the Illinois GRTGross Receipts Tax

2007

Defeat of

presented by M. Jason CunninghamCCBFA / Sonnenberg & Anderson

Outline

I. GRT as Proposed in Illinois

II. CCBFA Position

III. Fate of Proposed GRT

IV. Lessons Learned by CCBFA

Section I:Details of Proposed

GRT in Illinois

Illinois’ Proposed GRTWhat is Taxed?

Section 201: “A tax is hereby imposed on each taxpayer for the privilege of doing business in this State equal to the Illinois gross receipts of the taxpayer, multiplied by the rates determined under Section 203 of this Act”

I. Illinois GRT as Applied to Brokers

How Much is the Tax?

1.95% of Companies Gross Receipts

Companies with less than $2,000,000 gross receipts are exempt.

Corporate credit allowed for amount of income tax paid.

I. Illinois GRT as Applied to Brokers

Would the GRT Apply to Brokers?

Section 202. For purposes of this Act, "gross receipts" means the total amount realized by a taxpayer, without deduction for the cost of goods sold or other expenses incurred, ...

(1) Gross receipts include, but are not limited to: ...

(B) Amounts realized from the taxpayer's performance of services for another;

I. Illinois GRT as Applied to Brokers

Who Pays the Tax?

Brokers pay the tax.

“The tax imposed under this Act is a tax on the taxpayer and may not be separately billed or invoiced to another person.”

Sample Invoice to Importer from Freight Forwarder included in CCBFA Letters Against the GRT

•The GRT tax on this invoice would be $129.95 (1.95%). This would bring the profit of $558.26 down to $428.31. The profit of $428.31 will be brought down even further when the cost of payroll, office expenses, equipment maintenance, and existing federal and state taxes to just name a few.

Charge Cost

Ocean Freight $4040.00 $3900.00

Customs Duty $872.62 $872.62

Inland Cartage $1556.30 $1333.04

Custom Clearance

$195.00 $0.00

Total $6663.92 $6105.66

Illinois GRT’s Additional Transportation Tax

Also includes: “Gross receipts from the sale of transportation services by a common or contract carrier, in proportion to the mileage traveled by the carrier during the taxable year on roadways, waterways, airways, and railways in this State to the mileage traveled by the carrier during the taxable year on roadways, waterways, airways, and railways everywhere;”

I. Illinois GRT as Applied to Brokers

Section II:The CCBFA’s

Response to the Proposed GRT

Identifying, Unifying, and Acting

CCBFA’s Response to GRT

1.Early Action: CCBFA Board Members identified the GRT as a potential problem, early.

2.Board willing to take position against GRT.

3.Drafted and sent letters to all Illinois state legislators.

4.First CCBFA meetings in Springfield.

Entire process was low cost: volunteer time of members, stamps, letterhead.

5.Aligned with other organizations: Chambers of Commerce (State, Chicago, Rockford...)

Section III:GRT Defeated

CCBFA was one of many, harmonious voices in opposition to the Gross Receipts Tax

Poorly drafted bill, lost support. Resoundingly defeated.

State unable to pass annual budget without it, lead to temporary budgets, cutbacks, and threat of State Government shutdown.

Section IV: Lessons Learned by Local

BrokersIdentify issues early, formulate common position on the issue, send letters, use resources of others on your side.

Governor of Illinois claims he “lost” $8 billion with the defeat of the GRT.

Watch for different tax proposals next year: payroll and/or income tax increase

State governments are concerned with transportation and shipping infrastructure.

Thank You.

• Gross Receipts Tax

• 2007

the Illinois GRT

presented by M. Jason CunninghamCCBFA / Sonnenberg & Anderson