HB1552 94TH GENERAL ASSEMBLY

LRB094 07465 BDD 40394 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB1552

Introduced 2/10/2005, by Rep. JoAnn D. Osmond

SYNOPSIS AS INTRODUCED:

35 ILCS 5/911.2-5 new
35 ILCS 5/911.3

Amends the Illinois Income Tax Act. Sets forth procedures by which the Department of Revenue may withhold an income tax refund to pay a taxpayer's debt to a municipality or county.

FISCAL NOTE ACT MAY APPLY

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 Illinois Income Tax Act is amended by changing Section 911.3 and by adding Section 911.2-5 as follows:

(35 ILCS 5/911.2-5 new)

Sec. 911.2-5. Refunds withheld; debt claims of local governments.

(a) Definitions. As used in this Section:

"Debt" means:

(1) a parking citation of at least $20 that is unpaid and for which there has been no court appearance by the date specified in the citation or, if no date is specified, that is unpaid for at least 28 days;

(2) an unpaid fine, fee, restitution, or forfeiture of at least $20; and

(3) any other debt that is at least $20, except debt related to property taxes, if the debt has been reduced to a judgment or the municipality or county to which the debt is owed has provided the debtor reasonable notice and an opportunity to be heard with regards to the debt.

"Income tax" means any amount of income tax imposed on taxpayers under the laws of the State of Illinois, including additions to tax for penalties and interest.

"Debtor" means a person who owes a debt to a municipality or county.

"Refund" means a refund of overpaid income taxes imposed by the State of Illinois.

(b) In general. A municipality or county may:

(1) certify to the Director the existence of a debtor's debt; and

(2) request the Director to withhold any refund to which the debtor is entitled.

(c) Certification. A certification by a municipality or county to the Director must include:

(1) the full name and last known address of the debtor and any other names known to be used by the debtor;

(2) the social security number or federal tax identification number of the debtor; and

(3) the amount of the debt.

(d) Notification. As to any debtor due a refund, the Director must:

(1) notify the debtor that a municipality or county has provided certification of the existence of an debt;

(2) inform the debtor of the debt certified, including a statement showing the debt amount, a description of the debt, any interest, and any penalty;

(3) inform the debtor that failure to file a protest in accordance with subsection (e) of this Section shall constitute a waiver of any demand against this State for the amount certified;

(4) inform the debtor that the refund has been withheld and that the debt has been paid to the municipality or county as provided in subsection (i) of this Section;

(5) provide the debtor with notice of an opportunity to request a hearing to challenge the certification; and

(6) inform the debtor that the hearing may be requested under Section 910 of this Act.

(e) Protest of withholding. A debtor may protest the withholding of a refund pursuant to Section 910 of this Act (except that the protest must be filed within 30 days after the date of the Director's notice of certification under subsection (d) of this Section).

(f) Certification as prima facie evidence. If the debtor requests a hearing under Section 910 of this Act, the certification of the municipality or county is prima facie evidence of the correctness of the debt.

(g) Rights of spouses to refunds from joint returns. If a certification is based upon the debt of only one taxpayer and if the refund is based upon a joint personal income tax return, the nondebtor spouse shall have the right to:

(1) notification, as provided in subsection (d) of this Section;

(2) protest, as to the withholding of the nondebtor spouse's share of the refund, as provided in subsection (e) of this Section; and

(3) payment of his or her share of the refund, provided the amount of the overpayment refunded to the spouse shall not exceed the amount of the joint overpayment.

(h) Withholding and payment of refund. Upon receipt of a request for withholding in accordance with subsection (b) of this Section, the Director shall:

(1) withhold any refund that is certified by the tax officer;

(2) pay to the municipality or county the entire refund or the amount certified, whichever is less;

(3) pay any refund in excess of the amount certified to the debtor; and

(4) if a refund is less than the amount certified, withhold amounts from subsequent refunds due the debtor.

(i) Notice to the municipality or county. After receiving a certification from a municipality or county, the Director shall notify the municipality or county of the Director's determination that a withholding can or cannot be made.

(j) Director's authority. The Director has the authority to enter into agreements with the municipalities and counties relating to:

(1) procedures and methods to be employed by a municipality or county with respect to the operation of this Section;

(2) safeguards against the disclosure or inappropriate use of any information obtained or maintained pursuant to this Section that identifies, directly or indirectly, a particular taxpayer; and

(3) a minimum debt, amounts below which, in light of administrative expenses and efficiency, shall, in the Director's discretion, not be subject to the withholding procedures set forth in this Section.

(k) Administrative fee. The Director may charge and collect from a participating municipality and county a processing fee based upon the estimated amortized program costs and reviewed and adjusted yearly, if needed. This fee shall be based upon amounts withheld by the Department and not on amounts certified to the Department.

(l) Remedy not exclusive. The collection procedures under this Section are in addition to, and not in substitution for, any other remedy available by law.

(35 ILCS 5/911.3)

Sec. 911.3. Refunds withheld; order of honoring requests. The Department shall honor refund withholding requests in the following order:

(1) a refund withholding request to collect an unpaid State tax;

(2) a refund withholding request to collect certified past due child support amounts under Section 2505-650 of the Department of Revenue Law of the Civil Administrative Code of Illinois;

(3) a refund withholding request to collect any debt owed to the State;

(4) a refund withholding request made by the Secretary of the Treasury of the United States, or his or her delegate, to collect any tax liability arising from Title 26 of the United States Code;

(5) a refund withholding request pursuant to Section 911.2 or Section 911.2-5 of this Act; and

(6) a refund withholding request to collect certified past due fees owed to the Clerk of the Circuit Court as authorized under Section 2505-655 of the Department of Revenue Law of the Civil Administrative Code of Illinois.

(Source: P.A. 92-826, eff. 8-21-02; 93-836, eff. 1-1-05.)