Regulatory Alert


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  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

The Department of Revenue proposed amendments which will impact retailers who sell electronic cigarettes or smoking devices: 

The Department of Revenue proposed amendmentsto the Part titled Tobacco Products Tax Act of 1995 (86 IAC 660; 43 Ill Reg 13687) implementing provisions of Public Act 101-31. The rulemaking adds electronic cigarettes to the list of tobacco products subject to tax. Products included in the definition of electronic cigarettes include vape pens, pipes, hookahs, and any component or part that can be used to construct an electronic nicotine delivery system. Electronic cigarettes do not include products approved by the federal Food and Drug Administration as smoking cessation aids; asthma inhalers; or therapeutic medical cannabis smoking devices sold in licensed dispensaries. Effective 7/1/19, electronic cigarettes are taxed at 15% of the wholesale price and retailers selling electronic cigarettes must obtain a tobacco  VIDEO GAMING retailer or distributor license. Manufacturers of electronic cigarettes must obtain both retailer and distributor licenses if they meet the definition of a distributor. Out of State manufacturers and wholesalers must also register as distributors in Illinois if they have any physical presence in Illinois, such as an office or sales agents operating under their authority. The rulemaking also raises the tax on “little cigars” from 99 to 149 mills per cigar ($1.98 to $2.98 per pack of 20).

Bottom Line:  Sections 660.5 and 660.10 are Amended and Section 660.19 is created to implement changes to Tobacco Products Tax Act of 1995 made by PA 101-31. PA 101-31, effective July 1, 2019, increased the tax on little cigars from 99 mills per little cigar to 149 mills per little cigar ($1.98 per package of 20 little cigars to $2.98 per package of 20 little cigars). All moneys received by the Department under the Tobacco Products Tax Act from the additional 50 mills tax per little cigar are to be paid in accordance with Section 2 of the Cigarette Tax Act. PA 101-31 also defines "electronic cigarettes" and adds electronic cigarettes to the definition of "tobacco products." Beginning July 1, 2019, the tax on electronic cigarettes is at the rate of 15% of the wholesale price of electronic cigarettes sold or otherwise disposed of to consumers. A new Section 660.19 regarding electronic cigarettes is created to respond to changes made by the Act. Because retailers of electronic cigarettes historically have not been subject to regulation, the new section makes it clear that Part 660 applies to distributors and retailers of electronic cigarettes. The new section addresses electronic cigarettes marketed as therapeutic products under the Compassionate Use of Medical Cannabis Program Act, the taxation of components or parts that can be used to build electronic cigarettes, registration of distributors and retailers, and the content of invoices issued by distributors to retailers of electronic cigarettes. 

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 January 15, 2020.   


The Illinois Gaming Board proposed an emergency amendment which will impact licensed video gaming locations: 

The Illinois Gaming Board adopted an emergency amendment to Video Gaming (General) (11 IAC 1800; 43 Ill Reg 13785) effective 11/7/19 for a maximum of 150 days. An identical proposed rulemaking appears in the December 2nd Illinois Register at 43 Ill Reg 13488. These rulemakings implement Public Act 101-318, which requires IGB to implement (within 90 days after the PA’s effective date of 8/9/19) rules for undercover compliance checks of licensed video gaming locations to determine whether they are serving alcoholic beverages to persons under 21 or permitting such persons to play video gaming terminals. “Confidential sources” who are 18 or 19 years of age may be used to carry out these investigations. These sources must be of good character, must undergo background checks and must not use disguises, wear beards or moustaches, or alter their appearance in any way. Confidential sources must sign consent and acknowledgement forms (included in the rule) and carry either a valid State ID issued by the Secretary of State or no identification at all. Fraudulent or fictitious ID cards cannot be used in any compliance operation. All confidential sources shall receive orientation training on use of video gaming terminals and on avoiding actions that constitute entrapment. Confidential sources may be paid in compliance with Illinois State Police policy for payment of undercover agents or sources. Funding sources may set specific conditions for expenditure and accounting of funds that the Board must meet before authorizing any disbursement. Funds used for underage compliance checks must be photocopied in advance and kept with the case file and all expenditures (including payment to the confidential source and purchases made by the confidential source) must be preapproved by the detail supervisor. Prior to each detail, a compliance check operation plan must be submitted to and approved by the Board investigator in charge (operations officer). If possible, compliance checks shall be conducted outside of the peak business hours of a licensed video gaming location. A photograph of the confidential source showing his or her appearance and dress shall be taken on each day/night of the operation. Each detail team shall include at least 4 IGB investigators in addition to the confidential source. Procedures for conducting and recording compliance checks and for responding when a violation is found are also included. The goal of these rules is to have IGB investigators visit all licensed video gaming locations in the State according to an annualized schedule that ensures random visitations.

Bottom Line:  Section 1800.2110 establishes the statutory basis for the emergency rulemaking. Section 1800.2120 sets forth program considerations. It requires Illinois Gaming Board (Board) investigators to undertake underage video gaming compliance checks with the goal of visiting all licensed video gaming locations in the State according to an annualized schedule that ensures random visitations. Board investigators may also initiate unscheduled operations based on a review of citizen reports or police complaints. Board investigators shall use operational plans and checklists. They are directed to seek legal advice, as appropriate, from the Board's general counsel. Section 1800.2130 deals with utilization of the confidential sources in underage compliance checks. These confidential sources shall be of good character, have no criminal history and an acceptable driving record. The confidential sources shall be either 18 or 19 years old. They shall be required to sign and understand Youth Participation and Underage Gambling Participant Acknowledgment forms as these are set forth in the exhibits contained in Sections 1800.EXHIBIT A and 1800.EXHIBIT B. Each confidential source shall be photographed to establish physical appearance. Confidential sources shall be searched and allowed to carry only a State ID issued by the Secretary of State or no identification. They shall agree to make all reasonable efforts to be available for hearings or court proceedings. Confidential sources shall receive orientations on utilization of video gaming terminals and on entrapment issues. All service as a confidential source shall be strictly voluntary. 

Section 1800.2140 authorizes confidential sources to be provided with funds issued in compliance with Illinois State Police policy, as well as other funds made available to the Board by means of State appropriations, State or federal agency grants, or other funding sources. Funding sources may impose specific conditions for expenditure and accounting. To assure proper use of the funds, the rule requires the following: photocopying in advance; no expenditures for food; pre-approval of all covert alcohol purchases; pre-approval of all confidential source payment; pre-approval by a detail supervisor of expenditures by a confidential source; and pre-approval of funds for surveillance. Section 1800.2150 establishes operational procedures for underage compliance checks. Operational plans shall be submitted prior to each detail and approved by the Board investigator serving as operations officer. A photograph shall be taken of the confidential source at the time of the compliance check operation showing his or her appearance and dress. This photograph shall be available for hearing, along with an investigator who took the photo or observed it being taken. Board investigators shall be assigned to each detail team, including a detail supervisor, covert investigator, handler of the confidential source, investigator assigned to identify and confront the employee responsible for monitoring the video gaming terminals, and additional investigators serving in a support capacity. The investigator/handler shall direct the confidential source to enter the licensed video gaming location alone after surveillance positions have been taken by the covert investigators. All attempts by the confidential source to gamble shall be monitored. The confidential source shall sit at a video gaming terminal (VGT) and play a minimum bet per hand for a pre-determined number of plays. After these plays have been completed, the confidential source shall obtain a voucher, exit the location, and give the voucher to investigators. Following the compliance check, reports shall be made by the investigators and confidential source. If a violation is found, an investigator shall identify himself or herself to the on-site manager, explain the nature of the violation, ascertain the identity of the employee monitoring the VGTs, and obtain licensee information, photographs, and all other necessary information. If no violation is found, the location shall be notified of this determination within 30 days. Section 1800.2160 addresses reporting and evidence. A separate report shall be generated for each licensed video gaming location found in violation. The report shall set forth details of the compliance operation and indicate whether it was scheduled or unscheduled. Evidence generated during a compliance check that results in a finding of violation shall be marked, transported, copied and secured at headquarters by the designated investigator.

Section 1800.2170 directs investigators engaging in underage compliance checks to comply with the directive in Section 79 of the VGA [230 ILCS 40/79] that they shall exercise their powers, to the fullest extent practicable, in cooperation with local law enforcement officials. Section 79 of the Video Gaming Act is directly relevant here because it is the local law enforcement officials, either city or county, who have primary responsibility to do underage alcohol checks, whereas Illinois Gaming Board investigators are entrusted with underage video gaming checks. Section 1800.EXHIBIT A contains "Exhibit A", the Youth Participation Consent form. Section 1800.EXHIBIT B contains "Exhibit B", the Underage Gambling Participant Acknowledgement Form.

For questions or to submit comments, contact Agostino Lorenzini General Counsel Illinois Gaming Board 160 North LaSalle Street Chicago IL 60601 fax: 312/814-7253

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 January 15, 2020.   


The Office of the State Treasurer proposed amendments which will impact small business and non-profits with 25 or more employees:     

The OFFICE OF THE STATE TREASURER proposed amendments to Secure Choice Savings Plan (74 IAC 721; 43 Ill Reg 14069) updating the Secure Choice Savings Program to reflect recent legislation and other changes. The rulemaking adds traditional IRAs as an option (in addition to Roth IRAs), expands the definition of an employer eligible to participate in the Program to include client employers of professional employer organizations (PEOs; entities that handle personnel management for one or more workers who perform services for a client employer on an ongoing basis, rather than temporarily), and expands the definition of a qualified retirement plan to include Taft-Hartley plans (multi-employer, defined benefit pension plans). For purposes of the Program, wages paid to employees by a PEO on behalf of a client employer shall be deemed to have been paid by the client employer. PEOs shall annually provide the Treasurer with a list of all Illinois client employers with whom they have contracts; the Secure Choice Account Administrator will contact these clients to facilitate enrollment of their employees. For purposes of determining whether an employer has 25 or more employees (thereby making its employees eligible for automatic Program enrollment) total employee count will be based on employer contribution and wage reports submitted to the Department of Employment Security. Entities reporting at least 25 employees for all four quarters of the calendar year will be deemed to have met the 25-employee threshold; if fewer than 25 employees are reported for any quarter, the entity will not meet this threshold. The Illinois Secure Choice Savings Board shall submit its annual report by January 1 of the year following the fiscal year for which the report is made and shall make the report available on the Program website.

Bottom Line:  Businesses and not-for-profits that participate in Secure Choice will be required to facilitate the payroll deduction in the program for each of their employees but will not have any managerial responsibilities.  This rulemaking updates the existing rule to provide guidance on private employment organizations (PEO's) and include Taft-Hartley plans within the definition of a qualified retirement plan. Additionally, this rulemaking makes technical changes, including adding traditional IRAs as an option under the Secure Choice Program pursuant to Senate Bill 1787, which passed the General Assembly on May 23, 2019. 

For questions or comments contact Sara Meek, Office of the State Treasurer, 219 State House, Springfield, IL 62706, 217/524-0530, 217.524.0530 or email  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 1/20/20.


The Chief Procurement Officer for Higher Education proposed an amendment which will impact small businesses seeking procurement contracts with Illinois public higher education institutions:

The CHIEF PROCUREMENT OFFICER FOR HIGHER EDUCATION proposed an amendment to the Part titled Chief Procurement Officer for Public Institutions of Higher Education Standard Procurement (44 IAC 4; 43 Ill Reg 13841) clarifying the procedure for adjusting the small purchase threshold (below which competitive bidding is not required; currently, $100,000) for inflation. The rulemaking also clarifies procedures for conducting small purchases and determining whether a contract is under the small purchase limit and eliminates a requirement that universities annually submit their small purchase procurement procedures to the CPO-HE for approval.

Bottom Line:  The Chief Procurement Office for Public Institutions of Higher Education relied on 30 ILCS 500/20-20 to compose the rulemaking. This Section authorizes the small purchase maximum to be modified by rule when recommended by the Procurement Policy Board. A copy of the Board's recommendation is available for review with the Chief Procurement Office for Public Institutions of Higher Education at 401 S. Spring, Room 520 Stratton Office Building, Springfield IL 62706. 

For questions or comments contact Ben Bagby, CPO-HE, 401 South Spring Street, 520 Stratton Building, Springfield, IL 62706, 217.720.1555 or email  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 1/20/20. 


The Chief Procurement Officer for the Department of Transportation proposed amendments which will impact small businesses seeking contracts with the Illinois Department of Transportation:

The CHIEF PROCUREMENT OFFICER FOR THE DEPARTMENT OF TRANSPORTATION proposed amendments to the Part titled Chief Procurement Officer for the Department of Transportation – Contract Procurement (44 IAC 6; 43 Ill Reg 14490) implementing recent changes to the Procurement Code. The rulemaking expands the jurisdiction of the CPO-DOT to include procurement of construction support services, defined as all equipment, supplies and services necessary to the operation of a construction agency’s construction program, but not including construction related services such as design, layout, inspection, etc. (Currently, the Part applies to construction and construction-related services.)  Conditions for the use of sole source and sole economically feasible source purchasing, and the procedures for determining that such purchases can be made, are added. Definitions and provisions are added for piggyback contracts (cooperative purchasing in which the State accepts the pricing and terms of a contract entered into by another organization, agency or department; another state or its agencies; or the federal government) and no-cost contracts (in which the vendor does not pay or make payments to the State, but charges another entity the State contracted rate for goods or services). A small purchase threshold of $100,000 (below which competitive bidding is not required), adjusted annually for inflation, is established for construction purchases, individual purchases from any one source, and professional and artistic services contracted for a nonrenewable term of no more than 1 year. The notice period for execution of contracts is shortened from 30 to 14 days. Expenditures that exceed the contract price by more than $100,000 (currently, $30,000) require written approval or disapproval from DOT and contract change orders in excess of $100,000 (currently $30,000) must be published in the Procurement Bulletin. Procurement files also must be readily available for review or disclosure under the Freedom of Information Act but must not include trade secrets or other competitively sensitive or proprietary information. Grounds for rejecting a bid during the procurement process now include failure to submit a Disadvantaged Business Enterprise utilization plan if the provisions of the procurement or project require such a plan. Other provisions of this rulemaking address requests for information (RFI), joint purchasing with other governmental entities, electronic systems for accepting and opening bids, goals for small business contracts, and financial disclosure requirements for multiyear contracts. Finally, provisions related to the defunct Target Market Program are repealed.

Bottom Line: The Chief Procurement Officer (CPO) for the Department of Transportation (Department) proposes to amend this Part to incorporate changes to the Procurement Code (Code) from the 100th General Assembly. In addition to those changes, the CPO proposes to add rules to govern additional methods of procurement and source selection such as Joint Purchasing and Piggyback contracts. Other amendments seek to provide clarity and to provide consistency with the Code. This rulemaking also repeals all Sections currently codified under Subpart K because the Target Market Program statute has expired. 

For questions or comments, you may contact Mr. Bill Grunloh, Chief Procurement Officer, Chief Procurement Office Illinois Department of Transportation, 2300 S. Dirksen Parkway, Springfield IL 62764, 217/558-5434.  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 February 3, 2020.  


The Illinois Liquor Control Commission proposed an amendment which will impact manufacturers and distributors of alcoholic liquors:   

The ILLINOIS LIQUOR CONTROL COMMISSION proposed an amendment to the Part titled The Illinois Liquor Control Commission (11 IAC 100; 43 Ill Reg 14571) clarifying how manufacturers or distributors of alcoholic liquors may offer quantity discounting or cooperative purchasing agreements to retailers without violating federal and State laws prohibiting them from offering items “of value” to retailers. Quantity discounting is permitted if its primary purpose is to increase product sales and merchandising to retailers; if it is applied as a price reduction at the time of sale, or as a rebate or credit following the sale; and if the sales incentives are temporary and offered to all similarly situated retailers. The rulemaking also lists criteria for cooperative purchasing agreements and prohibits any party to such an agreement from participating in more than one liquor-related cooperative purchasing agreement. Designated agents who place orders on behalf of participants in a cooperative purchasing agreement must not be compensated directly or indirectly merely for making purchases (though they may be compensated for actual costs incurred, or as a regular employee of one of the parties to the agreement) and cannot have any interest in a manufacturer or distributor. Failure to comply with these criteria will render an agreement void. Definitions of manufacturer, distributor, and retailer for the purposes of applying these rules are added. Recordkeeping requirements for quantity discounts and cooperative purchasing agreements are also included.

Bottom Line:  This rulemaking amends the regulations that implement provisions of the Liquor Control Act of 1934 ("Act") governing "of value" transactions between retailers and manufacturers, distributors and importing distributors. The term, "of value," originates in the Federal Tied House Laws, 27 U.S.C. 205 (a), (b) and (c). The objective of these laws is to provide a clear framework for permissible and prohibited interactions between retailers and manufacturers and distributors in order to promote a competitive alcohol market. The Illinois General Assembly has enacted its own "tied-house" provisions at 235 ILCS 5/6-5, 5/6-6 and 5/6-6.3. This rulemaking implements those provisions. The rules provide that except as allowed by the Act, it is unlawful for any licensed manufacturer, non-resident dealer, distributor, importing distributor or foreign importer ("Industry Member") to furnish, give, or lend money or anything of value. This amendment amends the Section regarding quantity discounting to ensure retail licensees are treated fairly in the purchase of alcoholic product from distributors and manufacturers. Additionally, this amendment makes certain grammatical and style changes, those changes are not substantive changes to the rule. 

For questions or to submit comments, contact Pamela Paziotopoulos, General Counsel, Illinois Liquor Control Commission, 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. This rule is open for public comment until February 3, 2020.


The Department of Public Health proposed amendments which will impact nursing homes providing skilled or intermediate care:          

The DEPARTMENT OF PUBLIC HEALTH proposed amendments to the Part titled Skilled Nursing and Intermediate Care Facilities Code (77 IAC 300; 44 Ill Reg 435) implementing provisions of Public Acts 101-10 and 101-217. The rulemaking establishes oversight procedures and penalties for nursing homes that violate minimum staffing requirements or that fail to obtain informed consent from residents prior to administering psychotropic medications. Staffing Requirements The rulemaking clarifies current DPH rules requiring that at least 10% of nursing and personal care time be provided by registered professional nurses (RNs) and another 15% of nursing/personal care time be provided by either RNs or Licensed Practical Nurses, for a total of 25% of care time that must be provided by licensed nurses. The remaining 75% may be provided by other direct care staff, including certified nurse assistants; psychiatric or physical rehabilitation aides; and licensed physical, occupational, speech or respiratory therapists. Minimum staffing ratios are 3.8 hours of nursing/personal care per day for each skilled care resident and 2.5 hours of nursing/personal care per day for each intermediate care resident. The services that constitute skilled care (e.g., administering medication by injection or intravenously) and intermediate care (e.g., administering routine oral medication) are listed. Time spent in meals or breaks, scheduled training, or unpaid clinical nurse aide training shall not be included in staffing ratio calculations. Written work schedules shall be posted at least 10 days in advance and kept on file in paper or electronic format for at least 2 years after the scheduled work period. Procedures for facilities to submit quarterly compliance review data to DPH are outlined. When conducting inspections, surveys and evaluations, DPH will calculate a facility’s direct care staffing based on the finalized working schedule and daily resident census reports for the 2 weeks preceding the first day of the inspection. Facilities that do not meet minimum staffing ratios must post notices on their websites and in prominent locations within the facility (including all public entrances, next to the registration desk, and inside the main lobby). RN Staffing Waivers A facility that has been cited for failure to meet RN staffing requirements may obtain a waiver from those requirements if it demonstrates that it has been unable to hire a sufficient number of RNs, that it has made diligent efforts to recruit RNs (including by offering competitive wages) and that the waiver will not endanger resident health or safety. Facilities with RN staffing waivers must have a physician or RN immediately available by telephone when minimum RN staffing is not on site. Waivers will be reviewed on a quarterly basis and the facility must notify all residents, their guardians or representatives, applicants/ prospective residents, and the Office of the State Long Term Care Ombudsman of the waiver. Facilities that have had major violations or deficiencies within the previous 3 years are not eligible for RN staffing waivers. Penalties During the initial implementation period for this rulemaking (7/1/20 through 9/30/20) no monetary penalties for noncompliance with staffing requirements will be imposed, but DPH will issue written notices of noncompliance and facilities must submit a plan of correction for deficiencies. Monetary penalties will be imposed beginning no later than 1/1/21. For a first violation, the penalty shall be 125% of the cost of wages and benefits for the missing staffing hours, increasing to 150% of wage/benefit costs for the second violation and 200% of wage/benefit costs for third and subsequent violations. Penalties may be adjusted if the deviation from staffing requirements was 10% or less and may be waived entirely if unforeseen circumstances prevented scheduled staff from reporting to work (this exception may be applied no more than 6 days in each quarter). Psychotropic Medications With regard to psychotropic medications, the rulemaking requires the process of securing informed consent in nonemergency situations to include a private discussion of the medication’s risks and benefits, the most likely consequences of taking or not taking the medication, and possible alternatives to the proposed medication, among the resident, the resident’s representative/decision maker and at least one of the following: the resident’s physician; a registered pharmacist other than the dispensing pharmacist for the facility in which the resident lives; or a licensed nurse. Information addressed in this discussion must be given to the resident or decision maker in writing, with provisions in that document for the resident/decision maker to either give or refuse informed consent. The resident/decision maker shall also be advised that informed consent may be withdrawn at any time and that the resident may refuse to take the medication at any time even if informed consent has been given. In an emergency, the facility shall document the situation in detail and present this documentation to the resident and his or her decision maker. Informed consent must be renewed when the type or dosage of the medication changes, when the resident’s care plan changes in a manner that affects the medication prescription, or at least once a year. Dosages in excess of the maximums recommended in pharmacy reference guides shall not be proposed or administered unless the prescriber can state a justifying reason for doing so; dosages in excess of the recommended maximums shall be reviewed on a weekly basis. A resident who refuses to take psychotropic medication cannot be discharged from a facility on that basis unless the facility demonstrates that this refusal places the health and safety of that resident, other residents, facility staff, or visitors at risk. In such cases, documentation of the alleged risk must be presented to the resident/decision maker, DPH and to the Office of the State Long Term Care Ombudsman. No later than 4/10/21, all nursing facilities must implement written procedures for compliance with these informed consent provisions. Violations of any individual’s informed consent that last 7 days or more will carry fines of up to $1,100 per occurrence and, if repeated, reduce the facility’s license to a conditional license. Additionally, any facility that violates informed consent rules will be required to obtain the signatures of two licensed health care professionals on every informed consent form for psychotropic medication.

Bottom Line:  This rulemaking implements amendments to the Nursing Home Care Act contained in PA 101-10. The amendments provide for increased Department oversight, including increased penalties, for facilities licensed under the Act and 77 Ill. Adm. Code 300 in obtaining informed consent from residents prior to administering psychotropic drugs. PA 101-10 and this rulemaking also provide for increased oversight and fines for violations of the minimum staffing ratios in the Act, and for signage in facilities found in violation of the staffing requirements. This rulemaking also implements PA 100-217, which provides for waivers from minimum staffing requirements under certain conditions. The economic effect of this proposed rulemaking is unknown. Therefore, the Department requests any information that would assist in calculating this effect. The Department anticipates adoption of this rulemaking approximately six to nine months after publication of the Notice in the Illinois Register.  Facilities will be required to maintain accurate records of informed consent and of minimum staffing requirements, including quarterly reports to the Department.

For questions or comments, you may contact Erin Conley, DPH, 535 W. Jefferson St., 5th Fl., Springfield IL 62761, 2 1 7 / 7 8 2 - 2 0 4 3,  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 2/24/20.


The Department of Revenue proposed amendments which will impact vehicle dealers that accept trade-ins, and their customers:

The DEPARTMENT OF REVENUE adopted emergency amendments to Retailers’ Occupation Tax (86 IAC 130; 44 Ill Reg 552) and Use Tax (86 IAC 150; 44 Ill Reg 577) both effective 12/27/19 for a maximum of 150 days. Identical proposed rules appear in this week’s Illinois Register at 44 Ill Reg 485 and 487. Both of these emergency and proposed rules implement Public Act 101-31 by limiting the amount of trade-in credit on first division motor vehicles (those carrying 10 or fewer passengers) that can be deducted from the taxable selling price of the sold vehicle to $10,000 effective 1/1/20. Amendments to Part 130 (which concerns the retailer’s tax liability; Part 150 addresses use tax charged to the buyer) additionally clarify that sport utility vehicles (SUVs), all-terrain vehicles (ATVs), off-highway motorcycles, and any motor vehicle that was designed as a passenger vehicle for 10 or fewer passengers, regardless of its current use (e.g., a minivan with the seats removed) are classified as first division motor vehicles. Second division motor vehicles, which are not subject to the trade-in credit limitation, include any vehicle designed to carry more than 10 passengers; vehicles designed or used for living quarters, such as RVs or campers; school buses; ambulances, medical carriers, and hearses; and any vehicle designed to pull or carry property, freight, or cargo (e.g., pickup trucks and other open-bed vehicles, panel/cargo vans). The trade-in credit limitation applies only when one first division vehicle is traded in for another first division vehicle. A credit of more than $10,000 can be applied, but only the first $10,000 can be deducted from the selling price that determines State sales tax. Examples of when the credit limitation does and does not apply, and how it applies to multiple or split trade-in transactions, are included in Part 130.

Bottom Line:  This rulemaking implements the provisions of PA 101-31 that, effective with sales made on or after January 1, 2020, imposes a $10,000 limit on the credit allowed to reduce the taxable selling price when a first division motor vehicle is traded in on the purchase of another motor vehicle.  The $10,000 trade-in credit limit for the trade-in of first division motor vehicles imposed by PA 101-31 and implemented by this rulemaking will apply to any automobile dealerships that is a small business. It will not have a direct impact on small municipalities or not-for-profit corporations.  This rulemaking will require only minor additional reporting, bookkeeping or other procedures related to tracking the trade-in of first division motor vehicles whose value exceeds $10,000 by automobile dealerships. 

For questions or to submit comments, contact Samuel J. Moore Illinois Department of Revenue Legal Services Office 101 West Jefferson Springfield IL 62794 or call 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 2/24/2020.