Section 900.105  Definitions

 

"Act" means the Live Adult Entertainment Facility Surcharge Act [35 ILCS 175].

 

"Admission" means entry by a person into a live adult entertainment facility [35 ILCS 175/5].

 

"Department" means the Department of Revenue [35 ILCS 175/5].

 

"Gross receipts" has the meaning ascribed to the term in Section 1 of the Retailers' Occupation Tax Act [35 ILCS 120/1].

 

"Live adult entertainment facility" means a striptease club or other business that meets all of the following conditions:

 

the business serves alcohol or permits the consumption of alcohol on its premises;

 

during at least 30 consecutive or nonconsecutive days in a calendar year, the business offers or provides activities by employees, agents, or contractors of the business that involve nude or partially denuded individuals.  Customers of the business participating in activities such as wet tee-shirt contests are not considered employees, agents, or contractors; and

 

the activities by the employees, agents, or contractors, when considered as a whole, appeal primarily to an interest in nudity or sex.  [35 ILCS 175/5]

 

"Nude or partially denuded individual" means an individual who is:

 

entirely unclothed; or

 

clothed in a manner that leaves uncovered or visible through less than fully opaque clothing any portion of the breasts below the top of the areola of the breasts, if the person is female, or any portion of the genitals or buttocks. [35 ILCS 175/5]

 

"Operator" means any person who owns or operates a live adult entertainment facility in this State [35 ILCS 175/5].

 

"Premises" means the property on which the adult entertainment facility is located and all property contiguous to the live adult entertainment facility owned or leased by, or otherwise under the control of, the operator, including beer gardens and parking lots.  Property that is contiguous to a live adult entertainment facility but is not owned or leased by, or otherwise under the control of, the operator will nonetheless be considered part of the facility's "premises" if alcohol is served or consumed there and if customers can move freely between the contiguous property and the live adult entertainment facility.

 

"ROTA" means the Retailers' Occupation Tax Act [35 ILCS 120].

 

Section 900.110  Nature and Rate of the Surcharge

 

a)         Nature and Rate of Tax

An annual surcharge is imposed upon each operator who operates a live adult entertainment facility in this State. By January 20, 2014, and by January 20 of each year thereafter, each operator shall elect to pay the surcharge according to one of the two methods set forth in this Section.

 

1)         An operator who elects to be subject to this subsection (a)(1) shall pay to the Department a surcharge imposed upon admissions to a live adult entertainment facility operated by the operator in this State in an amount equal to $3 per person admitted to that live adult entertainment facility. This subsection (a)(1) does not require a live entertainment facility to impose a fee on a customer of the facility. An operator has the discretion to determine the manner in which the facility derives the moneys required to pay the surcharge imposed under this Section. In the event that an operator has not filed the applicable returns under ROTA for a full calendar year prior to any January 20, then the operator shall pay the surcharge pursuant to this subsection (a)(1) for moneys owed to the Department subject to the Act for the previous calendar year.

 

2)         An operator may, in the alternative, pay to the Department the surcharge as follows:

 

A)        If the gross receipts received by the live adult entertainment facility during the preceding calendar year, upon the basis of which a tax is imposed under Section 2 of ROTA, are equal to or greater than $2,000,000 during the preceding calendar year, the operator shall pay the Department a surcharge of $25,000.

 

B)        If the gross receipts received by the live adult entertainment facility during the preceding calendar year, upon the basis of which a tax is imposed under Section 2 of ROTA, are equal to or greater than $500,000 but less than $2,000,000 during the preceding calendar year, the operator shall pay to the Department a surcharge of $15,000.

 

C)        If the gross receipts received by the live adult entertainment facility during the preceding calendar year, upon the basis of which a tax is imposed under Section 2 of ROTA, are less than $500,000 during the preceding calendar year, the operator shall pay the Department a surcharge of $5,000. [35 ILCS 175/10]

 

b)         An operator may elect on an annual basis the method to pay the surcharge and is not bound by a prior election.

 

Section 900.115  Persons Subject to the Surcharge

 

a)         An annual surcharge is imposed upon each operator who operates a live adult entertainment facility in this State [35 ILCS 175/10].

 

b)         The Act applies to operators of live adult entertainment facilities.

 

1)         The operator for purposes of the Act is the person or entity that has managerial and operational control of the live adult entertainment facility and retains the revenues from the operations.

 

2)         An owner that contracts with an entity to manage a live adult entertainment facility and pays the entity a contractual sum to manage the facility is the operator for purposes of the Act.

 

3)         A lessor of the real property is not an operator for purposes of the Act if the lessor has leased the premises to a lessee that operates the live adult entertainment facility and the lessor has no interest in the proceeds derived from the live adult entertainment facility except for payments due under the terms of the lease.

 

4)         A person having a security interest in the real estate upon which the live adult entertainment facility is located, the building that houses the live adult entertainment facility, or the contents or fixtures located on the premises, is not an operator for purposes of the Act.

 

c)         The Act applies to a facility operated as a business that is open to the public.  The Act does not apply to private clubs.  The following factors are relevant for purposes of determining if an entity is open to the public or is considered a private club:

 

1)         Whether an entity uses genuine selectivity in the admission of its members, reflected, in part, by:

 

A)        permanent and formal procedures established to select and approve applicants; and

 

B)        strict limitation on the use of the club's facilities and services by members and their guests only.

 

2)         Whether the membership exercises substantial and meaningful control over the club's operations, reflected by the occurrence of general meetings and an organizational form that permits members to select officers who direct and manage the club.

 

3)         Whether the club advertises or publicizes its activities, events, services or facilities to nonmembers.

 

4)         Whether the club operates solely for the benefit of its members, or for the profit or benefit of one person or a small group.

 

5)         Whether the club observes formalities appropriate for a private club and adheres to them in practice, e.g., establishing bylaws, holding meetings, recording minutes and issuing and tracking membership.

 

6)         The club's history and purpose.

 

Section 900.120  Returns

 

a)         Payment of Surcharge Based on Admissions

 

1)         For each live adult entertainment facility paying the surcharge based on admissions, the operator must file a return electronically as provided by the Department and remit payment to the Department on an annual basis no later than January 20 covering the previous calendar year. Each return made to the Department must state the following:

 

A)        the name of the operator;

 

B)        the address of the live adult entertainment facility and the address of the principal place of business (if that is a different address) of the operator;

 

C)        the total number of admissions to the facility in the preceding calendar year; and

 

D)        the total amount of surcharge collected in the preceding calendar year.  [35 ILCS 175/10]

 

2)         A live adult entertainment facility paying the surcharge as set forth in Section 900.110(a)(1) is not required to impose a fee on a customer of the facility. An operator has the discretion to determine the manner in which the facility derives the moneys required to pay the surcharge imposed under the Act.  [35 ILCS 175/10] The total amount of surcharge collected in the preceding calendar year for purposes of subsection (a)(1)(D) of this Section shall be determined by multiplying the total number of admissions to the facility in the preceding calendar year by $3.

 

3)         An operator may remit payment of the surcharge electronically at the time the return is filed.  Payment must be remitted no later than January 20 and, if made electronically, must be made in accordance with the Department's rules governing electronic payments (86 Ill. Adm. Code 750.900).

 

b)         Payment of Surcharge Based on Gross Receipts

 

1)         For each live adult entertainment facility paying the surcharge based on gross receipts, the operator must file a return electronically as provided by the Department and remit payment to the Department on an annual basis no later than January 20 covering the previous calendar year. Each return made to the Department must state the following:

 

A)        the name of the operator;

 

B)        the address of the live adult entertainment facility and the address of the principal place of business (if that is a different address) of the operator;

 

C)        the gross receipts received by the live adult entertainment facility during    the preceding calendar year, upon the basis of which tax is imposed under Section 2 of ROTA; and

 

D)        the applicable surcharge from Section 10(a)(2) of the Act to be paid by the operator.  [35 ILCS 175/10]

 

2)         An operator may remit payment of the surcharge electronically at the time the return is filed.  Payment must be remitted no later than January 20 and, if made electronically, must be made in accordance with the Department's rules governing electronic payments (86 Ill. Adm. Code 750.900).

 

3)         If an operator has not filed the applicable returns under ROTA for a full calendar year prior to any January 20, then the operator may not pay the surcharge based on the gross receipts method and must pay the surcharge based on the number of admissions during the previous calendar year [35 ILCS 175/10].

 

4)         For purposes of determining the gross receipts received by the live adult entertainment facility during the preceding calendar year for purposes of subsection (b)(1)(C), gross receipts are calculated using the total taxable receipts from the prior year's ST-1 Sales and Use Tax and E911 Surcharge Return forms.

 

c)         An operator that has provided live adult entertainment less than 30 days during the calendar year is not required to file an annual return.

 

d)         Notwithstanding any other provision of this Section concerning the time within which an operator may file his or her return, if an operator ceases to operate a live adult entertainment facility, then he or she must file a final return under the Act with the Department not more than one calendar month after discontinuing that business [35 ILCS 175/10].  A business that has provided live adult entertainment less than 30 days during the calendar year and permanently ceases to provide live adult entertainment is not required to file a final return.  A business may cease to provide live adult entertainment for purposes of this Section but continue its operations for other purposes (e.g., operating a bar).

 

e)         An operator must elect at the time a return is due which method under Section 900.110(a) it uses to calculate the surcharge.  An operator may change the method it uses to calculate the surcharge at the time it files its next return.

 

f)         Any operator who fails to make a return or who makes a fraudulent return is guilty of a Class 4 felony [35 ILCS 175/45].

 

Section 900.125  Books and Records

 

a)         Every operator electing to pay the surcharge pursuant to Section 900.110(a)(1) shall record the admissions of customers subject to the surcharge under the Act [35 ILCS 175/20].  An operator meets its obligations under this subsection if an employee located at the entrance of the live adult entertainment facility sells tickets to customers entering the facility and collects them from the customers after entry to the facility and the operator maintains a daily record of ticket sales in his or her books and records.

 

b)         A customer that enters and leaves the facility on multiple occasions need only be counted once by an operator during a 24-hour period, beginning at 8 AM each day, for purposes of the surcharge, if the operator uses a method to verify the customer previously has been counted upon reentry. The method selected may not permit the customer to transfer re-entry privileges to another customer.  The following are acceptable, but not exclusive, methods of verification:

 

1)         the use of a stamp with indelible ink, the color of which changes daily at 8 AM; or

 

2)         a card permitting re-entry by the customer upon which the date and customer's name have been written with indelible ink and that matches a customer's government-issued identification upon re-entry.

 

c)         All of the provisions of Section 7 of ROTA regarding books and records that are not inconsistent with the Act apply, as far as practicable, to the surcharge imposed by the Act to the same extent as if those provisions were included in the Act.  References in the incorporated Sections of ROTA to retailers, to sellers, or to persons engaged in the business of selling tangible personal property mean operators.  [35 ILCS 175/25]

 

Section 900.130  Penalties, Interest and Procedures

 

a)         All provisions of the Uniform Penalty and Interest Act [35 ILCS 735] that are not inconsistent with the Act shall apply.

 

b)         All the provisions of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, 5j, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11, and 13 of ROTA that are not inconsistent with the Act apply, as far as practicable, to the surcharge imposed by the Act to the same extent as if those provisions were included in the Act.  References in ROTA Sections to retailers, to sellers, or to persons engaged in the business of selling tangible personal property mean operators. [35 ILCS 175/25]

 

c)         Any operator who fails to make a return or who makes a fraudulent return is guilty of a Class 4 felony [35 ILCS 175/45].

 

d)         Any person aggrieved by any decision of the Department under this Part may, within 60 days after notice of the decision, protest in writing and request a hearing.  Upon receiving a written request for a hearing, the Department shall give notice to the person requesting the hearing of the time and place fixed for the hearing and shall hold a hearing in conformity with the provisions of this Part.  The Department shall issue to that person its final administrative decision in the matter. In the absence of a protest and request for a hearing within 60 days, the Department's decision shall become final without any further determination being made or notice given.

 

e)         The circuit court of any county in which a hearing is held has the power to review all final administrative decisions of the Department in administering the surcharge imposed under the Act. The term "administrative decision" is defined as in Section 3-101 of the Code of Civil Procedure [735 ILCS 5/3-101]. [35 ILCS 175/40]