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90_SB0037
5 ILCS 365/2 from Ch. 127, par. 352
5 ILCS 365/4 from Ch. 127, par. 354
5 ILCS 365/8 from Ch. 127, par. 358
35 ILCS 5/804 from Ch. 120, par. 8-804
40 ILCS 5/15-185 from Ch. 108 1/2, par. 15-185
Amends the State Salary and Annuity Withholding Act and
the Illinois Pension Code to authorize voluntary withholding
from retirement and disability annuities payable from the
State Universities Retirement System. Authorizes withholding
under the State Salary and Annuity Withholding Act for the
purpose of paying to the Department of Revenue amounts due or
to become due under the Illinois Income Tax Act. Provides
that the amounts withheld shall be paid without delay to the
Department of Revenue or a depositary designated by the
Department. Also makes technical corrections. Amends the
Illinois Income Tax Act to provide that an individual may
elect to have the amounts withheld under the State Salary and
Annuity Withholding Act for payment of amounts due or to
become due under the Illinois Income Tax Act treated as
payments of estimated tax. Effective immediately.
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1 AN ACT in relation to voluntary withholding, amending
2 named Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The State Salary and Annuity Withholding Act
6 is amended by changing Sections 2, 4, and 8 as follows:
7 (5 ILCS 365/2) (from Ch. 127, par. 352)
8 Sec. 2. Definitions. As used in this Act, unless the
9 context otherwise requires:
10 "Office" means the State Comptroller, The Board of
11 Trustees of the University of Illinois, The Board of Trustees
12 of Southern Illinois University, the Board of Trustees of
13 Chicago State University, the Board of Trustees of Eastern
14 Illinois University, the Board of Trustees of Governors State
15 University, the Board of Trustees of Illinois State
16 University, the Board of Trustees of Northeastern Illinois
17 University, the Board of Trustees of Northern Illinois
18 University, the Board of Trustees of Western Illinois
19 University, and the Board of Trustees of the State
20 Universities Retirement System the Board of Governors of
21 State Colleges and Universities and the universities and
22 colleges under its jurisdiction and the Board of Regents and
23 the universities under its jurisdiction.
24 "Department" means any department, board, commission,
25 institution, officer, court, or any agency of the State
26 government, other than the University of Illinois, Southern
27 Illinois University, Chicago State University, Eastern
28 Illinois University, Governors State University, Illinois
29 State University, Northeastern Illinois University, Northern
30 Illinois University, and Western Illinois University,
31 receiving State appropriations and having power to certify
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1 payrolls to the Comptroller authorizing payments of salary or
2 wages from such appropriations from any State fund or from
3 trust funds held by the State Treasurer, and the Board of
4 Trustees of the General Assembly Retirement System, the Board
5 of Trustees of the State Employees' Retirement System of
6 Illinois and the Judges Retirement System of Illinois,
7 created respectively by Articles 2, 14 and 18 of the
8 "Illinois Pension Code.", approved March 18, 1963, as
9 heretofore amended;
10 "Employee" means any regular officer or employee who
11 receives salary or wages for personal service rendered to the
12 State of Illinois and, for the purpose of deduction for the
13 purchase of United States Savings Bonds, includes any State
14 contractual employee.;
15 "Annuitant" means a person receiving a service retirement
16 annuity allowance or ordinary or accidental disability
17 benefits under Article 2, Article 14, 15, or Article 18 of
18 the "Illinois Pension Code.", approved March 18, 1963, as
19 heretofore and hereafter amended;
20 "Annuity" means the service retirement annuity allowance
21 or accidental disability benefits received by an annuitant.
22 (Source: P.A. 89-4, eff. 1-1-96.)
23 (5 ILCS 365/4) (from Ch. 127, par. 354)
24 Sec. 4. Authorization of withholding. An employee or
25 annuitant may authorize the withholding of a portion of his
26 salary, wages, or annuity for any one or more of the
27 following purposes:
28 (1) for purchase of United States Savings Bonds;
29 (2) for payment of premiums on life or accident and
30 health insurance as defined in Section 4 of the "Illinois
31 Insurance Code", approved June 29, 1937, as amended, and for
32 payment of premiums on policies of automobile insurance as
33 defined in Section 143.13 of the "Illinois Insurance Code",
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1 as amended, and the personal multiperil coverages commonly
2 known as homeowner's insurance. However, no portion of
3 salaries, wages or annuities may be withheld to pay premiums
4 on automobile, homeowner's, life or accident and health
5 insurance policies issued by any one insurance company or
6 insurance service company unless a minimum of 100 employees
7 or annuitants insured by that company authorize the
8 withholding by an Office within 6 months after such
9 withholding begins. If such minimum is not satisfied the
10 Office may discontinue withholding for such company. For any
11 insurance company or insurance service company which has not
12 previously had withholding, the Office may allow withholding
13 for premiums, where less than 100 policies have been written,
14 to cover a probationary period. An insurance company which
15 has discontinued withholding may reinstate it upon
16 presentation of facts indicating new management or
17 re-organization satisfactory to the Office;
18 (3) for payment to any labor organization designated by
19 the employee;
20 (4) for payment of dues to any association the
21 membership of which consists of State employees and former
22 State employees;
23 (5) for deposit in any credit union, in which State
24 employees are within the field of membership as a result of
25 their employment;
26 (6) for payment to or for the benefit of an institution
27 of higher education by an employee of that institution;
28 (7) for payment of parking fees at the underground
29 facility located south of the William G. Stratton State
30 Office Building in Springfield, the parking ramp located at
31 401 South College Street, west of the William G. Stratton
32 State Office Building in Springfield, or at the parking
33 facilities located on the Urbana-Champaign campus of the
34 University of Illinois;.
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1 (8) for voluntary payment to the State of Illinois of
2 amounts then due and payable to the State;.
3 (9) for investment purchases made as a participant in
4 College Savings Programs established pursuant to Section
5 30-15.8a of the School Code;.
6 (10) for voluntary payment to the Illinois Department of
7 Revenue of amounts due or to become due under the Illinois
8 Income Tax Act.
9 (Source: P.A. 88-161.)
10 (5 ILCS 365/8) (from Ch. 127, par. 358)
11 Sec. 8. Payment of certain amounts withheld.
12 (a) If a withholding authorization is for the purpose of
13 payment of insurance premiums or for payment to a labor
14 union, each Office shall make payments, as soon as payroll
15 warrants are prepared and verified, on behalf of the employee
16 or annuitant to the payee named in the authorization the
17 amount specified in the authorization. Such payments shall
18 be made by warrants prepared at the time the payroll is
19 processed.
20 (b) If a withholding authorization is for the purpose of
21 purchasing United States Savings Bonds, each Office, whenever
22 a sufficient sum has accumulated in the employee's account to
23 purchase a bond of the denomination directed by the employee
24 in his authorization, shall purchase such a United States
25 Savings Bond in the name designated by the employee and
26 deliver it to the employee.
27 (c) If a withholding authorization is for the purpose of
28 payment of parking fees pursuant to paragraph 7 of Section 4,
29 the State Comptroller shall deposit 80% of the amount
30 withheld in the Capital Development Bond Retirement and
31 Interest Fund in the State Treasury and 20% of the amount
32 withheld in the State Parking Facility Maintenance Fund in
33 the State Treasury.
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1 (d) If a withholding authorization is for the purpose of
2 payment of amounts due or to become due under the Illinois
3 Income Tax Act, the Office shall pay the amounts withheld
4 without delay directly to the Department of Revenue or to a
5 depositary designated by the Department of Revenue.
6 (Source: P.A. 83-619.)
7 Section 10. The Illinois Income Tax Act is amended by
8 changing Section 804 as follows:
9 (35 ILCS 5/804) (from Ch. 120, par. 8-804)
10 Sec. 804. Failure to Pay Estimated Tax.
11 (a) In general. In case of any underpayment of estimated
12 tax by a taxpayer, except as provided in subsection (d) or
13 (e), the taxpayer shall be liable to a penalty in an amount
14 determined at the rate prescribed by Section 3-3 of the
15 Uniform Penalty and Interest Act upon the amount of the
16 underpayment (determined under subsection (b)) for each
17 required installment.
18 (b) Amount of underpayment. For purposes of subsection
19 (a), the amount of the underpayment shall be the excess of:
20 (1) the amount of the installment which would be
21 required to be paid under subsection (c), over
22 (2) the amount, if any, of the installment paid on
23 or before the last date prescribed for payment.
24 (c) Amount of Required Installments.
25 (1) Amount.
26 (A) In General. Except as provided in
27 paragraph (2), the amount of any required
28 installment shall be 25% of the required annual
29 payment.
30 (B) Required Annual Payment. For purposes of
31 subparagraph (A), the term "required annual payment"
32 means the lesser of
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1 (i) 90% of the tax shown on the return
2 for the taxable year, or if no return is filed,
3 90% of the tax for such year, or
4 (ii) 100% of the tax shown on the return
5 of the taxpayer for the preceding taxable year
6 if a return showing a liability for tax was
7 filed by the taxpayer for the preceding taxable
8 year and such preceding year was a taxable year
9 of 12 months.
10 (2) Lower Required Installment where Annualized
11 Income Installment is Less Than Amount Determined Under
12 Paragraph (1).
13 (A) In General. In the case of any required
14 installment if a taxpayer establishes that the
15 annualized income installment is less than the
16 amount determined under paragraph (1),
17 (i) the amount of such required
18 installment shall be the annualized income
19 installment, and
20 (ii) any reduction in a required
21 installment resulting from the application of
22 this subparagraph shall be recaptured by
23 increasing the amount of the next required
24 installment determined under paragraph (1) by
25 the amount of such reduction, and by increasing
26 subsequent required installments to the extent
27 that the reduction has not previously been
28 recaptured under this clause.
29 (B) Determination of Annualized Income
30 Installment. In the case of any required
31 installment, the annualized income installment is
32 the excess, if any, of
33 (i) an amount equal to the applicable
34 percentage of the tax for the taxable year
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1 computed by placing on an annualized basis the
2 net income for months in the taxable year
3 ending before the due date for the installment,
4 over
5 (ii) the aggregate amount of any prior
6 required installments for the taxable year.
7 (C) Applicable Percentage.
8 In the case of the following The applicable
9 required installments: percentage is:
10 1st ............................... 22.5%
11 2nd ............................... 45%
12 3rd ............................... 67.5%
13 4th ............................... 90%
14 (D) Annualized Net Income; Individuals. For
15 individuals, net income shall be placed on an
16 annualized basis by:
17 (i) multiplying by 12, or in the case of
18 a taxable year of less than 12 months, by the
19 number of months in the taxable year, the net
20 income computed without regard to the standard
21 exemption for the months in the taxable year
22 ending before the month in which the
23 installment is required to be paid;
24 (ii) dividing the resulting amount by the
25 number of months in the taxable year ending
26 before the month in which such installment date
27 falls; and
28 (iii) deducting from such amount the
29 standard exemption allowable for the taxable
30 year, such standard exemption being determined
31 as of the last date prescribed for payment of
32 the installment.
33 (E) Annualized Net Income; Corporations. For
34 corporations, net income shall be placed on an
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1 annualized basis by multiplying by 12 the taxable
2 income
3 (i) for the first 3 months of the taxable
4 year, in the case of the installment required
5 to be paid in the 4th month,
6 (ii) for the first 3 months or for the
7 first 5 months of the taxable year, in the case
8 of the installment required to be paid in the
9 6th month,
10 (iii) for the first 6 months or for the
11 first 8 months of the taxable year, in the case
12 of the installment required to be paid in the
13 9th month, and
14 (iv) for the first 9 months or for the
15 first 11 months of the taxable year, in the
16 case of the installment required to be paid in
17 the 12th month of the taxable year,
18 then dividing the resulting amount by the number of
19 months in the taxable year (3, 5, 6, 8, 9, or 11 as
20 the case may be).
21 (d) Exceptions. Notwithstanding the provisions of the
22 preceding subsections, the penalty imposed by subsection (a)
23 shall not be imposed if the taxpayer was not required to file
24 an Illinois income tax return for the preceding taxable year,
25 or if the taxpayer has underpaid taxes solely because of the
26 increased rate in effect during the period from July 1, 1989
27 through December 1989, or, for individuals, if the taxpayer
28 had no tax liability for the preceding taxable year and such
29 year was a taxable year of 12 months.
30 (e) The penalty imposed for underpayment of estimated
31 tax by subsection (a) of this Section shall not be imposed to
32 the extent that the Department or his designate determines,
33 pursuant to Section 3-8 of the Uniform Penalty and Interest
34 Act that the penalty should not be imposed.
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1 (f) Definition of tax. For purposes of subsections (b)
2 and (c), the term "tax" means the excess of the tax imposed
3 under Article 2 of this Act, over the amounts credited
4 against such tax under Sections 601(b) (3) and (4).
5 (g) Application of Section in case of tax withheld on
6 compensation. For purposes of applying this Section in the
7 case of an individual, tax withheld under Article 7 for the
8 taxable year shall be deemed a payment of estimated tax, and
9 an equal part of such amount shall be deemed paid on each
10 installment date for such taxable year, unless the taxpayer
11 establishes the dates on which all amounts were actually
12 withheld, in which case the amounts so withheld shall be
13 deemed payments of estimated tax on the dates on which such
14 amounts were actually withheld.
15 (g-5) Amounts withheld under the State Salary and
16 Annuity Withholding Act. An individual who has amounts
17 withheld under paragraph (10) of Section 4 of the State
18 Salary and Annuity Withholding Act may elect to have those
19 amounts treated as payments of estimated tax made on the
20 dates on which those amounts are actually withheld.
21 (i) Short taxable year. The application of this Section
22 to taxable years of less than 12 months shall be in
23 accordance with regulations prescribed by the Department.
24 The changes in this Section made by Public Act 84-127
25 shall apply to taxable years ending on or after January 1,
26 1986.
27 (Source: P.A. 86-678; 86-953; 86-1028; 87-205.)
28 Section 15. The Illinois Pension Code is amended by
29 changing Section 15-185 as follows:
30 (40 ILCS 5/15-185) (from Ch. 108 1/2, par. 15-185)
31 Sec. 15-185. Annuities, etc., exempt. The accumulated
32 employee and employer contributions shall be held in trust
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1 for each participant and annuitant, and this trust shall be
2 treated as a spendthrift trust. Except as provided in this
3 Article, all cash, securities and other property of this
4 system, all annuities and other benefits payable under this
5 Article and all accumulated credits of participants and
6 annuitants in this system and the right of any person to
7 receive an annuity or other benefit under this Article, or a
8 refund of contributions, shall not be subject to judgment,
9 execution, garnishment, attachment, or other seizure by
10 process, in bankruptcy or otherwise, nor to sale, pledge,
11 mortgage or other alienation, and shall not be assignable.
12 The board, however, may deduct from the benefits, refunds and
13 credits payable to the participant, annuitant or beneficiary,
14 amounts owed by the participant or annuitant to the system.
15 No attempted sale, transfer or assignment of any benefit,
16 refund or credit shall prevent the right of the board to make
17 the deduction and offset authorized in this Section. Any
18 participant or annuitant may authorize the board to deduct
19 from disability benefits or annuities, premiums due under any
20 group hospital-surgical insurance program which is sponsored
21 or approved by any employer; however, the deductions from
22 disability benefits may not begin prior to 6 months after the
23 disability occurs.
24 A person receiving an annuity or benefit under this
25 Article may authorize withholding from that annuity or
26 benefit in accordance with the provisions of the State Salary
27 and Annuity Withholding Act.
28 This amendatory Act of 1989 is a clarification of
29 existing law and shall be applicable to every participant and
30 annuitant without regard to whether status as an employee
31 terminates before the effective date of this amendatory Act
32 of 1989.
33 (Source: P.A. 86-273; 86-1488.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.