Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart I - PENALTIES AND INTEREST › Section 130.901 - Civil Penalties

Current through Register Vol. 48, No. 28, July 12, 2024
a) Filing an
				Incorrect Return
If the tax computed upon the basis of the gross
				  receipts as fixed by the Department is greater than the amount of tax due under
				  the return or returns as filed, the Department shall (or if the tax or any part
				  thereof that is admitted to be due by a return or returns, whether filed on
				  time or not, is not paid, the Department may) issue the taxpayer a notice of
				  tax liability for the amount of tax claimed by the Department to be due,
				  together with a penalty in an amount determined in accordance with Section 3-3
				  of the Uniform Penalty and Interest Act
(UPIA)
. Provided, that
				  if the incorrectness of any return or returns as determined by the Department
				  is due to negligence or fraud, said penalty shall be in an amount determined in
				  accordance with Section 3-5 or Section 3-6 of the
UPIA. [35 ILCS
				  120/4]
b) Failure to File Return When Required, but
				Payment Prior to Notice of Tax Liability
In case any person engaged in the business of selling
				  tangible personal property at retail fails to file a return when and as herein
				  required, but thereafter, prior to the Department's issuance of a notice of tax
				  liability under
this Section
, files a return and pays the
				  tax,
the person
shall also pay a penalty in an amount
				  determined in accordance with Section 3-3 of the
UPIA
.
[35 ILCS 120/5]
c) Filing Return at Required Time but Failure
				to Pay Tax
In case any person engaged in the business of selling
				  tangible personal property at retail files the return at the time required
				  by
the Act
but fails to pay the tax, or any part thereof, when
				  due, a penalty in an amount determined in accordance with Section 3-3 of
				  the
UPIA
shall be added thereto.
[35 ILCS
				  120/5]
d) Filing Late Return Without Payment of
				Entire Tax
In case any person engaged in the business of selling
				  tangible personal property at retail fails to file a return when and as herein
				  required, but thereafter, prior to the Department's issuance of a notice of tax
				  liability under
this Section
, files a return but fails to pay
				  the entire tax, a penalty in an amount determined in accordance with Section
				  3-3 of the
UPIA
shall be added thereto.
[35 ILCS
				  120/5]
e) Failure to File Return When Required, and
				Failure to Pay Prior to Notice by Department
In case any person engaged in the business of selling
				  tangible personal property at retail fails to file a return, the Department
				  shall determine the amount of tax due from
the person
according to its best judgment and information, which amount so fixed
				  by the Department shall be prima facie correct and shall be prima facie
				  evidence of the correctness of the amount of tax due, as shown in such
				  determination. The Department shall issue the taxpayer a notice of tax
				  liability for the amount of tax claimed by the Department to be due, together
				  with a penalty of 30% thereof.
[35 ILCS
				  120/5]
f) Notice of Tax Liability
Upon issuance of a notice of tax liability (NTL), a
taxpayer or the taxpayer's legal representative may, within 60 days
				  after such notice, file a protest to such notice of tax liability with the
				  Department and request a hearing
. The Department shall provide notice
				  of the time and place of the hearing to the taxpayer or the taxpayer's legal
				  representative and shall hold a hearing in accordance with the Act. After the
				  hearing, the Department shall issue a final assessment of the amount due to the
				  taxpayer or the taxpayer's legal representative.
If a protest to a
				  notice of tax liability and a request for hearing is not filed within 60 days
				  after
issuance of a NTL,
such
NTL
shall
				  become final without the necessity of a final assessment being issued and shall
				  be deemed to be a final assessment.
[35 ILCS
				  120/5]
g) Effect of a Taxpayer's Bankruptcy Filing
				Upon a Notice of Tax Liability
If prior to the issuance of the NTL, a taxpayer has filed a
				  petition in U.S. Bankruptcy Court and the automatic stay is still in effect, or
				  if a taxpayer files such a petition within 60 days after the issuance of a NTL,
				  the automatic stay prevents any pre-petition liability included in the NTL from
				  becoming final even though not protested within 60 days after the issuance of
				  the NTL. If any pre-petition tax included in the NTL is not paid to the
				  Department through the bankruptcy proceeding, adjudicated by the bankruptcy
				  court, or discharged by the bankruptcy court, the taxpayer has 60 days after
				  termination of the automatic stay to protest the pre-petition liability and
				  request an administrative hearing pursuant to 86 Ill. Adm. Code
				  200.
h) Over-Collection of
				Tax or Collection of Tax on Nontaxable Receipts
If a seller collects an amount (however designated)
				  that purports to reimburse the seller for retailers' occupation tax liability
				  measured by receipts that are not subject to retailers' occupation tax, or if a
				  seller, in collecting an amount (however designated) that purports to reimburse
				  the seller for retailers' occupation tax liability measured by receipts that
				  are subject to tax under
the Act,
collects more from the
				  purchaser than the seller's retailers' occupation tax liability on the
				  transaction, the purchaser shall have a legal right to claim a refund of that
				  amount from the seller. If, however, that amount is not refunded to the
				  purchaser for any reason, the seller is liable to pay that amount to the
				  Department. This
subsection (h)
does not apply to an amount
				  collected by the seller as reimbursement for the seller's retailers' occupation
				  tax liability on receipts that are subject to tax under
the Act
as long as the collection is made in compliance with the tax collection
				  brackets prescribed by the Department
at 86 Ill. Adm. Code 150.Table
				  A. [35 ILCS
				  120/2-40]
EXAMPLE: A lessor of tangible personal property who paid Use
				  Tax up front upon acquisition of the rental property collects an amount
				  described in the rental statements as a "tax" from lessees. Because the lease
				  contract payment amounts do not generate a tax, the amounts collected as a
				  "tax" are a collection of tax on nontaxable receipts and the lessee has a legal
				  right to claim a refund of that amount. If the amount is not refunded, the
				  taxpayer must pay the amount to the Department. (See John Nottoli, Inc. v.
				  Department of Revenue, 272 Ill. App. 3d 822 (4th Dist. 1995)).
i) Filing Late Return Due to "Reasonable
				Cause"
1)
The penalties imposed
				under
Sections 3-3, 3-4, and 3-5 of the Uniform Penalty and Interest
				Act
shall not apply if the taxpayer shows that the
taxpayer's
failure to file a return or pay tax at the required time was due to
				reasonable cause.
[35 ILCS 735/3-8]
2) The Department will decide whether to
				abate a penalty by considering the extent to which the taxpayer made a good
				faith effort to determine the proper tax liability and pay the proper liability
				in a timely fashion. In making this determination the Department will use the
				standards set out in the Reasonable Cause Section (86 Ill. Adm. Code
				700.400) of the Uniform Penalty
				and Interest Act regulations.