Tim’s Tax News on the Tenth – September 2021

In response to the federal state and local tax (“SALT”) deduction $10,000.00 cap enacted as part of the Tax Cuts and Jobs Act (“TCJA”), Illinois Governor J.B. Pritzker signed legislation into law last month that includes a pass-through entity workaround for tax years beginning on or after January 1, 2022.

With the state and local tax deduction bill now law in Illinois, Illinois joins more than a dozen states that have passed legislation to approve a similar workaround, including Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Louisiana, Maryland, Minnesota, New Jersey, New York, Oklahoma, Rhode Island, South Carolina, and Wisconsin.

The law will allow S-corporations and partnerships to avoid the $10,000 cap on the state and local tax deduction. The sponsor of the legislation, state Sen. Win Stoller, R-Germantown Hills, said “the legislation has the potential to help up to 400,000 Illinois business owners save thousands of dollars annually on their federal tax filings.” Stoller went on to say, “the beauty of this bill is it costs Illinois nothing all of the tax savings are on the federal side, but we had to make a simple change in Illinois tax law to allow our small businesses to take advantage of this opportunity.”

The IRS issued a notice in 2020 essentially blessing this type of workaround in the states’ tax code.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 28 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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Lavelle Law, Ltd. is registered with the Illinois Department of Financial and Professional Regulation as an approved continuing education provider for CPE for CPAs and Enrolled Agents. If your organization is seeking CPE courses in the area of Business Law, Innocent Spouse Relief, IRS Collections, Tax Scams (including ID Theft), or other areas in tax law that can be taught at your office, please contact me at thughes@lavellelaw.com