20 ILCS 2510/ Certified Audit Program Law.

(20 ILCS 2510/Art. 2510 heading) ARTICLE 2510. CERTIFIED AUDIT PROGRAM

(20 ILCS 2510/2510-1)

Sec. 2510-1. Short title. This Article 2510 of the Civil Administrative Code of Illinois may be cited as the Certified Audit Program Law.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-3)

Sec. 2510-3. Findings. The General Assembly finds that:

(1) Voluntary compliance is the cornerstone of an effective tax system.

(2) Despite attempts by the General Assembly, State taxes are not simple.

(3) Even the most diligent taxpayers through mistake or inadvertence may not pay all taxes due.

(4) The Illinois Department of Revenue lacks the resources to audit the compliance of all taxpayers.

(5) Illinois certified public accountants provide valuable advice and assistance to Illinois taxpayers on State tax issues.

(6) A pilot program establishing a partnership between taxpayers, Illinois certified public accountants, and the Illinois Department of Revenue will provide guidance to taxpayers and enhance voluntary compliance.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-5)

Sec. 2510-5. Definitions. As used in this Article:

"Certification program" means an instructional curriculum, examination, and process for certification, recertification, and revocation of certification of certified public accountants that is administered by the Illinois CPA Society and that is officially approved by the Department to ensure that a certified public accountant possesses the necessary skills and abilities to successfully perform an attestation engagement for tax compliance review in a certified audit project.

"Department" means the Illinois Department of Revenue.

"Participating taxpayer" means any person subject to the revenue laws administered by the Department who enters into an engagement with a qualified practitioner for tax compliance review and who is approved by the Department under the certified audit project.

"Qualified practitioner" means a certified public accountant who is licensed to practice in Illinois and who has completed the certification program. The phrase "completed the certification program" means the participant has met all requirements for the certified audit training course, achieved the required score on the certification test as approved by the Department, and has been certified by the Department.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-10)

Sec. 2510-10. Certified audit project.

(a) Subject to appropriation, the Department is authorized to initiate a certified audit pilot project to further enhance tax compliance reviews performed by qualified practitioners and to encourage taxpayers to hire qualified practitioners at their own expense to review and report on their sales tax and use tax compliance. The nature of the certified audit work performed by qualified practitioners shall be agreed-upon procedures in which the Department is the specified user of the resulting report.

(b) As an incentive for taxpayers to incur the costs of a certified audit, the Department shall abate penalties and interest due on any tax liabilities revealed by a certified audit, except that this authority to abate penalties or interest shall not apply to any liability for taxes that were collected by the participating taxpayer but not remitted to the Department nor shall the Department have the authority to abate fraud penalties.

(c) The certified audit pilot project shall apply only to occupation and use taxes administered and collected by the Department.

(d) The certified audit pilot project shall not extend beyond July 1, 2004.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-15)

Sec. 2510-15. Practitioner responsibilities. Any practitioner responsible for planning, directing, or conducting a certified audit or reporting on a participating taxpayer's tax compliance shall be a qualified practitioner. For purposes of this Section, a practitioner is responsible for:

(1) Planning a certified audit when performing work that involves determining the objectives, scope, and methodology of the certified audit, when establishing criteria to evaluate matters subject to the review as part of the certified audit, when gathering information used in planning the certified audit, or when coordinating the certified audit with the Department.

(2) Directing a certified audit when the work involves supervising the efforts or reviewing the work of others to determine whether it is properly accomplished and complete.

(3) Conducting a certified audit when performing tests and procedures or field audit work necessary to accomplish the audit objectives in accordance with applicable standards.

(4) Reporting on a participating taxpayer's tax compliance in a certified audit when determining report contents and substance or reviewing reports for technical content and substance prior to issuance.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-20)

Sec. 2510-20. Notification.

(a) A qualified practitioner shall notify the Department of an engagement to perform a certified audit and shall provide the Department with the information the Department deems necessary to identify the taxpayer, to confirm that the taxpayer is not already under audit by the Department, and to establish the basic nature of the taxpayer's business and the taxpayer's potential exposure to Illinois occupation and use tax laws. The information provided in the notification shall include the taxpayer's name, federal employer identification number or social security number, Illinois business tax number, mailing address, business location, and the specific occupation and use taxes and period proposed to be covered by the engagement for the certified audit. In addition, the notice shall include the name, address, identification number, contact person, and telephone number of the engaged firm.

(b) If the taxpayer has not been issued a written notice of intent to conduct an audit, the taxpayer shall be a participating taxpayer and the Department shall so advise the qualified practitioner in writing within 10 days after receipt of the engagement notice. However, the Department may exclude a taxpayer from a certified audit or may limit the taxes or periods subject to the certified audit on the basis that the Department has previously conducted an audit, that it is in the process of conducting an investigation or other examination of the taxpayer's records, or for just cause.

(c) Notice of the qualification of a taxpayer for a certified audit shall toll the statute of limitations provided with respect to the taxpayer for the tax and periods covered by the engagement.

(d) Within 30 days after receipt of the notice of qualification from the Department, the qualified practitioner shall contact the Department and submit a proposed audit plan and procedures for review and agreement by the Department. The Department may extend the time for submission of the plan and procedures for reasonable cause. The qualified practitioner shall initiate action to advise the Department that amendment or modification of the plan and procedures is necessary in the event that the qualified practitioner's inspection reveals that the taxpayer's circumstances or exposure to the revenue laws is substantially different than as described in the engagement notice.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-25)

Sec. 2510-25. Audit performance and review.

(a) Upon the Department's designation of the agreed-upon procedures to be followed by a practitioner in a certified audit, the qualified practitioner shall perform the engagement and shall timely submit a completed report to the Department. The report shall affirm completion of the agreed-upon procedures and shall provide any required disclosures.

(b) The Department shall review the report of the certified audit and shall accept it when it is determined to be complete. Once the report is accepted by the Department, the Department shall issue a notice of proposed assessment reflecting the determination of any additional liability reflected in the report and shall provide the taxpayer with all the normal payment, protest, and appeal rights with respect to the liability, including the right to a review by the Informal Conference Board. In cases where the report indicates an overpayment has been made, the taxpayer shall submit a properly executed claim for refund to the Department. Otherwise, the certified audit report is a final and conclusive determination with respect to the tax and period covered. No additional assessment may be made by the Department for the specific taxes and period referenced in the report, except upon a showing of fraud or material misrepresentation. This determination shall not prevent the Department from collecting liabilities not covered by the report or from conducting an audit or investigation and making an assessment for additional tax, penalty, or interest for any tax or period not covered by the report.

(Source: P.A. 92-456, eff. 8-21-01.)

(20 ILCS 2510/2510-30)

Sec. 2510-30. Rules. To implement the certified audit project, the Department shall have authority to adopt rules including, but not limited to:

(1) The availability of the certification program required for participation in the project;

(2) The requirements and basis for establishing just cause for approval or rejection of participation by taxpayers;

(3) Procedures for assessment, collection, and payment of liabilities or refund of overpayments and provisions for taxpayers to obtain informal and formal review of certified audit results;

(4) The nature, frequency, and basis for the Department's review of certified audits conducted by qualified practitioners, including the requirements for documentation, work-paper retention and access, and reporting; and

(5) Requirements for conducting certified audits and for review of agreed-upon procedures.

(Source: P.A. 92-456, eff. 8-21-01.)