98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB1730

 

Introduced 2/15/2013, by Sen. William R. Haine

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/412  from Ch. 73, par. 1024

    Amends the Illinois Insurance Code. Provides that the Department of Insurance shall have a lien for the taxes, fees, charges, fines, penalties, interest, other charges, or any portion thereof, imposed or assessed pursuant to the Code, upon all the real and personal property of any company or person to whom the assessment or final order has been issued or whenever a tax return is filed without payment of the tax or penalty shown therein to be due, including all such property of such company or person acquired after receipt of such assessment, issuance of such order, or filing of such return. Sets forth provisions concerning final assessments, the termination of a lien, and jeopardy assessment liens. Provides that nothing in the provision concerning liens shall be construed to give the Department a preference over the rights of any bona fide purchaser, holder of a security interest, mechanics lienholder, mortgagee, or judgment lien creditor arising prior to the filing of a regular notice of lien or a notice of jeopardy assessment lien in the office of the recorder in the county in which the property subject to the lien is located. Makes other changes. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Section 412 as follows:
 
6    (215 ILCS 5/412)  (from Ch. 73, par. 1024)
7    Sec. 412. Refunds; penalties; collection.
8    (1) (a) Whenever it appears to the satisfaction of the
9    Director that because of some mistake of fact, error in
10    calculation, or erroneous interpretation of a statute of
11    this or any other state, any authorized company has paid to
12    him, pursuant to any provision of law, taxes, fees, or
13    other charges in excess of the amount legally chargeable
14    against it, during the 6 year period immediately preceding
15    the discovery of such overpayment, he shall have power to
16    refund to such company the amount of the excess or excesses
17    by applying the amount or amounts thereof toward the
18    payment of taxes, fees, or other charges already due, or
19    which may thereafter become due from that company until
20    such excess or excesses have been fully refunded, or upon a
21    written request from the authorized company, the Director
22    shall provide a cash refund within 120 days after receipt
23    of the written request if all necessary information has

 

 

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1    been filed with the Department in order for it to perform
2    an audit of the annual return for the year in which the
3    overpayment occurred or within 120 days after the date the
4    Department receives all the necessary information to
5    perform such audit. The Director shall not provide a cash
6    refund if there are insufficient funds in the Insurance
7    Premium Tax Refund Fund to provide a cash refund, if the
8    amount of the overpayment is less than $100, or if the
9    amount of the overpayment can be fully offset against the
10    taxpayer's estimated liability for the year following the
11    year of the cash refund request. Any cash refund shall be
12    paid from the Insurance Premium Tax Refund Fund, a special
13    fund hereby created in the State treasury.
14        (b) Beginning January 1, 2000 and thereafter, the
15    Department shall deposit a percentage of the amounts
16    collected under Sections 409, 444, and 444.1 of this Code
17    into the Insurance Premium Tax Refund Fund. The percentage
18    deposited into the Insurance Premium Tax Refund Fund shall
19    be the annual percentage. The annual percentage shall be
20    calculated as a fraction, the numerator of which shall be
21    the amount of cash refunds approved by the Director for
22    payment and paid during the preceding calendar year as a
23    result of overpayment of tax liability under Sections 409,
24    444, and 444.1 of this Code and the denominator of which
25    shall be the amounts collected pursuant to Sections 409,
26    444, and 444.1 of this Code during the preceding calendar

 

 

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1    year. However, if there were no cash refunds paid in a
2    preceding calendar year, the Department shall deposit 5% of
3    the amount collected in that preceding calendar year
4    pursuant to Sections 409, 444, and 444.1 of this Code into
5    the Insurance Premium Tax Refund Fund instead of an amount
6    calculated by using the annual percentage.
7        (c) Beginning July 1, 1999, moneys in the Insurance
8    Premium Tax Refund Fund shall be expended exclusively for
9    the purpose of paying cash refunds resulting from
10    overpayment of tax liability under Sections 409, 444, and
11    444.1 of this Code as determined by the Director pursuant
12    to subsection 1(a) of this Section. Cash refunds made in
13    accordance with this Section may be made from the Insurance
14    Premium Tax Refund Fund only to the extent that amounts
15    have been deposited and retained in the Insurance Premium
16    Tax Refund Fund.
17        (d) This Section shall constitute an irrevocable and
18    continuing appropriation from the Insurance Premium Tax
19    Refund Fund for the purpose of paying cash refunds pursuant
20    to the provisions of this Section.
21    (2) When any insurance company or any surplus line producer
22fails to file any tax return required under Sections 408.1,
23409, 444, 444.1 and 445 of this Code or Section 12 of the Fire
24Investigation Act on the date prescribed, including any
25extensions, there shall be added as a penalty $400 or 10% of
26the amount of such tax, whichever is greater, for each month or

 

 

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1part of a month of failure to file, the entire penalty not to
2exceed $2,000 or 50% of the tax due, whichever is greater.
3    (3) (a) When any insurance company or any surplus line
4    producer fails to pay the full amount due under the
5    provisions of this Section, Sections 408.1, 409, 444, 444.1
6    or 445 of this Code, or Section 12 of the Fire
7    Investigation Act, there shall be added to the amount due
8    as a penalty an amount equal to 10% of the deficiency.
9        (b) If such failure to pay is determined by the
10    Director to be wilful, after a hearing under Sections 402
11    and 403, there shall be added to the tax as a penalty an
12    amount equal to the greater of 50% of the deficiency or 10%
13    of the amount due and unpaid for each month or part of a
14    month that the deficiency remains unpaid commencing with
15    the date that the amount becomes due. Such amount shall be
16    in lieu of any determined under paragraph (a).
17    (4) Any insurance company or any surplus line producer
18which fails to pay the full amount due under this Section or
19Sections 408.1, 409, 444, 444.1 or 445 of this Code, or Section
2012 of the Fire Investigation Act is liable, in addition to the
21tax and any penalties, for interest on such deficiency at the
22rate of 12% per annum, or at such higher adjusted rates as are
23or may be established under subsection (b) of Section 6621 of
24the Internal Revenue Code, from the date that payment of any
25such tax was due, determined without regard to any extensions,
26to the date of payment of such amount.

 

 

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1    (5) The Director, through the Attorney General, may
2institute an action in the name of the People of the State of
3Illinois, in any court of competent jurisdiction, for the
4recovery of the amount of such taxes, fees, and penalties due,
5and prosecute the same to final judgment, and take such steps
6as are necessary to collect the same.
7    (6) In the event that the certificate of authority of a
8foreign or alien company is revoked for any cause or the
9company withdraws from this State prior to the renewal date of
10the certificate of authority as provided in Section 114, the
11company may recover the amount of any such tax paid in advance.
12Except as provided in this subsection, no revocation or
13withdrawal excuses payment of or constitutes grounds for the
14recovery of any taxes or penalties imposed by this Code.
15    (7) When an insurance company or domestic affiliated group
16fails to pay the full amount of any fee of $200 or more due
17under Section 408 of this Code, there shall be added to the
18amount due as a penalty the greater of $100 or an amount equal
19to 10% of the deficiency for each month or part of a month that
20the deficiency remains unpaid.
21    (8) The Department shall have a lien for the taxes, fees,
22charges, fines, penalties, interest, other charges, or any
23portion thereof, imposed or assessed pursuant to this Code,
24upon all the real and personal property of any company or
25person to whom the assessment or final order has been issued or
26whenever a tax return is filed without payment of the tax or

 

 

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1penalty shown therein to be due, including all such property of
2the company or person acquired after receipt of the assessment,
3issuance of the order, or filing of the return. The company or
4person is liable for the filing fee incurred by the Department
5for filing the lien and the filing fee incurred by the
6Department to file the release of that lien. The filing fees
7shall be paid to the Department in addition to payment of the
8tax, fee, charge, fine, penalty, interest, other charges, or
9any portion thereof, included in the amount of the lien.
10However, where the lien arises because of the issuance of a
11final order of the Director or tax assessment by the
12Department, the lien shall not attach and the notice referred
13to in this Section shall not be filed until all administrative
14proceedings or proceedings in court for review of the final
15order or assessment have terminated or the time for the taking
16thereof has expired without such proceedings being instituted.
17    Upon the granting of Department review after a lien has
18attached, the lien shall remain in full force except to the
19extent to which the final assessment may be reduced by a
20revised final assessment following the rehearing or review. The
21lien created by the issuance of a final assessment shall
22terminate, unless a notice of lien is filed, within 3 years
23after the date all proceedings in court for the review of the
24final assessment have terminated or the time for the taking
25thereof has expired without such proceedings being instituted,
26or (in the case of a revised final assessment issued pursuant

 

 

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1to a rehearing or review by the Department) within 3 years
2after the date all proceedings in court for the review of such
3revised final assessment have terminated or the time for the
4taking thereof has expired without such proceedings being
5instituted. Where the lien results from the filing of a tax
6return without payment of the tax or penalty shown therein to
7be due, the lien shall terminate, unless a notice of lien is
8filed, within 3 years after the date when the return is filed
9with the Department.
10    The time limitation period on the Department's right to
11file a notice of lien shall not run during any period of time
12in which the order of any court has the effect of enjoining or
13restraining the Department from filing such notice of lien. If
14the Department finds that a company or person is about to
15depart from the State, to conceal himself or his property, or
16to do any other act tending to prejudice or to render wholly or
17partly ineffectual proceedings to collect the amount due and
18owing to the Department unless such proceedings are brought
19without delay, or if the Department finds that the collection
20of the amount due from any company or person will be
21jeopardized by delay, the Department shall give the company or
22person notice of such findings and shall make demand for
23immediate return and payment of the amount, whereupon the
24amount shall become immediately due and payable. If the company
25or person, within 5 days after the notice (or within such
26extension of time as the Department may grant), does not comply

 

 

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1with the notice or show to the Department that the findings in
2the notice are erroneous, the Department may file a notice of
3jeopardy assessment lien in the office of the recorder of the
4county in which any property of the company or person may be
5located and shall notify the company or person of the filing.
6The jeopardy assessment lien shall have the same scope and
7effect as the statutory lien provided for in this Section. If
8the company or person believes that the company or person does
9not owe some or all of the tax for which the jeopardy
10assessment lien against the company or person has been filed,
11or that no jeopardy to the revenue in fact exists, the company
12or person may protest within 20 days after being notified by
13the Department of the filing of the jeopardy assessment lien
14and request a hearing, whereupon the Department shall hold a
15hearing in conformity with the provisions of this Code and,
16pursuant thereto, shall notify the company or person of its
17findings as to whether or not the jeopardy assessment lien will
18be released. If not, and if the company or person is aggrieved
19by this decision, the company or person may file an action for
20judicial review of the final determination of the Department in
21accordance with the Administrative Review Law. If, pursuant to
22such hearing (or after an independent determination of the
23facts by the Department without a hearing), the Department
24determines that some or all of the amount due covered by the
25jeopardy assessment lien is not owed by the company or person,
26or that no jeopardy to the revenue exists, or if on judicial

 

 

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1review the final judgment of the court is that the company or
2person does not owe some or all of the amount due covered by
3the jeopardy assessment lien against them, or that no jeopardy
4to the revenue exists, the Department shall release its
5jeopardy assessment lien to the extent of such finding of
6nonliability for the amount, or to the extent of such finding
7of no jeopardy to the revenue. The Department shall also
8release its jeopardy assessment lien against the company or
9person whenever the amount due and owing covered by the lien,
10plus any interest which may be due, are paid and the company or
11person has paid the Department in cash or by guaranteed
12remittance an amount representing the filing fee for the lien
13and the filing fee for the release of that lien. The Department
14shall file that release of lien with the recorder of the county
15where that lien was filed.
16    Nothing in this Section shall be construed to give the
17Department a preference over the rights of any bona fide
18purchaser, holder of a security interest, mechanics
19lienholder, mortgagee, or judgment lien creditor arising prior
20to the filing of a regular notice of lien or a notice of
21jeopardy assessment lien in the office of the recorder in the
22county in which the property subject to the lien is located.
23For purposes of this Section, "bona fide" shall not include any
24mortgage of real or personal property or any other credit
25transaction that results in the mortgagee or the holder of the
26security acting as trustee for unsecured creditors of the

 

 

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1company or person mentioned in the notice of lien who executed
2such chattel or real property mortgage or the document
3evidencing such credit transaction. The lien shall be inferior
4to the lien of general taxes, special assessments, and special
5taxes levied by any political subdivision of this State. In
6case title to land to be affected by the notice of lien or
7notice of jeopardy assessment lien is registered under the
8provisions of the Registered Titles (Torrens) Act, such notice
9shall be filed in the office of the Registrar of Titles of the
10county within which the property subject to the lien is
11situated and shall be entered upon the register of titles as a
12memorial or charge upon each folium of the register of titles
13affected by such notice, and the Department shall not have a
14preference over the rights of any bona fide purchaser,
15mortgagee, judgment creditor, or other lien holder arising
16prior to the registration of such notice. The regular lien or
17jeopardy assessment lien shall not be effective against any
18purchaser with respect to any item in a retailer's stock in
19trade purchased from the retailer in the usual course of the
20retailer's business.
21(Source: P.A. 93-32, eff. 7-1-03.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.