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Public Act 91-0920
SB1440 Enrolled LRB9110653MWgc
AN ACT to create the Local Government Taxpayers' Bill of
Rights Act.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Local Government Taxpayers' Bill of Rights Act.
Section 5. Legislative declaration. It is the intent of
the General Assembly that this legislation grant various
rights and protections to taxpayers and tax collectors with
respect to the administration and enforcement of local
government tax laws. The provisions of this Act are designed
to reduce the burden on both taxpayers and tax collectors by
specifically providing that fair and consistent tax processes
and procedures be adopted and disseminated to taxpayers at
the local level while at the same time preserving local
government's full authority to collect taxes lawfully due
under their taxing ordinances.
This legislation also provides taxpayers a minimum
level of consistency with regard to the assessment and
collection of local taxes as they do business in multiple
locations within this State.
The General Assembly further finds that tax systems are
largely based on voluntary compliance and self-assessment and
the development of understandable tax laws. Providing clear
tax laws at the local level and providing all necessary due
process rights in the collection and enforcement of local tax
laws will only serve to improve voluntary compliance and
self-assessment of local government taxes.
Section 10. Application and home rule preemption. The
limitations provided by this Act shall take precedence over
any provision of any tax ordinance imposed by a unit of local
government, as defined in this Act, in Illinois.
This Act is a denial and limitation of home rule powers
and functions under subsection (g) of Section 6 of Article
VII of the Illinois Constitution.
Section 15. Definitions. In this Act:
"Locally imposed and administered tax" means a tax
imposed by a unit of local government that is collected or
administered by a unit of local government and not an agency
or Department of the State. A "locally imposed and
administered tax" does not include a tax imposed upon real
property under the Property Tax Code or fees collected by a
unit of local government other than infrastructure
maintenance fees.
"Local tax administrator" includes directors of local
government departments of revenue or taxation, or other local
government officers charged with the administration or
collection of a locally imposed and administered tax,
including their staffs, employees, or agents to the extent
they are authorized by a local tax administrator to act in
the local tax administrator's stead.
"Unit of local government" includes a municipality, a
county, or a home rule unit of this State, but does not
include (i) home rule municipalities with a population
greater than 1,000,000 and (ii) home rule counties with a
population greater than 3,000,000 that have locally
administered departments or bureaus of revenue.
Section 20. Responsibilities of units of local
government. Each unit of local government shall have the
powers and obligations enumerated in the following Sections
to protect the rights of the taxpayers.
Section 25. Application of payments. Taxpayers have the
right to know how tax payments and remittances covered by
this Act will be applied to the tax liability owed to units
of local government. Each unit of local government must
provide, by ordinance, for the order of application of tax
payments to tax liability, penalty, and interest, provided
that in no case may a payment be applied to penalties due
before it is applied to tax or interest. In the event that a
unit of local government does not provide for application of
payments, any payment or remittance received for a tax period
will be applied first to tax for the period, then to interest
due for the period, and then to penalties due for the period.
Section 30. Statute of limitations. Units of local
government have an obligation to review tax returns in a
timely manner and issue any determination of tax due as
promptly as possible so that taxpayers may make timely
corrections of future returns and minimize any interest
charges applied to tax underpayments. Each unit of local
government must provide appropriate statutes of limitation
for the determination and assessment of taxes covered by this
Act, provided, however, that a statute of limitations may not
exceed the following:
(1) No notice of determination of tax due or
assessment may be issued more than 4 years after the end
of the calendar year for which the return for the period
was filed or the end of the calendar year in which the
return for the period was due, whichever occurs later.
(2) If any tax return was not filed or if during
any 4-year period for which a notice of tax determination
or assessment may be issued by the unit of local
government the tax paid or remitted was less than 75% of
the tax due for that period, the statute of limitations
shall be no more than 6 years after the end of the
calendar year in which the return for the period was due
or the end of the calendar year in which the return for
the period was filed, whichever occurs later. In the
event that a unit of local government fails to
provide a statute of limitations, the maximum
statutory period provided in this Section applies.
This Section does not place any limitation on a unit of
local government if a fraudulent tax return is filed.
Section 35. Audit procedures. Taxpayers have the right
to be treated by officers, employees, and agents of the local
tax administrator with courtesy, fairness, uniformity,
consistency, and common sense. Taxpayers must be notified in
writing of a proposed audit of the taxpayer's books and
records. The notice of audit must specify the tax and time
period to be audited and must detail the minimum
documentation or books and records to be made available to
the auditor. Audits must be held only during reasonable
times of the day and, unless impracticable, at times agreed
to by the taxpayer. An auditor who determines that there has
been an overpayment of tax during the course of the audit is
obligated to identify the overpayment to the taxpayer so that
the taxpayer can take the necessary steps to recover the
overpayment. If the overpayment is the result of the
application of some or all of the taxpayer's tax payment to
an incorrect local government entity, the auditor must notify
the correct local government entity of the taxpayer's
application error.
Section 40. Appeals process. Units of local government
have an obligation to provide, by ordinance, a procedure for
appealing a determination of tax due or an assessment.
Local governments must provide to taxpayers a written
statement of rights whenever the local government issues a
protestable notice of tax due, a bill, a claim denial, or
a notice of claim reduction regarding any tax. The
statement must explain the reason for the assessment, the
amount of the tax liability proposed, the procedure for
appealing the assessment, and the obligations of the unit of
local government during the audit, appeal, refund, and
collection process. In no event may a taxpayer be provided a
time period less than 45 days after the date the notice
was served in which to protest a notice of tax
determination or notice of tax liability. Any notice of tax
assessment due must be sent by United States registered or
certified mail. The unit of local government must also
adopt procedures for opening up any closed protest period
or extending the protest period upon the showing of
reasonable cause by the taxpayer and full payment of the
contested tax liability along with interest accrued as of the
due date of the tax.
Section 45. Interest. Units of local government must
provide, by ordinance, for the amount of interest, if any,
to be assessed on a late payment, underpayment, or nonpayment
of tax.
Section 50. Late filing penalties. Late filing
penalties may not exceed 5% of the amount of tax required to
be shown as due on a return. A late filing penalty may not
apply if a failure to file penalty is imposed by the unit
of local government. A local tax administrator may
determine that the late filing was due to reasonable cause
and abate the penalty.
Section 55. Late payment penalty. Late payment
penalties may not exceed 5% of the tax due and not timely
paid or remitted to the unit of local government. This
penalty shall not apply if a failure to file penalty is
imposed by the unit of local government. A local tax
administrator may determine that the late payment was due to
reasonable cause and abate the penalty.
Section 60. Failure to file penalty. If no return is
filed before the issuance of a notice of tax deficiency or of
tax liability to the taxpayer, any failure to file penalty
may not exceed 25% of the total tax due for the applicable
reporting period for which the return was required to have
been filed. A local tax administrator may determine that the
failure to file a return was due to reasonable cause and
abate the penalty.
Section 65. Credits and refunds. Units of local
government shall provide a procedure for claiming a credit or
refund of taxes, interest, or penalties paid in error. No
units of local government are required to refund or credit
any taxes voluntarily paid without written protest at the
time of payment in the event that a local government tax is
declared invalidly enacted or unconstitutional by a court of
competent jurisdiction. A taxpayer shall not be deemed to
have paid a tax voluntarily if the taxpayer lacked knowledge
of the facts upon which to protest the taxes at the time of
payment or if the taxpayer paid the taxes under duress.
Unless the corporate authorities of a unit of local
government expressly adopt a shorter statute of limitations
for a particular tax, a statute of limitations on a claim for
credit or refund may not be less than 4 years after the end
of the calendar year in which payment or remittance in error
was made. No unit of local government shall be required to
grant a credit or refund of taxes, interest, or penalties to
a person who has not paid or remitted the amounts directly to
the unit of local government. Units of local government must
provide, by ordinance, a rate of interest for overpayment of
tax.
Section 70. Installment contracts. If a local
government tax ordinance or a local tax administrator allows
installment payment agreements for delinquent tax amounts,
the local tax administrator may not cancel any installment
contract unless the taxpayer fails to pay any amount due on
time and fails to cure the delinquency in the allowable time
supplied by the local tax administrator, or fails to
demonstrate good faith in restructuring any installment plan
agreement or contract with the local tax administrator.
Section 75. Voluntary disclosure. For any tax for which
a taxpayer has not received a written notice of an audit,
investigation, or assessment from the local tax
administrator, a taxpayer is entitled to file an
application with the local tax administrator for a
voluntary disclosure of the tax due. A taxpayer filing a
voluntary disclosure application must agree to pay the amount
of tax due, along with interest of one percent per month, for
all periods prior to the filing of the application but not
more than 4 years before the date of filing the
application. Except for the amount of tax and interest due
under this Section, a taxpayer filing a valid voluntary
disclosure application may not be liable for any additional
tax, interest, or penalty for any period before the date
the application was filed, provided, however, that if the
taxpayer incorrectly determined and underpaid the amount
of tax due as provided in this Section, the taxpayer is
liable for the underpaid tax along with applicable
interest on the underpaid tax, unless the underpayment was
the result of fraud on the part of the taxpayer, in which
case the application shall be deemed invalid and void. The
payment of tax and interest required under this Section must
be made within 90 days after the filing of the voluntary
disclosure application or the date agreed to by the local tax
administrator, whichever is longer, except that any
additional amounts owed as a result of an underpayment of tax
and interest previously paid under this Section must be paid
within 90 days after a final determination and the exhaustion
of all appeals of the additional amount owed or the date
agreed to by the local tax administrator, whichever is
longer.
Section 80. Criminal penalties. Criminal penalties may
not be imposed on taxpayers for non-compliance with the
provisions of a locally administered tax unless the
non-compliance is a result of willful or fraudulent disregard
of the local tax laws.
Section 85. Review of liens. The local tax
administrator must establish an internal review process
concerning liens against taxpayers. If the lien is determined
to be improper, the local tax administrator must remove
the lien at local government's own expense, correct the
taxpayer's credit record, and correct any public disclosure
of the improperly imposed lien.
Section 90. Publication of tax ordinances. Each unit of
local government that imposes one or more locally
administered taxes by ordinance must publish and make copies
of those taxing ordinances readily available to the public
upon request. Posting of the tax ordinances on the Internet
satisfies the publication requirement of this Section.
Section 99. Effective date. This Act takes effect on
January 1, 2001.
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