Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart O - CLAIMS TO RECOVER ERRONEOUSLY PAID TAX › Section 130.1501 - Claims for Credit - Limitations - Procedure

Current through Register Vol. 48, No. 28, July 12, 2024
a) Limitations Upon Claims
1) Where a taxpayer under the Retailers'
				Occupation Tax Act pays to the Department an amount of tax or penalty or
				interest not due under the provisions of the Act, either as the result of a
				mistake of fact or an error of law, such taxpayer may file a claim for credit
				with the Department. Beginning August 17, 1995, tax is deemed to be erroneously
				paid by a retailer when the manufacturer of a motor vehicle sold by the
				retailer accepts the return of that automobile and refunds to the purchaser the
				purchase price of the vehicle, as provided in Section 3 of the New Vehicle
				Buyer Protection Act [815 ILCS 380/3 ]. The claim is
				limited to taxes applicable to the purchase price of the automobile refunded to
				the consumer, which includes all collateral charges required to be included in
				the sales tax calculation (e.g., documentary fees), but does not include any
				reasonable allowance for consumer use of the automobile deducted from the
				purchase price by the manufacturer. Retailers filing such claims must comply
				with all requirements of this Section.
2) The Department cannot approve any claim
				for credit unless the proof submitted in support thereof clearly establishes
				that the claimant has borne the burden of the tax erroneously paid or that the
				claimant has unconditionally repaid the amount of the tax to the vendee from
				whom the claimant has collected such amount. In the latter event, the claimant
				must also prove that the vendee has borne the burden of such amount or has
				unconditionally repaid persons to whom such vendee has shifted the burden of
				such amount (see Section 6 of the Retailers' Occupation Tax Act). The retailer
				will be considered to have satisfied the unconditional repayment requirement
				where it provides its purchaser with an instrument upon which the purchaser can
				make a demand upon the retailer/claimant for payment of the tax recovered if
				the claim is allowed. The retailer's provision of unconditional promissory
				notes or irrevocable credit memoranda to its purchasers who paid tax in error
				would satisfy this requirement. The purpose of requiring the retailer to make
				an unconditional repayment to its purchasers is to prevent unjust enrichment on
				the part of the retailer. Therefore, in order to establish that it was not
				unjustly enriched, the retailer filing a claim for credit must be able to
				demonstrate that it gave unconditional promissory notes or irrevocable credit
				memoranda to its purchasers who paid tax in error to the retailer.
3) In addition, if the Retailers' Occupation
				Tax was paid on receipts from a sale made on or after August 1, 1955, no credit
				shall be allowed for any such amount paid by or collected from any claimant
				unless it shall appear that the claimant has unconditionally repaid, to the
				purchaser, any amount collected from the purchaser and retained by the claimant
				with respect to the same transaction under the Use Tax Act.
4) The Department cannot approve any claim
				for credit to the extent that the amount claimed is an amount which has been
				paid (voluntarily or involuntarily) in total or partial liquidation of an
				assessment which had become final before the claim for credit to recover the
				amount so paid is filed with the Department, or if paid in total or partial
				liquidation of a judgment, order or decree of court. Also, all claims for
				credit are subject to the statute of limitations, as follows:
Provided that as to any claim for credit filed with
				  the Department on and after each January 1 and July 1 no amount of tax or
				  penalty or interest erroneously paid (either in total or partial liquidation of
				  a tax or penalty or amount of interest under the Act) more than 3 years prior
				  to such January 1 and July 1, respectively, shall be credited; . . . except
				  that if both the Department and the taxpayer have agreed to an extension of
				  time to issue a notice of tax liability as provided in Section 4 of the Act,
				  such claim may be filed at any time prior to the expiration of the period
				  agreed upon.
(Section 6 of the Act)
Beginning June 25, 2021,
for any period included in a
				  claim for credit or refund for which the statute of limitations for issuing a
				  notice of tax liability under this Act will expire less than 6 months after the
				  date a taxpayer files the claim for credit or refund, the statute of
				  limitations is automatically extended for 6 months from the date it would have
				  otherwise expired.
(Section 6 of the Act)
This means that the normal statute of limitations will vary
				  from 3 to 31/2 years as shown in the following examples:
A) On June 29, 2022 a taxpayer files a claim
				with the Department. The credit may be allowed for amounts paid on or after
				January 1, 2019. The credit will not be allowed for amounts paid on or before
				December 31, 2018.
B) A taxpayer
				files a claim with the Department on July 2, 2022. In this case, amounts paid
				on or before June 30, 2019 were paid more than three years prior to July 1,
				2022 and are not subject to refund.
C) A taxpayer files a claim on November 30,
				2021 for the months of October through December 2018. The claim will be
				processed by the Department because the time period that is open under the
				statute of limitations extends back through July 1, 2018.
D) A taxpayer files a claim on January 5,
				2000 for the month of October 1996 that was paid on November 20, 1996. The
				claim will not be approved by the Department because it is barred by the
				statute of limitations. A claim filed on January 5, 2000 only has open periods
				back through January 1, 1997.
E)
				During the course of an audit of the periods July 1, 2019 through June 30,
				2022, the taxpayer and the Department agree in writing to extend the statute of
				limitations through December 31, 2023 for the purpose of issuing a notice of
				tax liability for the audit period. (See Section 4 of the Act.) This extension
				of the time for issuing a notice of tax liability also extends the period under
				which the taxpayer may file a claim. (See Section 6 of the Act.) Therefore a
				claim filed by the taxpayer on November 27, 2023 to recover a payment that was
				filed and paid on July 20, 2019 will be processed because the open time limit
				for filing claims extends back to July 1, 2019 pursuant to the agreement. This
				is true even if the payment was for the June 2019 monthly return (due date of
				July 20, 2019) and June 2019 is outside the statute of limitations period for
				issuing a notice of tax liability. However, since the claim was filed within 6
				months of when the statute of limitations would expire, which in this case is
				through December 31, 2023, the statute of limitations for issuing a notice of
				tax liability is automatically extended 6 months through June 30, 2024. It is
				important to note that the 6-month automatic extension of time for issuing a
				notice of tax liability does not grant an extension of time for filing a
				claim.