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91_HB3240ham001
LRB9111372SMmbam01
1 AMENDMENT TO HOUSE BILL 3240
2 AMENDMENT NO. . Amend House Bill 3240 by replacing
3 the title with the following:
4 "AN ACT to amend the Uniform Penalty and Interest Act by
5 changing Sections 3-2, 3-3, and 3-8 and by adding Section
6 3-7.5."; and
7 by replacing everything after the enacting clause with the
8 following:
9 "Section 5. The Uniform Penalty and Interest Act is
10 amended by changing Sections 3-2, 3-3, and 3-8 and by adding
11 Section 3-7.5 as follows:
12 (35 ILCS 735/3-2) (from Ch. 120, par. 2603-2)
13 Sec. 3-2. Interest.
14 (a) Interest paid by the Department to taxpayers and
15 interest charged to taxpayers by the Department shall be paid
16 at the annual rate determined by the Department. That rate
17 shall be the underpayment rate established under Section 6621
18 of the Internal Revenue Code.
19 (b) The interest rate shall be adjusted on a semiannual
20 basis, on January 1 and July 1, based upon the underpayment
21 rate going into effect on that January 1 or July 1 under
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1 Section 6621 of the Internal Revenue Code.
2 (c) This subsection (c) is applicable to returns due on
3 and before December 31, 2000. Interest shall be simple
4 interest calculated on a daily basis. Interest shall accrue
5 upon tax and penalty due. If notice and demand is made for
6 the payment of any amount of tax due and if the amount due is
7 paid within 30 days after the date of such notice and demand,
8 interest under this Section on the amount so paid shall not
9 be imposed for the period after the date of the notice and
10 demand.
11 (c-5) This subsection (c-5) is applicable to returns due
12 on and after January 1, 2001. Interest shall be simple
13 interest calculated on a daily basis. Interest shall accrue
14 upon tax due. If notice and demand is made for the payment
15 of any amount of tax due and if the amount due is paid within
16 30 days after the date of the notice and demand, interest
17 under this Section on the amount so paid shall not be imposed
18 for the period after the date of the notice and demand.
19 (d) No interest shall be paid upon any overpayment of
20 tax if the overpayment is refunded or a credit approved
21 within 90 days after the last date prescribed for filing the
22 original return, or within 90 days of the receipt of the
23 processable return, or within 90 days after the date of
24 overpayment, whichever date is latest, as determined without
25 regard to processing time by the Comptroller or without
26 regard to the date on which the credit is applied to the
27 taxpayer's account. In order for an original return to be
28 processable for purposes of this Section, it must be in the
29 form prescribed or approved by the Department, signed by the
30 person authorized by law, and contain all information,
31 schedules, and support documents necessary to determine the
32 tax due and to make allocations of tax as prescribed by law.
33 For the purposes of computing interest, a return shall be
34 deemed to be processable unless the Department notifies the
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1 taxpayer that the return is not processable within 90 days
2 after the receipt of the return; however, interest shall not
3 accumulate for the period following this date of notice.
4 Interest on amounts refunded or credited pursuant to the
5 filing of an amended return or claim for refund shall be
6 determined from the due date of the original return or the
7 date of overpayment, whichever is later, to the date of
8 payment by the Department without regard to processing time
9 by the Comptroller or the date of credit by the Department or
10 without regard to the date on which the credit is applied to
11 the taxpayer's account. If a claim for refund relates to an
12 overpayment attributable to a net loss carryback as provided
13 by Section 207 of the Illinois Income Tax Act, the date of
14 overpayment shall be the last day of the taxable year in
15 which the loss was incurred.
16 (e) Interest on erroneous refunds. Any portion of the
17 tax imposed by an Act to which this Act is applicable or any
18 interest or penalty which has been erroneously refunded and
19 which is recoverable by the Department shall bear interest
20 from the date of payment of the refund. However, no interest
21 will be charged if the erroneous refund is for an amount less
22 than $500 and is due to a mistake of the Department.
23 (Source: P.A. 89-379, eff. 1-1-96.)
24 (35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
25 Sec. 3-3. Penalty for failure to file or pay.
26 (a) This subsection (a) is applicable before January 1,
27 1996. A penalty of 5% of the tax required to be shown due on
28 a return shall be imposed for failure to file the tax return
29 on or before the due date prescribed for filing determined
30 with regard for any extension of time for filing (penalty for
31 late filing or nonfiling). If any unprocessable return is
32 corrected and filed within 21 days after notice by the
33 Department, the late filing or nonfiling penalty shall not
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1 apply. If a penalty for late filing or nonfiling is imposed
2 in addition to a penalty for late payment, the total penalty
3 due shall be the sum of the late filing penalty and the
4 applicable late payment penalty. Beginning on the effective
5 date of this amendatory Act of 1995, in the case of any type
6 of tax return required to be filed more frequently than
7 annually, when the failure to file the tax return on or
8 before the date prescribed for filing (including any
9 extensions) is shown to be nonfraudulent and has not occurred
10 in the 2 years immediately preceding the failure to file on
11 the prescribed due date, the penalty imposed by Section
12 3-3(a) shall be abated.
13 (a-5) This subsection (a-5) is applicable to returns due
14 on and after January 1, 1996 and on or before December 31,
15 2000. A penalty equal to 2% of the tax required to be shown
16 due on a return, up to a maximum amount of $250, determined
17 without regard to any part of the tax that is paid on time or
18 by any credit that was properly allowable on the date the
19 return was required to be filed, shall be imposed for failure
20 to file the tax return on or before the due date prescribed
21 for filing determined with regard for any extension of time
22 for filing. However, if any return is not filed within 30
23 days after notice of nonfiling mailed by the Department to
24 the last known address of the taxpayer contained in
25 Department records, an additional penalty amount shall be
26 imposed equal to the greater of $250 or 2% of the tax shown
27 on the return. However, the additional penalty amount may
28 not exceed $5,000 and is determined without regard to any
29 part of the tax that is paid on time or by any credit that
30 was properly allowable on the date the return was required to
31 be filed (penalty for late filing or nonfiling). If any
32 unprocessable return is corrected and filed within 30 days
33 after notice by the Department, the late filing or nonfiling
34 penalty shall not apply. If a penalty for late filing or
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1 nonfiling is imposed in addition to a penalty for late
2 payment, the total penalty due shall be the sum of the late
3 filing penalty and the applicable late payment penalty. In
4 the case of any type of tax return required to be filed more
5 frequently than annually, when the failure to file the tax
6 return on or before the date prescribed for filing (including
7 any extensions) is shown to be nonfraudulent and has not
8 occurred in the 2 years immediately preceding the failure to
9 file on the prescribed due date, the penalty imposed by
10 Section 3-3(a-5) 3-3(a) shall be abated.
11 (a-10) This subsection (a-10) is applicable to returns
12 due on and after January 1, 2001. A penalty equal to 2% of
13 the tax required to be shown due on a return, up to a maximum
14 amount of $250, reduced by any tax that is paid on time or by
15 any credit that was properly allowable on the date the return
16 was required to be filed, shall be imposed for failure to
17 file the tax return on or before the due date prescribed for
18 filing determined with regard for any extension of time for
19 filing. However, if any return is not filed within 30 days
20 after notice of nonfiling mailed by the Department to the
21 last known address of the taxpayer contained in Department
22 records, an additional penalty amount shall be imposed equal
23 to the greater of $250 or 2% of the tax shown on the return.
24 However, the additional penalty amount may not exceed $5,000
25 and is determined without regard to any part of the tax that
26 is paid on time or by any credit that was properly allowable
27 on the date the return was required to be filed (penalty for
28 late filing or nonfiling). If any unprocessable return is
29 corrected and filed within 30 days after notice by the
30 Department, the late filing or nonfiling penalty shall not
31 apply. If a penalty for late filing or nonfiling is imposed
32 in addition to a penalty for late payment, the total penalty
33 due shall be the sum of the late filing penalty and the
34 applicable late payment penalty. In the case of any type of
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1 tax return required to be filed more frequently than
2 annually, when the failure to file the tax return on or
3 before the date prescribed for filing (including any
4 extensions) is shown to be nonfraudulent and has not occurred
5 in the 2 years immediately preceding the failure to file on
6 the prescribed due date, the penalty imposed by Section
7 3-3(a-10) shall be abated.
8 (b) This subsection is applicable before January 1,
9 1998. A penalty of 15% of the tax shown on the return or the
10 tax required to be shown due on the return shall be imposed
11 for failure to pay:
12 (1) the tax shown due on the return on or before
13 the due date prescribed for payment of that tax, an
14 amount of underpayment of estimated tax, or an amount
15 that is reported in an amended return other than an
16 amended return timely filed as required by subsection (b)
17 of Section 506 of the Illinois Income Tax Act (penalty
18 for late payment or nonpayment of admitted liability); or
19 (2) the full amount of any tax required to be shown
20 due on a return and which is not shown (penalty for late
21 payment or nonpayment of additional liability), within 30
22 days after a notice of arithmetic error, notice and
23 demand, or a final assessment is issued by the
24 Department. In the case of a final assessment arising
25 following a protest and hearing, the 30-day period shall
26 not begin until all proceedings in court for review of
27 the final assessment have terminated or the period for
28 obtaining a review has expired without proceedings for a
29 review having been instituted. In the case of a notice
30 of tax liability that becomes a final assessment without
31 a protest and hearing, the penalty provided in this
32 paragraph (2) shall be imposed at the expiration of the
33 period provided for the filing of a protest.
34 (b-5) This subsection is applicable to returns due on
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1 and after January 1, 1998 and on or before December 31, 2000.
2 A penalty of 20% of the tax shown on the return or the tax
3 required to be shown due on the return shall be imposed for
4 failure to pay:
5 (1) the tax shown due on the return on or before
6 the due date prescribed for payment of that tax, an
7 amount of underpayment of estimated tax, or an amount
8 that is reported in an amended return other than an
9 amended return timely filed as required by subsection (b)
10 of Section 506 of the Illinois Income Tax Act (penalty
11 for late payment or nonpayment of admitted liability); or
12 (2) the full amount of any tax required to be shown
13 due on a return and which is not shown (penalty for late
14 payment or nonpayment of additional liability), within 30
15 days after a notice of arithmetic error, notice and
16 demand, or a final assessment is issued by the
17 Department. In the case of a final assessment arising
18 following a protest and hearing, the 30-day period shall
19 not begin until all proceedings in court for review of
20 the final assessment have terminated or the period for
21 obtaining a review has expired without proceedings for a
22 review having been instituted. In the case of a notice
23 of tax liability that becomes a final assessment without
24 a protest and hearing, the penalty provided in this
25 paragraph (2) shall be imposed at the expiration of the
26 period provided for the filing of a protest.
27 (b-10) This subsection (b-10) is applicable to returns
28 due on and after January 1, 2001. A penalty shall be imposed
29 for failure to pay:
30 (1) the tax shown due on a return on or before the
31 due date prescribed for payment of that tax, an amount of
32 underpayment of estimated tax, or an amount that is
33 reported in an amended return other than an amended
34 return timely filed as required by subsection (b) of
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1 Section 506 of the Illinois Income Tax Act (penalty for
2 late payment or nonpayment of admitted liability). The
3 amount of penalty imposed under this subsection (b-10)(1)
4 shall be 2% of any amount that is paid no later than 30
5 days after the due date, 5% of any amount that is paid
6 later than 30 days after the due date and not later than
7 90 days after the due date, 10% of any amount that is
8 paid later than 90 days after the due date and not later
9 than 180 days after the due date, and 15% of any amount
10 that is paid later than 180 days after the due date.
11 (2) the full amount of any tax required to be shown
12 due on a return and that is not shown (penalty for late
13 payment or nonpayment of additional liability), within 30
14 days after a notice of arithmetic error, notice and
15 demand, or a final assessment is issued by the
16 Department. In the case of a final assessment arising
17 following a protest and hearing, the 30-day period shall
18 not begin until all proceedings in court for review of
19 the final assessment have terminated or the period for
20 obtaining a review has expired without proceedings for a
21 review having been instituted. The amount of penalty
22 imposed under this subsection (b-10)(2) shall be 20% of
23 any amount that is not paid within the 30-day period. In
24 the case of a notice of tax liability that becomes a
25 final assessment without a protest and hearing, the
26 penalty provided in this subsection (b-10)(2) shall be
27 imposed at the expiration of the period provided for the
28 filing of a protest.
29 (c) For purposes of the late payment penalties, the
30 basis of the penalty shall be the tax shown or required to be
31 shown on a return, whichever is applicable, reduced by any
32 part of the tax which is paid on time and by any credit which
33 was properly allowable on the date the return was required to
34 be filed.
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1 (d) A penalty shall be applied to the tax required to be
2 shown even if that amount is less than the tax shown on the
3 return.
4 (e) This subsection (e) is applicable to returns due
5 before January 1, 2001. If both a subsection (b)(1) or
6 (b-5)(1) penalty and a subsection (b)(2) or (b-5)(2) penalty
7 are assessed against the same return, the subsection (b)(2)
8 or (b-5)(2) penalty shall be assessed against only the
9 additional tax found to be due.
10 (e-5) This subsection (e-5) is applicable to returns due
11 on and after January 1, 2001. If both a subsection (b-10)(1)
12 penalty and a subsection (b-10)(2) penalty are assessed
13 against the same return, the subsection (b-10)(2) penalty
14 shall be assessed against only the additional tax found to be
15 due.
16 (f) If the taxpayer has failed to file the return, the
17 Department shall determine the correct tax according to its
18 best judgment and information, which amount shall be prima
19 facie evidence of the correctness of the tax due.
20 (g) The time within which to file a return or pay an
21 amount of tax due without imposition of a penalty does not
22 extend the time within which to file a protest to a notice of
23 tax liability or a notice of deficiency.
24 (h) No return shall be determined to be unprocessable
25 because of the omission of any information requested on the
26 return pursuant to Section 2505-575 of the Department of
27 Revenue Law (20 ILCS 2505/2505-575).
28 (Source: P.A. 90-491, eff. 1-1-98; 90-548, eff. 12-4-97;
29 91-239, eff. 1-1-00.)
30 (35 ILCS 735/3-7.5 new)
31 Sec. 3-7.5. Bad check penalty. In addition to any other
32 penalty provided in this Act, a penalty of $25 shall be
33 imposed on any person who issues a check or other draft to
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1 the Department that is not honored upon presentment. The
2 penalty imposed under this Section shall be deemed assessed
3 at the time of presentment of the check or other draft and
4 shall be treated for all purposes, including collection and
5 allocation, as part of the tax or other liability for which
6 the check or other draft represented payment.
7 (35 ILCS 735/3-8) (from Ch. 120, par. 2603-8)
8 Sec. 3-8. No penalties if reasonable cause exists. The
9 penalties imposed under the provisions of Sections 3-3, 3-4,
10 and 3-5, and 3-7.5 of this Act shall not apply if the
11 taxpayer shows that his failure to file a return or pay tax
12 at the required time was due to reasonable cause. Reasonable
13 cause shall be determined in each situation in accordance
14 with the rules and regulations promulgated by the Department.
15 A taxpayer may protest the imposition of a penalty under
16 Section 3-3, 3-4, or 3-5, or 3-7.5 on the basis of reasonable
17 cause without protesting the underlying tax liability.
18 (Source: P.A. 87-205; 87-1189.)".