers’ Occupation Tax rates in unincorporated areas within a county may not exceed 3.75%, while the rate for a municipality within a county may not exceed 3%. Sales of medical cannabis are not subject to these taxes.
January 31, 2022
Illinois Releases Changes to 2021 Business Income Tax Returns
The Illinois Department of Revenue released a bulletin detailing changes to IL business income tax returns and schedules for tax year 2021. The following changes are outlined in the release: (1) The IL net loss deduction for corporations, excluding S Corps, is limited to $100,000 for tax years ending on or after December 31, 2021 and before December 31, 2021. (2) For any net loss that has not expired as of November 16, 2021, the carryover period is extended from 12 to 20 years, and the carryover period for tax years ending on or after December 31, 2021 has now become 20 years. (3) IL decouples from federal 100% bonus depreciation, thus on Form IL-4562, the taxpayer should include the amount of federal depreciation they would have claimed on their federal return without any regard to bonus depreciation.
January 17, 2022
Illinois Extends Income Tax Return and Payment Due Dates
The Illinois Department of Revenue and Governor Pritzker extended the December 10, 2021, deadline to May 16, 2022, for filing several individuals and business tax returns for those who were victims of severe storms and tornadoes. Tax filing relief is also available for late payment penalties beginning on December 10, 2021. Affected taxpayers who live or have a business in certain counties have until May 16, 2022, to file and pay personal income taxes that are due during this period and file 2021 business returns typically due on March 15, 2022, and April 18, 2022.
December 12, 2021
Illinois Releases “Questions and Answers” for Their Pass-Through Entity (PTE) Tax
The Illinois Department of Revenue updated its “Questions and Answers” webpage to include Illinois PTE Tax information. General information including election and payment is detailed on the website. In addition, the web page includes information on penalty relief related to PTE tax payments for tax years ending before December 31, 2022.
June 18, 2021
Illinois Revises Frequently Asked Questions for Marketplace Facilitators, Sellers and Remote Retailers
The Illinois Department of Revenue issued revised frequently asked questions (FAQs) for marketplace facilitators, marketplace sellers, and remote retailers. The FAQs address out-of-state retailers making sales on their own and through a marketplace. These out-of-state retailers also remit tax to the Department and maintain inventory in Illinois. The FAQs advise these out-of-state retailers on how to determine tax owed in this situation. For specific information, please visit the Illinois Revenue website.
May 13, 2021
Illinois Adopts Regulation on Data Center Investment Credit
The Illinois Department of Revenue has provided guidance on the newly adopted data center investment credit (86 Ill. Adm. Code § 100.2164, effective 04/15/2021). The credit is available for taxable years beginning on or after January 1, 2019 and is awarded by the Department of Commerce and Economic Opportunity. The credit will be 20% of the wages paid during the taxable year to a full-time or part-time employee of a construction contractor employed by a certified data center, if those wages are paid for the construction of a new data center in a geographic area that meets specific criteria. The credit is not refundable but may be carried forward up to five taxable years.
May 5, 2021
Illinois Municipalities May Tax Retail Sales of Adult Use of Cannabis
Effective July 1, 2021, Illinois municipalities may impose a tax on retail sales of cannabis—other than medical cannabis—at a rate that may not exceed 3%, imposed in one-quarter percent (0.25%) increments. Counties may impose a tax (also in one-quarter percent increments) on retail sales of cannabis, other than medical cannabis, at the following rates: in unincorporated areas of the county, the rate may not exceed 3.75%; in a municipality located in the county, the rate may not exceed 3%. These are new taxes exclusively on sales of adult-use cannabis, and are in addition to Illinois Retailers’ Occupation Tax on general merchandise (6.25%) and any locally imposed retailers’ occupation tax on general merchandise, which also apply to sales of adult-use cannabis.
March 23, 2021
Illinois Update on Extension of Filing Deadline
Governor Pritzker announced that Illinois is extending the individual income tax filing and payment deadline for tax year 2020 from April 15, 2021 to May 17, 2021. The filing extension takes effect automatically, so no further action is required by taxpayers. The Illinois Department of Revenue will continue to process tax refunds for those filing ahead of the deadline. The filing extension does not apply to estimated tax payments that are due on April 15, 2021: those payments are still due on April 15 and can be based on either 100% of estimated or 90% of actual liability for 2021, or 100% of actual liabilities for 2019 or 2020. ( Gov. Pritzker Announces Income Tax Filing Extension, 03/18/2021 .)
February 25, 2021
The State’s 2022 fiscal year budget proposal included a number of items aimed at reducing an anticipated three-billion-dollar deficit for the upcoming year. Certain income tax changes would include limiting corporate NOLs to $100,000 per year, decoupling from 100% additional bonus depreciation for federal income tax purposes, and sourcing foreign dividends based on the same principles as those pertaining to domestic dividends. Vendors and manufacturers may be faced with sales-tax-related changes as well. If you are doing business in Illinois, please reach out to Withum to determine if any such amendments will impact your business.
November 16, 2020
Illinois Annual Sales and Use Tax Nexus Summary
The Illinois Department of Revenue issued general information in November on ST 20-0017-GIL in response to the annual survey. In the letter, the Department notes that nexus in Illinois includes marketplace facilitators who have met the thresholds of $100,000 in sales or cumulatively reaching 200 or more separate transactions through the marketplace for sales of tangible personal property. The thresholds are determined by examining gross receipts and number of transactions excluding sales for reseal, sales of tangible personal property that are required to be registered with an Illinois agency such as vehicles or watercrafts, and sales made through the marketplace on behalf of a marketplace seller or marketplace facilitator subject to Retailers’ occupation Tax.
The General Letter provides a definition for marketplace sellers as a person or business that sells or offers tangible personal property through a marketplace operated by an unrelated third-party marketplace facilitator. A marketplace seller is only responsible for Illinois Use Tax liability on sales to Illinois customers and will not be held responsible for the collection and remittance of Illinois Use Tax when a marketplace facilitator fails to correctly collect and remit tax. If the marketplace facilitator can demonstrate the incorrect calculations is due to the marketplace sellers incorrect or insufficient information, the marketplace seller is held liable for any Illinois Use Tax due.
The Department clarified that viewing and downloading of videos, text, and other data over the interest is not considered to be tangible personal property subject to Retailers’ Occupation Tax and Use tax liability. The transfer of canned software, or updates to canned software is considered transfer of tangible personal property and therefore subject to Retailers’ Occupation Tax and Use tax liability. This would include sales of canned software downloaded electronically which would be taxable.
March 21, 2020
Relief for Eating and Drinking Establishments
In an effort to assist eating and drinking establishments impacted by the COVID-19 outbreak, effective immediately, the Illinois Department of Revenue (IDOR) is waiving any penalty and interest that would have been imposed on late Sales Tax payments from qualified taxpayers.
Taxpayers who are eligible for relief from penalties and interest on late Sales Tax payments are those operating eating and drinking establishments that incurred a total Sales Tax liability of less than $75,000 in calendar year 2019.
Qualified taxpayers will not be charged penalties or interest on late payments for Sales Tax liabilities reported on Form ST-1, Sales and Use Tax and E911 Surcharge Return, which are due for the February, March, and April 2020 reporting periods.
For most qualified taxpayers, IDOR will automatically waive penalties and interest. If a taxpayer receives a notice from IDOR that imposes penalties and interest that should have qualified for a waiver, the taxpayer can respond to the notice indicating as such. IDOR will review the response and grant relief, if appropriate. Qualified taxpayers are required to file Form ST-1 for each reporting period by their original due dates, even if they are unable to make a payment. To qualify for relief, taxpayers must pay their liabilities due in March, April, and May 2020 on four dates starting on May 20, 2020.
The required payment schedule for liabilities reported on Form ST-1 is as follows:
- One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due May 20, 2020.
- One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due June 22, 2020.
- One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due July 20, 2020.
- One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due August 20, 2020.
This includes quarterly filers reporting liabilities on Form ST-1 for January, February, and March. Taxpayers must begin making full payment on the scheduled due date for liabilities beginning with the May 2020 reporting period, which is due June 22, 2020, and all reporting periods following. Learn more here.
Marketplace Facilitator – Sales Tax Requirements
Beginning January 1, 2020, marketplace facilitators are now required to collect and remit sales tax if sales total $100,000 or more or have more than 200 sales in the state.
Graduated Income Tax Rate System
Effective January 1, 2021 a plan to implement a graduated income tax rate system is in place. Individuals, trusts and estates will now follow a tiered tax rate structure.
Proposed Tax on Video Streaming and its Potential Effects
Illinois has proposed two new state-wide taxes, the “Video Service Tax Modernization Act” and the “Entertainment Tax Fairness Act”. Both targeted at web streaming subscription services such as Netflix, Hulu, etc… Withum has a full writeup with details here (require link to article).
Illinois will be offering a Tax Amnesty program from October 1 through November 15, 2019 for all tax types. Periods covered under the program includes periods ending after June 30, 2011 through prior to July 1, 2018. The Department will abate all interest and penalties related to the delinquent periods.