Questions Submitted From Practitioners

              Note:
The answers by the Department of Revenue to the questions are not to be relied upon by taxpayers in lieu of a Private Letter Ruling and are not the kind of written
information upon which a taxpayer may rely to request an abatement under the Taxpayer Bill of Rights. Where a conflict appears to exist between these answers
and a form, instruction, regulation or bulletin issued by the Department, taxpayers are advised to follow the form, instruction, regulation or bulletin, contact the
Department’s Business Hotline at (217)-524-4772, or seek a Private Letter Ruling.
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January 2008 Illinois Department of Revenue Practitioners Meetings
Questions Submitted From Practitioners’
1. Electronic Filing
Can you now file electronically an individual return with a deduction on a k-1-p from a partnership?
Response:
Yes, beginning in processing year 2008 for calendar year 2007 IL-1040 Individual Income Tax Returns, Individuals may electronically file if they have a K-1P or K-1T. This includes if they have a deduction.
2. Informational Bulletin FY2008-5
Why has the Department been so negligent in issuing Informational Bulletin FY2008-5? Only one of our clients received it (as of 12/17/07), we did not even receive it at the firm! The contents affect every employer in the state, but few, except for the big payroll companies, even know that the rules have changed.
Response:
The department issued Bulletin FY 2008-5 in November and posted it on our website. As part of the transition to the new statutory withholding schedule (which conforms to federal payment dates and is part of a broader attempt to encourage increased electronic filing using the federal/state EFTPS pilot), when the department produced the 2008 withholding booklets it assigned taxpayers to the appropriate payment schedule. FY 2008-5 was mailed to each withholder and timed so that withholders would receive the bulletin before they received their withholding coupon books.
The department needs to understand why use of the free EFTPS program has not been higher and would like help in understanding what needs to be done to encourage that use. We had presumed larger numbers of taxpayers would take advantage of the convenience and ease of this free service. We would encourage you to contact Kevin Richards with any ideas.
3. Taxability of Software
The Department has chosen to decline to respond to questions surrounding the taxability of software in an Application Service Provider software transaction, most recently in ST 06-0116-GIL. Can you provide the Department's opinion on how these transactions should be treated? Fact Pattern: Company houses software on server located outside Illinois. Users in Illinois access software on Company's server, pursuant to a license agreement, which does not meet the 5 part license test. Users do not download any software from Company onto computers in Illinois.