Public Act 101-0009 and several corresponding bills have made numerous tax law changes for individuals and businesses doing business in Illinois. Some of the most impactful changes include:
The Illinois Tax Amnesty program will allow taxpayers with delinquent tax obligations to come forward, file and remit past tax due without being subject to interest OR penalties. The Illinois Tax Amnesty Program will be open October 1, 2019 through November 15, 2019. The applicable tax years for which the amnesty applies are those beginning after June 30, 2011, and before July 1, 2018.
Amnesty will not be granted to any taxpayer who is involved in pending civil or criminal litigation with Illinois related to state taxation.
Under current law, taxpayers are required to remit a franchise tax, also known as the personal property replacement tax, in addition to the Illinois income tax. For tax years beginning on or after January 1, 2020, the Illinois replacement tax will begin phasing out and will be fully phased out by tax years beginning in 2024. The current replacement tax rates are 2.5% for corporations and 1.5% for pass-through entities and trusts. Below is the breakdown of the phase out for tax years beginning on:
In response to the TCJA, Illinois will:
The November of 2020 ballot will propose the following 2021 income tax rates (P.A. 101-0008):
Non- Joint Filers
$0-$10,000 – 4.75%
$10,001-$100,000 – 4.9%
$100,001-$250,000 – 4.95%
$250,001-$350,000 – 7.75%
$350,001-$750,000 – 7.85%
$750,000 or more – 7.99%
Joint Filers
$0-$10,000 – 4.75%
$10,001-$100,000 – 4.9%
$100,001-$250,000 – 4.95%
$250,001-$350,000 – 7.75%
$350,001-$1,000,000 – 7.85%
$1,000,000 or more – 7.99%
In the wake of the 2018 Wayfair decision, multiple states have implemented rules surrounding marketplace facilitators aimed at online sellers, such as Amazon, Ebay, etc. Under the recently enacted Illinois law, if the marketplace facilitator has certified they will collect and remit sales tax on behalf of the seller, the seller does not include these sales in their gross receipts for Illinois sales tax purposes. Thus, the seller would decrease their taxable sales when filing Illinois sales tax returns.
Marketplace facilitator criteria to be evaluated each quarter for the prior 12 months includes:
Effective July 1, 2020, Illinois will change from origin-based sourcing to destination-based sourcing for remote sellers that exceed the economic nexus threshold (SB 690). Many remote sellers were only required to collect the state sales tax under the local origin-based sourcing rules. However, with the change remote sellers also must collect the local sales tax for the jurisdiction to where the product is being shipped.
Effective for purchases on or after July 1, 2019, the Illinois manufacturing machinery and equipment sales tax exemption also will apply to qualifying purchases of supplies and consumables used in a manufacturing facility. The sales tax exemption may now include fuels, coolants, solvents, lubricants, hand tools and safety equipment used during manufacturing.
In accordance with SB 689, Illinois has added a credit through the “Blue Collar Jobs Act” to increase expansion in the private sector. High-impact businesses are designated by the Illinois Department of Revenue after submitting an application and meeting certain criteria (such as substantial investment in underdeveloped areas). For those that are designated, there is an opportunity for a credit on “high-impact business construction jobs.” Up to 50% of income tax withheld from construction project employees (contractor and subcontractor) can be used as an income tax credit with a five-year carryforward. Pass-through entities earning credits will flow it through to its owners.
Employers with non-resident employees that spend more than 30 working days in Illinois are required to withhold Illinois Income tax starting with tax year 2020 (SB 1515). Illinois resident employees also will be permitted a credit for taxes paid to other states if the tax paid related to days spent in another state.
Illinois also passed various additional taxes and surcharges related to:
Contact Hannah Prengler at hprengler@cohencpa.com or a member of your service team for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.