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90_HB1425eng
35 ILCS 735/3-7 from Ch. 120, par. 2603-7
Amends the Uniform Penalty and Interest Act. Provides
that if a person fails to comply with the bonding
requirements prescribed for filing under the Administrative
Review Law an action to review a final assessment or revised
final assessment within the 20-day period, the Department of
Revenue shall file a motion to dismiss and the court shall
dismiss the action unless the person filing the action
complies with the bonding requirements within 30 days after
the filing of the Department's motion to dismiss. Provides
that these bonding provisions shall not apply to the review
of a final assessment or revised final assessment relating to
any trust tax imposed in accordance with the Illinois Income
Tax Act.
LRB9003728KDks
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1 AN ACT to amend the Uniform Penalty and Interest Act by
2 changing Section 3-7.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Uniform Penalty and Interest Act is
6 amended by changing Section 3-7 as follows:
7 (35 ILCS 735/3-7) (from Ch. 120, par. 2603-7)
8 Sec. 3-7. Personal Liability Penalty.
9 (a) Any officer or employee of any taxpayer subject to
10 the provisions of a tax Act administered by the Department
11 who has the control, supervision or responsibility of filing
12 returns and making payment of the amount of any trust tax
13 imposed in accordance with that Act and who wilfully fails to
14 file the return or make the payment to the Department or
15 wilfully attempts in any other manner to evade or defeat the
16 tax shall be personally liable for a penalty equal to the
17 total amount of tax unpaid by the taxpayer including interest
18 and penalties thereon. The Department shall determine a
19 penalty due under this Section according to its best judgment
20 and information, and that determination shall be prima facie
21 correct and shall be prima facie evidence of a penalty due
22 under this Section. Proof of that determination by the
23 Department shall be made at any hearing before it or in any
24 legal proceeding by reproduced copy or computer printout of
25 the Department's record relating thereto in the name of the
26 Department under the certificate of the Director of Revenue.
27 If reproduced copies of the Department's records are offered
28 as proof of that determination, the Director must certify
29 that those copies are true and exact copies of records on
30 file with the Department. If computer print-outs of the
31 Department's records are offered as proof of such
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1 determination, the Director must certify that those computer
2 print-outs are true and exact representations of records
3 properly entered into standard electronic computing
4 equipment, in the regular course of the Department's
5 business, at or reasonably near the time of the occurrence of
6 the facts recorded, from trustworthy and reliable
7 information. That certified reproduced copy or certified
8 computer print-out shall without further proof, be admitted
9 into evidence before the Department or in any legal
10 proceeding and shall be prima facie proof of the correctness
11 of the amount of tax or penalty due.
12 (b) The Department shall issue a notice of penalty
13 liability for the amount claimed by the Department pursuant
14 to this Section. Procedures for protest and review of a
15 notice of penalty liability issued pursuant to this Section
16 and assessment of the penalty due hereunder shall be the same
17 as those prescribed for protest and review of a notice of tax
18 liability or a notice of deficiency, as the case may be, and
19 the assessment of tax liability under the Act imposing that
20 liability.
21 (b-5) Any person filing an action under the
22 Administrative Review Law to review a final assessment or
23 revised final assessment (except a final assessment or
24 revised final assessment relating to any trust tax imposed in
25 accordance with the Illinois Income Tax Act) issued by the
26 Department under this Section shall, within 20 days after
27 filing the complaint, file a bond with good and sufficient
28 surety or sureties residing in this State or licensed to do
29 business in this State, or instead of bond, obtain an order
30 from the court imposing a lien upon the plaintiff's property
31 as hereinafter provided. If the person filing the complaint
32 fails to comply with this bonding requirement within 20 days
33 after filing the complaint, the Department shall file a
34 motion to dismiss and the court shall dismiss the action
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1 unless the person filing the action complies with the bonding
2 requirements set out with this provision within 30 days after
3 the filing of the Department's motion to dismiss. A court,
4 on its own motion or on motion of the Department, shall
5 dismiss an action under the Administrative Review Law to
6 review a final assessment or revised final assessment issued
7 by the Department under this Section (i) unless the plaintiff
8 files with the court, within 20 days after the filing of the
9 complaint and the issuance of the summons in the action, a
10 bond with good and sufficient surety or sureties residing in
11 this State or licensed to do business in this State or (ii)
12 unless the court, in place of the bond and with plaintiff's
13 consent, enters an order imposing a lien upon the plaintiff's
14 property as provided in this subsection.
15 Upon dismissal of a complaint for failure to comply with
16 this subsection, the court shall enter judgment against the
17 taxpayer and in favor of the Department in the amount of the
18 final assessment or revised final assessment, together with
19 any interest that has accrued since the Department issued the
20 final assessment or revised final assessment, and for costs.
21 The judgment is enforceable as other judgments for the
22 payment of money.
23 The amount of the bond shall be fixed and approved by the
24 court, but shall not be less than the amount of the tax and
25 penalty claimed to be due by the Department in its final
26 assessment or revised final assessment to the person filing
27 the bond, plus the amount of interest due from that person to
28 the Department at the time when the Department issued its
29 final assessment or revised final assessment to that person.
30 The bond must be executed in favor of the Department and
31 conditioned on the taxpayer's payment within 30 days after
32 termination of the proceedings for judicial review of the
33 amount of tax, penalty, and interest found by the court to be
34 due in those proceedings. The bond, when filed and approved,
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1 is, from that time until 2 years after termination of the
2 proceedings for judicial review in which the bond is filed, a
3 lien against the real estate situated in the county in which
4 the bond is filed of the person filing the bond and of the
5 surety or sureties on the bond, until the condition of the
6 bond is complied with or until the bond is canceled as
7 provided in this subsection. The lien does not apply,
8 however, to the real property of a corporate surety duly
9 licensed to do business in this State. If the person filing
10 the bond fails to keep its condition, the bond is forfeited,
11 and the Department may institute an action upon the bond in
12 its own name for the entire amount of the bond and costs. An
13 action upon the bond is in addition to any other remedy
14 provided by law. If the person filing the bond complies with
15 its condition or if, in the proceedings for judicial review
16 in which the bond is filed, the court determines that no tax,
17 penalty, or interest is due, the bond shall be canceled by
18 the issuer of the bond.
19 If the court finds in a particular case that the
20 plaintiff cannot furnish a satisfactory surety or sureties
21 for the kind of bond required in this subsection, the court
22 may relieve the plaintiff of the obligation of filing a bond
23 if, upon the timely application of the plaintiff for a lien
24 in place of a bond and accompanying proof, the court is
25 satisfied that a lien would secure the assessment as well as
26 would a bond. Upon that finding, the court shall enter an
27 order subjecting the plaintiff's real and personal property
28 (including subsequently acquired property) situated in the
29 county in which the order is entered to a lien in favor of
30 the Department. The lien shall be for the amount of the tax
31 and penalty claimed to be due by the Department in its final
32 assessment or revised final assessment, plus the amount of
33 interest due from that person to the Department at the time
34 when the Department issued its final assessment or revised
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1 final assessment to that person. The lien shall continue
2 until the court determines in the proceedings for judicial
3 review that no tax, penalty, or interest is due, or until the
4 plaintiff pays to the Department the tax, penalty, and
5 interest secured by the lien. In its discretion, the court
6 may impose a lien regardless of the ratio of the taxpayer's
7 assets to the final assessment or revised final assessment
8 plus the amount of the interest and penalty. This subsection
9 does not give the Department a preference over the rights of
10 a bona fide purchaser, mortgagee, judgment creditor, or other
11 lien holder arising before the entry of the order creating
12 the lien in favor of the Department. "Bona fide", as used in
13 this subsection, does not include a mortgage of real or
14 personal property or other credit transaction that results in
15 the mortgagee or the holder of the security acting as trustee
16 for unsecured creditors of the taxpayer who executed the
17 chattel or real property mortgage or the document evidencing
18 the credit transaction. The lien is inferior to the lien of
19 general taxes, special assessments, and special taxes levied
20 by a political subdivision of this State. The lien is not
21 effective against a purchaser with respect to an item in a
22 retailer's stock in trade purchased from the retailer in the
23 usual course of the retailer's business. The lien may not be
24 enforced against the household effects, wearing apparel,
25 books, or tools or implements of a trade or profession kept
26 for use by any person. The lien is not effective against real
27 property unless and until a certified copy or memorandum of
28 such order is recorded in the Office of the Recorder of Deeds
29 for the county or counties in which the property is located.
30 The lien is not effective against real property whose title
31 is registered under the provisions of the Registered Titles
32 (Torrens) Act until the provisions of Section 85 of that Act
33 are complied with.
34 Service upon the Director of Revenue or the Assistant
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1 Director of Revenue of summons issued in an action to review
2 a final administrative decision of the Department is service
3 upon the Department. The Department shall certify the record
4 of its proceedings if the taxpayer pays to it 75¢ per page of
5 testimony taken before the Department and 25¢ per page of all
6 other matters contained in the record, except that these
7 charges may be waived when the Department is satisfied that
8 the aggrieved party is a poor person who cannot afford to pay
9 the charges. If payment for the record is not made by the
10 taxpayer within 30 days after notice from the Department or
11 the Attorney General of the cost, the court in which the
12 proceeding is pending, on motion of the Department, shall
13 dismiss the complaint and (when the administrative decision
14 as to which the action for judicial review was filed is a
15 final assessment or revised final assessment) shall enter
16 judgment against the taxpayer and in favor of the Department
17 for the amount of tax and penalty shown by the Department's
18 final assessment or revised final assessment to be due, plus
19 interest as provided for in this Act from the date when the
20 liability upon which the interest accrued became delinquent
21 until the entry of the judgment in the action for judicial
22 review under the Administrative Review Law, and also for
23 costs.
24 (c) The personal liability imposed by this Section shall
25 survive the dissolution of a partnership, limited liability
26 company, or corporation. No notice of penalty liability
27 shall be issued after the expiration of 3 years after the
28 date all proceedings in court for the review of any final or
29 revised final assessments issued against a taxpayer which
30 constitute the basis of such penalty liability have
31 terminated or the time for the taking thereof has expired
32 without such proceedings being instituted or after the
33 expiration of 3 years after the date a return is filed with
34 the Department by a taxpayer in cases where the return
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1 constitutes the basis of such liability. Interest shall
2 continue to accrue on that portion of the penalty imposed by
3 this Section which represents the tax unpaid by the taxpayer
4 at the same rate and in the same amount as interest accrues
5 on the tax unpaid by the taxpayer.
6 (d) In addition to any other remedy provided for by the
7 laws of this State, and provided that no hearing or
8 proceeding for review is pending, any Section of a tax Act
9 which provides a means for collection of taxes shall in the
10 same manner and to the same extent provide a means for the
11 collection of the penalty imposed by this Section. The
12 procedures for the filing of an action for collection of the
13 penalty imposed by this Section shall be the same as those
14 prescribed by a tax Act for the filing of an action for
15 collection of the tax assessed under that Act. The time
16 limitation period on the Department's right to bring suit to
17 recover the amount of such tax, or portion thereof, or
18 penalty or interest from such person, or if deceased or
19 incompetent to file a claim thereof against his estate, shall
20 not run during: (1) any period of time in which the order of
21 any Court has the effect of enjoining or restraining the
22 Department from bringing such suit or claim against such
23 person, or (2) any period of time in which the order of the
24 Court has the effect of enjoining or restraining the
25 Department from bringing suit or initiating other proper
26 proceedings for the collection of such amounts from the
27 taxpayer, or (3) any period of time the person departs from
28 and remains out of the State; but the foregoing provisions
29 concerning absence from the State shall not apply to any case
30 in which, at the time when a tax or penalty becomes due under
31 this Act, the person allegedly liable therefor is not a
32 resident of this State.
33 (e) For the purposes of this Section, "officer or
34 employee of any taxpayer" includes a partner of a
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1 partnership, a manager or member of a limited liability
2 corporation, and a member of a registered limited liability
3 partnership.
4 (f) A trust tax is any tax for which an amount is
5 collected or withheld by a taxpayer from another person, and
6 any tax for which an amount is required to be collected or
7 withheld by a taxpayer from another person, regardless of
8 whether it is in fact collected or withheld.
9 (g) The personal liability imposed by this Section is in
10 addition to liability incurred by a partner of a partnership
11 or limited liability partnership resulting from the issuance
12 of a notice of tax liability issued to the partnership or
13 limited liability partnership.
14 (Source: P.A. 88-480; 88-683, eff. 1-24-95; 89-399, eff.
15 8-20-95; 89-626, eff. 8-9-96.)
16 Section 99. Effective date. This Act takes effect upon
17 becoming law.