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91_SB1440eng SB1440 Engrossed 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. SB1440 Engrossed -2- LRB9110653MWgc 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 SB1440 Engrossed -3- LRB9110653MWgc 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 SB1440 Engrossed -4- LRB9110653MWgc 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 SB1440 Engrossed -5- LRB9110653MWgc 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. SB1440 Engrossed -6- LRB9110653MWgc 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 payment 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 SB1440 Engrossed -7- LRB9110653MWgc 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 SB1440 Engrossed -8- LRB9110653MWgc 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 SB1440 Engrossed -9- LRB9110653MWgc 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 SB1440 Engrossed -10- LRB9110653MWgc 1 becoming law.