2023 Illinois Compiled Statutes › Chapter 35 - REVENUE › 35 ILCS 735/ - Uniform Penalty and Interest Act.

(35 ILCS 735/3-1) (from Ch. 120, par. 2603-1)
Sec. 3-1. 
		
		This Article may be cited as the Uniform Penalty and Interest Act.
(Source: P.A. 87-205.)
(35 ILCS 735/3-1A) (from Ch. 120, par. 2603-1A)
Sec. 3-1A. 
In this Article, references to this "Act" mean this "Article" and
references to "Department" mean the Department of Revenue. Unless otherwise
specified in a tax Act, this Act applies to all taxes administered by the
Department of Revenue, except for the Racing Privilege Tax Act, the provisions of the Property
Tax Code except as expressly provided in Section 31-15 of the Property Tax Code, the Real Estate Transfer Tax Act, and the
Coin Operated Amusement Device Tax.
(Source: P.A. 98-929, eff. 8-15-14.)
(35 ILCS 735/3-2) (from Ch. 120, par. 2603-2)
Sec. 3-2. Interest.
(a) Interest paid by the Department to taxpayers and interest
charged to taxpayers by the Department shall be paid at the annual
rate determined by the Department. For periods prior to January 1, 2004, and after December 31, 2013, that
rate shall be the underpayment
rate established under Section 6621 of the  Internal Revenue Code. For periods
after December 31, 2003, and prior to January 1, 2014, that rate shall be:
(1) for the one-year period beginning with the date     of underpayment or overpayment, the short-term federal rate established under Section 6621 of the Internal Revenue Code.
(2) for any period beginning the day after the     one-year period described in paragraph (1) of this subsection (a), the underpayment rate established under Section 6621 of the Internal Revenue Code.
(b) The interest rate shall be adjusted on a semiannual basis, on
January 1 and July 1, based upon the underpayment rate or short-term federal
rate going into
effect on that January 1 or July 1 under Section 6621 of the Internal
Revenue Code.
(c) This subsection (c) is applicable to returns due on and before
December 31, 2000.
Interest shall be simple interest calculated on a daily basis.
Interest shall accrue upon tax and penalty due.  If notice and demand
is made for the payment of any amount of tax due and if the amount due is
paid within 30 days after the date of such notice and demand, interest
under this Section on the amount so paid shall not be imposed for the
period after the date of the notice and demand.
(c-5) This subsection (c-5) is applicable to returns due on and after
January 1, 2001.
Interest shall be simple interest calculated on a daily basis.  Interest shall
accrue upon tax due.  If notice and demand is made for the payment of any
amount of tax due and if the amount due is paid within 30 days after the date
of the notice and demand, interest under this Section on the amount so paid
shall not be imposed for the period after the date of the notice and demand.
(d) No interest shall be paid upon any overpayment of tax if the
overpayment is refunded or a credit approved within 90 days after the last
date prescribed for filing the original return,
or within 90 days of the receipt of the processable return, or within 90
days after the date of overpayment, whichever date is latest, as determined
without regard to processing time by the Comptroller or without regard to
the date on which the credit is applied to the taxpayer's account.
In order for an original return to be processable for purposes of this
Section, it must be in the form prescribed or approved by
the Department, signed by the person authorized by law, and contain all
information, schedules, and support documents necessary to determine the
tax due and to make allocations of tax as prescribed by law.
For the purposes of computing interest, a return shall be deemed to be
processable unless the Department notifies the taxpayer that the return is
not processable within 90 days after the receipt of the return; however,
interest shall not accumulate for the period following this date of notice.
Interest on amounts refunded or credited pursuant to the filing of an
amended return or claim for refund shall be determined from the due date of
the original return or the date of overpayment, whichever is later, to the
date of payment by the Department without regard to processing time by the
Comptroller or the date of credit by the Department or without regard to
the date on which the credit is applied to  the taxpayer's account. If a
claim for refund relates to an overpayment attributable to a net loss
carryback as provided by Section 207 of the Illinois Income Tax Act, the
date of overpayment shall be the last day of the taxable year in which the
loss was incurred.
(e) Interest on erroneous refunds. Any portion of the tax imposed by an
Act to which this Act is applicable or any interest or penalty which has
been erroneously refunded and which is recoverable by the Department shall
bear interest from the date of payment of the refund. However, no interest
will be charged if the erroneous refund is for an amount less than $500 and
is due to a mistake of the Department.
(f) If a taxpayer has a tax liability for the taxable period ending after June 30,
1983 and prior to July 1, 2002 that is eligible for amnesty under
the Tax Delinquency Amnesty Act and the taxpayer fails to satisfy the tax
liability during the amnesty period provided for in that Act for that taxable period, then the interest
charged by the Department under this Section shall be
imposed at a rate that is 200% of the rate that would otherwise be imposed
under this Section.
(g) If a taxpayer has a tax liability for the taxable period ending after June 30, 2002 and prior to July 1, 2009 that is eligible for amnesty under the
Tax Delinquency Amnesty Act, except for any tax liability reported pursuant to Section 506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that is not final,  and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the interest charged by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(h) No interest shall be paid to a taxpayer on any refund allowed under the Tax Delinquency Amnesty Act.
(Source: P.A. 98-425, eff. 8-16-13.)
(35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
Sec. 3-3. Penalty for failure to file or pay.
(a) This subsection (a) is applicable before January 1, 1996.  A penalty
of 5% of the tax required to be shown due on a return shall be
imposed for failure to file the tax return on or before the due date prescribed
for filing determined with regard for any extension of time for filing
(penalty
for late filing or nonfiling).  If any unprocessable return is corrected and
filed within 21 days after notice by the Department, the late filing or
nonfiling penalty shall not apply.  If a penalty for late filing or nonfiling
is imposed in addition to a penalty for late payment, the total penalty due
shall be the sum of the late filing penalty and the applicable late payment
penalty.
Beginning on the effective date of this amendatory Act of 1995, in the case
of any type of tax return required to be filed more frequently
than annually, when the failure to file the tax return on or before the
date prescribed for filing (including any extensions) is shown to be
nonfraudulent and has not occurred in the 2 years immediately preceding the
failure to file on the prescribed due date, the penalty imposed by Section
3-3(a) shall be abated.
(a-5) This subsection (a-5) is applicable to returns due on and after
January 1, 1996 and on or before December 31, 2000.
A penalty equal to 2% of
the tax required to be shown due on a return, up to a maximum amount of $250,
determined without regard to any part of the tax that is paid on time or by any
credit that was properly allowable on the date the return was required to be
filed, shall be
imposed for failure to file the tax return on or before the due date prescribed
for filing determined with regard for any extension of time for filing.
However, if any return is not filed within 30 days after notice of nonfiling
mailed by the Department to the last known address of the taxpayer contained in
Department records, an additional penalty amount shall be imposed equal to the
greater of $250 or 2% of the tax shown on the return.  However, the additional
penalty amount may not exceed $5,000 and is determined without regard to any
part of the tax that is paid on time or by any credit that was properly
allowable on the date the return was required to be filed (penalty
for late filing or nonfiling).  If any unprocessable return is corrected and
filed within 30 days after notice by the Department, the late filing or
nonfiling penalty shall not apply.  If a penalty for late filing or nonfiling
is imposed in addition to a penalty for late payment, the total penalty due
shall be the sum of the late filing penalty and the applicable late payment
penalty.
In the case of any type of tax return required to be filed more frequently
than annually, when the failure to file the tax return on or before the
date prescribed for filing (including any extensions) is shown to be
nonfraudulent and has not occurred in the 2 years immediately preceding the
failure to file on the prescribed due date, the penalty imposed by Section
3-3(a-5) shall be abated.
(a-10) This subsection (a-10) is applicable to returns due on and after
January 1, 2001.
A penalty equal to 2% of
the tax required to be shown due on a return, up to a maximum amount of $250,
reduced by any tax that is
paid on time or by any
credit that was properly allowable on the date the return was required to be
filed, shall be
imposed for failure to file the tax return on or before the due date prescribed
for filing determined with regard for any extension of time for filing.
However, if any return is not filed within 30 days after notice of nonfiling
mailed by the Department to the last known address of the taxpayer contained in
Department records, an additional penalty amount shall be imposed equal to the
greater of $250 or 2% of the tax shown on the return.  However, the additional
penalty amount may not exceed $5,000 and is determined without regard to any
part of the tax that is paid on time or by any credit that was properly
allowable on the date the return was required to be filed (penalty
for late filing or nonfiling).  If any unprocessable return is corrected and
filed within 30 days after notice by the Department, the late filing or
nonfiling penalty shall not apply.  If a penalty for late filing or nonfiling
is imposed in addition to a penalty for late payment, the total penalty due
shall be the sum of the late filing penalty and the applicable late payment
penalty.
In the case of any type of tax return required to be filed more frequently
than annually, when the failure to file the tax return on or before the
date prescribed for filing (including any extensions) is shown to be
nonfraudulent and has not occurred in the 2 years immediately preceding the
failure to file on the prescribed due date, the penalty imposed by this subsection (a-10) shall be abated. This subsection (a-10) does not apply to transaction reporting returns required by Section 3 of the Retailers' Occupation Tax Act and Section 9 of the Use Tax Act that would not, when properly prepared and filed, result in the imposition of a tax; however, those returns are subject to the penalty set forth in subsection (a-15).
(a-15) A penalty of $100 shall be imposed for failure to file a transaction reporting return required by Section 3 of the Retailers' Occupation Tax Act and Section 9 of the Use Tax Act on or before the date a return is required to be filed; provided, however, that this penalty shall be imposed only if the return when properly prepared and filed would not result in the imposition of a tax. If such a transaction reporting return would result in the imposition of a tax when properly prepared and filed, then that return is subject to the provisions of subsection (a-10).
(b) This subsection is applicable before January 1, 1998.
A penalty of 15% of the tax shown on the return or the tax required to
be shown due on the return shall be imposed for failure to pay:
(1) the tax shown due on the return on or before the     due date prescribed for payment of that tax, an amount of underpayment of estimated tax, or an amount that is reported in an amended return other than an amended return timely filed as required by subsection (b) of Section 506 of the Illinois Income Tax Act (penalty for late payment or nonpayment of admitted liability); or
(2) the full amount of any tax required to be shown     due on a return and which is not shown (penalty for late payment or nonpayment of additional liability), within 30 days after a notice of arithmetic error, notice and demand, or a final assessment is issued by the Department. In the case of a final assessment arising following a protest and hearing, the 30-day period shall not begin until all proceedings in court for review of the final assessment have terminated or the period for obtaining a review has expired without proceedings for a review having been instituted.  In the case of a notice of tax liability that becomes a final assessment without a protest and hearing, the penalty provided in this paragraph (2) shall be imposed at the expiration of the period provided for the filing of a protest.
(b-5) This subsection is applicable to returns due on and after January
1, 1998 and on or before December 31, 2000.
A penalty of 20% of the tax shown on the return or the tax required to be
shown due on the return shall be imposed for failure to
pay:
(1) the tax shown due on the return on or before the     due date prescribed for payment of that tax, an amount of underpayment of estimated tax, or an amount that is reported in an amended return other than an amended return timely filed as required by subsection (b) of Section 506 of the Illinois Income Tax Act (penalty for late payment or nonpayment of admitted liability); or
(2) the full amount of any tax required to be shown     due on a return and which is not shown (penalty for late payment or nonpayment of additional liability), within 30 days after a notice of arithmetic error, notice and demand, or a final assessment is issued by the Department. In the case of a final assessment arising following a protest and hearing, the 30-day period shall not begin until all proceedings in court for review of the final assessment have terminated or the period for obtaining a review has expired without proceedings for a review having been instituted.  In the case of a notice of tax liability that becomes a final assessment without a protest and hearing, the penalty provided in this paragraph (2) shall be imposed at the expiration of the period provided for the filing of a protest.
(b-10) This subsection (b-10) is applicable to returns due on and after
January 1, 2001 and on or before December 31, 2003.  A penalty shall be
imposed for failure to pay:
(1) the tax shown due on a return on or before the     due date prescribed for payment of that tax, an amount of underpayment of estimated tax, or an amount that is reported in an amended return other than an amended return timely filed as required by subsection (b) of Section 506 of the Illinois Income Tax Act (penalty for late payment or nonpayment of admitted liability).  The amount of penalty imposed under this subsection (b-10)(1) shall be 2% of any amount that is paid no later than 30 days after the due date, 5% of any amount that is paid later than 30 days after the due date and not later than 90 days after the due date, 10% of any amount that is paid later than 90 days after the due date and not later than 180 days after the due date, and 15% of any amount that is paid later than 180 days after the due date. If notice and demand is made for the payment of any amount of tax due and if the amount due is paid within 30 days after the date of the notice and demand, then the penalty for late payment or nonpayment of admitted liability under this subsection (b-10)(1) on the amount so paid shall not accrue for the period after the date of the notice and demand.
(2) the full amount of any tax required to be shown     due on a return and that is not shown (penalty for late payment or nonpayment of additional liability), within 30 days after a notice of arithmetic error, notice and demand, or a final assessment is issued by the Department.  In the case of a final assessment arising following a protest and hearing, the 30-day period shall not begin until all proceedings in court for review of the final assessment have terminated or the period for obtaining a review has expired without proceedings for a review having been instituted.  The amount of penalty imposed under this subsection (b-10)(2) shall be 20% of any amount that is not paid within the 30-day period.  In the case of a notice of tax liability that becomes a final assessment without a protest and hearing, the penalty provided in this subsection (b-10)(2) shall be imposed at the expiration of the period provided for the filing of a protest.
(b-15) This subsection (b-15) is applicable to returns due on and after
January 1, 2004 and on or before December 31, 2004. A penalty shall be imposed for failure to pay the tax shown due or
required to be shown due on a return on or before the due date prescribed for
payment of that tax, an amount of underpayment of estimated tax, or an amount
that is reported in an amended return other than an amended return timely filed
as required by subsection (b) of Section 506 of the Illinois Income Tax Act
(penalty for late payment or nonpayment of admitted liability). The amount of
penalty imposed under this subsection (b-15)(1) shall be 2% of any amount that
is paid no later than 30 days after the due date, 10% of any amount that is
paid later than 30 days after the due date and not later than 90 days after the
due date, 15% of any amount that is paid later than 90 days after the due date
and not later than 180 days after the due date, and 20% of any amount that is
paid later than 180 days after the due date. If notice and demand is made for
the payment of any amount of tax due and if the amount due is paid within 30
days after the date of this notice and demand, then the penalty for late
payment or nonpayment of admitted liability under this subsection (b-15)(1) on
the amount so paid shall not accrue for the period after the date of the notice
and demand.
(b-20) This subsection (b-20) is applicable to returns due on and after January 1, 2005 and before January 1, 2024.
(1) A penalty shall be imposed for failure to pay,     prior to the due date for payment, any amount of tax the payment of which is required to be made prior to the filing of a return or without a return (penalty for late payment or nonpayment of estimated or accelerated tax). The amount of penalty imposed under this paragraph (1) shall be 2% of any amount that is paid no later than 30 days after the due date and 10% of any amount that is paid later than 30 days after the due date.
(2) A penalty shall be imposed for failure to pay the     tax shown due or required to be shown due on a return on or before the due date prescribed for payment of that tax or an amount that is reported in an amended return other than an amended return timely filed as required by subsection (b) of Section 506 of the Illinois Income Tax Act (penalty for late payment or nonpayment of tax). The amount of penalty imposed under this paragraph (2) shall be 2% of any amount that is paid no later than 30 days after the due date, 10% of any amount that is paid later than 30 days after the due date and prior to the date the Department has initiated an audit or investigation of the taxpayer, and 20% of any amount that is paid after the date the Department has initiated an audit or investigation of the taxpayer; provided that the penalty shall be reduced to 15% if the entire amount due is paid not later than 30 days after the Department has provided the taxpayer with an amended return (following completion of an occupation, use, or excise tax audit) or a form for waiver of restrictions on assessment (following completion of an income tax audit); provided further that the reduction to 15% shall be rescinded if the taxpayer makes any claim for refund or credit of the tax, penalties, or interest determined to be due upon audit, except in the case of a claim filed pursuant to subsection (b) of Section 506 of the Illinois Income Tax Act or to claim a carryover of a loss or credit, the availability of which was not determined in the audit.  For purposes of this paragraph (2), any overpayment reported on an original return that has been allowed as a refund or credit to the taxpayer shall be deemed to have not been paid on or before the due date for payment and any amount paid under protest pursuant to the provisions of the State Officers and Employees Money Disposition Act shall be deemed to have been paid after the Department has initiated an audit and more than 30 days after the Department has provided the taxpayer with an amended return (following completion of an occupation, use, or excise tax audit) or a form for waiver of restrictions on assessment (following completion of an income tax audit).
(3) The penalty imposed under this subsection (b-20)     shall be deemed assessed at the time the tax upon which the penalty is computed is assessed, except that, if the reduction of the penalty imposed under paragraph (2) of this subsection (b-20) to 15% is rescinded because a claim for refund or credit has been filed, the increase in penalty shall be deemed assessed at the time the claim for refund or credit is filed.
(b-25) This subsection (b-25) is applicable to returns due on or after January 1, 2024.
(1) A penalty shall be imposed for failure to pay,     prior to the due date for payment, any amount of tax the payment of which is required to be made prior to the filing of a return or without a return (penalty for late payment or nonpayment of estimated or accelerated tax). The amount of penalty imposed under this paragraph (1) shall be 2% of any amount that is paid no later than 30 days after the due date and 10% of any amount that is paid later than 30 days after the due date.
(2) A penalty shall be imposed for failure to pay the     tax shown due or required to be shown due on a return on or before the due date prescribed for payment of that tax (penalty for late payment or nonpayment of tax). The amount of penalty imposed under this paragraph (2) shall be 2% of any amount that is paid no later than 30 days after the due date, 10% of any amount that is paid later than 30 days after the due date and prior to the date the Department initiates an audit or investigation of the taxpayer, and 20% of any amount that is paid after the date the Department initiates an audit or investigation of the taxpayer; provided that the penalty shall be reduced to 15% if the entire amount due is paid not later than 30 days after the Department provides the taxpayer with an amended return (following completion of an occupation, use, or excise tax audit) or a form for waiver of restrictions on assessment (following completion of an income tax audit); provided further that the reduction to 15% shall be rescinded if the taxpayer makes any claim for refund or credit of the tax, penalties, or interest determined to be due upon audit, except in the case of a claim filed pursuant to subsection (b) of Section 506 of the Illinois Income Tax Act or to claim a carryover of a loss or credit, the availability of which was not determined in the audit.  For purposes of this paragraph (2):
(A) any overpayment reported on an original         return that has been allowed as a refund or credit to the taxpayer shall be deemed to have not been paid on or before the due date for payment;
(B) any amount paid under protest pursuant to the         provisions of the State Officers and Employees Money Disposition Act shall be deemed to have been paid after the Department has initiated an audit and more than 30 days after the Department has provided the taxpayer with an amended return (following completion of an occupation, use, or excise tax audit) or a form for waiver of restrictions on assessment (following completion of an income tax audit); and
(C)  any liability resulting from a federal         change required to be reported under subsection (b) of Section 506 of the Illinois Income Tax Act that is reported and paid no later than the due date for filing the federal change amended return shall be deemed to have been paid on or before the due date prescribed for payment.
(3) The penalty imposed under this subsection (b-25)     shall be deemed assessed at the time the tax upon which the penalty is computed is assessed, except that, if the reduction of the penalty imposed under paragraph (2) of this subsection (b-25) to 15% is rescinded because a claim for refund or credit has been filed, the increase in penalty shall be deemed assessed at the time the claim for refund or credit is filed.
(c) For purposes of the late payment penalties, the basis of the penalty
shall be the tax shown or required to be shown on a return, whichever is
applicable, reduced by any part of the tax which is paid on time and by any
credit which was properly allowable on the date the return was required to
be filed.
(d) A penalty shall be applied to the tax required to be shown even if
that amount is less than the tax shown on the return.
(e) This subsection (e) is applicable to returns due before January 1,
2001.
If both a subsection (b)(1) or (b-5)(1) penalty and a subsection (b)(2)
or (b-5)(2) penalty are assessed against the same return, the subsection
(b)(2) or (b-5)(2) penalty shall
be assessed against only the additional tax found to be due.
(e-5) This subsection (e-5) is applicable to returns due on and after
January 1, 2001.
If both a subsection (b-10)(1) penalty and a subsection
(b-10)(2) penalty are assessed against the same return,
the subsection (b-10)(2) penalty shall be assessed against
only the additional tax found to be due.
(f) If the taxpayer has failed to file the return, the Department shall
determine the correct tax according to its best judgment and information,
which amount shall be prima facie evidence of the correctness of the tax due.
(g) The time within which to file a return or pay an amount of tax due
without imposition of a penalty does not extend the time within which to
file a protest to a notice of tax liability or a notice of deficiency.
(h) No return shall be determined to be unprocessable because of the
omission of any information requested on the return pursuant to Section
2505-575
of the Department of Revenue Law (20 ILCS 2505/2505-575).
(i) If a taxpayer has a tax liability for the taxable period ending after June 30,
1983 and prior to July 1, 2002 that is eligible for amnesty under the
Tax Delinquency Amnesty Act and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the penalty imposed by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(j) If a taxpayer has a tax liability for the taxable period ending after June 30, 2002 and prior to July 1, 2009 that is eligible for amnesty under the
Tax Delinquency Amnesty Act, except for any tax liability reported pursuant to Section 506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that is not final, and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the penalty imposed by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(Source: P.A. 103-98, eff. 1-1-24.)
(35 ILCS 735/3-4) (from Ch. 120, par. 2603-4)
Sec. 3-4. Penalty for failure to file correct information returns.
(a) Failure to file correct information returns - imposition of penalty.
(1) In general. Unless otherwise provided in a tax     Act, in the case of a failure described in paragraph (2) of this subsection (a) by any person with respect to an information return, that person shall pay a penalty of $5 for each return or statement with respect to which the failure occurs, but the total amount imposed on that person for all such failures during any calendar year shall not exceed $25,000.
(2) Failures subject to penalty. The following     failures are subject to the penalty imposed in paragraph (1) of this subsection (a):
(A) any failure to file an information return         with the Department on or before the required filing date, or
(B) any failure to include all of the information         required to be shown on the return or the inclusion of incorrect information.
(b) Reduction where correction in specified period.
(1) Correction within 60 days. If any failure     described in subsection (a) (2) is corrected within 60 days after the required filing date:
(A) the penalty imposed by subsection (a) shall         be reduced by 50%; and
(B) the total amount imposed on the person for         all such failures during any calendar year which are so corrected shall not exceed 50% of the maximum prescribed in subsection (a) (1).
(c) Information return defined. An information return is any tax return
required by a tax Act to be filed with the Department that does not, by law,
require the payment of a tax liability.
(d) If a taxpayer has a tax liability for the taxable period ending after June 30,
1983 and prior to July 1, 2002 that is eligible for amnesty under
the Tax Delinquency Amnesty Act and the taxpayer fails to satisfy the tax
liability during the amnesty period provided for in that Act for that taxable period, then the penalty
imposed by the Department under this Section shall be
imposed in an amount that is 200% of the amount that would otherwise be imposed
under this Section.
(e) If a taxpayer has a tax liability for the taxable period ending after June 30, 2002 and prior to July 1, 2009 that is eligible for amnesty under the
Tax Delinquency Amnesty Act, except for any tax liability reported pursuant to Section 506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that is not final, and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the penalty imposed by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(Source: P.A. 96-1435, eff. 8-16-10.)
(35 ILCS 735/3-4.5)
Sec. 3-4.5. 
		Collection penalty.
(a) If any liability (including any liability for penalties or interest
imposed under this Act)
owed by a taxpayer with respect to any return due on or after July 1, 2003, is
not paid in full
prior to the date specified in subsection (b) of this Section, a collection
penalty shall be imposed
on the taxpayer. The penalty shall be deemed assessed as of the date specified
in subsection
(b) of this Section and shall be
considered additional State tax of the taxpayer imposed under the law under
which the tax being collected was imposed.
(b) The penalty under subsection (a) of this
Section shall be imposed if
full payment is not received prior to the 31st day after a notice and demand, a
notice of additional
tax due or a request
for payment of a final liability is issued by the Department.
(c) The penalty imposed under this Section shall be:
(1) $30 in any case in which the amount of the     liability shown on the notice and demand, notice of additional tax due, or other request for payment that remains unpaid as of the date specified in subsection (b) of this Section is less than $1,000; or
(2) $100 in any case in which the amount of the     liability shown on the notice and demand, notice of additional tax due, or other request for payment that remains unpaid as of the date specified in subsection (b) of this Section is $1,000 or more.
(Source: P.A. 93-32, eff. 6-20-03.)
(35 ILCS 735/3-5) (from Ch. 120, par. 2603-5)
Sec. 3-5. Penalty for negligence.
(a) If any return or amended return is prepared negligently, but without
intent to defraud, and filed, in addition to any penalty imposed under
Section 3-3 of this Act, a penalty shall be imposed in an amount equal to
20% of any resulting deficiency.
(b) Negligence includes any failure to make a reasonable attempt to
comply with the provisions of any tax Act and includes careless, reckless,
or intentional disregard of the law or regulations.
(c) No penalty shall be imposed under this Section
if it is shown that failure to comply with the tax Act is due to reasonable
cause.  A taxpayer is not negligent if the taxpayer shows substantial authority
to support the return as filed.
(d) If a taxpayer has a tax liability for the taxable period ending after June 30,
1983 and prior to July 1, 2002 that is eligible for amnesty under
the Tax Delinquency Amnesty Act and the taxpayer fails to satisfy the tax
liability during the amnesty period provided for in that Act for that taxable period, then the penalty
imposed by the Department shall be imposed in an amount
that is 200% of the amount that would otherwise be imposed in accordance with
this Section.
(e) If a taxpayer has a tax liability for the taxable period ending after June 30, 2002 and prior to July 1, 2009 that is eligible for amnesty under the
Tax Delinquency Amnesty Act, except for any tax liability reported pursuant to Section 506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that is not final, and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the penalty imposed by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(Source: P.A. 96-1435, eff. 8-16-10.)
(35 ILCS 735/3-6) (from Ch. 120, par. 2603-6)
Sec. 3-6. Penalty for fraud.
(a) If any return or amended return is filed with intent to defraud, in
addition to any penalty imposed under Section 3-3 of this Act, a penalty
shall be imposed in an amount equal to 50% of any resulting deficiency.
(b) If any claim is filed with intent to defraud, a penalty shall be
imposed in an amount equal to 50% of the amount fraudulently claimed for
credit or refund.
(c) If a taxpayer has a tax liability for the taxable period ending after June 30,
1983 and prior to July 1, 2002 that is eligible for amnesty under
the Tax Delinquency Amnesty Act and the taxpayer fails to satisfy the tax
liability during the amnesty period provided for in that Act for that taxable period, then the penalty
imposed by the Department under this Section shall be imposed in an amount that
is 200% of the amount that would otherwise be imposed under this Section.
(d) If a taxpayer has a tax liability for the taxable period ending after June 30, 2002 and prior to July 1, 2009 that is eligible for amnesty under the
Tax Delinquency Amnesty Act, except for any tax liability reported pursuant to Section 506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that is not final, and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the penalty imposed by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(Source: P.A. 96-1435, eff. 8-16-10.)
(35 ILCS 735/3-7) (from Ch. 120, par. 2603-7)
Sec. 3-7. 
		Personal Liability Penalty.
(a) Any officer or employee of any taxpayer subject to the provisions of
a tax Act administered by the Department who has the control, supervision
or responsibility of filing returns and making payment of the amount of any
trust tax imposed in accordance with that Act and who wilfully fails to file
the return or make the payment to the Department or wilfully attempts in any
other manner to evade or defeat the tax shall be personally liable for a
penalty equal to the total amount of tax unpaid by the taxpayer including
interest and penalties thereon. The Department shall determine a penalty due
under this Section according to its best judgment and information, and that
determination shall be prima facie correct and shall be prima facie
evidence of a penalty due under this Section.  Proof of that determination
by the Department shall be made at any hearing before it or in any legal
proceeding by reproduced copy or computer printout of the Department's
record relating thereto in the name of the Department under the certificate
of the Director of Revenue.  If reproduced copies of the Department's
records are offered as proof of that determination, the Director must
certify that those copies are true and exact copies of records on file with
the Department.  If computer print-outs of the Department's records are
offered as proof of such determination, the Director must certify that
those computer print-outs are true and exact representations of records
properly entered into standard electronic computing equipment, in the
regular course of the Department's business, at or reasonably near the time
of the occurrence of the facts recorded, from trustworthy and reliable
information.  That certified reproduced copy or certified computer
print-out shall without further proof, be admitted into evidence before the
Department or in any legal proceeding and shall be prima facie proof of the
correctness of the amount of tax or penalty due.
(b) The Department shall issue a notice of penalty liability for the
amount claimed by the Department pursuant to this Section.  Procedures for
protest and review of a notice of penalty liability issued pursuant to this
Section and assessment of the penalty due hereunder shall be the same as
those prescribed for protest and review of a notice of tax liability or a
notice of deficiency, as the case may be, and the assessment of tax
liability under the Act imposing that liability.
(b-5) Any person filing an action under the Administrative Review Law to
review a final assessment or revised final assessment (except a final
assessment or revised final assessment relating to any trust tax imposed in
accordance with the Illinois Income Tax Act) issued by the Department under
this Section shall, within 20 days after filing the complaint, file a bond with
good and sufficient surety or sureties residing in this State or licensed to do
business in this State, or instead of bond, obtain an order from the court
imposing a lien upon the plaintiff's property as hereinafter provided.  If the
person filing the complaint fails to comply with this bonding requirement
within 20 days after filing the complaint, the Department shall file a motion
to dismiss and the court shall dismiss the action unless the person filing the
action complies with the bonding requirements set out with this provision
within
30 days after the filing of the Department's motion to dismiss.
Upon dismissal of a
complaint for failure to comply with this subsection, the court
shall enter judgment against the taxpayer and in favor of the Department
in the amount of the final assessment or revised final assessment, together
with any interest that has accrued since the Department issued the final
assessment or revised final assessment, and for costs.  The judgment is
enforceable as other judgments for the payment of money.
The amount of the bond
shall be fixed and approved by the court, but shall not be less than the amount
of the tax and penalty claimed to be due by the Department in its final
assessment or revised final assessment to the person filing the bond, plus the
amount of interest due from that person to the Department at the time when the
Department issued its final assessment or revised final assessment to that
person.
The bond must be
executed in favor of the Department and conditioned on the
taxpayer's payment within 30 days after termination of the proceedings for
judicial review of the amount of tax, penalty, and interest found by the
court to be due in those proceedings.  The bond, when filed and approved, is,
from that time until 2 years after termination of the
proceedings for judicial review in which the bond is filed, a lien against
the real estate situated in the county in which the bond is filed of the
person filing the bond and of the surety or sureties on the bond, until the
condition of the bond is complied with or until the bond is
canceled as provided in this subsection.
The lien does not apply, however, to the real property of a corporate
surety duly licensed to do business in this State.
If the person filing the bond fails to
keep its condition, the bond is forfeited, and the
Department may institute an action upon the bond in its own name for the
entire amount of the bond and costs.  An action upon the bond is in
addition to any other remedy provided by law.  If the person filing the
bond complies with its condition or if, in the proceedings for
judicial review in which the bond is filed, the court determines that no
tax, penalty, or interest is due, the bond shall be canceled by the issuer of
the bond.
If the court finds in a particular case that the plaintiff cannot
furnish a satisfactory surety or sureties for the kind of bond required
in this subsection, the court may relieve the plaintiff of the obligation of
filing a bond if, upon the timely application of the plaintiff for a lien in
place of a bond and accompanying proof, the court is satisfied that a lien
would secure the assessment as well as would a bond.  Upon that finding,
the court shall enter an order subjecting the plaintiff's real and personal
property (including subsequently acquired property) situated in the county in
which the order is entered to a lien in favor of the Department.  The lien
shall be for the amount of the tax and penalty claimed to be due by the
Department in its final assessment or revised final assessment, plus the amount
of interest due from that person to the Department at the time when the
Department issued its final assessment or revised final assessment to that
person.  The lien shall continue until the court determines in the proceedings
for judicial review that no tax, penalty, or interest is due, or until the
plaintiff pays to the Department the tax, penalty, and
interest secured by the lien.  In
its discretion, the court may impose a lien regardless of the ratio
of the taxpayer's assets to the final assessment or revised final assessment
plus the amount of the interest and penalty.  This subsection does not
give the Department a preference over the rights of a bona fide
purchaser, mortgagee, judgment creditor, or other lien holder arising before
the entry of the order creating the lien in favor of the Department.
"Bona fide", as used in this subsection, does
not include a mortgage of real or personal property or other credit
transaction that results in the mortgagee or the holder of the security acting
as trustee for unsecured creditors of the taxpayer
who executed the chattel or real property mortgage or the document
evidencing the credit transaction.  The lien is inferior to the lien of
general taxes, special assessments, and special taxes
levied by a political subdivision of this State.  The lien is not
effective against a purchaser with respect to an item in a retailer's stock
in trade purchased from the retailer in the usual course of the retailer's
business.  The lien may not be enforced against the household effects,
wearing apparel, books, or tools or implements of a trade or profession
kept for use by any person. The lien is not effective against real property
unless and until a
certified copy or memorandum of such order is recorded in the Office of the
Recorder of Deeds for the county or counties in which the
property is located. The lien is not effective against real
property whose title is registered under the provisions of the Registered
Titles (Torrens) Act until the provisions of Section 85 of that Act are
complied with.
Service upon the Director of Revenue or the Assistant Director of Revenue
of summons issued in an action to review a final
administrative decision of the Department is service upon the Department.
The Department shall certify the record of its proceedings if the taxpayer
pays to it 75¢ per page of testimony taken before the Department and 25¢ per
page of all other matters contained in the record, except that these charges
may be waived when the Department is satisfied that the aggrieved party is a
poor person who cannot afford to pay the charges.  If payment for the record is
not made by the taxpayer within 30 days after notice from the Department or the
Attorney General of the cost, the court in which the proceeding is
pending, on motion of the Department, shall dismiss the complaint
and (when the administrative decision as to which the action for judicial
review was filed is a final assessment or revised final assessment) shall enter
judgment against the taxpayer and in favor of the Department for the amount of
tax and penalty shown by the Department's final assessment or revised final
assessment to be due, plus interest as provided for in this Act from the date
when the liability upon which the interest accrued became delinquent until the
entry of the judgment in the action for judicial review under the
Administrative Review Law, and also for costs.
(c) The personal liability imposed by this Section shall survive the
dissolution of a partnership, limited liability company, or corporation.
No notice of penalty liability shall be issued after the expiration of 3 years
after the date all proceedings in court for the review of any final or revised
final assessments issued against a taxpayer which constitute the basis of such
penalty liability have terminated or the time for the taking thereof has
expired without such proceedings being instituted or after the expiration of 3
years after the date a return is filed with the Department by a taxpayer in
cases where the return constitutes the basis of such liability.
Interest shall continue to accrue on that portion of the penalty imposed by
this Section which represents the tax unpaid by the taxpayer at the same
rate and in the same amount as interest accrues on the tax unpaid by the
taxpayer.
(d) In addition to any other remedy provided for by the laws of this
State, and provided that no hearing or proceeding for review is pending,
any Section of a tax Act which provides a means for collection of taxes
shall in the same manner and to the same extent provide a means for the
collection of the penalty imposed by this Section.  The procedures for the
filing of an action for collection of the penalty imposed by this Section
shall be the same as those prescribed by a tax Act for the filing of an
action for collection of the tax assessed under that Act.  The time
limitation period on the Department's right to bring suit to recover the
amount of such tax, or portion thereof, or penalty or interest from such
person, or if deceased or incompetent to file a claim thereof against his
estate, shall not run during:  (1) any period of time in which the order of
any Court has the effect of enjoining or restraining the Department from
bringing such suit or claim against such person, or (2) any period of time
in which the order of the Court has the effect of enjoining or restraining
the Department from bringing suit or initiating other proper proceedings
for the collection of such amounts from the taxpayer, or (3) any
period of time the person departs from and remains out of the State; but
the foregoing provisions concerning absence from the
State shall not apply to any case in which, at the time when a tax or
penalty becomes due under this Act, the person allegedly liable therefor is
not a resident of this State.
(e) For the purposes of this Section, "officer or employee of any
taxpayer" includes a partner of a partnership, a manager or
member of a limited liability corporation, and a member of a
registered limited
liability partnership.
(f) A trust tax is any tax for which an amount is collected or
withheld by a taxpayer from another person, and any tax for which an amount
is required to be collected or withheld by a taxpayer from another person,
regardless of whether it is in fact collected or withheld.
(g) The personal liability imposed by this Section is in addition to
liability incurred by a partner of a partnership or limited liability
partnership resulting from the issuance of a notice of tax liability issued to
the partnership or limited liability partnership.
(h) In addition to any other basis for imposition of liability under this
Act including under subsection (a) of this Section, any person who collects,
withholds, or receives a tax, or any amount represented to be a tax, from
another person holds the amount so collected or withheld in special trust for
the benefit of the Department and is liable to the Department for the amount so
withheld or collected plus accrued interest and penalty on that amount.  For
purposes of this subsection, "person" shall have the same definition as
provided in Section 1 of the Retailers' Occupation Tax Act.
(Source: P.A. 90-458, eff. 8-17-97; 91-203, eff. 7-20-99.)
(35 ILCS 735/3-7.5)
Sec. 3-7.5. Bad check penalty.
(a) In addition to any other penalty provided
in this Act, a penalty of $25 shall be imposed on any person who issues a check
or other draft to the Department that is not honored upon presentment.  The
penalty imposed under this Section shall be deemed assessed at the time of
presentment of the check or other draft and shall be treated for all purposes,
including collection and allocation, as part of the tax or other liability for
which the check or other draft represented payment.
(b) If a taxpayer has a tax liability for the taxable period ending after June 30,
1983 and prior to July 1, 2002 that is eligible for amnesty under
the Tax Delinquency Amnesty Act and the taxpayer fails to satisfy the tax
liability during the amnesty period provided for in that Act for that taxable period, then the penalty
imposed by the Department under this Section shall be imposed in an amount that
is 200% of the amount that would otherwise be imposed under this Section.
(c) If a taxpayer has a tax liability for the taxable period ending after June 30, 2002 and prior to July 1, 2009 that is eligible for amnesty under the
Tax Delinquency Amnesty Act, except for any tax liability reported pursuant to Section 506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that is not final, and the taxpayer fails to satisfy the tax liability
during the amnesty period provided for in that Act for that taxable period, then the penalty imposed by
the Department under this Section shall be imposed in an amount that is 200% of
the amount that would otherwise be imposed under this Section.
(Source: P.A. 96-1435, eff. 8-16-10.)
(35 ILCS 735/3-8) (from Ch. 120, par. 2603-8)
Sec. 3-8. 
		No penalties if reasonable cause exists. 
		The penalties imposed
under the provisions of Sections 3-3, 3-4, 3-5, and 3-7.5
of this Act shall not apply if the taxpayer shows that his failure to file a
return or pay tax at the
required time was due to reasonable cause.  Reasonable cause shall be
determined in each situation in accordance with the rules and regulations
promulgated by the Department.  A taxpayer may protest the imposition of a
penalty under Section 3-3, 3-4, 3-5, or 3-7.5 on the basis
of reasonable cause without
protesting the underlying tax liability.
(Source: P.A. 91-803, eff. 1-1-01.)
(35 ILCS 735/3-9) (from Ch. 120, par. 2603-9)
Sec. 3-9. 
		Application of provisions.
(a) The provisions of this Act shall apply to the rates of interest for
periods on and after the effective date of this Act. Interest for periods
prior to the effective date of this Act shall be computed at the rates in
effect prior to that date.
(b) Penalties shall be imposed at the rate and in the manner in effect
at the time the tax liability became due.
(c) Interest shall not be paid on claims filed after the effective date
of this Act except such interest which is paid in accordance with this Act.
(d) Payments received from a taxpayer shall be applied against the
outstanding liability of the taxpayer, or to an agreed portion of the
outstanding liability, in the following order: the principal amount of the
tax, then penalty, and then interest.
(Source: P.A. 87-205.)
(35 ILCS 735/3-10) (from Ch. 120, par. 2603-10)
Sec. 3-10. 
		Limitations.
(a) In the case of a false or fraudulent return with the intent to
evade tax, the tax may be assessed at any time.
(b) In the case of a failure to file a return required by law, the tax
may be assessed at any time.  If the taxpayer shows that there
was reasonable cause for failure to file a return, the period shall be
limited to not more than 6 years after the original due date of each return
required to have been filed.
(c) In the case of a failure to file a return required by law that is
voluntarily disclosed to the Department, in accordance with regulations
promulgated by the Department for receiving the voluntary disclosure, the
tax may be assessed no more than 4 years after the original due
date of each return required to have been filed.
(d) The limitations on assessment shall not apply where the Department has,
within the 6-year period of limitation, notified a person that a return is
required by law from that person.  These limitations shall be tolled for any
time period in which the order of any court has the effect of enjoining or
restraining the Department from that assessment.
(Source: P.A. 87-1189.)
(35 ILCS 735/3-11)
Sec. 3-11. 
		Department and Taxpayer Study.
(a) Beginning 3 years after the
effective date of this amendatory Act of 1995, the Illinois Department of
Revenue shall
conduct a study of the effectiveness of Section 3-3 of this Act as a means of
ensuring timely filing of returns and payment of tax.  This study shall include
an examination of the effect of the imposition of the Section 3-3(a) late
filing or non-filing penalty on the filing of returns required by Section 704
of the Illinois Income Tax Act.  The study shall also include an examination of
the level of compliance with estimated
income tax payment requirements of Section 803 of the Illinois Income Tax Act,
prior to and subsequent to the incorporation of the late payment penalty of
Section 3-3(b) of this Act into Section 804 of the Illinois Income Tax Act.
(b) The Department shall seek the advice and participation of interested
taxpayers in this study.  The Department shall report the results of the study
to the Illinois General Assembly no later than 4 years after the effective date
of this amendatory Act of 1995.  The study shall contain the Department's
conclusions and
recommendations, along with the conclusions and recommendations of
participating
taxpayers should those conclusions and recommendations differ from those of the
Department.
(Source: P.A. 89-379, eff. 8-18-95.)
(35 ILCS 735/3-12)
Sec. 3-12. Appeal options. The Department of Revenue shall include a
statement of the appeal options available to the taxpayer, either by law or by
departmental rule, for each penalty for late payment, penalty for failure to
file a tax return on or before the due date for filing, and penalty for failure
to file correct information returns. This Act is subject to the provisions of the Illinois Independent Tax Tribunal Act of 2012.
(Source: P.A. 97-1129, eff. 8-28-12.)