ILLINOIS TAX FACTS

BY MAURICE W.SCOTT Executive Vice President

Two important bills before the 1974 session of the Illinois General Assembly are now law, and these bills, H. B. 2049 and H. B. 2234, are of material interest to the taxpayers, the Taxpayers' Federation of Illinois reports today.

H. B. 2049 exempts from the ad valorem property tax personal property held by a trustee, guardian, conservator, executor, administrator or other fiduciary to the extent held for the exclusive benefit of a natural person. This new Act makes sense and will eliminate the following injustice; A man dies and leaves $50,000 in personal property equally to two sons, but one son is competent and the other non-competent. The latter son has a court appointed conservator to handle his $25,000 in personal property for him. Under prior law and court cases, the first son paid no personal property tax on his $25,000, but the non-competent son, through his conservator, was liable for personal property taxes on his $25,000.

Under the provisions of H. B. 2234, the corporate authorities of a municipality or the county board of a county may impose a use tax on any item of personal property purchased outside Illinois at retail which is titled or registered with an agency of the State's government. The rate may not exceed 1% of the selling price of the property. The Illinois Department of Revenue will collect the tax for any municipality or county that imposes the tax. The county use tax is to be collected from persons whose Illinois address for titling or registration purposes is given as being in an unincorporated area of the county. The municipal tax applies to those persons whose Illinois address is given as being, within such municipality. A municipal ordinance imposing the tax is effective on the first day of the month following the expiration of the publication period. A county ordinance or resolution imposing the tax is effective on the first day of the month following the month in which the ordinance or resolution is passed. Boats, airplanes, trucks, cars, mobile homes, motorcycles and trailers are presently registered or licensed by a State agency.

An example will help to explain the prior inequity in tax statutes that H. B. 2234 attempts to correct (an inequity especially severe to merchants close to stateline borders). A resident of Belleville, Illinois purchased a car (under prior law) in St. Louis and when he titled it in Illinois, paid the 4% State Use Tax. However, if he purchased it in Belleville, he would have paid a 5% Sales Tax, 4% to the State and 1% to the City of Belleville. The Belleville dealer was put at a definite disadvantage, tax-wise, when compared to the St. Louis dealer, and the St. Louis dealer capitalized in his publicity on this disadvantage.

Reprinted with the permission of Maurice W. Scott, Executive Vice President, Taxpayer's Federation of Illinois.

Illinois Parks and Recreation 8 November/ December 1974

ILLINOIS TAX FACTS

BY MAURICE W. SCOTT Executive Vice President

House Bill 194, passed by the General Assembly in 1974 and signed by Governor "Walker on August 26, allows counties to charge taxing districts a proportionate share of the costs to a county of extending and collecting property taxes, the Taxpayers' Federation Of Illinois explained today.

Under the provisions of the new statute, each county collector, when authorized by an ordinance passed by the county board, shall determine the total actual costs to the county of extending and collecting property taxes for the taxing districts within the county, and charge each taxing district its proportionate share of those costs. The proportionate share of a taxing district shall be determined by applying the same percentage to the actual total cost of extension (as determined by cost analysis by an independent auditing firm) as its extension (dollar amount) bears to the total extension (dollar amount). The resultant amount shall be billed to each taxing district after tax collections have been distributed to all taxing districts within the county.

According to the provisions of the Illinois Constitution of 1870 and applicable statutes, the county clerk charged local taxing districts 7cents for each property tax extension on each description of real estate and each person's personal tax, and the collector would reserve such amount from the taxes due and payable to such local taxing districts. The county collector, in first and second class counties, received a fee of 1% for collecting property taxes and 1% for paying them out to local governments. In Cook County (3rd class county), the fee was one-half of one percent for collecting the taxes and one-half of one percent for paying them out, "With the revenues from such fees, the county collector and county clerk paid their salaries, plus the salaries of their clerks and deputies, stationery, fuel and other office expenses, and all excess of such fees was paid into the county treasury. This excess amounted to a lot of revenue for the general fund of all counties.

Why House Bill 194? The new Illinois Constitution of 1970 contains a provision in the Local Government Article, Article VII, Section 9(a), that says "Fees shall not be based upon funds disbursed or collected, nor upon the levy or extension of taxes". So the question becomes, "Does H. B. 194 provide for a fee for the extension and collection of property taxes and violate said Section 9(a) of Article VII, or does it provide for a legitimate charge by the county to local governments of the costs of doing tax work for local governments, and outside the provision of said 9(a) of Article VII?" Anyway, we now have a statute on the question that will be resolved in the courts. In the old days, the extension and collection costs in an average county amounted to about 3% of the aggregate property tax extensions for local governmental units therein.

Reprinted with the permission of Maurice W. Scott, Executive Vice President, Taxpayer's Federation of Illinois.

Illinois Parks and Recreation 9 November/ December 1974