The Illinois Senate has passed SB 1719, which would impose a 20 percent "privilege tax" on fees earned by partnerships and S corporations engaged in the business of conducting "investment management services."
The tax would be imposed on "fees calculated by reference to the performance of the investment portfolio" rather than on the performance from "the investment itself" or "fees calculated by reference to the total assets under management."
While the text of the bill is not entirely clear, it appears to exempt from the 20 percent tax certain partners or shareholders of businesses primarily engaged in real estate investment. If passed, the bill would take effect on July 1, 2017. See the full text of the bill as passed by the Senate.
SB 1719 was introduced in the Senate on February 9, 2017. After passage in the Senate on May 23, 2017, the bill was sent to the Illinois House of Representatives for debate, amendment and a vote. The deadline for final action in the House is today, May 31, 2017. Click here to see the current status of the bill and any amendments.
If the bill passes in both chambers of the General Assembly, it will be referred to Governor Bruce Rauner for his signature or veto. If Governor Rauner vetoes the bill, the veto can only be overridden by a two-thirds vote in both chambers of the General Assembly.
We will continue to monitor the status of SB 1719 (and the corollary House bill, HB 3393) and provide updates as they become available. Opponents of the bill include the Illinois Department of Revenue, which is a strong indicator that Governor Rauner would be likely to veto any bill that passes in both chambers of the General Assembly.