Regulatory Alert

CURRENT PROPOSED STATE OF ILLINOIS RULES AFFECTING SMALL BUSINESS

If any of the following proposed regulations impact your business, let us know!  Click here to submit comments on how the proposed rulemakings will impact your business or industry.   

Following are proposed rules of possible interest to small businesses published in the Illinois Register.  During the comment period, individuals have an opportunity to express their support or opposition to the rule. To submit comments or to learn more about the proposed rules, contact Katy Khayyat at the Department of Commerce and Economic Opportunity Business Information Center via e-mail at Katy.Khayyat@Illinois.gov  or call 800.252.2923 or 217.558.0190. 

To get more information on Illinois Rules and Regulations, how to file a complaint about a burdensome or excessive state rule, go to www.ilsmallbiz.biz/regflex
 


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The Illinois Liquor Control Commission proposed an amendment which will impact small businesses and nonprofits that sell or serve alcoholic beverages, including holders of retailer, caterer retailer, special event retailer's license (not-for-profit), railroad, boat, wine maker's premises, airplane, brew pub, and distributor licenses:

The ILLINOIS LIQUOR CONTROL COMMISSION proposed an amendment to the Part titled The Illinois Liquor Control Commission (11 IAC 100; 43 Ill Reg 10763) giving the Commission authority to authorize transfers of alcohol between retail licensees (generally prohibited) on a case-by-case basis. Requests for these transfers must be submitted to the Commission on approved forms at least 10 business days in advance unless the transfer is due to an “imminent act of god” (e.g., a flood or other disaster), in which case the request may be submitted at any time prior to the transfer. The Commission may consider factors such as unforeseeable circumstances beyond the control of the licensee; whether the licensee is facing bankruptcy or temporary or permanent closure; and whether a new, non-common ownership licensee plans to take possession of the closing licensee’s current inventory. The rulemaking also clarifies that “retail licenses” include licenses granted to caterers, special event/nonprofit retailers, railroads, boats, airplanes, winemakers, and brew pubs.

Bottom Line:  The Illinois alcohol regulatory system relies on a three-tier organization which prohibits retailers, distributors, and manufacturers from having any interest in a part of the industry other than their own.  Generally, a retailer licensee transferring alcohol to another retail licensee would be prohibited – the retail transferor would be, in effect, distributing alcohol to another retailer. However, the Illinois Liquor Control Commission recognizes that cases arise in which the transfer of alcohol from one retailer to another is prudent. The Commission has proposed this amendment to grant itself authority to, on a case-by-case basis and under certain circumstances, authorize transfers of alcohol between retail licensees.

This rule is open for public comment until 11/18/19.  Questions/requests for copies/ comments through 11/4/19 may be directed to Questions/requests for copies/comments through 11/18/19:
Pamela Paziotopoulos, LCC, 100 W. Randolph St., Suite 7-801, Chicago IL 60601, 312/814-1804.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility.

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The Secretary of State proposed an amendment which will impact new and used vehicle dealers, currency exchanges, and other businesses that issue temporary registration permits: 

The SECRETARY OF STATE proposed amendments to the Part titled Certificate of Title, Registration of Vehicles (92 IAC 1010; 43 Ill Reg 11100) instituting new fraud prevention provisions for businesses that issue Temporary Registration Permits (TRPs) for newly purchased vehicles. Entities authorized to issue TRPs must designate one individual (a Superuser) to be responsible for issuing, tracking and managing these permits and to act as the primary contact with SOS. The Superuser may designate other persons as authorized issuers of TRPs. Only individuals with a valid username issued by SOS may issue a TRP from the inventory allocated to each licensed entity. If SOS determines that a Superuser or an authorized entity has allowed an unauthorized individual to issue a TRP, SOS may suspend, revoke or deny its access to the TRP program. All Superusers and authorized issuers must complete a no-cost training session on SOS procedures within 60 days after receiving a username and on an annual basis thereafter. All required information on a TRP must be electronically printed and the month and year of expiration must be indicated in permanent black marker. If a used vehicle is returned to a dealer due to mechanical defects within 15 calendar days after its sale or before it has been driven 500 miles, the licensed dealer may void the TRP, and must retain documentation of the reason the vehicle was returned. A TRP cannot be voided if the vehicle is returned to the dealer solely because the purchaser could not secure financing. In this case, the dealer must still submit the appropriate title, registration fees and applicable taxes to SOS before another TRP can be issued for the same vehicle. All TRPs must have a document number identifying the accompanying application for a certificate of title; if this application is missing, the TRP issuing entity shall be billed for the certificate of title fee. TRPs shall not be accessible to the general public or to any individual that does not have a Superuser or authorized issuer username issued by SOS. Holders of TRPs shall be limited to a 90-day inventory based on self-reported annual sales. Unused TRPs shall be returned to the SOS TRP Return Unit by mail. Entering false, misleading or deceptive information regarding a vehicle or vehicle owner into the TRP system shall incur a 90-day suspension of access to the system. Penalties for issuing TRPs without following proper SOS procedures include a $175 fine for every violation, a written warning for a single first time violation, and suspensions of 7 to 90 days for subsequent violations. 

Bottom Line:  These proposed changes to the administrative rule update the authorization and user agreements for entities approved by the Secretary of State that issue Temporary Registration Permits (TRP's) along with 7- day and 30-day drive away permits. Outlines parameters involving action the Secretary may take if the Secretary determines that fraud and abuse occur within the TRP system. Updates the fee the Secretary may charge for missing and fraudulently issued TRP's to reflect the changes made in statute concerning annual registration fees.  Each impacted entity must complete a Superuser agreement identifying a single person of contact. 

This rule is open for public comment until 11/25/19. Questions/requests for copies/ comments through 11/4/19 may be directed to Questions/requests for copies/comments through 11/25/19:  Pamela Wright Office of the General Counsel 298 Howlett Building Springfield IL 62756, or email pwright@ilsos.gov.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility.

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The Secretary of State proposed an amendment which will impact certain used vehicle dealers that also offer customer financing:

The SECRETARY OF STATE proposed amendments to the Part titled Dealers, Wreckers, Transporters and Rebuilders (92 IAC 1020; 43 Ill Reg 11934) implementing Public Act 101-105. The PA and the rulemaking institute rules for Buy Here, Pay Here (BHPH) used vehicle dealers that offer third-party financing through a financial institution in which the dealer has an ownership stake. (BHPH rules do not apply to dealers who use separate third-party lenders with which they have no legal or financial association.) Effective 1/1/20, all BHPH dealers must electronically submit titling and registration applications to SOS through the SOS website or via an Electronic Registration and Titling system. A BHPH shall only be required to acquire one license that permits it to sell 5 or more used vehicles per year. It may have a separate legal entity that provides financing solely for its customers and may sell vehicles for cash or by other traditional financing methods. However, promotion, advertisement, solicitation, or other engagement in sales transactions must mention the associated financing entity and the availability and terms of its payment plans. Every BHPH must submit the appropriate certificate of title, registration fees and taxes to SOS and the Department of Revenue for each sales transaction, and the application for title/registration must include the date of purchase, regardless of how the sale was ultimately financed or how the vehicle was transferred to the customer. Those affected by this rulemaking include certain used vehicle dealers that also offer customer financing.

Bottom Line:  This rulemaking implements Public Act 101-505.  Data historically recorded on paper will not be recorded electronically.  This rule is open for public comment until 12/2/19.  Questions/requests for copies/ comments through 11/4/19 may be directed to Questions/requests for copies/comments through 12/2/19:  Pamela Wright Office of the General Counsel 298 Howlett Building Springfield IL 62756, or email pwright@ilsos.gov.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility.

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The Secretary of State proposed an amendment which will impact businesses or non-profit entities that offer progressive jackpot video gaming:   

The ILLINOIS GAMING BOARD proposed amendments to Video Gaming (General) (11 IAC 1800; 43 Ill Reg 12767) implementing provisions of Public Act 101-31. Companion emergency rules (43 Ill Reg 11688) were effective 9/26/ 19. The proposed rulemaking creates a new Subpart T governing in-location progressive jackpot games (in which the jackpot escalates with each play until the game is won). Licensed gaming locations shall designate one or more owners or employees to implement the procedures required by these rules. Each terminal operator must employ a person of significant influence or control (e.g., an owner) as its progressive jackpot coordinator to handle all aspects of the progressive jackpot operation, winning or withholding process Each progressive game shall be conducted only within a single video gaming location. If a progressive jackpot of $1,200 or more is won, the video gaming terminal (VGT) shall immediately issue a voucher with the date, time and amount won, identifying the terminal operator and the terminal on which the prize was won, and giving a phone number to call for payment instructions. Terminal operators must pay jackpot winners within 3 days after a win, after retaining any applicable withholdings; no prize or portion thereof may be paid in the form of credits for further play on a VGT. Before operating an in-location progressive jackpot game, a terminal operator must obtain authorization from the Department of Healthcare and Family Services to intercept past-due child support and to access the HFS database of persons with past-due child support subject to withholding. If past-due child support is withheld from a jackpot and remitted to HFS, the terminal operator may additionally claim an administrative fee of 4% of the winnings (up to a maximum of $150). At least one designated owner or employee must be at the gaming location whenever a progressive jackpot game is being played. The winner of a progressive jackpot must present government or military-issued personal identification to the designated owner/employer and must sign a form provided by the terminal operator. Completed progressive jackpot forms, payment receipts/confirmations, gaming tickets, and other related documentation of a progressive jackpot win must be retained for audit and inspection by IGB or its agents for the time period prescribed by the Administrator of IGB.

Bottom Line:  The rulemaking will affect small businesses that are licensed as licensed video gaming locations or terminal operators and that conduct in-location progressive jackpot games in accordance with the provision of this rulemaking.  The rulemaking will require the Illinois Gaming Board to record all progressive jackpots won and amounts deducted for taxes and overdue child support payments, including information as to location, time and amount of each progressive jackpot and corresponding deductions. Terminal operators participating in progressive jackpot play will be required to keep all completed tax forms connected with progressive jackpots, records of communications with the GIPCS system, and documentation of all jackpot withholdings for taxes and overdue child support. Licensed video gaming locations participating in progressive jackpot play will be required to keep copies of all completed progressive jackpot forms.

This rulemaking implements the provisions of Section 20 (c) of the Video Gaming Act as added by PA 101-31 (Senate Bill 690), effective June 28, 2019. The rulemaking does the following: New Section 1800.2010 (In-location Progressive Games) requires all in-location jackpot games to be conducted in accordance with the requirements of the Video Gaming (General) Subpart [11 Ill. Adm. Code 1800] and with approval by the Administrator. New Section 1800.2020 (Optional Nature of In-location Progressive Games) makes the operation of in-location jackpot games optional on the part of both terminal operators and licensed video gaming locations. New Section 1800.2030 (Procedures Within Licensed Video Gaming Locations) sets forth the procedures by which in-location progressive video gaming play shall take place. Provisions of this section are the following:

All in-location progressive games shall be conducted only within a single video gaming location (subsection (a)). A location conducting in-location jackpot games must designate one or more of its owners or employees to implement the procedures set forth in this Section (subsection (b)).  Upon the winning of a jackpot of $1,200 or more, the video gaming terminal on which the jackpot has been won shall immediately issue a voucher with the date, time, amount won, and identity of the video gaming terminal where the jackpot was won. The voucher shall identify the terminal operator and specify a phone number that a patron can call for payment instructions. The voucher shall not be redeemable at any video gaming redemption kiosk. The designated owner or employee of the licensed video gaming location shall require one of several listed, acceptable forms of identification from the progressive jackpot winner (subsection (c)). The designated owner or employee of the licensed video gaming location shall complete and sign a progressive jackpot form previously provided to the location by the terminal operator. It shall be the duty of a terminal operator that has entered into a use agreement with a location where progressive jackpot play takes place to provide these forms in to the location in advance. There shall be three copies of this form, with one copy given to the winner, one copy retained by the location, and one copy provided to the terminal operator. Information on the form will include the name and address of the winning player, identification number from an authorized form of identification as established by subsection (c), date and time the progressive jackpot was won, amount of the progressive jackpot, license number and location of the video gaming terminal on which the progressive jackpot was won, and video gaming ticket number for which payment is made (subsection (d)). In no event shall the winning jackpot, or any portion thereof, be expressed as credits available for play on a video gaming terminal (subsection (e)). All completed progressive jackpot forms, payment receipts or confirmations, progressive gaming tickets, and other related documentation shall be retained for audit and inspection by the Board or its agents for a time period as prescribed by the Administrator (subsection (f)). New Section 1800.2040 (Payments of Progressive Jackpot Amount) requires, in conformity with the underlying statute, that payment of progressive jackpots shall be made within three days of the date of winning. After retaining all applicable withholdings as specified in Section 1800.2050, a terminal operator shall pay the remainder of the progressive jackpot amount to the progressive jackpot winner. Terminal operators must obtain prior approval from the Administrator for all methods of payment.

New Section 1800.2050 (Deductions from Progressive Jackpots) provides the following:  Any terminal operator planning to operate in-location progressive games shall first obtain from the Illinois Department of Healthcare and Family Services (HFS) all necessary permissions and certifications to conduct past-due child support withholdings in accordance with 89 Ill. Adm. Code 160.70 (q), including credentials to access the Gaming Intercept Program Certification System (GIPCS) (subsection (a)). After being presented with a progressive jackpot voucher and a completed progressive jackpot form, the terminal operator shall: 1) confirm that the individual seeking to claim the jackpot winnings is the same individual whose identifying information appears on the progressive jackpot form; 2) complete all necessary tax forms; 3) access the GIPCS system to determine if the winner has a past-due child support obligation; and 4) withhold any past-due child support and remit the required amount to the Division of Child Support Services within HFS in a manner prescribed by HFS (subsection (b)). For the withholding of past-due child support, the terminal operator shall be entitled to an administrative fee of four percent of the total amount of cash winnings paid to the jackpot winner, up to a maximum of $150 (subsection (c)). Only mandatory taxes shall be withheld from a progressive jackpot before the amount due to the Division of Child Support Services and the administrative fee. Voluntary taxes shall be deducted only after mandatory taxes, past-due child support and the administrative fee are withheld. In no event shall the total amount withheld exceed the amount of the progressive jackpot (subsection (d)). If there is withholding for past-due child support, the terminal operator shall provide the progressive jackpot winner with a Notice of Gaming Intercept provided by HFS (subsection (e)). A terminal operator that complies with this Section 1800.2050 shall not be further liable to the progressive jackpot winner or any other individual or entity, other than the Board, for past-due child support amounts or withheld taxes (subsection (f)).

New Section 1800.2060 (Progressive Jackpot Coordinator) provides the following Each terminal operator offering in-play progressive games shall employ a progressive jackpot coordinator and shall disclose this individual to the Administrator (subsection (a)). The progressive jackpot coordinator shall be a person with significant influence or control, as defined in Section 1800.110 (subsection (b)). No terminal operator may offer in-play progressive games until its progressive jackpot coordinator has been disclosed to, and approved by, the Administrator (subsection (c). The progressive jackpot coordinator will facilitate all aspects of the progressive jackpots, including but not limited to: (1) coordinating necessary approvals and credentials; (2) creating and distributing the progressive jackpot form; (3) coordinating with progressive jackpot winners to pay out the jackpot; and (4) ensuring that all payments and withholdings comply with applicable law, including this new subpart (subsection (d)). No provision of the In-Location Progressive Games Subpart (11 Ill. Adm. Code 1800.2010 through 1800.2060) shall be construed to render a terminal operator not subject to discipline for the actions or inactions of a progressive jackpot coordinator whom the terminal operator has employed or who acts at the terminal operator's behest (subsection (e)). 

For questions or comments contact Agostino Lorenzini General Counsel Illinois Gaming Board 160 North LaSalle Street Chicago IL 60601 fax: 312/814-7253 Agostino.lorenzini@igb.illinois.gov.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility.    This rule is open for public comment until December 16, 2019. 

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The Department of Revenue proposed amendments which will impact businesses engaged in manufacturing or graphic arts production:

DOR proposed amendments to Retailers’ Occupation Tax (86 IAC 130; 43 Ill Reg 13190), implementing various Public Acts. The rulemaking expands the sales tax exemption for manufacturing machinery and equipment to include items purchased for graphic arts production; updates and explains what items are considered “machinery and equipment” exempt from tax; and establishes a sales tax exemption for items used in the construction and operation of data centers that have been granted certificates of exemption by the Department of Commerce and Economic Opportunity.

Bottom Line:  Section 130.330 is amended in response to legislation that expanded the Manufacturing Machinery and Equipment exemption to include production related tangible personal property purchased on or after July 1, 2019, that is primarily used or consumed in a production related process by a manufacturer in a manufacturing facility in which a manufacturing process takes place or by a graphic arts producer in graphic arts production. PA 101-9, effective July 1, 2019. The definition of production related tangible personal property includes supplies and consumables used in a manufacturing facility including fuels, coolants, solvents, oils, lubricants and adhesives, hand tools, protective apparel, and fire and safety equipment primarily used or consumed within a manufacturing facility in a production related process. Production related tangible personal property also includes all tangible personal property that is primarily used in research and development regardless of use within or without a manufacturing or graphic arts production facility. The new section, Section 130.1957, implements PA 101-31, codified at 35 ILCS 120/2-5(44). PA 101-31 creates an exemption from Retailers' Occupation Tax for data centers that receive a certificate of exemption from the Department of Commerce and Economic Opportunity ("DCEO"). Qualified tangible personal property used in the construction and operation of a data center that has been granted a certificate of exemption by DCEO, whether the tangible personal property is purchased by the owner, operator, or tenant of the data center or by a contractor of the owner, operator, or tenant, is exempt from Retailers' Occupation Tax. 

In Section 130.330, Manufacturers who purchase production related tangible personal property that is primarily used or consumed in a production related process in a manufacturing facility in which a manufacturing process takes place or by a graphic arts producer in graphic arts production. In Section 130.1957, all businesses making retail sales of qualified tangible personal property are affected.

For questions or comments, you may contact Richard S. Wolters, Associate Counsel Illinois Department of Revenue, Legal Services Office 101 West Jefferson Springfield IL 62794 217/782-2844.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility.  This rule is open for public comment until December 30, 2019. 

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The Department of Revenue proposed amendments which will impact businesses that sell cigarettes anywhere in Illinois, or motor fuel in the Lake and Will counties:

DOR proposed amendments to the Part titled County Motor Fuel Tax (86 IAC 695; 43 Ill Reg 13276) implementing PA 101-32. The rulemaking extends the authority to impose county motor fuel taxes to Lake and Will counties (currently, DuPage, Kane, and McHenry counties). The allowable county fuel tax rate is raised from a maximum of 4 cents per gallon to between 4 and 8 cents per gallon, with automatic annual increases tied to inflation. DOR also proposed an amendment to Cigarette Use Tax Act (86 IAC 450; 43 Ill Reg 13266) implementing PA 101-31, which raised the State cigarette tax by $1 per pack.

Bottom Line:  This rulemaking implements the changes to the County Motor Fuel Tax Law [55 ILCS 5/5-1035.1] made by PA 101-32. PA 101-32 expands the authority to impose a tax on persons engaged in the county in the business of selling motor fuel to include Lake and Will Counties (in addition to the existing counties of DuPage, Kane, and McHenry). It also provides that the initial rate imposed may not be less than 4 cents per gallon (previously capped at 4 cents per gallon) and may not exceed 8 cents per gallon. Finally, PA 101-32 provides for automatic annual increases in the tax rate.  

For questions or comments, contact Samuel Moore, Illinois Department of Revenue Legal Services Office 101 West Jefferson Springfield IL 62794 217/782-2844.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility.  This rule is open for public comment until December 30, 2019. 

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The Department of Financial and Professional Regulation proposed amendments which will impact wholesale drug distributors and third-party logistics providers:

The DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION proposed amendments to the Part titled Wholesale Drug Distribution Licensing Act (68 IAC 1510; 43 Ill Reg 13160) implementing Public Act 101-420. The Act and this rulemaking extend the licensing, storage, handling and recordkeeping requirements that currently apply to wholesale drug distributors to third-party logistics providers (entities that contract with drug manufacturers to provide or coordinate warehousing, distribution, and other services, without claiming any ownership of the drugs or responsibility for their disposition). Applicants for licensure as third-party logistics providers will be subject to the same liability insurance, bond requirements, license application and annual renewal fees (both $200), and fees for changes of ownership ($200) or changes of name or address ($100) as wholesale distributors.

Bottom Line:  Licensed wholesale drug distributors and applicants, as well as newly eligible third-party logistics providers regulated under the Act may be affected.  This proposed rulemaking implements the statutory change made to Wholesale Drug Distribution Licensing Act in PA 101-420, which creates a license for third-party logistics providers. The changes include the setting forth of licensure requirements for third-party logistics providers, fingerprints and liability insurance requirements, storage and record keeping requirements, and defining change of ownership. This rulemaking also includes technical changes to maintain consistency with Department Acts.  Each applicant for license as a wholesale drug distributor or a third-party logistics provider shall maintain minimum liability insurance for the duration of the license. Additionally, each wholesale drug distributor and third-party logistics provider shall submit a bond or other equivalent means of security in the amount of one hundred thousand dollars ($100,000.00).

For questions or comments, contact Department of Financial and Professional Regulation Attention: Craig Cellini, 320 West Washington, 2nd Floor Springfield IL 62786 217/785-0813 fax: 217/557-4451, or email Craig.Cellini@Illinois.gov.  You may also click here to submit comments to the Department of Commerce Office of Regulatory Flexibility. This rule is open for public comment until December 30, 2019.