98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB2378

 

Introduced 2/15/2013, by Sen. Melinda Bush

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/1101  from Ch. 120, par. 11-1101
35 ILCS 120/5a  from Ch. 120, par. 444a

    Amends the Illinois Income Tax Act and the Retailers' Occupation Tax Act. Provides that the time limitation period on the Department of Revenue's right to file a notice of lien shall not run during the term of a repayment plan that taxpayer has entered into with the Department, as long as taxpayer remains in compliance with the terms of the repayment plan. Effective immediately.


LRB098 10625 HLH 40902 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2378LRB098 10625 HLH 40902 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 1101 as follows:
 
6    (35 ILCS 5/1101)  (from Ch. 120, par. 11-1101)
7    Sec. 1101. Lien for Tax.
8    (a) If any person liable to pay any tax neglects or refuses
9to pay the same after demand, the amount (including any
10interest, additional amount, addition to tax, or assessable
11penalty, together with any costs that may accrue in addition
12thereto) shall be a lien in favor of the State of Illinois upon
13all property and rights to property, whether real or personal,
14belonging to such person.
15    (b) Unless another date is specifically fixed by law, the
16lien imposed by subsection (a) of this Section shall arise at
17the time the assessment is made and shall continue until the
18liability for the amount so assessed (or a judgment against the
19taxpayer arising out of such liability) is satisfied or becomes
20unenforceable by reason of lapse of time.
21    (c) Deficiency procedure. If the lien arises from an
22assessment pursuant to a notice of deficiency, such lien shall
23not attach and the notice referred to in this section shall not

 

 

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1be filed until all proceedings in court for review of such
2assessment have terminated or the time for the taking thereof
3has expired without such proceedings being instituted.
4    (d) Notice of lien. The lien created by assessment shall
5terminate unless a notice of lien is filed, as provided in
6section 1103 hereof, within 3 years from the date all
7proceedings in court for the review of such assessment have
8terminated or the time for the taking thereof has expired
9without such proceedings being instituted. Where the lien
10results from the filing of a return without payment of the tax
11or penalty shown therein to be due, the lien shall terminate
12unless a notice of lien is filed within 3 years from the date
13such return was filed with the Department. For the purposes of
14this subsection (d), a tax return filed before the last day
15prescribed by law, including any extension thereof, shall be
16deemed to have been filed on such last day. The time limitation
17period on the Department's right to file a notice of lien shall
18not run (1) during any period of time in which the order of any
19court has the effect of enjoining or restraining the Department
20from filing such notice of lien, or (2) during the term of a
21repayment plan that taxpayer has entered into with the
22Department, as long as taxpayer remains in compliance with the
23terms of the repayment plan.
24(Source: P.A. 97-507, eff. 8-23-11.)
 
25    Section 10. The Retailers' Occupation Tax Act is amended by

 

 

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1changing Section 5a as follows:
 
2    (35 ILCS 120/5a)  (from Ch. 120, par. 444a)
3    Sec. 5a. The Department shall have a lien for the tax
4herein imposed or any portion thereof, or for any penalty
5provided for in this Act, or for any amount of interest which
6may be due as provided for in Section 5 of this Act, upon all
7the real and personal property of any person to whom a final
8assessment or revised final assessment has been issued as
9provided in this Act, or whenever a return is filed without
10payment of the tax or penalty shown therein to be due,
11including all such property of such persons acquired after
12receipt of such assessment or filing of such return. The
13taxpayer is liable for the filing fee incurred by the
14Department for filing the lien and the filing fee incurred by
15the Department to file the release of that lien. The filing
16fees shall be paid to the Department in addition to payment of
17the tax, penalty, and interest included in the amount of the
18lien.
19    However, where the lien arises because of the issuance of a
20final assessment or revised final assessment by the Department,
21such lien shall not attach and the notice hereinafter referred
22to in this Section shall not be filed until all proceedings in
23court for review of such final assessment or revised final
24assessment have terminated or the time for the taking thereof
25has expired without such proceedings being instituted.

 

 

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1    Upon the granting of a rehearing or departmental review
2pursuant to Section 4 or Section 5 of this Act after a lien has
3attached, such lien shall remain in full force except to the
4extent to which the final assessment may be reduced by a
5revised final assessment following such rehearing or review.
6    The lien created by the issuance of a final assessment
7shall terminate unless a notice of lien is filed, as provided
8in Section 5b hereof, within 3 years from the date all
9proceedings in court for the review of such final assessment
10have terminated or the time for the taking thereof has expired
11without such proceedings being instituted, or (in the case of a
12revised final assessment issued pursuant to a rehearing or
13departmental review) within 3 years from the date all
14proceedings in court for the review of such revised final
15assessment have terminated or the time for the taking thereof
16has expired without such proceedings being instituted; and
17where the lien results from the filing of a return without
18payment of the tax or penalty shown therein to be due, the lien
19shall terminate unless a notice of lien is filed, as provided
20in Section 5b hereof, within 3 years from the date when such
21return is filed with the Department: Provided that the time
22limitation period on the Department's right to file a notice of
23lien shall not run (1) during any period of time in which the
24order of any court has the effect of enjoining or restraining
25the Department from filing such notice of lien, or (2) during
26the term of a repayment plan that taxpayer has entered into

 

 

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1with the Department, as long as taxpayer remains in compliance
2with the terms of the repayment plan.
3    If the Department finds that a taxpayer is about to depart
4from the State, or to conceal himself or his property, or to do
5any other act tending to prejudice or to render wholly or
6partly ineffectual proceedings to collect such tax unless such
7proceedings are brought without delay, or if the Department
8finds that the collection of the amount due from any taxpayer
9will be jeopardized by delay, the Department shall give the
10taxpayer notice of such findings and shall make demand for
11immediate return and payment of such tax, whereupon such tax
12shall become immediately due and payable. If the taxpayer,
13within 5 days after such notice (or within such extension of
14time as the Department may grant), does not comply with such
15notice or show to the Department that the findings in such
16notice are erroneous, the Department may file a notice of
17jeopardy assessment lien in the office of the recorder of the
18county in which any property of the taxpayer may be located and
19shall notify the taxpayer of such filing. Such jeopardy
20assessment lien shall have the same scope and effect as the
21statutory lien hereinbefore provided for in this Section.
22    If the taxpayer believes that he does not owe some or all
23of the tax for which the jeopardy assessment lien against him
24has been filed, or that no jeopardy to the revenue in fact
25exists, he may protest within 20 days after being notified by
26the Department of the filing of such jeopardy assessment lien

 

 

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1and request a hearing, whereupon the Department shall hold a
2hearing in conformity with the provisions of this Act and,
3pursuant thereto, shall notify the taxpayer of its findings as
4to whether or not such jeopardy assessment lien will be
5released. If not, and if the taxpayer is aggrieved by this
6decision, he may file an action for judicial review of such
7final determination of the Department in accordance with
8Section 12 of this Act and the Administrative Review Law.
9    On and after July 1, 2013, protests concerning matters that
10are subject to the jurisdiction of the Illinois Independent Tax
11Tribunal shall be filed with the Tribunal, and hearings on
12those matters shall be held before the Tribunal in accordance
13with the Illinois Independent Tax Tribunal Act of 2012. The
14Tribunal shall notify the taxpayer of its findings as to
15whether or not such jeopardy assessment lien will be released.
16If not, and if the taxpayer is aggrieved by this decision, he
17may file an action for judicial review of such final
18determination of the Department in accordance with Section 12
19of this Act and the Illinois Independent Tax Tribunal Act of
202012.
21    With respect to protests filed with the Department prior to
22July 1, 2013 that would otherwise be subject to the
23jurisdiction of the Illinois Independent Tax Tribunal, the
24taxpayer may elect to be subject to the provisions of the
25Illinois Independent Tax Tribunal Act of 2012 at any time on or
26after July 1, 2013, but not later than 30 days after the date

 

 

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1on which the protest was filed. If made, the election shall be
2irrevocable.
3    If, pursuant to such hearing (or after an independent
4determination of the facts by the Department without a
5hearing), the Department or the Tribunal determines that some
6or all of the tax covered by the jeopardy assessment lien is
7not owed by the taxpayer, or that no jeopardy to the revenue
8exists, or if on judicial review the final judgment of the
9court is that the taxpayer does not owe some or all of the tax
10covered by the jeopardy assessment lien against him, or that no
11jeopardy to the revenue exists, the Department shall release
12its jeopardy assessment lien to the extent of such finding of
13nonliability for the tax, or to the extent of such finding of
14no jeopardy to the revenue.
15    The Department shall also release its jeopardy assessment
16lien against the taxpayer whenever the tax and penalty covered
17by such lien, plus any interest which may be due, are paid and
18the taxpayer has paid the Department in cash or by guaranteed
19remittance an amount representing the filing fee for the lien
20and the filing fee for the release of that lien. The Department
21shall file that release of lien with the recorder of the county
22where that lien was filed.
23    Nothing in this Section shall be construed to give the
24Department a preference over the rights of any bona fide
25purchaser, holder of a security interest, mechanics
26lienholder, mortgagee, or judgment lien creditor arising prior

 

 

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1to the filing of a regular notice of lien or a notice of
2jeopardy assessment lien in the office of the recorder in the
3county in which the property subject to the lien is located:
4Provided, however, that the word "bona fide", as used in this
5Section shall not include any mortgage of real or personal
6property or any other credit transaction that results in the
7mortgagee or the holder of the security acting as trustee for
8unsecured creditors of the taxpayer mentioned in the notice of
9lien who executed such chattel or real property mortgage or the
10document evidencing such credit transaction. Such lien shall be
11inferior to the lien of general taxes, special assessments and
12special taxes heretofore or hereafter levied by any political
13subdivision of this State.
14    In case title to land to be affected by the notice of lien
15or notice of jeopardy assessment lien is registered under the
16provisions of "An Act concerning land titles", approved May 1,
171897, as amended, such notice shall be filed in the office of
18the Registrar of Titles of the county within which the property
19subject to the lien is situated and shall be entered upon the
20register of titles as a memorial or charge upon each folium of
21the register of titles affected by such notice, and the
22Department shall not have a preference over the rights of any
23bona fide purchaser, mortgagee, judgment creditor or other lien
24holder arising prior to the registration of such notice:
25Provided, however, that the word "bona fide" shall not include
26any mortgage of real or personal property or any other credit

 

 

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1transaction that results in the mortgagee or the holder of the
2security acting as trustee for unsecured creditors of the
3taxpayer mentioned in the notice of lien who executed such
4chattel or real property mortgage or the document evidencing
5such credit transaction.
6    Such regular lien or jeopardy assessment lien shall not be
7effective against any purchaser with respect to any item in a
8retailer's stock in trade purchased from the retailer in the
9usual course of such retailer's business.
10(Source: P.A. 97-1129, eff. 8-28-12.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.