The National Law Forum

Blockchain for the Humanitarian Sector

A network of global charities has begun using blockchain to provide costs savings and transparency to donations. Organisations including Oxfam, Save the Children, Mercy Corps and Christian Aid are three of the 42 members of the Start Network, which trialled the use of blockchain in humanitarian projects last year. The group will work on the project with start-up fund management platform Disberse.

Disberse uses blockchain, which records all transactions in a distributed digital ledger, to try to ensure that less money is lost on exchange rate fluctuations and traditional banking fees. It will also help charities to fight fraud, by tracking all transactions. The ultimate aim would be to track every dollar in aid, from original donor to each individual assisted.

The Start Network plans a three-stage experiment, using blockchain to:

Support decentralised decision making by the Start Fund, a peer-reviewed emergency relief fund aimed at rapid response to small-to-medium-scale disasters.
Trigger and speed up pay-outs, using “smart contracts” – self-executing arrangements that are guaranteed to deliver swiftly.
Enhance transparency by developing a form of “digital ledger” for use in all Start Fund transactions.

A report – Blockchain for the humanitarian sector – published in 2016 by the Digital Humanitarian Network for OCHA, the United Nations’ humanitarian affairs office, concluded:

Blockchain “has the potential to transform the humanitarian sector by providing cost savings and traceability of information flows, and by reducing transaction times”.
Potential uses are in information management, identification, supply chain tracking, cash programming and humanitarian financing.
Since the technology can offer solutions to existing humanitarian challenges, it may be wise to begin studying its impact and experimenting with future implementation.

This post was written byJonathan Lawrence of K & L Gates.

Stanford University’s Loss in Interferences of Three Patents Covering Testing Methods for Fetal Aneuploidies for Lack of Written Description is Vacated

The Board of Trustees of the Leland Stanford Junior University v. The Chinese University of Hong Kong, Jun. 27, 2017, Before O’Malley, Reyna, and Chen.

Takeaway:

The Federal Circuit declined to reconsider its decision in Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015) that parties cannot bring civil actions in district court under 35 U.S.C. § 146 for review of the PTAB’s decisions in interferences declared on or after September 16, 2012.
In evaluating whether a claim satisfies the written description requirement, the fact finder may consider what a person of ordinary skill in the art would understand from a description of a product or technique in the specification as of the filing date of the application. Post-filing date publications may only be used as evidence of the state of the art existing on the filing date.

Procedural Posture:

Stanford University (“Stanford”) appealed from orders of the PTAB in three interference proceedings between Stanford and Chinese University of Hong Kong (“CUHK”), which found the claims of three Stanford patents directed to testing methods for fetal aneuploidies unpatenable for lack of written description. The appeal was initially filed pursuant to 35 U.S.C. § 146 in the District Court for the Northern District of California, and the parties engaged in discovery there. On May 7, 2015, the Federal Circuit affirmed the lower court’s decision in Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015), holding that under the AIA, for interferences declared after September 15, 2012, an appeal from an interference decision has to be made to the Federal Circuit. The parties then jointly requested transfer from the Northern District of California to the Federal Circuit, which was granted. The Federal Circuit considered the case on the merits, vacated and remanded.

Interference:

The Federal Circuit declined to revisit its holding in Biogen, noting that although Stanford briefed this issue in its opening brief, Stanford did not raise this issue again in its reply brief or in oral argument. Rehearing en banc and a petition for certiorari in the Biogen case were denied; thus, in the Federal Circuit’s view, “Biogen is the law in this circuit and we, as a panel, will not revisit it.”
The Federal Circuit declined to consider the record developed during discovery in the district court. Because the district court lacked subject matter jurisdiction to review the interference decisions, the Federal Circuit agreed with CUHK’s position that the activities in the district court were a nullity and should not be considered by the Federal Circuit or remanded to the Board for consideration.

Written Description:

Sufficiency of written description is evaluated from the perspective of one of ordinary skill in the art at the time of the invention, “by examining the record evidence as to pre-filing date art-related facts.” The post-filing date publications may be considered to the extent they “contain art-related facts … existing on the filing date,” but may not be used as a source for the knowledge about art-related facts that did not exist on the filing date.
The Board awarded patents in interferences to CUHK because it found that the Stanford patents’ specification disclosed “targeted” rather than “random” sequencing, and the specification would not have indicated to one of ordinary skill in the art that Stanford’s inventor Dr. Quake was in possession of the claimed random massively parallel sequencing (“MPS”) method. The Federal Circuit held that the PTAB erred because it did not adequately explain why the Illumina platform for sequencing DNA, referenced and described in Stanford’s original application, did not provide sufficient written description support for random sequencing. The Board improperly relied on the testimony of CUHK’s expert, who only described that an earlier sequencing technique, Roche 454, was used for targeted sequencing, and “failed to cite to the Roche 454 references with specificity.” The Board also erred in finding that, because Stanford’s application did not preclude targeted MPS sequencing, it did not disclose to a person of ordinary skill in the art random MPS sequencing.

This post was written by Georg C. Reitboeck Ksenia Takhistova Christopher Gresalfi of Andrews Kurth Kenyon.

Recreational Pot Comes to Nevada…But Why Are The Shelves Empty?

On July 1, 2017, Nevada became the fifth state in the United States to legalize the sale of recreational marijuana. The epicenter of “what happens here, stays here” tourism just added a new vice to its repertoire! So, what’s the problem?

Among other things, Nevada’s recreational marijuana dispensaries are facing the specter of empty shelves. Why? Because a wrinkle in the ballot measure that legalized recreational marijuana sales in Nevada gives licensed liquor wholesalers a temporary 18-month monopoly on marijuana distribution rights… “unless the [Nevada] Department [of Taxation] determines that an insufficient number of marijuana distributors will result from this limitation.” In order to fill its shelves, a Nevada-licensed recreational marijuana dispensary must use a licensed recreational marijuana distributor to transport the product from the cultivation facility to their stores (whereas dispensaries selling medical marijuana were allowed to move “medical-use” product from cultivation locations without an independent distribution network).

Despite efforts by marijuana dispensaries to stock up prior to July 1, overwhelming demand for recreational marijuana has resulted in dwindling supplies. And now, distributors are nowhere to be found. That is because very few liquor wholesalers have applied to become licensed marijuana distributors, and those that have made such application have failed to meet the requirements for licensure. The Nevada Department of Taxation (NDOT) reported that as of July 7, 2017, ZERO distribution licenses have been issued by NDOT.

Perhaps liquor wholesalers fear risking their federal alcohol permits issued by the Alcohol and Tobacco Tax and Trade Bureau? It would appear that marijuana distribution licenses would have to be issued to persons other than liquor wholesalers – however, nothing is that simple. A small group of liquor wholesalers, known as the Independent Alcohol Distributors of Nevada, sued and, on June 21, won a temporary injunction against NDOT to prevent marijuana distribution licenses from being issued to persons other than liquor wholesalers.

In response, on July 7, Governor Sandoval endorsed emergency regulations that would give NDOT the authority to determine whether there are a sufficient number of marijuana distributors to service the market – a determination that would allow NDOT to open up distributor licensing to those other than licensed liquor wholesalers. The emergency regulations will be considered by NDOT on July 13. Stay tuned.

This post was written by Kate C. Lowenhar-Fisher Jennifer J. Gaynor Jeffrey A. Silver and Gregory R. Gemignani of Dickinson Wright PLLC.

Senate Unveils Changes to the Better Care Reconciliation Act of 2017: Significant Changes, but Uncertainty Remains

On July 13th, the Senate released the updated version of the Better Care Reconciliation Act (BCRA) of 2017. While the new version makes some significant changes to the original Senate proposal, the major components of the original bill remain intact.

Will the Changes Result in Additional Support?

Securing the required votes to pass the revised BCRA will be very difficult, with two GOP Senators, Rand Paul (R-KY) and Susan Collins (R-ME) announcing soon after its release they cannot even support beginning debate on the measure, a key procedural Senate vote. Senator Paul believes the bill doesn’t go far enough to repeal the Affordable Care Act (ACA) while Collins believes the Medicaid cuts are far too deep. Four other Republican Senators have publicly said they remain undecided and many moderates in the Caucus have not announced their position.

Currently, Senate Republican Leader Mitch McConnell (R-KY) plans to begin the procedural process to allow debate on the bill as early as next week, following an anticipated Congressional Budget Office score Monday of the new language and the possible addition of an amendment by Senator Ted Cruz (R-TX). In an effort to appease more conservative Senators, the Cruz amendment would allow non-ACA compliant plans to exist alongside ACA compliant plans in the exchanges. However, that causes angst for many moderates who are concerned about the potential loss of assurances such as coverage for pre-existing conditions. Similar to the dynamic that unfolded in the House, moderates and conservatives in the Senate are deeply divided and appeasing one group tends to aggravate the other.

The following are highlights of the changes in the most recent version of the BCRA:

Changes to the Medicaid Provisions

Allows CMS to increase federal contributions to states above the limits imposed by per capita caps or Medicaid block grant amounts, if the state, or a location within the state, has a declared public health emergency.
Modifies requirements for Medicaid block grants to allow them to be applied to the Medicaid expansion population, and to prohibit states from using unspent block grant funds for non-Medicaid services.
Would retain an ACA requirement for states to cover children up to age 19 with incomes below 133% of the federal poverty level.
Allows states to receive relief from reductions in allowable disproportionate share hospital (DSH) payments during the following quarter in 2018 or 2019 if the state terminates its Medicaid expansion, and modifies the formula by which non-expansion states can receive additional DSH allocations.
Would allow seniors and the disabled to have Medicaid cover services provided during the three months prior to enrollment, as in current law. Other Medicaid beneficiaries would be limited to retroactive coverage during the month of enrollment.
Would allow states to apply for an aggregate of up to $8 billion in additional federally funded payments for home and community based services (HCBS) providers through a demonstration project. The 15 states with the lowest density are given priority in applying for these demonstration project funds.
Would expand federal support for services provided to members of an Indian tribe by enrolled Medicaid providers that are not Indian Health Services facilities.

Insurance-Related Changes

Consumers will be permitted to use HSA funds to pay health insurance premiums for the first time. This will allow consumers to use pre-tax dollars to pay for health insurance, and could reduce the financial incentives that have long supported employer-provided health insurance coverage.
The so-called “Cruz Amendment” has been included in the revised BCRA. This amendment would permit insurers to sell individual health insurance policies that do not comply with the market reforms in the ACA, so long as the insurer also sells an ACA-compliant policy in the same state.
- The non-ACA-compliant policies would be exempt from a number of popular market reforms, including:
  - Actuarial value requirements
  - Essential health benefits coverage
  - Limits on out-of-pocket expenses
  - Community rating
  - Guaranteed issuance of policies
  - Prohibition of pre-existing condition exclusions
  - Limitations on coverage waiting periods
  - No-copay preventive care coverage
  - Medical Loss Ratio requirements
- Coverage under a non-ACA-compliant policy does not constitute creditable coverage, so persons moving from non-compliant policies to ACA-compliant policies will be subject to a 6-month waiting period.
- Non-ACA-compliant policies are not included in the ACA’s risk adjustment program (42 U.S.C. §18063).

Other Notable Items

Substance use disorder treatment and recovery service funding is increased from $2 billion for one year to approximately $5 billion per year from 2018 through 2026.
Purchasers in the individual market will be able to buy catastrophic/lower-premium plans and still be eligible for tax credits.
While most of the Affordable Care Act tax repeals remain, this version does not repeal the net investment income tax, additional Medicare tax, and the limit on insurance company deductions for executive compensation.

As we continue to monitor the Senate debate on the BCRA, we will provide updates on the status of the Senate repeal and replace efforts.

This post was also written Nick Welle, Anil Shankar , Jennifer F. Walsh, Morgan J. Tilleman Marian E. Dodson of Foley & Lardner LLP,

Opportunity Foreclosed: The International Entrepreneur Parole Rule May Die Before it Gets Out of the Gate

The U.S. and worldwide entrepreneur community had been looking forward to July 17^th with great anticipation. This was supposed to be the effective date of the new International Entrepreneur Parole immigration regulation. This refreshing and innovative immigration option for foreign entrepreneurs would solve an enormous problem in the U.S. immigration system: the non-existence of a visa for start-ups founded by or being driven by talented foreign nationals. Yet on July 11, 2017 the Department of Homeland Security published a notice in the Federal Register seeking comments on its desire to rescind the rule.

This entrepreneur parole process would not have been a cakewalk for applicants: only those who could meet the stringent requirements associated with it would be able qualify (to be approved, entrepreneurs would have to own at least 10% of the enterprise and would have to have raised significant capital from established U.S. investors or government grants). Applications would be very strictly reviewed, and only applicants who clearly qualified and passed required government background checks would be approved for this temporary status.

Yet despite the strict criteria, the entrepreneur community was delighted that the U.S. government (during the Obama administration) had finally rolled out an immigration solution to the enormous talent crisis facing the U.S. technology sector.

The technology industry is fueled in large part by immigration. As of January, 2016 immigrants had started more than half (44 of 87) of America’s start-up companies valued at $1 billion dollars or more and are key members of management or product development teams in over 70 percent (62 or 87) of these companies.* Immigrants play vital roles in the technology industry in job creation, innovation and leadership.

The data shows that these immigrants are not taking jobs away from native born Americans – instead they are creating jobs for Americans. For years the U.S. has not graduated enough graduates in STEM fields to fill even a fraction of the open positions requiring STEM skills. By 2020, projections indicate that 1.4 million computer specialist positions will be open in the U.S. but domestic universities will only produce enough graduates to fill 29 percent of those jobs. As an example, in Massachusetts today, there are seventeen technology jobs for every person who graduates with a college degree in computer science or information technology. And international students are disproportionately more likely to get their degrees in a STEM field – they make up over 30% of the post-baccalaureate degrees in STEM fields. These immigrants are not just studying STEM subjects – they are innovating and inventing technology, pharmaceutical and engineering solutions at a rapid pace. In 2011, 76 percent of patents awarded to the top 10 U.S. patent-producing universities had an inventor that was foreign-born. In recent years, foreign nationals contributed to more than three quarters of patents in the fields of information technology, molecular and microbiology and pharmaceuticals. Many of these inventions are making all of our lives better. In 2016, all six American winners of the Nobel Prize in economics and scientific fields were foreign-born.

To remain competitive in the global marketplace, the U.S. needs to be able to attract and retain the best talent, the sharpest minds, and those who are passionate about building solutions, building companies, and building community. While we have many home grown entrepreneurs who fit this description, we do not have enough of them. We need, and should be welcoming, not turning away, brilliant, hard-working, upstanding foreign entrepreneurs.

Despite paying lip service to the need to create jobs and economic growth, the current Administration seems bent on ending the International Entrepreneur Parole solution without focusing on or acknowledging the myriad positive contributions of immigrants to our country.

Other countries will benefit from the vacuum that will be created by the dissolution of this rule. Canada, for example, has a very entrepreneur-friendly immigration option. If this fledgling International Entrepreneur Parole program is not revived, the U.S. will have lost a major battle in the highly competitive, global war for talent.

*All statistics cited in this post are from The Economic Impact of Immigration on the U.S., published by the Mass Technology Leadership Council, June, 2017.

This post was contributed by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C..

California Supreme Court Rules Homeowners Forfeited Right to Challenge Coastal Development Permit Conditions By Undertaking Work Authorized By Permit

The California Supreme Court ruled on Thursday in Lynch v. California Coastal Commission that two homeowners who obtained a coastal development permit (CDP) from the California Coastal Commission (Commission) to construct a new seawall forfeited their right to challenge mitigation conditions attached to the permit because they accepted the benefits conferred by the permit by undertaking the work authorized.

Key procedural takeaway: With exceptions noted below, if a permit applicant accepts a proffered CDP and acts on that permit – even while expressly reserving its asserted right to challenge the legality of the permit – the permittee has forfeited its right to subsequently challenge the permit in court.

Key takeaway on the merits of the claim: None. Since the Supreme Court ruled that the permittees had forfeited their right to challenge the CDP by undertaking the authorized construction, it found no need to address the underlying merits of the permittee’s challenge. In particular, the Court left unaddressed the contention that the mitigation conditions were unconstitutional, including the condition that limited the life of the seawall to 20 years unless reauthorized at the end of the term.

Homeowners Challenge CDP Conditions

The homeowners, Barbara Lynch and Thomas Frick, sought a CDP (more precisely, an amendment to the 1989 CDP authorizing construction of the existing seawall) to authorize demolition of an existing seawall, construction of a replacement seawall and rebuilding of a lower stairway providing access from the bluff to the beach. The Commission granted the CDP allowing seawall demolition and reconstruction but imposed several permit conditions.

The homeowners filed an administrative writ petition in superior court challenging the following three permit conditions: (1) a prohibition on reconstruction of the lower stairway; (2) a 20-year expiration period on the seawall permit and a prohibition on relying on the seawall as a source of geologic stability or protection for future blufftop redevelopment; and (3) a requirement that prior to expiration of the 20-year period, the homeowners must apply for a new permit to remove the seawall, change its size or configuration, or extend the authorization period.

Around the same time, the homeowners recorded deed restrictions on their property stating that the CDP conditions were covenants, conditions and restrictions on the use and enjoyment of their properties, satisfied all other permits conditions, obtained the permit and demolished and reconstructed the seawall.

Lower Court Rulings

The trial court issued a writ directing the Commission to remove the three challenged conditions from the CDP and found that the conditions prohibiting reconstruction of the stairway and imposing a 20-year expiration period were not valid. The appellate court reversed the trial court, determining that plaintiffs had waived their claims and, in any event, both conditions were valid.

California Supreme Court Ruling

Though the Court affirmed the appellate court’s reversal of the trial court decision, it did so on a different basis. The appellate court’s ruling rested on the concept of waiver while the Court found that the homeowners forfeited their right to challenge by accepting the benefits of the permit. The Court explained that forfeiture differs from waiver in that forfeiture results from a failure to invoke a right and waiver denotes an express relinquishment of a known right. The Court identified the crucial point as being that the homeowners “went forward with construction before obtaining a judicial determination of their objections.” By accepting the benefits of the CDP and undertaking the permitted project, the homeowners effectively forfeited the right to maintain their otherwise timely objections.

The Court rejected the homeowners’ argument that because the challenged permit conditions did not affect the design or construction of the seawall, it was possible to challenge the conditions while the project was being built. Such a rule, the Court said, would effectively expand the Mitigation Fee Act (Gov. Code, §§ 66000 et seq.), which establishes a procedure for developers to proceed with a project and still protest the imposition of “fees, dedications, reservations, or other exactions.” Not included in this list, however, are land use restrictions. The Court stated that only the Legislature has the power to declare that permits may be accepted and acted upon, even while the underlying land use restrictions imposed as a condition of that permit are being challenged in court.

The Court did note that there are potential remedies available to permit applicants. Responding to the homeowners’ protest that imposing a forfeiture under the circumstances present here – where the seawall was in danger of collapsing into the sea thus allowing no time to delay repairs until resolution of the litigation – the Court offered two solutions. First, property owners can address imminent dangers by obtaining an emergency permit from the Commission under Public Resources Code section 30624. Second, property owners can try to reach an agreement with the permitting agency to allow construction to proceed while a challenge to permit conditions is resolved in court, which the court noted could prevent a finding of equitable forfeiture. Neither remedy appears to have been pursued in this case.

Insights

Developers and property owners should view the unanimous Court’s holding as applying beyond CDPs and should thus proceed with extreme caution when faced with objectionable permit conditions. By refusing to extend the Mitigation Fee Act’s “pay and protest” option beyond fees and exactions, this decision gives permitting agencies leverage to impose potentially controversial permit conditions, knowing that permit applicants are often constrained in terms of time and money when choosing between moving forward with objectionable permit conditions or going to court. Legislative action on this issue could provide some relief, but may not be likely for the foreseeable future.

This post was written by Courtney A. Davis and James T. Burroughs Allen Matkins Leck Gamble Mallory & Natsis LLP.

Litigating Religious Land Use Cases, Second Edition

This second edition of Litigating Religious Land Use Cases is a must have resource for religious entities and practitioners alike. It provides practical advice intended to afford sound instruction for religious entities and lawyers representing them to navigate the challenges and uncertainties surrounding a religious land use claim.

Litigating Religious Land Use Cases, Second Edition is a thorough, detailed treatise that explains how to manage complex religious land use cases book in a manner that is easily understood. Although the subject-matter is complex, the author, an authority on land use issues, took great care to include practical case studies in the book that will assist anyone dealing with religious land use issues or practicing in this area of the law.

This edition includes:
• Updates in case law RLUIPA claims through March 1, 2016.
• An analysis of claims that can be raised in addition to religious land use claims.
• Text of the RLUIPA statute and attorney fee statute.
• Charts every single RLUIPA land use case decided:
o Breaking down the elements, whether a claim was justiciable or not.
o The success of the claims.
• Leading law review articles covering RLUIPA—some of which predate the statute

To purchase, please click here.

Massachusetts Sets Energy Storage Target

On June 30, 2017, the Massachusetts Department of Energy Resources (DOER) announced that Massachusetts would adopt an aspirational 200 megawatt-hour (MWh) energy storage target to be achieved by January 1, 2020. The target is the second largest in the nation, although it is far lower than California’s 1.3 gigawatt storage mandate. Still, Massachusetts’ storage target will make the commonwealth a leader in the burgeoning energy storage field.

The process of setting storage targets began last summer, when Massachusetts enacted a law directing DOER to determine whether to set targets for electric companies to procure energy storage systems by January 1, 2020. In September 2016, Massachusetts released a report called the “State of Charge,” which recommended the installation of 600 megawatts (MW) of energy storage by 2025. The report predicted that 600 MW of storage could capture $800 million in system benefits to Massachusetts ratepayers. The energy storage industry praised the 600 MW level as a good starting point.

DOER’s “aspirational” 200 MWh by 2020 target falls short of the “State of Charge” recommendation, but leaves the door open to achieving 600 MW by 2025. DOER’s letter announcing the target noted that “[s]torage procured under this target will serve as a crucial demonstration phase” for Massachusetts to gain knowledge and experience with storage. “Based on lessons learned from this initial target,” the letter continues, “DOER may determine whether to set additional procurement targets beyond January 1, 2020.”

Beyond DOER’s storage target, Massachusetts has a broader Energy Storage Initiative, which includes a $10 million grant program aimed at piloting energy storage use cases and business models in order to increase commercialization and deployment of storage technologies. DOER also announced that it will examine the benefits of amending the Alternative Portfolio Standards, an incentive program for installing alternative energy systems, to expand the eligibility of energy storage technologies able to participate. While Massachusetts’ storage targets are not as lofty as some in the industry were hoping, the commonwealth is demonstrating a clear commitment to developing its energy storage industry beyond the few megawatts currently installed.

This post was written by William M. Friedman of McDermott Will & Emery.

Tax Changes Implemented As Part of Revenue Package Supporting Illinois Budget

Yesterday afternoon, after months of wrangling and a marathon 4th of July weekend session, the Illinois House of Representatives voted to override Governor Bruce Rauner’s veto of Senate Bill (SB) 9, the revenue bill supporting the State’s Fiscal Year (FY) 2017-2018 Budget. The vote ended Illinois’ two year budget impasse and may avoid a threatened downgrade of Illinois bonds to junk status. The key tax components of the bill as enacted Public Act 100-0022 (Act) are as follows:

Income Tax

Rate increase. Income tax rates are increased, effective July 1, 2017, to 4.95 percent for individuals, trusts and estates, and 7 percent for corporations.

Income allocation. The Act contains a number of provisions intended to resolve questions regarding how income should be allocated between the two rates in effect for 2017.

Illinois Income Tax Act (IITA) 5/202.5(a) provides a default rule, a proration based on the days in each period (181/184), for purposes of allocating income between pre-July 1 segments and periods after the end of June when rates increase. Alternatively, IITA 5/202.5(b) provides that a taxpayer may elect to determine net income on a specific accounting basis for the two portions of their taxable year, from the beginning of the taxable year through the last day of the apportionment period, and from the first day of the next apportionment period through the end of the taxable year.

Note: This provision will create planning opportunities for taxpayers. For example, a taxpayer who paid bonuses to employees early in the year may wish to elect specific accounting, whereas taxpayers who paid bonuses out after the effective date of the tax increase may wish to pro rate under the default rule.

A new sub-section (IITA 202.5(c)(3)) provides that a taxpayer who elects a specific allocation different from the default rule must divide any Section 204 exemptions between the respective periods in amounts which bear the same ratio to the total exemption allowable under Section 204 as the total number of days in each period bears to the total number of days in the taxable year. We note that no mention is made regarding the treatment of credits.
Finally, another new sub-section (IITA 202.5(c)(4)) provides that a taxpayer who elects a specific allocation different from the default rule may not claim negative net income for one portion of the year and not the other. If a taxpayer’s net income otherwise would be negative for a portion of the year, the taxpayer is required to attribute all of its net income to the portion of the taxable year with positive net income and report net income for the other portion of the taxable year as zero.

Elimination of non-combination rule. For taxable years beginning on or after December 31, 2017, the definition of “unitary business group” is amended to eliminate the non-combination rule for group members that use different apportionment methods. There is no exception for insurance companies.

Note: For calendar year corporations, this change will take effect this year.

Expanded definition of “United States.” For taxable years ending on or after December 31, 2017, the definition of “unitary business group” is amended to include an expanded definition of “United States” to include the fifty states, the District of Columbia and “any area over which the United States has asserted jurisdiction or claimed exclusive rights with respect to the exploration for or exploitation of natural resources,” but not any territory or possession of the United States.

Note: For calendar year corporations, this change will take effect this year.

Decoupling from Domestic Production Activities Deduction (DPAD). The Act decouples from the federal domestic production activities deduction.

Research and Development Credit Extended and Reliance Protected. The research and development credit is restored retroactively (it had expired on January 1, 2016) and extended through December 31, 2021. The Act provides that all actions taken by taxpayers “in reliance on the continuation of the credit” are “hereby validated.”

Income Cap on individual taxpayer eligibility for certain exemptions and credits. Taxpayers with adjusted gross income for a taxable year in excess of $500,000 (in the case of spouses filing a joint federal return) or $250,000 (for all other taxpayers) may not claim the standard exemptions set forth in IITA Section 204. (IITA 5/204(g)). In addition, they may not claim a tax credit for residential real property taxes (IITA 5/208) or the education expense credit (IITA 5/201(m)).

Increased education expense credit. The education expense credit is increased to $750 for tax years ending on or after December 31, 2007. (See note above about limitations on taxpayer eligibility for the credit.)

Instructional materials credit. A new credit (maximum $250.00) is created for taxpayers who are teachers, instructors, counselors, principals or aides in qualified schools (for at least 900 hours during a school year) for instructional materials and supplies.

Sales Tax

Sales tax base not expanded to include services. The Act does not change the sales tax rate or expand the base to tax services.

Gasohol, majority blended ethanol, biodiesel and certain biodiesel blends. The Retailers’ Occupation Tax Act, Use Tax Act and Services Tax Act are amended to provide that gasohol is taxed at 100 percent of sales proceeds, effective July 1, 2017. Exemptions for blended ethanol, biodiesel and biodiesel blends are extended through 2023.

Manufacturing, Machinery and Equipment Exemption expanded to include graphic arts. The manufacturing, machinery and equipment exemption is expanded to include graphic arts machinery and equipment, effective July 1, 2017.

State Tax Lien Registration Act

The Act creates a central state tax lien registration system, which eliminates the requirement for the Illinois Department of Revenue (DOR) to post liens for taxes due in counties throughout the state. Taxpayers are required to pay any administrative fee imposed by the DOR by rule when creating the State Tax Lien Registry.

Revised Uniform Unclaimed Property Law

The Act includes a complete rewrite of the Illinois Unclaimed Property Laws, which we describe in a separate post.

This post was written byMary Kay McCalla Martire, Fred M. Ackerson and Lauren A. Ferrante of McDermott Will & Emery.

Nonimmigrant Visa Applicants May Have Longer Waits

President Donald Trump has issued an executive order striking the 80-percent/three-week goal for interviewing nonimmigrant visa applicants following submission of applications.

Since September 11, 2001, the State Department has given priority to security over quick visa adjudications. For many reasons, including heightened security, between 2001 and 2010, the U.S. share of the global tourism market had dropped markedly. The Obama Administration, concerned about the effect on the U.S. economy, took measures to “support a prosperous and secure travel and tourism industry in the United States.” The first steps were in 2010, when the National Export Initiative and the Travel Promotion Act became law. They mandated intergovernmental cooperation to work to establish a stronger brand identity for the U.S. and to promote exports. By 2012, President Barack Obama issued an executive order to continue the process of fostering more tourism and travel: Establishing Visa and Foreign Visitor Processing Goals and the Task Force on Travel and Competitiveness Order. One section ordered Consulates to “ensure that 80 percent of nonimmigrant visa applicants are interviewed within three weeks of receipt of application, recognizing that resource and security considerations . . . may dictate specific exceptions[.]”

Although the Obama EO contained a security waiver, on June 21, 2017, Trump signed his own EO, striking the 80 percent/three-week goal. This is being done in conjunction with the travel ban partially reinstated by the U.S. Supreme Court and the extreme vetting procedures instituted by Secretary of State Rex Tillerson.

Pursuant to extreme vetting, if deemed necessary to determine eligibility, visa applicants may be asked to supply:

Travel history during the last 15 years, including source of funding for travel;
Address history during the last 15 years;
Employment history during the last 15 years;
All passport numbers and country of issuance held by the applicant;
Names and dates of birth for all siblings;
Names and dates of birth for all children;
Names and dates of birth for all current and former spouses, or civil or domestic partners;
Social media platforms and identifiers, also known as handles, used during the last five years; and
Phone numbers and email addresses used during the last five years.

Assessing this amount of information and data obviously will take time. A White House spokesman stated that the elimination of the “arbitrary” three-week goal was needed because “[t]he president expects careful, accurate vetting of visa applicants, not a rushed process . . . .”

Business groups already troubled about possible deleterious effects from the travel ban and extreme vetting have expressed concern about additional delays in visa issuance. According to State Department’s own data, the nonimmigrant visa issuance rate has been dropping. In March, 907,166 were issued and the number was down to 735,000 in April.

This post was written by William J. Manning of Jackson Lewis P.C.

The National Law Forum

Blockchain for the Humanitarian Sector

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