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Public Act 103-0966 | ||||
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AN ACT concerning revenue. | ||||
Be it enacted by the People of the State of Illinois, | ||||
represented in the General Assembly: | ||||
Section 5. The Retailers' Occupation Tax Act is amended by | ||||
changing Section 2-10.5 as follows: | ||||
(35 ILCS 120/2-10.5) | ||||
Sec. 2-10.5. Direct payment program; purchaser's providing | ||||
of permit to retailer; retailer relieved of collecting use tax | ||||
and local retailers' occupation tax reimbursements from | ||||
purchaser; direct payment of retailers' occupation tax and | ||||
local retailers' occupation tax by purchaser. | ||||
(a) Beginning on July 1, 2001 there is established in this | ||||
State a Direct Payment Program to be administered by the | ||||
Department. The Department shall issue a Direct Pay Permit to | ||||
applicants who have been approved to participate in the Direct | ||||
Payment Program. Each person applying to participate in the | ||||
Direct Payment Program must demonstrate (1) the applicant's | ||||
ability to comply with the retailers' occupation tax laws and | ||||
the use tax laws in effect in this State and that the | ||||
applicant's accounting system will reflect the proper amount | ||||
of tax due, (2) that the applicant has a valid business purpose | ||||
for participating in the Direct Payment Program, and (3) how | ||||
the applicant's participation in the Direct Payment Program |
will benefit tax compliance. Application shall be made on | ||
forms provided by the Department and shall contain information | ||
as the Department may reasonably require. The Department shall | ||
approve or deny an applicant within 90 days after the | ||
Department's receipt of the application, unless the Department | ||
makes a written request for additional information from the | ||
applicant. | ||
(b) A person who has been approved for the Direct Payment | ||
Program and who has been issued a Direct Pay Permit by the | ||
Department is relieved of paying tax to a retailer when | ||
purchasing tangible personal property for use or consumption, | ||
except as provided in subsection (d), by providing that | ||
retailer a copy of that Direct Pay Permit. A retailer who | ||
accepts a copy of a customer's Direct Pay Permit is relieved of | ||
the obligation to remit the tax imposed by this Act on the | ||
transaction. References in this Section to "the tax imposed by | ||
this Act" include any local occupation taxes administered by | ||
the Department that would be incurred on the retail sale. | ||
(c) Once the holder of a Direct Pay Permit uses that Permit | ||
to relieve the Permit holder from paying tax to a particular | ||
retailer, the holder must use its Permit for all purchases, | ||
except as provided in subsection (d), from that retailer for | ||
so long as the Permit is valid. | ||
(d) Direct Pay Permits are not valid and shall not be used | ||
for sales or purchases of: | ||
(1) food or beverage; |
(2) tangible personal property required to be titled | ||
or registered with an agency of government; or | ||
(3) any transactions subject to the Service Occupation | ||
Tax Act or Service Use Tax Act. | ||
(e) Direct Pay Permits are not assignable and are not | ||
transferable. As an illustration, a construction contractor | ||
shall not make purchases using a customer's Direct Pay Permit. | ||
(f) A Direct Pay Permit is valid until it is revoked by the | ||
Department or until the holder notifies the Department in | ||
writing that the holder is withdrawing from the Direct Payment | ||
Program. A Direct Pay Permit can be revoked by the Department, | ||
after notice and hearing, if the holder violates any provision | ||
of this Act, any provision of the Illinois Use Tax Act, or any | ||
provision of any Act imposing a local retailers' occupation | ||
tax administered by the Department. | ||
(g) The holder of a Direct Pay Permit who has been relieved | ||
of paying tax to a retailer on a purchase for use or | ||
consumption by representing to that retailer that it would pay | ||
all applicable taxes directly to the Department shall pay | ||
those taxes to the Department not later than the 20th day of | ||
the month following the month in which the purchase was made. | ||
Permit holders making such purchases are subject to all | ||
provisions of this Act, and the tax must be reported and paid | ||
as retailers' occupation tax in the same manner that the | ||
retailer from whom the purchases were made would have reported | ||
and paid it, including any local retailers' occupation taxes |
applicable to that retail sale. Notwithstanding any other | ||
provision of this Act, Permit holders shall make all payments | ||
to the Department through the use of electronic funds | ||
transfer. | ||
(h) By March 31, 2025, and by March 31 of each year | ||
thereafter, each holder of a Direct Pay Permit shall review | ||
its purchase activity to verify that the purchases made during | ||
the 12-month period ending on December 31 of the immediately | ||
preceding calendar year were sourced correctly and that the | ||
correct tax rate was applied. If the holder of the Direct Pay | ||
Permit discovers an error in sourcing or the tax rate during | ||
the review process, then, by April 20 of the calendar year in | ||
which the review under this subsection occurs, the holder of | ||
the Direct Pay Permit shall file an amended return to correct | ||
the error. If, for any 12-month review period under this | ||
subsection, a holder of a Direct Pay Permit fails to properly | ||
verify purchase activity and correct sourcing and tax rate | ||
errors as required by this subsection and the rules adopted by | ||
the Department, then the Direct Pay Permit holder is liable to | ||
pay a penalty of $6,000 to the Department, for deposit into the | ||
Tax Compliance and Administration Fund. However, the penalty | ||
under this subsection shall not be imposed if the Department | ||
finds that at least 95% of the Direct Pay Permit holder's | ||
transactions for the applicable 12-month review period are | ||
correctly sourced and the correct taxes have been remitted or | ||
the permit holder acted with ordinary business care and |
prudence. For the purposes of this subsection, ordinary | ||
business care and prudence shall be determined in accordance | ||
with Section 3-8 of the Uniform Penalty and Interest Act. The | ||
Department may adopt rules to administer the penalties under | ||
this Section. | ||
(Source: P.A. 92-484, eff. 8-23-01.) | ||
Section 99. Effective date. This Act takes effect upon | ||
becoming law. |