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RECENT DEVELOPMENTS IN STATE AND LOCAL TAX -2010 LEGISLATIVE DEVELOPMENTS Illinois Bar Association

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 William J. Seitz Kupiec & Martin, LLC Fisk, Kart, Katz and Regan, Ltd

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RECENT DEVELOPMENTS IN STATE AND LOCAL TAX -2010 LEGISLATIVE DEVELOPMENTS Illinois Bar Association

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  1. 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 William J. Seitz Kupiec & Martin, LLC Fisk, Kart, Katz and Regan, Ltd dkupiec@kupiecandmartin.comisba.seitz@gmail.com

  2. 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).

  3. 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.

  4. 2010 Proposed Tax Joint Resolution Illinois Constitutional Amendments • House Joint Resolution Constitutional Amendment 0027 – Income Tax Rates Non-Graduated 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.

  5. 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).

  6. 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).

  7. Proposed Expanded Sales Tax Base(39 Potential Services) • 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 • 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

  8. 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

  9. 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

  10. 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

  11. 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 • PA 96-0935 (SB 3646) – Publicly-Traded Partnerships

  12. 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

  13. 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

  14. 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?

  15. Questions? For Additional Information Concerning This Presentation You May Contact: David Kupiec William Seitz (312) 632-1022 (312) 726-1833 dkupiec@kupiecandmartin.comisba.seitz@gmail.com

  16. 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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