November 30, 2021

Volume XI, Number 334

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November 29, 2021

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Senate Bill 1573 Would Repeal Illinois Self-Procurement Tax

On February 20, 2015, Sen. William Haine introduced Senate Bill 1573, which would repeal the self-procurement tax that came into effect January 1, 2015.  As we have previously covered in detail, at the end of its 2014 regular legislative session,the Illinois General Assembly enacted a multimillion dollar tax on Illinois companies using captive insurance arrangements (P.A. 98-978). The bill had been passed by the General Assembly under the guise of technical corrections to the insurance code and went widely unnoticed throughout the legislative process. Governor Quinn signed it into law, and efforts to repeal the law during the veto session were unavailing. The new tax is currently in effect and applies to policies effective on or after January 1, 2015. Reports, due 90 days after the effective date of coverage, will begin coming due at the beginning of April, with taxes and fees due 30 days after reports are filed.

Now, with a new General Assembly and a new governor, efforts again are underway to repeal the tax. Senate Bill 1573 would reverse the changes made last year by Public Act 98-978 by repealing the self-procurement tax.  In addition, the Bill restores a broader industrial insured exception to permit more Illinois-headquartered businesses that manage risks using captive insurance arrangements to transact non-admitting insurance without being subject to Illinois premium tax. The repeal would be effective upon enactment.  As currently drafted, the Bill does not appear to provide relief for policies subject to tax before the effective date of the repeal.

© 2021 McDermott Will & EmeryNational Law Review, Volume V, Number 64
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About this Author

In 1934 E.H. McDermott opened a law practice that focused exclusively on taxes. As chief counsel to the Joint Committee on Taxation of the United States Congress, McDermott observed firsthand how the rapidly expanding federal tax laws were affecting businesses and individuals. He recognized the need for a law firm to assist people and their businesses to understand and comply with their changing tax obligations.

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