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91_HB3915
LRB9112249SMdv
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 804.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 804 as follows:
7 (35 ILCS 5/804) (from Ch. 120, par. 8-804)
8 Sec. 804. Failure to Pay Estimated Tax.
9 (a) In general. In case of any underpayment of estimated
10 tax by a taxpayer, except as provided in subsection (d) or
11 (e), the taxpayer shall be liable to a penalty in an amount
12 determined at the rate prescribed by Section 3-3 of the
13 Uniform Penalty and Interest Act upon the amount of the
14 underpayment (determined under subsection (b)) for each
15 required installment.
16 (b) Amount of underpayment. For purposes of subsection
17 (a), the amount of the underpayment shall be the excess of:
18 (1) the amount of the installment which would be
19 required to be paid under subsection (c), over
20 (2) the amount, if any, of the installment paid on
21 or before the last date prescribed for payment.
22 (c) Amount of Required Installments.
23 (1) Amount.
24 (A) In General. Except as provided in
25 paragraph (2), the amount of any required
26 installment shall be 25% of the required annual
27 payment.
28 (B) Required Annual Payment. For purposes of
29 subparagraph (A), the term "required annual payment"
30 means the lesser of
31 (i) 90% of the tax shown on the return
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1 for the taxable year, or if no return is filed,
2 90% of the tax for such year, or
3 (ii) 100% of the tax shown on the return
4 of the taxpayer for the preceding taxable year
5 if a return showing a liability for tax was
6 filed by the taxpayer for the preceding taxable
7 year and such preceding year was a taxable year
8 of 12 months.
9 (2) Lower Required Installment where Annualized
10 Income Installment is Less Than Amount Determined Under
11 Paragraph (1).
12 (A) In General. In the case of any required
13 installment if a taxpayer establishes that the
14 annualized income installment is less than the
15 amount determined under paragraph (1),
16 (i) the amount of such required
17 installment shall be the annualized income
18 installment, and
19 (ii) any reduction in a required
20 installment resulting from the application of
21 this subparagraph shall be recaptured by
22 increasing the amount of the next required
23 installment determined under paragraph (1) by
24 the amount of such reduction, and by increasing
25 subsequent required installments to the extent
26 that the reduction has not previously been
27 recaptured under this clause.
28 (B) Determination of Annualized Income
29 Installment. In the case of any required
30 installment, the annualized income installment is
31 the excess, if any, of
32 (i) an amount equal to the applicable
33 percentage of the tax for the taxable year
34 computed by placing on an annualized basis the
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1 net income for months in the taxable year
2 ending before the due date for the installment,
3 over
4 (ii) the aggregate amount of any prior
5 required installments for the taxable year.
6 (C) Applicable Percentage.
7 In the case of the following The applicable
8 required installments: percentage is:
9 1st ............................... 22.5%
10 2nd ............................... 45%
11 3rd ............................... 67.5%
12 4th ............................... 90%
13 (D) Annualized Net Income; Individuals. For
14 individuals, net income shall be placed on an
15 annualized basis by:
16 (i) multiplying by 12, or in the case of
17 a taxable year of less than 12 months, by the
18 number of months in the taxable year, the net
19 income computed without regard to the standard
20 exemption for the months in the taxable year
21 ending before the month in which the
22 installment is required to be paid;
23 (ii) dividing the resulting amount by the
24 number of months in the taxable year ending
25 before the month in which such installment date
26 falls; and
27 (iii) deducting from such amount the
28 standard exemption allowable for the taxable
29 year, such standard exemption being determined
30 as of the last date prescribed for payment of
31 the installment.
32 (E) Annualized Net Income; Corporations. For
33 corporations, net income shall be placed on an
34 annualized basis by multiplying by 12 the taxable
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1 income
2 (i) for the first 3 months of the taxable
3 year, in the case of the installment required
4 to be paid in the 4th month,
5 (ii) for the first 3 months or for the
6 first 5 months of the taxable year, in the case
7 of the installment required to be paid in the
8 6th month,
9 (iii) for the first 6 months or for the
10 first 8 months of the taxable year, in the case
11 of the installment required to be paid in the
12 9th month, and
13 (iv) for the first 9 months or for the
14 first 11 months of the taxable year, in the
15 case of the installment required to be paid in
16 the 12th month of the taxable year,
17 then dividing the resulting amount by the number of
18 months in the taxable year (3, 5, 6, 8, 9, or 11 as
19 the case may be).
20 (d) Exceptions. Notwithstanding the provisions of the
21 preceding subsections, the penalty imposed by subsection (a)
22 shall not be imposed if the taxpayer was not required to file
23 an Illinois income tax return for the preceding taxable year,
24 or, for individuals, if the taxpayer had a no tax liability
25 of $250 or less for the preceding taxable year and such year
26 was a taxable year of 12 months. The penalty imposed by
27 subsection (a) shall also not be imposed on any underpayments
28 of estimated tax due before the effective date of this
29 amendatory Act of 1998 which underpayments are solely
30 attributable to the change in apportionment from subsection
31 (a) to subsection (h) of Section 304. The provisions of this
32 amendatory Act of 1998 apply to tax years ending on or after
33 December 31, 1998.
34 (e) The penalty imposed for underpayment of estimated
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1 tax by subsection (a) of this Section shall not be imposed to
2 the extent that the Department or his designate determines,
3 pursuant to Section 3-8 of the Uniform Penalty and Interest
4 Act that the penalty should not be imposed.
5 (f) Definition of tax. For purposes of subsections (b)
6 and (c), the term "tax" means the excess of the tax imposed
7 under Article 2 of this Act, over the amounts credited
8 against such tax under Sections 601(b) (3) and (4).
9 (g) Application of Section in case of tax withheld on
10 compensation. For purposes of applying this Section in the
11 case of an individual, tax withheld under Article 7 for the
12 taxable year shall be deemed a payment of estimated tax, and
13 an equal part of such amount shall be deemed paid on each
14 installment date for such taxable year, unless the taxpayer
15 establishes the dates on which all amounts were actually
16 withheld, in which case the amounts so withheld shall be
17 deemed payments of estimated tax on the dates on which such
18 amounts were actually withheld.
19 (g-5) Amounts withheld under the State Salary and
20 Annuity Withholding Act. An individual who has amounts
21 withheld under paragraph (10) of Section 4 of the State
22 Salary and Annuity Withholding Act may elect to have those
23 amounts treated as payments of estimated tax made on the
24 dates on which those amounts are actually withheld.
25 (i) Short taxable year. The application of this Section
26 to taxable years of less than 12 months shall be in
27 accordance with regulations prescribed by the Department.
28 The changes in this Section made by Public Act 84-127
29 shall apply to taxable years ending on or after January 1,
30 1986.
31 (Source: P.A. 90-448, eff. 8-16-97; 90-613, eff. 7-9-98.)
32 Section 99. Effective date. This Act takes effect upon
33 becoming law.