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State Tax Developments for Pass-Through Entities: Apportionment of Income for Corporate PartnersJune 18, 2019

State taxation of corporate partners in multistate partnerships raises interesting issues. In many circumstances, the corporate partner is subject to multistate taxation and is therefore engaged in the process of allocating and apportioning its income on a multistate basis. The difference between allocating and apportioning partnership income could have a material impact on a corporation's state blended rates utilized for…

Illinois’ Income Taxation of Foreign IncomeJanuary 29, 2019

With the Tax Cuts and Jobs Act (TCJA), many taxpayers have begun to focus on the manner in which states tax foreign income. Illinois? taxation of foreign income is fairly in line with most other states. However, given how much states can diverge on this …

Chicago and Cook County Amusement TaxJanuary 8, 2019

Although the Chicago and Cook County amusement tax are imposed similarly on taxpayers, they are independently administered taxes that feature key differences. Both the Chicago Amusement Tax Ordinance and Cook County Amusement Tax Ordinance impose the tax “upon the patrons of every amusement” within the …

Cook County Taxes: Parking Lot and Garage Operations TaxDecember 11, 2018

The “Parking Lot Tax” has recently been targeted by the Cook County Department of Revenue. In the past 3-5 years, we have seen a significant uptick in the Department’s audit activity, and challenges to Taxpayer positions. Their efforts have primarily focused on the enforcement of …

Illinois Corporate Income Tax- Apportioning Insurance Company IncomeNovember 27, 2018

In a previous post, we addressed the basics of Illinois corporate income tax apportionment. We also addressed how while most corporations are required to follow the standard statutory formula, the state imposes unique rules on a number of industries, including financial organizations. In addition to …

A Multistate Perspective on Taxation of Digital ProductsNovember 13, 2018

In a General Information Letter published in 2017, Illinois addressed how its taxation of canned and custom software would apply to cloud computing. The state explained that software as a service (SaaS) is not subject to the Retailers’ Occupation Tax, and SaaS providers are instead …

Illinois’ Taxation and Apportionment of Partnership Income Earned by Corporate PartnersOctober 30, 2018

Partnerships are not subject to the Illinois Income Tax. Instead, partners are taxed individually on their distributive shares from a partnership. For nonresident individual partners, only their pro rata share of the partnership’s income apportioned to Illinois is taxable. Corporate partners may be required to …

The Illinois Franchise TaxOctober 9, 2018

The Illinois Franchise Tax is a weird tax. It is imposed on the privilege of exercising a franchise in Illinois or, in the case of foreign corporations, for the authority to transact business in the state. It is administered by the Illinois Secretary of State, …

Illinois Motor Fuel TaxesSeptember 25, 2018

Like many states, Illinois and a number of Illinois localities impose motor fuel taxes. Although these taxes are each generally similar, they function slightly differently and are administered by different agencies. It is important not only for retailers of motor fuel, but any business that …

Application and Abatement of Penalties in Chicago and Cook CountySeptember 11, 2018

For taxpayers surprised to find their business caught in the crosshairs of a Chicago or Cook County audit, substantial penalties can also be an alarming challenge. In a prior post, I outlined penalties assessed by the Illinois Department of Revenue (“Department”), the basis for relief, …

The Illinois Constitution and TaxesAugust 28, 2018

The Illinois Constitution was adopted on December 15, 1970. The constitution sets forth the taxing powers of home rule units and describes the exclusive power of the General Assembly to raise revenue. Because the constitution creates the framework for how Illinois’ taxing system functions, this …

Illinois Department of Revenue Adopts Regulation Relating to Out-Of-State Retailers and Trade Show AppearancesAugust 16, 2018

The new rule provides that the presence of an out-of-state retailer or its representative in Illinois for the purpose of engaging in trade show activities establishes nexus for the retailer and requires collection of use tax on all sales into Illinois unless three conditions are …

Application and Abatement of Penalties in IllinoisAugust 14, 2018

At the close of an audit, in addition to tax and interest, a taxpayer may also be assessed various types of penalties that can be substantial and even surpass the underlying tax liability. However, there are several courses of action for seeking penalty abatement, which …

Illinois Corporate Income Tax: Alternative ApportionmentJuly 31, 2018

Like most states, Illinois statutes and regulations permit taxpayers and the Director of the Department of Revenue to obtain alternative apportionment of Illinois base income. Although case law is relatively scant, alternative apportionment remains an important means of reaching a fair income tax liability in …

Illinois Corporate Income Tax- Financial OrganizationsJuly 17, 2018

Financial organizations in Illinois are required to follow different apportionment rules than general service providers. Prior to December 31, 2017, such businesses were also required to file separate unitary business returns from taxpayers that filed their income tax returns under the standard apportionment rules. Beginning …

HMB Takeaways from WayfairJuly 9, 2018

Everyone is by now likely familiar with the recent Wayfair decision and its central holding. Prior to Wayfair, businesses had some degree of comfort that they would not be required to collect and remit sales or use taxes to states in which those businesses did …

Wayfair and its Impact on Illinois’ Economic Nexus LegislationJune 26, 2018

The Commerce Clause and interstate commerce were thrust into the spotlight last week, as the United States Supreme Court reversed the longstanding physical presence standard for sales tax nexus.

Key Phrases From the Wayfair Decision and My Initial ReactionsJune 22, 2018

In a landmark decision, the Supreme Court overturned Quill giving States more authority to collect sales tax. Jordan Goodman shares his initial reactions while reading the decision.

Local Sourcing Rules for the Illinois Retailers’ Occupation TaxJune 12, 2018

As we have discussed previously, Illinois localities have adopted a variety of unique taxes, such as the Chicago Personal Property Lease Transaction Tax, the Amusement Tax, and dozens more. Illinois localities may also impose a local option tax which is imposed in addition to the …

Illinois Adopts A New Remote Seller Nexus LawJune 11, 2018

Wayfair, Quill, Sales tax nexus, remote seller. Illinois adopted a South Dakota remote seller nexus rule effective October 1, 2018.

Illinois Corporate Income Tax: Throw-Back and ThrowoutMay 29, 2018

In calculating the Illinois sales factor, Illinois employs both a “throw-back” and “throwout” rule. While many states employ some form of throw-back rule, Illinois’ adoption of both a throw-back and throwout rule is unique.

Illinois’ Unique Treatment of Leases and Traps for the Unwary LessorMay 22, 2018

Illinois? treatment of leases is an anomaly when compared to almost all other jurisdictions. While most jurisdictions impose sales tax on the lease receipts collected from the lessee, the user of the equipment, Illinois differs by treating the lessor as the user of the equipment. …

Clarifying the Cloud: Taxation of Software in IllinoisMay 15, 2018

Determining whether computer software is taxable is no easy task, especially in light of the changing technological landscape. The Illinois Department of Revenue (“Department”) has been asked by taxpayers for a number of years to provide clarification, but until recently has been largely silent on …

Illinois Corporate Income Tax Basics – ApportionmentMay 7, 2018

In a previous post, we addressed the basics for calculating Illinois base income. In this post, we will focus on Illinois’ general apportionment rules, and in later posts, we will discuss Illinois’ combined reporting rules and the specific treatment of insurance companies and financial organizations …

Tax Amnesties Popping up…and should be taken seriously!May 3, 2018

Alabama, Connecticut and Texas are offering tax amnesty programs that have some huge benefits.

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