Simplified Municipal Telecommunications Tax
- 35 ILCS 636/5-1, et seq. - Simplified Municipal Telecommunications Tax Act
What is the Simplified Municipal Telecommunications Tax?
Effective January 1, 2003, the Simplified Municipal Telecommunications Tax Act authorized municipalities to impose a simplified municipal telecommunications tax, converted existing taxes imposed under the municipal telecommunications tax provisions listed below into a single tax imposed under the Simplified Municipal Telecommunications Tax Act, and repealed the following municipal telecommunications tax provisions:
- the municipal tax on transmitting messages under 65 ILCS 5/8-11-2,
- the municipal telecommunications tax under 65 ILCS 5/8-11-17,
- the optional infrastructure maintenance fee under 35 ILCS 635/15, andthe municipal infrastructure maintenance fee under 35 ILCS 635/20.
Who receives municipal telecommunications tax distributions?
Only those municipalities that have imposed the tax by local ordinance or resolution receive distributions of municipal telecommunications tax.
Is voter approval required before implementation?
No. Voter approval is not required to implement this tax.
What must a municipality do to establish, change, or discontinue this tax?
The corporate authorities (e.g. city council or village board) of the municipality must adopt an ordinance or resolution to impose, discontinue, or change the rate of a Simplified Municipal Telecommunications Tax. Once an ordinance or resolution has been adopted, the municipality must file a certified copy of the ordinance with the Illinois Department of Revenue's (IDOR) Local Tax Allocation Division (LTAD).
What is the deadline for filing an ordinance?
The ordinance must be filed with LTAD on or before March 20 for the imposition, discontinuation, or tax rate change to take effect July 1, or on or before September 20 for the imposition, discontinuation, or tax rate change to take effect January 1 of the following year.
What tax rate can be imposed?
Municipal Telecommunications Tax may be imposed in ¼ percent increments and may not exceed 6 percent. For example, a municipality may impose the tax at the rate of 3% or 4.25%, but not at the rate of 3.33% or 3.80%.
Who administers this tax?
IDOR is responsible for administering the municipal telecommunications tax for municipalities with populations of less than 500,000.
What items are subject to the municipal telecommunications tax?
Telecommunications is defined very broadly as follows: "telecommunications", in addition to the meaning ordinarily and popularly ascribed to it, includes, without limitation, messages or information transmitted through use of local, toll, and wide area telephone service, private line services, channel services, telegraph services, teletypewriter, computer exchange services, cellular mobile telecommunications service, specialized mobile radio, stationary two-way radio, paging service, or any other form of mobile and portable one-way or two-way communications, or any other transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber optics, laser, microwave, radio, satellite, or similar facilities.
Some common items that are taxed include:
- landline telephones;
- text and talk features on mobile phones;
- paging services; and
- stationary two-way radios.
What items or entities are not subject to the municipal telecommunications tax?
Items and entities that are not subject to the municipal telecommunication tax are:
- prepaid wireless telecommunications services such as prepaid calling cards and minutes added to "pay-as-you-go" phones; these are taxed under the Retailers' Occupation and Use Tax Acts instead;
- Data plans and e-mail services; and
- Federal and State governments, and State universities created by statute.
What must a local government do to ensure we are receiving the municipal telecommunications tax from residents living within our jurisdiction?
The municipality must provide to each telecommunications provider reporting tax for their jurisdiction a list of addresses containing the following information:
- each street name, known street name aliases, street address number ranges, applicable directional, and zip codes associated with each street name for all street addresses located within the municipality:
- each postal zip code and all the city names associated for all zip codes assigned to geographic areas located entirely within the municipality.
- rural route box number ranges and the city names and associated zip codes for all rural route boxes located within the municipality.
A list of telecommunications providers that report tax for your jurisdiction can be requested either electronically through MyLocalTax available at mytax.illinois.gov/MyLocalTax or by contacting the Local Tax Allocation Division (LTAD).
Note: The municipality is responsible for updating the lists of addresses and furnishing this information to all telecommunications providers as changes occur within your jurisdiction, such as annexations.
What is included in our monthly distributions?
In most instances, the money you receive each month represents your share of the tax paid on current returns filed by telecommunications providers. Providers are required to pay the tax in full and file returns on or before the last day of each month following the end of the reporting period.
In addition to the current returns, your distributions could include taxes paid on late-filed returns, payments made for an assessed liability, additional tax due resulting from a reporting error, and amended returns filed by providers who are paying additional tax.
Why does the amount of my municipal telecommunications tax distributions vary from month to month?
There are many reasons why the monthly tax distributions you receive may vary.
- Most providers file their returns on a monthly basis. However, some providers qualify to file on a quarterly or annual basis. The distributions you receive in the months of June, September, and December will reflect your share of receipts reported by quarterly filers. The distributions you receive in March will reflect your share of receipts by both quarterly and annual filers.
- Returns filed or paid after the due date will not be included in the current distribution and may "double up" the amount of municipal telecommunications tax received from a particular provider in the following months' distribution. The late payment may be subject to additional penalties and interest.
- A provider may file amended returns that either result in a refund or the payment of additional taxes. These adjustments would affect your distribution amount. The payment of additional tax may be subject to penalties and interest.
- Other activities such as audits completed on accounts, approved refunds of overpayments, or claims for credit also would affect your distribution amount. The payment of additional tax may be subject to penalties and interest.
When will we receive the first municipal telecommunications tax disbursement?
For taxes imposed effective January 1, the first disbursement will be made to the municipality during the following April. For taxes imposed effective July 1, the first disbursement will be made to the municipality during the following October.
Are there any other facts you should know?
An administrative fee is retained by the state treasurer to cover the costs we incur administering taxes imposed by municipalities.
Providers are allowed to take a discount for timely filing and payment of these taxes. Any allowable discount that is taken is reflected in the local government distributions that are made.
What financial information is available to the local government?
Local governments that impose the Simplified Municipal Telecommunications Tax may enter into a Reciprocal Agreement on Exchange of Information with IDOR. This agreement allows designated individuals within the municipality to receive specific financial information. Additional information regarding the Reciprocal Agreement on Exchange of Information can be found here.
How can a municipality contact LTAD?
You may contact LTAD through your MyLocalTax account or by using the contact information below.
ILLINOIS DEPARTMENT OF REVENUE
101 W JEFFERSON
SPRINGFIELD IL 62702
217 785-6527 FAX