97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB0024

 

Introduced 1/12/2011, by Rep. Jim Sacia

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/803  from Ch. 120, par. 8-803
35 ILCS 5/804  from Ch. 120, par. 8-804

    Amends the Illinois Income Tax Act. In a Section concerning estimated taxes, provides that, if (i) the taxpayer is owed a refund from the State based upon an income tax overpayment by the taxpayer, (ii) the taxpayer previously filed with the Department a valid amended Illinois income tax return claiming a refund for the overpayment, (iii) at least 30 days have elapsed between the date the taxpayer filed the amended return and the date the estimated tax installment is due, and (iv) the tax refund due to the taxpayer is larger than the estimated tax installment due, then the taxpayer may elect to reduce the amount of any unpaid refund owed to the taxpayer by the amount of the estimated tax due. Provides that the election must be approved by the Department and must be made in the form and manner prescribed by the Department. Exempts the offset amounts from certain penalty provisions. Effective immediately.


LRB097 00150 HLH 40162 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0024LRB097 00150 HLH 40162 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Sections 803 and 804 as follows:
 
6    (35 ILCS 5/803)  (from Ch. 120, par. 8-803)
7    Sec. 803. Payment of Estimated Tax.
8    (a) Every taxpayer other than an estate, trust,
9partnership, Subchapter S corporation or farmer is required to
10pay estimated tax for the taxable year, in such amount and with
11such forms as the Department shall prescribe, if the amount
12payable as estimated tax can reasonably be expected to be more
13than (i) $250 for taxable years ending before December 31, 2001
14and $500 for taxable years ending on or after December 31, 2001
15or (ii) $400 for corporations.
16    (b) Estimated tax defined. The term "estimated tax" means
17the excess of:
18        (1) The amount which the taxpayer estimates to be his
19    tax under this Act for the taxable year, over
20        (2) The amount which he estimates to be the sum of any
21    amounts to be withheld on account of or credited against
22    such tax.
23    (c) Joint payment. If they are eligible to do so for

 

 

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1federal tax purposes, a husband and wife may pay estimated tax
2as if they were one taxpayer, in which case the liability with
3respect to the estimated tax shall be joint and several. If a
4joint payment is made but the husband and wife elect to
5determine their taxes under this Act separately, the estimated
6tax for such year may be treated as the estimated tax of either
7husband or wife, or may be divided between them, as they may
8elect.
9    (d) There shall be paid 4 equal installments of estimated
10tax for each taxable year, payable as follows:
11Required Installment:Due Date:
121stApril 15
132ndJune 15
143rdSeptember 15
154thIndividuals: January 15 of the
16following taxable year
17Corporations: December 15
18    (e) Farmers. An individual, having gross income from
19farming for the taxable year which is at least 2/3 of his total
20estimated gross income for such year.
21    (f) Application to short taxable years. The application of
22this section to taxable years of less than 12 months shall be
23in accordance with regulations prescribed by the Department.
24    (g) Fiscal years. In the application of this section to the
25case of a taxable year beginning on any date other than January
261, there shall be substituted, for the months specified in

 

 

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1subsections (d) and (e), the months which correspond thereto.
2    (h) Installments paid in advance. Any installment of
3estimated tax may be paid before the date prescribed for its
4payment.
5    The changes in this Section made by this amendatory Act of
61985 shall apply to taxable years ending on or after January 1,
71986.
8    (i) Beginning with the first installment due on or after
9the effective date of this amendatory Act of the 97th General
10Assembly, if (i) the taxpayer is owed a refund from the State
11based upon an income tax overpayment by the taxpayer, (ii) the
12taxpayer previously filed with the Department a valid amended
13Illinois income tax return claiming a refund for the
14overpayment, (iii) at least 30 days have elapsed between the
15date the taxpayer filed the amended return and the date the
16estimated tax installment is due, and (iv) the tax refund due
17to the taxpayer is larger than the estimated tax installment
18due, then the taxpayer may elect to reduce the amount of any
19unpaid refund owed to the taxpayer by the amount of the
20estimated tax due. Such an election must be approved by the
21Department and must be made in the form and manner prescribed
22by the Department.
23(Source: P.A. 91-913, eff. 1-1-01.)
 
24    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
25    Sec. 804. Failure to Pay Estimated Tax.

 

 

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1    (a) In general. In case of any underpayment of estimated
2tax by a taxpayer, except as provided in subsection (d) or (e),
3the taxpayer shall be liable to a penalty in an amount
4determined at the rate prescribed by Section 3-3 of the Uniform
5Penalty and Interest Act upon the amount of the underpayment
6(determined under subsection (b)) for each required
7installment.
8    (b) Amount of underpayment. For purposes of subsection (a),
9the amount of the underpayment shall be the excess of:
10        (1) the amount of the installment which would be
11    required to be paid under subsection (c), over
12        (2) the amount, if any, of the installment paid on or
13    before the last date prescribed for payment.
14    (c) Amount of Required Installments.
15        (1) Amount.
16            (A) In General. Except as provided in paragraph
17        (2), the amount of any required installment shall be
18        25% of the required annual payment.
19            (B) Required Annual Payment. For purposes of
20        subparagraph (A), the term "required annual payment"
21        means the lesser of
22                (i) 90% of the tax shown on the return for the
23            taxable year, or if no return is filed, 90% of the
24            tax for such year, or
25                (ii) 100% of the tax shown on the return of the
26            taxpayer for the preceding taxable year if a return

 

 

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1            showing a liability for tax was filed by the
2            taxpayer for the preceding taxable year and such
3            preceding year was a taxable year of 12 months.
4        (2) Lower Required Installment where Annualized Income
5    Installment is Less Than Amount Determined Under Paragraph
6    (1).
7            (A) In General. In the case of any required
8        installment if a taxpayer establishes that the
9        annualized income installment is less than the amount
10        determined under paragraph (1),
11                (i) the amount of such required installment
12            shall be the annualized income installment, and
13                (ii) any reduction in a required installment
14            resulting from the application of this
15            subparagraph shall be recaptured by increasing the
16            amount of the next required installment determined
17            under paragraph (1) by the amount of such
18            reduction, and by increasing subsequent required
19            installments to the extent that the reduction has
20            not previously been recaptured under this clause.
21            (B) Determination of Annualized Income
22        Installment. In the case of any required installment,
23        the annualized income installment is the excess, if
24        any, of
25                (i) an amount equal to the applicable
26            percentage of the tax for the taxable year computed

 

 

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1            by placing on an annualized basis the net income
2            for months in the taxable year ending before the
3            due date for the installment, over
4                (ii) the aggregate amount of any prior
5            required installments for the taxable year.
6            (C) Applicable Percentage.
7        In the case of the followingThe applicable
8        required installments:percentage is:
9        1st ...............................22.5%
10        2nd ...............................45%
11        3rd ...............................67.5%
12        4th ...............................90%
13            (D) Annualized Net Income; Individuals. For
14        individuals, net income shall be placed on an
15        annualized basis by:
16                (i) multiplying by 12, or in the case of a
17            taxable year of less than 12 months, by the number
18            of months in the taxable year, the net income
19            computed without regard to the standard exemption
20            for the months in the taxable year ending before
21            the month in which the installment is required to
22            be paid;
23                (ii) dividing the resulting amount by the
24            number of months in the taxable year ending before
25            the month in which such installment date falls; and
26                (iii) deducting from such amount the standard

 

 

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1            exemption allowable for the taxable year, such
2            standard exemption being determined as of the last
3            date prescribed for payment of the installment.
4            (E) Annualized Net Income; Corporations. For
5        corporations, net income shall be placed on an
6        annualized basis by multiplying by 12 the taxable
7        income
8                (i) for the first 3 months of the taxable year,
9            in the case of the installment required to be paid
10            in the 4th month,
11                (ii) for the first 3 months or for the first 5
12            months of the taxable year, in the case of the
13            installment required to be paid in the 6th month,
14                (iii) for the first 6 months or for the first 8
15            months of the taxable year, in the case of the
16            installment required to be paid in the 9th month,
17            and
18                (iv) for the first 9 months or for the first 11
19            months of the taxable year, in the case of the
20            installment required to be paid in the 12th month
21            of the taxable year,
22        then dividing the resulting amount by the number of
23        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
24        case may be).
25    (d) Exceptions. Notwithstanding the provisions of the
26preceding subsections, the penalty imposed by subsection (a)

 

 

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1shall not be imposed if the taxpayer was not required to file
2an Illinois income tax return for the preceding taxable year,
3or, for individuals, if the taxpayer had no tax liability for
4the preceding taxable year and such year was a taxable year of
512 months. The penalty imposed by subsection (a) shall also not
6be imposed on any underpayments of estimated tax due before the
7effective date of this amendatory Act of 1998 which
8underpayments are solely attributable to the change in
9apportionment from subsection (a) to subsection (h) of Section
10304. The penalty imposed by subsection (a) shall also not be
11imposed with respect to any amounts the taxpayer is eligible to
12deduct from his or her tax refund pursuant to subsection (i) of
13Section 803 of this Act. The provisions of this amendatory Act
14of 1998 apply to tax years ending on or after December 31,
151998.
16    (e) The penalty imposed for underpayment of estimated tax
17by subsection (a) of this Section shall not be imposed to the
18extent that the Director or his or her designate determines,
19pursuant to Section 3-8 of the Uniform Penalty and Interest Act
20that the penalty should not be imposed.
21    (f) Definition of tax. For purposes of subsections (b) and
22(c), the term "tax" means the excess of the tax imposed under
23Article 2 of this Act, over the amounts credited against such
24tax under Sections 601(b) (3) and (4).
25    (g) Application of Section in case of tax withheld under
26Article 7. For purposes of applying this Section:

 

 

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1        (1) in the case of an individual, tax withheld from
2    compensation for the taxable year shall be deemed a payment
3    of estimated tax, and an equal part of such amount shall be
4    deemed paid on each installment date for such taxable year,
5    unless the taxpayer establishes the dates on which all
6    amounts were actually withheld, in which case the amounts
7    so withheld shall be deemed payments of estimated tax on
8    the dates on which such amounts were actually withheld;
9        (2) amounts timely paid by a partnership, Subchapter S
10    corporation, or trust on behalf of a partner, shareholder,
11    or beneficiary pursuant to subsection (f) of Section 502 or
12    Section 709.5 and claimed as a payment of estimated tax
13    shall be deemed a payment of estimated tax made on the last
14    day of the taxable year of the partnership, Subchapter S
15    corporation, or trust for which the income from the
16    withholding is made was computed; and
17        (3) all other amounts pursuant to Article 7 shall be
18    deemed a payment of estimated tax on the date the payment
19    is made to the taxpayer of the amount from which the tax is
20    withheld.
21    (g-5) Amounts withheld under the State Salary and Annuity
22Withholding Act. An individual who has amounts withheld under
23paragraph (10) of Section 4 of the State Salary and Annuity
24Withholding Act may elect to have those amounts treated as
25payments of estimated tax made on the dates on which those
26amounts are actually withheld.

 

 

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1    (i) Short taxable year. The application of this Section to
2taxable years of less than 12 months shall be in accordance
3with regulations prescribed by the Department.
4    The changes in this Section made by Public Act 84-127 shall
5apply to taxable years ending on or after January 1, 1986.
6(Source: P.A. 95-233, eff. 8-16-07.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.