Rep. Joe C. Sosnowski

Filed: 5/6/2024

 

 


 

 


 
10300SB3282ham002LRB103 34197 HLH 73006 a

1
AMENDMENT TO SENATE BILL 3282

2    AMENDMENT NO. ______. Amend Senate Bill 3282 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Retailers' Occupation Tax Act is amended
5by changing Section 2-10.5 as follows:
 
6    (35 ILCS 120/2-10.5)
7    Sec. 2-10.5. Direct payment program; purchaser's providing
8of permit to retailer; retailer relieved of collecting use tax
9and local retailers' occupation tax reimbursements from
10purchaser; direct payment of retailers' occupation tax and
11local retailers' occupation tax by purchaser.
12    (a) Beginning on July 1, 2001 there is established in this
13State a Direct Payment Program to be administered by the
14Department. The Department shall issue a Direct Pay Permit to
15applicants who have been approved to participate in the Direct
16Payment Program. Each person applying to participate in the

 

 

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1Direct Payment Program must demonstrate (1) the applicant's
2ability to comply with the retailers' occupation tax laws and
3the use tax laws in effect in this State and that the
4applicant's accounting system will reflect the proper amount
5of tax due, (2) that the applicant has a valid business purpose
6for participating in the Direct Payment Program, and (3) how
7the applicant's participation in the Direct Payment Program
8will benefit tax compliance. Application shall be made on
9forms provided by the Department and shall contain information
10as the Department may reasonably require. The Department shall
11approve or deny an applicant within 90 days after the
12Department's receipt of the application, unless the Department
13makes a written request for additional information from the
14applicant.
15    (b) A person who has been approved for the Direct Payment
16Program and who has been issued a Direct Pay Permit by the
17Department is relieved of paying tax to a retailer when
18purchasing tangible personal property for use or consumption,
19except as provided in subsection (d), by providing that
20retailer a copy of that Direct Pay Permit. A retailer who
21accepts a copy of a customer's Direct Pay Permit is relieved of
22the obligation to remit the tax imposed by this Act on the
23transaction. References in this Section to "the tax imposed by
24this Act" include any local occupation taxes administered by
25the Department that would be incurred on the retail sale.
26    (c) Once the holder of a Direct Pay Permit uses that Permit

 

 

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1to relieve the Permit holder from paying tax to a particular
2retailer, the holder must use its Permit for all purchases,
3except as provided in subsection (d), from that retailer for
4so long as the Permit is valid.
5    (d) Direct Pay Permits are not valid and shall not be used
6for sales or purchases of:
7        (1) food or beverage;
8        (2) tangible personal property required to be titled
9    or registered with an agency of government; or
10        (3) any transactions subject to the Service Occupation
11    Tax Act or Service Use Tax Act.
12    (e) Direct Pay Permits are not assignable and are not
13transferable. As an illustration, a construction contractor
14shall not make purchases using a customer's Direct Pay Permit.
15    (f) A Direct Pay Permit is valid until it is revoked by the
16Department or until the holder notifies the Department in
17writing that the holder is withdrawing from the Direct Payment
18Program. A Direct Pay Permit can be revoked by the Department,
19after notice and hearing, if the holder violates any provision
20of this Act, any provision of the Illinois Use Tax Act, or any
21provision of any Act imposing a local retailers' occupation
22tax administered by the Department.
23    (g) The holder of a Direct Pay Permit who has been relieved
24of paying tax to a retailer on a purchase for use or
25consumption by representing to that retailer that it would pay
26all applicable taxes directly to the Department shall pay

 

 

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1those taxes to the Department not later than the 20th day of
2the month following the month in which the purchase was made.
3Permit holders making such purchases are subject to all
4provisions of this Act, and the tax must be reported and paid
5as retailers' occupation tax in the same manner that the
6retailer from whom the purchases were made would have reported
7and paid it, including any local retailers' occupation taxes
8applicable to that retail sale. Notwithstanding any other
9provision of this Act, Permit holders shall make all payments
10to the Department through the use of electronic funds
11transfer.
12    (h) By March 31, 2025, and by March 31 of each year
13thereafter, each holder of a Direct Pay Permit shall review
14its purchase activity to verify that the purchases made during
15the 12-month period ending on December 31 of the immediately
16preceding calendar year were sourced correctly and that the
17correct tax rate was applied. If the holder of the Direct Pay
18Permit discovers an error in sourcing or the tax rate during
19the review process, then, by April 20 of the calendar year in
20which the review under this subsection occurs, the holder of
21the Direct Pay Permit shall file an amended return to correct
22the error. If, for any 12-month review period under this
23subsection, a holder of a Direct Pay Permit fails to properly
24verify purchase activity and correct sourcing and tax rate
25errors as required by this subsection and the rules adopted by
26the Department, then the Direct Pay Permit holder is liable to

 

 

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1pay a penalty of $6,000 to the Department, for deposit into the
2Tax Compliance and Administration Fund. However, the penalty
3under this subsection shall not be imposed if the Department
4finds that at least 95% of the Direct Pay Permit holder's
5transactions for the applicable 12-month review period are
6correctly sourced and the correct taxes have been remitted or
7the permit holder acted with ordinary business care and
8prudence. For the purposes of this subsection, ordinary
9business care and prudence shall be determined in accordance
10with Section 3-8 of the Uniform Penalty and Interest Act. The
11Department may adopt rules to administer the penalties under
12this Section.
13(Source: P.A. 92-484, eff. 8-23-01.)
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.".