820 ILCS 405/1404

(820 ILCS 405/1404) (from Ch. 48, par. 554)

Sec. 1404. Payments in lieu of contributions by nonprofit organizations.

A. For the year 1972 and for each calendar year thereafter, contributions shall accrue and become payable, pursuant to Section 1400, by each nonprofit organization (defined in Section 211.2) upon the wages paid by it with respect to employment after 1971, unless the nonprofit organization elects, in accordance with the provisions of this Section, to pay, in lieu of contributions, an amount equal to the amount of regular benefits and one-half the amount of extended benefits (defined in Section 409) paid to individuals, for any weeks which begin on or after the effective date of the election, on the basis of wages for insured work paid to them by such nonprofit organization during the effective period of such election. Notwithstanding the preceding provisions of this subsection and the provisions of subsection D, with respect to benefit years beginning prior to July 1, 1989, any adjustment after September 30, 1989 to the base period wages paid to the individual by any employer shall not affect the ratio for determining the payments in lieu of contributions of a nonprofit organization which has elected to make payments in lieu of contributions. Provided, however, that with respect to benefit years beginning on or after July 1, 1989, the nonprofit organization shall be required to make payments equal to 100% of regular benefits, including dependents' allowances, and 50% of extended benefits, including dependents' allowances, paid to an individual with respect to benefit years beginning during the effective period of the election, but only if the nonprofit organization: (a) is the last employer as provided in Section 1502.1 and (b) paid to the individual receiving benefits, wages for insured work during his base period. If the nonprofit organization described in this paragraph meets the requirements of (a) but not (b), with respect to benefit years beginning on or after July 1, 1989, it shall be required to make payments in an amount equal to 50% of regular benefits, including dependents' allowances, and 25% of extended benefits, including dependents' allowances, paid to an individual with respect to benefit years beginning during the effective period of the election.

1. Any employing unit which becomes a nonprofit organization on January 1, 1972, may elect to make payments in lieu of contributions for not less than one calendar year beginning with January 1, 1972, provided that it files its written election with the Director not later than January 31, 1972.

2. Any employing unit which becomes a nonprofit organization after January 1, 1972, may elect to make payments in lieu of contributions for a period of not less than one calendar year beginning as of the first day with respect to which it would, in the absence of its election, incur liability for the payment of contributions, provided that it files its written election with the Director not later than 30 days immediately following the end of the calendar quarter in which it becomes a nonprofit organization.

3. A nonprofit organization which has incurred liability for the payment of contributions for at least 2 calendar years and is not delinquent in such payment and in the payment of any interest or penalties which may have accrued, may elect to make payments in lieu of contributions beginning January 1 of any calendar year, provided that it files its written election with the Director prior to such January 1, and provided, further, that such election shall be for a period of not less than 2 calendar years.

4. An election to make payments in lieu of contributions shall not terminate any liability incurred by an employer for the payment of contributions, interest or penalties with respect to any calendar quarter (or month, as the case may be) which ends prior to the effective period of the election.

5. A nonprofit organization which has elected, pursuant to paragraph 1, 2, or 3, to make payments in lieu of contributions may terminate the effective period of the election as of January 1 of any calendar year subsequent to the required minimum period of the election only if, prior to such January 1, it files with the Director a written notice to that effect. Upon such termination, the organization shall become liable for the payment of contributions upon wages for insured work paid by it on and after such January 1 and, notwithstanding such termination, it shall continue to be liable for payments in lieu of contributions with respect to benefits paid to individuals on and after such January 1, with respect to benefit years beginning prior to July 1, 1989, on the basis of wages for insured work paid to them by the nonprofit organization prior to such January 1, and, with respect to benefit years beginning after June 30, 1989, if such employer was the last employer as provided in Section 1502.1 during a benefit year beginning prior to such January 1.

6. Written elections to make payments in lieu of contributions and written notices of termination of election shall be filed in such form and shall contain such information as the Director may prescribe. Upon the filing of such election or notice, the Director shall either order it approved, or, if it appears to the Director that the nonprofit organization has not filed such election or notice within the time prescribed, he shall order it disapproved. The Director shall serve notice of his order upon the nonprofit organization. The Director's order shall be final and conclusive upon the nonprofit organization unless, within 15 days after the date of mailing of notice thereof, the nonprofit organization files with the Director an application for its review, setting forth its reasons in support thereof. Upon receipt of an application for review within the time prescribed, the Director shall order it allowed, or shall order that it be denied, and shall serve notice upon the nonprofit organization of his order. All of the provisions of Section 1509, applicable to orders denying applications for review of determinations of employers' rates of contribution and not inconsistent with the provisions of this subsection, shall be applicable to an order denying an application for review filed pursuant to this subsection.

B. As soon as practicable following the close of each calendar quarter, the Director shall mail to each nonprofit organization which has elected to make payments in lieu of contributions a Statement of the amount due from it for the regular and one-half the extended benefits paid (or the amounts otherwise provided for in subsection A) during the calendar quarter, together with the names of its workers or former workers and the amounts of benefits paid to each of them during the calendar quarter, with respect to benefit years beginning prior to July 1, 1989, on the basis of wages for insured work paid to them by the nonprofit organization; or, with respect to benefit years beginning after June 30, 1989, if such nonprofit organization was the last employer as provided in Section 1502.1 with respect to a benefit year beginning during the effective period of the election. The amount due shall be payable, and the nonprofit organization shall make payment of such amount not later than 30 days after the date of mailing of the Statement. The Statement shall be final and conclusive upon the nonprofit organization unless, within 20 days after the date of mailing of the Statement, the nonprofit organization files with the Director an application for revision thereof. Such application shall specify wherein the nonprofit organization believes the Statement to be incorrect, and shall set forth its reasons for such belief. All of the provisions of Section 1508, applicable to applications for revision of Statements of Benefit Wages and Statements of Benefit Charges and not inconsistent with the provisions of this subsection, shall be applicable to an application for revision of a Statement filed pursuant to this subsection.

1. Payments in lieu of contributions made by any nonprofit organization shall not be deducted or deductible, in whole or in part, from the remuneration of individuals in the employ of the organization, nor shall any nonprofit organization require or accept any waiver of any right under this Act by an individual in its employ. The making of any such deduction or the requirement or acceptance of any such waiver is a Class A misdemeanor. Any agreement by an individual in the employ of any person or concern to pay all or any portion of a payment in lieu of contributions, required under this Act from a nonprofit organization, is void.

2. A nonprofit organization which fails to make any payment in lieu of contributions when due under the provisions of this subsection shall pay interest thereon at the rates specified in Section 1401. A nonprofit organization which has elected to make payments in lieu of contributions shall be subject to the penalty provisions of Section 1402. In the making of any payment in lieu of contributions or in the payment of any interest or penalties, a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to one cent.

3. All of the remedies available to the Director under the provisions of this Act or of any other law to enforce the payment of contributions, interest, or penalties under this Act, including the making of determinations and assessments pursuant to Section 2200, are applicable to the enforcement of payments in lieu of contributions and of interest and penalties, due under the provisions of this Section. For the purposes of this paragraph, the term "contribution" or "contributions" which appears in any such provision means "payment in lieu of contributions" or "payments in lieu of contributions." The term "contribution" which appears in Section 2800 also means "payment in lieu of contributions."

4. All of the provisions of Sections 2201 and 2201.1, applicable to adjustment or refund of contributions, interest and penalties erroneously paid and not inconsistent with the provisions of this Section, shall be applicable to payments in lieu of contributions erroneously made or interest or penalties erroneously paid by a nonprofit organization.

5. Payment in lieu of contributions shall be due with respect to any sum erroneously paid as benefits to an individual unless such sum has been recouped pursuant to Section 900 or has otherwise been recovered. If such payment in lieu of contributions has been made, the amount thereof shall be adjusted or refunded in accordance with the provisions of paragraph 4 and Section 2201 if recoupment or other recovery has been made.

6. A nonprofit organization which has elected to make payments in lieu of contributions and thereafter ceases to be an employer shall continue to be liable for payments in lieu of contributions with respect to benefits paid to individuals on and after the date it has ceased to be an employer, with respect to benefit years beginning prior to July 1, 1989, on the basis of wages for insured work paid to them by it prior to the date it ceased to be an employer, and, with respect to benefit years beginning after June 30, 1989, if such employer was the last employer as provided in Section 1502.1 prior to the date that it ceased to be an employer.

7. With respect to benefit years beginning prior to July 1, 1989, wages paid to an individual during his base period, by a nonprofit organization which elects to make payments in lieu of contributions, for less than full time work, performed during the same weeks in the base period during which the individual had other insured work, shall not be subject to payments in lieu of contributions (upon such employer's request pursuant to the regulation of the Director) so long as the employer continued after the end of the base period, and continues during the applicable benefit year, to furnish such less than full time work to the individual on the same basis and in substantially the same amount as during the base period. If the individual is paid benefits with respect to a week (in the applicable benefit year) after the employer has ceased to furnish the work hereinabove described, the nonprofit organization shall be liable for payments in lieu of contributions with respect to the benefits paid to the individual after the date on which the nonprofit organization ceases to furnish the work.

C. With respect to benefit years beginning prior to July 1, 1989, whenever benefits have been paid to an individual on the basis of wages for insured work paid to him by a nonprofit organization, and the organization incurred liability for the payment of contributions on some of the wages because only a part of the individual's base period was within the effective period of the organization's written election to make payments in lieu of contributions, the organization shall pay an amount in lieu of contributions which bears the same ratio to the total benefits paid to the individual as the total wages for insured work paid to him during the base period by the organization upon which it did not incur liability for the payment of contributions (for the aforesaid reason) bear to the total wages for insured work paid to the individual during the base period by the organization.

D. With respect to benefit years beginning prior to July 1, 1989, whenever benefits have been paid to an individual on the basis of wages for insured work paid to him by a nonprofit organization which has elected to make payments in lieu of contributions, and by one or more other employers, the nonprofit organization shall pay an amount in lieu of contributions which bears the same ratio to the total benefits paid to the individual as the wages for insured work paid to the individual during his base period by the nonprofit organization bear to the total wages for insured work paid to the individual during the base period by all of the employers. If the nonprofit organization incurred liability for the payment of contributions on some of the wages for insured work paid to the individual, it shall be treated, with respect to such wages, as one of the other employers for the purposes of this paragraph.

E. Two or more nonprofit organizations which have elected to make payments in lieu of contributions may file a joint application with the Director for the establishment of a group account, effective January 1 of any calendar year, for the purpose of sharing the cost of benefits paid on the basis of the wages for insured work paid by such nonprofit organizations, provided that such joint application is filed with the Director prior to such January 1. The application shall identify and authorize a group representative to act as the group's agent for the purposes of this paragraph, and shall be filed in such form and shall contain such information as the Director may prescribe. Upon his approval of a joint application, the Director shall, by order, establish a group account for the applicants and shall serve notice upon the group's representative of such order. Such account shall remain in effect for not less than 2 calendar years and thereafter until terminated by the Director for good cause or, as of the close of any calendar quarter, upon application by the group. Upon establishment of the account, the group shall be liable to the Director for payments in lieu of contributions in an amount equal to the total amount for which, in the absence of the group account, liability would have been incurred by all of its members; provided, with respect to benefit years beginning prior to July 1, 1989, that the liability of any member to the Director with respect to any payment in lieu of contributions, interest or penalties not paid by the group when due with respect to any calendar quarter shall be in an amount which bears the same ratio to the total benefits paid during such quarter on the basis of the wages for insured work paid by all members of the group as the total wages for insured work paid by such member during such quarter bear to the total wages for insured work paid during the quarter by all members of the group, and, with respect to benefit years beginning on or after July 1, 1989, that the liability of any member to the Director with respect to any payment in lieu of contributions, interest or penalties not paid by the group when due with respect to any calendar quarter shall be in an amount which bears the same ratio to the total benefits paid during such quarter to individuals with respect to whom any member of the group was the last employer as provided in Section 1502.1 as the total wages for insured work paid by such member during such quarter bear to the total wages for insured work paid during the quarter by all members of the group. With respect to calendar months and quarters beginning on or after January 1, 2013, the liability of any member to the Director with respect to any penalties that are assessed for failure to file a timely and sufficient report of wages and which are not paid by the group when due with respect to the calendar month or quarter, as the case may be, shall be in an amount which bears the same ratio to the total penalties due with respect to such month or quarter as the total wages for insured work paid by such member during such month or quarter bear to the total wages for insured work paid during the month or quarter by all members of the group. All of the provisions of this Section applicable to nonprofit organizations which have elected to make payments in lieu of contributions, and not inconsistent with the provisions of this paragraph, shall apply to a group account and, upon its termination, to each former member thereof. The Director shall by regulation prescribe the conditions for establishment, maintenance and termination of group accounts, and for addition of new members to and withdrawal of active members from such accounts.

F. Whenever service of notice is required by this Section, such notice may be given and be complete by depositing it with the United States Mail, addressed to the nonprofit organization (or, in the case of a group account, to its representative) at its last known address. If such organization is represented by counsel in proceedings before the Director, service of notice may be made upon the nonprofit organization by mailing the notice to such counsel.

(Source: P.A. 97-689, eff. 6-14-12.)