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Not One but TWO Tax Events Coming Up this Week!

Inside SALT: Significant State Tax Developments and Opportunities

June 8, 2017 – New York, NY

Lawyers in McDermott Will & Emery’s State and Local Tax Group present an informative half-day program. A wide range of topics will be discussed, including:

  • New York developments, including false claims and budget provisions
  • Nexus updates and developments in digital taxation
  • New developments in apportionment, transfer pricing developments and unclaimed property

You can still register! Click here to view more details and register for the event.

Tax in the City®: A Women’s Tax Roundtable

June 8, 2017 – Chicago, IL

McDermott Will & Emery’s Tax in the City® is a discussion and networking group for women in tax that facilitates in-person connections and roundtable study group events around the country.

At this year’s second edition of Tax in the City®, we will host a CLE/CPE discussion focusing on current developments in professional responsibility and ethics, including a presentation focused on ethical issues arising out of our increasing access to connectivity (such as Facebook, Twitter, and other social media outlets). This will be followed by a substantive lunch program featuring the following topics:

  • Best Practices for Drafting Tax Provisions in Commercial and Other Contracts
  • Getting Ready for 2018 – Taking Steps to Prepare for Rules that Become Effective 01/01/2018
  • Tax Reform – What Can / Should You Be Doing Now?

To find our more information about Tax in the City® and get involved in future events, please email khazel@mwe.com, jmay@mwe.com or smcgill@mwe.com.




Finishing SALT: InsideSALT’s Monthly Recap

Wrapping Up May – and Looking Forward to June

Our May 2017 blog posts are available on our Inside SALT blog, 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, fill out the form on the right to subscribe to our email list.

May 16, 2017: Illinois Department of Revenue Affirms Cloud-Based Services Not Taxable

In two recent General Information Letters (GILs), the Illinois Department of Revenue (Department) reaffirmed that computer software provided through a cloud-based delivery system is not subject to tax in Illinois. The Department announced that while it continues to review cloud-based arrangements and may determine they are taxable at some point, any decision to tax cloud-based services will be applied prospectively only.

May 24, 2017: Illinois Bills to Watch

Just days away from the May 31 close of its regular legislative session, the Illinois General Assembly has yet to enact the comprehensive series of tax and budget reforms that were first proposed by the Illinois Senate leadership late last year. On May 23, the Senate passed a modified version of Senate Bill (SB) 9, the tax proposal we described in a previous post, without any Republican support, but it seems likely that Illinois’ Republican Governor will veto the legislation.

Looking forward to June:

June 8, 2017: Chicago – Tax in the City®: A Women’s Tax Roundtable

McDermott Will & Emery’s Tax in the City® network will host a CLE/CPE discussion focusing on current developments in professional responsibility and ethics, including a discussion focused on ethical issues arising out of our increasing access to connectivity.

June 8, 2017: New York – Inside SALT: Significant State Developments and Opportunities

McDermott Will & Emery’s New York State and Local Tax group presents a half-day program that will discuss a wide range of topics, including New York developments such as false claims and budget provisions, Nexus updates and developments in digital taxation, and new developments in apportionment, transfer pricing and unclaimed property.




Illinois Department of Revenue Reaffirms Cloud-Based Services Not Taxable

In two recent General Information Letters (GILs), the Illinois Department of Revenue (Department) reaffirmed that computer software provided through a cloud-based delivery system is not subject to tax in Illinois. The Department announced that while it continues to review cloud-based arrangements and may determine they are taxable at some point, any decision to tax cloud-based services will be applied prospectively only. The GILs also recognize Quill’s physical presence requirement for Commerce Clause nexus. (more…)




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…)




Illinois Supreme Court Holds City of Chicago Went Too Far in Taxing Cars Rented Outside Its Borders

The Illinois Supreme Court, in Hertz Corp v. City of Chicago, 2017 IL 119945 (Jan. 20, 2017) , held that the City of Chicago’s ruling requiring rental car companies located within three miles of the City to collect tax on vehicle rentals is unconstitutional under the home rule article of the Illinois Constitution. Hopefully, the court’s ruling will stymie the City’s expansive interpretation of its taxing powers.

The tax at issue is the City’s Personal Property Lease Transaction Tax (Lease Tax), which is imposed upon “(1) the lease or rental in the city of personal property or (2) the privilege of using in the city personal property that is leased or rented outside of the city.” Mun. Code of Chi. § 3-32-030(A). While the Lease Tax is imposed upon and must be paid by the lessee, the lessor is obligated to collect it at the time the lessee makes a lease payment and remit it to the City. Mun. Code of Chi. §§ 3-32-030(A), 3-32-070(A).

The subject of this litigation is the City’s application of the Tax in its Personal Property Lease Transaction Tax Second Amended Ruling No. 11 (eff. May 1, 2011) (Ruling 11). The plaintiffs argued that Ruling 11 extends the reach of the tax ordinance beyond Chicago’s borders in violation of the home rule provision of the Illinois Constitution and violates the federal due process and commerce clauses. The Ruling “concerns [short-term] vehicle rentals to Chicago residents, on or after July 1, 2011, from suburban locations within 3 miles of Chicago’s border … [excluding locations within O’Hare International Airport] by motor vehicle rental companies doing business in the City.” Ruling 11 § 1.  The Ruling explains that “‘doing business’ in the City includes, for example, having a location in the City or regularly renting vehicles that are used in the City, such that the company is subject to audit by the [City of Chicago Department of Finance] under state and federal law.” Ruling 11 § 3. As for taxability of leased property, the Ruling cites the primary use exemption, exempting from Tax “[t]he use in the city of personal property leased or rented outside the city if the property is primarily used (more than 50 percent) outside the city” and stating the taxpayer or tax collector has the burden of proving where the use occurs.  Ruling 11 § 2(c) (quoting Mun. Code of Chi. § 3-32-050(A)(1)).

Ruling 11 contains a rebuttable presumption that motor vehicles rented to customers who are Chicago residents from the suburban locations of rental companies that are otherwise doing business in Chicago are subject to the Lease Tax. The Ruling applies to companies with suburban addresses located within three miles of the City. The presumption may be rebutted by any writing disputing the conclusion that the vehicle is used more than 50 percent of the time in the City. The opposite is assumed for non-Chicago residents. Ruling 11 § 3. The Ruling provides that such a writing can be as simple as a customer’s [...]

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