Illinois tax break for businesses in limbo


Illinois tax break for businesses in limbo

The Legislature balked at Gov. J.B. Pritzker’s effort to close that loophole by decoupling from the federal tax code in its lame-duck session in early January.

Administration members and allies at the time said they thought they’d quickly be able to round up enough votes to pass their bill not too far into the General Assembly’s spring session. Failing to act would leave the already strapped state with a budget hole of $500 million to $1 billion, they say.

Now, though, lawmakers aren’t scheduled to go into full session until at least some time in March because of COVID concerns— but tax filing begins on Feb. 15.

Pritzker aides say there’s still time and they’re still working on the issue.

“The tax code has been changed after filing has started in previous years,” said a senior administration official. “The entities impacted by this tax giveaway (high-income pass-throughs) frequently file late in the filing season or seek a six-month extension.”

But the lawmaker who chairs the panel that would have to consider Pritzker’s request isn’t buying that.

“From my perspective, it has to be done before filing begins,” House Revenue Committee Chair Mike Zalewski, D-Chicago, said.  While talking about passing a bill is easier than doing it, Zalewski conceded—“It’s difficult with COVID and other dynamics”—some affected people will start filing immediately, and it will be increasingly hard to change the law later and make them return any refund.

Somewhere in the middle of the timing question is Carol Portman, president of the Taxpayers’ Federation of Illinois.

The Legislature probably has a little time if it acts fairly quickly, especially if the state revenue officials “slow walk” certain returns to buy lawmakers some time, Portman said.

“But it really is an awkward situation,” Portman added. “The longer you wait, the more awkward it is.”  Certainly waiting to act until after the April 15 filing deadline “would be an embarrassment.”

Senate sources say that body is ready to act, but note that Pritzker’s bill mostly had problems in the House. Newly installed House Speaker Emanuel “Chris” Welch so far has said little about the issue.

I hear some chatter about another possibility: Delaying the April 15 deadline for everyone, something that also would give lawmakers more time. But insiders say the Pritzker Administration does not support that idea.


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