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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) 785-8020. 

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

 

 

The following proposed amendments will impact businesses interested in contracting with public institutions of higher education:                      

 

The Chief Procurement Officer for Public Institutions of Higher Education (CPO)  proposed amendments to the Part titled Chief Procurement Officer for Public Institutions of Higher Education Standard Procurement (44 IAC 4; 39 Ill Reg 8481) that implement two recent Public Acts amending the Illinois Procurement Code. The rulemaking increases the threshold for reporting subcontractor activity from $25,000 to $50,000; prescribes electronic signature protocols for vendors; revises notice and hearing procedures for sole source contracts; establishes the CPO as the publisher of the Illinois Procurement Bulletin for higher education; and prescribes policies on a vendor web portal, among other measures. Except for records subject to attorney-client privilege, the CPO may access any records to review whether a contract or purchase is exempt under the Procurement Code.  Two additional exemptions from the Code applicable to higher education are added:  procurements for placement of students in externships, medical residencies, etc., and contracts for programming and broadcast license rights for university operated radio and television stations. Expedited or abbreviated procurement practices may be established by the CPO for medical, dental or veterinary teaching facilities. The Illinois Mathematics and Science Academy shall procure goods and services through the CPO.  Notice of renegotiated contracts and change orders for more than $10,000 or for an extension of more than 30 days shall be published in the Procurement Bulletin. All bids/offers shall be date and time-stamped, with no information given by university personnel other than confirmation of receipt of a bid or offer, except as otherwise permitted by the State Procurement Officer (SPO).  New procedures governing electronic or fax submissions and communications are prescribed (e.g., responses must be submitted to a secure electronic lock box, signatures must be a scanned original signature or a digital signature using an approved security process).  Evaluation committees reviewing proposals shall be determined by the university, but can be removed by a SPO for failure to comply with instructions or to ensure the integrity of the procurement. SPOs have the right to attend evaluation committee meetings. The CPO may establish policies and procedures regarding the use of the small purchase method of source selection, such as to promote small business, diversity and transparency. New contract areas that may employ sole source procurement include items for an existing franchise agreement, items required for research where no other source is able to meet the need procurement need, and new latest edition textbooks that are available only from a publisher in classroom quantities. For grant-funded research procurements, a university may directly negotiate with a vendor when the conditions of the grant making using one of the statutory source selection methods impractical (e.g., grant agreement compliance deadlines). New provisions regarding change orders are added: a written determination must be filed when a change order changes the contract amount by more than $10,000 or 30 or more days’ duration; shall be published in the Procurement Bulletin; and total contract terms are limited to 10 years, among other changes.  Revised policies are proposed for various procurement preferences, such as: contracting with persons with disabilities; biodiesel and hybrid fuel purchasing; small business set-aside contract thresholds; and service-disabled veteran contracting. New statutory provisions are added   concerning procurement ethics and procurement communication reporting. This rulemaking will affect small businesses. Readers are advised to examine the rule in detail, as numerous changes are proposed that are not detailed in this summary. 

 

 

Bottom Line:  In PA 97-895 and PA 98-1076, the Illinois Procurement Code was amended, following up on and clarifying issues from PA 96-795, which transferred oversight for procurement to independent Chief Procurement Officers appointed by the Executive Ethics Commission and confirmed by the Senate. The statute further established independent State Purchasing Officers and Procurement Compliance Monitors.  The proposed amendments implement the changes of PA 96-795 and PA 98-1076 for the Chief Procurement Office for Public Institutions of Higher Education, further defining terms, the structure and procurement authority oversight of the CPO-HE and SPOs, and providing direction to universities on procurement matters. The proposed amendments allow for CPO-HE access to records to determine if a contract or expenditure is subject to the provisions of the Procurement Code and provide for exemption from the Illinois Procurement Code for certain contracts entered into by the University of Illinois and Southern Illinois University for certain supplies and services. The amendments increase from $25,000 to $50,000 the disclosure requirements of subcontractors and clarify vendors' responsibilities when there is a change of subcontractor. The amendments:  provide direction on publication requirements for renegotiated contracts and change orders; provide instruction on how to receive bids and offers in order to maintain confidentiality; specify the requirements for evaluation committees; specify what discussion may occur with apparent awardees prior to notice of award; provide guidance on the use of contracts with qualified not-for-profit agencies for person with severe disabilities; and allow for the use of electronic signatures by vendors. The amendments:  clarify notice and hearing requirements for sole source contracts and for alleged conflict of interests; clarify an SPO's obligation to approve (and not sign) contracts by universities; provide for the CPO-HE to be responsible for and publish the Illinois Procurement Bulletin/Chief Procurement Officer for Institutions of Public Higher Education; provide guidance on the establishment and use of a vendor portal; implement publication requirements for awards to other than the low bidder; and clarify that procurement files shall not include trade secrets or other sensitive, confidential or proprietary information. The amendments: define criteria for contracts with Illinois small businesses; provide for the CPO-HE to verify a business entity is in compliance with requirements to register with the State Board of Elections; and allow opportunity for contractors to terminate subcontractors who provide false certifications. The amendments: clarify when vendors may be prohibited bidders and contractors; specify when state employees are required to report conversations with potential vendors; and provide due process when suspected prohibited political contributions are made by vendors.    Businesses interested in contracting with the State will be required to meet financial disclosure requirements and to annually recertify compliance documents.  Businesses having contracts or proposing to do business with the State of Illinois will be required to provide conflict of interest disclosures, financial interest disclosures and sign certifications. Businesses may be required to obtain a Department of Human Rights Number, be authorized to do business in the State of Illinois and register with the State Board of Elections. Requirements for contract execution prior to when deliverables may begin will also impact these organizations.  For questions or to submit comments, contact Shirley Webb, Deputy Chief Procurement Officer, at Shirley.J.Webb@Illinois.gov, or call (217) 558-2247.  Click here to submit comments.

 

 

 

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The Department of Revenue proposed amendments to Liquor Control Act which will impact businesses that sell or produce alcoholic beverages or spirits:

 

 

 

The Department of Revenue proposed amendments to Liquor Control Act (86 IAC 420; 39 Ill. Reg. 8879) implementing several Public Acts.  The rulemaking updates tax rates on wine, beer, cider and other alcoholic spirits to reflect tax increases enacted on 9/1/09; requires out-of-state wineries that are licensed to ship wine directly to Illinois residents for personal use to register under the Use Tax Act and collect and pay Illinois use tax on each gallon of wine sold to Illinois residents; and lowers the annual tax liability threshold (from $200,000 to $20,000) t6hat requires a business to make all tax payments to DOR by electronic funds transfer. 

 

 

 

Bottom Line:  Most of the statutes administered by the Department are contained in Chapter 35 of the Illinois Compiled Statutes. The Liquor Control Act is contained in Chapter 235 of the Illinois Compiled Statutes. A new Section 420.1 is added to Part 420 to explain that Part 420 contains the rules and regulations for the administration of the duties vested in the Department by Article VIII of the Liquor Control Act of 1934.  Article I of the Liquor Control Act contains definitions for words used in the Liquor

 

Control Act. A new Section 420.5 is added to Part 420 to incorporate the definitions that are relevant to Article VIII and may be helpful for understanding the rules contained in Part 420.  PA 95-634 amended Article V of the Liquor Control Act by providing for the licensing of wine shippers at 235 ILCS 5/5-1. A winery shipper's license allows a person who is licensed to make wine under the laws of another state to ship wine made by that licensee directly to a resident of Illinois for that resident's personal use and not for resale. An applicant for a winery shipper's license must consent to the jurisdiction of the Department of Revenue concerning the enforcement of the Act and any related laws, rules, and regulations. A winery shipper's licensee must pay to the Department the liquor gallonage tax under Section 8-1 of the Liquor Control Act for all wine that is sold by the licensee and shipped to a person in this State. A licensee who is not otherwise required to register under the Retailers' Occupation Tax Act must register under the Use Tax Act to collect and remit Use Tax to the Department for all gallons of wine that are sold by the licensee and shipped to persons in this State. Section 10 of the Part is amended to add the statutory text.  PA 96-34 and PA 96-38 amended Article VIII of the Liquor Control Act by raising the tax rates on cider, wine, beer and alcoholic spirits, effective September 1, 2009. (See 235 ILCS 5/8-1). Section 10 of the rules is amended to reflect the rate changes.  PA 96-1027 amended the Department of Revenue Law. Beginning October 1, 2010, a company who had an annual tax liability of $20,000 or more was required to make all payments of tax to the Department by electronic funds transfer. Prior to October 1, 2010, the threshold was $200,000. 20 ILCS 2505/2505-210 is cited. Section 80 of the Part is amended to reflect this change.  For questions or comments, contact Richard Wolters at (217) 782-2844 or Richard.Wolters@Illinois.govClick here to submit comments.

 

 

 

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The Department of Revenue proposed an amendment which will impact businesses that sell tobacco products:

 

 

 

The Department of Revenue proposed an amendment to Cigarette Tax Act (86 IAC 440; 39 Ill. Reg 8897) concerning sales of “little cigars”.  The rulemaking allows persons licensed as distributors under the Tobacco Products Tax Act to obtain a parallel license under the Cigarette Tax Act and obtain the necessary tax stamp for selling unstamped packages of little cigars, without having to document their ability to purchase cigarettes directly from at least three major cigarette manufacturers.  The three-manufacturer requirement still applies to persons who wish to stamp and sell unstamped packages of cigarettes. 

 

 

 

Bottom Line:  The Tobacco Products Act of 1995 allows only stamping distributors to possess untaxed little cigars and affix tax stamps to unstamped packages of little cigars containing 20 or 25 little cigars. To qualify as a stamping distributor a person must possess a license under the Cigarette Tax Act or Cigarette Use Tax Act and the Tobacco Products Tax Act. To obtain a license under the Cigarette Tax Act, Section 440.50 requires an applicant to present to the Department satisfactory proof in writing that the applicant will be able to buy cigarettes directly from at least 3 major cigarette manufacturers. The proposed amendment to Section 440.50 will permit a person licensed as a distributor under the Tobacco Products Tax Act to obtain a license under the Cigarette Tax Act in order to qualify as a stamping distributor for the purpose of acquiring and possessing untaxed little cigars and affixing tax stamps to unstamped packages of little cigars containing 20 or 25 little cigars without having to present to the Department satisfactory proof in writing that the applicant will be able to buy cigarettes directly from at least 3 major cigarette manufacturers. When a licensed tobacco distributor possessing a distributor's license under the Cigarette Tax Act subsequently wishes to possess or affix stamps to unstamped packages of cigarettes, the distributor must present the Department with satisfactory proof in writing that he or she will be able to buy cigarettes directly from at least 3 major cigarette manufacturers.  For questions or comments, contact Richard Wolters at (217) 782-2844 or Richard.Wolters@Illinois.govClick here to submit comments.

 

 

 

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The Department of Agriculture proposed amendments which will impact farmers, fertilizer companies and any business which stores or supplies anhydrous ammonia:

 

 

 

The Department of Agriculture proposed amendments to the Part titled Anhydrous Ammonia, Low Pressure Nitrogen Solutions, Equipment, Containers, and Storage Facilities (8 IAC 215; 39 Ill Reg 9065) concerning safety requirements for anhydrous ammonia storage and application equipment and implementing new certification requirements for persons handling anhydrous. The rulemaking extends the part’s applicability to include noncommercial (including on-farm) anhydrous storage and handling systems and requires any person who handles or stores anhydrous in vessels of greater than 3,000 gallons to be    certified competent attendant. Railroad tank cars may no longer be used for anhydrous storage, and permanently mounted tank cars currently in use must be removed from service by 12/1/25.  Container pressure relief devices may not be used more than 5 years beyond their date of manufacture; all facilities must comply with this requirement by 12/1/20. Regulated entities with multiple storage facilities must bring at least 25% of their vessels into compliance with this Part each year, beginning 12/1/16.  The rulemaking adds new definitions and expands the definition of a public assembly (from which storage vessels must maintain a setback of 200 or 400 feet). A certified competent attendant must be on site during operations at any commercial or non-commercial storage facility, and attendants must attend refresher training every 3 years.  A voluntary anhydrous safety training program will be offered for growers producing crops on their own land. Records of all inspections and maintenance on storage vessels must be kept at the facility for at least 5 years.  Other provisions address specifications for new and existing storage vessels, pressure testing and repair criteria, container markings, shutoff valves, portable “nurse tanks”, and other system components. 

 

 

 

Bottom Line:  Revision to the rules to incorporate innovation in safety equipment for storage vessels, inclusion of anhydrous ammonia application equipment, low pressure nitrogen equipment and be consistent with new language proposed for the Compressed Gas Association.  A written record of all inspections and maintenance shall be kept at the facility for a period of 5 years or until sold or removed from service.  Records of the maintenance and inspections shall be kept at the facility for review.  All valves shall be in compliance no later than December 1, 2020.  For questions or to submit comments, contact Susan Baatz, Illinois Department of Agriculture, at (217) 524-6905 or email Susan.Baatz@Illinois.govClick here to submit comments.

 

 

 

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The Department of Revenue proposed amendments which will impact businesses subject to retailers’ occupation tax: 

 

 

 

The Department of Revenue proposed amendments to Retailers’ Occupation Tax (86 IAC 130; 39 Ill Reg 9126) implementing various PAs concerning exemptions from the tax. The rulemaking includes a new process for documenting the building materials exemption and the reporting of incentives in enterprise zones and high impact businesses. It also removes obsolete provisions for the building materials exemption and adds exemptions for building materials used to construct the South Suburban Airport and the Illiana Expressway. The rulemaking clarifies that exemptions for items used or consumed in manufacturing or assembly of goods for wholesale or retail sale, and for repair and replacement parts for machinery used in the manufacturing/assembly process, do not apply to items used or consumed in the generation of electricity or natural gas or the treatment of water. Other amendments provide clearer explanations of existing rules.

 

 

 

Bottom Line:  PA 97-905 makes changes to Section 5k of the Retailers' Occupation Tax Act, the building materials exemption for enterprise zones, and Section 5l, the building materials exemption for High Impact Businesses. PA 98-109 amends Section 2-54, the building materials exemption for River Edge Redevelopment Zones, and further amends Sections 5k and 5l. These changes incorporate a new process for documenting the building materials exemption and require reporting of incentives under the Enterprise Zone program. The new Sections also establish, pursuant to the Department's statutory authority, rules governing the suspension or revocation of licensees who fail to report or who both fail to report and misuse their exemption certificates. PA 98-109 creates a new exemption for building materials used to construct a South Suburban Airport. [35 ILCS 120/1s] A new Section 130.1949 identifies the requirements for obtaining this exemption. PA 96-913 creates a new exemption for building materials to be incorporated into the Illiana expressway. [35 ILCS 120/1q] A new Section 130.1956 identifies the requirements for obtaining this exemption.  PA 98-0583 amends Section 1d of the Retailers' Occupation Tax Act to clarify that the exemption for tangible personal property used or consumed in the process of

 

manufacturing or assembly of tangible personal property for wholesale or retail sale, and repair and replacement parts for that machinery and equipment, does not apply to such property used or consumed in the generation of electricity, the generation or treatment of natural gas, or the treatment of water for wholesale or retail sale. Section 130.1947 reflects this clarification.  The provisions currently contained in Sections 130.1951 and Section 130.1952 relating to tangible personal property used or consumed in the process of manufacturing and assembly and graphics arts production within an enterprise zone have been removed from these Sections and placed in new Sections 130.1946 and 130.1947. The provisions contained in Section 130.1951 relating to tangible personal property used or consumed in the operation of pollution control facilities located within an enterprise zone have been removed from this section and placed in a new Section 130.1948. In addition, provisions of Section 130.1951 that describe the building materials exemption requirements from 1985 through August 6, 2002 are deleted. They no longer apply and serve no useful purpose in the rule (audits would not even involve these time periods). These changes will make the rule much shorter and more navigable. In addition, the Section of the rules governing "Dentists" (130.1950) will be moved so that all the rules governing tax incentives are grouped together in Subpart S.  For questions or to submit comments, contact Richard Wolters, DOR Legal Services at Richard.Wolters@illinois.gov or call (217) 782-2844.  Click here to submit comments.

 

 

 

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The Department of Revenue proposed an amendment which will impact all partnerships, subchapter S corporations and trusts on income passed through to their partners, shareholders and beneficiaries: 

 

 

 

The Department of Revenue proposed an amendment to Income Tax (86 IAC 100; 39 Ill. Reg. 9882) concerning “hedging transactions” undertaken to offset the impact of fluctuations in interest rates, prices, or currency exchange rates upon a taxpayer’s business profits or expenses.  The rulemaking requires Illinois income tax payers to count gains and losses from hedging transactions as adjustments to the dollar amounts of the hedged transactions, rather than as separate transactions, for purposes of computing the sales factor. 

 

 

 

Bottom Line:  The amendment prescribes the proper sales factor treatment of gains and losses from hedging transactions; that is transactions specifically identified by the taxpayer for federal income tax purposes as entered into by the taxpayer for purposes of hedging against the effect on profits or costs of business transactions that result from fluctuations in interest rates, prices or currency exchange rates.  The rulemaking requires taxpayers to treat these gains and losses as adjustments to the dollar amounts of the hedged transactions, rather than as separate transactions, in computing the sales factor.   For questions or to submit comments, contact Paul Caselton at (217) 524-3951 or Paul.Caselton@Illinois.govClick here to submit comments.

 

 

 

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The Human Rights Commission and Department of Human Rights both proposed new rules which will impact businesses, units of local government non-profit agencies, employment agencies and labor organizations:

 

 

 

The Human Rights Commission and Department of Human Rights both proposed new parts titled Joint Rules of the Human Rights Commission and Department of Human Rights:  Rules on Pregnancy Discrimination and Accommodation in Employment (65 IAC 5215; 39 Ill. Reg. 9911 and 56 IAC 2535; 39 Ill. Reg. 9682).  The new Parts (56 IAC 5215 cross-references the complete text in 56 IAC 2535) implement PA 98-1050, which requires employers to reasonably accommodate a job applicant or employee’s pregnancy and to notify employees of their statutory rights in this regard.  The rules give examples of reasonable accommodations which may be agreed upon by the employer and employee/applicant, including temporary transfer or reassignment to a less hazardous or strenuous position.  However, an employer may not require an applicant or employee to accept such accommodations. 

 

 

 

Bottom Line:  Pursuant to Public Act 98-1050, the Human Rights Commission is proposing rules on pregnancy discrimination and accommodation for pregnant employees in employment.  It will impact all employers subject to Illinois Human Rights Act.  For questions or to submit comments, contact Evelio Mora, Illinois Human Rights Commission, via email at Evelio.Mora@Illinois.gov, or call (312) 814-6269.  Click here to submit comments.

 

 

 

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The Department of Children and Family Services proposed amendments which will impact home day care centers:

 

 

 

The Department of Children and Family Services proposed amendments to Licensing Standards for Day Care Homes (89 IAC 406; 39 Ill Reg 10500) and Licensing Standards for Group Day Care Homes (89 IAC 408; 39 Ill Reg 10540) implementing recent Public Acts and other changes.  Both rulemakings require licensed day care homes to post “no firearms” signs in accordance with the Firearm Concealed Carry Act, prohibit use of swimming pools during child care hours unless the care provider has a license from the Department of Public Health to operate a swimming pool, and prohibit caregivers from working outside the home during the hours that the day care home is licensed to operate. Other provisions require emergency preparedness plans to include procedures for notifying parents and reuniting them with their children in case of an evacuation, and to include procedures for evacuating children at or below 30 months of age and special needs children. Day care staff licensed to care for infants must also undergo training regarding Sudden Infant Death Syndrome (SIDS), Sudden  Unexplained Infant Death (SUID), safe sleep, and Shaken Baby Syndrome when their licenses are renewed every 3 years, as well as prior to initial licensure. Finally, a college or vocational school diploma may be accepted in place of a high school diploma for day care staff required to hold at least a high school diploma.

 

 

Bottom Line:  The rule provides clarification for signage, and use of swimming pool during hours that the day care is in operation.  New requirements are proposed with regard to preparedness plans and procedures for notification and evacuation in an emergency.   Training requirements are clarified.  For questions or to submit comments, contact Jeff Osowski, Office of Child and Family Policy at DCFS, email:  CFPolicy@idcfs.state.il.us or call (217) 524-1983. Click here to submit comments.

 

 

 
 
 
 

 

 

 

 

 

 

 

 

 

 

 


For more information on anything in this issue of Regulatory and Information Alert, contact Katy Khayyat at Katy.Khayyat@Illinois.gov or call (217) 785-8020 or (800) 252-2923.  To be removed from this mailing list, please contact Katy Khayyat at Katy.Khayyat@Illinois.gov or by calling (217) 785-8020 or (800) 252-2923.