SB2502 100TH GENERAL ASSEMBLY

LRB100 14948 HLH 32495 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2502

Introduced 2/6/2018, by Sen. Jennifer Bertino-Tarrant

SYNOPSIS AS INTRODUCED:

35 ILCS 105/3-45.5 new
35 ILCS 105/10	from Ch. 120, par. 439.10
35 ILCS 110/3-40.5 new
35 ILCS 110/10	from Ch. 120, par. 439.40

Amends the Use Tax Act and the Service Use Tax Act. Provides that retailers and servicemen that do not collect the taxes under those Acts shall make the following reports and notifications: (1) a notification with each purchase made to an Illinois purchaser that use tax is due on certain purchases at retail made from the retailer and that the State requires the purchaser to file a use tax return; and (2) an annual notification to each Illinois purchaser detailing the total amount paid by the purchaser for Illinois purchases at retail during the previous calendar year. Provides that, if a purchaser has otherwise failed to file a return with the Department of Revenue and remit the proper amount of tax due, and if the purchaser receives a notification from a retailer under the provisions of the amendatory Act, then that purchaser must file a return and pay the tax by April 15 of the year in which the notification is received. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

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

Section 5. The Use Tax Act is amended by changing Section 10 and by adding Section 3-45.5 as follows:

(35 ILCS 105/3-45.5 new)

Sec. 3-45.5. Notice and reporting requirements for non-collecting retailers.

(a) Each retailer that does not collect the tax under this Act shall, at the time of purchase, notify Illinois purchasers that use tax is due on certain purchases at retail made from the retailer and that the State requires the purchaser to file a use tax return.

(b) Each retailer that does not collect the tax under this Act shall send notification to all Illinois purchasers by January 31 of each year showing such information as the Department shall require by rule and including the total amount paid by the purchaser for Illinois purchases at retail made from the retailer in the previous calendar year. Such notification shall include, if available, the dates of purchases at retail, the amounts of each purchase at retail, and the category of the purchase at retail, including, if known by the retailer, whether the purchase at retail is exempt or not exempt from taxation. The notification shall inform the purchaser that the State requires a use tax return to be filed and use tax paid on certain Illinois purchases at retail made by the purchaser from the retailer, as provided in Section 10 of this Act.

The Director of Revenue may require any retailer that does not collect the tax under this Act and makes total Illinois sales of more than $100,000 in a calendar year to file the annual statement described in this subsection (c) by magnetic media or another machine-readable form for that year.

(c) Failure to send the notification required in subsection (a) shall subject the retailer to a penalty of $5 for each such failure unless the retailer shows reasonable cause for the failure. Failure to send the notification required in subsection (b) shall subject the retailer to a penalty of $10 for each such failure unless the retailer shows reasonable cause for the failure.

(d) Retailers that do not collect the tax under this Act but made less than $100,000 in total gross sales in Illinois in the previous calendar year, and who reasonably expect gross sales in the current calendar year to be less than $100,000, are exempt from the notice.

(e) As used in this Section, "Illinois purchaser" means a person who purchases tangible personal property from a retailer and provides either a billing address or a delivery address in the State of Illinois.

(35 ILCS 105/10) (from Ch. 120, par. 439.10)

Sec. 10. Except as to motor vehicles, aircraft, watercraft, and trailers, and except as to cigarettes as defined in the Cigarette Use Tax Act, when tangible personal property is purchased from a retailer for use in this State by a purchaser who did not pay the tax imposed by this Act to the retailer, and who does not file returns with the Department as a retailer under Section 9 of this Act, such purchaser (by the last day of the month following the calendar month in which such purchaser makes any payment upon the selling price of such property) shall, except as otherwise provided in this Section, file a return with the Department and pay the tax upon that portion of the selling price so paid by the purchaser during the preceding calendar month. Such return shall be filed on a form prescribed by the Department and shall contain such information as the Department may reasonably require. Such return and payment from the purchaser shall be submitted to the Department sooner than the last day of the month after the month in which the purchase is made to the extent that that may be necessary in order to secure the title to a motor vehicle or the certificate of registration for an aircraft. However, except as to motor vehicles and aircraft, and except as to cigarettes as defined in the Cigarette Use Tax Act, if the purchaser's annual use tax liability does not exceed $600, the purchaser may file the return on an annual basis on or before April 15th of the year following the year use tax liability was incurred. Individual purchasers with an annual use tax liability that does not exceed $600 may, in lieu of the filing and payment requirements in this Section, file and pay in compliance with Section 502.1 of the Illinois Income Tax Act.

If a purchaser has otherwise failed to file a return with the Department and remit the proper amount of tax due as required under this Act, and if the purchaser receives a notification from a retailer under Section 3-45.5 of this Act, then that purchaser, on or before April 15 of the year in which the notification is received, must file a return and pay the tax upon those portions of the selling prices so paid by the purchaser, plus late fees, as determined by the Department, for the failure to file a return with the Department and remit the proper amount of tax due by the applicable deadline as determined by this Act. Failure to file a return and pay taxes in the manner described in this paragraph will result in additional late fees as determined by the Department.

If cigarettes, as defined in the Cigarette Use Tax Act, are purchased from a retailer for use in this State by a purchaser who did not pay the tax imposed by this Act to the retailer, and who does not file returns with the Department as a retailer under Section 9 of this Act, such purchaser must, within 30 days after acquiring the cigarettes, file a return with the Department and pay the tax upon that portion of the selling price so paid by the purchaser for the cigarettes.

In addition with respect to motor vehicles, aircraft, watercraft, and trailers, a purchaser of such tangible personal property for use in this State, who purchases such tangible personal property from an out-of-state retailer, shall file with the Department, upon a form to be prescribed and supplied by the Department, a return for each such item of tangible personal property purchased, except that if, in the same transaction, (i) a purchaser of motor vehicles, aircraft, watercraft, or trailers who is a retailer of motor vehicles, aircraft, watercraft, or trailers purchases more than one motor vehicle, aircraft, watercraft, or trailer for the purpose of resale or (ii) a purchaser of motor vehicles, aircraft, watercraft, or trailers purchases more than one motor vehicle, aircraft, watercraft, or trailer for use as qualifying rolling stock as provided in Section 3-55 of this Act, then the purchaser may report the purchase of all motor vehicles, aircraft, watercraft, or trailers involved in that transaction to the Department on a single return prescribed by the Department. Such return in the case of motor vehicles and aircraft must show the name and address of the seller, the name, address of purchaser, the amount of the selling price including the amount allowed by the retailer for traded in property, if any; the amount allowed by the retailer for the traded-in tangible personal property, if any, to the extent to which Section 2 of this Act allows an exemption for the value of traded-in property; the balance payable after deducting such trade-in allowance from the total selling price; the amount of tax due from the purchaser with respect to such transaction; the amount of tax collected from the purchaser by the retailer on such transaction (or satisfactory evidence that such tax is not due in that particular instance if that is claimed to be the fact); the place and date of the sale, a sufficient identification of the property sold, and such other information as the Department may reasonably require.

Such return shall be filed not later than 30 days after such motor vehicle or aircraft is brought into this State for use.

For purposes of this Section, "watercraft" means a Class 2, Class 3, or Class 4 watercraft as defined in Section 3-2 of the Boat Registration and Safety Act, a personal watercraft, or any boat equipped with an inboard motor.

The return and tax remittance or proof of exemption from the tax that is imposed by this Act may be transmitted to the Department by way of the State agency with which, or State officer with whom, the tangible personal property must be titled or registered (if titling or registration is required) if the Department and such agency or State officer determine that this procedure will expedite the processing of applications for title or registration.

With each such return, the purchaser shall remit the proper amount of tax due (or shall submit satisfactory evidence that the sale is not taxable if that is the case), to the Department or its agents, whereupon the Department shall issue, in the purchaser's name, a tax receipt (or a certificate of exemption if the Department is satisfied that the particular sale is tax exempt) which such purchaser may submit to the agency with which, or State officer with whom, he must title or register the tangible personal property that is involved (if titling or registration is required) in support of such purchaser's application for an Illinois certificate or other evidence of title or registration to such tangible personal property.

When a purchaser pays a tax imposed by this Act directly to the Department, the Department (upon request therefor from such purchaser) shall issue an appropriate receipt to such purchaser showing that he has paid such tax to the Department. Such receipt shall be sufficient to relieve the purchaser from further liability for the tax to which such receipt may refer.

A user who is liable to pay use tax directly to the Department only occasionally and not on a frequently recurring basis, and who is not required to file returns with the Department as a retailer under Section 9 of this Act, or under the "Retailers' Occupation Tax Act", or as a registrant with the Department under the "Service Occupation Tax Act" or the "Service Use Tax Act", need not register with the Department. However, if such a user has a frequently recurring direct use tax liability to pay to the Department, such user shall be required to register with the Department on forms prescribed by the Department and to obtain and display a certificate of registration from the Department. In that event, all of the provisions of Section 9 of this Act concerning the filing of regular monthly, quarterly or annual tax returns and all of the provisions of Section 2a of the "Retailers' Occupation Tax Act" concerning the requirements for registrants to post bond or other security with the Department, as the provisions of such sections now exist or may hereafter be amended, shall apply to such users to the same extent as if such provisions were included herein.

(Source: P.A. 100-321, eff. 8-24-17.)

Section 10. The Service Use Tax Act is amended by changing Section 10 and by adding Section 3-40.5 as follows:

(35 ILCS 110/3-40.5 new)

Sec. 3-40.5. Notice and reporting requirements for non-collecting servicemen.

(a) Each serviceman that does not collect the tax under this Act shall, at the time of purchase, notify Illinois purchasers that use tax is due on certain purchases at retail made from the retailer and that the State requires the purchaser to file a use tax return.

(b) Each serviceman that does not collect the tax under this Act shall send notification to all Illinois purchasers by January 31 of each year showing such information as the Department shall require by rule and including the total amount paid by the purchaser for Illinois purchases at retail made from the serviceman in the previous calendar year. Such notification shall include, if available, the dates of purchases at retail, the amounts of each purchase at retail, and the category of the purchase at retail, including, if known by the serviceman, whether the purchase at retail is exempt or not exempt from taxation. The notification shall inform the purchaser that the State requires a use tax return to be filed and use tax paid on certain Illinois purchases at retail made by the purchaser from the serviceman, as provided in Section 10 of this Act.

The notification specified in this subsection (b) shall be sent separately to all Illinois purchasers by first-class mail and shall not be included with any other shipments. The notification shall include the words "Important Tax Document Enclosed" on the exterior of the mailing. The notification shall include the name of the serviceman.

(c) Failure to send the notification required in subsection (a) shall subject the serviceman to a penalty of $5 for each such failure unless the serviceman shows reasonable cause for the failure. Failure to send the notification required in subsection (b) shall subject the serviceman to a penalty of $10 for each such failure unless the serviceman shows reasonable cause for the failure.

(d) Servicemen that do not collect the tax under this Act but made less than $100,000 in total gross sales in Illinois in the previous calendar year, and who reasonably expect gross sales in the current calendar year to be less than $100,000, are exempt from the notice.

(e) As used in this Section, "Illinois purchaser" means a person who purchases tangible personal property from a serviceman and provides either a billing address or a delivery address in the State of Illinois.

(35 ILCS 110/10) (from Ch. 120, par. 439.40)

Sec. 10. Where property is acquired as an incident to the purchase of a service from a serviceman for use in this State by a purchaser who did not pay the tax herein imposed to the serviceman, and who does not file returns with the Department as a serviceman under Section 9 of this Act, such purchaser (by the last day of the month following the calendar month in which such purchaser makes any payment upon the selling price of such property) shall, except as hereinafter provided in this Section, file a return with the Department and pay the tax upon that portion of the selling price so paid by the purchaser during the preceding calendar month. Such return shall be filed on a form prescribed by the Department and shall contain such information as the Department may reasonably require.

When a purchaser pays a tax herein imposed directly to the Department, the Department (upon request therefor from such purchaser) shall issue an appropriate receipt to such purchaser showing that he has paid such tax to the Department. Such receipt shall be sufficient to relieve the purchaser from further liability from the tax to which such receipt may refer.

A user who is liable to pay Service Use Tax directly to the Department only occasionally and not on a frequently recurring basis, and who is not required to file returns within the Department as a serviceman under Section 9 of this Act, or as a serviceman under the "Service Occupation Tax Act", or as a retailer or user under the "Use Tax Act", or as a retailer under the "Retailers' Occupation Tax Act", need not register with the Department. However, if such a user has a frequently recurring direct Service Use Tax liability to pay to the Department, such user shall be required to register with the Department on forms prescribed by the Department and to obtain and display a certificate of registration from the Department. In that event, all of the provisions of Section 9 of this Act concerning the filing of regular monthly, quarterly or annual tax returns and all of the provisions of Section 2a of the "Retailers' Occupation Tax Act" concerning the requirements for registrants to post bond or other security with the Department, as the provisions of such sections now exist or may hereafter be amended, shall apply to such users to the same extent as if such provisions were included herein.

If a purchaser has otherwise failed to file a return with the Department and remit the proper amount of tax due as required under this Act, and if the purchaser receives a notification from a serviceman under Section 3-40.5 of this Act, then that purchaser, on or before April 15 of the year in which the notification is received, must file a return and pay the tax upon those portions of the selling prices so paid by the purchaser, plus late fees, as determined by the Department, for the failure to file a return with the Department and remit the proper amount of tax due by the applicable deadline as determined by this Act. Failure to file a return and pay taxes in the manner described in this paragraph will result in additional late fees as determined by the Department.

(Source: P.A. 91-51, eff. 6-30-99.)

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