SB1641 EngrossedLRB103 00122 HLH 45126 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Uniform Penalty and Interest Act is amended
5by changing Section 3-3 as follows:
 
6    (35 ILCS 735/3-3)  (from Ch. 120, par. 2603-3)
7    Sec. 3-3. Penalty for failure to file or pay.
8    (a) This subsection (a) is applicable before January 1,
91996. A penalty of 5% of the tax required to be shown due on a
10return shall be imposed for failure to file the tax return on
11or before the due date prescribed for filing determined with
12regard for any extension of time for filing (penalty for late
13filing or nonfiling). If any unprocessable return is corrected
14and filed within 21 days after notice by the Department, the
15late filing or nonfiling penalty shall not apply. If a penalty
16for late filing or nonfiling is imposed in addition to a
17penalty for late payment, the total penalty due shall be the
18sum of the late filing penalty and the applicable late payment
19penalty. Beginning on the effective date of this amendatory
20Act of 1995, in the case of any type of tax return required to
21be filed more frequently than annually, when the failure to
22file the tax return on or before the date prescribed for filing
23(including any extensions) is shown to be nonfraudulent and

 

 

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1has not occurred in the 2 years immediately preceding the
2failure to file on the prescribed due date, the penalty
3imposed by Section 3-3(a) shall be abated.
4    (a-5) This subsection (a-5) is applicable to returns due
5on and after January 1, 1996 and on or before December 31,
62000. A penalty equal to 2% of the tax required to be shown due
7on a return, up to a maximum amount of $250, determined without
8regard to any part of the tax that is paid on time or by any
9credit that was properly allowable on the date the return was
10required to be filed, shall be imposed for failure to file the
11tax return on or before the due date prescribed for filing
12determined with regard for any extension of time for filing.
13However, if any return is not filed within 30 days after notice
14of nonfiling mailed by the Department to the last known
15address of the taxpayer contained in Department records, an
16additional penalty amount shall be imposed equal to the
17greater of $250 or 2% of the tax shown on the return. However,
18the additional penalty amount may not exceed $5,000 and is
19determined without regard to any part of the tax that is paid
20on time or by any credit that was properly allowable on the
21date the return was required to be filed (penalty for late
22filing or nonfiling). If any unprocessable return is corrected
23and filed within 30 days after notice by the Department, the
24late filing or nonfiling penalty shall not apply. If a penalty
25for late filing or nonfiling is imposed in addition to a
26penalty for late payment, the total penalty due shall be the

 

 

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1sum of the late filing penalty and the applicable late payment
2penalty. In the case of any type of tax return required to be
3filed more frequently than annually, when the failure to file
4the tax return on or before the date prescribed for filing
5(including any extensions) is shown to be nonfraudulent and
6has not occurred in the 2 years immediately preceding the
7failure to file on the prescribed due date, the penalty
8imposed by Section 3-3(a-5) shall be abated.
9    (a-10) This subsection (a-10) is applicable to returns due
10on and after January 1, 2001. A penalty equal to 2% of the tax
11required to be shown due on a return, up to a maximum amount of
12$250, reduced by any tax that is paid on time or by any credit
13that was properly allowable on the date the return was
14required to be filed, shall be imposed for failure to file the
15tax return on or before the due date prescribed for filing
16determined with regard for any extension of time for filing.
17However, if any return is not filed within 30 days after notice
18of nonfiling mailed by the Department to the last known
19address of the taxpayer contained in Department records, an
20additional penalty amount shall be imposed equal to the
21greater of $250 or 2% of the tax shown on the return. However,
22the additional penalty amount may not exceed $5,000 and is
23determined without regard to any part of the tax that is paid
24on time or by any credit that was properly allowable on the
25date the return was required to be filed (penalty for late
26filing or nonfiling). If any unprocessable return is corrected

 

 

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1and filed within 30 days after notice by the Department, the
2late filing or nonfiling penalty shall not apply. If a penalty
3for late filing or nonfiling is imposed in addition to a
4penalty for late payment, the total penalty due shall be the
5sum of the late filing penalty and the applicable late payment
6penalty. In the case of any type of tax return required to be
7filed more frequently than annually, when the failure to file
8the tax return on or before the date prescribed for filing
9(including any extensions) is shown to be nonfraudulent and
10has not occurred in the 2 years immediately preceding the
11failure to file on the prescribed due date, the penalty
12imposed by this subsection (a-10) shall be abated. This
13subsection (a-10) does not apply to transaction reporting
14returns required by Section 3 of the Retailers' Occupation Tax
15Act and Section 9 of the Use Tax Act that would not, when
16properly prepared and filed, result in the imposition of a
17tax; however, those returns are subject to the penalty set
18forth in subsection (a-15).
19    (a-15) A penalty of $100 shall be imposed for failure to
20file a transaction reporting return required by Section 3 of
21the Retailers' Occupation Tax Act and Section 9 of the Use Tax
22Act on or before the date a return is required to be filed;
23provided, however, that this penalty shall be imposed only if
24the return when properly prepared and filed would not result
25in the imposition of a tax. If such a transaction reporting
26return would result in the imposition of a tax when properly

 

 

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1prepared and filed, then that return is subject to the
2provisions of subsection (a-10).
3    (b) This subsection is applicable before January 1, 1998.
4A penalty of 15% of the tax shown on the return or the tax
5required to be shown due on the return shall be imposed for
6failure to pay:
7        (1) the tax shown due on the return on or before the
8    due date prescribed for payment of that tax, an amount of
9    underpayment of estimated tax, or an amount that is
10    reported in an amended return other than an amended return
11    timely filed as required by subsection (b) of Section 506
12    of the Illinois Income Tax Act (penalty for late payment
13    or nonpayment of admitted liability); or
14        (2) the full amount of any tax required to be shown due
15    on a return and which is not shown (penalty for late
16    payment or nonpayment of additional liability), within 30
17    days after a notice of arithmetic error, notice and
18    demand, or a final assessment is issued by the Department.
19    In the case of a final assessment arising following a
20    protest and hearing, the 30-day period shall not begin
21    until all proceedings in court for review of the final
22    assessment have terminated or the period for obtaining a
23    review has expired without proceedings for a review having
24    been instituted. In the case of a notice of tax liability
25    that becomes a final assessment without a protest and
26    hearing, the penalty provided in this paragraph (2) shall

 

 

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1    be imposed at the expiration of the period provided for
2    the filing of a protest.
3    (b-5) This subsection is applicable to returns due on and
4after January 1, 1998 and on or before December 31, 2000. A
5penalty of 20% of the tax shown on the return or the tax
6required to be shown due on the return shall be imposed for
7failure to pay:
8        (1) the tax shown due on the return on or before the
9    due date prescribed for payment of that tax, an amount of
10    underpayment of estimated tax, or an amount that is
11    reported in an amended return other than an amended return
12    timely filed as required by subsection (b) of Section 506
13    of the Illinois Income Tax Act (penalty for late payment
14    or nonpayment of admitted liability); or
15        (2) the full amount of any tax required to be shown due
16    on a return and which is not shown (penalty for late
17    payment or nonpayment of additional liability), within 30
18    days after a notice of arithmetic error, notice and
19    demand, or a final assessment is issued by the Department.
20    In the case of a final assessment arising following a
21    protest and hearing, the 30-day period shall not begin
22    until all proceedings in court for review of the final
23    assessment have terminated or the period for obtaining a
24    review has expired without proceedings for a review having
25    been instituted. In the case of a notice of tax liability
26    that becomes a final assessment without a protest and

 

 

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1    hearing, the penalty provided in this paragraph (2) shall
2    be imposed at the expiration of the period provided for
3    the filing of a protest.
4    (b-10) This subsection (b-10) is applicable to returns due
5on and after January 1, 2001 and on or before December 31,
62003. A penalty shall be imposed for failure to pay:
7        (1) the tax shown due on a return on or before the due
8    date prescribed for payment of that tax, an amount of
9    underpayment of estimated tax, or an amount that is
10    reported in an amended return other than an amended return
11    timely filed as required by subsection (b) of Section 506
12    of the Illinois Income Tax Act (penalty for late payment
13    or nonpayment of admitted liability). The amount of
14    penalty imposed under this subsection (b-10)(1) shall be
15    2% of any amount that is paid no later than 30 days after
16    the due date, 5% of any amount that is paid later than 30
17    days after the due date and not later than 90 days after
18    the due date, 10% of any amount that is paid later than 90
19    days after the due date and not later than 180 days after
20    the due date, and 15% of any amount that is paid later than
21    180 days after the due date. If notice and demand is made
22    for the payment of any amount of tax due and if the amount
23    due is paid within 30 days after the date of the notice and
24    demand, then the penalty for late payment or nonpayment of
25    admitted liability under this subsection (b-10)(1) on the
26    amount so paid shall not accrue for the period after the

 

 

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1    date of the notice and demand.
2        (2) the full amount of any tax required to be shown due
3    on a return and that is not shown (penalty for late payment
4    or nonpayment of additional liability), within 30 days
5    after a notice of arithmetic error, notice and demand, or
6    a final assessment is issued by the Department. In the
7    case of a final assessment arising following a protest and
8    hearing, the 30-day period shall not begin until all
9    proceedings in court for review of the final assessment
10    have terminated or the period for obtaining a review has
11    expired without proceedings for a review having been
12    instituted. The amount of penalty imposed under this
13    subsection (b-10)(2) shall be 20% of any amount that is
14    not paid within the 30-day period. In the case of a notice
15    of tax liability that becomes a final assessment without a
16    protest and hearing, the penalty provided in this
17    subsection (b-10)(2) shall be imposed at the expiration of
18    the period provided for the filing of a protest.
19    (b-15) This subsection (b-15) is applicable to returns due
20on and after January 1, 2004 and on or before December 31,
212004. A penalty shall be imposed for failure to pay the tax
22shown due or required to be shown due on a return on or before
23the due date prescribed for payment of that tax, an amount of
24underpayment of estimated tax, or an amount that is reported
25in an amended return other than an amended return timely filed
26as required by subsection (b) of Section 506 of the Illinois

 

 

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1Income Tax Act (penalty for late payment or nonpayment of
2admitted liability). The amount of penalty imposed under this
3subsection (b-15)(1) shall be 2% of any amount that is paid no
4later than 30 days after the due date, 10% of any amount that
5is paid later than 30 days after the due date and not later
6than 90 days after the due date, 15% of any amount that is paid
7later than 90 days after the due date and not later than 180
8days after the due date, and 20% of any amount that is paid
9later than 180 days after the due date. If notice and demand is
10made for the payment of any amount of tax due and if the amount
11due is paid within 30 days after the date of this notice and
12demand, then the penalty for late payment or nonpayment of
13admitted liability under this subsection (b-15)(1) on the
14amount so paid shall not accrue for the period after the date
15of the notice and demand.
16    (b-20) This subsection (b-20) is applicable to returns due
17on and after January 1, 2005 and before January 1, 2024.
18        (1) A penalty shall be imposed for failure to pay,
19    prior to the due date for payment, any amount of tax the
20    payment of which is required to be made prior to the filing
21    of a return or without a return (penalty for late payment
22    or nonpayment of estimated or accelerated tax). The amount
23    of penalty imposed under this paragraph (1) shall be 2% of
24    any amount that is paid no later than 30 days after the due
25    date and 10% of any amount that is paid later than 30 days
26    after the due date.

 

 

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1        (2) A penalty shall be imposed for failure to pay the
2    tax shown due or required to be shown due on a return on or
3    before the due date prescribed for payment of that tax or
4    an amount that is reported in an amended return other than
5    an amended return timely filed as required by subsection
6    (b) of Section 506 of the Illinois Income Tax Act (penalty
7    for late payment or nonpayment of tax). The amount of
8    penalty imposed under this paragraph (2) shall be 2% of
9    any amount that is paid no later than 30 days after the due
10    date, 10% of any amount that is paid later than 30 days
11    after the due date and prior to the date the Department has
12    initiated an audit or investigation of the taxpayer, and
13    20% of any amount that is paid after the date the
14    Department has initiated an audit or investigation of the
15    taxpayer; provided that the penalty shall be reduced to
16    15% if the entire amount due is paid not later than 30 days
17    after the Department has provided the taxpayer with an
18    amended return (following completion of an occupation,
19    use, or excise tax audit) or a form for waiver of
20    restrictions on assessment (following completion of an
21    income tax audit); provided further that the reduction to
22    15% shall be rescinded if the taxpayer makes any claim for
23    refund or credit of the tax, penalties, or interest
24    determined to be due upon audit, except in the case of a
25    claim filed pursuant to subsection (b) of Section 506 of
26    the Illinois Income Tax Act or to claim a carryover of a

 

 

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1    loss or credit, the availability of which was not
2    determined in the audit. For purposes of this paragraph
3    (2), any overpayment reported on an original return that
4    has been allowed as a refund or credit to the taxpayer
5    shall be deemed to have not been paid on or before the due
6    date for payment and any amount paid under protest
7    pursuant to the provisions of the State Officers and
8    Employees Money Disposition Act shall be deemed to have
9    been paid after the Department has initiated an audit and
10    more than 30 days after the Department has provided the
11    taxpayer with an amended return (following completion of
12    an occupation, use, or excise tax audit) or a form for
13    waiver of restrictions on assessment (following completion
14    of an income tax audit).
15        (3) The penalty imposed under this subsection (b-20)
16    shall be deemed assessed at the time the tax upon which the
17    penalty is computed is assessed, except that, if the
18    reduction of the penalty imposed under paragraph (2) of
19    this subsection (b-20) to 15% is rescinded because a claim
20    for refund or credit has been filed, the increase in
21    penalty shall be deemed assessed at the time the claim for
22    refund or credit is filed.
23    (b-25) This subsection (b-25) is applicable to returns due
24on or after January 1, 2024.
25        (1) A penalty shall be imposed for failure to pay,
26    prior to the due date for payment, any amount of tax the

 

 

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1    payment of which is required to be made prior to the filing
2    of a return or without a return (penalty for late payment
3    or nonpayment of estimated or accelerated tax). The amount
4    of penalty imposed under this paragraph (1) shall be 2% of
5    any amount that is paid no later than 30 days after the due
6    date and 10% of any amount that is paid later than 30 days
7    after the due date.
8        (2) A penalty shall be imposed for failure to pay the
9    tax shown due or required to be shown due on a return on or
10    before the due date prescribed for payment of that tax
11    (penalty for late payment or nonpayment of tax). The
12    amount of penalty imposed under this paragraph (2) shall
13    be 2% of any amount that is paid no later than 30 days
14    after the due date, 10% of any amount that is paid later
15    than 30 days after the due date and prior to the date the
16    Department initiates an audit or investigation of the
17    taxpayer, and 20% of any amount that is paid after the date
18    the Department initiates an audit or investigation of the
19    taxpayer; provided that the penalty shall be reduced to
20    15% if the entire amount due is paid not later than 30 days
21    after the Department provides the taxpayer with an amended
22    return (following completion of an occupation, use, or
23    excise tax audit) or a form for waiver of restrictions on
24    assessment (following completion of an income tax audit);
25    provided further that the reduction to 15% shall be
26    rescinded if the taxpayer makes any claim for refund or

 

 

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1    credit of the tax, penalties, or interest determined to be
2    due upon audit, except in the case of a claim filed
3    pursuant to subsection (b) of Section 506 of the Illinois
4    Income Tax Act or to claim a carryover of a loss or credit,
5    the availability of which was not determined in the audit.
6    For purposes of this paragraph (2):
7            (A) any overpayment reported on an original return
8        that has been allowed as a refund or credit to the
9        taxpayer shall be deemed to have not been paid on or
10        before the due date for payment;
11            (B) any amount paid under protest pursuant to the
12        provisions of the State Officers and Employees Money
13        Disposition Act shall be deemed to have been paid
14        after the Department has initiated an audit and more
15        than 30 days after the Department has provided the
16        taxpayer with an amended return (following completion
17        of an occupation, use, or excise tax audit) or a form
18        for waiver of restrictions on assessment (following
19        completion of an income tax audit); and
20            (C) any liability resulting from a federal change
21        required to be reported under subsection (b) of
22        Section 506 of the Illinois Income Tax Act that is
23        reported and paid no later than the due date for filing
24        the federal change amended return shall be deemed to
25        have been paid on or before the due date prescribed for
26        payment.

 

 

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1    (3) The penalty imposed under this subsection (b-25) shall
2be deemed assessed at the time the tax upon which the penalty
3is computed is assessed, except that, if the reduction of the
4penalty imposed under paragraph (2) of this subsection (b-25)
5to 15% is rescinded because a claim for refund or credit has
6been filed, the increase in penalty shall be deemed assessed
7at the time the claim for refund or credit is filed.
8    (c) For purposes of the late payment penalties, the basis
9of the penalty shall be the tax shown or required to be shown
10on a return, whichever is applicable, reduced by any part of
11the tax which is paid on time and by any credit which was
12properly allowable on the date the return was required to be
13filed.
14    (d) A penalty shall be applied to the tax required to be
15shown even if that amount is less than the tax shown on the
16return.
17    (e) This subsection (e) is applicable to returns due
18before January 1, 2001. If both a subsection (b)(1) or
19(b-5)(1) penalty and a subsection (b)(2) or (b-5)(2) penalty
20are assessed against the same return, the subsection (b)(2) or
21(b-5)(2) penalty shall be assessed against only the additional
22tax found to be due.
23    (e-5) This subsection (e-5) is applicable to returns due
24on and after January 1, 2001. If both a subsection (b-10)(1)
25penalty and a subsection (b-10)(2) penalty are assessed
26against the same return, the subsection (b-10)(2) penalty

 

 

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1shall be assessed against only the additional tax found to be
2due.
3    (f) If the taxpayer has failed to file the return, the
4Department shall determine the correct tax according to its
5best judgment and information, which amount shall be prima
6facie evidence of the correctness of the tax due.
7    (g) The time within which to file a return or pay an amount
8of tax due without imposition of a penalty does not extend the
9time within which to file a protest to a notice of tax
10liability or a notice of deficiency.
11    (h) No return shall be determined to be unprocessable
12because of the omission of any information requested on the
13return pursuant to Section 2505-575 of the Department of
14Revenue Law (20 ILCS 2505/2505-575).
15    (i) If a taxpayer has a tax liability for the taxable
16period ending after June 30, 1983 and prior to July 1, 2002
17that is eligible for amnesty under the Tax Delinquency Amnesty
18Act and the taxpayer fails to satisfy the tax liability during
19the amnesty period provided for in that Act for that taxable
20period, then the penalty imposed by the Department under this
21Section shall be imposed in an amount that is 200% of the
22amount that would otherwise be imposed under this Section.
23    (j) If a taxpayer has a tax liability for the taxable
24period ending after June 30, 2002 and prior to July 1, 2009
25that is eligible for amnesty under the Tax Delinquency Amnesty
26Act, except for any tax liability reported pursuant to Section

 

 

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1506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that
2is not final, and the taxpayer fails to satisfy the tax
3liability during the amnesty period provided for in that Act
4for that taxable period, then the penalty imposed by the
5Department under this Section shall be imposed in an amount
6that is 200% of the amount that would otherwise be imposed
7under this Section.
8(Source: P.A. 98-425, eff. 8-16-13; 99-335, eff. 8-10-15.)