Public Act 90-0458 of the 90th General Assembly
Public Act 90-0458
HB0526 Enrolled LRB9000539DNmb
AN ACT to amend the Illinois Income Tax Act by changing
Section 201.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Section 201 as follows:
(35 ILCS 5/201) (from Ch. 120, par. 2-201)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate
for each taxable year ending after July 31, 1969 on the
privilege of earning or receiving income in or as a resident
of this State. Such tax shall be in addition to all other
occupation or privilege taxes imposed by this State or by any
municipal corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows:
(1) In the case of an individual, trust or estate,
for taxable years ending prior to July 1, 1989, an amount
equal to 2 1/2% of the taxpayer's net income for the
taxable year.
(2) In the case of an individual, trust or estate,
for taxable years beginning prior to July 1, 1989 and
ending after June 30, 1989, an amount equal to the sum of
(i) 2 1/2% of the taxpayer's net income for the period
prior to July 1, 1989, as calculated under Section 202.3,
and (ii) 3% of the taxpayer's net income for the period
after June 30, 1989, as calculated under Section 202.3.
(3) In the case of an individual, trust or estate,
for taxable years beginning after June 30, 1989, an
amount equal to 3% of the taxpayer's net income for the
taxable year.
(4) (Blank).
(5) (Blank).
(6) In the case of a corporation, for taxable years
ending prior to July 1, 1989, an amount equal to 4% of
the taxpayer's net income for the taxable year.
(7) In the case of a corporation, for taxable years
beginning prior to July 1, 1989 and ending after June 30,
1989, an amount equal to the sum of (i) 4% of the
taxpayer's net income for the period prior to July 1,
1989, as calculated under Section 202.3, and (ii) 4.8% of
the taxpayer's net income for the period after June 30,
1989, as calculated under Section 202.3.
(8) In the case of a corporation, for taxable years
beginning after June 30, 1989, an amount equal to 4.8% of
the taxpayer's net income for the taxable year.
(c) Beginning on July 1, 1979 and thereafter, in
addition to such income tax, there is also hereby imposed the
Personal Property Tax Replacement Income Tax measured by net
income on every corporation (including Subchapter S
corporations), partnership and trust, for each taxable year
ending after June 30, 1979. Such taxes are imposed on the
privilege of earning or receiving income in or as a resident
of this State. The Personal Property Tax Replacement Income
Tax shall be in addition to the income tax imposed by
subsections (a) and (b) of this Section and in addition to
all other occupation or privilege taxes imposed by this State
or by any municipal corporation or political subdivision
thereof.
(d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S
corporation, shall be an additional amount equal to 2.85% of
such taxpayer's net income for the taxable year, except that
beginning on January 1, 1981, and thereafter, the rate of
2.85% specified in this subsection shall be reduced to 2.5%,
and in the case of a partnership, trust or a Subchapter S
corporation shall be an additional amount equal to 1.5% of
such taxpayer's net income for the taxable year.
(e) Investment credit. A taxpayer shall be allowed a
credit against the Personal Property Tax Replacement Income
Tax for investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to
.5% of the basis of qualified property placed in service
during the taxable year, provided such property is placed
in service on or after July 1, 1984. There shall be
allowed an additional credit equal to .5% of the basis of
qualified property placed in service during the taxable
year, provided such property is placed in service on or
after July 1, 1986, and the taxpayer's base employment
within Illinois has increased by 1% or more over the
preceding year as determined by the taxpayer's employment
records filed with the Illinois Department of Employment
Security. Taxpayers who are new to Illinois shall be
deemed to have met the 1% growth in base employment for
the first year in which they file employment records with
the Illinois Department of Employment Security. The
provisions added to this Section by Public Act 85-1200
(and restored by Public Act 87-895) shall be construed as
declaratory of existing law and not as a new enactment.
If, in any year, the increase in base employment within
Illinois over the preceding year is less than 1%, the
additional credit shall be limited to that percentage
times a fraction, the numerator of which is .5% and the
denominator of which is 1%, but shall not exceed .5%.
The investment credit shall not be allowed to the extent
that it would reduce a taxpayer's liability in any tax
year below zero, nor may any credit for qualified
property be allowed for any year other than the year in
which the property was placed in service in Illinois. For
tax years ending on or after December 31, 1987, and on or
before December 31, 1988, the credit shall be allowed for
the tax year in which the property is placed in service,
or, if the amount of the credit exceeds the tax liability
for that year, whether it exceeds the original liability
or the liability as later amended, such excess may be
carried forward and applied to the tax liability of the 5
taxable years following the excess credit years if the
taxpayer (i) makes investments which cause the creation
of a minimum of 2,000 full-time equivalent jobs in
Illinois, (ii) is located in an enterprise zone
established pursuant to the Illinois Enterprise Zone Act
and (iii) is certified by the Department of Commerce and
Community Affairs as complying with the requirements
specified in clause (i) and (ii) by July 1, 1986. The
Department of Commerce and Community Affairs shall notify
the Department of Revenue of all such certifications
immediately. For tax years ending after December 31,
1988, the credit shall be allowed for the tax year in
which the property is placed in service, or, if the
amount of the credit exceeds the tax liability for that
year, whether it exceeds the original liability or the
liability as later amended, such excess may be carried
forward and applied to the tax liability of the 5 taxable
years following the excess credit years. The credit shall
be applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, earlier credit
shall be applied first.
(2) The term "qualified property" means property
which:
(A) is tangible, whether new or used,
including buildings and structural components of
buildings and signs that are real property, but not
including land or improvements to real property that
are not a structural component of a building such as
landscaping, sewer lines, local access roads,
fencing, parking lots, and other appurtenances;
(B) is depreciable pursuant to Section 167 of
the Internal Revenue Code, except that "3-year
property" as defined in Section 168(c)(2)(A) of that
Code is not eligible for the credit provided by this
subsection (e);
(C) is acquired by purchase as defined in
Section 179(d) of the Internal Revenue Code;
(D) is used in Illinois by a taxpayer who is
primarily engaged in manufacturing, or in mining
coal or fluorite, or in retailing; and
(E) has not previously been used in Illinois
in such a manner and by such a person as would
qualify for the credit provided by this subsection
(e) or subsection (f).
(3) For purposes of this subsection (e),
"manufacturing" means the material staging and production
of tangible personal property by procedures commonly
regarded as manufacturing, processing, fabrication, or
assembling which changes some existing material into new
shapes, new qualities, or new combinations. For purposes
of this subsection (e) the term "mining" shall have the
same meaning as the term "mining" in Section 613(c) of
the Internal Revenue Code. For purposes of this
subsection (e), the term "retailing" means the sale of
tangible personal property or services rendered in
conjunction with the sale of tangible consumer goods or
commodities.
(4) The basis of qualified property shall be the
basis used to compute the depreciation deduction for
federal income tax purposes.
(5) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in Illinois by the taxpayer, the amount
of such increase shall be deemed property placed in
service on the date of such increase in basis.
(6) The term "placed in service" shall have the
same meaning as under Section 46 of the Internal Revenue
Code.
(7) If during any taxable year, any property ceases
to be qualified property in the hands of the taxpayer
within 48 months after being placed in service, or the
situs of any qualified property is moved outside Illinois
within 48 months after being placed in service, the
Personal Property Tax Replacement Income Tax for such
taxable year shall be increased. Such increase shall be
determined by (i) recomputing the investment credit which
would have been allowed for the year in which credit for
such property was originally allowed by eliminating such
property from such computation and, (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (7), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent
of such reduction.
(8) Unless the investment credit is extended by
law, the basis of qualified property shall not include
costs incurred after December 31, 2003, except for costs
incurred pursuant to a binding contract entered into on
or before December 31, 2003.
(9) Each taxable year, a partnership may elect to
pass through to its partners the credits to which the
partnership is entitled under this subsection (e) for the
taxable year. A partner may use the credit allocated to
him or her under this paragraph only against the tax
imposed in subsections (c) and (d) of this Section. If
the partnership makes that election, those credits shall
be allocated among the partners in the partnership in
accordance with the rules set forth in Section 704(b) of
the Internal Revenue Code, and the rules promulgated
under that Section, and the allocated amount of the
credits shall be allowed to the partners for that taxable
year. The partnership shall make this election on its
Personal Property Tax Replacement Income Tax return for
that taxable year. The election to pass through the
credits shall be irrevocable.
(f) Investment credit; Enterprise Zone.
(1) A taxpayer shall be allowed a credit against
the tax imposed by subsections (a) and (b) of this
Section for investment in qualified property which is
placed in service in an Enterprise Zone created pursuant
to the Illinois Enterprise Zone Act. For partners and for
shareholders of Subchapter S corporations, there shall be
allowed a credit under this subsection (f) to be
determined in accordance with the determination of income
and distributive share of income under Sections 702 and
704 and Subchapter S of the Internal Revenue Code. The
credit shall be .5% of the basis for such property. The
credit shall be available only in the taxable year in
which the property is placed in service in the Enterprise
Zone and shall not be allowed to the extent that it would
reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero.
For tax years ending on or after December 31, 1985, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether
it exceeds the original liability or the liability as
later amended, such excess may be carried forward and
applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be
applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, the credit
accruing first in time shall be applied first.
(2) The term qualified property means property
which:
(A) is tangible, whether new or used,
including buildings and structural components of
buildings;
(B) is depreciable pursuant to Section 167 of
the Internal Revenue Code, except that "3-year
property" as defined in Section 168(c)(2)(A) of that
Code is not eligible for the credit provided by this
subsection (f);
(C) is acquired by purchase as defined in
Section 179(d) of the Internal Revenue Code;
(D) is used in the Enterprise Zone by the
taxpayer; and
(E) has not been previously used in Illinois
in such a manner and by such a person as would
qualify for the credit provided by this subsection
(f) or subsection (e).
(3) The basis of qualified property shall be the
basis used to compute the depreciation deduction for
federal income tax purposes.
(4) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in the Enterprise Zone by the taxpayer,
the amount of such increase shall be deemed property
placed in service on the date of such increase in basis.
(5) The term "placed in service" shall have the
same meaning as under Section 46 of the Internal Revenue
Code.
(6) If during any taxable year, any property ceases
to be qualified property in the hands of the taxpayer
within 48 months after being placed in service, or the
situs of any qualified property is moved outside the
Enterprise Zone within 48 months after being placed in
service, the tax imposed under subsections (a) and (b) of
this Section for such taxable year shall be increased.
Such increase shall be determined by (i) recomputing the
investment credit which would have been allowed for the
year in which credit for such property was originally
allowed by eliminating such property from such
computation, and (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (6), a reduction of the basis
of qualified property resulting from a redetermination of
the purchase price shall be deemed a disposition of
qualified property to the extent of such reduction.
(g) Jobs Tax Credit; Enterprise Zone and Foreign
Trade Zone or Sub-Zone.
(1) A taxpayer conducting a trade or business in an
enterprise zone or a High Impact Business designated by
the Department of Commerce and Community Affairs
conducting a trade or business in a federally designated
Foreign Trade Zone or Sub-Zone shall be allowed a credit
against the tax imposed by subsections (a) and (b) of
this Section in the amount of $500 per eligible employee
hired to work in the zone during the taxable year.
(2) To qualify for the credit:
(A) the taxpayer must hire 5 or more eligible
employees to work in an enterprise zone or federally
designated Foreign Trade Zone or Sub-Zone during the
taxable year;
(B) the taxpayer's total employment within the
enterprise zone or federally designated Foreign
Trade Zone or Sub-Zone must increase by 5 or more
full-time employees beyond the total employed in
that zone at the end of the previous tax year for
which a jobs tax credit under this Section was
taken, or beyond the total employed by the taxpayer
as of December 31, 1985, whichever is later; and
(C) the eligible employees must be employed
180 consecutive days in order to be deemed hired for
purposes of this subsection.
(3) An "eligible employee" means an employee who
is:
(A) Certified by the Department of Commerce
and Community Affairs as "eligible for services"
pursuant to regulations promulgated in accordance
with Title II of the Job Training Partnership Act,
Training Services for the Disadvantaged or Title III
of the Job Training Partnership Act, Employment and
Training Assistance for Dislocated Workers Program.
(B) Hired after the enterprise zone or
federally designated Foreign Trade Zone or Sub-Zone
was designated or the trade or business was located
in that zone, whichever is later.
(C) Employed in the enterprise zone or Foreign
Trade Zone or Sub-Zone. An employee is employed in
an enterprise zone or federally designated Foreign
Trade Zone or Sub-Zone if his services are rendered
there or it is the base of operations for the
services performed.
(D) A full-time employee working 30 or more
hours per week.
(4) For tax years ending on or after December 31,
1985 and prior to December 31, 1988, the credit shall be
allowed for the tax year in which the eligible employees
are hired. For tax years ending on or after December 31,
1988, the credit shall be allowed for the tax year
immediately following the tax year in which the eligible
employees are hired. If the amount of the credit exceeds
the tax liability for that year, whether it exceeds the
original liability or the liability as later amended,
such excess may be carried forward and applied to the tax
liability of the 5 taxable years following the excess
credit year. The credit shall be applied to the earliest
year for which there is a liability. If there is credit
from more than one tax year that is available to offset a
liability, earlier credit shall be applied first.
(5) The Department of Revenue shall promulgate such
rules and regulations as may be deemed necessary to carry
out the purposes of this subsection (g).
(6) The credit shall be available for eligible
employees hired on or after January 1, 1986.
(h) Investment credit; High Impact Business.
(1) Subject to subsection (b) of Section 5.5 of the
Illinois Enterprise Zone Act, a taxpayer shall be allowed
a credit against the tax imposed by subsections (a) and
(b) of this Section for investment in qualified property
which is placed in service by a Department of Commerce
and Community Affairs designated High Impact Business.
The credit shall be .5% of the basis for such property.
The credit shall not be available until the minimum
investments in qualified property set forth in Section
5.5 of the Illinois Enterprise Zone Act have been
satisfied and shall not be allowed to the extent that it
would reduce a taxpayer's liability for the tax imposed
by subsections (a) and (b) of this Section to below zero.
The credit applicable to such minimum investments shall
be taken in the taxable year in which such minimum
investments have been completed. The credit for
additional investments beyond the minimum investment by a
designated high impact business shall be available only
in the taxable year in which the property is placed in
service and shall not be allowed to the extent that it
would reduce a taxpayer's liability for the tax imposed
by subsections (a) and (b) of this Section to below zero.
For tax years ending on or after December 31, 1987, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether
it exceeds the original liability or the liability as
later amended, such excess may be carried forward and
applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be
applied to the earliest year for which there is a
liability. If there is credit from more than one tax
year that is available to offset a liability, the credit
accruing first in time shall be applied first.
Changes made in this subdivision (h)(1) by Public
Act 88-670 restore changes made by Public Act 85-1182 and
reflect existing law.
(2) The term qualified property means property
which:
(A) is tangible, whether new or used,
including buildings and structural components of
buildings;
(B) is depreciable pursuant to Section 167 of
the Internal Revenue Code, except that "3-year
property" as defined in Section 168(c)(2)(A) of that
Code is not eligible for the credit provided by this
subsection (h);
(C) is acquired by purchase as defined in
Section 179(d) of the Internal Revenue Code; and
(D) is not eligible for the Enterprise Zone
Investment Credit provided by subsection (f) of this
Section.
(3) The basis of qualified property shall be the
basis used to compute the depreciation deduction for
federal income tax purposes.
(4) If the basis of the property for federal income
tax depreciation purposes is increased after it has been
placed in service in a federally designated Foreign Trade
Zone or Sub-Zone located in Illinois by the taxpayer, the
amount of such increase shall be deemed property placed
in service on the date of such increase in basis.
(5) The term "placed in service" shall have the
same meaning as under Section 46 of the Internal Revenue
Code.
(6) If during any taxable year ending on or before
December 31, 1996, any property ceases to be qualified
property in the hands of the taxpayer within 48 months
after being placed in service, or the situs of any
qualified property is moved outside Illinois within 48
months after being placed in service, the tax imposed
under subsections (a) and (b) of this Section for such
taxable year shall be increased. Such increase shall be
determined by (i) recomputing the investment credit which
would have been allowed for the year in which credit for
such property was originally allowed by eliminating such
property from such computation, and (ii) subtracting such
recomputed credit from the amount of credit previously
allowed. For the purposes of this paragraph (6), a
reduction of the basis of qualified property resulting
from a redetermination of the purchase price shall be
deemed a disposition of qualified property to the extent
of such reduction.
(7) Beginning with tax years ending after December
31, 1996, if a taxpayer qualifies for the credit under
this subsection (h) and thereby is granted a tax
abatement and the taxpayer relocates its entire facility
in violation of the explicit terms and length of the
contract under Section 18-183 of the Property Tax Code,
the tax imposed under subsections (a) and (b) of this
Section shall be increased for the taxable year in which
the taxpayer relocated its facility by an amount equal to
the amount of credit received by the taxpayer under this
subsection (h).
(i) A credit shall be allowed against the tax imposed by
subsections (a) and (b) of this Section for the tax imposed
by subsections (c) and (d) of this Section. This credit
shall be computed by multiplying the tax imposed by
subsections (c) and (d) of this Section by a fraction, the
numerator of which is base income allocable to Illinois and
the denominator of which is Illinois base income, and further
multiplying the product by the tax rate imposed by
subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under
this subsection which is unused in the year the credit is
computed because it exceeds the tax liability imposed by
subsections (a) and (b) for that year (whether it exceeds the
original liability or the liability as later amended) may be
carried forward and applied to the tax liability imposed by
subsections (a) and (b) of the 5 taxable years following the
excess credit year. This credit shall be applied first to
the earliest year for which there is a liability. If there
is a credit under this subsection from more than one tax year
that is available to offset a liability the earliest credit
arising under this subsection shall be applied first.
If, during any taxable year ending on or after December
31, 1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsection (c) and (d). If any portion of the
reduced amount of credit has been carried to a different
taxable year, an amended return shall be filed for such
taxable year to reduce the amount of credit claimed.
(j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986, a taxpayer shall be
allowed a credit against the tax imposed by subsection (a)
and (b) under this Section for all amounts paid or accrued,
on behalf of all persons employed by the taxpayer in Illinois
or Illinois residents employed outside of Illinois by a
taxpayer, for educational or vocational training in
semi-technical or technical fields or semi-skilled or skilled
fields, which were deducted from gross income in the
computation of taxable income. The credit against the tax
imposed by subsections (a) and (b) shall be 1.6% of such
training expenses. For partners and for shareholders of
subchapter S corporations, there shall be allowed a credit
under this subsection (j) to be determined in accordance with
the determination of income and distributive share of income
under Sections 702 and 704 and subchapter S of the Internal
Revenue Code.
Any credit allowed under this subsection which is unused
in the year the credit is earned may be carried forward to
each of the 5 taxable years following the year for which the
credit is first computed until it is used. This credit shall
be applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from
more than one tax year that is available to offset a
liability the earliest credit arising under this subsection
shall be applied first.
(k) Research and development credit.
Beginning with tax years ending after July 1, 1990, a
taxpayer shall be allowed a credit against the tax imposed by
subsections (a) and (b) of this Section for increasing
research activities in this State. The credit allowed
against the tax imposed by subsections (a) and (b) shall be
equal to 6 1/2% of the qualifying expenditures for increasing
research activities in this State.
For purposes of this subsection, "qualifying
expenditures" means the qualifying expenditures as defined
for the federal credit for increasing research activities
which would be allowable under Section 41 of the Internal
Revenue Code and which are conducted in this State,
"qualifying expenditures for increasing research activities
in this State" means the excess of qualifying expenditures
for the taxable year in which incurred over qualifying
expenditures for the base period, "qualifying expenditures
for the base period" means the average of the qualifying
expenditures for each year in the base period, and "base
period" means the 3 taxable years immediately preceding the
taxable year for which the determination is being made.
Any credit in excess of the tax liability for the taxable
year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried
over as a credit against the tax liability for the following
5 taxable years or until it has been fully used, whichever
occurs first.
If an unused credit is carried forward to a given year
from 2 or more earlier years, that credit arising in the
earliest year will be applied first against the tax liability
for the given year. If a tax liability for the given year
still remains, the credit from the next earliest year will
then be applied, and so on, until all credits have been used
or no tax liability for the given year remains. Any
remaining unused credit or credits then will be carried
forward to the next following year in which a tax liability
is incurred, except that no credit can be carried forward to
a year which is more than 5 years after the year in which the
expense for which the credit is given was incurred.
Unless extended by law, the credit shall not include
costs incurred after December 31, 1999, except for costs
incurred pursuant to a binding contract entered into on or
before December 31, 1999.
(Source: P.A. 88-45; 88-89; 88-141; 88-547, eff. 6-30-94;
88-670, eff. 12-2-94; 89-235, eff. 8-4-95; 89-519, eff.
7-18-96; 89-591, eff. 8-1-96.)
Section 10. The Uniform Penalty and Interest Act is
amended by changing Section 3-7 as follows:
(35 ILCS 735/3-7) (from Ch. 120, par. 2603-7)
Sec. 3-7. Personal Liability Penalty.
(a) Any officer or employee of any taxpayer subject to
the provisions of a tax Act administered by the Department
who has the control, supervision or responsibility of filing
returns and making payment of the amount of any trust tax
imposed in accordance with that Act and who wilfully fails to
file the return or make the payment to the Department or
wilfully attempts in any other manner to evade or defeat the
tax shall be personally liable for a penalty equal to the
total amount of tax unpaid by the taxpayer including interest
and penalties thereon. The Department shall determine a
penalty due under this Section according to its best judgment
and information, and that determination shall be prima facie
correct and shall be prima facie evidence of a penalty due
under this Section. Proof of that determination by the
Department shall be made at any hearing before it or in any
legal proceeding by reproduced copy or computer printout of
the Department's record relating thereto in the name of the
Department under the certificate of the Director of Revenue.
If reproduced copies of the Department's records are offered
as proof of that determination, the Director must certify
that those copies are true and exact copies of records on
file with the Department. If computer print-outs of the
Department's records are offered as proof of such
determination, the Director must certify that those computer
print-outs are true and exact representations of records
properly entered into standard electronic computing
equipment, in the regular course of the Department's
business, at or reasonably near the time of the occurrence of
the facts recorded, from trustworthy and reliable
information. That certified reproduced copy or certified
computer print-out shall without further proof, be admitted
into evidence before the Department or in any legal
proceeding and shall be prima facie proof of the correctness
of the amount of tax or penalty due.
(b) The Department shall issue a notice of penalty
liability for the amount claimed by the Department pursuant
to this Section. Procedures for protest and review of a
notice of penalty liability issued pursuant to this Section
and assessment of the penalty due hereunder shall be the same
as those prescribed for protest and review of a notice of tax
liability or a notice of deficiency, as the case may be, and
the assessment of tax liability under the Act imposing that
liability.
(b-5) Any person filing an action under the
Administrative Review Law to review a final assessment or
revised final assessment (except a final assessment or
revised final assessment relating to any trust tax imposed in
accordance with the Illinois Income Tax Act) issued by the
Department under this Section shall, within 20 days after
filing the complaint, file a bond with good and sufficient
surety or sureties residing in this State or licensed to do
business in this State, or instead of bond, obtain an order
from the court imposing a lien upon the plaintiff's property
as hereinafter provided. If the person filing the complaint
fails to comply with this bonding requirement within 20 days
after filing the complaint, the Department shall file a
motion to dismiss and the court shall dismiss the action
unless the person filing the action complies with the bonding
requirements set out with this provision within 30 days after
the filing of the Department's motion to dismiss. A court,
on its own motion or on motion of the Department, shall
dismiss an action under the Administrative Review Law to
review a final assessment or revised final assessment issued
by the Department under this Section (i) unless the plaintiff
files with the court, within 20 days after the filing of the
complaint and the issuance of the summons in the action, a
bond with good and sufficient surety or sureties residing in
this State or licensed to do business in this State or (ii)
unless the court, in place of the bond and with plaintiff's
consent, enters an order imposing a lien upon the plaintiff's
property as provided in this subsection.
Upon dismissal of a complaint for failure to comply with
this subsection, the court shall enter judgment against the
taxpayer and in favor of the Department in the amount of the
final assessment or revised final assessment, together with
any interest that has accrued since the Department issued the
final assessment or revised final assessment, and for costs.
The judgment is enforceable as other judgments for the
payment of money.
The amount of the bond shall be fixed and approved by the
court, but shall not be less than the amount of the tax and
penalty claimed to be due by the Department in its final
assessment or revised final assessment to the person filing
the bond, plus the amount of interest due from that person to
the Department at the time when the Department issued its
final assessment or revised final assessment to that person.
The bond must be executed in favor of the Department and
conditioned on the taxpayer's payment within 30 days after
termination of the proceedings for judicial review of the
amount of tax, penalty, and interest found by the court to be
due in those proceedings. The bond, when filed and approved,
is, from that time until 2 years after termination of the
proceedings for judicial review in which the bond is filed, a
lien against the real estate situated in the county in which
the bond is filed of the person filing the bond and of the
surety or sureties on the bond, until the condition of the
bond is complied with or until the bond is canceled as
provided in this subsection. The lien does not apply,
however, to the real property of a corporate surety duly
licensed to do business in this State. If the person filing
the bond fails to keep its condition, the bond is forfeited,
and the Department may institute an action upon the bond in
its own name for the entire amount of the bond and costs. An
action upon the bond is in addition to any other remedy
provided by law. If the person filing the bond complies with
its condition or if, in the proceedings for judicial review
in which the bond is filed, the court determines that no tax,
penalty, or interest is due, the bond shall be canceled by
the issuer of the bond.
If the court finds in a particular case that the
plaintiff cannot furnish a satisfactory surety or sureties
for the kind of bond required in this subsection, the court
may relieve the plaintiff of the obligation of filing a bond
if, upon the timely application of the plaintiff for a lien
in place of a bond and accompanying proof, the court is
satisfied that a lien would secure the assessment as well as
would a bond. Upon that finding, the court shall enter an
order subjecting the plaintiff's real and personal property
(including subsequently acquired property) situated in the
county in which the order is entered to a lien in favor of
the Department. The lien shall be for the amount of the tax
and penalty claimed to be due by the Department in its final
assessment or revised final assessment, plus the amount of
interest due from that person to the Department at the time
when the Department issued its final assessment or revised
final assessment to that person. The lien shall continue
until the court determines in the proceedings for judicial
review that no tax, penalty, or interest is due, or until the
plaintiff pays to the Department the tax, penalty, and
interest secured by the lien. In its discretion, the court
may impose a lien regardless of the ratio of the taxpayer's
assets to the final assessment or revised final assessment
plus the amount of the interest and penalty. This subsection
does not give the Department a preference over the rights of
a bona fide purchaser, mortgagee, judgment creditor, or other
lien holder arising before the entry of the order creating
the lien in favor of the Department. "Bona fide", as used in
this subsection, does not include a mortgage of real or
personal property or other credit transaction that results in
the mortgagee or the holder of the security acting as trustee
for unsecured creditors of the taxpayer who executed the
chattel or real property mortgage or the document evidencing
the credit transaction. The lien is inferior to the lien of
general taxes, special assessments, and special taxes levied
by a political subdivision of this State. The lien is not
effective against a purchaser with respect to an item in a
retailer's stock in trade purchased from the retailer in the
usual course of the retailer's business. The lien may not be
enforced against the household effects, wearing apparel,
books, or tools or implements of a trade or profession kept
for use by any person. The lien is not effective against real
property unless and until a certified copy or memorandum of
such order is recorded in the Office of the Recorder of Deeds
for the county or counties in which the property is located.
The lien is not effective against real property whose title
is registered under the provisions of the Registered Titles
(Torrens) Act until the provisions of Section 85 of that Act
are complied with.
Service upon the Director of Revenue or the Assistant
Director of Revenue of summons issued in an action to review
a final administrative decision of the Department is service
upon the Department. The Department shall certify the record
of its proceedings if the taxpayer pays to it 75¢ per page of
testimony taken before the Department and 25¢ per page of all
other matters contained in the record, except that these
charges may be waived when the Department is satisfied that
the aggrieved party is a poor person who cannot afford to pay
the charges. If payment for the record is not made by the
taxpayer within 30 days after notice from the Department or
the Attorney General of the cost, the court in which the
proceeding is pending, on motion of the Department, shall
dismiss the complaint and (when the administrative decision
as to which the action for judicial review was filed is a
final assessment or revised final assessment) shall enter
judgment against the taxpayer and in favor of the Department
for the amount of tax and penalty shown by the Department's
final assessment or revised final assessment to be due, plus
interest as provided for in this Act from the date when the
liability upon which the interest accrued became delinquent
until the entry of the judgment in the action for judicial
review under the Administrative Review Law, and also for
costs.
(c) The personal liability imposed by this Section shall
survive the dissolution of a partnership, limited liability
company, or corporation. No notice of penalty liability
shall be issued after the expiration of 3 years after the
date all proceedings in court for the review of any final or
revised final assessments issued against a taxpayer which
constitute the basis of such penalty liability have
terminated or the time for the taking thereof has expired
without such proceedings being instituted or after the
expiration of 3 years after the date a return is filed with
the Department by a taxpayer in cases where the return
constitutes the basis of such liability. Interest shall
continue to accrue on that portion of the penalty imposed by
this Section which represents the tax unpaid by the taxpayer
at the same rate and in the same amount as interest accrues
on the tax unpaid by the taxpayer.
(d) In addition to any other remedy provided for by the
laws of this State, and provided that no hearing or
proceeding for review is pending, any Section of a tax Act
which provides a means for collection of taxes shall in the
same manner and to the same extent provide a means for the
collection of the penalty imposed by this Section. The
procedures for the filing of an action for collection of the
penalty imposed by this Section shall be the same as those
prescribed by a tax Act for the filing of an action for
collection of the tax assessed under that Act. The time
limitation period on the Department's right to bring suit to
recover the amount of such tax, or portion thereof, or
penalty or interest from such person, or if deceased or
incompetent to file a claim thereof against his estate, shall
not run during: (1) any period of time in which the order of
any Court has the effect of enjoining or restraining the
Department from bringing such suit or claim against such
person, or (2) any period of time in which the order of the
Court has the effect of enjoining or restraining the
Department from bringing suit or initiating other proper
proceedings for the collection of such amounts from the
taxpayer, or (3) any period of time the person departs from
and remains out of the State; but the foregoing provisions
concerning absence from the State shall not apply to any case
in which, at the time when a tax or penalty becomes due under
this Act, the person allegedly liable therefor is not a
resident of this State.
(e) For the purposes of this Section, "officer or
employee of any taxpayer" includes a partner of a
partnership, a manager or member of a limited liability
corporation, and a member of a registered limited liability
partnership.
(f) A trust tax is any tax for which an amount is
collected or withheld by a taxpayer from another person, and
any tax for which an amount is required to be collected or
withheld by a taxpayer from another person, regardless of
whether it is in fact collected or withheld.
(g) The personal liability imposed by this Section is in
addition to liability incurred by a partner of a partnership
or limited liability partnership resulting from the issuance
of a notice of tax liability issued to the partnership or
limited liability partnership.
(Source: P.A. 88-480; 88-683, eff. 1-24-95; 89-399, eff.
8-20-95; 89-626, eff. 8-9-96.)
Section 99. Effective date. This Act takes effect upon
becoming law.