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IMA Tax Policy Blog

IL Repeals Double Throwback Rule

by Jon Cesaretti and Dan Sieburg

Crowe Horwath is an IMA member public accounting, consulting, and technology firm…

The Illinois Department of Revenue has retroactively repealed its double throwback rule for years ending on or after Dec. 31, 2008, providing taxpayers with a refund opportunity.
Prior to the repeal, Illinois regulations included a double throwback rule, which provided that a sale is attributed to Illinois when 1) neither the origin nor the destination of the sale is in Illinois, 2) the taxpayer is not subject to tax in either the origin or destination state, and 3) the taxpayer making the sale is subject to Illinois income tax.
For example, the Illinois office of a business subject to tax in Illinois enters into an agreement to sell goods to a customer in Maryland. The Illinois taxpayer arranges for its supplier to ship the goods directly from the supplier’s facility in California to the Maryland customer. If the Illinois taxpayer is not subject to tax in either California or Maryland, the double throwback rule would have assigned the sale to the numerator of the Illinois sales factor.
Under the amended regulations, the sale no longer would be included in the numerator of the Illinois sales factor, providing a refund opportunity for all open years.
The retroactive repeal of the double throwback rule provides Illinois taxpayers with a potential refund opportunity for years still open under Illinois’ three-year statute of limitations. For calendar year taxpayers that extended their 2013 returns, the opportunity to claim a refund will expire on the earlier of three years from the date the 2013 return was filed or Oct. 15, 2017.


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