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91_SB1440
LRB9110653MWgc
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 and property of Illinois taxpayers are
14 adequately protected during the assessment and collection of
15 all taxes imposed and administered by local governments of
16 this State. A local government taxpayers' bill of rights is
17 necessary as current law does not provide for specific and
18 guaranteed rights of taxpayers in the administration,
19 enforcement, and collection of local taxes to assure
20 taxpayers a minimum standard of due process in their dealings
21 with local governments. This legislation also provides
22 taxpayers a minimum level of consistency with regard to the
23 assessment and collection of local taxes as they do business
24 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.
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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 "Tax Appeal Officer" means an existing employee of the
25 unit of local government or an individual appointed by the
26 unit of local government who reviews appeals resulting from
27 an audit of a taxpayer's books and records conducted by the
28 local tax administrator.
29 "Unit of local government" includes a municipality, a
30 county, or a home rule unit of this State, but does not
31 include (i) home rule municipalities with a population
32 greater than 1,000,000 and (ii) home rule counties with a
33 population greater than 3,000,000 that have locally
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1 administered departments or bureaus of revenue.
2 Section 20. Responsibilities of units of local
3 government. Each unit of local government shall have the
4 powers and obligations enumerated in the following Sections
5 to protect the rights of the taxpayers.
6 Section 25. Application of payments. Taxpayers have the
7 right to know how tax payments and remittances covered by
8 this Act, will be applied to the tax liability owed to units
9 of local government. Each unit of local government must
10 provide, by ordinance, for the order of application of tax
11 payments to tax liability, penalty, and interest, provided
12 that in no case may a payment be applied to penalties due
13 before it is applied to tax or interest. In the event that a
14 unit of local government does not provide for application of
15 payments, any payment or remittance received for a tax period
16 will be applied first to tax for the period, then to interest
17 due for the period, and then to penalties due for the period.
18 Section 30. Statute of limitations. Units of local
19 government have an obligation to review tax returns in a
20 timely manner and issue any determination of tax due as
21 promptly as possible so that taxpayers may make timely
22 corrections of future returns and minimize any interest
23 charges applied to tax underpayments. Each unit of local
24 government must provide appropriate statutes of limitation
25 for the determination and assessment of taxes covered by this
26 Act, provided, however, that a statute of limitations may not
27 exceed the following:
28 (1) No notice of determination of tax due or
29 assessment may be issued more than 4 years after the end
30 of the calendar year for which the return for the period
31 was filed or the end of the calendar year in which the
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1 return for the period was due, whichever occurs later.
2 (2) If any tax return was not filed or if during
3 any 4-year period for which a notice of tax determination
4 or assessment may be issued by the unit of local
5 government the tax paid or remitted was less than 75% of
6 the tax due for that period, the statute of limitations
7 shall be no more than 6 years after the end of the
8 calendar year in which the return for the period was due
9 or the end of the calendar year in which the return for
10 the period was filed, whichever occurs later.
11 In the event that a unit of local government fails to
12 provide a statute of limitations, the maximum statutory
13 period provided in this Section applies.
14 This Section does not place any limitation on a unit of
15 local government if a fraudulent tax return is filed.
16 Section 35. Audit procedures. Taxpayers have the right
17 to be treated by officers, employees, and agents of the local
18 tax administrator with courtesy, fairness, uniformity,
19 consistency, and common sense. Taxpayers must be notified in
20 writing of a proposed audit of the taxpayer's books and
21 records. The notice of audit must specify the tax and time
22 period to be audited and must detail the minimum
23 documentation or books and records to be made available to
24 the auditor. Audits must be held only during reasonable
25 times of the day and, unless impracticable, at times agreed
26 to by the taxpayer. An auditor who determines that there has
27 been an overpayment of tax during the course of the audit is
28 obligated to identify the overpayment to the taxpayer so that
29 the taxpayer can take the necessary steps to recover the
30 overpayment.
31 Section 40. Appeals process. Units of local government
32 have an obligation to provide, by ordinance, a procedure for
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1 appealing a determination of tax due or an assessment.
2 Taxpayers are entitled to receive a written statement of
3 rights whenever they receive a protestable notice of tax due,
4 a bill, a claim denial, or a notice of claim reduction
5 regarding any tax. The statement must explain the reason for
6 the assessment, the amount of the tax liability proposed, the
7 procedure for appealing the assessment, and the obligations
8 of the unit of local government during the audit, appeal,
9 refund, and collection process. In no event may a taxpayer
10 be provided a time period less than 60 days after the date
11 the notice was served in which to protest a notice of tax
12 determination or notice of tax liability. The unit of local
13 government must also adopt procedures for opening up any
14 closed protest period or extending the protest period upon
15 the showing of reasonable cause by the taxpayer.
16 Section 45. Interest. Units of local government must
17 provide by ordinance for the amount of interest, if any, to
18 be assessed on a late payment, underpayment, or nonpayment of
19 tax. In no event may an ordinance impose an interest charge
20 for late payment, underpayment, or nonpayment exceeding 1% of
21 the tax imposed by the ordinance per month on any late tax
22 payments or tax remittance or on any unpaid or unremitted tax
23 liability. Units of local government must pay interest to
24 taxpayers who have made overpayments of tax at the same rate
25 as interest charged on underpayments.
26 Section 50. Late filing penalties. Late filing
27 penalties may not exceed 2% of the tax due and not timely
28 paid or remitted to the unit of local government. A late
29 filing penalty may not apply if a failure to file penalty is
30 imposed by the unit of local government. A local tax
31 administrator may determine that the late filing was due to
32 reasonable cause and abate the penalty.
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1 Section 55. Late payment penalty. Late payment
2 penalties may not exceed 2% of the tax due and not timely
3 paid or remitted to the unit of local government. This
4 penalty shall not apply if a failure to file penalty is
5 imposed by the unit of local government. A local tax
6 administrator may determine that the late filing was due to
7 reasonable cause and abate the penalty.
8 Section 60. Failure to file penalty. If no return is
9 filed before the issuance of a notice of tax deficiency or of
10 tax liability to the taxpayer, any failure to file penalty
11 may not exceed 20% of the total tax due for the applicable
12 reporting period for which the return was required to have
13 been filed. A local tax administrator may determine that the
14 failure to file a return was due to reasonable cause and
15 abate the penalty.
16 Section 65. Credits and refunds. Taxpayers have a right
17 to obtain a credit or refund of overpaid tax, penalty, or
18 interest. If a tax ordinance does not provide for a credit
19 or refund, and it appears that an amount of tax, interest, or
20 penalty has been paid or remitted to the unit of local
21 government, the taxpayer may file a claim for credit or
22 refund, provided, however, that no person may be eligible for
23 a credit or refund unless the person had paid or remitted the
24 tax, interest, or penalty directly to the unit of local
25 government. Units of local government shall provide a form
26 or procedure for requesting a refund or credit. While a unit
27 of local government may provide for a longer statute of
28 limitations for filing a claim for refund or credit, in no
29 event may a statute of limitations on a claim made in writing
30 be less than 4 years after the end of the calendar year in
31 which payment or remittance in error was made. Any credit or
32 refund issued must bear interest, at a rate equal to the rate
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1 of interest charged for an underpayment of tax, from the date
2 the local government received the erroneous payment or
3 remittance until the date the credit or refund is issued.
4 Section 70. Erroneous written information. Units of
5 local government are obligated to abate taxes, interest, and
6 penalties assessed based upon erroneous written information
7 or written advice given by the local tax administrator.
8 Section 75. Installment contracts. If a local
9 government tax ordinance or a local tax administrator allows
10 installment payment agreements for delinquent tax amounts,
11 the local tax administrator may not cancel any installment
12 contract unless the taxpayer fails to pay any amount due on
13 time and fails to cure the delinquency in the allowable time
14 supplied by the local tax administrator, or fails to
15 demonstrate good faith in restructuring any installment plan
16 agreement or contract with the local tax administrator.
17 Section 80. Tax Appeal Officers. Units of local
18 government must appoint one or more Tax Appeal Officers. A
19 Tax Appeal Officer shall review requests for abatement of
20 taxes, interest, or penalties resulting from an audit of a
21 taxpayer's books and records based on collectability, equity,
22 or hardship. A Tax Appeal Officer has the power to abate, in
23 whole or in part, any tax, interest, or penalty with the
24 approval of the local tax administrator. A taxpayer may
25 apply to a Tax Appeal Officer for an abatement before,
26 during, or after any administrative hearing or judicial
27 process.
28 Appeal to the Tax Appeal Officer is a process separate
29 and distinct from any administrative hearing, if available,
30 or judicial process in which a taxpayer is protesting or
31 challenging any tax, interest, or penalty on factual or legal
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1 grounds.
2 Section 85. Voluntary disclosure. For any tax for which
3 a taxpayer has not received a written notice of an audit or
4 assessment from the local tax administrator, a taxpayer is
5 entitled to file an application with the local tax
6 administrator for a voluntary disclosure of the tax due. A
7 taxpayer filing a voluntary disclosure application must agree
8 to pay the amount of tax due, along with interest of one-half
9 percent per month, for all periods prior to the filing of the
10 application but not more than 4 years before the date of
11 filing the application. Except for the amount of tax and
12 interest due under this Section, a taxpayer filing a valid
13 voluntary disclosure application may not be liable for any
14 additional tax, interest, or penalty for any period before
15 the date the application was filed, provided, however, that
16 if the taxpayer incorrectly determined and underpaid the
17 amount of tax due as provided in this Section, the taxpayer
18 is liable for the underpaid tax along with applicable
19 interest on the underpaid tax, unless the underpayment was
20 the result of fraud on the part of the taxpayer, in which
21 case the application shall be deemed invalid and void. The
22 payment of tax and interest required under this Section must
23 be made within 90 days after the filing of the voluntary
24 disclosure application or the date agreed to by the local tax
25 administrator, whichever is longer, except that any
26 additional amounts owed as a result of an underpayment of tax
27 and interest previously paid under this Section must be paid
28 within 90 days after a final determination and the exhaustion
29 of all appeals of the additional amount owed or the date
30 agreed to by the local tax administrator, whichever is
31 longer.
32 Section 90. Willful and wanton actions. A taxpayer has
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1 the right to sue a unit of local government if the local tax
2 administrator willfully or wantonly disregards any laws,
3 regulations, or rules in collecting taxes. The maximum
4 recovery for damages for the suit shall be $100,000. If the
5 taxpayer's suit is determined by the court to be frivolous,
6 the court may impose a penalty on the taxpayer not to exceed
7 $10,000 to be collected as a tax.
8 Section 95. Review of liens. The local tax
9 administrator must establish an internal review process
10 concerning liens against taxpayers. If the lien is determined
11 to be improper, the local tax administrator must publicly
12 disclose that fact, remove the lien at its own expense, and
13 correct the taxpayer's credit record.
14 Section 100. Publication of tax ordinances. Each unit
15 of local government imposing locally administered taxes shall
16 forward a certified copy of each ordinance imposing such tax
17 to the Department of Revenue no later than January 1, 2001.
18 The Department of Revenue shall retain copies of local
19 government tax ordinances and shall maintain a computerized
20 database of those ordinances that is readily accessible to
21 interested and affected taxpayers. Units of local government
22 must notify the Department, in writing, of the adoption of
23 any new taxes or any amendments to existing taxes within 30
24 days after the adoption or amendment. Failure to timely
25 notify the Department of Revenue of an existing locally
26 administered tax ordinance, the adoption of a new locally
27 administered tax, or the amendment of a locally administered
28 tax shall prohibit enforcement of that tax or tax amendment
29 for the period of time in which the local government is not
30 in compliance with the disclosure requirements of this Act.
31 Section 999. Effective date. This Act takes effect upon
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1 becoming law.