State of Illinois
90th General Assembly
Legislation

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[ Introduced ]

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
HB1425 Engrossed                               LRB9003728KDks
 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
HB1425 Engrossed            -3-                LRB9003728KDks
 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,
HB1425 Engrossed            -4-                LRB9003728KDks
 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
HB1425 Engrossed            -5-                LRB9003728KDks
 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
HB1425 Engrossed            -6-                LRB9003728KDks
 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
HB1425 Engrossed            -7-                LRB9003728KDks
 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
HB1425 Engrossed            -8-                LRB9003728KDks
 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.

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