50 ILCS 45/ Local Government Taxpayers' Bill of Rights Act.

(50 ILCS 45/1)

Sec. 1. Short title. This Act may be cited as the Local Government Taxpayers' Bill of Rights Act.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/5)

Sec. 5. Legislative declaration. It is the intent of the General Assembly that this legislation grant various rights and protections to taxpayers and tax collectors with respect to the administration and enforcement of local government tax laws. The provisions of this Act are designed to reduce the burden on both taxpayers and tax collectors by specifically providing that fair and consistent tax processes and procedures be adopted and disseminated to taxpayers at the local level while at the same time preserving local government's full authority to collect taxes lawfully due under their taxing ordinances.

This legislation also provides taxpayers a minimum level of consistency with regard to the assessment and collection of local taxes as they do business in multiple locations within this State.

The General Assembly further finds that tax systems are largely based on voluntary compliance and self-assessment and the development of understandable tax laws. Providing clear tax laws at the local level and providing all necessary due process rights in the collection and enforcement of local tax laws will only serve to improve voluntary compliance and self-assessment of local government taxes.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/10)

Sec. 10. Application and home rule preemption. The limitations provided by this Act shall take precedence over any provision of any tax ordinance imposed by a unit of local government, as defined in this Act, in Illinois, including without limitation any tax authorized under Section 8-11-2 of the Illinois Municipal Code.

Consistent with the limitations provided by this Act, a municipality, other than a municipality having a population greater than 1,000,000, may not impose any penalty with respect to a tax authorized by Section 8-11-2 of the Illinois Municipal Code or with respect to an audit authorized by Section 8-11-2.5 of the Illinois Municipal Code, except as specified in Sections 50, 55, and 60 of this Act.

This Act is a denial and limitation of home rule powers and functions under subsection (g) of Section 6 of Article VII of the Illinois Constitution.

(Source: P.A. 96-1422, eff. 8-3-10.)

(50 ILCS 45/15)

Sec. 15. Definitions. In this Act:

"Locally imposed and administered tax" means a tax imposed by a unit of local government that is collected or administered by a unit of local government and not an agency or Department of the State. A "locally imposed and administered tax" does not include a tax imposed upon real property under the Property Tax Code or fees collected by a unit of local government other than infrastructure maintenance fees.

"Local tax administrator" includes directors of local government departments of revenue or taxation, or other local government officers charged with the administration or collection of a locally imposed and administered tax, including their staffs, employees, or agents to the extent they are authorized by a local tax administrator to act in the local tax administrator's stead.

"Unit of local government" includes a municipality, a county, or a home rule unit of this State, but does not include (i) home rule municipalities with a population greater than 1,000,000 and (ii) home rule counties with a population greater than 3,000,000 that have locally administered departments or bureaus of revenue.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/20)

Sec. 20. Responsibilities of units of local government. Each unit of local government shall have the powers and obligations enumerated in the following Sections to protect the rights of the taxpayers.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/25)

Sec. 25. Application of payments. Taxpayers have the right to know how tax payments and remittances covered by this Act will be applied to the tax liability owed to units of local government. Each unit of local government must provide, by ordinance, for the order of application of tax payments to tax liability, penalty, and interest, provided that in no case may a payment be applied to penalties due before it is applied to tax or interest. In the event that a unit of local government does not provide for application of payments, any payment or remittance received for a tax period will be applied first to tax for the period, then to interest due for the period, and then to penalties due for the period.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/30)

Sec. 30. Statute of limitations. Units of local government have an obligation to review tax returns in a timely manner and issue any determination of tax due as promptly as possible so that taxpayers may make timely corrections of future returns and minimize any interest charges applied to tax underpayments. Each unit of local government must provide appropriate statutes of limitation for the determination and assessment of taxes covered by this Act, provided, however, that a statute of limitations may not exceed the following:

(1) No notice of determination of tax due or assessment may be issued more than 5 years after the end of the calendar year for which the return for the period was filed or the end of the calendar year in which the return for the period was due, whichever occurs later. An audit or review that is timely performed under Section 35 of this Act or Section 8-11-2.5 of the Illinois Municipal Code shall toll the applicable 5-year period for a period of not more than one year.

(2) If any tax return was not filed or if during any 4-year period for which a notice of tax determination or assessment may be issued by the unit of local government the tax paid or remitted was less than 75% of the tax due for that period, the statute of limitations shall be no more than 6 years after the end of the calendar year in which the return for the period was due or the end of the calendar year in which the return for the period was filed, whichever occurs later. In the event that a unit of local government fails to provide a statute of limitations, the maximum statutory period provided in this Section applies.

The changes to this Section made by Public Act 102-1144 do not revive any determination and assessment of tax due where the statute of limitations has expired as of March 17, 2023 (the effective date of Public Act 102-1144), but the changes do extend the statute of limitations for the determination and assessment of taxes where the statute of limitation has not expired as of March 17, 2023 (the effective date of Public Act 102-1144).

This Section does not place any limitation on a unit of local government if a fraudulent tax return is filed.

(Source: P.A. 102-1144, eff. 3-17-23; 103-605, eff. 7-1-24.)

(50 ILCS 45/35)

Sec. 35. Audit procedures. Taxpayers have the right to be treated by officers, employees, and agents of the local tax administrator with courtesy, fairness, uniformity, consistency, and common sense. This Section applies to any audit of a tax imposed by a unit of local government other than a municipality having a population greater than 1,000,000, except to the extent otherwise provided in Section 8-11-2.5 of the Illinois Municipal Code. Taxpayers must be notified in writing by the local jurisdiction of a proposed audit of the taxpayer's books and records clearly identifying who will be conducting the audit. For audits being conducted by third-party providers, the local jurisdiction must provide written authorization for the third-party provider to review the books and records of the taxpayer. No contact may be made by the third-party provider until the local-jurisdiction authorization is received by the taxpayer. The notice of audit must specify the tax and time period to be audited and must detail the minimum documentation or books and records to be made available to the auditor. Audits must be held only during reasonable times of the day and, unless impracticable, at times agreed to by the taxpayer. The auditor must sign a confidentiality agreement upon request by the taxpayer. Upon the completion of the audit, the local jurisdiction must issue an audit closure report to the taxpayer with the results of the audit. An auditor who determines that there has been an overpayment of tax during the course of the audit is obligated to identify the overpayment to the taxpayer so that the taxpayer can take the necessary steps to recover the overpayment. If the overpayment is the result of the application of some or all of the taxpayer's tax payment to an incorrect local government entity, then upon request by a unit of local government, the audit information must be given to any unit of local government that may be affected by an overpayment.

(Source: P.A. 96-1422, eff. 8-3-10.)

(50 ILCS 45/40)

Sec. 40. Appeals process. Units of local government have an obligation to provide, by ordinance, a procedure for appealing a determination of tax due or an assessment. Local governments must provide to taxpayers a written statement of rights whenever the local government issues a protestable notice of tax due, a bill, a claim denial, or a notice of claim reduction regarding any tax. The statement must explain the reason for the assessment, the amount of the tax liability proposed, the procedure for appealing the assessment, and the obligations of the unit of local government during the audit, appeal, refund, and collection process. In no event may a taxpayer be provided a time period less than 45 days after the date the notice was served in which to protest a notice of tax determination or notice of tax liability. Any notice of tax assessment due must be sent by United States registered or certified mail. The unit of local government must also adopt procedures for opening up any closed protest period or extending the protest period upon the showing of reasonable cause by the taxpayer and full payment of the contested tax liability along with interest accrued as of the due date of the tax.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/45)

Sec. 45. Interest. Units of local government must provide, by ordinance, for the amount of interest, if any, to be assessed on a late payment, underpayment, or nonpayment of tax.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/50)

Sec. 50. Late filing penalties. Late filing penalties may not exceed 5% of the amount of tax required to be shown as due on a return. A late filing penalty may not apply if a failure to file penalty is imposed by the unit of local government. A local tax administrator may determine that the late filing was due to reasonable cause and abate the penalty.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/55)

Sec. 55. Late payment penalty. Late payment penalties may not exceed 5% of the tax due and not timely paid or remitted to the unit of local government. This penalty shall not apply if a failure to file penalty is imposed by the unit of local government. A local tax administrator may determine that the late payment was due to reasonable cause and abate the penalty.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/60)

Sec. 60. Failure to file penalty. If no return is filed before the issuance of a notice of tax deficiency or of tax liability to the taxpayer, any failure to file penalty may not exceed 25% of the total tax due for the applicable reporting period for which the return was required to have been filed. A local tax administrator may determine that the failure to file a return was due to reasonable cause and abate the penalty.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/65)

Sec. 65. Credits and refunds. Units of local government shall provide a procedure for claiming a credit or refund of taxes, interest, or penalties paid in error. No units of local government are required to refund or credit any taxes voluntarily paid without written protest at the time of payment in the event that a local government tax is declared invalidly enacted or unconstitutional by a court of competent jurisdiction. A taxpayer shall not be deemed to have paid a tax voluntarily if the taxpayer lacked knowledge of the facts upon which to protest the taxes at the time of payment or if the taxpayer paid the taxes under duress. Unless the corporate authorities of a unit of local government expressly adopt a shorter statute of limitations for a particular tax, a statute of limitations on a claim for credit or refund may not be less than 4 years after the end of the calendar year in which payment or remittance in error was made. No unit of local government shall be required to grant a credit or refund of taxes, interest, or penalties to a person who has not paid or remitted the amounts directly to the unit of local government. Units of local government must provide, by ordinance, a rate of interest for overpayment of tax.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/70)

Sec. 70. Installment contracts. If a local government tax ordinance or a local tax administrator allows installment payment agreements for delinquent tax amounts, the local tax administrator may not cancel any installment contract unless the taxpayer fails to pay any amount due on time and fails to cure the delinquency in the allowable time supplied by the local tax administrator, or fails to demonstrate good faith in restructuring any installment plan agreement or contract with the local tax administrator.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/75)

Sec. 75. Voluntary disclosure. For any tax for which a taxpayer has not received a written notice of an audit, investigation, or assessment from the local tax administrator, a taxpayer is entitled to file an application with the local tax administrator for a voluntary disclosure of the tax due. A taxpayer filing a voluntary disclosure application must agree to pay the amount of tax due, along with interest of one percent per month, for all periods prior to the filing of the application but not more than 4 years before the date of filing the application. Except for the amount of tax and interest due under this Section, a taxpayer filing a valid voluntary disclosure application may not be liable for any additional tax, interest, or penalty for any period before the date the application was filed, provided, however, that if the taxpayer incorrectly determined and underpaid the amount of tax due as provided in this Section, the taxpayer is liable for the underpaid tax along with applicable interest on the underpaid tax, unless the underpayment was the result of fraud on the part of the taxpayer, in which case the application shall be deemed invalid and void. The payment of tax and interest required under this Section must be made within 90 days after the filing of the voluntary disclosure application or the date agreed to by the local tax administrator, whichever is longer, except that any additional amounts owed as a result of an underpayment of tax and interest previously paid under this Section must be paid within 90 days after a final determination and the exhaustion of all appeals of the additional amount owed or the date agreed to by the local tax administrator, whichever is longer.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/80)

Sec. 80. Criminal penalties. Criminal penalties may not be imposed on taxpayers for non-compliance with the provisions of a locally administered tax unless the non-compliance is a result of willful or fraudulent disregard of the local tax laws.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/85)

Sec. 85. Review of liens. The local tax administrator must establish an internal review process concerning liens against taxpayers. If the lien is determined to be improper, the local tax administrator must remove the lien at local government's own expense, correct the taxpayer's credit record, and correct any public disclosure of the improperly imposed lien.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/90)

Sec. 90. Publication of tax ordinances. Each unit of local government that imposes one or more locally administered taxes by ordinance must publish and make copies of those taxing ordinances readily available to the public upon request. Posting of the tax ordinances on the Internet satisfies the publication requirement of this Section.

(Source: P.A. 91-920, eff. 1-1-01.)

(50 ILCS 45/99)

Sec. 99. Effective date. This Act takes effect on January 1, 2001.

(Source: P.A. 91-920, eff. 1-1-01.)