Tax Law Blog | IRS Tax Attorneys

Get ready to dig a little deeper, Cook County homeowners.

Under a new state law, you’ll be forced to pay slightly more of your property tax bill up front so county agencies, municipalities, school districts and other local governments can improve their bottom lines.

The so-called “accelerated billing” law — which sailed quietly through the General Assembly last year and applies only to Cook County — requires that the first installment of property taxes due March 2 be computed based on 55 percent of the total taxes paid last year, instead of the usual 50 percent.

The change is being spotlighted by county treasurer Maria Pappas, who is including fliers headlined “CALCULATION CHANGE 55%” in this year’s tax bills. Those bills began arriving in mailboxes this weekend, just days before the Feb. 2 primary.

Pappas said Monday she opposes the law. But support from other county leaders and Chicago government officials apparently helped it win approval in the Legislature, where it passed 48-8 in the Senate on April 1 and 67-46 in the House on May 19. Gov. Quinn signed it Aug. 14.

“Right now, people’s income fluctuates month by month, particularly those out of jobs and in between jobs,” said Rep. Jim Durkin (R-Western Springs), who voted against the change. “For people in very difficult situations trying to make their mortgage payments and just getting by, that additional 5 percent is significant.”

A homeowner who paid a $5,000 tax bill last year, for example, would have a first installment of $2,750 this year — $250 more than under the old law. But proponents point out that the change won’t hike the total taxes property owners will pay over the course of the year and could result in lower tax payments on the second installments of their bills.

“When confronted with the fact [local governments] can’t pay their bills, you feel this is one way to get a little more money into their funds,” said Sen. Louis Viverito (D-Burbank), the plan’s lead Senate sponsor.

“Historically, taxpayers are faced with a second property-tax installment that is higher than the first,” said Ashley Cross, a spokeswoman for Quinn. “This slight change aims to provide relief to taxpayers by helping to better balance the two payment cycles.”

There’s a slight chance homeowners who escrow their property taxes could see increases in their monthly mortgage payments based on the new law, said Frank Binetti, president of the Illinois Mortgage Bankers Association. Most lenders, however, should have adequate funds in reserve to cover homeowners’ bills.

“It’s not going to impact the lenders as much as the individual homeowner who pays their own taxes,” Binetti said. “They’re the ones who probably haven’t anticipated this.”

Source

Cash-strapped communities have a message for corporations that promised jobs in return for tax breaks: A deal’s a deal.

As the economy sputters along, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don’t hire enough workers, that lay them off or that close up shop. At the same time, they’re sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don’t deliver.

“We will roll out the red carpet as much as we can (but) they are going to honor the contract,” said Brendon Gallagher, an alderman in DeKalb, Ill., where Target Corp. got abatements from the city, county, school district and other taxing bodies after promising at least 500 jobs at a local distribution center.

So when the company came up 66 workers short in 2009, Target got word its next tax bill would be jumping almost $600,000 — more than half of which goes to the local school district, where teachers and programs have been cut as coffers dried up.

The newfound boldness comes from communities and states that have long bent over backward to lure companies and jobs by offering abatements and other incentives — to the tune of an estimated $60 billion a year in the United States, according to the Washington-based economic development watchdog group Good Jobs First.

The willingness to write — and enforce — the “clawback” provisions comes even as companies across the country struggle and against a broader backdrop of governments getting tough on business practices.

What’s more, the poor economy has communities thinking about how the tax breaks they dole out will play with residents who have grown increasingly angry at the thought of anything that hints of corporate welfare.

“The public is a lot more aware of tax abatements and there’s a climate of skepticism about what can be perceived as corporate handouts,” said Geoff McKimm, a member of the Monroe County Council in Indiana.

Source

So you think you know your candy, Mr. and Ms. Sweet Tooth? The State of Illinois begs to differ.

That regular melt-in-your-mouth Hershey’s bar? Candy for sure. But the Cookies ‘n’ Creme spinoff? That’s food, not candy, according to a new state tax law.

A Butterfinger? Candy. Butterfinger Stixx with wafer center? Not candy.

Likewise, Twix, Kit Kat and Twizzlers, are all candy-aisle staples that Illinois no longer officially considers to be candy.

And on it goes down the list of cavity-inducing standbys as the state scratches to squeeze more money out of consumers to help pay for a $31 billion public works program Gov. Pat Quinn recently signed into law.

Source

Looking for an Illinois Tax Lawyer?

Four Illinois riverboat casinos failed to get the U.S. Supreme Court to hear their challenge to a law requiring them to share their profits with the state’s ailing horse racing tracks.

The court’s Monday decision means Illinois tracks expect to share in an estimated $80 million — money set aside under a 2006 law requiring state riverboat casinos that gross over $200 million annually to give 3 percent of their take to the horse racing industry.

The boats — in Aurora, Elgin, and two in Joliet — asked the high court to review whether the law violated the U.S. Constitution’s prohibition on unwarranted seizure of assets. The Illinois Supreme Court ruled last year that the “takings” clause applies to government acquisition of private land, not taxes.

The casinos had paid the fee in protest and money was set aside in a special state account during the three-year life of the law. About $79 million was in the account at the time of last June’s state court ruling.

Illinois Tax Attorneys:

Chicago Criminal Tax Attorneys

With irate property owners clamoring for relief, Illinois lawmakers passed a law in 1991 to cap skyrocketing real estate tax bills.

At the time, no one anticipated that more than 17 years later, the rate of inflation—the key measure used in the legislation to limit tax increases—would be less than 1 percent.

In 2008, the annual bump in the rate was an unprecedented 0.1 percent. That means most taxpayers can expect only slight increases in their 2009 tax bills, which are paid in 2010.

But it also means that many school districts and other government agencies will see only tiny increases in the property-tax revenues they will collect next year. And that has sent shock waves around the state, as school districts scramble to adjust their budgets and plan for cuts as early as next school year.

With tax referendum measures unlikely to succeed in the current recession, suburban districts are moving to eliminate everything from staff to band programs and sports teams as they try to cover teacher salaries and other costs that are going up by far greater than 0.1 percent.

“Property taxes are huge for us. They comprise about 56 percent of our revenue stream,” said Tom Hernandez, director of community relations for Plainfield Community Consolidated School District 202.

The tax cap as a theory works exactly as intended for taxpayers, he said, and municipalities and other home-rule communities can offset the cap through gas taxes and sales taxes.

“But we can’t do that,” he said. “We are limited to the rate of inflation and we are now taking a big hit from it.”

John Reiniche, assistant superintendent for business services at Orland School District 135, said his district and others have been closely watching the Consumer Price Index. While there have been no cutbacks in District 135 in personnel or programs as a direct result of the economy and tax cap, the situation will be front and center in setting a tentative budget by June.

“That will definitely be a point of conversation with our board coming down the road in 2010,” he said.

Most districts rely on local property taxes to cover the majority of their budgets and don’t anticipate the state coming to the rescue. The state already is behind on sending money to districts for special education, transportation and other costs.

The unease has reached Springfield, where lawmakers have begun filing legislation to change the so-called tax-cap law and provide relief for school budgets.

Taxpayer advocates are wary of any changes.

An expert Chicago Tax Attorney is only a click away.