Reed Smith Client Briefings

An overview of recent noteworthy court decisions, rulings, regulations, and pending tax tribunal petitions concerning Illinois state and local taxes.

Authors: David P. Dorner Jeremy P. Gove

Type: Client Alerts

FEDERAL TAX REFORM

Department of Revenue offers guidance on the impact of Tax Cuts and Jobs Act on Illinois

The Illinois Department of Revenue has issued multiple publications providing guidance on the impact of the federal Tax Cuts and Jobs Act (TCJA) on Illinois taxpayers and the State of Illinois. One TCJA provision that has garnered much attention is Internal Revenue Code (IRC) section 965, which imposes a tax on untaxed foreign earnings and profits for certain shareholders of controlled foreign corporations. The Department noted that Illinois does not follow the IRC section 965(h) election to pay the tax liability in installments over eight years.1 Illinois taxpayers must include IRC section 965 income when determining their Illinois base income subject to tax; however, Illinois’ subtraction modification for foreign dividends will exclude some of that increase in taxable income from Illinois base income.