Illinois Administrative Code › Title 86 - REVENUE › Part 700 - UNIFORM PENALTY AND INTEREST ACT › Subpart B - INTEREST › Section 700.220 - Interest Charged Taxpayers (UPIA Section 3-2)

Current through Register Vol. 48, No. 28, July 12, 2024
a) Interest charged to taxpayers applicable
				for returns due on or before December 31, 2000 (without regard to extensions).
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 UPIA Section 3-2(c) on
				the amount so paid shall not be imposed for the period after the date of the
				notice and demand.
(UPIA Section 3-2(c))
b) Interest charged to taxpayers applicable
				for returns due on and after January 1, 2001 (without regard to extensions).
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 UPIA Section 3-2(c) on the amount
				so paid shall not be imposed for the period after the date of the notice and
				demand.
(UPIA Section 3-2(c)) Under this provision, interest shall not
				accrue on penalties.
EXAMPLE: A taxpayer timely filed his individual income tax
				  return on April 15, but because of an arithmetic error the taxpayer did not pay
				  the entire amount of tax due. If the return was due prior to January 1, 2001,
				  interest accrues on the unpaid tax liability and on any late payment penalty.
				  If the return was due on or after January 1, 2001, interest accrues on the
				  unpaid tax liability, but not on any late payment penalty.
c) Interest on tax shall accrue from the date
				of underpayment.
d) For returns due
				on or before December 31, 2000 (without regard to extensions), interest on any
				penalty shall accrue from the date the penalty is imposed.
EXAMPLE 1: Taxpayer's Retailers' Occupation Tax return for
				  the January 1994 liability period was due February 20, 1994. The return was
				  filed and tax was paid on May 25, 1994. Interest is charged on the tax due from
				  February 21, 1994 through May 25, 1994, the date the tax was paid, and on any
				  penalty assessed from February 21, 1994 through the date the penalty is
				  paid.
EXAMPLE 2: Taxpayer's Retailers' Occupation Tax return for
				  the November 1993 liability period was due December 20, 1993. The return was
				  filed and tax was paid on May 25, 1994. Interest is charged on the tax due at
				  the
				  1.25 % per month
				  or fraction of month rate from December 21, 1993 to December 31, 1993 (see ROTA
				  Section 5, prior to amendment by P.A. 87-205) and at the semiannually adjusted
				  daily rate imposed pursuant to the UPIA and this Part from January 1, 1994
				  through May 25, 1994, the date the tax was paid. No interest is charged on the
				  penalty assessed since the due date of the tax was before the effective date of
				  the UPIA.
EXAMPLE 3: Taxpayer's accelerated payments of the Public
				  Utilities Tax were due on the 7th,
				  15th, 22nd and
				  31st of January 1994. Each payment should have been
				  $3,000. Taxpayer did not make the payment due on January 31, but paid the
				  $3,000 with the monthly return that was filed, when due, on February 15, 1994.
				  The taxpayer will be charged a 15% late payment penalty under UPIA Section
				  3-3(b) because the last accelerated payment was not paid when due. Interest is
				  charged on the $3,000 late payment from February 1, 1994 through February 15,
				  1994, when the payment was received, and on the penalty from February 1, 1994
				  through the date the penalty is paid.
EXAMPLE 4: Corporation filed its calendar 1993 income tax
				  return on March 15, 1994, the unextended due date. The corporation was liable
				  for, but did not make, any estimated payments for the taxable year. The tax
				  liability reported on the return was paid in full when the return was filed.
				  Interest on the penalty for failure to make timely estimated tax payments
				  accrues from March 15, 1994 through the date the penalty is paid.
EXAMPLE 5: Corporation filed its calendar 1993 income tax
				  return on March 15, 1994, the unextended due date. The corporation properly
				  made all estimated payments and paid the remainder of its tax liability when
				  the return was filed. In 1997 an audit was completed on the corporation's 1993
				  return and additional liability was proposed. The corporation agreed to the
				  audit results but did not pay the liability until 35 days after the Notice and
				  Demand for payment was issued. A late payment penalty was assessed on the audit
				  liability under UPIA Section 3-3(b) and interest accrues on the penalty from
				  March 15, 1994 through the date the penalty is paid.