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Finishing SALT: Inside SALT’s Monthly Recap

Wrapping Up June

Our June 2017 blog posts are available on insidesalt.com, or read each article by clicking on the titles below. To receive the latest on state and local tax news and commentary directly in your inbox as they are posted, click here to subscribe to our email list.

June 5, 2017: Nexus is Crucial, Complex Connection for State Tax Professionals

June 6, 2017: Substitute Alert – Delaware Technical Corrections Bill

June 8, 2017: Inside SALT Event in McDermott Will & Emery’s New York Office

New York, NY: The annual Inside SALT event took place on Thursday, June 8, 2017 in McDermott’s New York office. Tax lawyers Peter Faber, Todd Harrison, Stephen Kranz, Alysse McLoughlin, Art Rosen, Diann Smith and Mark Yopp presented a substantive half-day program highlighting many State and Local Tax updates, including recent changes specific to the New York area, Nexus developments in digital taxation, and news related to apportionment, transfer pricing and unclaimed property. The event had a successful turnout, with tax executives from many of McDermott’s top clients, and culminated in a networking reception.

June 8, 2017: Tax in the City® Event in McDermott Will & Emery’s Chicago Office

Established in 2014 by McDermott Will & Emery LLP, Tax in the City® is a discussion and networking group for women in tax that fosters collaboration and mentorship and facilitates in-person connections and roundtable study group events around the country.

McDermott’s second Tax in the City® meeting of the year took place on Thursday, June 8, 2017 in the Chicago office. The event began with a CLE/CPE presentation on Privilege and the Ethics of Connectivity. After a break for lunch and networking around the room, the program continued with a roundtable discussion focusing on best practices for drafting tax provisions in commercial contracts. Kristen Hazel spoke about drafting Letters of Intent, then Britt Haxton covered credit agreements, Sandra McGill covered withholding tax provisions, and Jane May wrapped up with settlement agreements.  Following that discussion, Mary Kay Martire passed our continuing discussion of the Illinois Grand Bargain over to Carol Portman, McDermott Alum and President of the Taxpayers Federation of Illinois, who shared with us some insights into the Illinois budget stalemate. The event concluded with Sandra McGill offering her insights into tax reform, as well as Kristen Hazel’s thoughts on preparing for new rules effective in 2018. The roundtable event aided great networking and conversations, and saw an impressive turnout with female tax leaders from many of McDermott’s client companies.

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Update on Illinois Legislative Session

On May 31, the Illinois General Assembly closed its regular legislative session, without a budget agreement.

Senate Bill 9

As we previously reported, the Senate passed a modified version of Senate Bill 9 (Bill), a tax proposal that is part of the Illinois “Grand Bargain” that we described in a previous post. The version of Senate Bill 9 that passed out of the Senate passed the House Revenue Committee on May 29 on a partisan vote. The House has extended the Bill’s final action deadline to June 30.

The current version of the Bill is similar but not identical to the version that we have previously described. Some of the more significant amendments include the following:

Two New Taxes. The Bill now proposes to create two new taxes. The “Video Service Tax Modernization Act” purports to impose a tax on satellite television and streaming television services at a rate of 5 percent of the gross revenues that a provider earns from its Illinois customers. The Bill also creates the “Entertainment Tax Fairness Act” which seeks to tax viewing “entertainment,” defined as “paid video programming whether transmitted by cable service, direct-to-home satellite service, direct broadcast satellite service, digital audio-visual works service, or video service.” The tax rate is 1 percent of charges paid by the customer. Both taxes exempt satellite or subscription radio services and can be passed-through and collected from customers.

Income Tax. The Bill now proposes to increase income tax rates for individuals, trusts and estates to 4.95 percent (rather than the previously proposed 4.99 percent rate). Also, the tax rate increases, including the increase to 7 percent for corporations (corporate increase unchanged from the Bill’s prior version), continue to be permanent.

Sales Tax Base Expansion. The current version of the Bill removes repair and maintenance services, landscaping services, cable television services (but see “Two New Taxes” described above) and some personal care services (including nails and hair removal) from the Bill’s expansion of the Illinois sales tax base.

It is difficult to predict whether any portion of Senate Bill 9 will be enacted. Since the Illinois General Assembly’s regular sessions have now ended, legislative approval will require a three-fifths majority and, to date, the governor has refused to endorse the legislation.

Senate Bill 1577

We have previously reported on Senate Bill 1577, which proposes to increase the penalty amounts imposed for violation of the Illinois False Claims Act. The bill passed the House on May 30 with the exception for certain low dollar tax claims as previously described.




Tax Highlights of Proposed Illinois “Grand Bargain”

In an effort to resolve Illinois’ 20-month budget impasse, the Illinois Senate leadership (Senate Majority Leader John Cullerton and Senate Minority Leader Christine Rodogno) have jointly proposed a series of bills to increase revenue, reduce spending, and respond to the Illinois Governor’s concerns regarding pension reforms, workers compensation reform and property tax relief.  A series of twelve bills have been introduced, all of which are interlinked for passage.  The bills are termed the Illinois “Grand Bargain.”  Most of the tax-related changes are found in Senate Bill 9.  The current version of the Senate Bill 9 (Amendment 3) (“Bill”) was submitted on March 3 and includes the following proposed changes: (more…)




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