State of Illinois
91st General Assembly
Legislation

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[ House Amendment 001 ]

91_HB3467

 
                                               LRB9110144SMdv

 1        AN  ACT  to amend the Uniform Penalty and Interest Act by
 2    changing Sections 3-2, 3-3, and 3-10.

 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section  5.   The  Uniform  Penalty  and  Interest Act is
 6    amended by changing Sections 3-2, 3-3, and 3-10 as follows:

 7        (35 ILCS 735/3-2) (from Ch. 120, par. 2603-2)
 8        Sec. 3-2.  Interest.
 9        (a)  Interest paid by the  Department  to  taxpayers  and
10    interest charged to taxpayers by the Department shall be paid
11    at  the  annual  rate determined by the Department. That rate
12    shall be the underpayment rate established under Section 6621
13    of the  Internal Revenue Code.
14        (b)  The interest rate shall be adjusted on a  semiannual
15    basis,  on  January 1 and July 1, based upon the underpayment
16    rate going into effect on that January  1  or  July  1  under
17    Section 6621 of the Internal Revenue Code.
18        (c)  Interest  shall  be  simple interest calculated on a
19    daily basis. Interest shall accrue upon tax and penalty  due.
20    If notice and demand is made for the payment of any amount of
21    tax  due  and  if the amount due is paid within 30 days after
22    the date of such  notice  and  demand,  interest  under  this
23    Section  on  the  amount so paid shall not be imposed for the
24    period after the date of the notice and demand.
25        (d)  No interest shall be paid upon  any  overpayment  of
26    tax  if  the  overpayment  is  refunded  or a credit approved
27    within 90 days after the last date prescribed for filing  the
28    original  return,  or  within  90  days of the receipt of the
29    processable return, or within  90  days  after  the  date  of
30    overpayment,  whichever date is latest, as determined without
31    regard to processing  time  by  the  Comptroller  or  without
 
                            -2-                LRB9110144SMdv
 1    regard  to  the  date  on  which the credit is applied to the
 2    taxpayer's account. In order for an  original  return  to  be
 3    processable  for  purposes of this Section, it must be in the
 4    form prescribed or approved by the Department, signed by  the
 5    person  authorized  by  law,  and  contain  all  information,
 6    schedules,  and  support documents necessary to determine the
 7    tax due and to make allocations of tax as prescribed by  law.
 8    For  the  purposes  of  computing interest, a return shall be
 9    deemed to be processable unless the Department  notifies  the
10    taxpayer  that  the  return is not processable within 90 days
11    after the receipt of the return; however, interest shall  not
12    accumulate  for  the  period  following  this date of notice.
13    Interest on amounts refunded  or  credited  pursuant  to  the
14    filing  of  an  amended  return  or claim for refund shall be
15    determined from the due date of the original  return  or  the
16    date  of  overpayment,  whichever  is  later,  to the date of
17    payment by the Department without regard to  processing  time
18    by the Comptroller or the date of credit by the Department or
19    without  regard to the date on which the credit is applied to
20    the taxpayer's account. If a claim for refund relates  to  an
21    overpayment  attributable to a net loss carryback as provided
22    by Section 207 of the Illinois Income Tax Act,  the  date  of
23    overpayment  shall  be  the  last  day of the taxable year in
24    which the loss was incurred.
25        (e)  Interest on erroneous refunds. Any  portion  of  the
26    tax  imposed by an Act to which this Act is applicable or any
27    interest or penalty which has been erroneously  refunded  and
28    which  is  recoverable  by the Department shall bear interest
29    from the date of payment of the refund. However, no  interest
30    will be charged if the erroneous refund is for an amount less
31    than $500 and is due to a mistake of the Department.
32    (Source: P.A. 89-379, eff. 1-1-96.)

33        (35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
 
                            -3-                LRB9110144SMdv
 1        Sec. 3-3.  Penalty for failure to file or pay.
 2        (a)  This  subsection (a) is applicable before January 1,
 3    1996.  A penalty of 5% of the tax required to be shown due on
 4    a return shall be imposed for failure to file the tax  return
 5    on  or  before  the due date prescribed for filing determined
 6    with regard for any extension of time for filing (penalty for
 7    late filing or nonfiling).  If any  unprocessable  return  is
 8    corrected  and  filed  within  21  days  after  notice by the
 9    Department, the late filing or nonfiling  penalty  shall  not
10    apply.   If a penalty for late filing or nonfiling is imposed
11    in addition to a penalty for late payment, the total  penalty
12    due  shall  be  the  sum  of  the late filing penalty and the
13    applicable late payment penalty. Beginning on  the  effective
14    date  of this amendatory Act of 1995, in the case of any type
15    of tax return required  to  be  filed  more  frequently  than
16    annually,  when  the  failure  to  file  the tax return on or
17    before  the  date  prescribed  for  filing   (including   any
18    extensions) is shown to be nonfraudulent and has not occurred
19    in  the  2 years immediately preceding the failure to file on
20    the prescribed due  date,  the  penalty  imposed  by  section
21    3-3(a) shall be abated.
22        (a-5)  This  subsection  (a-5) is applicable on and after
23    January 1, 1996. A penalty equal to 2% of the tax required to
24    be shown due on a return, up to a  maximum  amount  of  $250,
25    reduced  by  any determined without regard to any part of the
26    tax that is paid on time or by any credit that  was  properly
27    allowable  on  the  date the return was required to be filed,
28    shall be imposed for failure to file the  tax  return  on  or
29    before  the  due  date  prescribed for filing determined with
30    regard for any extension of time for filing. However, if  any
31    return  is not filed within 30 days after notice of nonfiling
32    mailed by the Department to the last  known  address  of  the
33    taxpayer  contained  in  Department  records,  an  additional
34    penalty  amount shall be imposed equal to the greater of $250
 
                            -4-                LRB9110144SMdv
 1    or  2%  of  the  tax  shown  on  the  return.   However,  the
 2    additional penalty  amount  may  not  exceed  $5,000  and  is
 3    determined without regard to any part of the tax that is paid
 4    on  time  or by any credit that was properly allowable on the
 5    date the return was required to be filed  (penalty  for  late
 6    filing   or  nonfiling).   If  any  unprocessable  return  is
 7    corrected and filed  within  30  days  after  notice  by  the
 8    Department,  the  late  filing or nonfiling penalty shall not
 9    apply.  If a penalty for late filing or nonfiling is  imposed
10    in  addition to a penalty for late payment, the total penalty
11    due shall be the sum of  the  late  filing  penalty  and  the
12    applicable late payment penalty.   In the case of any type of
13    tax   return  required  to  be  filed  more  frequently  than
14    annually, when the failure to  file  the  tax  return  on  or
15    before   the   date  prescribed  for  filing  (including  any
16    extensions) is shown to be nonfraudulent and has not occurred
17    in the 2 years immediately preceding the failure to  file  on
18    the  prescribed  due  date,  the  penalty  imposed by section
19    3-3(a) shall be abated.
20        (b)  This subsection  is  applicable  before  January  1,
21    1998.  A penalty of 15% of the tax shown on the return or the
22    tax required to be shown due on the return shall  be  imposed
23    for failure to pay:
24             (1)  the  tax  shown  due on the return on or before
25        the due date prescribed  for  payment  of  that  tax,  an
26        amount  of  underpayment  of  estimated tax, or an amount
27        that is reported in  an  amended  return  other  than  an
28        amended return timely filed as required by subsection (b)
29        of  Section  506  of the Illinois Income Tax Act (penalty
30        for late payment or nonpayment of admitted liability); or
31             (2)  the full amount of any tax required to be shown
32        due on a return and which is not shown (penalty for  late
33        payment or nonpayment of additional liability), within 30
34        days  after  a  notice  of  arithmetic  error, notice and
 
                            -5-                LRB9110144SMdv
 1        demand,  or  a  final  assessment  is   issued   by   the
 2        Department.  In  the  case  of a final assessment arising
 3        following a protest and hearing, the 30-day period  shall
 4        not  begin  until  all proceedings in court for review of
 5        the final assessment have terminated or  the  period  for
 6        obtaining  a review has expired without proceedings for a
 7        review having been instituted.  In the case of  a  notice
 8        of  tax liability that becomes a final assessment without
 9        a protest and  hearing,  the  penalty  provided  in  this
10        paragraph  (2)  shall be imposed at the expiration of the
11        period provided for the filing of a protest.
12        (b-5)  This subsection is applicable on and after January
13    1, 1998.  A penalty for failure to pay  of  20%  of  the  tax
14    shown  on  the  return or the tax required to be shown due on
15    the return shall be imposed for failure to pay:
16             (1)  equal to 10% of the tax shown due on the return
17        on or before the due date prescribed for payment of  that
18        tax,  an  amount  of underpayment of estimated tax, or an
19        amount that is reported in an amended return  other  than
20        an  amended return timely filed as required by subsection
21        (b) of  Section  506  of  the  Illinois  Income  Tax  Act
22        (penalty  for  late  payment  or  nonpayment  of admitted
23        liability); or
24             (2)  equal to 20% of the  full  amount  of  any  tax
25        required  to  be  shown  due on a return and which is not
26        shown  (penalty  for  late  payment  or   nonpayment   of
27        additional  liability),  within 30 days after a notice of
28        arithmetic  error,  notice  and  demand,   or   a   final
29        assessment  is issued by the Department. In the case of a
30        final assessment arising following a protest and hearing,
31        the 30-day period shall not begin until  all  proceedings
32        in   court  for  review  of  the  final  assessment  have
33        terminated or the  period  for  obtaining  a  review  has
34        expired  without  proceedings  for  a  review having been
 
                            -6-                LRB9110144SMdv
 1        instituted.  In the case of a  notice  of  tax  liability
 2        that  becomes  a  final  assessment without a protest and
 3        hearing, the penalty provided in this paragraph (2) shall
 4        be imposed at the expiration of the period  provided  for
 5        the filing of a protest.
 6        (c)  For  purposes  of  the  late  payment penalties, the
 7    basis of the penalty shall be the tax shown or required to be
 8    shown on a return, whichever is applicable,  reduced  by  any
 9    part of the tax which is paid on time and by any credit which
10    was properly allowable on the date the return was required to
11    be filed.
12        (d)  A penalty shall be applied to the tax required to be
13    shown  even  if that amount is less than the tax shown on the
14    return.
15        (e)  If both a subsection (b)(1) penalty and a subsection
16    (b)(2) penalty are assessed  against  the  same  return,  the
17    subsection  (b)(2) penalty shall be assessed against only the
18    additional tax found to be due.
19        (f)  If the taxpayer has failed to file the  return,  the
20    Department  shall  determine the correct tax according to its
21    best judgment and information, which amount  shall  be  prima
22    facie evidence of the correctness of the tax due.
23        (g)  The  time  within  which  to file a return or pay an
24    amount of tax due without imposition of a  penalty  does  not
25    extend the time within which to file a protest to a notice of
26    tax liability or a notice of deficiency.
27        (h)  No  return  shall  be determined to be unprocessable
28    because of the omission of any information requested  on  the
29    return  pursuant  to  Section  2505-575  of the Department of
30    Revenue Law (20 ILCS 2505/2505-575).
31    (Source: P.A. 90-491,  eff.  1-1-98;  90-548,  eff.  12-4-97;
32    91-239, eff. 1-1-00.)

33        (35 ILCS 735/3-10) (from Ch. 120, par. 2603-10)
 
                            -7-                LRB9110144SMdv
 1        Sec. 3-10.  Limitations.
 2        (a)  In the case of a false or fraudulent return with the
 3    intent to evade tax, the tax may be assessed at any time.
 4        (b)  Except  in  the  case of a willful failure to file a
 5    return required by law, a tax may be assessed the tax may  be
 6    assessed  at  any time.  If the taxpayer shows that there was
 7    reasonable cause for failure to file  a  return,  the  period
 8    shall  be limited to not more than 6 years after the original
 9    due date of each return required to have been filed.
10        (c)  In the case of a failure to file a  return  required
11    by  law  that  is voluntarily disclosed to the Department, in
12    accordance with regulations promulgated by the Department for
13    receiving the voluntary disclosure, the tax may  be  assessed
14    no  more  than  4  years  after the original due date of each
15    return required to have been filed.
16        (d)  The limitations on assessment shall not apply  where
17    the  Department  has, within the 6-year period of limitation,
18    notified a person that a return is required by law from  that
19    person.   These  limitations  shall  be  tolled  for any time
20    period in which the order of any  court  has  the  effect  of
21    enjoining or restraining the Department from that assessment.
22    (Source: P.A. 87-1189.)

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