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Public Act 100-0023 - Recommended Accounting Treatment

November 28, 2017 | TARC updates

Background
As part of the State Budget process, the Illinois General Assembly passed Public Act 100-0023. Public Act 100-0023 provides that, beginning in July 2017, 2% of locally imposed sales taxes collected by the state be transferred to the Tax Compliance and Administration Fund. The 2% administrative fee was not imposed on the local portion of the 6.25% state sales tax, but all other sales taxes collected by the state on behalf of local government (including Home Rule Sales Tax) are subject to the 2% administrative fee.

Recommended Accounting Treatment
TARC has concluded that the 2% administrative fee can be treated as a deduction from revenue or recorded separately as an expenditure. TARC does suggest that municipalities may want to track the amount of fees charged under Public Act 100-0023 to be able to communicate the impact of this law. The amount of the 2% administrative fee should also reduce any Receivables and Deferred Inflows of Resources reported in fiscal year-end financial statements.

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