Public Act 93-0026

SB969 Enrolled                       LRB093 02878 SJM 02894 b

    AN ACT in relation to taxes.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  1. Short title. This Act may be cited as the Tax
Delinquency Amnesty Act.

    Section 5. Definitions. As used in this Act:
    "Department" means the Illinois Department of Revenue.
    "Rules" means any rules adopted or  forms  prescribed  by
the Department.
    "Taxable  period"  means any period of time for which any
tax is imposed by and owed to the State of Illinois.
    "Taxpayer" means any person, corporation, or other entity
subject to any tax,  except  for  the  motor  fuel  use  tax,
imposed  by  any  law of the State of Illinois and payable to
the State of Illinois.

    Section  10.  Amnesty  program.  The   Department   shall
establish  an amnesty program for all taxpayers owing any tax
imposed by reason of or pursuant to authorization by any  law
of the State of Illinois and collected by the Department.
    The amnesty program shall be for a period from October 1,
2003 through November 15, 2003.
    The amnesty program shall provide that, upon payment by a
taxpayer  of all taxes due from that taxpayer to the State of
Illinois for any taxable period ending after  June  30,  1983
and prior to July 1, 2002, the Department shall abate and not
seek  to  collect  any  interest  or  penalties  that  may be
applicable  and  the  Department  shall  not  seek  civil  or
criminal prosecution for any taxpayer for the period of  time
for  which  amnesty has been granted to the taxpayer. Failure
to pay all taxes due to the State for a taxable period  shall
invalidate  any amnesty granted under this Act. Amnesty shall
be granted only if all amnesty conditions  are  satisfied  by
the taxpayer.
    Amnesty shall not be granted to taxpayers who are a party
to  any  criminal  investigation  or to any civil or criminal
litigation that is pending in any circuit court or  appellate
court  or  the  Supreme  Court  of this State for nonpayment,
delinquency, or fraud in relation to any State tax imposed by
any law of the State of Illinois.
    Voluntary payments made under this Act shall be  made  by
cash, check, guaranteed remittance, or ACH debit.
    The   Department   shall  adopt  rules  as  necessary  to
implement the provisions of this Act.
    Except as otherwise provided in this Section,  all  money
collected  under  this  Act that would otherwise be deposited
into the General Revenue Fund shall be deposited as  follows:
(i)  one-half into the Common School Fund; (ii) one-half into
the General Revenue Fund. Two percent of all money  collected
under this Act shall be deposited by the State Treasurer into
the  Tax  Compliance  and Administration Fund and, subject to
appropriation, shall be used by the Department to cover costs
associated with the administration of this Act.

    Section 905.  The Uniform Penalty  and  Interest  Act  is
amended  by  changing  Sections  3-2, 3-3, 3-4, 3-5, 3-6, and
3-7.5 as follows:

    (35 ILCS 735/3-2) (from Ch. 120, par. 2603-2)
    Sec. 3-2.  Interest.
    (a)  Interest paid by the  Department  to  taxpayers  and
interest charged to taxpayers by the Department shall be paid
at  the  annual  rate determined by the Department. That rate
shall be the underpayment rate established under Section 6621
of the  Internal Revenue Code.
    (b)  The interest rate shall be adjusted on a  semiannual
basis,  on  January 1 and July 1, based upon the underpayment
rate going into effect on that January  1  or  July  1  under
Section 6621 of the Internal Revenue Code.
    (c)  This  subsection (c) is applicable to returns due on
and before  December  31,  2000.  Interest  shall  be  simple
interest  calculated  on a daily basis. Interest shall accrue
upon tax and penalty due.  If notice and demand is  made  for
the payment of any amount of tax due and if the amount due is
paid within 30 days after the date of such notice and demand,
interest  under  this Section on the amount so paid shall not
be imposed for the period after the date of  the  notice  and
demand.
    (c-5)  This subsection (c-5) is applicable to returns due
on  and  after  January  1,  2001.   Interest shall be simple
interest calculated on a daily basis.  Interest shall  accrue
upon  tax  due.  If notice and demand is made for the payment
of any amount of tax due and if the amount due is paid within
30 days after the date of the  notice  and  demand,  interest
under this Section on the amount so paid shall not be imposed
for the period after the date of the notice and demand.
    (d)  No  interest  shall  be paid upon any overpayment of
tax if the overpayment  is  refunded  or  a  credit  approved
within  90 days after the last date prescribed for filing the
original return, or within 90 days  of  the  receipt  of  the
processable  return,  or  within  90  days  after the date of
overpayment, whichever date is latest, as determined  without
regard  to  processing  time  by  the  Comptroller or without
regard to the date on which the  credit  is  applied  to  the
taxpayer's  account.  In  order  for an original return to be
processable for purposes of this Section, it must be  in  the
form  prescribed or approved by the Department, signed by the
person  authorized  by  law,  and  contain  all  information,
schedules, and support documents necessary to  determine  the
tax  due and to make allocations of tax as prescribed by law.
For the purposes of computing interest,  a  return  shall  be
deemed  to  be processable unless the Department notifies the
taxpayer that the return is not processable  within  90  days
after  the receipt of the return; however, interest shall not
accumulate for the period  following  this  date  of  notice.
Interest  on  amounts  refunded  or  credited pursuant to the
filing of an amended return or  claim  for  refund  shall  be
determined  from  the  due date of the original return or the
date of overpayment, whichever  is  later,  to  the  date  of
payment  by  the Department without regard to processing time
by the Comptroller or the date of credit by the Department or
without regard to the date on which the credit is applied  to
the  taxpayer's  account. If a claim for refund relates to an
overpayment attributable to a net loss carryback as  provided
by  Section  207  of the Illinois Income Tax Act, the date of
overpayment shall be the last day  of  the  taxable  year  in
which the loss was incurred.
    (e)  Interest  on  erroneous  refunds. Any portion of the
tax imposed by an Act to which this Act is applicable or  any
interest  or  penalty which has been erroneously refunded and
which is recoverable by the Department  shall  bear  interest
from  the date of payment of the refund. However, no interest
will be charged if the erroneous refund is for an amount less
than $500 and is due to a mistake of the Department.
    (f)  If a taxpayer has a tax liability that  is  eligible
for  amnesty  under  the  Tax Delinquency Amnesty Act and the
taxpayer fails  to  satisfy  the  tax  liability  during  the
amnesty  period  provided  for in that Act, then the interest
charged by the Department under this Section shall be imposed
at a rate that is 200% of the rate that  would  otherwise  be
imposed under this Section.
(Source: P.A. 91-803, eff. 1-1-01.)
    (35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
    Sec. 3-3.  Penalty for failure to file or pay.
    (a)  This  subsection (a) is applicable before January 1,
1996.  A penalty of 5% of the tax required to be shown due on
a return shall be imposed for failure to file the tax  return
on  or  before  the due date prescribed for filing determined
with regard for any extension of time for filing (penalty for
late filing or nonfiling).  If any  unprocessable  return  is
corrected  and  filed  within  21  days  after  notice by the
Department, the late filing or nonfiling  penalty  shall  not
apply.   If a penalty for late filing or nonfiling is imposed
in addition to a penalty for late payment, the total  penalty
due  shall  be  the  sum  of  the late filing penalty and the
applicable late payment penalty. Beginning on  the  effective
date  of this amendatory Act of 1995, in the case of any type
of tax return required  to  be  filed  more  frequently  than
annually,  when  the  failure  to  file  the tax return on or
before  the  date  prescribed  for  filing   (including   any
extensions) is shown to be nonfraudulent and has not occurred
in  the  2 years immediately preceding the failure to file on
the prescribed due  date,  the  penalty  imposed  by  Section
3-3(a) shall be abated.
    (a-5)  This subsection (a-5) is applicable to returns due
on  and  after  January 1, 1996 and on or before December 31,
2000. A penalty equal to 2% of the tax required to  be  shown
due  on  a return, up to a maximum amount of $250, determined
without regard to any part of the tax that is paid on time or
by any credit that was properly allowable  on  the  date  the
return was required to be filed, shall be imposed for failure
to  file  the tax return on or before the due date prescribed
for filing determined with regard for any extension  of  time
for  filing.  However,  if  any return is not filed within 30
days after notice of nonfiling mailed by  the  Department  to
the   last   known  address  of  the  taxpayer  contained  in
Department records, an additional  penalty  amount  shall  be
imposed  equal  to the greater of $250 or 2% of the tax shown
on the return.  However, the additional  penalty  amount  may
not  exceed  $5,000  and  is determined without regard to any
part of the tax that is paid on time or by  any  credit  that
was properly allowable on the date the return was required to
be  filed  (penalty  for  late  filing or nonfiling).  If any
unprocessable return is corrected and filed  within  30  days
after  notice by the Department, the late filing or nonfiling
penalty shall not apply.  If a penalty  for  late  filing  or
nonfiling  is  imposed  in  addition  to  a  penalty for late
payment, the total penalty due shall be the sum of  the  late
filing  penalty  and  the applicable late payment penalty. In
the case of any type of tax return required to be filed  more
frequently  than  annually,  when the failure to file the tax
return on or before the date prescribed for filing (including
any extensions) is shown to  be  nonfraudulent  and  has  not
occurred  in the 2 years immediately preceding the failure to
file on the prescribed  due  date,  the  penalty  imposed  by
Section 3-3(a-5) shall be abated.
    (a-10)  This  subsection  (a-10) is applicable to returns
due on and after January 1, 2001. A penalty equal  to  2%  of
the tax required to be shown due on a return, up to a maximum
amount of $250, reduced by any tax that is paid on time or by
any credit that was properly allowable on the date the return
was  required  to  be  filed, shall be imposed for failure to
file the tax return on or before the due date prescribed  for
filing  determined  with regard for any extension of time for
filing. However, if any return is not filed  within  30  days
after  notice  of  nonfiling  mailed by the Department to the
last known address of the taxpayer  contained  in  Department
records,  an additional penalty amount shall be imposed equal
to the greater of $250 or 2% of the tax shown on the  return.
However,  the additional penalty amount may not exceed $5,000
and is determined without regard to any part of the tax  that
is  paid on time or by any credit that was properly allowable
on the date the return was required to be filed (penalty  for
late  filing  or  nonfiling).  If any unprocessable return is
corrected and filed  within  30  days  after  notice  by  the
Department,  the  late  filing or nonfiling penalty shall not
apply.  If a penalty for late filing or nonfiling is  imposed
in  addition to a penalty for late payment, the total penalty
due shall be the sum of  the  late  filing  penalty  and  the
applicable  late  payment penalty. In the case of any type of
tax  return  required  to  be  filed  more  frequently   than
annually,  when  the  failure  to  file  the tax return on or
before  the  date  prescribed  for  filing   (including   any
extensions) is shown to be nonfraudulent and has not occurred
in  the  2 years immediately preceding the failure to file on
the prescribed due  date,  the  penalty  imposed  by  Section
3-3(a-10) shall be abated.
    (b)  This  subsection  is  applicable  before  January 1,
1998. A penalty of 15% of the tax shown on the return or  the
tax  required  to be shown due on the return shall be imposed
for failure to pay:
         (1)  the tax shown due on the return  on  or  before
    the  due  date  prescribed  for  payment  of that tax, an
    amount of underpayment of estimated  tax,  or  an  amount
    that  is  reported  in  an  amended  return other than an
    amended return timely filed as required by subsection (b)
    of Section 506 of the Illinois Income  Tax  Act  (penalty
    for late payment or nonpayment of admitted liability); or
         (2)  the full amount of any tax required to be shown
    due  on a return and which is not shown (penalty for late
    payment or nonpayment of additional liability), within 30
    days after a  notice  of  arithmetic  error,  notice  and
    demand,   or   a   final  assessment  is  issued  by  the
    Department. In the case of  a  final  assessment  arising
    following  a protest and hearing, the 30-day period shall
    not begin until all proceedings in court  for  review  of
    the  final  assessment  have terminated or the period for
    obtaining a review has expired without proceedings for  a
    review  having  been instituted.  In the case of a notice
    of tax liability that becomes a final assessment  without
    a  protest  and  hearing,  the  penalty  provided in this
    paragraph (2) shall be imposed at the expiration  of  the
    period provided for the filing of a protest.
    (b-5)  This  subsection  is  applicable to returns due on
and after January 1, 1998 and on or before December 31, 2000.
A penalty of 20% of the tax shown on the return  or  the  tax
required  to  be shown due on the return shall be imposed for
failure to pay:
         (1)  the tax shown due on the return  on  or  before
    the  due  date  prescribed  for  payment  of that tax, an
    amount of underpayment of estimated  tax,  or  an  amount
    that  is  reported  in  an  amended  return other than an
    amended return timely filed as required by subsection (b)
    of Section 506 of the Illinois Income  Tax  Act  (penalty
    for late payment or nonpayment of admitted liability); or
         (2)  the full amount of any tax required to be shown
    due  on a return and which is not shown (penalty for late
    payment or nonpayment of additional liability), within 30
    days after a  notice  of  arithmetic  error,  notice  and
    demand,   or   a   final  assessment  is  issued  by  the
    Department. In the case of  a  final  assessment  arising
    following  a protest and hearing, the 30-day period shall
    not begin until all proceedings in court  for  review  of
    the  final  assessment  have terminated or the period for
    obtaining a review has expired without proceedings for  a
    review  having  been instituted.  In the case of a notice
    of tax liability that becomes a final assessment  without
    a  protest  and  hearing,  the  penalty  provided in this
    paragraph (2) shall be imposed at the expiration  of  the
    period provided for the filing of a protest.
    (b-10)  This  subsection  (b-10) is applicable to returns
due on and after January 1, 2001.  A penalty shall be imposed
for failure to pay:
         (1)  the tax shown due on a return on or before  the
    due date prescribed for payment of that tax, an amount of
    underpayment  of  estimated  tax,  or  an  amount that is
    reported in an  amended  return  other  than  an  amended
    return  timely  filed  as  required  by subsection (b) of
    Section 506 of the Illinois Income Tax Act  (penalty  for
    late  payment  or nonpayment of admitted liability).  The
    amount of penalty imposed under this subsection (b-10)(1)
    shall be 2% of any amount that is paid no later  than  30
    days  after  the  due date, 5% of any amount that is paid
    later than 30 days after the due date and not later  than
    90  days  after  the  due date, 10% of any amount that is
    paid later than 90 days after the due date and not  later
    than  180  days after the due date, and 15% of any amount
    that is paid later than 180 days after the due  date.  If
    notice  and  demand is made for the payment of any amount
    of tax due and if the amount due is paid within  30  days
    after the date of the notice and demand, then the penalty
    for  late  payment  or  nonpayment  of admitted liability
    under this subsection (b-10)(1) on  the  amount  so  paid
    shall  not  accrue  for  the period after the date of the
    notice and demand.
         (2)  the full amount of any tax required to be shown
    due on a return and that is not shown (penalty  for  late
    payment or nonpayment of additional liability), within 30
    days  after  a  notice  of  arithmetic  error, notice and
    demand,  or  a  final  assessment  is   issued   by   the
    Department.   In  the  case of a final assessment arising
    following a protest and hearing, the 30-day period  shall
    not  begin  until  all proceedings in court for review of
    the final assessment have terminated or  the  period  for
    obtaining  a review has expired without proceedings for a
    review having been instituted.   The  amount  of  penalty
    imposed  under  this subsection (b-10)(2) shall be 20% of
    any amount that is not paid within the 30-day period.  In
    the case of a notice of  tax  liability  that  becomes  a
    final  assessment  without  a  protest  and  hearing, the
    penalty provided in this subsection  (b-10)(2)  shall  be
    imposed  at the expiration of the period provided for the
    filing of a protest.
    (c)  For purposes of  the  late  payment  penalties,  the
basis of the penalty shall be the tax shown or required to be
shown  on  a  return, whichever is applicable, reduced by any
part of the tax which is paid on time and by any credit which
was properly allowable on the date the return was required to
be filed.
    (d)  A penalty shall be applied to the tax required to be
shown even if that amount is less than the tax shown  on  the
return.
    (e)  This  subsection  (e)  is  applicable to returns due
before January 1,  2001.  If  both  a  subsection  (b)(1)  or
(b-5)(1)  penalty and a subsection (b)(2) or (b-5)(2) penalty
are assessed against the same return, the  subsection  (b)(2)
or  (b-5)(2)  penalty  shall  be  assessed  against  only the
additional tax found to be due.
    (e-5)  This subsection (e-5) is applicable to returns due
on and after January 1, 2001. If both a subsection  (b-10)(1)
penalty  and  a  subsection  (b-10)(2)  penalty  are assessed
against the same return,  the  subsection  (b-10)(2)  penalty
shall be assessed against only the additional tax found to be
due.
    (f)  If  the  taxpayer has failed to file the return, the
Department shall determine the correct tax according  to  its
best  judgment  and  information, which amount shall be prima
facie evidence of the correctness of the tax due.
    (g)  The time within which to file a  return  or  pay  an
amount  of  tax  due without imposition of a penalty does not
extend the time within which to file a protest to a notice of
tax liability or a notice of deficiency.
    (h)  No return shall be determined  to  be  unprocessable
because  of  the omission of any information requested on the
return pursuant to Section  2505-575  of  the  Department  of
Revenue Law (20 ILCS 2505/2505-575).
    (i)  If  a  taxpayer has a tax liability that is eligible
for amnesty under the Tax Delinquency  Amnesty  Act  and  the
taxpayer  fails  to  satisfy  the  tax  liability  during the
amnesty period provided for in that  Act,  then  the  penalty
imposed by the Department under this Section shall be imposed
in  an amount that is 200% of the amount that would otherwise
be imposed under this Section.
(Source: P.A.  91-239,  eff.  1-1-00;  91-803,  eff.  1-1-01;
92-742, eff. 7-25-02.)

    (35 ILCS 735/3-4) (from Ch. 120, par. 2603-4)
    Sec.  3-4.   Penalty  for   failure   to   file   correct
information returns.
    (a)  Failure   to  file  correct  information  returns  -
imposition of penalty.
         (1)  In general. Unless otherwise provided in a  tax
    Act,  in the case of a failure described in paragraph (2)
    of this subsection (a) by any person with respect  to  an
    information return, that person shall pay a penalty of $5
    for  each  return  or statement with respect to which the
    failure occurs, but the  total  amount  imposed  on  that
    person  for  all  such  failures during any calendar year
    shall not exceed $25,000.
         (2)  Failures  subject  to  penalty.  The  following
    failures are subject to the penalty imposed in  paragraph
    (1) of this subsection (a):
              (A)  any  failure to file an information return
         with the Department on or before the required filing
         date, or
              (B)  any  failure  to  include   all   of   the
         information  required  to  be shown on the return or
         the inclusion of incorrect information.
    (b)  Reduction where correction in specified period.
         (1)  Correction  within  60  days.  If  any  failure
    described in subsection (a) (2) is  corrected  within  60
    days after the required filing date:
              (A)  the  penalty  imposed  by  subsection  (a)
         shall be reduced by 50%; and
              (B)  the total amount imposed on the person for
         all such failures during any calendar year which are
         so  corrected  shall  not  exceed 50% of the maximum
         prescribed in subsection (a) (1).
    (c)  Information return defined. An information return is
any tax return required by a tax Act to  be  filed  with  the
Department  that  does  not, by law, require the payment of a
tax liability.
    (d)  If a taxpayer has a tax liability that  is  eligible
for  amnesty  under  the  Tax Delinquency Amnesty Act and the
taxpayer fails  to  satisfy  the  tax  liability  during  the
amnesty  period  provided  for  in that Act, then the penalty
imposed by the Department under this Section shall be imposed
in an amount that is 200% of the amount that would  otherwise
be imposed under this Section.
(Source: P.A. 87-205.)

    (35 ILCS 735/3-5) (from Ch. 120, par. 2603-5)
    Sec. 3-5.  Penalty for negligence.
    (a)  If   any   return  or  amended  return  is  prepared
negligently, but without intent to  defraud,  and  filed,  in
addition  to  any  penalty  imposed under Section 3-3 of this
Act, a penalty shall be imposed in an amount equal to 20%  of
any resulting deficiency.
    (b)  Negligence includes any failure to make a reasonable
attempt  to  comply  with  the  provisions of any tax Act and
includes careless, reckless, or intentional disregard of  the
law or regulations.
    (c)  No penalty shall be imposed under this Section if it
is  shown  that  failure to comply with the tax Act is due to
reasonable  cause.   A  taxpayer  is  not  negligent  if  the
taxpayer shows substantial authority to support the return as
filed.
    (d)  If a taxpayer has a tax liability that  is  eligible
for  amnesty  under  the  Tax Delinquency Amnesty Act and the
taxpayer fails  to  satisfy  the  tax  liability  during  the
amnesty  period  provided  for  in that Act, then the penalty
imposed by the Department shall be imposed in an amount  that
is  200%  of  the  amount  that would otherwise be imposed in
accordance with this Section.
(Source: P.A. 87-205; 87-1189.)

    (35 ILCS 735/3-6) (from Ch. 120, par. 2603-6)
    Sec. 3-6.  Penalty for fraud.
    (a)  If any return or amended return is filed with intent
to defraud, in addition to any penalty imposed under  Section
3-3  of  this  Act,  a  penalty shall be imposed in an amount
equal to 50% of any resulting deficiency.
    (b)  If any claim is filed  with  intent  to  defraud,  a
penalty  shall  be  imposed  in an amount equal to 50% of the
amount fraudulently claimed for credit or refund.
    (c)  If a taxpayer has a tax liability that  is  eligible
for  amnesty  under  the  Tax Delinquency Amnesty Act and the
taxpayer fails  to  satisfy  the  tax  liability  during  the
amnesty  period  provided  for  in that Act, then the penalty
imposed by the Department under this Section shall be imposed
in an amount that is 200% of the amount that would  otherwise
be imposed under this Section.
(Source: P.A. 87-205.)

    (35 ILCS 735/3-7.5)
    Sec. 3-7.5.  Bad check penalty.
    (a)  In  addition  to  any other penalty provided in this
Act, a penalty of $25 shall be  imposed  on  any  person  who
issues  a  check or other draft to the Department that is not
honored upon presentment.  The  penalty  imposed  under  this
Section  shall  be deemed assessed at the time of presentment
of the check or other draft and  shall  be  treated  for  all
purposes, including collection and allocation, as part of the
tax  or  other  liability  for which the check or other draft
represented payment.
    (b)  If a taxpayer has a tax liability that  is  eligible
for  amnesty  under  the  Tax Delinquency Amnesty Act and the
taxpayer fails  to  satisfy  the  tax  liability  during  the
amnesty  period  provided  for  in that Act, then the penalty
imposed by the Department under this Section shall be imposed
in an amount that is 200% of the amount that would  otherwise
be imposed under this Section.
(Source: P.A. 91-803, eff. 1-1-01.)

    Section 999.  Effective date.  This Act takes effect upon
becoming law.