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June 22, 2024

Legislative Inspector General: “Income” Not Properly Defined –

By John Kraft & Kirk Allen

On June 6, 2023

Springfield, Ill. (ECWd) –

Last October, a complaint was filed with the Legislative Inspector General’s office alleging that State Senator Michael Hastings had filed false Statements of Economic Interest forms (article here) on May 1 and November 25, 2019, May 27, 2020, April 26, 2021, and March 3, 2022.

From the LIGs May 31, 2023, letter:

  • Our office concluded that your complaint was unsubstantiated due to a statutory ambiguity between gross income and taxable net income. The statute’s reference to income “required to be reported on the filer’s federal income tax return” does not explain whether it is gross income exceeding $7500 or net taxable income exceeding $7500 which must be reported on the statement of economic interest form.

Here is where we see the problem: The definition of “income” in the Ethics Act is clear in that all income required to be reported on a federal income tax return must be included on a Statement of Economic Interest form.

The LIG did not indicate if either of Hastings’ net or gross income exceeded the $7500 threshold for reporting in the SEI, they simply said the statute was confusing.

The definition of “income” doesn’t appear confusing to us:

Illinois Governmental Ethics Act(5 ILCS 420/1-105.6)
    Sec. 1-105.6. “Income” means, for the purposes of Sections 4A-102 and 4A-103, pension income and any income from whatever source derived, required to be reported on the filer’s federal income tax return, including, but not limited to: compensation received for services rendered or to be rendered (as required to be reported on any Internal Revenue Service forms, including, but not limited to, Forms W-2, 1099, or K-1); earnings or capital gains from the sale of assets; profit; interest or dividend income from all assets; revenue from leases and rentals, royalties, prizes, awards, or barter; forgiveness of debt; and earnings derived from annuities or trusts other than testamentary trusts. “Income” does not include compensation earned for service in the position that necessitates the filing of the statement of economic interests, or investment or interest returns on items excluded from the definition of “asset”, or income from the sale of a personal residence or personal vehicle.

This is simply another example of politicians never being held accountable to the laws and rules applicable to them.

We suggest an amendment to the Ethics Act to make it more clear to those filing their SEIs that income means gross income.

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