Section 215.100  Informal Conference Board

 

The Director of Revenue shall establish an Informal Conference Board (ICB) for the purpose of reviewing proposed adjustments to tax returns generated by auditors of the Department of Revenue's Audit Bureau prior to the issuance of a Notice of Tax Liability, Notice of Deficiency or Notice of Claim Denial.   The ICB shall have the authority to recommend an appropriate resolution to any such matter when, following a review, circumstances warrant such action. This informal review process affords taxpayers an opportunity to resolve disagreements with the Department after a liability, deficiency, or claim denial has been proposed, but before commencement of the formal protest and administrative hearing process.  It is the goal of the Informal Conference Board to ensure that the Department's proposed audit adjustments that are disputed by the taxpayer are correct and to resolve disputes with taxpayers concerning their tax liability at the earliest opportunity possible in the administrative process.  The ICB will liberally exercise its discretion in all areas provided for in this Part with this goal in mind.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.105  Composition of the Informal Conference Board

 

a)         The members of the ICB shall be:

 

1)         the General Counsel for the Department;

 

2)         the Chairman of the Board of Appeals;

 

3)         the Manager of the Audit Bureau; and

 

4)         at least three employees of the Department, other than the ICB Administrator, who have experience in state and local tax and procedure , to be designated by the Director of Revenue.

 

b)         The Board members will serve on panels consisting of three members each.  The assignment of Board members to a panel will be handled by the ICB Administrator.  The ICB Administrator shall assign cases to the panels at his or her discretion.

 

c)         The ICB members designated by the Director under subsection (a)(4) shall serve for initial terms of one year upon appointment and thereafter shall serve at the pleasure of the Director.  Each ICB member may delegate his or her function on the Board to one or more qualified staff members who may represent the Board member at any informal  conferences.  However, each ICB member shall remain personally responsible for approving final actions of the ICB panel.  In the event a Board member recuses himself or herself due to a conflict of interest, the Board member may designate a replacement who will be responsible for approving final actions of the ICB panel.

 

d)         The ICB Administrator shall be an individual with extensive experience in state and local tax procedures and shall be appointed by the Director of Revenue.  The ICB Administrator shall be under the direct supervision  and serve at the pleasure of the Director.  The ICB Administrator shall be responsible for the day-to-day operation of the ICB and shall maintain a record of the cases considered and the activities and decisions of the Board.  The ICB Administrator shall supervise the conferees and support staff of the ICB and ensure that the work of the ICB is completed in a timely manner.

 

e)         The ICB shall be a separate and distinct division of the Department of Revenue and shall not be a unit or division of the Audit Bureau, the Office of Administrative Hearings, the Board of Appeals or the Office of Legal Services.  If a member of the Office of Administrative Hearings or Special Assistant Attorney General assigned as a litigator within the Department, except the General Counsel, participates in the informal conference process as a board member, representative of a board member, or conferee, that employee shall be barred from later involvement with the case as an administrative law judge or as a litigator, should the taxpayer subsequently file a protest with the Office of Administrative Hearings or in Circuit Court regarding the matter.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.110  Representation of the Taxpayer Before the Informal Conference Board

 

A taxpayer may represent himself or herself or may be represented by any person of the taxpayer's choice during the informal conference process.  A taxpayer's chosen representative before the ICB need not be an attorney.  However, any person purporting to act in a representative capacity must file a duly executed Power of Attorney on a form prescribed by the Department, or must file a copy of a previously submitted executed Power of Attorney on a form prescribed by the Department, before that person will be allowed to represent the taxpayer before the ICB.  Powers of Attorney filed as part of the informal conference process shall be good for that function only and shall not authorize representation or require Department notice for any other purpose following service of a final decision by the ICB.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.115  Procedure for Requesting Review by the Informal Conference Board

 

a)         Notice of Proposed Audit Adjustments.  Once the auditor has conducted the audit and made an examination of the taxpayer's books and records provided during the audit process, the Department shall issue a written notice to the taxpayer in cases in which a liability or deficiency is asserted or a refund claimed is denied in whole or in part as a result of the audit. Such letter shall be referred to as a Notice of Proposed Liability, Notice of Proposed Deficiency, or Notice of Proposed Claim Denial.  The notice shall state the amount of the proposed liability, deficiency or claim denial and inform the taxpayer of his or her right to an informal review by the Informal Conference Board.  The taxpayer shall have 60 days after the date the Notice of Proposed Liability, Notice of Proposed Deficiency, or Notice of Proposed Claim Denial is issued to file a request with the Informal Conference Board for review of the proposed audit adjustment.  The 60-day period for filing a request commences with the date the notice is hand delivered to the taxpayer, or with the mailing date of the notice.  The mailing date is the date that appears on the face of the notice or the postmark date, if later than the date shown on the notice.  A request for review shall be deemed to be timely filed if it is either received by the ICB or is postmarked within the 60-day period.

 

b)         Situations When the Taxpayer Will Not Be Issued a Notice of Proposed Audit Adjustment.  The Department will not issue a Notice of Proposed Liability, Notice of Proposed Deficiency or Notice of Proposed Claim Denial when a taxpayer has agreed to an audit by signing the EDA-105 or IL-870, or by making a payment of tax deemed assessed under ITA Section 903(a)(4). By signing the EDA-105 or IL-870, or making such a payment, the taxpayer has waived his or her right to seek review by the Informal Conference Board.  The Department will also not issue a Notice of Proposed Liability, Notice of Proposed Deficiency, or Notice of Proposed Claim Denial when the taxpayer refuses to extend the statute of limitations when those statutes will expire prior to the expiration of the 60-day period for seeking Informal Conference Board review.

 

c)         Requirements of a Request for Review.  A written request to the ICB will commence the informal review process.  The ICB will examine the basis for the proposed audit adjustments that are being disputed and review the reasons why the taxpayer disagrees with the proposed adjustments, along with all supporting documentation and any additional information that the taxpayer may wish to submit in support of his or her position. The request to the ICB for review of the proposed audit adjustments shall be on a form prescribed by the Department.  The form shall include at least the following information:

 

1)         The name of the taxpayer or taxpayers;

 

2)         the taxpayer's identifying numbers (Social Security number of individuals or the Illinois Business Tax number issued by the Department for registration purposes, or federal identification number for entities, such as corporations, estates and trusts, or partnerships);

 

3)         the current address of the taxpayer and the taxpayer's representative to which correspondence concerning the request should be directed;

 

4)         the amount of the proposed liability, deficiency or claim denial that is the subject of the request;

 

5)         the audit period at issue to which the request is directed; and

 

6)         the identifying numbers that appear on the Notice of Proposed Liability, Notice of Proposed Deficiency or Notice of Proposed Claim Denial.  The request must be dated and signed by the taxpayer or by an authorized representative of the taxpayer.  If the taxpayer fails, unless for good cause shown, to provide all information required by the Department's form and instructions, the Board may refuse to take jurisdiction of the request or dismiss the request.

 

d)         In-Person Conference Request. An in-person conference with the ICB panel members or their representatives must be requested at the time that the request for review is filed with the ICB.  See Section 215.130 for additional detail relating to in-person conferences.

 

e)         Grounds for Request.  A request to the ICB must raise objections to the proposed audit adjustments.  The request may be supplemented up until 30 days before the in-person conference, if one is requested, or within 30 days after the filing of the request if an in-person conference is not requested.  The request shall state the taxpayer's specific reasons for the disagreement with the proposed adjustments and show why the Department's proposed tax adjustment is incorrect.  The request should reference any information relied upon by the taxpayer.

 

f)          The filing of a Request for Review by a taxpayer or authorized representative under this Part shall act as a waiver of the applicable statute of limitation that would otherwise prevent the Department from the issuance of a Notice of Tax Liability, Notice of Deficiency, or Notice of Claim Denial following the completion of an audit.  In such instance, any applicable limitations period shall be tolled from the date the Request for Review is accepted by the ICB up to and including 180 days following the date of the final decision or memorandum issued by the ICB.  Futhermore, should the ICB matter impact future audit periods, the taxpayer will execute all necessary waivers for later audit periods when requested to do so by the Audit Bureau while the matter is pending at the ICB.  If the ICB matter impacts later audit periods and the taxpayer fails to execute all necessary waivers for later audit periods when requested to do so by the Audit Bureau, the Audit Bureau will notify the ICB of the non-compliance and the ICB may dismiss the taxpayer's case.  For purposes of this Part, an impact on future audit periods includes, but is not limited to, the following situations:  the same issues are involved in both audit periods; the subsequent audit period is a mandatory audit due to the amount of liability proposed in the ICB matter; or the amounts shown on a return subject to review by the ICB may be carried to a subsequent year's return.

 

g)         Proposals for Disposition.  A taxpayer may submit a formal request to settle the tax dispute with the Department as a part of the initial request to the ICB or at any point during ICB review prior to the issuance of an Action Decision. Procedures for proposals are outlined in Section 215.125.

 

h)         Offers in Compromise.  The ICB will not accept or negotiate offers in compromise.  If a taxpayer is only seeking relief from the further obligation to pay an undisputed tax liability based on an inability to pay, the taxpayer should contact the Department's Board of Appeals after a final assessment of the tax.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.120  Review of Requests by the Informal Conference Board

 

a)         The informal conference process is the first step in attempting to resolve a tax dispute with the Department.   It provides an opportunity for the ICB and the taxpayer to review and discuss the issues relating to the proposed audit adjustments brought into question.  The informal conference process is not subject to the requirements of the Illinois Administrative Procedure Act [5 ILCS 100] and any final action taken by the ICB is not subject to administrative review.

 

b)         In order to make its determination with respect to a written request, the ICB may request additional relevant information regarding the grounds raised in the taxpayer's request for ICB review.  Requests for information by the ICB are limited to information or documents related to issues raised during the audit that are reflected in the reasons for, and/or the computations supporting, any proposed audit adjustments.  A request for additional information may also be made by the ICB either in writing or orally during the course of an in-person conference.  The taxpayer, or the taxpayer's representative, has a duty to respond to any requests for additional information within 30 days from the date of the request, unless otherwise agreed.  Failure to respond in a timely and complete manner may result in the request for an in-person conference and/or relief being denied.  A written statement by the taxpayer that information requested does not or did not exist, or cannot be assembled or collated in a reasonable amount of time, will be considered a complete response.  However,  failure to provide the information requested because it cannot be assembled or collated in a reasonable amount of time may be the basis of an ICB decision to deny an in-person conference and/or the relief requested by the taxpayer.

 

c)         Documentation or information submitted to the ICB in writing or as part of an informal conference, other than offers of disposition, may become part of the Department's audit file or may be reviewed by the Audit Bureau.  If a taxpayer submits information to the conferee, the information may be given to the auditor to review and make any revisions to the proposed audit adjustments before an ICB conference is held or before a recommendation is made by the conferee.  In the situation where information is returned to the auditor for review, the ICB will retain jurisdiction over the matter.  Documentation or information submitted to the ICB does not become part of any formal record and cannot be forwarded to any other agency or judicial body for purposes of that body making a determination on the merits of any case.  Both the taxpayer and the Department must present all evidence directly to those judicial bodies in accordance with the rules of those bodiesif they wish the evidence to be considered.

 

d)         Requests for review submitted to the ICB and all accompanying information provided are part of the pre-assessment administrative process of the Department.  All such information is covered by the confidentiality provisions of the various tax laws.

 

e)         Recommendations, notes, memoranda and other records of the ICB with respect to issues raised in pending ICB matters are not subject to disclosure and do not become part of the audit file.

 

f)         The ICB is charged with the responsibility of making a determination of whether the amount of the proposed audit adjustment is accurate.  After a complete review of the request, accompanying information and any evidence and arguments submitted on behalf of the taxpayer at an in-person conference, if requested, the ICB shall issue an Action Decision.  Whenever possible, the Action Decision shall be issued within 120 days after receipt of the taxpayer's request.  An Action Decision shall be issued only upon the approval of no fewer than 2 of the 3 members of the ICB panel assigned to the matter.  The ICB may expedite the processing of requests for review that involve proposed liabilities, deficiencies or claim denials in an amount of $5,000 or less.  In determining whether a request should be expedited, the ICB administrator will consider such factors as whether the amount at issue exceeds $5,000, or whether the issue is one of first impression or controversial.  The ICB administrator will notify the taxpayer in writing if it is determined that the matter should be expedited.  The expedited process would mean that only the conferee assigned to the matter will attend the in-person conference, if one is requested.  In addition, an Action Decision issued in an expedited matter shall be issued upon the approval of one member of the ICB panel.  The Action Decision is final and binding on the Department except where there is a misrepresentation of material fact or a clerical or mathematical error made by the taxpayer, the ICB or a member of the ICB staff.  In such situations, the Board may amend or vacate the Action Decision.  Action Decisions must be implemented by those areas of the Department to which they are directed.  The taxpayer and its representative will be provided with a written notice of the Action Decision.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.125  Disposition of Proposed Assessments

 

a)         Offers of disposition of a proposed audit adjustment may be proposed to the ICB or by the ICB.  The ICB shall consider disposing of the matter in controversy in all instances where, having made a reasonable evaluation of such matters, the ICB determines that there is uncertainty as to the correctness of the proposed audit adjustments and it is not in the best interest of the Department to issue an assessment or claim denial with respect to the issue.

 

b)         Offers of disposition shall be tendered in writing to the ICB on a form prescribed by the Department. Disposition offers may be submitted with the initial request to the ICB or at any point during ICB review prior to the issuance of an Action Decision.  The offer shall include specific proposed net dollar amounts, identification of issues to be conceded, in whole or in part, by either party, and the supporting rationale for acceptance of the offer.  The ICB may also consider a request for penalty waiver as part of the offer. Any offer received may be accepted, rejected or countered by the ICB and the taxpayer or its representative shall be notified of the ICB's decision with regard to the offer as part of the Action Decision.

 

c)         Statements made by a taxpayer in the written offer of disposition will be considered to be made in the course of good faith negotiations and will not be admissible against the taxpayer in any further proceedings with regard to the matter in controversy.

 

d)         When a decision has been reached by the ICB, an Action Decision setting forth the terms and conditions of the proposed disposition shall be issued.  As with all other Action Decisions issued by the ICB after informal review or in-person conference, the Action Decision must be approved by  no fewer than 2 of the 3 members of the ICB panel assigned to the matter.

 

e)         An approved Action Decision setting forth the conditions of the proposed disposition submitted in accordance with this Section becomes effective when executed by the taxpayer or its representative.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.130  In-Person Conferences

 

a)         Taxpayers shall be given an in-person conference if requested in the taxpayer's initial application for review with ICB.  The ICB may also request an in-person conference.  There is no requirement that an in-person conference be held, except as requested by the taxpayer.  However, failure of a taxpayer to agree to an ICB requested in-person conference may result in denial of the relief sought due to a lack of sufficient information having been supplied to the ICB.

 

b)         The purpose of the in-person conference is to allow the ICB members or their representatives and the taxpayer or taxpayer's representative to explore the issues raised by the proposed audit adjustment, develop the factual basis of the request, and consider information relevant to the determination of the request.

 

c)         The ICB shall mail a written notice of the time, date and location of the in-person conference to the taxpayer or taxpayer's representative, at the address provided on the request to the ICB.   The address provided in the original request shall be presumed to be the correct address for all purposes unless the taxpayer or taxpayer's representative notifies the ICB of a change of address in writing. Failure to notify the ICB of a change in address is grounds for dismissal of the taxpayer's request for review by the ICB.

 

d)         An in-person conference will be scheduled within 45 days after receipt of the request from the taxpayer whenever possible, and may be established by mutual agreement of the taxpayer, the taxpayer's representative and the ICB members or staff representatives conducting the conference.  Failure of the taxpayer or the taxpayer's representative to cooperate with setting a conference date constitutes grounds for denial of an in-person conference.  At least 2 of the 3 ICB panel members or their representatives shall participate in the in-person conference.  In cases in which the amount of proposed liability, deficiency or claim denial at issue is $5,000 or less, then only one ICB member or his or her representative is required to participate in the in-person conference.

 

e)         A taxpayer or a taxpayer's representative who does not appear at the scheduled conference shall be deemed to have waived his or her right to an in-person conference unless good cause for failing to attend can be shown.  Good cause shall include, but not be limited to, illness of the taxpayer or his or her representative or weather conditions or catastrophes, natural or otherwise, that preclude attendance by any party to the conference.

 

f)         Formal rules of evidence do not apply at an in-person conference.

 

g)         Upon conclusion of the in-person conference, the ICB panel will issue a final Action Decision to the taxpayer and/or the taxpayer's representative and to the Audit Bureau, where the terms of the final Action Decision shall be implemented.

 

(Source:  Amended at 31 Ill. Reg. 8535, effective June 1, 2007)

 

Section 215.135  Informal Review in Administrative Hearings Not Available

 

a)         Effective with respect to a Notice of Proposed Liability, Notice of Proposed Deficiency, or Notice of Proposed Claim denial issued on or after May 31, 2007, when the Informal Conference Board has issued an Action Decision that addresses the merits of the audit adjustments, a taxpayer that files a protest of any subsequent Notice of Tax Liability, Notice of Deficiency, of Notice of Claim Denial with the Office of Administrative Hearings cannot request informal review as provided by 86 Ill. Adm. Code 200.135

 

b)         See 86 Ill. Adm. Code 200.135 for further guidance.

 

(Source:  Added at 31 Ill. Reg. 8535, effective June 1, 2007)