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91_SB1440enr
SB1440 Enrolled LRB9110653MWgc
1 AN ACT to create the Local Government Taxpayers' Bill of
2 Rights Act.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 1. Short title. This Act may be cited as the
6 Local Government Taxpayers' Bill of Rights Act.
7 Section 5. Legislative declaration. It is the intent of
8 the General Assembly that this legislation grant various
9 rights and protections to taxpayers and tax collectors with
10 respect to the administration and enforcement of local
11 government tax laws. The provisions of this Act are designed
12 to reduce the burden on both taxpayers and tax collectors by
13 specifically providing that fair and consistent tax processes
14 and procedures be adopted and disseminated to taxpayers at
15 the local level while at the same time preserving local
16 government's full authority to collect taxes lawfully due
17 under their taxing ordinances.
18 This legislation also provides taxpayers a minimum
19 level of consistency with regard to the assessment and
20 collection of local taxes as they do business in multiple
21 locations within this State.
22 The General Assembly further finds that tax systems are
23 largely based on voluntary compliance and self-assessment and
24 the development of understandable tax laws. Providing clear
25 tax laws at the local level and providing all necessary due
26 process rights in the collection and enforcement of local tax
27 laws will only serve to improve voluntary compliance and
28 self-assessment of local government taxes.
29 Section 10. Application and home rule preemption. The
30 limitations provided by this Act shall take precedence over
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1 any provision of any tax ordinance imposed by a unit of local
2 government, as defined in this Act, in Illinois.
3 This Act is a denial and limitation of home rule powers
4 and functions under subsection (g) of Section 6 of Article
5 VII of the Illinois Constitution.
6 Section 15. Definitions. In this Act:
7 "Locally imposed and administered tax" means a tax
8 imposed by a unit of local government that is collected or
9 administered by a unit of local government and not an agency
10 or Department of the State. A "locally imposed and
11 administered tax" does not include a tax imposed upon real
12 property under the Property Tax Code or fees collected by a
13 unit of local government other than infrastructure
14 maintenance fees.
15 "Local tax administrator" includes directors of local
16 government departments of revenue or taxation, or other local
17 government officers charged with the administration or
18 collection of a locally imposed and administered tax,
19 including their staffs, employees, or agents to the extent
20 they are authorized by a local tax administrator to act in
21 the local tax administrator's stead.
22 "Unit of local government" includes a municipality, a
23 county, or a home rule unit of this State, but does not
24 include (i) home rule municipalities with a population
25 greater than 1,000,000 and (ii) home rule counties with a
26 population greater than 3,000,000 that have locally
27 administered departments or bureaus of revenue.
28 Section 20. Responsibilities of units of local
29 government. Each unit of local government shall have the
30 powers and obligations enumerated in the following Sections
31 to protect the rights of the taxpayers.
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1 Section 25. Application of payments. Taxpayers have the
2 right to know how tax payments and remittances covered by
3 this Act will be applied to the tax liability owed to units
4 of local government. Each unit of local government must
5 provide, by ordinance, for the order of application of tax
6 payments to tax liability, penalty, and interest, provided
7 that in no case may a payment be applied to penalties due
8 before it is applied to tax or interest. In the event that a
9 unit of local government does not provide for application of
10 payments, any payment or remittance received for a tax period
11 will be applied first to tax for the period, then to interest
12 due for the period, and then to penalties due for the period.
13 Section 30. Statute of limitations. Units of local
14 government have an obligation to review tax returns in a
15 timely manner and issue any determination of tax due as
16 promptly as possible so that taxpayers may make timely
17 corrections of future returns and minimize any interest
18 charges applied to tax underpayments. Each unit of local
19 government must provide appropriate statutes of limitation
20 for the determination and assessment of taxes covered by this
21 Act, provided, however, that a statute of limitations may not
22 exceed the following:
23 (1) No notice of determination of tax due or
24 assessment may be issued more than 4 years after the end
25 of the calendar year for which the return for the period
26 was filed or the end of the calendar year in which the
27 return for the period was due, whichever occurs later.
28 (2) If any tax return was not filed or if during
29 any 4-year period for which a notice of tax determination
30 or assessment may be issued by the unit of local
31 government the tax paid or remitted was less than 75% of
32 the tax due for that period, the statute of limitations
33 shall be no more than 6 years after the end of the
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1 calendar year in which the return for the period was due
2 or the end of the calendar year in which the return for
3 the period was filed, whichever occurs later. In the
4 event that a unit of local government fails to
5 provide a statute of limitations, the maximum
6 statutory period provided in this Section applies.
7 This Section does not place any limitation on a unit of
8 local government if a fraudulent tax return is filed.
9 Section 35. Audit procedures. Taxpayers have the right
10 to be treated by officers, employees, and agents of the local
11 tax administrator with courtesy, fairness, uniformity,
12 consistency, and common sense. Taxpayers must be notified in
13 writing of a proposed audit of the taxpayer's books and
14 records. The notice of audit must specify the tax and time
15 period to be audited and must detail the minimum
16 documentation or books and records to be made available to
17 the auditor. Audits must be held only during reasonable
18 times of the day and, unless impracticable, at times agreed
19 to by the taxpayer. An auditor who determines that there has
20 been an overpayment of tax during the course of the audit is
21 obligated to identify the overpayment to the taxpayer so that
22 the taxpayer can take the necessary steps to recover the
23 overpayment. If the overpayment is the result of the
24 application of some or all of the taxpayer's tax payment to
25 an incorrect local government entity, the auditor must notify
26 the correct local government entity of the taxpayer's
27 application error.
28 Section 40. Appeals process. Units of local government
29 have an obligation to provide, by ordinance, a procedure for
30 appealing a determination of tax due or an assessment.
31 Local governments must provide to taxpayers a written
32 statement of rights whenever the local government issues a
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1 protestable notice of tax due, a bill, a claim denial, or
2 a notice of claim reduction regarding any tax. The
3 statement must explain the reason for the assessment, the
4 amount of the tax liability proposed, the procedure for
5 appealing the assessment, and the obligations of the unit of
6 local government during the audit, appeal, refund, and
7 collection process. In no event may a taxpayer be provided a
8 time period less than 45 days after the date the notice
9 was served in which to protest a notice of tax
10 determination or notice of tax liability. Any notice of tax
11 assessment due must be sent by United States registered or
12 certified mail. The unit of local government must also
13 adopt procedures for opening up any closed protest period
14 or extending the protest period upon the showing of
15 reasonable cause by the taxpayer and full payment of the
16 contested tax liability along with interest accrued as of the
17 due date of the tax.
18 Section 45. Interest. Units of local government must
19 provide, by ordinance, for the amount of interest, if any,
20 to be assessed on a late payment, underpayment, or nonpayment
21 of tax.
22 Section 50. Late filing penalties. Late filing
23 penalties may not exceed 5% of the amount of tax required to
24 be shown as due on a return. A late filing penalty may not
25 apply if a failure to file penalty is imposed by the unit
26 of local government. A local tax administrator may
27 determine that the late filing was due to reasonable cause
28 and abate the penalty.
29 Section 55. Late payment penalty. Late payment
30 penalties may not exceed 5% of the tax due and not timely
31 paid or remitted to the unit of local government. This
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1 penalty shall not apply if a failure to file penalty is
2 imposed by the unit of local government. A local tax
3 administrator may determine that the late payment was due to
4 reasonable cause and abate the penalty.
5 Section 60. Failure to file penalty. If no return is
6 filed before the issuance of a notice of tax deficiency or of
7 tax liability to the taxpayer, any failure to file penalty
8 may not exceed 25% of the total tax due for the applicable
9 reporting period for which the return was required to have
10 been filed. A local tax administrator may determine that the
11 failure to file a return was due to reasonable cause and
12 abate the penalty.
13 Section 65. Credits and refunds. Units of local
14 government shall provide a procedure for claiming a credit or
15 refund of taxes, interest, or penalties paid in error. No
16 units of local government are required to refund or credit
17 any taxes voluntarily paid without written protest at the
18 time of payment in the event that a local government tax is
19 declared invalidly enacted or unconstitutional by a court of
20 competent jurisdiction. A taxpayer shall not be deemed to
21 have paid a tax voluntarily if the taxpayer lacked knowledge
22 of the facts upon which to protest the taxes at the time of
23 payment or if the taxpayer paid the taxes under duress.
24 Unless the corporate authorities of a unit of local
25 government expressly adopt a shorter statute of limitations
26 for a particular tax, a statute of limitations on a claim for
27 credit or refund may not be less than 4 years after the end
28 of the calendar year in which payment or remittance in error
29 was made. No unit of local government shall be required to
30 grant a credit or refund of taxes, interest, or penalties to
31 a person who has not paid or remitted the amounts directly to
32 the unit of local government. Units of local government must
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1 provide, by ordinance, a rate of interest for overpayment of
2 tax.
3 Section 70. Installment contracts. If a local
4 government tax ordinance or a local tax administrator allows
5 installment payment agreements for delinquent tax amounts,
6 the local tax administrator may not cancel any installment
7 contract unless the taxpayer fails to pay any amount due on
8 time and fails to cure the delinquency in the allowable time
9 supplied by the local tax administrator, or fails to
10 demonstrate good faith in restructuring any installment plan
11 agreement or contract with the local tax administrator.
12 Section 75. Voluntary disclosure. For any tax for which
13 a taxpayer has not received a written notice of an audit,
14 investigation, or assessment from the local tax
15 administrator, a taxpayer is entitled to file an
16 application with the local tax administrator for a
17 voluntary disclosure of the tax due. A taxpayer filing a
18 voluntary disclosure application must agree to pay the amount
19 of tax due, along with interest of one percent per month, for
20 all periods prior to the filing of the application but not
21 more than 4 years before the date of filing the
22 application. Except for the amount of tax and interest due
23 under this Section, a taxpayer filing a valid voluntary
24 disclosure application may not be liable for any additional
25 tax, interest, or penalty for any period before the date
26 the application was filed, provided, however, that if the
27 taxpayer incorrectly determined and underpaid the amount
28 of tax due as provided in this Section, the taxpayer is
29 liable for the underpaid tax along with applicable
30 interest on the underpaid tax, unless the underpayment was
31 the result of fraud on the part of the taxpayer, in which
32 case the application shall be deemed invalid and void. The
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1 payment of tax and interest required under this Section must
2 be made within 90 days after the filing of the voluntary
3 disclosure application or the date agreed to by the local tax
4 administrator, whichever is longer, except that any
5 additional amounts owed as a result of an underpayment of tax
6 and interest previously paid under this Section must be paid
7 within 90 days after a final determination and the exhaustion
8 of all appeals of the additional amount owed or the date
9 agreed to by the local tax administrator, whichever is
10 longer.
11 Section 80. Criminal penalties. Criminal penalties may
12 not be imposed on taxpayers for non-compliance with the
13 provisions of a locally administered tax unless the
14 non-compliance is a result of willful or fraudulent disregard
15 of the local tax laws.
16 Section 85. Review of liens. The local tax
17 administrator must establish an internal review process
18 concerning liens against taxpayers. If the lien is determined
19 to be improper, the local tax administrator must remove
20 the lien at local government's own expense, correct the
21 taxpayer's credit record, and correct any public disclosure
22 of the improperly imposed lien.
23 Section 90. Publication of tax ordinances. Each unit of
24 local government that imposes one or more locally
25 administered taxes by ordinance must publish and make copies
26 of those taxing ordinances readily available to the public
27 upon request. Posting of the tax ordinances on the Internet
28 satisfies the publication requirement of this Section.
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1 Section 99. Effective date. This Act takes effect on
2 January 1, 2001.
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