Bill Text: IL SB1641 | 2023-2024 | 103rd General Assembly | Chaptered

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Bill Title: Amends the Uniform Penalty and Interest Act. In provisions concerning penalties for late payment or nonpayment of tax, removes references to an amended return. Provides that a liability resulting from a federal change that is reported and paid no later than the due date for filing the federal change amended return shall be deemed to have been paid on or before the due date prescribed for payment.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2023-06-09 - Public Act . . . . . . . . . 103-0098 [SB1641 Detail]

Download: Illinois-2023-SB1641-Chaptered.html

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Public Act 103-0098
SB1641 Enrolled LRB103 00122 HLH 45126 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Uniform Penalty and Interest Act is amended
by changing Section 3-3 as follows:
(35 ILCS 735/3-3) (from Ch. 120, par. 2603-3)
Sec. 3-3. Penalty for failure to file or pay.
(a) This subsection (a) is applicable before January 1,
1996. A penalty of 5% of the tax required to be shown due on a
return shall be imposed for failure to file the tax return on
or before the due date prescribed for filing determined with
regard for any extension of time for filing (penalty for late
filing or nonfiling). If any unprocessable return is corrected
and filed within 21 days after notice by the Department, the
late filing or nonfiling penalty shall not apply. If a penalty
for late filing or nonfiling is imposed in addition to a
penalty for late payment, the total penalty due shall be the
sum of the late filing penalty and the applicable late payment
penalty. Beginning on the effective date of this amendatory
Act of 1995, in the case of any type of tax return required to
be filed more frequently than annually, when the failure to
file the tax return on or before the date prescribed for filing
(including any extensions) is shown to be nonfraudulent and

has not occurred in the 2 years immediately preceding the
failure to file on the prescribed due date, the penalty
imposed by Section 3-3(a) shall be abated.
(a-5) This subsection (a-5) is applicable to returns due
on and after January 1, 1996 and on or before December 31,
2000. A penalty equal to 2% of the tax required to be shown due
on a return, up to a maximum amount of $250, determined without
regard to any part of the tax that is paid on time or by any
credit that was properly allowable on the date the return was
required to be filed, shall be imposed for failure to file the
tax return on or before the due date prescribed for filing
determined with regard for any extension of time for filing.
However, if any return is not filed within 30 days after notice
of nonfiling mailed by the Department to the last known
address of the taxpayer contained in Department records, an
additional penalty amount shall be imposed equal to the
greater of $250 or 2% of the tax shown on the return. However,
the additional penalty amount may not exceed $5,000 and is
determined without regard to any part of the tax that is paid
on time or by any credit that was properly allowable on the
date the return was required to be filed (penalty for late
filing or nonfiling). If any unprocessable return is corrected
and filed within 30 days after notice by the Department, the
late filing or nonfiling penalty shall not apply. If a penalty
for late filing or nonfiling is imposed in addition to a
penalty for late payment, the total penalty due shall be the

sum of the late filing penalty and the applicable late payment
penalty. In the case of any type of tax return required to be
filed more frequently than annually, when the failure to file
the tax return on or before the date prescribed for filing
(including any extensions) is shown to be nonfraudulent and
has not occurred in the 2 years immediately preceding the
failure to file on the prescribed due date, the penalty
imposed by Section 3-3(a-5) shall be abated.
(a-10) This subsection (a-10) is applicable to returns due
on and after January 1, 2001. A penalty equal to 2% of the tax
required to be shown due on a return, up to a maximum amount of
$250, reduced by any tax that is paid on time or by any credit
that was properly allowable on the date the return was
required to be filed, shall be imposed for failure to file the
tax return on or before the due date prescribed for filing
determined with regard for any extension of time for filing.
However, if any return is not filed within 30 days after notice
of nonfiling mailed by the Department to the last known
address of the taxpayer contained in Department records, an
additional penalty amount shall be imposed equal to the
greater of $250 or 2% of the tax shown on the return. However,
the additional penalty amount may not exceed $5,000 and is
determined without regard to any part of the tax that is paid
on time or by any credit that was properly allowable on the
date the return was required to be filed (penalty for late
filing or nonfiling). If any unprocessable return is corrected

and filed within 30 days after notice by the Department, the
late filing or nonfiling penalty shall not apply. If a penalty
for late filing or nonfiling is imposed in addition to a
penalty for late payment, the total penalty due shall be the
sum of the late filing penalty and the applicable late payment
penalty. In the case of any type of tax return required to be
filed more frequently than annually, when the failure to file
the tax return on or before the date prescribed for filing
(including any extensions) is shown to be nonfraudulent and
has not occurred in the 2 years immediately preceding the
failure to file on the prescribed due date, the penalty
imposed by this subsection (a-10) shall be abated. This
subsection (a-10) does not apply to transaction reporting
returns required by Section 3 of the Retailers' Occupation Tax
Act and Section 9 of the Use Tax Act that would not, when
properly prepared and filed, result in the imposition of a
tax; however, those returns are subject to the penalty set
forth in subsection (a-15).
(a-15) A penalty of $100 shall be imposed for failure to
file a transaction reporting return required by Section 3 of
the Retailers' Occupation Tax Act and Section 9 of the Use Tax
Act on or before the date a return is required to be filed;
provided, however, that this penalty shall be imposed only if
the return when properly prepared and filed would not result
in the imposition of a tax. If such a transaction reporting
return would result in the imposition of a tax when properly

prepared and filed, then that return is subject to the
provisions of subsection (a-10).
(b) This subsection is applicable before January 1, 1998.
A penalty of 15% of the tax shown on the return or the tax
required to be shown due on the return shall be imposed for
failure to pay:
(1) the tax shown due on the return on or before the
due date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is
reported in an amended return other than an amended return
timely filed as required by subsection (b) of Section 506
of the Illinois Income Tax Act (penalty for late payment
or nonpayment of admitted liability); or
(2) the full amount of any tax required to be shown due
on a return and which is not shown (penalty for late
payment or nonpayment of additional liability), within 30
days after a notice of arithmetic error, notice and
demand, or a final assessment is issued by the Department.
In the case of a final assessment arising following a
protest and hearing, the 30-day period shall not begin
until all proceedings in court for review of the final
assessment have terminated or the period for obtaining a
review has expired without proceedings for a review having
been instituted. In the case of a notice of tax liability
that becomes a final assessment without a protest and
hearing, the penalty provided in this paragraph (2) shall

be imposed at the expiration of the period provided for
the filing of a protest.
(b-5) This subsection is applicable to returns due on and
after January 1, 1998 and on or before December 31, 2000. A
penalty of 20% of the tax shown on the return or the tax
required to be shown due on the return shall be imposed for
failure to pay:
(1) the tax shown due on the return on or before the
due date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is
reported in an amended return other than an amended return
timely filed as required by subsection (b) of Section 506
of the Illinois Income Tax Act (penalty for late payment
or nonpayment of admitted liability); or
(2) the full amount of any tax required to be shown due
on a return and which is not shown (penalty for late
payment or nonpayment of additional liability), within 30
days after a notice of arithmetic error, notice and
demand, or a final assessment is issued by the Department.
In the case of a final assessment arising following a
protest and hearing, the 30-day period shall not begin
until all proceedings in court for review of the final
assessment have terminated or the period for obtaining a
review has expired without proceedings for a review having
been instituted. In the case of a notice of tax liability
that becomes a final assessment without a protest and

hearing, the penalty provided in this paragraph (2) shall
be imposed at the expiration of the period provided for
the filing of a protest.
(b-10) This subsection (b-10) is applicable to returns due
on and after January 1, 2001 and on or before December 31,
2003. A penalty shall be imposed for failure to pay:
(1) the tax shown due on a return on or before the due
date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is
reported in an amended return other than an amended return
timely filed as required by subsection (b) of Section 506
of the Illinois Income Tax Act (penalty for late payment
or nonpayment of admitted liability). The amount of
penalty imposed under this subsection (b-10)(1) shall be
2% of any amount that is paid no later than 30 days after
the due date, 5% of any amount that is paid later than 30
days after the due date and not later than 90 days after
the due date, 10% of any amount that is paid later than 90
days after the due date and not later than 180 days after
the due date, and 15% of any amount that is paid later than
180 days after the due date. 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, then the penalty for late payment or nonpayment of
admitted liability under this subsection (b-10)(1) on the
amount so paid shall not accrue for the period after the

date of the notice and demand.
(2) the full amount of any tax required to be shown due
on a return and that is not shown (penalty for late payment
or nonpayment of additional liability), within 30 days
after a notice of arithmetic error, notice and demand, or
a final assessment is issued by the Department. In the
case of a final assessment arising following a protest and
hearing, the 30-day period shall not begin until all
proceedings in court for review of the final assessment
have terminated or the period for obtaining a review has
expired without proceedings for a review having been
instituted. The amount of penalty imposed under this
subsection (b-10)(2) shall be 20% of any amount that is
not paid within the 30-day period. In the case of a notice
of tax liability that becomes a final assessment without a
protest and hearing, the penalty provided in this
subsection (b-10)(2) shall be imposed at the expiration of
the period provided for the filing of a protest.
(b-15) This subsection (b-15) is applicable to returns due
on and after January 1, 2004 and on or before December 31,
2004. A penalty shall be imposed for failure to pay the tax
shown due or required to be shown due on a return on or before
the due date prescribed for payment of that tax, an amount of
underpayment of estimated tax, or an amount that is reported
in an amended return other than an amended return timely filed
as required by subsection (b) of Section 506 of the Illinois

Income Tax Act (penalty for late payment or nonpayment of
admitted liability). The amount of penalty imposed under this
subsection (b-15)(1) shall be 2% of any amount that is paid no
later than 30 days after the due date, 10% of any amount that
is paid later than 30 days after the due date and not later
than 90 days after the due date, 15% of any amount that is paid
later than 90 days after the due date and not later than 180
days after the due date, and 20% of any amount that is paid
later than 180 days after the due date. 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 this notice and
demand, then the penalty for late payment or nonpayment of
admitted liability under this subsection (b-15)(1) on the
amount so paid shall not accrue for the period after the date
of the notice and demand.
(b-20) This subsection (b-20) is applicable to returns due
on and after January 1, 2005 and before January 1, 2024.
(1) A penalty shall be imposed for failure to pay,
prior to the due date for payment, any amount of tax the
payment of which is required to be made prior to the filing
of a return or without a return (penalty for late payment
or nonpayment of estimated or accelerated tax). The amount
of penalty imposed under this paragraph (1) shall be 2% of
any amount that is paid no later than 30 days after the due
date and 10% of any amount that is paid later than 30 days
after the due date.

(2) A penalty shall be imposed for failure to pay the
tax shown due or required to be shown due on a return on or
before the due date prescribed for payment of that tax or
an amount that is reported in an amended return other than
an amended return timely filed as required by subsection
(b) of Section 506 of the Illinois Income Tax Act (penalty
for late payment or nonpayment of tax). The amount of
penalty imposed under this paragraph (2) shall be 2% of
any amount that is paid no later than 30 days after the due
date, 10% of any amount that is paid later than 30 days
after the due date and prior to the date the Department has
initiated an audit or investigation of the taxpayer, and
20% of any amount that is paid after the date the
Department has initiated an audit or investigation of the
taxpayer; provided that the penalty shall be reduced to
15% if the entire amount due is paid not later than 30 days
after the Department has provided the taxpayer with an
amended return (following completion of an occupation,
use, or excise tax audit) or a form for waiver of
restrictions on assessment (following completion of an
income tax audit); provided further that the reduction to
15% shall be rescinded if the taxpayer makes any claim for
refund or credit of the tax, penalties, or interest
determined to be due upon audit, except in the case of a
claim filed pursuant to subsection (b) of Section 506 of
the Illinois Income Tax Act or to claim a carryover of a

loss or credit, the availability of which was not
determined in the audit. For purposes of this paragraph
(2), any overpayment reported on an original return that
has been allowed as a refund or credit to the taxpayer
shall be deemed to have not been paid on or before the due
date for payment and any amount paid under protest
pursuant to the provisions of the State Officers and
Employees Money Disposition Act shall be deemed to have
been paid after the Department has initiated an audit and
more than 30 days after the Department has provided the
taxpayer with an amended return (following completion of
an occupation, use, or excise tax audit) or a form for
waiver of restrictions on assessment (following completion
of an income tax audit).
(3) The penalty imposed under this subsection (b-20)
shall be deemed assessed at the time the tax upon which the
penalty is computed is assessed, except that, if the
reduction of the penalty imposed under paragraph (2) of
this subsection (b-20) to 15% is rescinded because a claim
for refund or credit has been filed, the increase in
penalty shall be deemed assessed at the time the claim for
refund or credit is filed.
(b-25) This subsection (b-25) is applicable to returns due
on or after January 1, 2024.
(1) A penalty shall be imposed for failure to pay,
prior to the due date for payment, any amount of tax the

payment of which is required to be made prior to the filing
of a return or without a return (penalty for late payment
or nonpayment of estimated or accelerated tax). The amount
of penalty imposed under this paragraph (1) shall be 2% of
any amount that is paid no later than 30 days after the due
date and 10% of any amount that is paid later than 30 days
after the due date.
(2) A penalty shall be imposed for failure to pay the
tax shown due or required to be shown due on a return on or
before the due date prescribed for payment of that tax
(penalty for late payment or nonpayment of tax). The
amount of penalty imposed under this paragraph (2) shall
be 2% of any amount that is paid no later than 30 days
after the due date, 10% of any amount that is paid later
than 30 days after the due date and prior to the date the
Department initiates an audit or investigation of the
taxpayer, and 20% of any amount that is paid after the date
the Department initiates an audit or investigation of the
taxpayer; provided that the penalty shall be reduced to
15% if the entire amount due is paid not later than 30 days
after the Department provides the taxpayer with an amended
return (following completion of an occupation, use, or
excise tax audit) or a form for waiver of restrictions on
assessment (following completion of an income tax audit);
provided further that the reduction to 15% shall be
rescinded if the taxpayer makes any claim for refund or

credit of the tax, penalties, or interest determined to be
due upon audit, except in the case of a claim filed
pursuant to subsection (b) of Section 506 of the Illinois
Income Tax Act or to claim a carryover of a loss or credit,
the availability of which was not determined in the audit.
For purposes of this paragraph (2):
(A) any overpayment reported on an original return
that has been allowed as a refund or credit to the
taxpayer shall be deemed to have not been paid on or
before the due date for payment;
(B) any amount paid under protest pursuant to the
provisions of the State Officers and Employees Money
Disposition Act shall be deemed to have been paid
after the Department has initiated an audit and more
than 30 days after the Department has provided the
taxpayer with an amended return (following completion
of an occupation, use, or excise tax audit) or a form
for waiver of restrictions on assessment (following
completion of an income tax audit); and
(C) any liability resulting from a federal change
required to be reported under subsection (b) of
Section 506 of the Illinois Income Tax Act that is
reported and paid no later than the due date for filing
the federal change amended return shall be deemed to
have been paid on or before the due date prescribed for
payment.

(3) The penalty imposed under this subsection (b-25) shall
be deemed assessed at the time the tax upon which the penalty
is computed is assessed, except that, if the reduction of the
penalty imposed under paragraph (2) of this subsection (b-25)
to 15% is rescinded because a claim for refund or credit has
been filed, the increase in penalty shall be deemed assessed
at the time the claim for refund or credit is filed.
(c) For purposes of the late payment penalties, the basis
of the penalty shall be the tax shown or required to be shown
on a return, whichever is applicable, reduced by any part of
the tax which is paid on time and by any credit which was
properly allowable on the date the return was required to be
filed.
(d) A penalty shall be applied to the tax required to be
shown even if that amount is less than the tax shown on the
return.
(e) This subsection (e) is applicable to returns due
before January 1, 2001. If both a subsection (b)(1) or
(b-5)(1) penalty and a subsection (b)(2) or (b-5)(2) penalty
are assessed against the same return, the subsection (b)(2) or
(b-5)(2) penalty shall be assessed against only the additional
tax found to be due.
(e-5) This subsection (e-5) is applicable to returns due
on and after January 1, 2001. If both a subsection (b-10)(1)
penalty and a subsection (b-10)(2) penalty are assessed
against the same return, the subsection (b-10)(2) penalty

shall be assessed against only the additional tax found to be
due.
(f) If the taxpayer has failed to file the return, the
Department shall determine the correct tax according to its
best judgment and information, which amount shall be prima
facie evidence of the correctness of the tax due.
(g) The time within which to file a return or pay an amount
of tax due without imposition of a penalty does not extend the
time within which to file a protest to a notice of tax
liability or a notice of deficiency.
(h) No return shall be determined to be unprocessable
because of the omission of any information requested on the
return pursuant to Section 2505-575 of the Department of
Revenue Law (20 ILCS 2505/2505-575).
(i) If a taxpayer has a tax liability for the taxable
period ending after June 30, 1983 and prior to July 1, 2002
that is eligible for amnesty under the Tax Delinquency Amnesty
Act and the taxpayer fails to satisfy the tax liability during
the amnesty period provided for in that Act for that taxable
period, then the penalty imposed by the Department under this
Section shall be imposed in an amount that is 200% of the
amount that would otherwise be imposed under this Section.
(j) If a taxpayer has a tax liability for the taxable
period ending after June 30, 2002 and prior to July 1, 2009
that is eligible for amnesty under the Tax Delinquency Amnesty
Act, except for any tax liability reported pursuant to Section

506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that
is not final, and the taxpayer fails to satisfy the tax
liability during the amnesty period provided for in that Act
for that taxable period, then the penalty imposed by the
Department under this Section shall be imposed in an amount
that is 200% of the amount that would otherwise be imposed
under this Section.
(Source: P.A. 98-425, eff. 8-16-13; 99-335, eff. 8-10-15.)