HBAI
Member - NAHB - National Home Builders Association
House 4

The Tax on Home Repair under SB09

Bill Ward, Home Builders Association of Illinois

SB09 is the omnibus tax bill to raise new revenues for the state of Illinois. One tax that seems to be flying under the radar is a new “Use Tax” on home repair work which can be found in Amendment #3 to SB09, beginning on Page 213:

(2) Repair, servicing, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property that has been affixed to real estate; this paragraph (2) does not apply to new construction, reconstruction, or expansion of a building or structure.

Many who have read the amendment fail to grasp the impact of this section due to the vague manner in which it is written. Let’s just say, for all intents and purposes, this is a 6.25% Use Tax on Home Repairs.

Within the Wisconsin Administrative Codes is a chart that identifies what is taxable under their terminology: “tangible personal property that has been affixed to real estate.”

If Illinois is to follow Wisconsin’s lead, here is what will be taxed starting January 1, 2018:

The Repair Work of:

1.      Central air conditioning.

2.      And installation of window air conditioners.

3.      Roof mounted antennas.

4.      Awnings.

5.      Bar equipment.

6.      Boilers.

7.      Installation of Buildings sold for Removal.

8.      Burglar Alarm fixtures.

9.      Cabinets in bathrooms.

10. Carpeting.

11. Coolers.

12. Counters in bathrooms.

13. Curtains.

14. Dehumidifiers.

15. Dishwashers.

16. Drapes.

17. Electric Clocks.

18. Electric Dust Collectors.

19. Electric Signs.

20. Faucets in the bathroom.

21. Fire Alarm fixtures.

22. Furnaces.

23. Furniture.

24. Grills & Rotisseries.

25. Home Theatre Systems.

26. Television sets.

27. Humidifiers.

28. Incinerators.

29. Intercoms.

30. Jukeboxes.

31. Laundry & Dry Cleaning machines.

32. Manufactured homes on leased land.

33. Manufactured homes on owned land not on a foundation.

34. Ovens.

35. Partitions & Movable walls.

36. Piers.

37. Portable Appliances.

38. Portable Lamps.

39. Pumps.

40. Radios & TVs.

41. Railroad Signs & Signals.

42. Satellite Dishes.

43. Shades.

44. Sinks.

45. Standing Timber for Removal.

46. Stop & Go lights.

47. Street Identification Signs.

48. Sump Pumps.

49. Swimming Pools.

50. Tables.

51. Temporary Electric Service.

52. Transformers.

53. Utility lines above ground within the right-of-way.

54. Venetian Blinds.

55. Washers.

56. Water Heaters.

57. Water Softeners.

This is Wisconsin’s list: what Illinois taxes will be left to the Governor, the Ill. Dept. of Revenue, and the Joint Committee on Administrative Rules.

If the Home Repair Tax is imposed, the National Association of Home Builders projects a decline in home repair work that would amount to at least $30 million and would lay off over 330 workers, statewide.

And let’s not forget, Illinois is dead last in new home production given a ratio of building permits to state population. The National Average for new home construction starts is close to 60% of normal construction rates; Illinois’ construction rate stands still at 25% of normal.

Illinois home construction market dropped by 85% after the economic collapse of 2008. We are nowhere close to being back on our feet, and now is not the time to tax homeowners for home repair work.

The solution is simple: delete language in SB09 that taxes “Tangible Personal Property Affixed to Real Estate” (Code Name: Home Repair Tax).

Illinois Senate Puts Tax Bill on Ice

Bill Ward, Executive Vice President, HBAI

Leaders in the Illinois State Senate have failed in their attempt to pass SB09, the omnibus tax bill that was part of the “Grand Bargain.” HBAI opposed the taxation portion of the bipartisan effort as it would have implemented a new Excise Tax on home repair services that would have increased costs to home owners by 5%.

Senate President John Cullerton (D-Chicago) announced on Wednesday that, due to a lack of support by Republican members in the Senate, SB09 would not be called for a vote. Cullerton blamed Governor Bruce Rauner for intervening during the time that Cullerton and Senate Republican Leader, Christine Radogno (R-Lemont) were attempting to put enough Democratic and Republican votes on the board to move SB09 to the House of Representatives.

SB09 was particularly bad for those of us in the home repair and remodeling industry. On top of a personal and corporate income tax increase, there was a new Excise Tax on “the repair of tangible personal property attached to real estate.”

This tax would work like a 5% sales tax on repair work, and home repair work was only one of five economic sectors to be burdened with this new form of taxation. The other four sectors included dry cleaning, warehouse storage, landscaping, and amusements. Another 140 possible services could have been named in SB09, but Senate Leaders kept it to these five to allow for easier passage.

The Excise Tax was initiated after retailers and soda pop manufacturers removed from SB09, a penny per ounce tax on the sale of soda pop. To fill the gap left by the vacancy of the soda pop tax, Senate leaders embraced a Wisconsin law taxing the five service sectors that seemed to have little clout in the Illinois Senate.

One other tax in SB09 was the Business Opportunity Tax that would have assessed businesses with a tax based upon the size of company payrolls. HBAI was opposed to this form of taxation, as well.

HBAI has maintained throughout the process, that we are willing to accept broad based forms of taxation to help solve Illinois’ budgetary problems. However, the Excise Tax is a narrow based form of taxation that was unf

“VoterVoice”

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The Grand Bargain Tax Increase (SB09) is going to be called today on the Illinois Senate Floor. Home Builders opposes the 5% Excise Tax on Home Repair Work because it is Unfair, Complicated, and Narrow-Based. Send this message to your State Senator Now! Do Not Wait until Tomorrow!

I stand with the Home Builders Association of Illinois in Opposition to SB09 which initiates an Excise Tax on the Home Repair Business for the first time in Illinois.

  • The 5% Tax is Unfair – five small sectors of the state’s economy have been singled out as low-hanging fruit for legislators to pick without political fallout.
  • The 5% Tax is Complicated – the Wisconsin Grid of what work is in and what is out leaves all of our members guessing at what to tax and not to tax. It will be Open Season for Tax Auditors who will discover mistakes made by every entity attempting to comply with this complicated law.
  • The 5% Tax is Narrow Based – While Illinois needs Billions and Billions of new revenue to solve its budget shortfall, the Excise tax will absorb $30 million from the repair industry for the state. While sole proprietorships and partnerships sweat from the burden of this tax code, Illinois will feel no real benefit in closing the gap between revenue and expenses.

Home Builders are prepared for broad-based forms of taxation to adequately address what really needs to be done to solve Illinois’ budget dilemma. But we cannot see the sense in this portion of the omnibus tax bill that is part of the Grand Bargain, SB09. Vote No on SB09 and throw out the Excise Tax on Home Repar and other small sectors of Illinois' economy.

                                                           “VoterVoice”

https://votervoice.net/HBAIL/Register

It only takes a couple of minutes!