Revenue Director: Pritzker Tax Changes Require Legislative Approval
The Illinois Department of Revenue building in Springfield.
The Director of the Illinois Department of Revenue is offering clarity on Governor JB Pritzker’s proposed tax changes on business that were unveiled Friday with little explanation.
IDOR Director David Harris, a former Republican State Representative, says Pritzker’s proposed tax changes would decouple the state from tax breaks outlined in the federal CARES Act. The federal law allows businesses to write off five years of losses to get a tax break moving forward.
Harris says the state would decouple from that bill, instead not giving the tax break to businesses for the last five years, but would continue to do so moving forward.
Harris says the bill only impacts pass-through businesses like Limited Liability Companies or “S” Corporations. He says that only makes up about 9% of some 450,000 pass-through businesses in the state.
Harris says the change won’t hurt small businesses in the state.
“We have a very small number of pass-through entities that even have carryforward losses,” he said. “The ones that do tend to be larger entities.”
Harris says the losses businesses face this year can still be used in future tax years.
“They don’t lose the ability to use the losses,” he said. “They can carry those losses forward indefinitely, up to 80-percent of operating income. It’s not like the benefit is going away, it’s just simply that you can’t carry it back five years. Only forward.”
Harris says the decoupling effort would require legislative approval, though it isn’t clear if that will happen during the lame duck session or in the next General Assembly, which begins Wednesday.