Week in Insights: Ending Illinois Tax Tribunal Would Be Misguided

Illinois appears set to eliminate its Independent Tax Tribunal, a move that would have access-to-justice consequences for any taxpayers challenging state assessments.

The proposal to roll tribunal responsibilities into the Department of Revenue leans on efficiency and marginal cost savings as upsides. But it misses the point—these check systems aim to impose procedural distance between assessment and oversight, not necessarily to further efficiency.

Removing that separation would simplify administration, but it also would reduce the checks that separation was designed to provide. This would result in a net increase in the cost of challenging the state on assessments.

State tax administration in recent times has trended toward greater independence, not less. Illinois is among states such as New York and California that have built systems that separate tax collection from adjudication. Now it appears to be moving in the opposite direction, for what would amount to negligible savings.

Without an independent tribunal to bring claims, many taxpayers would either need to pay their disputed liabilities upfront before getting meaningful judicial review or just accept the Department of Revenue’s review of their own assessment.

That wouldn’t be a neutral shift. Large corporations could absorb these costs or the cost to litigate, but some smaller businesses and individual taxpayers wouldn’t be so lucky. This would mean fewer challenges overall, more settlements by those least able to pay, and a tax system where access to justice turns less on the merits of a case than on one’s ability to bankroll costly litigation.

—Andrew Leahey

Independent state tax tribunals aim to impose procedural distance between assessment and oversight, not necessarily to further efficiency.

Photographer: Al Drago/Bloomberg via Getty Images

Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined Utah’s proposed porn and ad taxes, the value-added tax challenges of usage-based billing, and more.

The Exchange—It’s where great ideas on tax and accounting intersect.

Insights

Alaska Debates First State Sales Tax to Plug Big Budget Hole

With much of its territory unavailable for traditional development and taxation, Alaska is now considering a statewide sales tax to address a $1.5 billion deficit.

Middle East Conflict Means Multiple Challenges for Tax Teams

The ongoing conflict in the Middle East region has affected international businesses, with higher energy costs, supply-chain disruptions, and staff-related challenges arising. Tax teams need to take immediate steps to minimize the impact.

Utah Porn and Ad Taxes Would Boost Litigation More Than Revenue

If enacted, Utah’s proposed taxes on advertising and pornography would face serious legal challenges relating to the Internet Tax Freedom Act and the First Amendment.

Downstream Tariff Refund Suits Face Hurdles From Antitrust Law

The US Supreme Court’s recent tariff ruling created a potential opportunity for importers of record to recover unlawfully imposed tariffs, but it didn’t create a right of recovery for downstream purchasers.

When Billing Systems and VAT Collide, Tax Teams Face Challenges

The shift to usage-based billing moves value-added tax risk into places tax teams don’t traditionally control. They need to focus attention on operational questions.

Businesses Need Sound Tax Policy to Attract and Keep H-1B Workers

If the US Supreme Court rules for the plaintiffs in Chamber of Commerce v. DHS, fees may return to the status quo, but foreign-born workers may not. Businesses that need foreign-born talent must think outside the box to develop a stable policy that can endure and attract these workers.

Moving IP Back to the US Involves More Than Saving Tax Dollars

Companies looking to transfer existing IP from offshore affiliates to US entities, or to place all newly created IP in US affiliates, should know that each choice poses tax and legal challenges.

Five Questions With EisnerAmper Tax Partner Dean Peterson

Bloomberg Tax Insights & Commentary is featuring a recurring questionnaire of prominent tax professionals who are willing to share their thoughts about their work and the practice of tax these days. This week’s answers are from Dean Peterson, partner-in-charge of EisnerAmper’s international tax practice.

Technically Speaking

Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax

New York City Mayor Zohran Mamdani’s reported plan to slash the state’s estate tax exemption threshold to $750,000 isn’t wrong in concept, but its structure could hit many middle-class homeowners and small businesses, Andrew Leahey says in his latest Technically Speaking column.

“A policy solution that treats a Brooklyn brownstone and a nine-figure financial portfolio as equally problematic is a tough sell politically,” Andrew writes, adding that the city should instead set the exemption threshold in the low millions, while eliminating the estate tax cliff that distorts behavior. Read More

News Roundup

Whistleblower Targets Tax Shelter Promoting Do-Good Technology

A whistleblower is urging federal authorities to investigate a tax shelter that allegedly allows wealthy Americans to claim large charitable tax deductions after donating digital technology to small 501(c)(3) organizations. The company promoting the strategy told the Senate Finance Committee it’s done nothing wrong.

There’s Never Been a Better Time to Play the Tax Shelter Game

Tax shelter promoters, unlike tax preparers, aren’t named on their customers’ tax returns. And whether the tax-cutting strategy they recommend is allowable can be an open question until the IRS weighs in, which can take years, even when the agency is at full strength. Today, headcount at the IRS is down roughly 25% since President Donald Trump returned to the White House.

Big Four Firms Embrace AI to Revamp Corporate Service Offerings

The Big Four accounting and consulting firms are looking to stay competitive as artificial intelligence shakes up their industry by pivoting to focus on multi-year contracts meant to reinvent and run corporate back-office suites.

Utah Governor Signs Bill Creating Tax on Targeted Ad Revenue

Utah Gov. Spencer Cox (R) signed a bill (SB 287) Wednesday to impose a new tax on targeted advertising, after enacting a another new tax on pornographic websites and a law to ensure all streaming services are paying the state’s sales tax.