Wipfli’s sales and local tax highlight the hottest topics in tax this quarter including the grocery tax holiday and unclaimed property compliance history.
Illinois tax holiday on grocery sales tax
The state of Illinois suspended the 1 percent sales and use tax on groceries from July 1, 2022, through June 30, 2023. The grocery tax break applies to “food for human consumption that is to be consumed off the premises where it is sold,” according to a bulletin released by the Illinois Department of Revenue. This can include foods such as condiments, spices, seasonings, vitamins, ice and bottled water. Retailers should continue to report their normal taxable sales, including receipts from sales of groceries.
California unclaimed property inquiry through income tax
Coming this November, the Franchise Tax Board (FTB) has been given the authority to inquire and provide information collected on business tax returns to the California State Controller’s Office (SCO) in regard to Unclaimed Property compliance history. Assembly Bill No. 466 allows for unclaimed property compliance history to be provided to the SCO which is responsible for conducting unclaimed property audits. An amnesty program is currently in the works that would offer holders some forgiveness and encourage future compliance in California.
Unclaimed property fall compliance deadline October 31/November 1
Companies should start reviewing their books and records for potential unclaimed property to report. Unclaimed property is tangible or intangible property that has been abandoned, lost, or without owner contact for a specified period of time, typically one to five years. By law, unclaimed property is reportable once it reaches the dormancy period. Reporting forms and dormancy periods vary by state and property type. Due diligence notifications are a preliminary step in the compliance process required by all states. Exemptions and deductions should also be considered before escheating unclaimed property to the state.
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