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91_SB0880eng SB880 Engrossed LRB9104035MWcb 1 AN ACT to create the Local Government Taxpayers' Bill of 2 Rights Act. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 1. Short title. This Act may be cited as the 6 Local Government Taxpayers' Bill of Rights Act. 7 Section 5. Legislative declaration. The General 8 Assembly finds and declares that, in order to ensure fairness 9 in the administration and enforcement of locally imposed and 10 administered taxes, all taxpayers should, at a minimum, be 11 afforded certain basic rights. It is the intent of the 12 General Assembly to place guarantees in Illinois law to 13 ensure that the rights, privacy, and property of Illinois 14 taxpayers are adequately protected during the assessment and 15 collection of all taxes imposed and administered by local 16 governments of this State. A local government taxpayers' 17 bill of rights is necessary as current law does not provide 18 for specific and guaranteed rights of taxpayers in the 19 administration, enforcement, and collection of local taxes to 20 assure taxpayers a minimum standard of due process in their 21 dealings with local governments. This legislation also 22 provides taxpayers a minimum level of consistency with regard 23 to the assessment and collection of local taxes as they do 24 business in multiple locations within this State. 25 The General Assembly further finds that tax systems are 26 largely based on voluntary compliance and self-assessment and 27 the development of understandable tax laws. Providing clear 28 tax laws at the local level and providing all necessary due 29 process rights in the collection and enforcement of local tax 30 laws will only serve to improve voluntary compliance and 31 self-assessment of local government taxes. SB880 Engrossed -2- LRB9104035MWcb 1 Section 10. Application and home rule preemption. The 2 limitations provided by this Act shall take precedence over 3 any provision of any tax ordinance imposed by a unit of local 4 government, as defined in this Act, in Illinois. 5 This Act is a denial and limitation of home rule powers 6 and functions under subsection (g) of Section 6 of Article 7 VII of the Illinois Constitution. 8 Section 15. Definitions. In this Act: 9 "Locally imposed and administered tax" means a tax 10 imposed by a unit of local government that is collected or 11 administered by a unit of local government and not an agency 12 or Department of the State. A "locally imposed and 13 administered tax" does not include a tax imposed upon real 14 property under the Property Tax Code or fees collected by a 15 unit of local government other than infrastructure 16 maintenance fees. 17 "Local tax administrator" includes directors of local 18 government departments of revenue or taxation, or other local 19 government officers charged with the administration or 20 collection of a locally imposed and administered tax, 21 including their staffs, employees, or agents to the extent 22 they are authorized by a local tax administrator to act in 23 the local tax administrator's stead. 24 "Person" means and includes an individual, trust, estate, 25 partnership, association, firm, company, corporation, limited 26 liability company, or fiduciary. 27 "Tax Appeal Officer" means an existing employee of the 28 unit of local government or an individual appointed by the 29 unit of local government who reviews appeals resulting from 30 an audit of a taxpayer's books and records conducted by the 31 local tax administrator. 32 "Unit of local government" includes a municipality, a 33 county, or a home rule unit of this State, but does not SB880 Engrossed -3- LRB9104035MWcb 1 include (i) home rule municipalities with a population 2 greater than 1,000,000 and (ii) home rule counties with a 3 population greater than 3,000,000 that have locally 4 administered departments or bureaus of revenue. 5 Section 20. Publication of rules and regulations. Units 6 of local government are authorized to adopt reasonable rules 7 and regulations pertaining to the administration of this Act. 8 Any rule or regulation adopted under the authority of this 9 Act must be published in the same manner as the ordinance 10 imposing the tax that is the subject of the rules or 11 regulations. 12 Section 25. Responsibilities of units of local 13 government. Each unit of local government shall have the 14 powers and obligations enumerated in the following Sections 15 to protect the rights of the taxpayers. 16 Section 30. Application of payments. Taxpayers have the 17 right to know how tax payments and remittances covered by 18 this Act, will be applied to the tax liability owed to units 19 of local government. Each unit of local government must 20 provide, by ordinance or regulation, for the order of 21 application of tax payments to tax liability, penalty, and 22 interest, provided that in no case may a payment be applied 23 to penalties due before it is applied to tax or interest. In 24 the event that a unit of local government does not provide 25 for application of payments, any payment or remittance 26 received for a tax period will be applied first to tax for 27 the period, then to interest due for the period, and then to 28 penalties due for the period. 29 Section 35. Statute of limitations. Units of local 30 government have an obligation to review tax returns in a SB880 Engrossed -4- LRB9104035MWcb 1 timely manner and issue any determination of tax due as 2 promptly as possible so that taxpayers may make timely 3 corrections of future returns and minimize any interest 4 charges applied to tax underpayments. Each unit of local 5 government must provide appropriate statutes of limitation 6 for the determination and assessment of taxes covered by this 7 Act, provided, however, that a statute of limitations may not 8 exceed the following: 9 (1) No notice of determination of tax due or 10 assessment may be issued more than 4 years after the end 11 of the calendar year for which the return for the period 12 was filed or the end of the calendar year in which the 13 return for the period was due, whichever occurs later. 14 (2) If any tax return was not filed or if during 15 any 4-year period for which a notice of tax determination 16 or assessment may be issued by the unit of local 17 government the tax paid or remitted was less than 75% of 18 the tax due for that period, the statute of limitations 19 shall be no more than 6 years after the end of the 20 calendar year in which the return for the period was due 21 or the end of the calendar year in which the return for 22 the period was filed, whichever occurs later. 23 In the event that a unit of local government fails to 24 provide a statute of limitations, the maximum statutory 25 period provided in this Section applies. 26 This Section does not place any limitation on a unit of 27 local government if a fraudulent tax return is filed. 28 Section 40. Audit procedures. Taxpayers have the right 29 to be treated by officers, employees, and agents of the local 30 tax administrator with courtesy, fairness, uniformity, 31 consistency, and common sense. Taxpayers must be notified in 32 writing of a proposed audit of the taxpayer's books and 33 records. The notice of audit must specify the tax and time SB880 Engrossed -5- LRB9104035MWcb 1 period to be audited and must detail the minimum 2 documentation or books and records to be made available to 3 the auditor. Audits must be held only during reasonable 4 times of the day and, unless impracticable, at times agreed 5 to by the taxpayer. An auditor who determines that there has 6 been an overpayment of tax during the course of the audit is 7 obligated to identify the overpayment to the taxpayer so that 8 the taxpayer can take the necessary steps to recover the 9 overpayment. 10 Section 45. Appeals process. Units of local government 11 have an obligation to provide, by ordinance or regulation, a 12 procedure for appealing a determination of locally 13 administered tax due or an assessment. Taxpayers are 14 entitled to receive a written statement of rights whenever 15 they receive a protestable notice, a bill, a claim denial, or 16 reduction regarding any tax. The statement must explain the 17 reason for the assessment, the amount of the tax liability 18 proposed, the procedure for appealing the assessment, and the 19 obligations of the unit of local government during the audit, 20 appeal, refund, and collection process. In no event may a 21 taxpayer be provided a time period less than 60 days after 22 the date the notice was served in which to protest a notice 23 of tax determination or notice of tax liability. The unit of 24 local government must also adopt rules or procedures for 25 opening up any closed protest period or extending the protest 26 period upon the showing of reasonable cause by the taxpayer. 27 Section 50. Interest. Units of local government must 28 provide by ordinance for the amount of interest to be 29 assessed on a late payment, underpayment, or nonpayment of 30 tax. In no event may an ordinance impose an interest charge 31 for late payment, underpayment, or nonpayment exceeding 1%, 32 or a fraction thereof, of the tax imposed by the ordinance SB880 Engrossed -6- LRB9104035MWcb 1 per month on any late tax payments, tax remittance, or unpaid 2 or unremitted tax liability. Units of local government must 3 pay interest to taxpayers who have made overpayments of tax 4 at the same rate as interest charged on underpayments. 5 Section 55. Late filing penalties. Late filing 6 penalties may not exceed 2% of the tax due and not timely 7 paid or remitted to the unit of local government. A late 8 filing penalty may not apply if a failure to file penalty is 9 imposed by the unit of local government. A local tax 10 administrator may determine that the late filing was due to 11 reasonable cause and abate the penalty. 12 Section 60. Late payment penalty. Late payment 13 penalties may not exceed 2% of the tax due and not timely 14 paid or remitted to the unit of local government. This 15 penalty shall not apply if a failure to file penalty is 16 imposed by the unit of local government. A local tax 17 administrator may determine that the late filing was due to 18 reasonable cause and abate the penalty. 19 Section 65. Failure to file penalty. If no return is 20 filed before the issuance of a notice of tax deficiency or of 21 tax liability to the taxpayer, any failure to file penalty 22 may not exceed 20% of the total tax due for the applicable 23 reporting period for which the return was required to have 24 been filed. A local tax administrator may determine that the 25 failure to file a return was due to reasonable cause and 26 abate the penalty. 27 Section 70. Credits and refunds. Taxpayers have a right 28 to obtain a credit or refund of overpaid tax, penalty, or 29 interest. If a tax ordinance does not provide for a credit 30 or refund, and it appears that an amount of tax, interest, or SB880 Engrossed -7- LRB9104035MWcb 1 penalty has been paid or remitted to the unit of local 2 government, the taxpayer may file a claim for credit or 3 refund, provided, however, that no person may be eligible for 4 a credit or refund unless the person had paid or remitted the 5 tax, interest, or penalty directly to the unit of local 6 government. Units of local government shall provide a form 7 or procedure for requesting a refund or credit. While a unit 8 of local government may provide for a longer statute of 9 limitations for filing a claim for refund or credit, in no 10 event may a statute of limitations on a claim made in writing 11 be less than 4 years after the end of the calendar year in 12 which payment or remittance in error was made. Any credit or 13 refund issued must bear interest, at a rate equal to the rate 14 of interest charged for an underpayment of tax, from the date 15 the local government received the erroneous payment or 16 remittance until the date the credit or refund is issued. 17 Section 75. Erroneous written information. Units of 18 local government are obligated to abate taxes, interest, and 19 penalties assessed based upon erroneous written information 20 or written advice given by the local tax administrator. 21 Section 80. Installment contracts. Local tax 22 administrators may not cancel any installment contracts 23 unless the taxpayer fails to pay any amount due on time and 24 fails to cure the delinquency in the allowable time supplied 25 by the local tax administrator, or fails to demonstrate good 26 faith in restructuring any installment plan agreement or 27 contract with the local tax administrator. 28 Section 85. Escrow accounts. Local tax administrators 29 must place seized taxpayer bank accounts in escrow with the 30 bank for 20 days to permit the taxpayer to correct any errors 31 by the local tax administrator. SB880 Engrossed -8- LRB9104035MWcb 1 Section 90. Tax Appeal Officers. Units of local 2 government must appoint one or more Tax Appeal Officers. A 3 Tax Appeal Officer shall review requests for abatement of 4 taxes, interest, or penalties resulting from an audit of a 5 taxpayer's books and records based on collectability, equity, 6 or hardship. A Tax Appeal Officer has the power to abate, in 7 whole or in part, any tax, interest, or penalty with the 8 approval of the local tax administrator. A taxpayer may 9 apply to a Tax Appeal Officer for an abatement before, 10 during, or after any administrative hearing or judicial 11 process. 12 Appeal to the Tax Appeal Officer is a process separate 13 and distinct from any administrative hearing, if available, 14 or judicial process in which a taxpayer is protesting or 15 challenging any tax, interest, or penalty on factual or legal 16 grounds. 17 Section 95. Voluntary disclosure. For any tax for which 18 a taxpayer has not received a written notice of an audit or 19 assessment from the local tax administrator, a taxpayer is 20 entitled to file an application with the local tax 21 administrator for a voluntary disclosure of the tax due. A 22 taxpayer filing a voluntary disclosure application must agree 23 to pay the amount of tax due, along with interest of one-half 24 percent per month, for all periods prior to the filing of the 25 application but not more than 4 years before the date of 26 filing the application, provided, however, that the 4-year 27 limitation does not apply to taxes collected by the applicant 28 from another person and held in trust for the unit of local 29 government. Except for the amount of tax and interest due 30 under this Section, a taxpayer filing a valid voluntary 31 disclosure application may not be liable for any additional 32 tax, interest, or penalty for any period before the date the 33 application was filed, provided, however, that if the SB880 Engrossed -9- LRB9104035MWcb 1 taxpayer incorrectly determined and underpaid the amount of 2 tax due as provided in this Section, the taxpayer is liable 3 for the underpaid tax along with applicable interest on the 4 underpaid tax, unless the underpayment was the result of 5 fraud on the part of the taxpayer, in which case the 6 application shall be deemed invalid and void. The payment of 7 tax and interest required under this Section must be made 8 within 90 days after the filing of the voluntary disclosure 9 application or the date agreed to by the local tax 10 administrator, whichever is longer, except that any 11 additional amounts owed as a result of an underpayment of tax 12 and interest previously paid under this Section must be paid 13 within 90 days after a final determination and the exhaustion 14 of all appeals of the additional amount owed or the date 15 agreed to by the local tax administrator, whichever is 16 longer. 17 Section 100. Reckless actions. A taxpayer has the right 18 to sue a unit of local government if the local tax 19 administrator willfully or wantonly disregards any laws, 20 regulations, or rules in collecting taxes. The maximum 21 recovery for damages for the suit shall be $100,000. If the 22 taxpayer's suit is determined by the court to be frivolous, 23 the court may impose a penalty on the taxpayer not to exceed 24 $10,000 to be collected as a tax. 25 Section 105. Review of liens. The local tax 26 administrator must establish an internal review process 27 concerning liens against taxpayers. If the lien is determined 28 to be improper, the local tax administrator must publicly 29 disclose that fact, remove the lien at its own expense, and 30 correct the taxpayer's credit record. 31 Section 110. Publication of tax ordinances and business SB880 Engrossed -10- LRB9104035MWcb 1 fees. Each unit of local government imposing locally 2 administered taxes on persons doing business within their 3 jurisdiction shall forward a certified copy of each ordinance 4 imposing such tax or fee to the Department of Commerce and 5 Community Affairs no later than November 1, 1999. The 6 Department of Commerce and Community Affairs shall retain 7 copies of local government tax ordinances and shall maintain 8 a computerized database of those ordinances that is readily 9 accessible to interested and affected taxpayers. Units of 10 local government must notify the Department of Commerce and 11 Community Affairs, in writing, of the adoption of any new 12 taxes or any amendments to existing taxes within 30 days 13 after the adoption or amendment. 14 Section 999. Effective date. This Act takes effect upon 15 becoming law.