SB3282 EnrolledLRB103 34197 HLH 64020 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 Retailers' Occupation Tax Act is amended by
5changing Section 2-10.5 as follows:
 
6    (35 ILCS 120/2-10.5)
7    Sec. 2-10.5. Direct payment program; purchaser's providing
8of permit to retailer; retailer relieved of collecting use tax
9and local retailers' occupation tax reimbursements from
10purchaser; direct payment of retailers' occupation tax and
11local retailers' occupation tax by purchaser.
12    (a) Beginning on July 1, 2001 there is established in this
13State a Direct Payment Program to be administered by the
14Department. The Department shall issue a Direct Pay Permit to
15applicants who have been approved to participate in the Direct
16Payment Program. Each person applying to participate in the
17Direct Payment Program must demonstrate (1) the applicant's
18ability to comply with the retailers' occupation tax laws and
19the use tax laws in effect in this State and that the
20applicant's accounting system will reflect the proper amount
21of tax due, (2) that the applicant has a valid business purpose
22for participating in the Direct Payment Program, and (3) how
23the applicant's participation in the Direct Payment Program

 

 

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1will benefit tax compliance. Application shall be made on
2forms provided by the Department and shall contain information
3as the Department may reasonably require. The Department shall
4approve or deny an applicant within 90 days after the
5Department's receipt of the application, unless the Department
6makes a written request for additional information from the
7applicant.
8    (b) A person who has been approved for the Direct Payment
9Program and who has been issued a Direct Pay Permit by the
10Department is relieved of paying tax to a retailer when
11purchasing tangible personal property for use or consumption,
12except as provided in subsection (d), by providing that
13retailer a copy of that Direct Pay Permit. A retailer who
14accepts a copy of a customer's Direct Pay Permit is relieved of
15the obligation to remit the tax imposed by this Act on the
16transaction. References in this Section to "the tax imposed by
17this Act" include any local occupation taxes administered by
18the Department that would be incurred on the retail sale.
19    (c) Once the holder of a Direct Pay Permit uses that Permit
20to relieve the Permit holder from paying tax to a particular
21retailer, the holder must use its Permit for all purchases,
22except as provided in subsection (d), from that retailer for
23so long as the Permit is valid.
24    (d) Direct Pay Permits are not valid and shall not be used
25for sales or purchases of:
26        (1) food or beverage;

 

 

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1        (2) tangible personal property required to be titled
2    or registered with an agency of government; or
3        (3) any transactions subject to the Service Occupation
4    Tax Act or Service Use Tax Act.
5    (e) Direct Pay Permits are not assignable and are not
6transferable. As an illustration, a construction contractor
7shall not make purchases using a customer's Direct Pay Permit.
8    (f) A Direct Pay Permit is valid until it is revoked by the
9Department or until the holder notifies the Department in
10writing that the holder is withdrawing from the Direct Payment
11Program. A Direct Pay Permit can be revoked by the Department,
12after notice and hearing, if the holder violates any provision
13of this Act, any provision of the Illinois Use Tax Act, or any
14provision of any Act imposing a local retailers' occupation
15tax administered by the Department.
16    (g) The holder of a Direct Pay Permit who has been relieved
17of paying tax to a retailer on a purchase for use or
18consumption by representing to that retailer that it would pay
19all applicable taxes directly to the Department shall pay
20those taxes to the Department not later than the 20th day of
21the month following the month in which the purchase was made.
22Permit holders making such purchases are subject to all
23provisions of this Act, and the tax must be reported and paid
24as retailers' occupation tax in the same manner that the
25retailer from whom the purchases were made would have reported
26and paid it, including any local retailers' occupation taxes

 

 

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1applicable to that retail sale. Notwithstanding any other
2provision of this Act, Permit holders shall make all payments
3to the Department through the use of electronic funds
4transfer.
5    (h) By March 31, 2025, and by March 31 of each year
6thereafter, each holder of a Direct Pay Permit shall review
7its purchase activity to verify that the purchases made during
8the 12-month period ending on December 31 of the immediately
9preceding calendar year were sourced correctly and that the
10correct tax rate was applied. If the holder of the Direct Pay
11Permit discovers an error in sourcing or the tax rate during
12the review process, then, by April 20 of the calendar year in
13which the review under this subsection occurs, the holder of
14the Direct Pay Permit shall file an amended return to correct
15the error. If, for any 12-month review period under this
16subsection, a holder of a Direct Pay Permit fails to properly
17verify purchase activity and correct sourcing and tax rate
18errors as required by this subsection and the rules adopted by
19the Department, then the Direct Pay Permit holder is liable to
20pay a penalty of $6,000 to the Department, for deposit into the
21Tax Compliance and Administration Fund. However, the penalty
22under this subsection shall not be imposed if the Department
23finds that at least 95% of the Direct Pay Permit holder's
24transactions for the applicable 12-month review period are
25correctly sourced and the correct taxes have been remitted or
26the permit holder acted with ordinary business care and

 

 

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1prudence. For the purposes of this subsection, ordinary
2business care and prudence shall be determined in accordance
3with Section 3-8 of the Uniform Penalty and Interest Act. The
4Department may adopt rules to administer the penalties under
5this Section.
6(Source: P.A. 92-484, eff. 8-23-01.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.