Full Text of SB1881 101st General Assembly
SB1881ham002 101ST GENERAL ASSEMBLY | Rep. Michael J. Zalewski Filed: 5/28/2019
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| 1 | | AMENDMENT TO SENATE BILL 1881
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 1881 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Article 1. Short Title. | 5 | | Section 1-1. Short title. This Act may be cited as the | 6 | | Local Government Revenue Recapture Act. | 7 | | Article 5. Local Government Revenue Recapture. | 8 | | Section 5-5. Definitions. As used in this Article: | 9 | | "Department" means the Department of Revenue. | 10 | | "Family member" means the following, whether by whole | 11 | | blood, half-blood, or adoption: | 12 | | (1) a parent or step-parent; | 13 | | (2) a child or step-child; | 14 | | (3) a grandparent or step-grandparent; |
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| 1 | | (4) an aunt, uncle, great-aunt, or great-uncle; | 2 | | (5) a sibling; | 3 | | (6) a spouse or domestic partner; and | 4 | | (7) the spouse or domestic partner of any person | 5 | | referenced in items (1) through (5). | 6 | | "Financial information" means the information provided to | 7 | | the municipality or county by the Department under Section 11 | 8 | | of the Retailers' Occupation Tax Act that is reported to the | 9 | | Department by a business located in a given municipality or | 10 | | county. | 11 | | "Person" means an individual, sole proprietorship, | 12 | | corporation, registered limited liability partnership, limited | 13 | | liability company, partnership, professional service | 14 | | corporation, or any other form of organization. | 15 | | "Misallocation" means tax paid by the taxpayer and | 16 | | allocated to one unit of local government that should have been | 17 | | allocated to a different unit of local government. | 18 | | "Misallocation" does not include amounts overpaid by the | 19 | | taxpayer and therefore not owed to any unit of local | 20 | | government, nor amounts underpaid by the taxpayer and therefore | 21 | | not previously allocated to any unit of local government. | 22 | | "Monitoring disbursements" means keeping track of payments | 23 | | from the Department by a municipality, county, or third party | 24 | | for the limited purpose of tracking previous misallocations. | 25 | | "Third party" means a person, partnership, corporation, or | 26 | | other entity or individual registered to do business in |
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| 1 | | Illinois who contracts with a municipality or county to review | 2 | | financial information related to the disbursement of local | 3 | | taxes by the Department to the municipality or county. | 4 | | Section 5-10. Contracts with third parties. A municipality | 5 | | or county that receives a disbursement of tax proceeds from the | 6 | | Department may contract with a third party for the purpose of | 7 | | ensuring that the municipality or county receives the correct | 8 | | disbursement from the Department and monitoring disbursements. | 9 | | The third party may not contact the Department on behalf of the | 10 | | municipality or county, but instead must work directly with the | 11 | | municipality or county to acquire financial information. To be | 12 | | eligible to receive financial information from the | 13 | | municipality or county, the third party must: | 14 | | (1) enter into a confidentiality agreement with the | 15 | | municipality or county in the form and manner required by | 16 | | the Department prior to receiving the financial | 17 | | information; | 18 | | (2) have an existing contract with the municipality or | 19 | | county at the time the third party enters into the | 20 | | confidentiality agreement with the municipality or county; | 21 | | a copy of that existing contract must be on file with the | 22 | | Department; | 23 | | (3) abide by the same conditions as the municipality or | 24 | | county with respect to the furnishing of financial | 25 | | information under Section 11 of the Retailers' Occupation |
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| 1 | | Tax Act; and | 2 | | (4) be registered with the Department as required by | 3 | | Section 5-35 of this Act. | 4 | | Section 5-15. Financial information. The third party may | 5 | | use the financial information it receives from the contracting | 6 | | municipality or county only for the purpose of providing | 7 | | services to the municipality or county as specified in this Act | 8 | | and may not use the information for any other purpose. | 9 | | Electronic data submitted to third parties or by the | 10 | | contracting municipality or county must be accessible only to | 11 | | third parties who have entered into a confidentiality agreement | 12 | | with the municipality or county or who have an existing | 13 | | contract with the municipality or county. | 14 | | Section 5-20. Retention, collection, disclosure, and | 15 | | destruction of financial information. | 16 | | (a) A third party in possession of a taxpayer's financial | 17 | | information must permanently destroy that financial | 18 | | information pursuant to this Act. The financial information | 19 | | shall be destroyed upon the soonest of the following to occur: | 20 | | (1) if the taxpayer is not referred to the Department, | 21 | | within 30 days after receipt of the taxpayer's financial | 22 | | information from either the municipality or county, unless | 23 | | the third party is monitoring disbursements from the | 24 | | Department on an ongoing basis for a municipality or |
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| 1 | | county; or | 2 | | (2) within 30 days after the Department receives a | 3 | | taxpayer audit referral from a third party referring the | 4 | | taxpayer to the Department for additional review. | 5 | | (b) No third party in possession of financial information | 6 | | may sell, lease, trade, market, or otherwise utilize or profit | 7 | | from a taxpayer's financial information, except for a fee as | 8 | | negotiated by the municipality or county. The fee may be in the | 9 | | form of a contingency fee for a percentage of the amount of | 10 | | additional distributions the municipality or county receives | 11 | | for no more than 3 years following the first disbursement to | 12 | | the municipality or county as a result of the services of the | 13 | | third party under this Act. | 14 | | (c) No third party may permanently or temporarily collect, | 15 | | capture, purchase, use, receive through trade, or otherwise | 16 | | retain a taxpayer's financial information beyond the scope of | 17 | | subsection (a) of this Section. | 18 | | (d) No third party in possession of confidential | 19 | | information may disclose, redisclose, share, or otherwise | 20 | | disseminate a taxpayer's financial information. | 21 | | (e) A third party must dispose of the materials containing | 22 | | financial information in a manner that renders the financial | 23 | | information unreadable, unusable, and undecipherable. Proper | 24 | | disposal methods include, but are not limited to, the | 25 | | following: | 26 | | (1) in the case of paper documents, burning, |
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| 1 | | pulverizing, or shredding so that the information cannot | 2 | | practicably be read or reconstructed; and | 3 | | (2) in the case of electronic media and other non-paper | 4 | | media containing information, destroying or erasing so | 5 | | that information cannot practicably be read, | 6 | | reconstructed, or otherwise utilized by the third party or | 7 | | others. | 8 | | Section 5-25. Notice of intent to contract; award of | 9 | | contracts. A municipality or county that chooses to contract | 10 | | with a third party pursuant to this Act shall follow all rules | 11 | | set forth in the Illinois Municipal Code or the Counties Code, | 12 | | as applicable, concerning those contracts. | 13 | | Section 5-30. Posting results. Annually, the third party | 14 | | shall provide the municipality or county with a final summary | 15 | | of the review for publication. It is the responsibility of the | 16 | | third party to ensure that this summary includes no personal or | 17 | | identifying information of taxpayers and that all such taxpayer | 18 | | information is kept confidential. If the summary includes any | 19 | | discussion of tax revenue, it shall include only aggregate | 20 | | amounts by tax type, and shall in no way include information | 21 | | about an individual return or an individual taxpayer, even with | 22 | | identifying information redacted. In addition, due to the | 23 | | preliminary nature of such a summary based only on unaudited | 24 | | financial information, no claim of specific tax savings or |
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| 1 | | revenue generation may be made in the summary. | 2 | | Section 5-35. Third party registration. | 3 | | (a) Beginning on January 1, 2020, no person shall engage in | 4 | | business as a third party pursuant to this Act in this State | 5 | | without first having registered with the Department. | 6 | | Application for registration or renewal of registration shall | 7 | | be made to the Department, by electronic means, in a form and | 8 | | at the time prescribed by the Department. Each applicant for | 9 | | registration or renewal of registration under this Section | 10 | | shall furnish to the Department, in an electronic format | 11 | | established by the Department, the following information: | 12 | | (1) the name and address of the applicant; | 13 | | (2) the address of the location at which the applicant | 14 | | proposes to engage in business as a third party in this | 15 | | State; | 16 | | (3) valid and updated contact information; | 17 | | (4) attestation of good standing to do business in | 18 | | Illinois; | 19 | | (5) a copy of each contract it has entered into with a | 20 | | municipality or county; if an applicant has a contract with | 21 | | a municipality or county prior to the effective date of | 22 | | this Act, a copy of all existing contracts must be | 23 | | provided; | 24 | | (6) an annual certification of process letter that: | 25 | | (A) is signed by an attorney or certified public |
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| 1 | | accountant licensed and authorized to practice in the | 2 | | State of Illinois; | 3 | | (B) contains findings that, after due diligence, | 4 | | the author is of the opinion that: | 5 | | (i) the third party's confidentiality | 6 | | standards for storing encrypted data at rest, | 7 | | using a cryptographic algorithm, conform to the | 8 | | Federal Information Processing Standard (FIPS) | 9 | | Publication 140-2; | 10 | | (ii) the third party uses multi-factor
| 11 | | authentication;
| 12 | | (iii) the third party uses HTTPS with at least | 13 | | TLS 1.2 or its successor to protect the data files | 14 | | while in transit between a browser and server; | 15 | | (iv) the third party adheres to best practices | 16 | | as recommended by the Open Web Application | 17 | | Security Project (OWASP); | 18 | | (v) the third party has a firewall which | 19 | | protects against unauthorized use of the data; and | 20 | | (vi) the third party shall maintain a physical | 21 | | location in this State at all times; if, at any | 22 | | time, the third party fails to have a physical | 23 | | location in this State, the third party's | 24 | | registration shall be revoked; and | 25 | | (7) such other additional information as the | 26 | | Department may require by rule. |
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| 1 | | The annual registration fee payable to the Department for | 2 | | each third party shall be $15,000. The fee shall be deposited | 3 | | into the Tax Compliance and Administration Fund and shall be | 4 | | used for the cost of administering the certified audit pilot | 5 | | project under Article 10. | 6 | | Each applicant shall pay the fee to the Department at the | 7 | | time of submitting its application or renewal to the | 8 | | Department. The Department may require an applicant under this | 9 | | Section to electronically file and pay the fee. | 10 | | (b) The following are ineligible to register as a third | 11 | | party under this Act: | 12 | | (1) a person who has been convicted of a felony related | 13 | | to financial crimes under any federal or State law, if the | 14 | | Department, after investigation and a hearing if requested | 15 | | by the applicant, determines that the person has not been | 16 | | sufficiently rehabilitated to warrant the public trust, | 17 | | including an individual or any employee, officer, manager, | 18 | | member, partner, or director of an entity that has been | 19 | | convicted as provided in this paragraph (1); | 20 | | (2) a person, if any employee, contractual employee, | 21 | | officer, manager, or director thereof, or any person or | 22 | | persons owning in the aggregate more than 5% thereof, is | 23 | | employed by or appointed or elected to the corporate | 24 | | authorities of any municipality or county in this State; | 25 | | (3) a person, if any employee, contractual employee, | 26 | | officer, manager, or director thereof, or any person or |
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| 1 | | persons owning in the aggregate more than 5% thereof, is | 2 | | not or would not be eligible to receive a certificate of | 3 | | registration under this Act or a license under the Illinois | 4 | | Public Accounting Act for any reason; | 5 | | (4) a person who is a family member of any person who | 6 | | is employed by or appointed or elected to the corporate | 7 | | authorities of any municipality or county in the State; | 8 | | (5) a person who is a qualified practitioner, as | 9 | | defined by Section 10-15 of this Act; | 10 | | (6) a third party owned, in whole or in part, by any | 11 | | entity that competes directly or indirectly with any | 12 | | taxpayer whose financial information they are seeking or | 13 | | receiving; and | 14 | | (7) a third party owning in whole or in part, directly | 15 | | or indirectly, any entity that competes, directly or | 16 | | indirectly, with any taxpayer whose financial information | 17 | | they are seeking or receiving. | 18 | | (c) The Department shall begin accepting applications no | 19 | | later than January 1, 2020. Upon receipt of an application and | 20 | | registration fee in proper form from a person who is eligible | 21 | | to register as a third party under this Act, the Department | 22 | | shall issue, within 60 days after receipt of an application, a | 23 | | certificate of registration to such applicant in such form as | 24 | | prescribed by the Department. That certificate of registration | 25 | | shall permit the applicant to whom it is issued to engage in | 26 | | business as a third party under this Act. All certificates of |
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| 1 | | registration issued by the Department under this Section shall | 2 | | be valid for a period not to exceed one year after issuance | 3 | | unless sooner revoked or suspended as provided in this Act. No | 4 | | certificate of registration issued under this Section is | 5 | | transferable or assignable. A person who obtains a certificate | 6 | | of registration as a third party who ceases to do business as | 7 | | specified in the certificate of registration, or who never | 8 | | commenced business, or whose certificate of registration is | 9 | | suspended or revoked, shall immediately surrender the | 10 | | certificate of registration to the Department. | 11 | | (d) Any person aggrieved by any decision of the Department | 12 | | under this Section may, within 60 days after notice of the | 13 | | decision, protest and request a hearing. Upon receiving a | 14 | | request for a hearing, the Department shall give written notice | 15 | | to the person requesting the hearing of the time and place | 16 | | fixed for the hearing and shall hold a hearing and then issue | 17 | | its final administrative decision in the matter to that person | 18 | | within 60 days after the date of the hearing. In the absence of | 19 | | a protest and request for a hearing within 60 days, the | 20 | | Department's decision shall become final without any further | 21 | | determination being made or notice given. | 22 | | (e) All final decisions by the Department under this | 23 | | Section are subject to judicial review under the provisions of | 24 | | the Administrative Review Law. | 25 | | Section 5-37. Insurance policy requirement. A third party |
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| 1 | | is required to file and maintain in force an insurance policy | 2 | | issued by an insurance company authorized to transact fidelity | 3 | | and surety business in the State of Illinois. The insurance | 4 | | policy shall be for coverage of potential legal claims, | 5 | | including, by not limited to, penalties set forth under Section | 6 | | 5-60, embezzlement, dishonesty, fraud, omissions or errors, or | 7 | | other financial wrongdoing in the course of providing services. | 8 | | The policy shall be in the form prescribed by the Department in | 9 | | the sum of $500,000. The policy shall be continuous in form and | 10 | | run concurrently with the original and each renewal | 11 | | certification period unless terminated by the insurance | 12 | | company. An insurance company may terminate a policy and avoid | 13 | | further liability by filing a 60-day notice of termination with | 14 | | the Department and at the same time sending the same notice to | 15 | | the licensee. A license shall be canceled on the termination | 16 | | date of the policy unless a new policy is filed with the | 17 | | Department and becomes effective at the termination date of the | 18 | | prior policy. If a policy has been canceled under this Section, | 19 | | the third party must file a new application and will be | 20 | | considered a new applicant if it obtains a new policy. | 21 | | Section 5-40. Revocation or suspension of certification. | 22 | | (a) A contracting municipality or county shall refuse to | 23 | | provide any information, including financial information, to | 24 | | any third party who violates this Act or rules adopted pursuant | 25 | | to this Act or the Retailers' Occupation Tax Act or rules |
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| 1 | | adopted pursuant to the Retailers' Occupation Tax Act. | 2 | | (b) The Department may, after notice and a hearing, revoke | 3 | | or suspend the certificate of registration of any third party | 4 | | for a violation of any provision of this Act, for noncompliance | 5 | | with any provision contained in this Act, or because the | 6 | | Department determines that the third party is ineligible for a | 7 | | certificate of registration for any one or more of the reasons | 8 | | provided for in Section 5-35 of this Act. The decision whether | 9 | | to suspend or revoke and, if a suspension is in order, the | 10 | | duration of the suspension shall be made by taking into account | 11 | | factors that include but are not limited to, the registrant's | 12 | | previous history of compliance with the Act as of its creation, | 13 | | the number,
seriousness, and duration of the violations, and | 14 | | the registrant's
cooperation in discontinuing and correcting | 15 | | violations.
| 16 | | Section 5-50. Audit referrals; restrictions. | 17 | | (a) Upon entering into a contract with a municipality or | 18 | | county, a third party shall be prohibited from communicating | 19 | | directly or indirectly in any manner with a taxpayer known or | 20 | | believed to be operating within that municipality or county | 21 | | about any matters directly or indirectly related to, or covered | 22 | | by, the contract. | 23 | | (b) If, based on a review of the financial information | 24 | | provided by the Department to a municipality or a county, or | 25 | | provided by a municipality or county to a registered third |
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| 1 | | party, a municipality, county, or third party discovers that | 2 | | local retailers' or service occupation tax may have been | 3 | | underpaid, then it may refer the matter to the Department for a | 4 | | limited-scope audit in accordance with Article 10 of this Act. | 5 | | (c) With respect to taxes administered by the Department, | 6 | | units of local government and third parties are not authorized | 7 | | to (i) access, review, or compel the production of taxpayers' | 8 | | actual tax returns or (ii) access, review, or compel the | 9 | | production of taxpayers' books and records. | 10 | | (d) With respect to taxes administered by the Department, | 11 | | units of local government and third parties are prohibited from | 12 | | (i) engaging in an audit of any taxpayer, (ii) assessing tax | 13 | | against any taxpayer, (iii) engaging in collection actions | 14 | | against any taxpayer for the tax, or (iv) engaging in any other | 15 | | action related to such taxes that is assigned by law to the | 16 | | Department. | 17 | | (e) A local government shall not share any financial | 18 | | information
received with another local government or another | 19 | | third party. Further, a local government may not share the | 20 | | findings
of a third party with another local government or | 21 | | another third party. | 22 | | Section 5-55. No basis for action under Illinois False | 23 | | Claims Act. No information received by a municipality, county, | 24 | | third party, or any other person or entity under this Act shall | 25 | | be the basis for filing an action by a private person under the |
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| 1 | | Illinois False Claims Act. | 2 | | Section 5-60. Penalties. | 3 | | (a) Any third party who violates any provision of this Act | 4 | | shall be subject to the penalties set forth in Section 11 of | 5 | | the Retailers' Occupation Tax Act. | 6 | | (b) Any third party who violates Section 5-20 is subject to | 7 | | a civil penalty of not more than $10,000 for each taxpayer with | 8 | | respect to whom financial information is improperly disclosed, | 9 | | profited from, or disposed of in violation of that Section. The | 10 | | Attorney General may impose a civil penalty not to exceed | 11 | | $50,000 for each instance of improper disposal of materials | 12 | | containing financial information. The Attorney General may | 13 | | impose a civil penalty after notice to the person accused of | 14 | | violating Section 5-20 and an opportunity for that person to be | 15 | | heard in the matter. The Attorney General may file a civil | 16 | | action in the circuit court to recover any penalty imposed for | 17 | | a violation of Section 5-20. In addition to the authority to | 18 | | impose a civil penalty under this Section, the Attorney General | 19 | | may bring an action in the circuit court to remedy a violation | 20 | | of this Section, seeking any appropriate relief. | 21 | | (c) Neither the State nor any municipality or county shall | 22 | | be held liable for the mishandling of information by a third | 23 | | party, including information from the Department or any other | 24 | | financial information of taxpayers. | 25 | | (d) Any taxpayer aggrieved by a violation of this Act shall |
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| 1 | | have a right of action in a State circuit court or as a | 2 | | supplemental claim in federal district court against a third | 3 | | party. A taxpayer may recover for each violation: | 4 | | (1) against a third party that, by gross negligence, | 5 | | violates a provision of this Act, liquidated damages of | 6 | | $5,000 or actual damages, whichever is greater; | 7 | | (2) against a third party that intentionally or | 8 | | recklessly violates a provision of this Act, liquidated | 9 | | damages of $10,000 or actual damages, whichever is greater; | 10 | | (3) reasonable attorney's fees and costs, including | 11 | | expert witness fees and other litigation expenses; and | 12 | | (4) other relief, including an injunction, as the State | 13 | | or federal court may deem appropriate. | 14 | | Article 10. Local Government Revenue Recapture Certified Audit | 15 | | Pilot Program. | 16 | | Section 10-5. Findings. The General Assembly finds that: | 17 | | (1) Voluntary compliance is the cornerstone of an | 18 | | effective tax system. | 19 | | (2) Despite attempts by the General Assembly, State | 20 | | taxes are not simple. | 21 | | (3) Even the most diligent taxpayers, through mistake | 22 | | or inadvertence, may not pay all taxes due. | 23 | | (4) The Department lacks the resources to audit the | 24 | | compliance of all taxpayers. |
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| 1 | | (5) Illinois certified public accountants provide | 2 | | valuable advice and assistance to Illinois taxpayers on | 3 | | State tax issues. | 4 | | (6) A pilot program establishing a partnership between | 5 | | taxpayers, Illinois certified public accountants, and the | 6 | | Department will provide guidance to taxpayers and enhance | 7 | | voluntary compliance. | 8 | | (7) A pilot project to establish a certified audit | 9 | | program to address underpayment of local occupation and use | 10 | | taxes would address concerns raised by units of local | 11 | | government. | 12 | | Section 10-10. Purpose. The purpose of this Article is to | 13 | | create a certified audit program under a 5-year pilot project | 14 | | that is limited in scope to specifically address concerns | 15 | | related to the proper reporting and payment of local occupation | 16 | | and use taxes that are collected and distributed to | 17 | | municipalities and counties by the Department. | 18 | | Section 10-15. Definitions. As used in this Article: | 19 | | "Audit" means an agreed-upon procedures engagement in | 20 | | accordance with Statements on Standards for the Attestation | 21 | | Engagements (AICPA Professional Standards, AT-C Section 315 | 22 | | (Compliance Attest)). | 23 | | "Certification program" means an instructional curriculum, | 24 | | examination, and process for certification, recertification, |
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| 1 | | and revocation of certification of certified public | 2 | | accountants that is administered by the Department with the | 3 | | assistance of the Illinois CPA Society and that is officially | 4 | | approved by the Department to ensure that a certified public | 5 | | accountant possesses the necessary skills and abilities to | 6 | | successfully perform an attestation engagement for a | 7 | | limited-scope tax compliance review in a certified audit | 8 | | project under this Act. | 9 | | "Department" means the Department of Revenue. | 10 | | "Family member" means the following, whether by whole | 11 | | blood, half-blood, or adoption: | 12 | | (1) a parent or step-parent; | 13 | | (2) a child or step-child; | 14 | | (3) a grandparent or step-grandparent; | 15 | | (4) an aunt, uncle, great-aunt, or great-uncle; | 16 | | (5) a sibling; | 17 | | (6) a spouse or domestic partner; and | 18 | | (7) the spouse or domestic partner of any person | 19 | | referenced in items (1) through (5). | 20 | | "Misallocation" means tax paid by the taxpayer and | 21 | | allocated to one unit of local government that should have been | 22 | | allocated to a different unit of local government. | 23 | | "Misallocation" does not include amounts overpaid by the | 24 | | taxpayer and therefore not owed to any unit of local | 25 | | government, nor amounts underpaid by the taxpayer and therefore | 26 | | not previously allocated to any unit of local government. |
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| 1 | | "Participating taxpayer" means any person subject to the | 2 | | revenue laws administered by the Department who is the subject | 3 | | of a tax compliance referral by a municipality, county, or | 4 | | third party, who enters into an engagement with a qualified | 5 | | practitioner for a limited-scope tax compliance review under | 6 | | this Act, and who is approved by the Department under the local | 7 | | government revenue recapture certified audit pilot project. | 8 | | "Qualified practitioner" means a certified public | 9 | | accountant who is licensed or registered to perform accountancy | 10 | | activities in Illinois under Section 8.05 of the Illinois | 11 | | Public Accounting Act and who has met all requirements for the | 12 | | local government revenue recapture certified audit training | 13 | | course, achieved the required score on the certification test | 14 | | as approved by the Department, and been certified by the | 15 | | Department. "Qualified practitioner" does not include a third | 16 | | party, as defined by Section 5-5 of this Act, or any employee, | 17 | | contractual employee, officer, manager, or director thereof, | 18 | | any person or persons owning in the aggregate more than 5% of | 19 | | such third party, or a person who is a family member of any | 20 | | person who is employed by or is an appointed or elected member | 21 | | of any corporate authorities, as defined in the Illinois | 22 | | Municipal Code. | 23 | | Section 10-20. Local government revenue recapture | 24 | | certified audit project. | 25 | | (a) The Department shall initiate a certified audit pilot |
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| 1 | | project to further enhance tax compliance reviews performed by | 2 | | qualified practitioners and to encourage taxpayers to hire | 3 | | qualified practitioners at their own expense to review and | 4 | | report on certain aspects of their sales tax and use tax | 5 | | compliance in cases where the Department has notified the | 6 | | taxpayer that it has received a tax compliance referral from a | 7 | | municipality, county, or third party under this Act. The nature | 8 | | of the certified audit work performed by qualified | 9 | | practitioners shall be agreed-upon procedures of a Compliance | 10 | | Attestation in which the Department is the specified user of | 11 | | the resulting report. Qualified practitioners are prohibited | 12 | | from using information obtained from audit manuals, training | 13 | | materials, or any other materials provided by the Department | 14 | | under this Act for any purpose other than to perform the tax | 15 | | compliance reviews under the certified audit pilot program | 16 | | under this Act. | 17 | | The tax compliance reviews shall be limited in scope and | 18 | | may include include only: (i) whether the taxpayer is reporting | 19 | | receipts in the proper jurisdiction; (ii) whether asset | 20 | | purchases by the taxpayer were taxed properly; (iii) an | 21 | | evaluation of sales reported as exempt from tax; (iv) whether | 22 | | the proper tax rate was charged; (v) whether the tax was | 23 | | properly reported as retailers' occupation tax or use tax; and | 24 | | (vi) any other factor that impacts the Department's allocation | 25 | | of sales and use tax revenues to the jurisdiction in which the | 26 | | taxpayer reports sales or use tax. |
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| 1 | | (b) As an incentive for taxpayers to incur the costs of a | 2 | | certified audit, the Department shall abate penalties due on | 3 | | any tax liabilities revealed by a certified audit, except that | 4 | | this authority to abate penalties shall not apply to any | 5 | | liability for taxes that were collected by the participating | 6 | | taxpayer but not remitted to the Department, nor shall the | 7 | | Department have the authority to abate fraud penalties. | 8 | | (c) The certified audit pilot project shall apply only to | 9 | | taxpayers who have been notified that an audit referral has | 10 | | been received by the Department under this Act and only to | 11 | | occupation and use taxes administered and collected by the | 12 | | Department. | 13 | | (d) The certified audit pilot project shall begin with | 14 | | audit referrals received on and after January 1, 2020. Upon | 15 | | obtaining proper certification, qualified practitioners may | 16 | | initiate certified audits beginning January 1, 2020. | 17 | | Section 10-25. Practitioner responsibilities. Any | 18 | | practitioner responsible for planning, directing, or | 19 | | conducting a certified audit or reporting on a participating | 20 | | taxpayer's tax compliance shall be a qualified practitioner. | 21 | | For purposes of this Section, a qualified practitioner is | 22 | | responsible for: | 23 | | (1) planning a certified audit when performing work | 24 | | that involves determining the objectives, scope, and | 25 | | methodology of the certified audit, when establishing |
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| 1 | | criteria to evaluate matters subject to the review as part | 2 | | of the certified audit, when gathering information used in | 3 | | planning the certified audit, or when coordinating the | 4 | | certified audit with the Department; | 5 | | (2) directing a certified audit when the work involves | 6 | | supervising the efforts or reviewing the work of others to | 7 | | determine whether it is properly accomplished and | 8 | | complete; | 9 | | (3) conducting a certified audit when performing tests | 10 | | and procedures or field audit work necessary to accomplish | 11 | | the audit objectives in accordance with applicable | 12 | | professional standards; | 13 | | (4) reporting on a participating taxpayer's tax | 14 | | compliance in a certified audit when determining report | 15 | | contents and substance or reviewing reports for technical | 16 | | content and substance prior to issuance; and | 17 | | (5) answering questions by Department review staff, | 18 | | answering questions raised by the Informal Conference | 19 | | Board, and testifying in any administrative or court | 20 | | proceeding regarding the audit or report. | 21 | | Section 10-30. Local government revenue recapture audit | 22 | | referral. | 23 | | (a) A third party shall not refer a taxpayer to the | 24 | | Department for audit consideration unless the third party is | 25 | | registered with the Department pursuant to Section 5-35. |
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| 1 | | (b) If, based on a review of the financial information | 2 | | provided by the Department to a municipality or county, or | 3 | | provided by a municipality or county to a registered third | 4 | | party, the municipality or county discovers that a taxpayer may | 5 | | have underpaid local retailers' or service occupation taxes, | 6 | | then it may refer the matter to the Department for audit | 7 | | consideration. The tax compliance referral may be made only by | 8 | | the municipality, county, or third party and shall be made in | 9 | | the form and manner required by the Department, including any | 10 | | requirement that the referral be submitted electronically. The | 11 | | tax compliance referral shall, at a minimum, include proof of | 12 | | registration as a third party, a copy of a contract between the | 13 | | third party and the county or municipality, the taxpayer's | 14 | | name, Department account identification number, mailing | 15 | | address, and business location, and the specific reason for the | 16 | | tax compliance referral, including as much detail as possible. | 17 | | (c) The Department shall complete its evaluation of all | 18 | | audit referrals under this Act within 60 days after receipt of | 19 | | the referral and shall handle all audit referrals as follows: | 20 | | (1) the Department shall evaluate the referral to | 21 | | determine whether it is sufficient to warrant further | 22 | | action based on the information provided in the referral, | 23 | | any other information the Department possesses, and audit | 24 | | selection procedures of the Department; | 25 | | (2) if the Department determines that the referral is | 26 | | not actionable, then the Department shall notify the local |
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| 1 | | government that it has evaluated the referral and has | 2 | | determined that no action
is deemed necessary and provide | 3 | | the local government with an explanation for that decision; | 4 | | (3) if the Department determines that the referral is | 5 | | actionable, then it shall determine whether the taxpayer is | 6 | | currently under audit or scheduled for audit; | 7 | | (A) if the taxpayer is not currently under audit or | 8 | | scheduled for audit, the Department shall determine | 9 | | whether it will schedule the taxpayer for audit; and | 10 | | (B) if the taxpayer is not under audit by the | 11 | | Department or scheduled for audit by the Department and | 12 | | the Department decides to schedule the taxpayer for | 13 | | audit, then the Department shall notify the taxpayer | 14 | | that the Department has received an actionable audit | 15 | | referral on the taxpayer and issue a notice to the | 16 | | taxpayer as provided under subsection (d) of this | 17 | | Section. | 18 | | (d) The notice to the taxpayer required by subparagraph (B) | 19 | | of paragraph (3) of subsection (c) shall include, but not be | 20 | | limited to, the following: | 21 | | (1) that the taxpayer must either: (A) engage a | 22 | | qualified practitioner, at
the taxpayer's expense, to | 23 | | complete a certified audit, limited in scope to the | 24 | | taxpayer's Retailers' Occupation Tax, Use Tax, Service | 25 | | Occupation Tax, or Service Use Tax liability, and the | 26 | | taxpayer's liability for any local retailers' or service |
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| 1 | | occupation tax administered by the Department; or (B) be | 2 | | subject to audit by the Department; | 3 | | (2) that, as an incentive, for taxpayers who agree to | 4 | | the limited-scope certified audit, the Department shall | 5 | | abate penalties as provided in Section 10-20; and | 6 | | (3) A statement that reads: "[INSERT THE NAME OF THE | 7 | | ELECTED CHIEF EXECUTIVE OF THE CORPORATE AUTHORITY] has | 8 | | contracted with [INSERT THIRD PARTY] to review your | 9 | | Retailers' Occupation Tax, Use Tax, Service Occupation | 10 | | Tax, Service Use Tax, and any local retailers' or service | 11 | | occupation taxes reported to the Illinois Department of | 12 | | Revenue ("Department"). [INSERT THE NAME OF THE ELECTED | 13 | | CHIEF EXECUTIVE OF THE CORPORATE AUTHORITY] and [INSERT THE | 14 | | THIRD PARTY] have selected and referred your business to | 15 | | the Department for a certified audit of your Retailers' | 16 | | Occupation Tax, Use Tax, Service Occupation Tax, Service | 17 | | Use Tax, and any local retailers' or service occupation | 18 | | taxes reported to the Department pursuant to the Local | 19 | | Government Revenue Recapture Act. The purpose of the audit | 20 | | is to verify that your business
reported and submitted the | 21 | | proper Retailers' Occupation Tax, Use Tax, Service | 22 | | Occupation Tax, Service Use Tax, and any local retailers' | 23 | | or service occupation taxes administered by the | 24 | | Department. The Department is required to disclose your | 25 | | confidential financial information to [INSERT THE NAME OF | 26 | | THE ELECTED CHIEF EXECUTIVE OF THE CORPORATE AUTHORITY] and |
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| 1 | | [INSERT THE THIRD PARTY]. Additional information can be | 2 | | accessed from the Department's website and publications | 3 | | for a basic overview of your rights as a Taxpayer. If you | 4 | | have questions regarding your business's referral to the | 5 | | Department for audit, please contact [CORPORATE | 6 | | AUTHORITY'S] mayor, village president,or any other person | 7 | | serving as [CORPORATE AUTHORITY'S] chief executive officer | 8 | | or chief financial officer. [INSERT THIRD PARTY] is | 9 | | prohibited from discussing this matter with you directly or | 10 | | indirectly in any manner regardless of who initiates the | 11 | | contact. If [INSERT THIRD PARTY] contacts you, please | 12 | | contact the Department.".
| 13 | | (e) Within 90 days after notice by the Department, the | 14 | | taxpayer must respond by stating in writing whether it will or | 15 | | will not arrange for the performance of a certified audit under | 16 | | this Act. If the taxpayer states that it will arrange for the | 17 | | performance of a certified audit, then it must do so within 60 | 18 | | days after responding to the Department or within 90 days after | 19 | | notice by the Department, whichever comes first. If the | 20 | | taxpayer states that it will not arrange for the performance of | 21 | | a certified audit or if the taxpayer does not arrange for the | 22 | | performance of a certified audit within 180 days after notice | 23 | | by the Department, then the Department may schedule the | 24 | | taxpayer for audit by the Department. | 25 | | (f) The certified audit must not be a contingent-fee | 26 | | engagement and must be completed in accordance with this |
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| 1 | | Article 10. | 2 | | Section 10-35. Notification by qualified practitioner. | 3 | | (a) A qualified practitioner hired by a taxpayer who elects | 4 | | to perform a certified audit under Section 10-30 shall notify | 5 | | the Department of an engagement to perform a certified audit | 6 | | and shall provide the Department with the information the | 7 | | Department deems necessary to identify the taxpayer, to confirm | 8 | | that the taxpayer is not already under audit by the Department, | 9 | | and to establish the basic nature of the taxpayer's business | 10 | | and the taxpayer's potential exposure to Illinois occupation | 11 | | and use tax laws. The information provided in the notification | 12 | | shall be submitted in the form and manner required by the | 13 | | Department and shall include the taxpayer's name, federal | 14 | | employer identification number or social security number, | 15 | | Department account identification number, mailing address, and | 16 | | business location, and the specific occupation and use taxes | 17 | | and period proposed to be covered by the engagement for the | 18 | | certified audit. In addition, the notice shall include the | 19 | | name, address, identification number, contact person, and | 20 | | telephone number of the engaged firm. An engagement for a | 21 | | qualified practitioner to perform a certified audit under this | 22 | | Act shall not be authorized by the Department unless the | 23 | | taxpayer received notice from the Department under | 24 | | subparagraph (b) of paragraph (3) of subsection (c) of Section | 25 | | 10-30. |
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| 1 | | (b) If the taxpayer has received notice of an audit | 2 | | referral from the Department and has not been issued a written | 3 | | notice of intent to conduct an audit, the taxpayer shall be a | 4 | | participating taxpayer and the Department shall so advise the | 5 | | qualified practitioner in writing within 10 days after receipt | 6 | | of the engagement notice. However, the Department may exclude a | 7 | | taxpayer from a certified audit or may limit the taxes or | 8 | | periods subject to the certified audit on the basis that: (i) | 9 | | the Department has previously conducted an audit; (ii) the | 10 | | Department is in the process of conducting an investigation or | 11 | | other examination of the taxpayer's records; (iii) the taxpayer | 12 | | has already been referred to the Department pursuant to Section | 13 | | 10-30 and the Department determined an audit referral is not | 14 | | actionable; (iv) the Department or a qualified practitioner has | 15 | | previously conducted an audit under Section 10-30 of this Act; | 16 | | or (v) for just cause. | 17 | | (c) Within 30 days after receipt of the notice of | 18 | | qualification from the Department under subsection (b), the | 19 | | qualified practitioner shall contact the Department and | 20 | | submit, for review and agreement by the Department, a proposed | 21 | | audit plan and procedures. The Department may extend the time | 22 | | for submission of the plan and procedures for reasonable cause. | 23 | | The qualified practitioner shall initiate action to advise the | 24 | | Department that amendment or modification of the plan and | 25 | | procedures is necessary if the qualified practitioner's | 26 | | inspection reveals that the taxpayer's circumstances or |
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| 1 | | exposure to the revenue laws is substantially different from | 2 | | those described in the engagement notice. | 3 | | Section 10-40. Audit performance and review. | 4 | | (a) Upon the Department's designation of the agreed-upon | 5 | | procedures to be followed by a practitioner in a certified | 6 | | audit, the qualified practitioner shall perform the engagement | 7 | | and shall timely submit a completed report to the Department in | 8 | | the form and manner required by the Department and professional | 9 | | standards. The report shall affirm completion of the | 10 | | agreed-upon procedures and shall provide any required | 11 | | disclosures. | 12 | | (b) The Department shall review the report of the certified | 13 | | audit and shall accept it when it is determined to be complete | 14 | | by the qualified practitioner. Once the report is accepted by | 15 | | the Department, the Department shall issue a notice of proposed | 16 | | assessment reflecting the determination of any additional | 17 | | liability reflected in the report and shall provide the | 18 | | taxpayer with all the normal payment, protest, and appeal | 19 | | rights with respect to the liability, including the right to a | 20 | | review by the Informal Conference Board. In cases in which the | 21 | | report indicates an overpayment has been made, the taxpayer | 22 | | shall submit a properly executed claim for credit or refund to | 23 | | the Department. Otherwise, the certified audit report is a | 24 | | final and conclusive determination with respect to the tax and | 25 | | period covered. No additional assessment may be made by the |
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| 1 | | Department for the specific taxes and period referenced in the | 2 | | report, except upon a showing of fraud or material | 3 | | misrepresentation. This determination shall not prevent the | 4 | | Department from collecting liabilities not covered by the | 5 | | report or from conducting an audit or investigation and making | 6 | | an assessment for additional tax, penalty, or interest for any | 7 | | tax or period not covered by the report. | 8 | | (c) A notice of proposed assessment issued by the | 9 | | Department under this Act is subject to the statute of | 10 | | limitations for assessments under the Retailers' Occupation | 11 | | Tax Act, the Use Tax Act, the Service Occupation Tax Act, the | 12 | | Service Use Tax Act, and any local retailers' or service | 13 | | occupation tax, as appropriate, and local taxes collected on | 14 | | assessments issued shall be allocated to units of local | 15 | | government for the full period of the statute of limitations in | 16 | | accordance with those Acts and any applicable local retailers' | 17 | | or service occupation tax Act. The Department shall provide | 18 | | notice in writing to the municipality or county and the third | 19 | | party, if applicable, of any audit findings, determinations, or | 20 | | collections once finalized. | 21 | | Claims for credit or refund filed by taxpayers under this | 22 | | Act are subject to the statute of limitations under the | 23 | | Retailers' Occupation Tax Act, the Use Tax Act, the Service | 24 | | Occupation Tax Act, the Service Use Tax Act, and any local | 25 | | retailers' or service occupation tax Act, as appropriate, and | 26 | | any credit or refund of local taxes allowed to the taxpayer |
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| 1 | | shall be de-allocated from units of local government for the | 2 | | full period of the statute of limitations in accordance with | 3 | | those Acts and any applicable local retailers' or service | 4 | | occupation tax Act. | 5 | | With respect to misallocations discovered under this Act, | 6 | | the Department shall increase or decrease the amount allocated | 7 | | to a unit of local government by an amount necessary to offset | 8 | | any misallocation of previous disbursements. The offset amount | 9 | | shall be the amount erroneously disbursed within the previous 6 | 10 | | months from the time a misallocation is discovered. | 11 | | (d) Under no circumstances may a person, including a | 12 | | municipality or county or third party, other than the person | 13 | | audited and his or her attorney, have any right to participate | 14 | | in an appeal or other proceeding regarding the audit, | 15 | | participate in settlement negotiations, challenge the validity | 16 | | of any settlement between the Department and any person, or | 17 | | review any materials, other than financial information as | 18 | | otherwise provided in this Act, that are subject to the | 19 | | confidentiality provisions of the underlying tax act. In | 20 | | addition, the Department's determination of whether to audit a | 21 | | taxpayer or the result of the audit creates no justiciable | 22 | | cause of action, and any adjudication related to this program | 23 | | is limited to the taxpayer's rights in an administrative | 24 | | hearing held by the Department, an administrative hearing held | 25 | | by the Illinois Independent Tax Tribunal, or related to | 26 | | payments made under protest as provided in Section 2a.1 of the |
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| 1 | | State Officers and Employees Money Disposition Act, as | 2 | | appropriate. | 3 | | Section 10-45. Rules. To implement the certified audit | 4 | | project, the Department shall have authority to adopt rules, | 5 | | including, but not limited to: | 6 | | (1) rules concerning the availability of the | 7 | | certification program required for participation in the | 8 | | project; | 9 | | (2) rules concerning the requirements and basis for | 10 | | establishing just cause for approval or rejection of | 11 | | participation by taxpayers; | 12 | | (3) rules setting forth procedures for assessment, | 13 | | collection, and payment of liabilities or refund of | 14 | | overpayments and provisions for taxpayers to obtain | 15 | | informal and formal review of certified audit results; | 16 | | (4) rules concerning the nature, frequency, and basis | 17 | | for the Department's review of certified audits conducted | 18 | | by qualified practitioners, including the requirements for | 19 | | documentation, work-paper retention and access, and | 20 | | reporting; and | 21 | | (5) rules setting forth requirements for conducting | 22 | | certified audits and for review of agreed-upon procedures. | 23 | | Article 900. Amendatory Provisions. |
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| 1 | | Section 900-5. The Retailers' Occupation Tax Act is amended | 2 | | by changing Section 11 as follows:
| 3 | | (35 ILCS 120/11) (from Ch. 120, par. 450)
| 4 | | Sec. 11. All information received by the Department from | 5 | | returns filed
under this Act, or from any investigation | 6 | | conducted under this Act, shall
be confidential, except for | 7 | | official purposes, and any person , including a third party as | 8 | | defined in the Local Government Revenue Recapture Act, who | 9 | | divulges
any such information in any manner, except in | 10 | | accordance with a proper
judicial order or as otherwise | 11 | | provided by law, including the Local Government Revenue | 12 | | Recapture Act, shall be guilty of a Class
B misdemeanor with a | 13 | | fine not to exceed $7,500.
| 14 | | Nothing in this Act prevents the Director of Revenue from | 15 | | publishing or
making available to the public the names and | 16 | | addresses of persons filing
returns under this Act, or | 17 | | reasonable statistics concerning the operation
of the tax by | 18 | | grouping the contents of returns so the information in any
| 19 | | individual return is not disclosed.
| 20 | | Nothing in this Act prevents the Director of Revenue from | 21 | | divulging to
the United States Government or the government of | 22 | | any other state, or any
officer or agency thereof, for | 23 | | exclusively official purposes, information
received by the | 24 | | Department in administering this Act, provided that such
other | 25 | | governmental agency agrees to divulge requested tax |
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| 1 | | information to
the Department.
| 2 | | The Department's furnishing of information derived from a | 3 | | taxpayer's
return or from an investigation conducted under this | 4 | | Act to the surety on a
taxpayer's bond that has been furnished | 5 | | to the Department under this Act,
either to provide notice to | 6 | | such surety of its potential liability under
the bond or, in | 7 | | order to support the Department's demand for payment from
such | 8 | | surety under the bond, is an official purpose within the | 9 | | meaning of
this Section.
| 10 | | The furnishing upon request of information obtained by the | 11 | | Department
from returns filed under this Act or investigations | 12 | | conducted under this
Act to the Illinois Liquor Control | 13 | | Commission for official use is deemed to
be an official purpose | 14 | | within the meaning of this Section.
| 15 | | Notice to a surety of potential liability shall not be | 16 | | given unless the
taxpayer has first been notified, not less | 17 | | than 10 days prior thereto, of
the Department's intent to so | 18 | | notify the surety.
| 19 | | The furnishing upon request of the Auditor General, or his | 20 | | authorized agents,
for official use, of returns filed and | 21 | | information related thereto under
this Act is deemed to be an | 22 | | official purpose within the meaning of this
Section.
| 23 | | Where an appeal or a protest has been filed on behalf of a | 24 | | taxpayer, the
furnishing upon request of the attorney for the | 25 | | taxpayer of returns filed
by the taxpayer and information | 26 | | related thereto under this Act is deemed
to be an official |
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| 1 | | purpose within the meaning of this Section.
| 2 | | The furnishing of financial information to a municipality | 3 | | or county, upon request of the chief executive officer thereof, | 4 | | is an official purpose within the meaning of this Section,
| 5 | | provided the municipality or county agrees in
writing to the | 6 | | requirements of this Section. Information provided to | 7 | | municipalities and counties under this paragraph shall be | 8 | | limited to: (1) the business name; (2) the business address; | 9 | | (3) the standard classification number assigned to the | 10 | | business; (4) net revenue distributed to the requesting | 11 | | municipality or county that is directly related to the | 12 | | requesting municipality's or county's local share of the | 13 | | proceeds under the Use Tax Act, the Service Use Tax Act, the | 14 | | Service Occupation Tax Act, and the Retailers' Occupation Tax | 15 | | Act distributed from the Local Government Tax Fund, and, if | 16 | | applicable, any locally imposed retailers' occupation tax or | 17 | | service occupation tax; and (5) a listing of all businesses | 18 | | within the requesting municipality or county by account | 19 | | identification number and address. On and after July 1, 2015, | 20 | | the furnishing of financial information to municipalities and | 21 | | counties under this paragraph may be by electronic means. If | 22 | | the Department may furnish financial information to a | 23 | | municipality or county under this paragraph, then the chief | 24 | | executive officer of the municipality or county may, in turn, | 25 | | provide that financial information to a third party pursuant to | 26 | | the Local Government Revenue Recapture Act. However, the third |
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| 1 | | party shall agree in writing to the requirements of this | 2 | | Section and meet the requirements of the Local Government | 3 | | Revenue Recapture Act.
| 4 | | Information so provided shall be subject to all | 5 | | confidentiality provisions
of this Section. The written | 6 | | agreement shall provide for reciprocity,
limitations on | 7 | | access, disclosure, and procedures for requesting information. | 8 | | For the purposes of furnishing financial information to a | 9 | | municipality or county under this Section, "chief executive | 10 | | officer" means the mayor of a city, the village board president | 11 | | of a village, the mayor or president of an incorporated town, | 12 | | the county executive of a county that has adopted the county | 13 | | executive form of government, the president of the board of | 14 | | commissioners of Cook County, or the chairperson of the county | 15 | | board or board of county commissioners of any other county.
| 16 | | The Department may make available to the Board of Trustees | 17 | | of any Metro
East Mass Transit District information contained | 18 | | on transaction reporting
returns required to be filed under | 19 | | Section 3 of this Act that report sales made
within the | 20 | | boundary of the taxing authority of that Metro East Mass | 21 | | Transit
District, as provided in Section 5.01 of the Local Mass | 22 | | Transit District Act.
The disclosure shall be made pursuant to | 23 | | a written agreement between the
Department and the Board of | 24 | | Trustees of a Metro East Mass Transit District,
which is an | 25 | | official purpose within the meaning of this Section. The | 26 | | written
agreement between the Department and the Board of |
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| 1 | | Trustees of a Metro East
Mass Transit District shall provide | 2 | | for reciprocity, limitations on access,
disclosure, and | 3 | | procedures for requesting information. Information so provided
| 4 | | shall be subject to all confidentiality provisions of this | 5 | | Section.
| 6 | | The Director may make available to any State agency, | 7 | | including the
Illinois Supreme Court, which licenses persons to | 8 | | engage in any occupation,
information that a person licensed by | 9 | | such agency has failed to file
returns under this Act or pay | 10 | | the tax, penalty and interest shown therein,
or has failed to | 11 | | pay any final assessment of tax, penalty or interest due
under | 12 | | this Act.
The Director may make available to any State agency, | 13 | | including the Illinois
Supreme
Court, information regarding | 14 | | whether a bidder, contractor, or an affiliate of a
bidder or
| 15 | | contractor has failed to collect and remit Illinois Use tax on | 16 | | sales into
Illinois, or any tax
under this Act or pay the tax, | 17 | | penalty, and interest shown therein, or has
failed to pay any
| 18 | | final assessment of tax, penalty, or interest due under this | 19 | | Act, for the
limited purpose of
enforcing bidder and contractor | 20 | | certifications. The Director may make available
to units
of | 21 | | local government and school districts that require bidder and | 22 | | contractor
certifications,
as set forth in Sections 50-11 and | 23 | | 50-12 of the Illinois Procurement Code,
information
regarding | 24 | | whether a bidder, contractor, or an affiliate of a bidder or
| 25 | | contractor has failed
to collect and remit Illinois Use tax on | 26 | | sales into Illinois, file returns under
this Act, or
pay the |
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| 1 | | tax, penalty, and interest shown therein, or has failed to pay | 2 | | any final
assessment
of tax, penalty, or interest due under | 3 | | this Act, for the limited purpose of
enforcing bidder
and | 4 | | contractor certifications. For purposes of this Section, the | 5 | | term
"affiliate" means any
entity that (1) directly, | 6 | | indirectly, or constructively controls another
entity,
(2) is | 7 | | directly,
indirectly, or constructively controlled by another | 8 | | entity, or (3) is subject
to
the control of
a common entity. | 9 | | For purposes of this Section, an entity controls another
entity
| 10 | | if it owns,
directly or individually, more than 10% of the | 11 | | voting securities of that
entity.
As used in
this Section, the | 12 | | term "voting security" means a security that (1) confers upon
| 13 | | the holder
the right to vote for the election of members of the | 14 | | board of directors or
similar governing
body of the business or | 15 | | (2) is convertible into, or entitles the holder to
receive upon | 16 | | its
exercise, a security that confers such a right to vote. A | 17 | | general partnership
interest is a
voting security.
| 18 | | The Director may make available to any State agency, | 19 | | including the
Illinois
Supreme Court, units of local | 20 | | government, and school districts, information
regarding
| 21 | | whether a bidder or contractor is an affiliate of a person who | 22 | | is not
collecting
and
remitting Illinois Use taxes for the | 23 | | limited purpose of enforcing bidder and
contractor
| 24 | | certifications.
| 25 | | The Director may also make available to the Secretary of | 26 | | State
information that a limited liability company, which has |
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| 1 | | filed articles of
organization with the Secretary of State, or | 2 | | corporation which has been
issued a certificate of | 3 | | incorporation by the Secretary of State has failed to
file | 4 | | returns under this Act or pay the tax, penalty and interest | 5 | | shown therein,
or has failed to pay any final assessment of | 6 | | tax, penalty or interest due under
this Act. An assessment is | 7 | | final when all proceedings in court for review of
such | 8 | | assessment have terminated or the time for the taking thereof | 9 | | has expired
without such proceedings being instituted.
| 10 | | The Director shall make available for public inspection in | 11 | | the Department's
principal office and for publication, at cost, | 12 | | administrative decisions issued
on or after January 1, 1995. | 13 | | These decisions are to be made available in a
manner so that | 14 | | the following taxpayer information is not disclosed:
| 15 | | (1) The names, addresses, and identification numbers | 16 | | of the taxpayer,
related entities, and employees.
| 17 | | (2) At the sole discretion of the Director, trade | 18 | | secrets
or other confidential information identified as | 19 | | such by the taxpayer, no later
than 30 days after receipt | 20 | | of an administrative decision, by such means as the
| 21 | | Department shall provide by rule.
| 22 | | The Director shall determine the appropriate extent of the | 23 | | deletions allowed
in paragraph (2). In the event the taxpayer | 24 | | does not submit deletions, the
Director shall make only the | 25 | | deletions specified in paragraph (1).
| 26 | | The Director shall make available for public inspection and |
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| 1 | | publication an
administrative decision within 180 days after | 2 | | the issuance of the
administrative decision. The term | 3 | | "administrative decision" has the same
meaning as defined in | 4 | | Section 3-101 of Article III of the Code of Civil
Procedure. | 5 | | Costs collected under this Section shall be paid into the Tax
| 6 | | Compliance and Administration Fund.
| 7 | | Nothing contained in this Act shall prevent the Director | 8 | | from divulging
information to any person pursuant to a request | 9 | | or authorization made by the
taxpayer or by an authorized | 10 | | representative of the taxpayer.
| 11 | | (Source: P.A. 98-1058, eff. 1-1-15; 99-517, eff. 6-30-16.)
| 12 | | Section 900-10. The Illinois False Claims Act is amended by | 13 | | changing Section 3 as follows:
| 14 | | (740 ILCS 175/3) (from Ch. 127, par. 4103)
| 15 | | Sec. 3. False claims.
| 16 | | (a) Liability for certain acts. | 17 | | (1) In general, any person who:
| 18 | | (A) knowingly presents, or causes to be presented, | 19 | | a false or fraudulent claim
for payment or approval;
| 20 | | (B) knowingly makes, uses, or causes to be made or | 21 | | used, a false record
or statement material to a false | 22 | | or fraudulent claim;
| 23 | | (C) conspires to commit a violation of | 24 | | subparagraph (A), (B), (D), (E), (F), or (G);
|
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| 1 | | (D) has possession, custody, or control of | 2 | | property or money used, or to
be used, by the State and | 3 | | knowingly delivers, or causes to be delivered, less | 4 | | than all the money or property;
| 5 | | (E) is authorized to make or deliver a document | 6 | | certifying receipt of
property used, or to be used, by | 7 | | the State and, intending to defraud the
State, makes or | 8 | | delivers the receipt without completely knowing that | 9 | | the
information on the receipt is true;
| 10 | | (F) knowingly buys, or receives as a pledge of an | 11 | | obligation or debt,
public property from an officer or | 12 | | employee of the State, or a member of
the Guard, who | 13 | | lawfully may not sell or pledge property; or
| 14 | | (G) knowingly makes, uses, or causes to be made or | 15 | | used, a false record
or statement material to an | 16 | | obligation to pay or transmit
money or property to the | 17 | | State, or knowingly conceals or knowingly and | 18 | | improperly avoids or decreases an obligation to pay or | 19 | | transmit money or property to the State,
| 20 | | is liable to the State for a civil penalty of not less than | 21 | | the minimum amount and not more than the maximum amount | 22 | | allowed for a civil penalty for a violation of the federal | 23 | | False Claims Act (31 U.S.C. 3729 et seq.) as adjusted by | 24 | | the Federal Civil Penalties Inflation Adjustment Act of | 25 | | 1990 (28 U.S.C. 2461), plus 3 times the amount of damages | 26 | | which the State
sustains because of the act of that person. |
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| 1 | | Notwithstanding any other provision, a person is liable to | 2 | | the State for a civil penalty of not less than $5,500 and | 3 | | not more than $11,000, plus 3 times the amount of damages | 4 | | which the State sustains because of the act of that person, | 5 | | when: (i) the civil action was brought by a private person | 6 | | pursuant to paragraph (1) of subsection (b) of Section 4; | 7 | | (ii) the State did not elect to intervene pursuant to | 8 | | paragraph (2) of subsection (b) of Section 4; (iii) the | 9 | | actual amount of the tax owed to the State is equal to or | 10 | | less than $50,000, which does not include interest, | 11 | | penalties, attorney's fees, costs, or any other amounts | 12 | | owed or paid pursuant to this Act; and (iv) the violation | 13 | | of this Act relates to or involves a false claim regarding | 14 | | a tax administered by the Department of Revenue, excluding | 15 | | claims, records, or statements made under the Property Tax | 16 | | Code. The penalties in this Section are intended to be | 17 | | remedial rather than punitive, and shall not preclude, nor | 18 | | be precluded by, a criminal prosecution for the same | 19 | | conduct. | 20 | | (2) A person violating
this subsection shall also be | 21 | | liable to the State for the costs of a civil
action brought | 22 | | to recover any such penalty or damages.
| 23 | | (b) Definitions. For purposes of this Section: | 24 | | (1) The terms
"knowing" and "knowingly": | 25 | | (A) mean that a person, with respect to | 26 | | information:
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| 1 | | (i) has actual knowledge of the information;
| 2 | | (ii) acts in deliberate ignorance of the truth | 3 | | or falsity of the
information; or
| 4 | | (iii) acts in reckless disregard of the truth | 5 | | or falsity of the
information, and | 6 | | (B) require no proof of specific intent to defraud.
| 7 | | (2) The term "claim": | 8 | | (A) means any
request or demand, whether under a | 9 | | contract or otherwise, for money or
property and | 10 | | whether or not the State has title to the money or | 11 | | property, that | 12 | | (i) is presented to an officer, employee, or | 13 | | agent of the State; or | 14 | | (ii) is made to a contractor, grantee, or other | 15 | | recipient, if the money or property is to be spent | 16 | | or used on the State's behalf or to advance a State | 17 | | program or interest, and if the
State: | 18 | | (I) provides or has provided any portion | 19 | | of the money or property requested or
demanded; | 20 | | or | 21 | | (II) will reimburse such contractor, | 22 | | grantee, or other
recipient for any portion of | 23 | | the money or property which is requested
or | 24 | | demanded; and | 25 | | (B) does not include requests or demands for money | 26 | | or property that the State has paid to an individual as |
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| 1 | | compensation for State employment or as an income | 2 | | subsidy with no restrictions on that individual's use | 3 | | of the money or property.
| 4 | | (3) The term "obligation" means an established duty, | 5 | | whether or not fixed, arising from an express or implied | 6 | | contractual, grantor-grantee, or licensor-licensee | 7 | | relationship, from a fee-based or similar relationship, | 8 | | from statute or regulation, or from the retention of any | 9 | | overpayment. | 10 | | (4) The term "material" means having a natural tendency | 11 | | to influence, or be capable of influencing, the payment or | 12 | | receipt of money or property. | 13 | | (c) Exclusion. This Section does not apply to any taxes | 14 | | imposed, collected, or administered by the State of Illinois | 15 | | claims, records, or
statements made under the Illinois Income | 16 | | Tax Act .
| 17 | | (Source: P.A. 100-452, eff. 8-25-17.)
| 18 | | Article 999. Effective Date. | 19 | | Section 999-999. Effective date. This Act takes effect upon | 20 | | becoming law.".
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