Bill Text: IL SB3282 | 2023-2024 | 103rd General Assembly | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Retailers' Occupation Tax Act. Provides that, by March 31 of each year, each holder of a Direct Pay Permit shall review its purchase activity for the 12-month period ending on December 31 of the immediately preceding calendar year to verify that the purchases made in that 12-month period were sourced correctly and the correct tax rate was applied. Provides that the Direct Pay Permit holder is subject to a $6,000 penalty for failure to properly verify purchase activity and correct sourcing and tax rate errors. Provides that the penalty does not apply if at least 95% of the Direct Pay Permit holder's transactions for the applicable 12-month review period are correctly sourced and the correct taxes have been remitted or the permit holder acted with ordinary business care and prudence. Effective immediately.
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Passed) 2024-08-09 - Public Act . . . . . . . . . 103-0966 [SB3282 Detail]
Download: Illinois-2023-SB3282-Engrossed.html
Bill Title: Amends the Retailers' Occupation Tax Act. Provides that, by March 31 of each year, each holder of a Direct Pay Permit shall review its purchase activity for the 12-month period ending on December 31 of the immediately preceding calendar year to verify that the purchases made in that 12-month period were sourced correctly and the correct tax rate was applied. Provides that the Direct Pay Permit holder is subject to a $6,000 penalty for failure to properly verify purchase activity and correct sourcing and tax rate errors. Provides that the penalty does not apply if at least 95% of the Direct Pay Permit holder's transactions for the applicable 12-month review period are correctly sourced and the correct taxes have been remitted or the permit holder acted with ordinary business care and prudence. Effective immediately.
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Passed) 2024-08-09 - Public Act . . . . . . . . . 103-0966 [SB3282 Detail]
Download: Illinois-2023-SB3282-Engrossed.html
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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Retailers' Occupation Tax Act is amended by | ||||||
5 | changing Section 2-10.5 as follows:
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6 | (35 ILCS 120/2-10.5)
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7 | Sec. 2-10.5.
Direct payment program; purchaser's providing | ||||||
8 | of permit to
retailer; retailer relieved of collecting use tax | ||||||
9 | and local retailers'
occupation tax reimbursements from | ||||||
10 | purchaser; direct payment of retailers'
occupation tax and | ||||||
11 | local retailers' occupation tax by purchaser.
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12 | (a) Beginning on July 1, 2001 there is established in this | ||||||
13 | State a Direct
Payment Program to be administered by the | ||||||
14 | Department. The Department shall
issue a Direct Pay Permit to | ||||||
15 | applicants who have been approved to participate
in the Direct | ||||||
16 | Payment Program. Each person applying to participate in the
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17 | Direct Payment Program must demonstrate (1) the applicant's | ||||||
18 | ability to comply
with the retailers' occupation tax laws and | ||||||
19 | the use tax laws in effect in this
State and that the | ||||||
20 | applicant's accounting system will reflect the proper amount
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21 | of tax due, (2) that the applicant has a valid business purpose | ||||||
22 | for
participating in the Direct Payment Program, and (3) how | ||||||
23 | the applicant's
participation in the Direct Payment Program |
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1 | will benefit tax compliance.
Application shall be made on | ||||||
2 | forms provided by the Department and shall contain
information | ||||||
3 | as the Department may reasonably require. The Department shall
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4 | approve or deny an applicant within 90 days after the | ||||||
5 | Department's receipt of
the application, unless the Department | ||||||
6 | makes a written request for additional
information from the | ||||||
7 | applicant.
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8 | (b) A person who has been approved for the Direct Payment | ||||||
9 | Program and who
has been issued a Direct Pay Permit by the | ||||||
10 | Department is relieved of paying tax
to a retailer when | ||||||
11 | purchasing tangible personal property for use or
consumption, | ||||||
12 | except as provided in subsection (d), by providing that | ||||||
13 | retailer a
copy of that Direct Pay Permit. A retailer who | ||||||
14 | accepts a copy of a customer's
Direct Pay Permit is relieved of | ||||||
15 | the obligation to remit the tax imposed by
this Act on the | ||||||
16 | transaction. References in this Section to "the tax imposed by
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17 | this Act" include any local occupation taxes administered by | ||||||
18 | the Department
that would be incurred on the retail sale.
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19 | (c) Once the holder of a Direct Pay Permit uses that Permit | ||||||
20 | to relieve the
Permit holder from paying tax to a particular | ||||||
21 | retailer, the holder must use its
Permit for all purchases, | ||||||
22 | except as provided in subsection (d), from that
retailer for | ||||||
23 | so long as the Permit is valid.
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24 | (d) Direct Pay Permits are not valid and shall not be used | ||||||
25 | for sales or
purchases of:
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26 | (1) food or beverage;
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1 | (2) tangible personal property required to be titled | ||||||
2 | or registered with an
agency of government; or
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3 | (3) any transactions subject to the Service Occupation | ||||||
4 | Tax Act or Service
Use Tax Act.
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5 | (e) Direct Pay Permits are not assignable and are not | ||||||
6 | transferable. As an
illustration, a construction contractor | ||||||
7 | shall not make purchases using a
customer's Direct Pay Permit.
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8 | (f) A Direct Pay Permit is valid until it is revoked by the | ||||||
9 | Department or
until the holder notifies the Department in | ||||||
10 | writing that the holder is
withdrawing from the Direct Payment | ||||||
11 | Program. A Direct Pay Permit can be
revoked by the Department, | ||||||
12 | after notice and hearing, if the holder violates any
provision | ||||||
13 | of this Act, any provision of the Illinois Use Tax Act, or any
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14 | provision of any Act imposing a local retailers' occupation | ||||||
15 | tax administered by
the Department.
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16 | (g) The holder of a Direct Pay Permit who has been relieved | ||||||
17 | of paying tax to
a retailer on a purchase for use or | ||||||
18 | consumption by representing to that
retailer that it would pay | ||||||
19 | all applicable taxes directly to the Department
shall pay | ||||||
20 | those taxes to the Department not later than the 20th day of | ||||||
21 | the
month following the month in which the purchase was made. | ||||||
22 | Permit holders
making such purchases are subject to all | ||||||
23 | provisions of this Act, and the tax
must be reported and paid | ||||||
24 | as retailers' occupation tax in the same manner that
the | ||||||
25 | retailer from whom the purchases were made would have reported | ||||||
26 | and paid it,
including any local retailers' occupation taxes |
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1 | applicable to that retail sale.
Notwithstanding any other | ||||||
2 | provision of this Act, Permit holders shall make all
payments | ||||||
3 | to the Department through the use of electronic funds | ||||||
4 | transfer.
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5 | (h) Beginning on January 1, 2025, each holder of a Direct | ||||||
6 | Pay Permit must review its purchase activity by January 31 and | ||||||
7 | July 31 of each year to verify that the purchases made in the | ||||||
8 | preceding 6-month period ending on the last day of the | ||||||
9 | calendar month immediately preceding the month in which the | ||||||
10 | report is due were sourced correctly and the correct tax rate | ||||||
11 | was applied. If any errors are discovered, then the holder of | ||||||
12 | the Direct Pay Permit shall correct the errors on returns | ||||||
13 | filed on or after the date on which the error is discovered and | ||||||
14 | shall file amended returns to correct past errors. Any holder | ||||||
15 | of a Direct Pay Permit who fails to properly verify purchase | ||||||
16 | activity and correct sourcing and tax rate errors based on the | ||||||
17 | permit holder's purchase activity, as required by this Section | ||||||
18 | and the rules adopted by the Department, is liable to pay to | ||||||
19 | the Department, for deposit into the Tax Compliance and | ||||||
20 | Administration Fund, a penalty of $6,000 for each 6-month | ||||||
21 | review period after which the permit holder does not correct | ||||||
22 | sourcing and tax rate errors based on its purchase activity | ||||||
23 | until the permit holder comes into compliance and corrects any | ||||||
24 | sourcing or tax rate errors. The penalties imposed under this | ||||||
25 | Section shall not apply if the permit holder shows that he or | ||||||
26 | she acted with ordinary business care and prudence. The |
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1 | Department may adopt rules to administer the penalties under | ||||||
2 | this Section. | ||||||
3 | (Source: P.A. 92-484, eff. 8-23-01.)
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4 | Section 99. Effective date. This Act takes effect upon | ||||||
5 | becoming law.
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