(625 ILCS 5/2-124) (from Ch. 95 1/2, par. 2-124)

Sec. 2-124. Audits, interest and penalties.

(a) Audits. The Secretary of State or employees and agents designated by him, may audit the books, records, tax returns, reports, and any and all other pertinent records or documents of any person licensed or registered, or required to be licensed or registered, under any provisions of this Act, for the purpose of determining whether such person has not paid any fees or taxes required to be paid to the Secretary of State and due to the State of Illinois. For purposes of this Section, "person" means an individual, corporation, or partnership, or an officer or an employee of any corporation, including a dissolved corporation, or a member or an employee of any partnership, who as an officer, employee, or member under a duty to perform the act in respect to which the violation occurs.

(b) Joint Audits. The Secretary of State may enter into reciprocal audit agreements with officers, agents or agencies of another State or States, for joint audits of any person subject to audit under this Act.

(c) Special Audits. If the Secretary of State is not satisfied with the books, records and documents made available for an audit, or if the Secretary of State is unable to determine therefrom whether any fees or taxes are due to the State of Illinois, or if there is cause to believe that the person audited has declined or refused to supply the books, records and documents necessary to determine whether a deficiency exists, the Secretary of State may either seek a court order for production of any and all books, records and documents he deems relevant and material, or, in his discretion, the Secretary of State may instead give written notice to such person requiring him to produce any and all books, records and documents necessary to properly audit and determine whether any fees or taxes are due to the State of Illinois. If such person fails, refuses or declines to comply with either the court order or written notice within the time specified, the Secretary of State shall then order a special audit at the expense of the person affected. Upon completion of the special audit, the Secretary of State shall determine if any fees or taxes required to be paid under this Act have not been paid, and make an assessment of any deficiency based upon the books, records and documents available to him, and in an assessment, he may rely upon records of other persons having an operation similar to that of the person audited specially. A person audited specially and subject to a court order and in default thereof, shall in addition, be subject to any penalty or punishment imposed by the court entering the order.

(d) Deficiency; Audit Costs. When a deficiency is found and any fees or taxes required to be paid under this Act have not been paid to the State of Illinois, the Secretary of State may impose an audit fee of $100 per day, or $50 per half-day, per auditor, plus in the case of out-of-state travel, transportation expenses incurred by the auditor or auditors. Where more than one person is audited on the same out-of-state trip, the additional transportation expenses may be apportioned. The actual costs of a special audit shall be imposed upon the person audited.

(e) Interest. When a deficiency is found and any fees or taxes required to be paid under this Act have not been paid to the State of Illinois, the amount of the deficiency, if greater than $100 for all registration years examined, shall also bear interest at the rate of 1/2 of 1% per month or fraction thereof, from the date when the fee or tax due should have been paid under the provisions of this Act, subject to a maximum of 6% per annum.

(f) Willful Negligence. When a deficiency is determined by the Secretary to be caused by the willful neglect or negligence of the person audited, an additional 10% penalty, that is 10% of the amount of the deficiency or assessment, shall be imposed, and the 10% penalty shall bear interest at the rate of 1/2 of 1% on and after the 30th day after the penalty is imposed until paid in full.

(g) Fraud or Evasion. When a deficiency is determined by the Secretary to be caused by fraud or willful evasion of the provisions of this Act, an additional penalty, that is 20% of the amount of the deficiency or assessment, shall be imposed, and the 20% penalty shall bear interest at the rate of 1/2 of 1% on and after the 30th day after the penalty is imposed until paid in full.

(h) Notice. The Secretary of State shall give written notice to any person audited, of the amount of any deficiency found or assessment made, of the costs of an audit or special audit, and of the penalty imposed, and payment shall be made within 30 days of the date of the notice unless such person petitions for a hearing.

However, except in the case of fraud or willful evasion, or the inaccessibility of books and records for audit or with the express consent of the person audited, no notice of a deficiency or assessment shall be issued by the Secretary for more than 3 registration years. This limitation shall commence on any January 1 as to calendar year registrations and on any July 1 as to fiscal year registrations. This limitation shall not apply for any period during which the person affected has declined or refuses to make his books and records available for audit, nor during any period of time in which an Order of any Court has the effect of enjoining or restraining the Secretary from making an audit or issuing a notice. Notwithstanding, each person licensed under the International Registration Plan and audited by this State or any member jurisdiction shall follow the assessment and refund procedures as adopted and amended by the International Registration Plan members. The Secretary of State shall have the final decision as to which registrants may be subject to the netting of audit fees as outlined in the International Registration Plan. Persons audited may be subject to a review process to determine the final outcome of the audit finding. This process shall follow the adopted procedure as outlined in the International Registration Plan. All decisions by the IRP designated tribunal shall be binding.

(i) Every person subject to licensing or registration and audit under the provisions of this Chapter shall retain all pertinent licensing and registration documents, books, records, tax returns, reports and all supporting records and documents for a period of 4 years.

(j) Hearings. Any person receiving written notice of a deficiency or assessment may, within 30 days after the date of the notice, petition for a hearing before the Secretary of State or his duly appointed hearing officer to contest the audit in whole or in part, and the petitioner shall simultaneously file a certified check or money order, or certificate of deposit, or a surety bond approved by the Secretary in the amount of the deficiency or assessment. Hearings shall be held pursuant to the provisions of Section 2-118 of this Act.

(k) Judgments. The Secretary of State may enforce any notice of deficiency or assessment pursuant to the provisions of Section 3-831 of this Act.

(Source: P.A. 92-69, eff. 7-12-01; 93-32, eff. 7-1-03.)