Gas & Cigarette Tax Increase
Minimum Wage Ordinance Update
The Minimum Wage Ordinance Applies to:
• Employers that maintain a business facility within the city of Chicago and/or are required to obtain a business license to operate in the city.
• Employees of an employer that is subject to the ordinance who work at least two hours in the city within the period of two weeks qualify for the minimum wage required by the ordinance. This includes domestic employees, day laborers and home health care workers. A union may waive its members’ rights to receive the minimum wage as part of a collective bargaining agreement.
How the Minimum Wage Increase Works:
• The minimum wage increase will be phased in on an annual basis every July 1st until 2019 according to the schedule below. Beginning in 2020 and every year thereafter, the minimum wage increase will be tied to the rate of inflation, but not to exceed 2.5 percent, and there will be no increase to the minimum wage in years when the unemployment rate in Chicago in the previous year was equal to or greater than 8.5 percent.
Effective Date Non-Tipped Employees Tipped Employees*
Current $12.00 $6.25
July 1, 2019 $13.00 $6.40
Mayor Rahm Emanuel today proposed a new Mobile Merchant license under the Regulated Business License for the City’s growing mobile boutique industry. The Mobile Merchant license would allow mobile boutique operators, who currently operate under the Emerging Business Permit, to receive a renewable two-year license within BACP’s license structure. The new license activity offers more flexibility in allowing the sales of non-food merchandise from a mobile vehicle. The Emerging Business Permit was created in 2012 as part of Mayor Emanuel’s License Reform initiative, which simplified the licensing process for business owners by consolidating from 117 to 40 license types. The permit gives entrepreneurs the chance to test their unique business ideas for up to two-years while the City works to identify the necessary license framework. 43rd Ward Alderman Michele Smith is a co-sponsor of the new ordinance.
Illinois Sales Tax 10.25%
Chicago Restaurant Tax 0.25%
If located within the MPEA area an additional 1.00%*
Total Taxes for Restaurants: 10.50% or 11.50%(if located in the MPEA)
MPEA Borders (approximate)
MPEA 1% Tax District – statutorily defined in 70 ILCS 210 as “(3) that portion of the City of Chicago located within the following area: Beginning at the point 150 feet west of the intersection of the west line of North Ashland Avenue and the north line of West Diversey Avenue, then north 150 feet, then east along a line 150 feet north of the north line of West Diversey Avenue extended to the shoreline of Lake Michigan, then following the shoreline of Lake Michigan (including Navy Pier and all other improvements fixed to land, docks, or piers) to the point where the shoreline of Lake Michigan and the Adlai E. Stevenson Expressway extended east to that shoreline intersect, then west along the Adlai E. Stevenson Expressway to a point 150 feet west of the west line of South Ashland Avenue, then north along a line 150 feet west of the west line of South and North Ashland Avenue to the point of beginning.”
These taxes are paid through MyTaxIllinois. This tax is paid monthly through the Chicago Department of Finance Electronic Tax Filing and Payment site. And the annual tax return for this tax is due August 15th.
Remember: The IRS only contacts you by regular mail. Calls and emails are SCAMS!
For a complete sales tax listing, please visit MyTaxIllinois.
Paid Sick Leave Ordinance Update
The Paid Sick Leave Ordinance Applies to:
• Employers that maintain a business facility within the City of Chicago and/or are required to obtain a business license to operate in the city.
• Employees of an employer that is subject to the Ordinance who work at least 80 hours within any 120-day period qualify. This includes domestic employees, day laborers, tipped workers, and home health care workers.
How Paid Sick Leave is Calculated:
• Paid sick leave begins to accrue either on the 1st calendar day after the start of employment or on July 1, 2017, whichever is later.
• For every 40 hours worked, an employee earns one hour of paid sick leave in full hour increments.
• Salaried employees who are exempt from overtime requirements shall accrue one hour of Paid Sick Leave for each week of employment.
• Paid sick leave hours are capped at 40 hours per 12-month period unless the employer sets a higher limit.
• At the end of a 12-month accrual period, employees must be allowed to carry over up to half of unused paid sick leave (a maximum of 20 hours) unless the employer sets a higher limit.
• If subject to Family and Medical Leave Act (FMLA), each employee must be allowed to carry over up to 40 hours of unused paid sick leave, in addition to half of all unused paid sick time, to use exclusively for FMLA-eligible purposes.
How Businesses Can Comply with the Ordinance:
WHAT EMPLOYERS MUST DO:
• If employers already have a paid sick leave policy that meets the requirements of the Ordinance they are not required to provide additional paid leave.
• If the policy awards all paid sick leave immediately upon date of eligibility instead of an accrual method, employees must be provided 40 hours of paid sick leave within one calendar year of their date of eligibility the first year and 60 hours for each subsequent year.
• Employers must allow employees to begin taking paid sick leave no later than on the 180th calendar day after their start of employment.
• Employers are required to post this Notice of Paid Sick Leave in their business facilities and to provide the notice to each employee on July 1, 2017, or with the employee’s first paycheck after hire.
• Employers must maintain records of paid sick leave accrued and make such records available to the Commissioner of the Department of Business Affairs and Consumer Protection (BACP) upon request.
• Employers may not discriminate or take any adverse action against any employee in retaliation for exercising rights under this Ordinance.
• Employers may be fined $500-$1,000 per offense for violations of the Ordinance, in addition to facing license suspension or revocation and ordered to pay restitution to employees.
WHAT EMPLOYERS MAY DO:
• Employers may set a reasonable minimum for requested time off not to exceed 4 hours per day.
• If the use of paid sick leave is reasonably foreseeable, employers may require up to seven days’ notice before leave is taken. If the need is not reasonably foreseeable, an employer may require notification as soon as practicable on the day the leave is taken unless the employee is unable to give notice because of medical incapacitation.
• If an employee is absent for more than three consecutive work days, employers may require documentation for the use of paid sick leave. Employers cannot require that the documentation specify the nature of injury, illness or condition. Employers cannot deny paid sick leave or delay wages due to not yet receiving documentation.
• Employers may take disciplinary action, up to and including termination, against employees who use paid sick leave for purposes other than described in the Ordinance.
Employee Rights Under the Ordinance:
Employers cannot require employees to find replacement workers to cover their hours off in order to use their paid sick leave.
EMPLOYEES MAY USE PAID SICK LEAVE WHEN:
• They are ill or injured, or to receive medical care, treatment, diagnosis or preventative medical care
• A family member is ill or injured, or to care for a family member receiving medical care, treatment, diagnosis or preventative medical care
• They or a family member are victims of domestic violence or sex offense; or
• Their place of business is closed by order of a public official due to public health emergency, or they have a child who needs care because their school or place or care is closed due to a public health emergency.
• Employees who believe they have not received paid sick leave may call 311 to report a violation of the Ordinance to the City of Chicago.
• A complaint affidavit must be fully completed and returned to BACP to initiate an investigation.
• Employees are not required to provide, and the City will not request, information regarding the immigration status of any person filing a complaint.
• BACP does not act as the employee’s private attorney. Any employee has the right to file a private civil action against the employer in circuit court if the employer violated the provisions of the Ordinance.
Income Tax Credit
An income tax credit is created for employers for certain employees if: (1) the employer does not employ more than 50 employees during the applicable payment period; and (2) the average wage paid by the employer per employee for all employees making less than $55,000 during the reporting period is greater than the average wage paid by the employer per employee for all employees making less than $55,000 during the same reporting period of the prior year.
Note that the employer must track the payment period and the reporting period. The credit is received by reporting period.
- Payment period. Pursuant to 35 ILCS 5/704A(c)(1)(A) and (B) and (2), an employer who withholds or is required to withhold more than $12,000 during the one-year period ending on June 30th of the preceding calendar year or in any quarter of a calendar year, is required to make payment twice-per-week. Any employer who withholds or is required to withhold less than $12,000 in the periods above is required to make payments monthly (on or before the 15th of each month for the preceding month).
- Reporting period. Pursuant to 35 ILCS 5/704A(b), every employer files a return with respect to taxes withheld or required to be withheld for each quarter on or before the last day of the first month following the close of that quarter.
|1||January- March||April 30th|
|2||April – June||July 31st|
|3||July – September||October 31st|
|4||October – December||January 31st|
So, if an employer exceeds 50 employees at any time during any of the payment periods in the first quarter, he/she is ineligible for the credit.
How the credit is applied:
- $0.45 per hour worked (tipped employees)
- $0.53 per hour worked (learners – different from training wage)
- $0.75 per hour worked (all others)
The credit is calculated by payment period under the Income Tax Act (defined above). It is taken by reporting period (as defined above)
The credit can be taken for reporting periods (quarterly) that begin on or after January 1, 2018 and end on or before (1) December 31, 2025 for employers that employ more than 5 employees during the applicable period; and (2) December 31, 2027 for employers that employ no more than 5 employees during the period. The employer can only take the credit if all of the following conditions are met:
- Employer does not own or operate 4 or more establishments in the aggregate nationally pursuant toa franchise agreement.
- Employer does not exceed 50 employees at any point during a payment period. As an example, you have 48 employees, 2 take leave and you hire two temporarily to replace them, you are now over 50 employees.
- Employee must have worked 90 consecutive days. Please note this states ‘worked’ as opposed to what it should read which is “employed”;
- The average wage paid by the employer per employee for all employees making less than $55,000 during the reporting period is greater than the average wage paid by the employer per employee for all employees making less than $55,000 during the same reporting period of the prior calendar year;
- The average wage for all employees is greater than the average wages paid for all employees in the previous year;
Finally, you can only claim the credit for the number of employees making less than the minimum wage or reduced wage for the current calendar year during the last reporting period of the preceding calendar year. In other words, if you have no employees at the training wage ($0.50 of the minimum or reduced wage), you will not be able to claim the credit even though you had any number of employees at the minimum or reduced wage
Plastic Bag Ordinance
Sponsors: Alderman Moreno, Cardenas, Austin and O’Shea
- Prohibits stores from providing plastic bags to customers
- Stores are retailers that have three or more locations having common ownership, or any retailer that is part of a franchise
- Restaurants are exempt
- Stores must provide reusable bags, recyclable paper bags or commercially compostable bags or any combination thereof
- Stores must establish an in-store collection program for recycling plastic bags, except for stores that are prohibited from offering plastic bags and except for restaurants and any store that is not a chain store
- Stores over 10,000 sq. ft. will have an effective date of 8/1/15 and stores 10,000 sq. ft. or less will have an effective date of 8/1/16
Sunday Liquor Sales Will Start at 8am
Alderman Pat O’Connor sponsored a proposed ordinance to allow the sale of alcohol for certain packaged good licensees at 8am on Sundays which passed in the Committee on License and Consumer Protection. The ordinance will allow supermarkets (food stores with at least 10,000 sq. ft. of retail sales space where the sale of liquor does not comprise more than 25% of the floor area devoted to retail sales) to sell alcohol on Sundays starting at 8am instead of the current 11am. Supermarkets would have to submit plans for the store that specify the floor area and location of alcohol sales as well as pay a $250 fee for the plan review. The ordinance also deletes the provision that currently allows all packaged goods license holders to sell alcohol at 8am on Sundays if Sunday falls on Christmas Eve or New Year’s Eve.
Sunday Paid Parking
The following streets will have paid parking on Sundays:
- North Broadway from Diversey Parkway to Cuyler Avenue
- North Halsted Street from Barry Avenue to Dakin Street
- North Clark Street from Diversey to Byron Street
- Belmont-Racine east to Broadway
Mayor Emanuel Announces New Online Tools for Small Businesses
New Small Business Center Site Now Available in both English and Spanish;
Site Selector Site Will Help Business Owners Search for Everything from Commercial Properties to Zoning Requirements and Available Incentives
Mayor Rahm Emanuel announced today two online tools to help small business owners access critical services that will help them get started and grow. The first is a website for the Small Business Center (SBC), available in English and Spanish that will serve as a one stop shop for entrepreneurs and business owners. The second, which was completed in conjunction with World Business Chicago, is a new and improved Site Selector tool to help small businesses search for commercial sites available for lease or sale. Both sites were developed in cooperation with the Mayor’s Innovation Delivery Team and following consultations with businesses and the Mayor’s Small Business Advisory Council.
“Small businesses are the backbone of our economy and I am committed to making City Hall a partner to these job creators,” said Mayor Rahm Emanuel. “These new online tools will help Chicago’s small business owners access the resources they need to not only open their doors in Chicago, but succeed.”
The new City of Chicago Small Business Center website, allows business owners to access important information in a customer-friendly layout and includes the following features:
- Financial assistance tool – Helps direct businesses to the appropriate resources based on their needs. It also contains information about workshops and an updated directory of financing opportunities including microloans, traditional loans, grants, and tax credits
- Interactive map with services across the city – The map helps small business owners find supportive services in their neighborhood, including Neighborhood Business Development Centers, Alderman Offices, and Illinois Small Business Development Centers.
- Business Licensing Factsheets for individual license categories – For the first time, business owners will find fact sheets explaining the business license types, the cost of each license, and which inspections will be necessary for common license types.
The World Business Chicago Site Selector tool, is a free service for small business owners looking for commercial and industrial space in Chicago. The tool also helps brokers and property owners promote available properties in the city. Neighborhood Business Development Centers (NBDC) will work with local property owners to identify properties in their communities that are for lease though not listed with a broker and will post availability on Site Selector. Posting and searching for listings are both free.
“Site Selector is great for potential business owners looking for properties. Not only does it help locate available properties, it includes a lot of information like the properties zoning which is critical to making a good choice,” said Dan Stratis Vice President & Managing Broker, @properties Commercial.
Listings are sourced by the NBDCs and 120 independent Chicago brokers, and maintained by the Small Business Center. To date, there are 757 retail listings and 405 office space listings.
“Site Selector has helped us develop new relationships with brokers and owner and we work together to promote our available sites,” said Roger Sosa, Back of the Yards Neighborhood Association.
Site Selector was developed by World Business Chicago, the city’s economic development arm responsible for business attraction, expansion, and retention. Initially unveiled in beta in 2011, today’s launch marks Site Selector’s emergence as a full-featured product supporting the site location needs of businesses both large and small.
“Site Selector allows users to utilize map layers including industrial corridors, universities, City-owned property, and incentives, in order to visualize the location that would best meet their needs,” said World Business Chicago President & CEO Jeff Malehorn. “This is a unique and easily accessible resource that businesses can use as a first step in the site selection process.”
Chicago is one of five cities to receive an Innovation Delivery Team grant from Bloomberg Philanthropies. Since launching in November 2011, the Mayor’s Innovation Delivery Team has spearheaded a business license reform ordinance that reduced the number of license categories by 60 percent and helped design the Small Business Center to serve as a one-stop-shop for small businesses.
Part of Bloomberg Philanthropies’ Mayors Project, Innovation Delivery Team grants were also awarded to Atlanta, Louisville, Memphis, and New Orleans.
On April 27th, Mayor Rahm Emanuel announced a package of new reforms to support small businesses across the city. The plan will reduce costs for businesses, simplify the licensing process, increase transparency, support start-up and innovative businesses, and reduce the burden of inspections for all businesses. For those that could not make it to the announcement, I am hosting a conference call from 1:45 p.m. – 2:15 p.m. this afternoon where I will provide updates on the following initiatives that we are working towards implementing in the coming days, weeks and months!
- Business License Issuance Clock
Did you know that over 60% of business licenses are issued within 1 day? The BACP License Clock, which launched on May 4 and will be updated each month, is part of our commitment to increase transparency and be a partner, not a problem, for small business owners. We ask that you check out the clock, located prominently on our home page (cityofchicago.org/bacp), and use the information to hold us accountable as we work to improve our numbers.
- Mobile Merchant License
Introduced to City Council in April, this new license will give mobile boutique operators the ability to sell retail goods out of a mobile vehicle under a permanent licensing category. Seven entrepreneurs have been operating under the Emerging Business Permit since 2016- this ordinance makes permanent the rules that they have been operating under with great success. This license will provide exciting opportunities for new and existing business owners, bring retail options to new communities, and complement existing brick and mortar stores on retail corridors.
- Start-Up License Fee
Mayor Emanuel is set to announce the details of Start-Up License Fee soon, one of the key points of his small business plan. To help alleviate the financial pressures associated with launching a small business, we will be lowering the price of a new Limited Business License (LBL) from $250 to $125, giving a business their first two-year license for the price of one year.
- Sidewalk Café Full Year
Along with the Start-Up License Fee, Mayor Emanuel soon will also announce the extension of the Sidewalk Café Permit to a full-year term. This change will apply to existing permit holders, offering three additional months of operation at no additional cost. This is part of our commitment to get out of the way of business owners whenever possible- if restaurants want to operate a sidewalk café in the winter months, we should not stand in their way. This summer, we will be updating the sidewalk café rules to make it easier to operate in winter months.
- Pre-Payment of Tickets
Coming soon, businesses that commit certain common violations will have the option to pre-pay instead of attending an administrative hearing in person. This business-friendly initiative will relieve a substantial burden on owners and allow them to get back to business quickly.
- Pop-Up Permitting
All entrepreneurs would benefit greatly from the opportunity to test the market and their concept and get a feel for a location before acquiring a lease. We will be creating a “pop-up” permit that allows for certain retail food activities, in additional to general retail, in pop-up locations for a short period of time out of a pre-approved space.
- License Inspection Checklist
One of the primary complaints from business owners is that they regularly receive different feedback from different City Departments. We will create standard, license-specific checklists that business owners can use as a reference to help them know what to expect from different City inspections.
- Nights and Weekends
Many businesses operate outside of a regular 9-5 schedules. BACP will be instituting Night and Weekend shifts as part of our efforts to meet business owners on their timetable.
- Request for Proposals
The 2019/2020 RFP is open for submission through midnight on May 31st.
The State of Illinois passed Firearm Conceal and Carry Act
This act allows individuals in possession of a concealed carry license (CCL) in the State of Illinois to:
- Carry a loaded or unloaded concealed handgun, fully concealed or partially concealed, on or about his or her person, and
Keep or carry a loaded or unloaded concealed firearm on or about his or her person within a vehicle.
Signs Can Be Posted & Must Meet Regulatory Requirements
Press Release Date: October 11, 2013
SPRINGFIELD – Illinois State Police Officials today released information on regulatory requirements for concealed carry signage under the Firearm Concealed Carry Act (430 ILCS 66/1, et. seq.).
Individuals licensed to carry a concealed firearm under the Firearm Concealed Carry Act are prohibited from carrying a firearm on, or into, any of the prohibited areas listed under Section 65 of the statute. Private property owners may also prohibit individuals from carrying a concealed firearm on, or into, property under their control.
Owners of any statutorily prohibited area or private property, excluding residences, where the owner prohibits the carrying of firearms must clearly and conspicuously post the Illinois State Police approved sign, in accordance with 430 ILCS 66/1, at the entrance of the building, premises or real property:
HB183, Section 65 (Prohibited Areas) (d) Signs stating that the carrying of firearms is prohibited shall be clearly and conspicuously posted at the entrance of a building, premises, or real property specified in this Section as a prohibited area, unless the building or premises is a private residence. Signs shall be of a uniform design as established by the Department and shall be 4 inches by 6 inches in size…. Please refer to Section 65 (Prohibited Areas) for more information on statutory regulatory requirements for signage as well as where concealed weapons are prohibited.
Pursuant to Section 65(d) of the Firearms Concealed Carry Act, signs must be of a uniform design and the Illinois State Police is responsible for adopting rules for standardized signs. The Illinois State Police has proposed rules which require a white background; no text (except the reference to the Illinois Code 430 ILCS 66/1) or marking within the one-inch area surrounding the graphic design; a depiction of a handgun in black ink with a circle around and diagonal slash across the firearm in red ink; and that the image be 4 inches in diameter. The sign in its entirety will measure 4 in x 6 in.
The Illinois State Police’s proposed administrative rules allow the design and posting of a larger sign if the property owner believes the entrance of the building, premises or real property requires it. The administrative rules proposed by the Illinois State Police would also permit a larger sign to include additional language. These administrative rules have been filed with the Illinois Secretary of State pursuant to the Illinois Administrative Procedure Act.
Official Sign for Businesses:
(1) Any building, real property, and parking area under the control of a public or private elementary or secondary school.
(2) Any building, real property, and parking area under the control of a pre-school or child care facility, including any room or portion of a building under the control of a pre-school or child care facility. Nothing in this paragraph shall prevent the operator of a child care facility in a family home from owning or possessing a firearm in the home or license under this Act, if no child under child care at the home is present in the home or the firearm in the home is stored in a locked container when a child under child care at the home is present in the home.
(3) Any building, parking area, or portion of a building under the control of an officer of the executive or legislative branch of government, provided that nothing in this paragraph shall prohibit a licensee from carrying a concealed firearm onto the real property, bikeway, or trail in a park regulated by the Department of Natural Resources or any other designated public hunting area or building where firearm possession is permitted as established by the Department of Natural Resources under Section 1.8 of the Wildlife Code.
(4) Any building designated for matters before a circuit court, appellate court, or the Supreme Court, or HB0183 Enrolled LRB098 05760 MGM 35799 b Public Act 098-0063any building or portion of a building under the control of the Supreme Court.
(5) Any building or portion of a building under the control of a unit of local government.
(6) Any building, real property, and parking area under the control of an adult or juvenile detention or correctional institution, prison, or jail.
(7) Any building, real property, and parking area under the control of a public or private hospital or hospital affiliate, mental health facility, or nursing home.
(8) Any bus, train, or form of transportation paid for in whole or in part with public funds, and any building, real property, and parking area under the control of a public transportation facility paid for in whole or in part with public funds.
(9) Any building, real property, and parking area under the control of an establishment that serves alcohol on its premises, if more than 50% of the establishment’s gross receipts within the prior 3 months is from the sale of alcohol. The owner of an establishment who knowingly fails to prohibit concealed firearms on its premises as provided in this paragraph or who knowingly makes a false statement or record to avoid the prohibition on concealed firearms under this paragraph is subject to the penalty under subsection (c-5) of Section 10-1 of the Liquor Control Act of 1934.
(10) Any public gathering or special event conducted on property open to the public that requires the issuance of a permit from the unit of local government, provided this prohibition shall not apply to a licensee who must walk through a public gathering in order to access his or her residence, place of business, or vehicle.
(11) Any building or real property that has been issued a Special Event Retailer’s license as defined in Section 1-3.17.1 of the Liquor Control Act during the time designated for the sale of alcohol by the Special Event Retailer’s license, or a Special use permit license as defined in subsection (q) of Section 5-1 of the Liquor Control Act during the time designated for the sale of alcohol by the Special use permit license.
(12) Any public playground.
(13) Any public park, athletic area, or athletic facility under the control of a municipality or park district, provided nothing in this Section shall prohibit a licensee from carrying a concealed firearm while on a trail or bikeway if only a portion of the trail or bikeway includes a public park.
(14) Any real property under the control of the Cook County Forest Preserve District.
(15) Any building, classroom, laboratory, medical clinic, hospital, artistic venue, athletic venue, entertainment venue, officially recognized university-related organization property, whether owned or leased, and any real property, including parking areas, sidewalks, and common areas under the control of a public or private community college, college, or university.
(16) Any building, real property, or parking area under the control of a gaming facility licensed under the Riverboat Gambling Act or the Illinois Horse Racing Act of 1975, including an inter-track wagering location licensee.
(17) Any stadium, arena, or the real property or parking area under the control of a stadium, arena, or any collegiate or professional sporting event.
(18) Any building, real property, or parking area under the control of a public library.
(19) Any building, real property, or parking area under the control of an airport.
(20) Any building, real property, or parking area under the control of an amusement park.
(21) Any building, real property, or parking area under the control of a zoo or museum.
(22) Any street, driveway, parking area, property, building, or facility, owned, leased, controlled, or used by a nuclear energy, storage, weapons, or development site or facility regulated by the federal Nuclear Regulatory Commission. The licensee shall not under any circumstance store a firearm or ammunition in his or her vehicle or in a compartment or container within a vehicle located anywhere in or on the street, driveway, parking area, property, building, or facility described in this paragraph.
(23) Any area where firearms are prohibited under federal law.
City Council Approves Ordinance to Regulate E-cigarettes as Tobacco Products
January 15, 2014
City Council today approved an ordinance that will regulate electronic cigarettes as “tobacco products” in the City of Chicago pending further regulations from the Food and Drug Administration. The new policy bans the distribution and sale of e-cigarettes to minors and moves e-cigarettes from in front of the counter to behind the counter in stores where they are sold, making it more difficult for youth to access. The ordinance also prohibits the use of e-cigarettes in restaurants, sports venues, and everywhere else cigarettes are banned and requires e-cigarette dealers to be licensed. Since the Mayor announced that he was joining with City Council members and community groups to support this ordinance, New York City and Los Angeles have taken up similar proposals.
State Court Strikes Down Illinois Main Street Fairness Act
The Illinois Supreme Court’s decided to strike down the Main Street Fairness Act on Oct. 18.
Illinois Governor Pat Quinn signed into law the Main Street Fairness Act in March 2011, requiring all online retailers doing business in Illinois to collect sales tax for the state. But a Cook County judge declared the law unconstitutional in April 2012.
“It’s disappointing that the Illinois Supreme Court did not address the constitutionality of the issue, but rather erred in its conclusion that the act violated the Internet Tax Freedom act,” IRMA President & CEO David F. Vite said.
The new law was meant to close a painful loophole in Illinois by forcing internet companies to treat a sale as a sale, no matter whether it was done over a counter top or with a keyboard and mouse. Illinois has been losing hundreds of millions of dollars in tax revenue because out-of-state companies willfully evaded their responsibility to collect Illinois sales taxes.
The Illinois Department of Revenue appealed that ruling with the Illinois State Supreme Court in 2012 and IRMA supported the appeal by filing an Amicus Brief on the case. The Brief was filed in partnership with the City of Chicago and the Illinois Municipal League.
Illinois has been losing an estimated $1 billion in uncollected sales tax revenue because out-of-state companies willfully evaded their responsibility to collect state sales taxes. With no federal law in place to force those remote sellers to collect sales tax without a nexus, or a physical location, consumers find it cheaper to buy online.
When online retailers do not collect sales tax, the tax is still owed and the responsibility falls to the customer who is required under current law to report and pay use tax to the state on these purchases. The Main Street Fairness Act was the state’s answer to the problem: the law stated that if any remote seller was connected to affiliates with physical locations in Illinois, it would have to either drop those affiliates or start collecting sales taxes for online sales.
Some online retailers, such as Amazon.com and Overstock.com, responded to the law by severing ties with local affiliates in order to avoid paying taxes.
In May, the U.S. Senate voted for the federal Marketplace Fairness Act, requiring Internet sellers with $1 million a year or more in sales outside their home states to collect each state’s sales tax. The U.S. House has not voted on the Act.
Vite said the court’s decision underscores the need for action in Washington to quickly pass the Marketplace Fairness Act. Until then, sales tax collection laws continue to depend on both where and how a retailer is selling to customers.
“Working with a hodgepodge of laws around the country is intolerable and brick and mortar retailers continue to be at a substantial disadvantage to their online competitors,” Vite said.
Public Safety Annoucement
Public safety continues to be a top concern in our community, particularly as crime rates traditionally increase in warmer weather. We encourage you to attend your next CAPS Beat meeting and work with your officers and neighbors to reduce instances of crime in your neighborhood.
Visit the Chicago Police Department website or call 311 to find your beat and upcoming meetings; even if you know your beat, double check as many beats and meetings changed after the 19th and 23rd police district merger earlier this year.
- Restaurant Start-Up Guide
- How to Apply for a City of Chicago Liquor License
- City of Chicago Licensing, Permits and Inspections 101
- Public Way Use Permits
- Home Rule Tax Changes
- Is Your Business Wheelchair Accessible?
Free Business Education Workshops
The City of Chicago Business Affairs is offers free workshops each month. All workshops are FREE and are located at the City of Chicago Department of Business Affairs and Consumer Protection City Hall, 121 N. LaSalle St., Room 805.