2008 Regulatory Alerts
CURRENT PROPOSED STATE OF ILLINOIS RULES AFFECTING SMALL BUSINESS
Following are proposed rules of possible interest to small businesses published in the Illinois Register. During the comment period, individuals have an opportunity to express their support or opposition to the rule. To submit comments or to learn more about the proposed rules, contact Katy Khayyat at the Department of Commerce and Economic Opportunity Entrepreneurship Network Information Center via e-mail at Katy.Khayyat@Illinois.gov or call (800) 252-2923 or (217) 785-8020.
To see an online version of Regulatory Alert, go to www.ienconnect.com/regalert. To get more information on Illinois Rules and Regulations, how to file a complaint about a burdensome or excessive state rule, go to www.ienconnect.com/regflex.
***
The following proposed regulation will impact hotels, conference centers, banquet halls and other similar establishments:
The Department of Revenue proposed an amendment to "Retailers' Occupation Tax" (86 Ill. Adm. Code 130; 32 Ill. Reg. 15763) explaining the application of the tax to situations in which hotels and similar establishments rent meeting, conference, banquet, or similar facilities when food or beverages are served. In situations where only snacks and nonalcoholic beverages are served, the true object of the transaction is the rental of the room, and the room rental is not subject to tax. However, if non-snack food or alcoholic beverages are provided, the true object of the sale is sale of food and beverages, and the room rental is subject to the tax as a cost incidental to doing business. Additionally, other charges associated with the sale of food or beverages are also taxable (e.g., food serving), while those not affiliated with the food or beverage sale (e.g. coatcheck) are not.
Bottom Line: This rulemaking is proposed in order to explain the application of Retailers' Occupation Tax to charges made by hotels and other establishments for the rental of meeting, conference, banquet and other types of rooms when food and beverages are provided. For questions or comments, contact Jerilynn Troxell at (217) 782-2844.
The following proposed regulation will impact businesses affiliated with insurance, financial, or transportation companies:
The Department of Revenue proposed an amendment to "Income Tax" (86 Ill. Adm. Code 100; 32 Ill. Reg. 16951), implementing Public Acts 95-233 and 95-707. The rulemaking forbids certain groups of affiliated businesses from deducting insurance premiums, interest income, and intangible expenses paid between group members from their Illinois taxable income. The acts and the rulemaking extend rules that already apply to unitary business groups, which file tax returns as if they were a single company, to business groups that would be considered unitary except for the "noncombination rule" of the Illinois Income Tax Act. (The noncombination rule excludes business groups that combine insurance, financial or transportation companies with other types of businesses from the definition of unitary business groups.)
Bottom Line: This rulemaking amends the regulation dealing with the disallowance of deductions for certain expenses paid to related parties who would be unitary with the taxpayer if not for the fact that they operate pr9imarily outside the United States to reflect the amendments to Section 203 of the Illinois Income Tax Act made by Public Acts 95-233 and 95-707. Those Acts expand the expense disallowance provision to also apply to expenses (including insurance premiums) paid to related parties who would be unitary with the taxpayer if not for the prohibition against including financial organizations, insurance companies and transportation companies in a unitary group with persons engaged in other business. For questions or comments, contact Paul Caselton, Deputy General Counsel--Income Tax, Illinois Department of Revenue, at (217) 524-3951 or email at Paul.Caselton@Illinois.gov.
The following proposed regulation will impact businesses (e.g. gas stations) that plan to replace or upgrade underground storage tanks with European sucking piping systems:
The Office of the State Fire Marshall proposed amendments to "Storage, Transportation, Sale and Use of Petroleum and Other Regulated Substances" (41 Ill. Adm. Code 170; 32 Ill. Reg. 17019) removing an exemption from under-dispenser containment requirements for underground storage tank (UST) systems using European suction (piping installed at an angle that allows fuel to flow back into the tank after suction stops at the pump). The amendment implements changes required by the federal Energy Policy Act of 2005 for UST regulatory programs receiving federal funding. OSFM states that he new rule will apply only to new or upgraded European suction piping systems, not to those already in place that adhere to current OSFM rules.
Bottom Line: This rulemaking implements a federal requirement pursuant to the federal Energy Policy Act of 2005, Pursuant to a USEPA clarification of its guidance for State underground storage tank system (UST) regulatory programs receiving federal funding, European Suction UST piping systems re not exempt from the requirement for under-dispenser containment for new and replaced tanks and piping and this rulemaking deletes that exemption for those systems. For questions or to submit comments, contact Shelly Bradley, Manager Division of Petroleum and Chemical Safety, Office of the State Fire Marshall, at (217) 557-3131 or at Shelly.Bradley@Illinois.gov.
The following proposed regulation will impact businesses conducted as partnerships, subchapter S corporations, and trusts:
The Department of Revenue proposed amendments to "Income Tax" (86 Ill. Adm. Code 100; 32 Ill. Reg. 17105) to implement Public Acts 95-233 and 95-707 by allowing partnerships and subchapter S corporations to file composite returns and pay the tax on behalf of their partners or shareholders. Under current regulations, partners and share holders pay their tax liability individually. The amendments also require trusts, partnerships, and subchapter S corporations to withhold Illinois income tax from their nonresident beneficiaries, partners, and shareholders who are not included in the composite return. Both provisions are prop9osed in response to new statutory requirements. Current withholding requirements already state elsewhere in rule are also added as a new Section.
Bottom Line: This rulemaking implements the amendments to the Illinois Income Tax Act made by Public Acts 95-233 and 95-707 to the provisions allowing partnerships and subchapter S corporations to file composite returns and pay tax on behalf of their partners and shareholders and to require partnerships, subchapter S corporations and trusts to withhold Illinois income tax from their nonresident partners, shareholders and beneficiaries who are not included in a composite return. For questions or to submit comments, contact Paul Caselton, Deputy General Counsel-- Income Tax, Illinois Department of Revenue, at (217) 524-3951 or at Paul.Caselton@Illinois.gov.
***
For more information on anything in this issue of Regulatory and Information Alert, contact Katy Khayyat at Katy.Khayyat@Illinois.gov or call (217) 785-8020 or (800) 252-2923. To be removed from this mailing list, please contact Katy Khayyat at Katy.Khayyat@Illinois.gov or by calling (217) 785-8020 or (800) 252-2923.