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Public Act 92-0456
SB1283 Enrolled LRB9206807LDprA
AN ACT in relation to audits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Civil Administrative Code of Illinois is
amended by adding Article 2510 as follows:
(20 ILCS 2510/Art. 2510 heading new)
ARTICLE 2510. CERTIFIED AUDIT PROGRAM
(20 ILCS 2510/2510-1 new)
Sec. 2510-1. Short title. This Article 2510 of the Civil
Administrative Code of Illinois may be cited as the Certified
Audit Program Law.
(20 ILCS 2510/2510-3 new)
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.
(20 ILCS 2510/2510-5 new)
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.
(20 ILCS 2510/2510-10 new)
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.
(20 ILCS 2510/2510-15 new)
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.
(20 ILCS 2510/2510-20 new)
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.
(20 ILCS 2510/2510-25 new)
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.
(20 ILCS 2510/2510-30 new)
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.
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly May 31, 2001.
Approved August 21, 2001.
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