SB0181 95TH GENERAL ASSEMBLY

LRB095 04765 BDD 24824 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB0181

Introduced 1/31/2007, by Sen. Pamela J. Althoff

SYNOPSIS AS INTRODUCED:

35 ILCS 645/5-5
35 ILCS 645/5-10 new
50 ILCS 45/10
50 ILCS 45/35
65 ILCS 5/8-11-2.5 new

Amends the Electricity Infrastructure Maintenance Fee Law and the Illinois Municipal Code. Authorizes municipalities that impose certain taxes or fees on or collected by public utilities to conduct audits of those utilities to determine the accuracy of the taxes or fees paid to the municipality. Sets forth procedures under which a municipality may collect information from a public utility that is necessary to perform an audit. Sets forth procedures concerning the audit findings, liability for errors, penalties, confidentiality, and exemptions. Amends the Local Government Taxpayers' Bill of Rights Act. Limits the authority of municipalities (including home rule municipalities) to impose penalties with respect to certain taxes imposed under the Illinois Municipal Code or with respect to the municipal electricity infrastructure maintenance fee. Effective immediately.

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning local government.

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

Section 5. The Electricity Infrastructure Maintenance Fee Law is amended by changing Section 5-5 and by adding Section 5-10 as follows:

(35 ILCS 645/5-5)

Sec. 5-5. Municipal electricity infrastructure maintenance fee.

(a) Any municipality that on the effective date of this Law had in effect a franchise agreement with an electricity deliverer may impose an infrastructure maintenance fee upon electricity deliverers, as compensation for granting electricity deliverers the privilege of using public rights of way, in an amount specified in subsection (b) of this Section. If more than one electricity deliverer is responsible for the delivery of the same electricity to the same consumer, the fee related to that electricity shall be imposed upon the electricity deliverer who last physically uses the public way for delivery of that electricity prior to its consumption.

(b) (1) In municipalities with a population greater than 500,000, the amount of the infrastructure maintenance fee imposed under this Section shall not exceed the following maximum rates for kilowatt-hours delivered within the municipality to each purchaser:

(i) For the first 2,000 kilowatt-hours of electricity used or consumed in a month: 0.53 cents per kilowatt-hour;

(ii) For the next 48,000 kilowatt-hours of electricity used or consumed in a month: 0.35 cents per kilowatt-hour;

(iii) For the next 50,000 kilowatt-hours of electricity used or consumed in a month: 0.31 cents per kilowatt-hour;

(iv) For the next 400,000 kilowatt-hours of electricity used or consumed in a month: 0.305 cents per kilowatt-hour;

(v) For the next 500,000 kilowatt-hours of electricity used or consumed in a month: 0.30 cents per kilowatt-hour;

(vi) For the next 2,000,000 kilowatt-hours of electricity used or consumed in a month: 0.28 cents per kilowatt-hour;

(vii) For the next 2,000,000 kilowatt-hours of electricity used or consumed in a month: 0.275 cents per kilowatt-hour;

(viii) For the next 5,000,000 kilowatt-hours of electricity used or consumed in a month: 0.27 cents per kilowatt-hour;

(ix) For the next 10,000,000 kilowatt-hours used or consumed in a month: 0.265 cents per kilowatt-hour;

(x) For all kilowatt-hours of electricity in excess of 20,000,000 kilowatt-hours used or consumed in a month: 0.26 cents per kilowatt-hour.

(2) In municipalities with a population of 500,000 or less, the amount of the infrastructure maintenance fee imposed under this Section shall be imposed based on the kilowatt-hour categories set forth above and shall be calculated on a monthly basis for kilowatt-hours of electricity delivered to each purchaser; provided, that if, immediately prior to imposing an infrastructure maintenance fee, such municipality receives franchise fees, permit fees, free electrical service, or other forms of compensation pursuant to an existing franchise agreement, the rates established for these kilowatt-hour categories for such infrastructure maintenance fee during the term of the franchise agreement shall not exceed rates reasonably calculated, at the time such infrastructure maintenance fee is initially imposed, to generate an amount of revenue equivalent to the value of the compensation received or provided under the franchise agreement.

(3) Notwithstanding any other provision of this subsection (b), a fee shall not be imposed if and to the extent that imposition or collection of the fee would violate the Constitution or statutes of the United States or the statutes or Constitution of the State of Illinois.

(c) Any electricity deliverer may collect the amount of a fee imposed under this Section from the purchaser using or consuming the electricity with respect to which the fee was imposed. The fee may be collected by the electricity deliverer from the purchaser as a separately stated charge on the purchaser's bills or in any other manner permitted from time to time by law or by the electricity deliverer's tariffs. The electricity deliverer shall be allowed credit for any portion of the fee related to deliveries of electricity the charges for which are written off as uncollectible, provided, that if such charges are thereafter collected, the electricity deliverer shall be obligated to pay such fee. For purposes of this Section, any partial payment not specifically identified by the purchaser shall be deemed to be for the delivery of electricity. No ordinance imposing the fee authorized by this Section with respect to the kilowatt-hours delivered to non-residential customers shall be effective until October 1, 1999. For purposes of this Law, the period of time from the effective date of this Law through and including September 30, 1999 shall be referred to as the "Initial Period."

(d) As between the electricity deliverer and the municipality, the fee authorized by this Section shall be collected, enforced, and administered by the municipality imposing the fee. Any municipality adopting an ordinance imposing an infrastructure maintenance fee under this Law shall give written notice to each electricity deliverer subject to the fee not less than 60 days prior to the date the fee is imposed.

(e) A municipality may not impose, under (i) any ordinance imposing an infrastructure maintenance fee under this Law or (ii) its franchise agreement with the electricity deliverer, any penalty with respect to the infrastructure maintenance fees permitted under this Law, except as that penalty would be permitted under Sections 50, 55, and 60 of the Local Government Taxpayer's Bill of Rights Act if the word "fee" were substituted for the word "tax" each time it appears in those Sections (except where the word tax appears immediately before the word "administrator").

(Source: P.A. 90-561, eff. 8-1-98.)

(35 ILCS 645/5-10 new)

Sec. 5-10. Municipal tax review; requests for information.

(a) A municipality may conduct an audit of fees under this Act to determine the accuracy of the fees paid by an electricity deliverer.

(b) Not more than once every 2 years, a municipality that has imposed a fee under this Law may, subject to the limitations and protections stated in Section 16-122 of the Public Utilities Act, request any information from an electricity deliverer that the municipality reasonably requires in order to perform an audit under subsection (a). The information that may be requested by the municipality includes, without limitation:

(1) in an electronic format, the database used by the electricity deliverer to determine the amount due to the municipality; provided, however, that, if the municipality has requested customer-specific billing, usage, and load shape date from an electricity deliverer that is an electric utility and has not provided the electric utility with the verifiable authorization required by Section 16-122 of the Public Utilities Act, then the electric utility shall remove from the database all customer-specific billing, usage, and load shape data before providing it to the municipality; and

(2) in a format used by the public utility in the ordinary course of its business, summary data, as needed by the municipality, to determine the unit consumption by providing the gross kilowatt-hours or other units of measurement subject to the fee imposed by this Law within the municipal jurisdiction.

(c) Each electricity deliverer must provide the information requested under subsection (b) within:

(1) 60 days after the date of the request if the population of the requesting municipality is 500,000 or less; or

(2) 90 days after the date of the request if the population of the requesting municipality exceeds 500,000.

The time in which an electricity deliverer must provide the information requested under subsection (b) may be extended by an agreement between the municipality and the electricity deliverer. If an electricity deliverer receives, during a single month, information requests from more than 2 municipalities, or the aggregate population of the requesting municipalities is 100,000 customers or more, the electricity deliverer is entitled to an additional 30 days to respond to those requests. The Illinois Department of Revenue may grant the electricity deliverer additional extensions to respond.

(d) If an audit by the municipality or its agents finds an error by the electricity deliverer in the amount of fees paid by the electricity deliverer, then the municipality must notify the electricity deliverer of the error. Any such notice must be made by the municipality no later than 4 years after the date the fee required to be paid under this Law was due or any lesser period of time that may be specified in the municipal ordinance imposing the fee. Upon such a notice, the electricity deliverer must submit a written response within 60 days after the date the notice was postmarked stating that it has corrected the error or stating the reason that the error is inapplicable or inaccurate. The municipality then has 60 days after the receipt of the electricity deliverer's response to review and contest the conclusion of the electricity deliverer. If the parties are unable to agree on the disposition of the audit findings within 120 days after the notification of the error to the electricity deliverer, then either party may submit the matter to the Illinois Department of Revenue for resolution.

(e) Electricity deliverers and municipalities are not liable for any error in past collections and payments that was unknown to either the electricity deliverer or the municipality prior to the audit process unless the error was due to gross negligence in the collection or processing of required data. If, however, an error in past collections or payments resulted in a customer, who should not have owed a fee to any municipality, having paid a fee to a municipality, then the customer may, to the extent allowed by section 9-252 of the Public Utilities Act, recover the fee from the electricity deliverer, and any amount so paid by the electricity deliverer may be deducted by that electricity deliverer from any fees or taxes then or thereafter owed by the electricity deliverer to that municipality.

(f) All account specific information provided by an electricity deliverer under this Section may be used only for the purpose of an audit of fees conducted under this Section and the enforcement of any related claim. All such information must be held in strict confidence by the municipality and its agents and may not be disclosed to the public under the Freedom of Information Act or under any other similar statutes allowing for or requiring public disclosure.

(g) An electricity deliverer that pays less than $1,000 annually in fees under this Law is exempt from the provisions of subsections (a) through (e) of this Section.

(h) The Department of Revenue shall adopt any rules that are required to effectively enforce this Section, and those rules must be consistent with existing processes applicable to the Electricity Excise Tax Law. The Department of Revenue has the exclusive jurisdiction to resolve any disputes arising under this Section, subject to review by the courts under the Administrative Review Law.

(i) Any public utility that fails to comply with the provisions of this Section shall pay for all costs of enforcement, including reasonable legal fees.

Section 10. The Local Government Taxpayers' Bill of Rights Act is amended by changing Sections 10 and 35 as follows:

(50 ILCS 45/10)

Sec. 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, including without limitation any tax authorized under Section 8-11-2 of the Illinois Municipal Code.

Consistent with the limitations provided by this Act, a municipality may not impose, under (i) any ordinance imposing a tax authorized by Section 8-11-2 of the Illinois Municipal Code or (ii) its franchise agreement with a public utility, any penalty with respect to a tax authorized by Section 8-11-2 of the Illinois Municipal Code or with respect to an audit authorized by Section 8-11-2.5 of the Illinois Municipal Code, except as specified in Sections 50, 55, and 60 of this Act. For purposes of this Section, a penalty includes, without limitation, (i) fines, assessments, forfeitures, fees, or other similar charges, (ii) liens or encumbrances on property of a public utility, (iii) a revocation or modification of any existing license, permit, right, or franchise of a public utility, and (iv) a refusal to renew or grant or any license, permit, right, or franchise to a public utility except on the condition that the public utility agrees to any penalty.

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.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/35)

Sec. 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. This Section applies to any audit of a tax imposed by a unit of local government, except to the extent otherwise provided in Section 8-11-2.5 of the Illinois Municipal Code. Taxpayers must be notified in writing by the local jurisdiction of a proposed audit of the taxpayer's books and records clearly identifying who will be conducting the audit. For audits being conducted by third-party providers, the local jurisdiction must provide written authorization for the third-party provider to review the books and records of the taxpayer. No contact may be made by the third-party provider until the local-jurisdiction authorization is received by the taxpayer. 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. The auditor must sign a confidentiality agreement upon request by the taxpayer, and the taxpayer may require that an audit be conducted at the taxpayer's place of books and records. Upon the completion of the audit, the local jurisdiction must issue an audit closure report to the taxpayer with the results of the audit. 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.

(Source: P.A. 91-920, eff. 1-1-01.)

Section 15. The Illinois Municipal Code is amended by adding Section 8-11-2.5 as follows:

(65 ILCS 5/8-11-2.5 new)

Sec. 8-11-2.5. Municipal tax review; requests for information.

(a) If a municipality has imposed a tax under Section 8-11-2, then the municipality may conduct an audit of tax receipts collected from the public utility that is subject to the tax or that collects the tax from purchasers on behalf of the municipality to determine whether the amount of tax that was paid by the public utility was accurate.

(b) Not more than once every 2 years, a municipality that has imposed a tax under this Act may, subject to the limitations and protections stated in Section 16-122 of the Public Utilities Act and in the Local Government Taxpayers' Bill of Rights Act, request any information from a utility in the format maintained by the public utility in the ordinary course of its business that the municipality reasonably requires in order to perform an audit under subsection (a). The information that may be requested by the municipality includes, without limitation:

(1) in an electronic format used by the public utility in the ordinary course of its business, the database used by the public utility to determine the amount of tax due to the municipality; provided, however, that, if the municipality has requested customer-specific billing, usage, and load shape date from a public utility that is an electric utility and has not provided the electric utility with the verifiable authorization required by Section 16-122 of the Public Utilities Act, then the electric utility shall remove from the database all customer-specific billing, usage, and load shape data before providing it to the municipality; and

(2) in a format used by the public utility in the ordinary course of its business, summary data, as needed by the municipality, to determine the unit consumption of utility services by providing the gross therms, kilowatts, minutes or other units of measurement being taxed within the municipal jurisdiction and the gross revenues collected and the associated taxes assessed.

(c) Each public utility must provide the information requested under subsection (b) within:

(1) 60 days after the date of the request if the population of the requesting municipality is 500,000 or less; or

(2) 90 days after the date of the request if the population of the requesting municipality exceeds 500,000.

The time in which a public utility must provide the information requested under subsection (b) may be extended by an agreement between the municipality and the public utility. If a public utility receives, during a single month, information requests from more than 2 municipalities, or the aggregate population of the requesting municipalities is 100,000 customers or more, the public utility is entitled to an additional 30 days to respond to those requests. The Illinois Department of Revenue may grant the public utility additional extensions to respond.

(d) If an audit by the municipality or its agents finds an error by the public utility in the amount of taxes paid by the public utility, then the municipality may notify the public utility of the error. Any such notice must made by the municipality no later than 4 years after the date the tax required to be paid under this Law was due or any lesser period of time that may be specified in the municipal ordinance imposing the tax. Upon such a notice, the public utility must submit a written response within 60 days after the date the notice was postmarked stating that it has corrected the error on a prospective basis or stating the reason that the error is inapplicable or inaccurate. The municipality then has 60 days after the receipt of the public utility's response to review and contest the conclusion of the public utility. If the parties are unable to agree on the disposition of the audit findings within 120 days after the notification of the error to the public utility, then either party may submit the matter to the Illinois Department of Revenue for resolution.

(e) No public utility is liable for any error in past collections and payments that was unknown by it prior to the audit process unless (i) the error was due to gross negligence by the public utility in the collection or processing of required data and (ii) the municipality had not failed to respond in writing on an accurate and timely basis to any written request of the public utility to review and correct information used by the public utility to collect the municipality's tax if a diligent review of such information by the municipality reasonably could have been expected to discover such error. If, however, an error in past collections or payments resulted in a customer, who should not have owed a tax to any municipality, having paid a tax to a municipality, then the customer may, to the extent allowed by section 9-252 of the Public Utilities Act, recover the tax from the public utility, and any amount so paid by the public utility may be deducted by that public utility from any taxes then or thereafter owed by the public utility to that municipality.

(f) All account specific information provided by a public utility under this Section may be used only for the purpose of an audit of taxes conducted under this Section and the enforcement of any related tax claim. All such information must be held in strict confidence by the municipality and its agents and may not be disclosed to the public under the Freedom of Information Act or under any other similar statutes allowing for or requiring public disclosure.

(g) A public utility that collects less than $1,000 annually in taxes under this Act is exempt from the provisions of subsections (a) through (e) of this Section.

(h) The Department of Revenue shall adopt any rules that are required to effectively enforce this Section, and those rules must be consistent with existing processes applicable to the Electricity Excise Tax Law. The Department of Revenue has the exclusive jurisdiction to resolve any disputes arising under this Section, subject to review by the courts under the Administrative Review Law.

(i) Any public utility that fails to comply with the provisions of this Section shall pay for all costs of enforcement, including reasonable legal fees.

Section 99. Effective date. This Act takes effect upon becoming law.