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91_HB3240enr
HB3240 Enrolled 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
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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
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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
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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
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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
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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
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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
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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
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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
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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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