The Illinois Department of Revenue (DOR) has issued a bulletin summarizing Illinois income tax return changes that affect corporations, partnerships (including limited liability companies classified as partnerships for income tax purposes), and individuals for the 2016 tax year, including:
- extension of April 15, 2017 due dates to April 18, 2017 because of the Emancipation Day holiday being observed on April 17 in the District of Columbia;
- new due dates for calendar year and fiscal year C corporations that follow federal filing due date changes;
- changes to filing extension periods to accommodate the new C corporation due date changes;
- expiration of the Research and Development credit and, for short year or fiscal year filers,
- the River Edge Redevelopment Zone Investment Credit, River Edge Redevelopment Zone Remediation Credit, Veterans Jobs Credit, Angel Investment Credit, Live Theater Production Credit, and the Hospital Credit;
- an increase in the individual taxpayer standard exemption allowance from $2,150 to $2,175; and
- changes to various return line items and schedules.
MyTax Illinois, the department’s free online tax filing and payment system, started accepting 2016 individual and business income tax returns on January 23, 2017. Employers are also reminded that all electronically submitted W-2 forms are due by February 15, 2017. Finally, the bulletin discusses new income tax withholding requirements for 2017 and important information for tax preparers and software vendors regarding 2017 tax forms.
Informational Bulletin FY 2017-12, Illinois Department of Revenue, January 2017
Personal Property Lease Tax Does Not Apply Outside Chicago
The Illinois Supreme Court held that Chicago’s taxation of car rentals outside city limits under its personal property lease transaction tax ordinance violated the city’s home rule powers under the home rule article of the Illinois constitution. Home rule units may not extend their taxing power beyond the home rule unit’s borders absent express legislative authority. Chicago announced it would assume that short-term vehicle lease transactions occurring within three miles of the city’s borders were taxable under its ordinance if the lessee intended to use the vehicle in Chicago more than 50% of the time or was a Chicago resident. To help determine whether a transaction was taxable, the ordinance provided language for rental agreements through which the lessee would notify the lessor that she intended to use the leased vehicle either inside or outside of Chicago more than 50% of the time. The ordinance was challenged by car rental companies. Chicago argued that the tax was imposed on the use of vehicles inside Chicago. The Court found that the tax was not imposed on a lessee’s use but on either a lessee’s stated intent as to where the lessee would use the vehicle, or a conclusive presumption that a Chicago resident would use the vehicle in Chicago.
The Hertz Corp. v. The City of Chicago, Illinois Supreme Court, No. 119945, 119960, January 20, 2017
Taxpayers Required to File Quarterly Withholding Tax Returns in 2017
The Illinois Department of Revenue (IDOR) announced in a press release that all taxpayers are required to file quarterly personal income withholding tax returns and report detailed payroll data beginning in 2017. The annual filing and payment frequency has been eliminated. The new quarterly reporting requirement has been introduced to reduce taxpayer filing and payment errors, and increase the detection of false income reporting and insolvent employers. The change will impact employers, payroll service providers, software developers and individuals that pay gambling and lottery winnings.
Source: Press Release, Illinois Department of Taxes, January 5, 2017 and IMA member Plante Moran’s State & Local Tax Advisor