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91_HB3467
LRB9110144SMdv
1 AN ACT to amend the Uniform Penalty and Interest Act by
2 changing Sections 3-2, 3-3, and 3-10.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Uniform Penalty and Interest Act is
6 amended by changing Sections 3-2, 3-3, and 3-10 as follows:
7 (35 ILCS 735/3-2) (from Ch. 120, par. 2603-2)
8 Sec. 3-2. Interest.
9 (a) Interest paid by the Department to taxpayers and
10 interest charged to taxpayers by the Department shall be paid
11 at the annual rate determined by the Department. That rate
12 shall be the underpayment rate established under Section 6621
13 of the Internal Revenue Code.
14 (b) The interest rate shall be adjusted on a semiannual
15 basis, on January 1 and July 1, based upon the underpayment
16 rate going into effect on that January 1 or July 1 under
17 Section 6621 of the Internal Revenue Code.
18 (c) Interest shall be simple interest calculated on a
19 daily basis. Interest shall accrue upon tax and penalty due.
20 If notice and demand is made for the payment of any amount of
21 tax due and if the amount due is paid within 30 days after
22 the date of such notice and demand, interest under this
23 Section on the amount so paid shall not be imposed for the
24 period after the date of the notice and demand.
25 (d) No interest shall be paid upon any overpayment of
26 tax if the overpayment is refunded or a credit approved
27 within 90 days after the last date prescribed for filing the
28 original return, or within 90 days of the receipt of the
29 processable return, or within 90 days after the date of
30 overpayment, whichever date is latest, as determined without
31 regard to processing time by the Comptroller or without
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1 regard to the date on which the credit is applied to the
2 taxpayer's account. In order for an original return to be
3 processable for purposes of this Section, it must be in the
4 form prescribed or approved by the Department, signed by the
5 person authorized by law, and contain all information,
6 schedules, and support documents necessary to determine the
7 tax due and to make allocations of tax as prescribed by law.
8 For the purposes of computing interest, a return shall be
9 deemed to be processable unless the Department notifies the
10 taxpayer that the return is not processable within 90 days
11 after the receipt of the return; however, interest shall not
12 accumulate for the period following this date of notice.
13 Interest on amounts refunded or credited pursuant to the
14 filing of an amended return or claim for refund shall be
15 determined from the due date of the original return or the
16 date of overpayment, whichever is later, to the date of
17 payment by the Department without regard to processing time
18 by the Comptroller or the date of credit by the Department or
19 without regard to the date on which the credit is applied to
20 the taxpayer's account. If a claim for refund relates to an
21 overpayment attributable to a net loss carryback as provided
22 by Section 207 of the Illinois Income Tax Act, the date of
23 overpayment shall be the last day of the taxable year in
24 which the loss was incurred.
25 (e) Interest on erroneous refunds. Any portion of the
26 tax imposed by an Act to which this Act is applicable or any
27 interest or penalty which has been erroneously refunded and
28 which is recoverable by the Department shall bear interest
29 from the date of payment of the refund. However, no interest
30 will be charged if the erroneous refund is for an amount less
31 than $500 and is due to a mistake of the Department.
32 (Source: P.A. 89-379, eff. 1-1-96.)
33 (35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
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1 Sec. 3-3. Penalty for failure to file or pay.
2 (a) This subsection (a) is applicable before January 1,
3 1996. A penalty of 5% of the tax required to be shown due on
4 a return shall be imposed for failure to file the tax return
5 on or before the due date prescribed for filing determined
6 with regard for any extension of time for filing (penalty for
7 late filing or nonfiling). If any unprocessable return is
8 corrected and filed within 21 days after notice by the
9 Department, the late filing or nonfiling penalty shall not
10 apply. If a penalty for late filing or nonfiling is imposed
11 in addition to a penalty for late payment, the total penalty
12 due shall be the sum of the late filing penalty and the
13 applicable late payment penalty. Beginning on the effective
14 date of this amendatory Act of 1995, in the case of any type
15 of tax return required to be filed more frequently than
16 annually, when the failure to file the tax return on or
17 before the date prescribed for filing (including any
18 extensions) is shown to be nonfraudulent and has not occurred
19 in the 2 years immediately preceding the failure to file on
20 the prescribed due date, the penalty imposed by section
21 3-3(a) shall be abated.
22 (a-5) This subsection (a-5) is applicable on and after
23 January 1, 1996. A penalty equal to 2% of the tax required to
24 be shown due on a return, up to a maximum amount of $250,
25 reduced by any determined without regard to any part of the
26 tax that is paid on time or by any credit that was properly
27 allowable on the date the return was required to be filed,
28 shall be imposed for failure to file the tax return on or
29 before the due date prescribed for filing determined with
30 regard for any extension of time for filing. However, if any
31 return is not filed within 30 days after notice of nonfiling
32 mailed by the Department to the last known address of the
33 taxpayer contained in Department records, an additional
34 penalty amount shall be imposed equal to the greater of $250
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1 or 2% of the tax shown on the return. However, the
2 additional penalty amount may not exceed $5,000 and is
3 determined without regard to any part of the tax that is paid
4 on time or by any credit that was properly allowable on the
5 date the return was required to be filed (penalty for late
6 filing or nonfiling). If any unprocessable return is
7 corrected and filed within 30 days after notice by the
8 Department, the late filing or nonfiling penalty shall not
9 apply. If a penalty for late filing or nonfiling is imposed
10 in addition to a penalty for late payment, the total penalty
11 due shall be the sum of the late filing penalty and the
12 applicable late payment penalty. In the case of any type of
13 tax return required to be filed more frequently than
14 annually, when the failure to file the tax return on or
15 before the date prescribed for filing (including any
16 extensions) is shown to be nonfraudulent and has not occurred
17 in the 2 years immediately preceding the failure to file on
18 the prescribed due date, the penalty imposed by section
19 3-3(a) shall be abated.
20 (b) This subsection is applicable before January 1,
21 1998. A penalty of 15% of the tax shown on the return or the
22 tax required to be shown due on the return shall be imposed
23 for failure to pay:
24 (1) the tax shown due on the return on or before
25 the due date prescribed for payment of that tax, an
26 amount of underpayment of estimated tax, or an amount
27 that is reported in an amended return other than an
28 amended return timely filed as required by subsection (b)
29 of Section 506 of the Illinois Income Tax Act (penalty
30 for late payment or nonpayment of admitted liability); or
31 (2) the full amount of any tax required to be shown
32 due on a return and which is not shown (penalty for late
33 payment or nonpayment of additional liability), within 30
34 days after a notice of arithmetic error, notice and
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1 demand, or a final assessment is issued by the
2 Department. In the case of a final assessment arising
3 following a protest and hearing, the 30-day period shall
4 not begin until all proceedings in court for review of
5 the final assessment have terminated or the period for
6 obtaining a review has expired without proceedings for a
7 review having been instituted. In the case of a notice
8 of tax liability that becomes a final assessment without
9 a protest and hearing, the penalty provided in this
10 paragraph (2) shall be imposed at the expiration of the
11 period provided for the filing of a protest.
12 (b-5) This subsection is applicable on and after January
13 1, 1998. A penalty for failure to pay of 20% of the tax
14 shown on the return or the tax required to be shown due on
15 the return shall be imposed for failure to pay:
16 (1) equal to 10% of the tax shown due on the return
17 on or before the due date prescribed for payment of that
18 tax, an amount of underpayment of estimated tax, or an
19 amount that is reported in an amended return other than
20 an amended return timely filed as required by subsection
21 (b) of Section 506 of the Illinois Income Tax Act
22 (penalty for late payment or nonpayment of admitted
23 liability); or
24 (2) equal to 20% of the full amount of any tax
25 required to be shown due on a return and which is not
26 shown (penalty for late payment or nonpayment of
27 additional liability), within 30 days after a notice of
28 arithmetic error, notice and demand, or a final
29 assessment is issued by the Department. In the case of a
30 final assessment arising following a protest and hearing,
31 the 30-day period shall not begin until all proceedings
32 in court for review of the final assessment have
33 terminated or the period for obtaining a review has
34 expired without proceedings for a review having been
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1 instituted. In the case of a notice of tax liability
2 that becomes a final assessment without a protest and
3 hearing, the penalty provided in this paragraph (2) shall
4 be imposed at the expiration of the period provided for
5 the filing of a protest.
6 (c) For purposes of the late payment penalties, the
7 basis of the penalty shall be the tax shown or required to be
8 shown on a return, whichever is applicable, reduced by any
9 part of the tax which is paid on time and by any credit which
10 was properly allowable on the date the return was required to
11 be filed.
12 (d) A penalty shall be applied to the tax required to be
13 shown even if that amount is less than the tax shown on the
14 return.
15 (e) If both a subsection (b)(1) penalty and a subsection
16 (b)(2) penalty are assessed against the same return, the
17 subsection (b)(2) penalty shall be assessed against only the
18 additional tax found to be due.
19 (f) If the taxpayer has failed to file the return, the
20 Department shall determine the correct tax according to its
21 best judgment and information, which amount shall be prima
22 facie evidence of the correctness of the tax due.
23 (g) The time within which to file a return or pay an
24 amount of tax due without imposition of a penalty does not
25 extend the time within which to file a protest to a notice of
26 tax liability or a notice of deficiency.
27 (h) No return shall be determined to be unprocessable
28 because of the omission of any information requested on the
29 return pursuant to Section 2505-575 of the Department of
30 Revenue Law (20 ILCS 2505/2505-575).
31 (Source: P.A. 90-491, eff. 1-1-98; 90-548, eff. 12-4-97;
32 91-239, eff. 1-1-00.)
33 (35 ILCS 735/3-10) (from Ch. 120, par. 2603-10)
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1 Sec. 3-10. Limitations.
2 (a) In the case of a false or fraudulent return with the
3 intent to evade tax, the tax may be assessed at any time.
4 (b) Except in the case of a willful failure to file a
5 return required by law, a tax may be assessed the tax may be
6 assessed at any time. If the taxpayer shows that there was
7 reasonable cause for failure to file a return, the period
8 shall be limited to not more than 6 years after the original
9 due date of each return required to have been filed.
10 (c) In the case of a failure to file a return required
11 by law that is voluntarily disclosed to the Department, in
12 accordance with regulations promulgated by the Department for
13 receiving the voluntary disclosure, the tax may be assessed
14 no more than 4 years after the original due date of each
15 return required to have been filed.
16 (d) The limitations on assessment shall not apply where
17 the Department has, within the 6-year period of limitation,
18 notified a person that a return is required by law from that
19 person. These limitations shall be tolled for any time
20 period in which the order of any court has the effect of
21 enjoining or restraining the Department from that assessment.
22 (Source: P.A. 87-1189.)