The 2016 Cubs’ World Series win finally put to rest the long standing “Wait ’Til Next Year” slogan. However, the slogan may be resurrected in connection with Illinois’s state budget. For nearly two years, the Illinois legislature has failed to pass a comprehensive annual budget. Last year, on June 30, 2016, the ongoing partisan divide resulted in Illinois Governor Bruce Rauner signing a last-minute, stopgap budget to fund critical state operations for the remainder of 2016. With just over a month remaining in the 2017 legislative session, there appears to be little traction on any significant tax reform. That said, a number of bills have sparked widespread attention in the Illinois taxpayer community over the past few months and potentially may foreshadow significant tax reform in the coming years.
On January 20, 2017, the Illinois Supreme Court issued a taxpayer-friendly opinion in The Hertz Corporation, et al v. The City of Chicago, 2017 IL 119945. At issue was whether the City of Chicago (the “City”) could mandate collection of its Personal Property Lease Transaction Tax (the “Transaction Tax”) from certain car rental agencies located outside its borders based on presumptive, but not actual, use of property within the City. Hertz Corporation and Enterprise Leasing, Inc. challenged the City’s extraterritorial tax scheme as a violation of both the Illinois Constitution and the U.S. Constitution. The Illinois Supreme Court struck down the tax, holding that it violated the Illinois Constitution.
The U.S. Supreme Court has requested Michigan’s response to several certiorari appeals from taxpayers seeking relief from Michigan’s retroactive repeal of its Multistate Tax Compact (“MTC”) election. The Court was originally scheduled to review the Michigan petitions at its conference on January 19, but has now provided a February 9 deadline for Michigan’s response. Additionally, the Court’s January 19 conference to discuss Dot Foods, Inc., another state tax retroactivity case appealed to the Court several months ago dealing with the interpretation of a Washington business and occupation tax exemption, has been put on hold. See Dot Foods, Inc. v. Wash. Dep’t of Revenue, U.S., No. 16-308, cert. petition filed 9/9/16 and cert response filed 12/5/16. These recent actions by the Court appear to signal an interest in retroactivity cases, with heightened potential to take one or both cases.
The Mississippi Supreme Court upheld the Mississippi Chancery Court’s decision in Mississippi Dep’t of Rev. v. AT&T Corp., Dkt. No. 2015-CA-00600-SCT (Miss. S. Ct. 10/27/2016), holding that the Mississippi dividend exclusion statute was unconstitutional under the dormant aspect of the Commerce Clause of the U.S. Constitution.