Illinois Administrative Code › Title 86 - REVENUE › Part 660 - TOBACCO PRODUCTS TAX ACT OF 1995 › Section 660.50 - Penalties, Interest and Procedures

Current through Register Vol. 48, No. 28, July 12, 2024
a) The provisions of the Uniform Penalty and
			 Interest Act [ 35 ILCS 735 ] that are not inconsistent with the Act apply to
			 the enforcement of the Act. See Section 3-1A of the Uniform Penalty and
			 Interest Act.
b)
When the
			 amount due is under $300, any distributor who fails to file a return, willfully
			 fails or refuses to make any payment to the Department of the tax imposed by
			 the Act, or files a fraudulent return, or any officer or agent of a corporation
			 engaged in the business of distributing tobacco products to retailers and
			 consumers located in this State who signs a fraudulent return filed on behalf
			 of the corporation, or any accountant or other agent who knowingly enters false
			 information on the return of any taxpayer under the Act is guilty of a Class 4
			 felony.
c)
When
			 the amount due is under $300, any person who accepts money that is due to the
			 Department under the Act from a taxpayer for the purpose of acting as the
			 taxpayer's agent to make the payment to the Department, but who fails to remit
			 the payment to the Department when due, is guilty of a Class 4
			 felony.
d)
When
			 the amount due is $300 or more, any distributor who files, or causes to be
			 filed, a fraudulent return, or any officer or agent of a corporation engaged in
			 the business of distributing tobacco products to retailers and consumers
			 located in this State who files or causes to be filed or signs or causes to be
			 signed a fraudulent return filed on behalf of the corporation, or any
			 accountant or other agent who knowingly enters false information on the return
			 of any taxpayer under the Act is guilty of a Class 3 felony.
e)
When the amount due is $300 or
			 more, any person engaged in the business of distributing tobacco products to
			 retailers and consumers located in this State who fails to file a return,
			 willfully fails or refuses to make any payment to the Department of the tax
			 imposed by the Act, or accepts money that is due to the Department under the
			 Act from a taxpayer for the purpose of acting as the taxpayer's agent to make
			 payment to the Department but fails to remit that payment to the Department
			 when due is guilty of a Class 3 felony.
f)
Any person who violates any
			 provision of Section 10-20 of the Act and, beginning January 1, 2016, Sections
			 10-21 and 10-22 of the Act, fails to keep books and records as required under
			 the Act, or willfully violates a rule or regulation of the Department for the
			 administration and enforcement of the Act, is guilty of a Class 4 felony. A
			 person commits a separate offense on each day that he or she engages in
			 business in violation of Section 10-20 of the Act and, beginning January 1,
			 2016, Section 10-21 or 10-22 of the Act. If a person fails to produce the books
			 and records for inspection by the Department upon request, a prima facie
			 presumption shall arise that the person has failed to keep books and records as
			 required under this Act. A person who is unable to rebut this presumption is in
			 violation of the Act and is subject to the penalties provided in this
			 Section.
g)
Any
			 taxpayer or agent of a taxpayer who, with the intent to defraud, purports to
			 make a payment due to the Department by issuing or delivering a check or other
			 order upon a real or fictitious depository for the payment of money, knowing
			 that it will not be paid by the depository, is guilty of a deceptive practice
			 in violation of Section 17-1 of the Criminal Code of 2012.
h)
Any person who violates any
			 provision of Sections 10-20, 10-21 and 10-22 of the Act, fails to keep books
			 and records as required under the Act, or willfully violates a rule or
			 regulation of the Department for the administration and enforcement of the Act,
			 is guilty of a business offense and may be fined up to $5,000. If a person
			 fails to produce books and records for inspection by the Department upon
			 request, a prima facie presumption shall arise that the person has failed to
			 keep books and records as required under the Act. A person who is unable to
			 rebut this presumption is in violation of the Act and is subject to the
			 penalties provided in this Section. A person commits a separate offense on each
			 day that he or she engages in business in violation of Sections 10-20, 10-21
			 and 10-22 of the Act.
i)
When the amount due is under $300, any retailer who fails to file a
			 return, willfully fails or refuses to make any payment to the Department of the
			 tax imposed by the Act, or files a fraudulent return, or any officer or agent
			 of a corporation engaged in the retail business of selling tobacco products to
			 purchasers of tobacco products for use and consumption located in this State
			 who signs a fraudulent return filed on behalf of the corporation, or any
			 accountant or other agent who knowingly enters false information on the return
			 of any taxpayer under the Act is guilty of a Class A misdemeanor for a first
			 offense and a Class 4 felony for each subsequent offense.
j)
When the amount due is $300 or
			 more, any retailer who fails to file a return, willfully fails or refuses to
			 make any payment to the Department of the tax imposed by the Act, or files a
			 fraudulent return, or any officer or agent of a corporation engaged in the
			 retail business of selling tobacco products to purchasers of tobacco products
			 for use and consumption located in this State who signs a fraudulent return
			 filed on behalf of the corporation, or any accountant or other agent who
			 knowingly enters false information on the return of any taxpayer under the Act
			 is guilty of a Class 4 felony.
k)
A prosecution for a violation
			 described in subsections (b) through (j) may be commenced within 3 years after
			 the commission of the act constituting the violation.
[
			 35 ILCS
			 143/10-50 ]
l)
Any person who knowingly acts as a
			 retailer of tobacco products in this State without first having obtained a
			 license to do so in compliance with Section 10-21 of the Act or a license in
			 compliance with Section 4g of the Cigarette Tax Act shall be guilty of a Class
			 A misdemeanor for the first offense and a Class 4 felony for a second or
			 subsequent offense. Each day the person operates as a retailer without a
			 license constitutes a separate offense.
[
			 35
			 ILCS 143/10-53 ]
m)
The Department may impose a civil
			 penalty on distributors and retailers not to exceed $1,000 for the first
			 violation and $3,000 for each subsequent violation of Section 10-37 of the
			 Act.
[
			 35 ILCS
			 143/10-37 ]
n)
Any person whose principal place
			 of business is in the State and who is charged with a violation under Section
			 10-50 of the Act shall be tried in the county where his or her principal place
			 of business is located unless he or she asserts a right to be tried in another
			 venue. If the taxpayer does not have his or her principal place of business in
			 this State, however, the hearing must be held in Sangamon County unless the
			 taxpayer asserts a right to be tried in another venue.
[
			 35 ILCS
			 143/10-50 ]
o) Except as otherwise provided in this Part,
			 any person aggrieved by any decision of the Department under this Part may,
			 within 60 days after notice of the decision, protest in writing and request a
			 hearing. Upon receiving a written request for a hearing, the Department shall
			 give notice to the person requesting the hearing of the time and place fixed
			 for the hearing and shall hold a hearing in conformity with the provisions of
			 this Part and then issue its final administrative decision in the matter to
			 that person. In the absence of a protest and request for a hearing within 60
			 days, the Department's decision shall become final without any further
			 determination being made or notice given.
p)
Except as provided by the
			 Constitution of the United States, the Constitution of the State of Illinois,
			 or any statutes of this State, including, but not limited to, the State
			 Officers and Employees Money Disposition Act
[ 30 ILCS 230 ]
,
			 the Tax Tribunal
established pursuant to the Illinois Independent Tax
			 Tribunal Act of 2012 [ 35 ILCS 1010 ]
shall have original jurisdiction
			 over all determinations of the Department reflected on a Notice of Deficiency,
			 Notice of Tax Liability, Notice of Claim Denial, or Notice of Penalty Liability
			 issued under the Tobacco Products Tax Act of 1995 or the Uniform Penalty and
			 Interest Act. Jurisdiction of the Tax Tribunal is limited to Notices of Tax
			 Liability, Notices of Deficiency, Notices of Claim Denial, and Notices of
			 Penalty Liability when the amount at issue in a notice, or the aggregate amount
			 at issue in multiple notices issued for the same tax year or audit period,
			 exceeds $15,000, exclusive of penalties and interest. In notices solely
			 asserting either an interest or penalty assessment, or both, the Tax Tribunal
			 shall have jurisdiction over cases in which the combined total of all penalties
			 or interest assessed exceeds $15,000.
[
			 35 ILCS
			 1010/1-45 ]
q)
Any person who fails to keep books
			 and records or fails to produce books and records for inspection, as required
			 by Section 10-35, is liable to pay to the Department, for deposit in the Tax
			 Compliance and Administration Fund, a penalty of $1,000 for the first failure
			 to keep books and records or failure to produce books and records for
			 inspection, as required by Section 10-35, and $3,000 for each subsequent
			 failure to keep books and records or failure to produce books and records for
			 inspection, as required by Section 10-35.
[
			 35 ILCS
			 143/10-35a ]
1) All
			 books and records and other papers and documents that are required to be kept
			 by the Act shall, at all times during the usual business hours of the day, be
			 subject to inspection by the Department or its duly authorized agents and
			 employees. (See Sections
			 660.24(b)
			 and
			 660.25(b).)
			 A person that prohibits a duly authorized agent of the Department from
			 inspecting books and records during usual business hours of the day has failed
			 to produce books and records to the Department for inspection as required by
			 this Section. The Department may issue a notice of penalty to that person
			 pursuant to this subsection (q)(1). The Department is not required to provide
			 the retailer with a written document request pursuant to this subsection (q)(1)
			 or provide additional time for the retailer to allow the inspection of the
			 premises and the books and records at the location.
2) Except for retailers that are permitted to
			 maintain books and records at another location pursuant to Section
			 660.24(a),
			 distributors and retailers must have a person at their place of business at all
			 times during the usual business hours of the day who is authorized to produce
			 books and records for inspection by the Department. It is presumed that a
			 person working at a place of business has authority to permit the Department to
			 inspect the books and records at the business location. If a retail
			 establishment has only one employee working at the time of the request for the
			 books and records who has no ownership interest in the establishment and is not
			 authorized to produce books and records, the employee is required to advise the
			 Department he or she does not have authority to provide books and records for
			 inspection. The Department will not issue a notice of penalty to a distributor
			 or retailer for failure to produce books and records if a person who is
			 authorized to produce the books and records can be contacted by the employee
			 and arrives at the place of business within 2 hours and produces the books and
			 records. The Department may extend the period either on verbal or written
			 request for good cause shown or on its own motion.
EXAMPLE 1: An authorized agent of the Department attempts to
				inspect the books and records of a tobacco retailer. The person at the store
				states the records are at the store but refuses to provide access to the books
				and records because the owner of the store told him not to let anyone have
				access to the records. The person states the owner is unavailable and cannot be
				contacted. The Department will issue a notice of penalty.
EXAMPLE 2: An authorized agent of the Department attempts to
				inspect the books and records of a tobacco retailer. The person at the store
				states the records are at the store but refuses to provide access to the books
				and records because the owner of the store told him not to let anyone have
				access to the records. The person states he can call a person responsible for
				making the records available to the agent. The employee calls the person and
				the person arrives at the store in less than 60 minutes and makes the records
				available to the agent. The Department will not issue a notice of
				penalty.
EXAMPLE 3: An authorized agent of the Department enters a
				retailer's place of business and requests to see the books and records. The
				person at the store states the books and records are maintained at another
				business location in Illinois. The agent cannot issue a notice of penalty
				unless the retailer failed to notify the Department that the books and records
				are located at another location pursuant to Section
				660.24(a).
				However, the authorized agent of the Department does have authority to inspect
				the premises pursuant to Section 620.24(b).
3) If a person fails to produce books and
			 records for inspection by the Department upon request, a prima facie
			 presumption shall arise that the person has failed to keep the books and
			 records as required. A person who is unable to rebut this presumption is
			 subject to the penalty provided in this subsection (q).
4) Except as otherwise provided by subsection
			 (q)(1), if a request for the production of books and records has been made and
			 not honored, prior to issuing a notice of penalty for a failure to maintain
			 books and records or a failure to produce books and records, the Department
			 must provide the taxpayer with a document request in writing. The written
			 document request must contain:
A) the name of
			 the person receiving the request;
B) the name of the business;
C) the date and time of the original request
			 or requests;
D) the books and
			 records requested;
E) the books and
			 records that the person failed to produce;
F) the number of days the person has to
			 produce the books and records; and
G) the name of the Department agent or
			 employee and his or her contact information.
5) The Department agent or employee shall
			 sign and date the written document request and personally provide or mail a
			 copy of the written document request to the business at its last known address.
			 The person shall have 30 days from the date of the written document request to
			 produce the books and records the person has failed to produce. The Department
			 may extend the period either on written request for good cause shown or on its
			 own motion. If the person fails to produce the books and records within the
			 time allotted, the Department may issue a notice of penalty pursuant to this
			 subsection (q) to the business at its last known address.
EXAMPLE: An authorized agent of the Department enters a
				convenience store and requests to see all the invoices for tobacco products
				purchased by the store in the last 60 days and all cash register receipts for
				sales made in the last 60 days. The person at the store produces the cash
				register receipts but states that they have no invoices for tobacco products
				purchased in the last 60 days. The agent fills out a written document request,
				provides a copy of the written document request to the person, and provides the
				person 30 days to produce the invoices. The agent returns 30 days later and
				requests the invoices. The person at the store cannot produce the invoices. The
				Department issues a notice of penalty to the business at its last known
				address.
6) Any person
			 receiving a notice of penalty may, within 20 days after the date on the notice
			 of penalty, protest and request a hearing. Upon receiving a request for a
			 hearing, the Department shall give notice to the person requesting the hearing
			 of the time and place fixed for the hearing and shall hold a hearing in
			 conformity with the provisions of the Act and then issue its final
			 administrative decision in the matter to that person. If the request is made
			 during an audit, the Department shall postpone the hearing until completion of
			 the audit or inspection. In the absence of a protest and request for a hearing
			 within 20 days, the Department's decision shall become final without any
			 further determination being made or notice given.
7) The Department cannot impose more than one
			 penalty for failing to produce books and records for a calendar month.
EXAMPLE 1: An authorized agent of the Department inspects a
				tobacco retailer and requests the records for the first week in April. The
				retailer does not produce the records. The agent subsequently requests the
				records for the remaining 3 weeks in April. The retailer does not produce the
				records. The agent can assess only one penalty for the month of April.
EXAMPLE 2: An authorized agent of the Department inspects a
				tobacco retailer and requests all purchase invoices for cigarettes for March.
				The invoices are not provided by the retailer and the Department issues a
				notice of penalty. The agent returns in May and ask to see all the tobacco
				sales receipts for March. The retailer fails to produce the sales receipts. The
				Department cannot issue a notice of penalty for failure of the retailer to
				provide sales receipts for March because the agent has previously issued a
				notice of penalty for failure to produce records for March.
8) A records request can cover multiple
			 periods. The Department is authorized to issue a separate penalty for each
			 period; e.g., for a taxpayer that files returns monthly, the period is one
			 month.
EXAMPLE: An authorized agent of the Department inspects a
				tobacco retailer and requests the books and records for the months of January
				through July. The retailer cannot produce the books and records for any of the
				months. The agent fills out a written document request, provides a copy to the
				person, and provides the person 30 business days to produce the invoices. The
				agent returns 30 business days later and requests the invoices. The person at
				the store cannot produce the invoices. The Department will issue a notice of
				penalty in the amount of $1,000 for the month of January and $3,000 for each of
				the months February through July, for a total penalty of
				$19,000.