March 19, 2009—Issue 12

More on the Budget

In my rush to get our TFI from the Capital out yesterday on Governor Quinn’s proposed Fiscal 2010 Budget I incorrectly stated that the new total corporate income tax rate would be increased to 9.9%, the correct new rate would be 9.7%.

                                                                                    Sorry,  Tom

We now have more information on the Business Tax Law Changes that are included in the Governor’s 2010 Budget Proposal that are estimated to provide $273 million of additional revenue. They include:

Income Tax

• Include the Outer Continental Shelf and U.S. Territories in the definition of the United States

• Decouple from Federal Tax Incentives that flow through to Illinois and reduce state tax receipts

• Repeal of the Research and Development Credit
• Limiting credits to 50% of tax owed.
• Decouple from the following provisions of the American Recovery and Reinvestment Act 
• Deferral of gain recognition from reacquisition of business debt security
• Five  year carry-back of net operating losses by small businesses

Sales Tax

• Taxation of Licensed Software
• Reduce the retailer’s discount rate for fiscal 2010 to .75% to finance the Sales Tax Holiday
• Limit the Graphic Arts Machinery and Equipment  Exemption to Graphic Arts firms
• Expiration of the Manufacturers’ Purchase Credit
• Sweetened Tea and Coffee Drinks will be taxed as Soft Drinks
• Tax all grooming and hygiene products at the same rate (presumably the high rate)

Other Taxes

• Subject Insurance Premiums tax to coverage purchased from unlicensed underwriters
• Require Banks to provide data match on account holders that owe state tax

We have only seen the statutory language to implement changes for the last item.  click here

Language for the other provisions will be provided when available. 

Illinois’ Director of Revenue Brian Hamer will be joining us at our Spring Seminar next week to present Governor Quinn’s Budget Plan.

Further information regarding the Spring Symposium may be accessed at the following link:  click here.  Further, an on-line registration form may be accessed at this link:  click here