Illinois Tax Updates

Hi Everybody!

Welcome to another episode of “Ask Jade”. Today I am going to just go over some Illinois Tax Updates. These are tax laws that took place during 2019 that you’ll just want to have on your radar. It will not only affect business owners but also just, everybody. Illinois now has a tax amnesty program. They approved this program for taxpayers who are delinquent on taxes owed between 2011 and 2018 if you file delinquent returns in 2019, or for 2019, the state will waive the penalties and interest and will not impose any civil or criminal penalties – that is just kind of an overview of that. Then also there’s a franchise tax phase-out in the amnesty program that Illinois has instituted in 2019. So the annual Illinois franchise requirement will be phased out by January 2021, so be paying attention to that. Illinois has expanded the manufacturing exemption so they expanded the definition of tangible personal property to include supplies and consumables used in a manufacturing process or in a manufacturing facility. So if you are a business manufacturer this applies to you, and for more details on this, obviously reach out to me, but also the manufacturing machinery and equipment tax, you can kind of just look into that some more to see if you fall under those exemptions. Another tax update for everyone, so local sales tax. Illinois will now require remote sellers to source sales based on destination or customer location as of January 1st, 2020. Currently, Illinois follows an origin-based sourcing method which requires remote sellers only to charge a state sales tax of 6.25%. So this change will now require out of state or remote sellers to collect both the state and local tax beginning in January 2020. So just an example, I’m currently a remote seller shipping to a customer in Chicago would just collect the sales tax rate of 6.25 percent. Now after this change, that same remote seller will be required to collect a sales tax rate of 10.25%. And Illinois will remain an origin-based state for all in-state sellers. So that’s something to keep in mind for all you retailers out there, whether you’re in Illinois or right outside in Indiana and then also for your in-state sellers. Again, if you need more details, please reach out to me. Then just a couple other ones, so there’s a potential graduated tax rate that might, that’s going to be proposed for Illinois. Illinois currently has a flat income tax rate and it’s actually graduated tax rates actually aren’t allowed by the Illinois constitution. So a graduated tax rate system has been proposed will be on the ballot in November 2020. Taxpayers will need to authorize this. But the tax brackets could range from 4.75% up to about 8%, currently, the flat Illinois tax rate is 4.95%. Also, there’s as of January 1st, 2020 Illinois non-resident employees will be required to file Illinois tax returns if they work more than 30 days in the state of Illinois. Currently only taxes for non-residents if they base their operations in the state of Illinois. So this new law if you’re a non-resident that earns wages in and outside of Illinois, you’re going to be allowed to have a credit for taxes paid to the other state but Illinois is going to start tax returns if you work at least 30 days in the state of Illinois. That’s something else to keep in mind. And then beginning January 1st, 2020 Illinois is going to start imposing a 6% parking tax on hourly, daily, or weekly parking. And a 9% parking tax on monthly or annual parking. So that’s kind of an update for everybody on these new tax laws. Some are fun, some are not so fun. But it affects everybody and business owners and this is kind of just a very brief overview so please reach out to me for more details.

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*The materials available at or within this video are for information purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem.