State of Illinois
91st General Assembly
Legislation

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[ Introduced ][ Enrolled ][ House Amendment 001 ]

91_HB3240eng

 
HB3240 Engrossed                               LRB9111372SMdv

 1        AN  ACT  to amend the Uniform Penalty and Interest Act by
 2    changing Sections 3-2, 3-3, and 3-8  and  by  adding  Section
 3    3-7.5.

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

 6        Section 5.  The  Uniform  Penalty  and  Interest  Act  is
 7    amended  by changing Sections 3-2, 3-3, and 3-8 and by adding
 8    Section 3-7.5 as follows:

 9        (35 ILCS 735/3-2) (from Ch. 120, par. 2603-2)
10        Sec. 3-2.  Interest.
11        (a)  Interest paid by the  Department  to  taxpayers  and
12    interest charged to taxpayers by the Department shall be paid
13    at  the  annual  rate determined by the Department. That rate
14    shall be the underpayment rate established under Section 6621
15    of the  Internal Revenue Code.
16        (b)  The interest rate shall be adjusted on a  semiannual
17    basis,  on  January 1 and July 1, based upon the underpayment
18    rate going into effect on that January  1  or  July  1  under
19    Section 6621 of the Internal Revenue Code.
20        (c)  This  subsection (c) is applicable to returns due on
21    and before  December  31,  2000.  Interest  shall  be  simple
22    interest  calculated  on a daily basis. Interest shall accrue
23    upon tax and penalty due.  If notice and demand is  made  for
24    the payment of any amount of tax due and if the amount due is
25    paid within 30 days after the date of such notice and demand,
26    interest  under  this Section on the amount so paid shall not
27    be imposed for the period after the date of  the  notice  and
28    demand.
29        (c-5)  This subsection (c-5) is applicable to returns due
30    on and after January 1,  2001.    Interest  shall  be  simple
31    interest  calculated on a daily basis.  Interest shall accrue
 
HB3240 Engrossed            -2-                LRB9111372SMdv
 1    upon tax due.  If notice and demand is made for  the  payment
 2    of any amount of tax due and if the amount due is paid within
 3    30  days  after  the  date of the notice and demand, interest
 4    under this Section on the amount so paid shall not be imposed
 5    for the period after the date of the notice and demand.
 6        (d)  No interest shall be paid upon  any  overpayment  of
 7    tax  if  the  overpayment  is  refunded  or a credit approved
 8    within 90 days after the last date prescribed for filing  the
 9    original  return,  or  within  90  days of the receipt of the
10    processable return, or within  90  days  after  the  date  of
11    overpayment,  whichever date is latest, as determined without
12    regard to processing  time  by  the  Comptroller  or  without
13    regard  to  the  date  on  which the credit is applied to the
14    taxpayer's account. In order for an  original  return  to  be
15    processable  for  purposes of this Section, it must be in the
16    form prescribed or approved by the Department, signed by  the
17    person  authorized  by  law,  and  contain  all  information,
18    schedules,  and  support documents necessary to determine the
19    tax due and to make allocations of tax as prescribed by  law.
20    For  the  purposes  of  computing interest, a return shall be
21    deemed to be processable unless the Department  notifies  the
22    taxpayer  that  the  return is not processable within 90 days
23    after the receipt of the return; however, interest shall  not
24    accumulate  for  the  period  following  this date of notice.
25    Interest on amounts refunded  or  credited  pursuant  to  the
26    filing  of  an  amended  return  or claim for refund shall be
27    determined from the due date of the original  return  or  the
28    date  of  overpayment,  whichever  is  later,  to the date of
29    payment by the Department without regard to  processing  time
30    by the Comptroller or the date of credit by the Department or
31    without  regard to the date on which the credit is applied to
32    the taxpayer's account. If a claim for refund relates  to  an
33    overpayment  attributable to a net loss carryback as provided
34    by Section 207 of the Illinois Income Tax Act,  the  date  of
 
HB3240 Engrossed            -3-                LRB9111372SMdv
 1    overpayment  shall  be  the  last  day of the taxable year in
 2    which the loss was incurred.
 3        (e)  Interest on erroneous refunds. Any  portion  of  the
 4    tax  imposed by an Act to which this Act is applicable or any
 5    interest or penalty which has been erroneously  refunded  and
 6    which  is  recoverable  by the Department shall bear interest
 7    from the date of payment of the refund. However, no  interest
 8    will be charged if the erroneous refund is for an amount less
 9    than $500 and is due to a mistake of the Department.
10    (Source: P.A. 89-379, eff. 1-1-96.)

11        (35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
12        Sec. 3-3.  Penalty for failure to file or pay.
13        (a)  This  subsection (a) is applicable before January 1,
14    1996.  A penalty of 5% of the tax required to be shown due on
15    a return shall be imposed for failure to file the tax  return
16    on  or  before  the due date prescribed for filing determined
17    with regard for any extension of time for filing (penalty for
18    late filing or nonfiling).  If any  unprocessable  return  is
19    corrected  and  filed  within  21  days  after  notice by the
20    Department, the late filing or nonfiling  penalty  shall  not
21    apply.   If a penalty for late filing or nonfiling is imposed
22    in addition to a penalty for late payment, the total  penalty
23    due  shall  be  the  sum  of  the late filing penalty and the
24    applicable late payment penalty. Beginning on  the  effective
25    date  of this amendatory Act of 1995, in the case of any type
26    of tax return required  to  be  filed  more  frequently  than
27    annually,  when  the  failure  to  file  the tax return on or
28    before  the  date  prescribed  for  filing   (including   any
29    extensions) is shown to be nonfraudulent and has not occurred
30    in  the  2 years immediately preceding the failure to file on
31    the prescribed due  date,  the  penalty  imposed  by  Section
32    3-3(a) shall be abated.
33        (a-5)  This subsection (a-5) is applicable to returns due
 
HB3240 Engrossed            -4-                LRB9111372SMdv
 1    on  and  after  January 1, 1996 and on or before December 31,
 2    2000. A penalty equal to 2% of the tax required to  be  shown
 3    due  on  a return, up to a maximum amount of $250, determined
 4    without regard to any part of the tax that is paid on time or
 5    by any credit that was properly allowable  on  the  date  the
 6    return was required to be filed, shall be imposed for failure
 7    to  file  the tax return on or before the due date prescribed
 8    for filing determined with regard for any extension  of  time
 9    for  filing.  However,  if  any return is not filed within 30
10    days after notice of nonfiling mailed by  the  Department  to
11    the   last   known  address  of  the  taxpayer  contained  in
12    Department records, an additional  penalty  amount  shall  be
13    imposed  equal  to the greater of $250 or 2% of the tax shown
14    on the return.  However, the additional  penalty  amount  may
15    not  exceed  $5,000  and  is determined without regard to any
16    part of the tax that is paid on time or by  any  credit  that
17    was properly allowable on the date the return was required to
18    be  filed  (penalty  for  late  filing or nonfiling).  If any
19    unprocessable return is corrected and filed  within  30  days
20    after  notice by the Department, the late filing or nonfiling
21    penalty shall not apply.  If a penalty  for  late  filing  or
22    nonfiling  is  imposed  in  addition  to  a  penalty for late
23    payment, the total penalty due shall be the sum of  the  late
24    filing  penalty and the applicable late payment penalty.   In
25    the case of any type of tax return required to be filed  more
26    frequently  than  annually,  when the failure to file the tax
27    return on or before the date prescribed for filing (including
28    any extensions) is shown to  be  nonfraudulent  and  has  not
29    occurred  in the 2 years immediately preceding the failure to
30    file on the prescribed  due  date,  the  penalty  imposed  by
31    Section 3-3(a-5) 3-3(a) shall be abated.
32        (a-10)  This  subsection  (a-10) is applicable to returns
33    due on and after January 1, 2001.  A penalty equal to  2%  of
34    the tax required to be shown due on a return, up to a maximum
 
HB3240 Engrossed            -5-                LRB9111372SMdv
 1    amount of $250, reduced by any tax that is paid on time or by
 2    any credit that was properly allowable on the date the return
 3    was  required  to  be  filed, shall be imposed for failure to
 4    file the tax return on or before the due date prescribed  for
 5    filing  determined  with regard for any extension of time for
 6    filing. However, if any return is not filed  within  30  days
 7    after  notice  of  nonfiling  mailed by the Department to the
 8    last known address of the taxpayer  contained  in  Department
 9    records,  an additional penalty amount shall be imposed equal
10    to the greater of $250 or 2% of the tax shown on the  return.
11    However,  the additional penalty amount may not exceed $5,000
12    and is determined without regard to any part of the tax  that
13    is  paid on time or by any credit that was properly allowable
14    on the date the return was required to be filed (penalty  for
15    late  filing  or  nonfiling).  If any unprocessable return is
16    corrected and filed  within  30  days  after  notice  by  the
17    Department,  the  late  filing or nonfiling penalty shall not
18    apply.  If a penalty for late filing or nonfiling is  imposed
19    in  addition to a penalty for late payment, the total penalty
20    due shall be the sum of  the  late  filing  penalty  and  the
21    applicable late payment penalty.   In the case of any type of
22    tax   return  required  to  be  filed  more  frequently  than
23    annually, when the failure to  file  the  tax  return  on  or
24    before   the   date  prescribed  for  filing  (including  any
25    extensions) is shown to be nonfraudulent and has not occurred
26    in the 2 years immediately preceding the failure to  file  on
27    the  prescribed  due  date,  the  penalty  imposed by Section
28    3-3(a-10) shall be abated.
29        (b)  This subsection  is  applicable  before  January  1,
30    1998.  A penalty of 15% of the tax shown on the return or the
31    tax required to be shown due on the return shall  be  imposed
32    for failure to pay:
33             (1)  the  tax  shown  due on the return on or before
34        the due date prescribed  for  payment  of  that  tax,  an
 
HB3240 Engrossed            -6-                LRB9111372SMdv
 1        amount  of  underpayment  of  estimated tax, or an amount
 2        that is reported in  an  amended  return  other  than  an
 3        amended return timely filed as required by subsection (b)
 4        of  Section  506  of the Illinois Income Tax Act (penalty
 5        for late payment or nonpayment of admitted liability); or
 6             (2)  the full amount of any tax required to be shown
 7        due on a return and which is not shown (penalty for  late
 8        payment or nonpayment of additional liability), within 30
 9        days  after  a  notice  of  arithmetic  error, notice and
10        demand,  or  a  final  assessment  is   issued   by   the
11        Department.  In  the  case  of a final assessment arising
12        following a protest and hearing, the 30-day period  shall
13        not  begin  until  all proceedings in court for review of
14        the final assessment have terminated or  the  period  for
15        obtaining  a review has expired without proceedings for a
16        review having been instituted.  In the case of  a  notice
17        of  tax liability that becomes a final assessment without
18        a protest and  hearing,  the  penalty  provided  in  this
19        paragraph  (2)  shall be imposed at the expiration of the
20        period provided for the filing of a protest.
21        (b-5)  This subsection is applicable to  returns  due  on
22    and after January 1, 1998 and on or before December 31, 2000.
23    A  penalty  of  20% of the tax shown on the return or the tax
24    required to be shown due on the return shall be  imposed  for
25    failure to pay:
26             (1)  the  tax  shown  due on the return on or before
27        the due date prescribed  for  payment  of  that  tax,  an
28        amount  of  underpayment  of  estimated tax, or an amount
29        that is reported in  an  amended  return  other  than  an
30        amended return timely filed as required by subsection (b)
31        of  Section  506  of the Illinois Income Tax Act (penalty
32        for late payment or nonpayment of admitted liability); or
33             (2)  the full amount of any tax required to be shown
34        due on a return and which is not shown (penalty for  late
 
HB3240 Engrossed            -7-                LRB9111372SMdv
 1        payment or nonpayment of additional liability), within 30
 2        days  after  a  notice  of  arithmetic  error, notice and
 3        demand,  or  a  final  assessment  is   issued   by   the
 4        Department.  In  the  case  of a final assessment arising
 5        following a protest and hearing, the 30-day period  shall
 6        not  begin  until  all proceedings in court for review of
 7        the final assessment have terminated or  the  period  for
 8        obtaining  a review has expired without proceedings for a
 9        review having been instituted.  In the case of  a  notice
10        of  tax liability that becomes a final assessment without
11        a protest and  hearing,  the  penalty  provided  in  this
12        paragraph  (2)  shall be imposed at the expiration of the
13        period provided for the filing of a protest.
14        (b-10)  This subsection (b-10) is applicable  to  returns
15    due on and after January 1, 2001.  A penalty shall be imposed
16    for failure to pay:
17             (1)  the  tax shown due on a return on or before the
18        due date prescribed for payment of that tax, an amount of
19        underpayment of estimated  tax,  or  an  amount  that  is
20        reported  in  an  amended  return  other  than an amended
21        return timely filed as  required  by  subsection  (b)  of
22        Section  506  of the Illinois Income Tax Act (penalty for
23        late payment or nonpayment of admitted  liability).   The
24        amount of penalty imposed under this subsection (b-10)(1)
25        shall  be  2% of any amount that is paid no later than 30
26        days after the due date, 5% of any amount  that  is  paid
27        later  than 30 days after the due date and not later than
28        90 days after the due date, 10% of  any  amount  that  is
29        paid  later than 90 days after the due date and not later
30        than 180 days after the due date, and 15% of  any  amount
31        that is paid later than 180 days after the due date.
32             (2)  the full amount of any tax required to be shown
33        due  on  a return and that is not shown (penalty for late
34        payment or nonpayment of additional liability), within 30
 
HB3240 Engrossed            -8-                LRB9111372SMdv
 1        days after a  notice  of  arithmetic  error,  notice  and
 2        demand,   or   a   final  assessment  is  issued  by  the
 3        Department.  In the case of a  final  assessment  arising
 4        following  a protest and hearing, the 30-day period shall
 5        not begin until all proceedings in court  for  review  of
 6        the  final  assessment  have terminated or the period for
 7        obtaining a review has expired without proceedings for  a
 8        review  having  been  instituted.   The amount of penalty
 9        imposed under this subsection (b-10)(2) shall be  20%  of
10        any amount that is not paid within the 30-day period.  In
11        the  case  of  a  notice  of tax liability that becomes a
12        final assessment  without  a  protest  and  hearing,  the
13        penalty  provided  in  this subsection (b-10)(2) shall be
14        imposed at the expiration of the period provided for  the
15        filing of a protest.
16        (c)  For  purposes  of  the  late  payment penalties, the
17    basis of the penalty shall be the tax shown or required to be
18    shown on a return, whichever is applicable,  reduced  by  any
19    part of the tax which is paid on time and by any credit which
20    was properly allowable on the date the return was required to
21    be filed.
22        (d)  A penalty shall be applied to the tax required to be
23    shown  even  if that amount is less than the tax shown on the
24    return.
25        (e)  This subsection (e) is  applicable  to  returns  due
26    before  January  1,  2001.  If  both  a  subsection (b)(1) or
27    (b-5)(1) penalty and a subsection (b)(2) or (b-5)(2)  penalty
28    are  assessed  against the same return, the subsection (b)(2)
29    or (b-5)(2)  penalty  shall  be  assessed  against  only  the
30    additional tax found to be due.
31        (e-5)  This subsection (e-5) is applicable to returns due
32    on and after January 1, 2001.  If both a subsection (b-10)(1)
33    penalty  and  a  subsection  (b-10)(2)  penalty  are assessed
34    against the same return,  the  subsection  (b-10)(2)  penalty
 
HB3240 Engrossed            -9-                LRB9111372SMdv
 1    shall be assessed against only the additional tax found to be
 2    due.
 3        (f)  If  the  taxpayer has failed to file the return, the
 4    Department shall determine the correct tax according  to  its
 5    best  judgment  and  information, which amount shall be prima
 6    facie evidence of the correctness of the tax due.
 7        (g)  The time within which to file a  return  or  pay  an
 8    amount  of  tax  due without imposition of a penalty does not
 9    extend the time within which to file a protest to a notice of
10    tax liability or a notice of deficiency.
11        (h)  No return shall be determined  to  be  unprocessable
12    because  of  the omission of any information requested on the
13    return pursuant to Section  2505-575  of  the  Department  of
14    Revenue Law (20 ILCS 2505/2505-575).
15    (Source: P.A.  90-491,  eff.  1-1-98;  90-548,  eff. 12-4-97;
16    91-239, eff. 1-1-00.)

17        (35 ILCS 735/3-7.5 new)
18        Sec. 3-7.5.  Bad check penalty.  In addition to any other
19    penalty provided in this Act,  a  penalty  of  $25  shall  be
20    imposed  on  any  person who issues a check or other draft to
21    the Department that is not  honored  upon  presentment.   The
22    penalty  imposed  under this Section shall be deemed assessed
23    at the time of presentment of the check or  other  draft  and
24    shall  be  treated for all purposes, including collection and
25    allocation, as part of the tax or other liability  for  which
26    the check or other draft represented payment.

27        (35 ILCS 735/3-8) (from Ch. 120, par. 2603-8)
28        Sec.  3-8.  No  penalties if reasonable cause exists. The
29    penalties imposed under the provisions of Sections 3-3,  3-4,
30    and  3-5,  and  3-7.5  of  this  Act  shall  not apply if the
31    taxpayer shows that his failure to file a return or  pay  tax
32    at the required time was due to reasonable cause.  Reasonable
 
HB3240 Engrossed            -10-               LRB9111372SMdv
 1    cause  shall  be  determined  in each situation in accordance
 2    with the rules and regulations promulgated by the Department.
 3    A taxpayer may protest the  imposition  of  a  penalty  under
 4    Section 3-3, 3-4, or 3-5, or 3-7.5 on the basis of reasonable
 5    cause without protesting the underlying tax liability.
 6    (Source: P.A. 87-205; 87-1189.)

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