Illinois Administrative Code › Title 86 - REVENUE › Part 100 - INCOME TAX › Subpart V - EMPLOYER'S RETURN AND PAYMENT OF TAX WITHHELD › Section 100.7370 - Penalty and Interest Provisions Relating to Reporting and Payment of Income Tax Withheld (IITA Sections 704 and 704A)

Current through Register Vol. 48, No. 28, July 12, 2024
a) Failure to file returns. In addition to
				any other penalties imposed by the IITA, an employer failing to file a
				quarterly return or the annual transmittal form for wage and tax statements
				required by IITA Section 704 or regulations promulgated under the statute shall
				incur a penalty for each such failure as prescribed by UPIA Section 3-3
				[35 ILCS
				735/3-3 ]. (IITA Section 1104) See 86 Ill. Adm. Code
				700.300
				for more guidance on the penalty for failure to file quarterly and annual
				returns.
b) Failure to pay. UPIA
				Section 3-3(b), (b-5), (b-10), (b-15) and (b-20) provides for penalties for
				failure to pay amounts shown due on a return on or before the due date for
				payment. Pursuant to 86 Ill. Adm. Code
				700.500(c),
				any payment of taxes withheld during a quarter shall be applied against the
				earliest unpaid liability for that quarter under Section
				100.7320(b)
				or (c) or
				100.7325(b)
				or (c).
EXAMPLE 1: An employer required to make semi-weekly payments
				  is required to deposit $500 on the 10th,
				  18th and 25th day of a
				  month and on the 3rd day of the following month.
				  Employer makes a payment of $700 on the 15th of the
				  month and pays the remaining $1,300 of the liability on the
				  15th of the following month. No other payments are
				  made during that period. $500 of the payment on the
				  15th of the month is applied in satisfaction of the
				  amount due on the 10th, and the remaining $200 is
				  applied toward the amount due on the 18th. The
				  remainder of the amount due on the 18th and the
				  remaining amounts due are unpaid until the 15th of
				  the following month. Any amount withheld in the following month and due on or
				  before the 15th of that month is subject to late
				  payment penalty because the payment made on the 15th
				  is applied to amounts due in the first month.
EXAMPLE 2: The employer in Example 1 makes payments of $500
				  on the 18th and 25th days
				  of the month and on the 3rd of the following month.
				  The balance is paid on the 15th of the following
				  month. The payment made on the 18th is applied to
				  the amount due on the 10th, the payment made on the
				  25th is applied to the amount due on the
				  18th, and the payment made on the
				  3rd is applied to the amount due on the
				  25th. The penalty for late payment will therefore
				  apply to all four amounts.
c) Failure to withhold. If an employer fails
				to deduct and withhold any amount of tax as required under Article 7 of the
				IITA, and thereafter the tax on account of which such amount was required to be
				deducted and withheld is paid, such amount of tax shall not be collected from
				the employer, but the employer shall not be relieved from liability for
				penalties or interest otherwise applicable in respect of such failure to deduct
				and withhold. (IITA Sections 706 and 713) The amount required to be deducted
				and withheld during a year shall be considered paid by the employee if the
				employee pays his or her entire Illinois income tax liability for that year,
				even if that liability is less than the amount required to be deducted and
				withheld by the employer. Any employer who fails to deduct and withhold the
				required amount of tax shall be liable for any underpayment of tax by the
				employee (excluding interest and penalties imposed on the employee), up to the
				amount the employer improperly failed to deduct and withhold, together with
				interest and penalties for failure to deduct and withhold; provided that the
				amount of tax due from the employee shall not be collected more than once under
				this provision.
d) Personal
				liability penalty. Any person required to collect, truthfully account for, and
				pay over the tax required to be paid over under Article 7 of the IITA who
				willfully fails to collect such tax or truthfully account for and pay over such
				tax or willfully attempts in any manner to evade or defeat the tax or the
				payment thereof shall, in addition to other penalties provided by law, be
				liable for the penalty imposed by UPIA Section 3-7. (IITA Section 1002(d)) (See
				86 Ill. Adm. Code
				700.340.)