093_SB0018eng SB18 Engrossed LRB093 02605 SJM 02615 b 1 AN ACT in relation to taxes. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 1. Short title. This Act may be cited as the Tax 5 Delinquency Amnesty Act. 6 Section 5. Definitions. As used in this Act: 7 "Department" means the Illinois Department of Revenue. 8 "Rules" means any rules adopted or forms prescribed by 9 the Department. 10 "Taxable period" means any period of time for which any 11 tax is imposed by and owed to the State of Illinois. 12 "Taxpayer" means any person, corporation, or other entity 13 subject to any tax, except for the motor fuel use tax, 14 imposed by any law of the State of Illinois and payable to 15 the State of Illinois. 16 Section 10. Amnesty program. The Department shall 17 establish an amnesty program for all taxpayers owing any tax 18 imposed by reason of or pursuant to authorization by any law 19 of the State of Illinois and collected by the Department. 20 The amnesty program shall be for a period from September 21 1, 2003 through November 15, 2003. 22 The amnesty program shall provide that, upon payment by a 23 taxpayer of all taxes due from that taxpayer to the State of 24 Illinois for any taxable period ending after June 30, 1983 25 and prior to July 1, 2002, the Department shall abate and not 26 seek to collect any interest or penalties that may be 27 applicable and the Department shall not seek civil or 28 criminal prosecution for any taxpayer for the period of time 29 for which amnesty has been granted to the taxpayer. Failure 30 to pay all taxes due to the State for a taxable period shall SB18 Engrossed -2- LRB093 02605 SJM 02615 b 1 invalidate any amnesty granted under this Act. Amnesty shall 2 be granted only if all amnesty conditions are satisfied by 3 the taxpayer. 4 Amnesty shall not be granted to taxpayers who are a party 5 to any criminal investigation or to any civil or criminal 6 litigation that is pending in any circuit court or appellate 7 court or the Supreme Court of this State for nonpayment, 8 delinquency, or fraud in relation to any State tax imposed by 9 any law of the State of Illinois. 10 Voluntary payments made under this Act shall be made by 11 cash, check, guaranteed remittance, or ACH debit. 12 The Department shall adopt rules as necessary to 13 implement the provisions of this Act. 14 Except as otherwise provided in this Section, all money 15 collected under this Act that would otherwise be deposited 16 into the General Revenue Fund shall be deposited as follows: 17 (i) one-half into the Common School Fund; (ii) one-half into 18 the General Revenue Fund. Two percent of all money collected 19 under this Act shall be deposited by the State Treasurer into 20 the Tax Compliance and Administration Fund and, subject to 21 appropriation, shall be used by the Department to cover costs 22 associated with the administration of this Act. 23 Section 97. Repealer. This Act is repealed on January 1, 24 2005. 25 Section 905. The Uniform Penalty and Interest Act is 26 amended by changing Sections 3-2, 3-3, 3-4, 3-5, 3-6, and 27 3-7.5 as follows: 28 (35 ILCS 735/3-2) (from Ch. 120, par. 2603-2) 29 Sec. 3-2. Interest. 30 (a) Interest paid by the Department to taxpayers and 31 interest charged to taxpayers by the Department shall be paid SB18 Engrossed -3- LRB093 02605 SJM 02615 b 1 at the annual rate determined by the Department. That rate 2 shall be the underpayment rate established under Section 6621 3 of the Internal Revenue Code. 4 (b) The interest rate shall be adjusted on a semiannual 5 basis, on January 1 and July 1, based upon the underpayment 6 rate going into effect on that January 1 or July 1 under 7 Section 6621 of the Internal Revenue Code. 8 (c) This subsection (c) is applicable to returns due on 9 and before December 31, 2000. Interest shall be simple 10 interest calculated on a daily basis. Interest shall accrue 11 upon tax and penalty due. If notice and demand is made for 12 the payment of any amount of tax due and if the amount due is 13 paid within 30 days after the date of such notice and demand, 14 interest under this Section on the amount so paid shall not 15 be imposed for the period after the date of the notice and 16 demand. 17 (c-5) This subsection (c-5) is applicable to returns due 18 on and after January 1, 2001. Interest shall be simple 19 interest calculated on a daily basis. Interest shall accrue 20 upon tax due. If notice and demand is made for the payment 21 of any amount of tax due and if the amount due is paid within 22 30 days after the date of the notice and demand, interest 23 under this Section on the amount so paid shall not be imposed 24 for the period after the date of the notice and demand. 25 (d) No interest shall be paid upon any overpayment of 26 tax if the overpayment is refunded or a credit approved 27 within 90 days after the last date prescribed for filing the 28 original return, or within 90 days of the receipt of the 29 processable return, or within 90 days after the date of 30 overpayment, whichever date is latest, as determined without 31 regard to processing time by the Comptroller or without 32 regard to the date on which the credit is applied to the 33 taxpayer's account. In order for an original return to be 34 processable for purposes of this Section, it must be in the SB18 Engrossed -4- LRB093 02605 SJM 02615 b 1 form prescribed or approved by the Department, signed by the 2 person authorized by law, and contain all information, 3 schedules, and support documents necessary to determine the 4 tax due and to make allocations of tax as prescribed by law. 5 For the purposes of computing interest, a return shall be 6 deemed to be processable unless the Department notifies the 7 taxpayer that the return is not processable within 90 days 8 after the receipt of the return; however, interest shall not 9 accumulate for the period following this date of notice. 10 Interest on amounts refunded or credited pursuant to the 11 filing of an amended return or claim for refund shall be 12 determined from the due date of the original return or the 13 date of overpayment, whichever is later, to the date of 14 payment by the Department without regard to processing time 15 by the Comptroller or the date of credit by the Department or 16 without regard to the date on which the credit is applied to 17 the taxpayer's account. If a claim for refund relates to an 18 overpayment attributable to a net loss carryback as provided 19 by Section 207 of the Illinois Income Tax Act, the date of 20 overpayment shall be the last day of the taxable year in 21 which the loss was incurred. 22 (e) Interest on erroneous refunds. Any portion of the 23 tax imposed by an Act to which this Act is applicable or any 24 interest or penalty which has been erroneously refunded and 25 which is recoverable by the Department shall bear interest 26 from the date of payment of the refund. However, no interest 27 will be charged if the erroneous refund is for an amount less 28 than $500 and is due to a mistake of the Department. 29 (f) If a taxpayer has a tax liability that is eligible 30 for amnesty under the Tax Delinquency Amnesty Act and the 31 taxpayer fails to satisfy the tax liability during the 32 amnesty period provided for in that Act, then the interest 33 charged by the Department under this Section shall be imposed 34 at a rate that is 200% of the rate that would otherwise be SB18 Engrossed -5- LRB093 02605 SJM 02615 b 1 imposed under this Section. 2 (Source: P.A. 91-803, eff. 1-1-01.) 3 (35 ILCS 735/3-3) (from Ch. 120, par. 2603-3) 4 Sec. 3-3. Penalty for failure to file or pay. 5 (a) This subsection (a) is applicable before January 1, 6 1996. A penalty of 5% of the tax required to be shown due on 7 a return shall be imposed for failure to file the tax return 8 on or before the due date prescribed for filing determined 9 with regard for any extension of time for filing (penalty for 10 late filing or nonfiling). If any unprocessable return is 11 corrected and filed within 21 days after notice by the 12 Department, the late filing or nonfiling penalty shall not 13 apply. If a penalty for late filing or nonfiling is imposed 14 in addition to a penalty for late payment, the total penalty 15 due shall be the sum of the late filing penalty and the 16 applicable late payment penalty. Beginning on the effective 17 date of this amendatory Act of 1995, in the case of any type 18 of tax return required to be filed more frequently than 19 annually, when the failure to file the tax return on or 20 before the date prescribed for filing (including any 21 extensions) is shown to be nonfraudulent and has not occurred 22 in the 2 years immediately preceding the failure to file on 23 the prescribed due date, the penalty imposed by Section 24 3-3(a) shall be abated. 25 (a-5) This subsection (a-5) is applicable to returns due 26 on and after January 1, 1996 and on or before December 31, 27 2000. A penalty equal to 2% of the tax required to be shown 28 due on a return, up to a maximum amount of $250, determined 29 without regard to any part of the tax that is paid on time or 30 by any credit that was properly allowable on the date the 31 return was required to be filed, shall be imposed for failure 32 to file the tax return on or before the due date prescribed 33 for filing determined with regard for any extension of time SB18 Engrossed -6- LRB093 02605 SJM 02615 b 1 for filing. However, if any return is not filed within 30 2 days after notice of nonfiling mailed by the Department to 3 the last known address of the taxpayer contained in 4 Department records, an additional penalty amount shall be 5 imposed equal to the greater of $250 or 2% of the tax shown 6 on the return. However, the additional penalty amount may 7 not exceed $5,000 and is determined without regard to any 8 part of the tax that is paid on time or by any credit that 9 was properly allowable on the date the return was required to 10 be filed (penalty for late filing or nonfiling). If any 11 unprocessable return is corrected and filed within 30 days 12 after notice by the Department, the late filing or nonfiling 13 penalty shall not apply. If a penalty for late filing or 14 nonfiling is imposed in addition to a penalty for late 15 payment, the total penalty due shall be the sum of the late 16 filing penalty and the applicable late payment penalty. In 17 the case of any type of tax return required to be filed more 18 frequently than annually, when the failure to file the tax 19 return on or before the date prescribed for filing (including 20 any extensions) is shown to be nonfraudulent and has not 21 occurred in the 2 years immediately preceding the failure to 22 file on the prescribed due date, the penalty imposed by 23 Section 3-3(a-5) shall be abated. 24 (a-10) This subsection (a-10) is applicable to returns 25 due on and after January 1, 2001. A penalty equal to 2% of 26 the tax required to be shown due on a return, up to a maximum 27 amount of $250, reduced by any tax that is paid on time or by 28 any credit that was properly allowable on the date the return 29 was required to be filed, shall be imposed for failure to 30 file the tax return on or before the due date prescribed for 31 filing determined with regard for any extension of time for 32 filing. However, if any return is not filed within 30 days 33 after notice of nonfiling mailed by the Department to the 34 last known address of the taxpayer contained in Department SB18 Engrossed -7- LRB093 02605 SJM 02615 b 1 records, an additional penalty amount shall be imposed equal 2 to the greater of $250 or 2% of the tax shown on the return. 3 However, the additional penalty amount may not exceed $5,000 4 and is determined without regard to any part of the tax that 5 is paid on time or by any credit that was properly allowable 6 on the date the return was required to be filed (penalty for 7 late filing or nonfiling). If any unprocessable return is 8 corrected and filed within 30 days after notice by the 9 Department, the late filing or nonfiling penalty shall not 10 apply. If a penalty for late filing or nonfiling is imposed 11 in addition to a penalty for late payment, the total penalty 12 due shall be the sum of the late filing penalty and the 13 applicable late payment penalty. In the case of any type of 14 tax return required to be filed more frequently than 15 annually, when the failure to file the tax return on or 16 before the date prescribed for filing (including any 17 extensions) is shown to be nonfraudulent and has not occurred 18 in the 2 years immediately preceding the failure to file on 19 the prescribed due date, the penalty imposed by Section 20 3-3(a-10) shall be abated. 21 (b) This subsection is applicable before January 1, 22 1998. A penalty of 15% of the tax shown on the return or the 23 tax required to be shown due on the return shall be imposed 24 for failure to pay: 25 (1) the tax shown due on the return on or before 26 the due date prescribed for payment of that tax, an 27 amount of underpayment of estimated tax, or an amount 28 that is reported in an amended return other than an 29 amended return timely filed as required by subsection (b) 30 of Section 506 of the Illinois Income Tax Act (penalty 31 for late payment or nonpayment of admitted liability); or 32 (2) the full amount of any tax required to be shown 33 due on a return and which is not shown (penalty for late 34 payment or nonpayment of additional liability), within 30 SB18 Engrossed -8- LRB093 02605 SJM 02615 b 1 days after a notice of arithmetic error, notice and 2 demand, or a final assessment is issued by the 3 Department. In the case of a final assessment arising 4 following a protest and hearing, the 30-day period shall 5 not begin until all proceedings in court for review of 6 the final assessment have terminated or the period for 7 obtaining a review has expired without proceedings for a 8 review having been instituted. In the case of a notice 9 of tax liability that becomes a final assessment without 10 a protest and hearing, the penalty provided in this 11 paragraph (2) shall be imposed at the expiration of the 12 period provided for the filing of a protest. 13 (b-5) This subsection is applicable to returns due on 14 and after January 1, 1998 and on or before December 31, 2000. 15 A penalty of 20% of the tax shown on the return or the tax 16 required to be shown due on the return shall be imposed for 17 failure to pay: 18 (1) the tax shown due on the return on or before 19 the due date prescribed for payment of that tax, an 20 amount of underpayment of estimated tax, or an amount 21 that is reported in an amended return other than an 22 amended return timely filed as required by subsection (b) 23 of Section 506 of the Illinois Income Tax Act (penalty 24 for late payment or nonpayment of admitted liability); or 25 (2) the full amount of any tax required to be shown 26 due on a return and which is not shown (penalty for late 27 payment or nonpayment of additional liability), within 30 28 days after a notice of arithmetic error, notice and 29 demand, or a final assessment is issued by the 30 Department. In the case of a final assessment arising 31 following a protest and hearing, the 30-day period shall 32 not begin until all proceedings in court for review of 33 the final assessment have terminated or the period for 34 obtaining a review has expired without proceedings for a SB18 Engrossed -9- LRB093 02605 SJM 02615 b 1 review having been instituted. In the case of a notice 2 of tax liability that becomes a final assessment without 3 a protest and hearing, the penalty provided in this 4 paragraph (2) shall be imposed at the expiration of the 5 period provided for the filing of a protest. 6 (b-10) This subsection (b-10) is applicable to returns 7 due on and after January 1, 2001. A penalty shall be imposed 8 for failure to pay: 9 (1) the tax shown due on a return on or before the 10 due date prescribed for payment of that tax, an amount of 11 underpayment of estimated tax, or an amount that is 12 reported in an amended return other than an amended 13 return timely filed as required by subsection (b) of 14 Section 506 of the Illinois Income Tax Act (penalty for 15 late payment or nonpayment of admitted liability). The 16 amount of penalty imposed under this subsection (b-10)(1) 17 shall be 2% of any amount that is paid no later than 30 18 days after the due date, 5% of any amount that is paid 19 later than 30 days after the due date and not later than 20 90 days after the due date, 10% of any amount that is 21 paid later than 90 days after the due date and not later 22 than 180 days after the due date, and 15% of any amount 23 that is paid later than 180 days after the due date. If 24 notice and demand is made for the payment of any amount 25 of tax due and if the amount due is paid within 30 days 26 after the date of the notice and demand, then the penalty 27 for late payment or nonpayment of admitted liability 28 under this subsection (b-10)(1) on the amount so paid 29 shall not accrue for the period after the date of the 30 notice and demand. 31 (2) the full amount of any tax required to be shown 32 due on a return and that is not shown (penalty for late 33 payment or nonpayment of additional liability), within 30 34 days after a notice of arithmetic error, notice and SB18 Engrossed -10- LRB093 02605 SJM 02615 b 1 demand, or a final assessment is issued by the 2 Department. In the case of a final assessment arising 3 following a protest and hearing, the 30-day period shall 4 not begin until all proceedings in court for review of 5 the final assessment have terminated or the period for 6 obtaining a review has expired without proceedings for a 7 review having been instituted. The amount of penalty 8 imposed under this subsection (b-10)(2) shall be 20% of 9 any amount that is not paid within the 30-day period. In 10 the case of a notice of tax liability that becomes a 11 final assessment without a protest and hearing, the 12 penalty provided in this subsection (b-10)(2) shall be 13 imposed at the expiration of the period provided for the 14 filing of a protest. 15 (c) For purposes of the late payment penalties, the 16 basis of the penalty shall be the tax shown or required to be 17 shown on a return, whichever is applicable, reduced by any 18 part of the tax which is paid on time and by any credit which 19 was properly allowable on the date the return was required to 20 be filed. 21 (d) A penalty shall be applied to the tax required to be 22 shown even if that amount is less than the tax shown on the 23 return. 24 (e) This subsection (e) is applicable to returns due 25 before January 1, 2001. If both a subsection (b)(1) or 26 (b-5)(1) penalty and a subsection (b)(2) or (b-5)(2) penalty 27 are assessed against the same return, the subsection (b)(2) 28 or (b-5)(2) penalty shall be assessed against only the 29 additional tax found to be due. 30 (e-5) This subsection (e-5) is applicable to returns due 31 on and after January 1, 2001. If both a subsection (b-10)(1) 32 penalty and a subsection (b-10)(2) penalty are assessed 33 against the same return, the subsection (b-10)(2) penalty 34 shall be assessed against only the additional tax found to be SB18 Engrossed -11- LRB093 02605 SJM 02615 b 1 due. 2 (f) If the taxpayer has failed to file the return, the 3 Department shall determine the correct tax according to its 4 best judgment and information, which amount shall be prima 5 facie evidence of the correctness of the tax due. 6 (g) The time within which to file a return or pay an 7 amount of tax due without imposition of a penalty does not 8 extend the time within which to file a protest to a notice of 9 tax liability or a notice of deficiency. 10 (h) No return shall be determined to be unprocessable 11 because of the omission of any information requested on the 12 return pursuant to Section 2505-575 of the Department of 13 Revenue Law (20 ILCS 2505/2505-575). 14 (i) If a taxpayer has a tax liability that is eligible 15 for amnesty under the Tax Delinquency Amnesty Act and the 16 taxpayer fails to satisfy the tax liability during the 17 amnesty period provided for in that Act, then the penalty 18 imposed by the Department under this Section shall be imposed 19 in an amount that is 200% of the amount that would otherwise 20 be imposed under this Section. 21 (Source: P.A. 91-239, eff. 1-1-00; 91-803, eff. 1-1-01; 22 92-742, eff. 7-25-02.) 23 (35 ILCS 735/3-4) (from Ch. 120, par. 2603-4) 24 Sec. 3-4. Penalty for failure to file correct 25 information returns. 26 (a) Failure to file correct information returns - 27 imposition of penalty. 28 (1) In general. Unless otherwise provided in a tax 29 Act, in the case of a failure described in paragraph (2) 30 of this subsection (a) by any person with respect to an 31 information return, that person shall pay a penalty of $5 32 for each return or statement with respect to which the 33 failure occurs, but the total amount imposed on that SB18 Engrossed -12- LRB093 02605 SJM 02615 b 1 person for all such failures during any calendar year 2 shall not exceed $25,000. 3 (2) Failures subject to penalty. The following 4 failures are subject to the penalty imposed in paragraph 5 (1) of this subsection (a): 6 (A) any failure to file an information return 7 with the Department on or before the required filing 8 date, or 9 (B) any failure to include all of the 10 information required to be shown on the return or 11 the inclusion of incorrect information. 12 (b) Reduction where correction in specified period. 13 (1) Correction within 60 days. If any failure 14 described in subsection (a) (2) is corrected within 60 15 days after the required filing date: 16 (A) the penalty imposed by subsection (a) 17 shall be reduced by 50%; and 18 (B) the total amount imposed on the person for 19 all such failures during any calendar year which are 20 so corrected shall not exceed 50% of the maximum 21 prescribed in subsection (a) (1). 22 (c) Information return defined. An information return is 23 any tax return required by a tax Act to be filed with the 24 Department that does not, by law, require the payment of a 25 tax liability. 26 (d) If a taxpayer has a tax liability that is eligible 27 for amnesty under the Tax Delinquency Amnesty Act and the 28 taxpayer fails to satisfy the tax liability during the 29 amnesty period provided for in that Act, then the penalty 30 imposed by the Department under this Section shall be imposed 31 in an amount that is 200% of the amount that would otherwise 32 be imposed under this Section. 33 (Source: P.A. 87-205.) SB18 Engrossed -13- LRB093 02605 SJM 02615 b 1 (35 ILCS 735/3-5) (from Ch. 120, par. 2603-5) 2 Sec. 3-5. Penalty for negligence. 3 (a) If any return or amended return is prepared 4 negligently, but without intent to defraud, and filed, in 5 addition to any penalty imposed under Section 3-3 of this 6 Act, a penalty shall be imposed in an amount equal to 20% of 7 any resulting deficiency. 8 (b) Negligence includes any failure to make a reasonable 9 attempt to comply with the provisions of any tax Act and 10 includes careless, reckless, or intentional disregard of the 11 law or regulations. 12 (c) No penalty shall be imposed under this Section if it 13 is shown that failure to comply with the tax Act is due to 14 reasonable cause. A taxpayer is not negligent if the 15 taxpayer shows substantial authority to support the return as 16 filed. 17 (d) If a taxpayer has a tax liability that is eligible 18 for amnesty under the Tax Delinquency Amnesty Act and the 19 taxpayer fails to satisfy the tax liability during the 20 amnesty period provided for in that Act, then the penalty 21 imposed by the Department shall be imposed in an amount that 22 is 200% of the amount that would otherwise be imposed in 23 accordance with this Section. 24 (Source: P.A. 87-205; 87-1189.) 25 (35 ILCS 735/3-6) (from Ch. 120, par. 2603-6) 26 Sec. 3-6. Penalty for fraud. 27 (a) If any return or amended return is filed with intent 28 to defraud, in addition to any penalty imposed under Section 29 3-3 of this Act, a penalty shall be imposed in an amount 30 equal to 50% of any resulting deficiency. 31 (b) If any claim is filed with intent to defraud, a 32 penalty shall be imposed in an amount equal to 50% of the 33 amount fraudulently claimed for credit or refund. SB18 Engrossed -14- LRB093 02605 SJM 02615 b 1 (c) If a taxpayer has a tax liability that is eligible 2 for amnesty under the Tax Delinquency Amnesty Act and the 3 taxpayer fails to satisfy the tax liability during the 4 amnesty period provided for in that Act, then the penalty 5 imposed by the Department under this Section shall be imposed 6 in an amount that is 200% of the amount that would otherwise 7 be imposed under this Section. 8 (Source: P.A. 87-205.) 9 (35 ILCS 735/3-7.5) 10 Sec. 3-7.5. Bad check penalty. 11 (a) In addition to any other penalty provided in this 12 Act, a penalty of $25 shall be imposed on any person who 13 issues a check or other draft to the Department that is not 14 honored upon presentment. The penalty imposed under this 15 Section shall be deemed assessed at the time of presentment 16 of the check or other draft and shall be treated for all 17 purposes, including collection and allocation, as part of the 18 tax or other liability for which the check or other draft 19 represented payment. 20 (b) If a taxpayer has a tax liability that is eligible 21 for amnesty under the Tax Delinquency Amnesty Act and the 22 taxpayer fails to satisfy the tax liability during the 23 amnesty period provided for in that Act, then the penalty 24 imposed by the Department under this Section shall be imposed 25 in an amount that is 200% of the amount that would otherwise 26 be imposed under this Section. 27 (Source: P.A. 91-803, eff. 1-1-01.) 28 Section 999. Effective date. This Act takes effect upon 29 becoming law.