Bill Text: IL SB3282 | 2023-2024 | 103rd General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Enrolled.html

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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Retailers' Occupation Tax Act is amended by
changing Section 2-10.5 as follows:
(35 ILCS 120/2-10.5)
Sec. 2-10.5. Direct payment program; purchaser's providing
of permit to retailer; retailer relieved of collecting use tax
and local retailers' occupation tax reimbursements from
purchaser; direct payment of retailers' occupation tax and
local retailers' occupation tax by purchaser.
(a) Beginning on July 1, 2001 there is established in this
State a Direct Payment Program to be administered by the
Department. The Department shall issue a Direct Pay Permit to
applicants who have been approved to participate in the Direct
Payment Program. Each person applying to participate in the
Direct Payment Program must demonstrate (1) the applicant's
ability to comply with the retailers' occupation tax laws and
the use tax laws in effect in this State and that the
applicant's accounting system will reflect the proper amount
of tax due, (2) that the applicant has a valid business purpose
for participating in the Direct Payment Program, and (3) how
the applicant's participation in the Direct Payment Program

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will benefit tax compliance. Application shall be made on
forms provided by the Department and shall contain information
as the Department may reasonably require. The Department shall
approve or deny an applicant within 90 days after the
Department's receipt of the application, unless the Department
makes a written request for additional information from the
applicant.
(b) A person who has been approved for the Direct Payment
Program and who has been issued a Direct Pay Permit by the
Department is relieved of paying tax to a retailer when
purchasing tangible personal property for use or consumption,
except as provided in subsection (d), by providing that
retailer a copy of that Direct Pay Permit. A retailer who
accepts a copy of a customer's Direct Pay Permit is relieved of
the obligation to remit the tax imposed by this Act on the
transaction. References in this Section to "the tax imposed by
this Act" include any local occupation taxes administered by
the Department that would be incurred on the retail sale.
(c) Once the holder of a Direct Pay Permit uses that Permit
to relieve the Permit holder from paying tax to a particular
retailer, the holder must use its Permit for all purchases,
except as provided in subsection (d), from that retailer for
so long as the Permit is valid.
(d) Direct Pay Permits are not valid and shall not be used
for sales or purchases of:
(1) food or beverage;

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(2) tangible personal property required to be titled
or registered with an agency of government; or
(3) any transactions subject to the Service Occupation
Tax Act or Service Use Tax Act.
(e) Direct Pay Permits are not assignable and are not
transferable. As an illustration, a construction contractor
shall not make purchases using a customer's Direct Pay Permit.
(f) A Direct Pay Permit is valid until it is revoked by the
Department or until the holder notifies the Department in
writing that the holder is withdrawing from the Direct Payment
Program. A Direct Pay Permit can be revoked by the Department,
after notice and hearing, if the holder violates any provision
of this Act, any provision of the Illinois Use Tax Act, or any
provision of any Act imposing a local retailers' occupation
tax administered by the Department.
(g) The holder of a Direct Pay Permit who has been relieved
of paying tax to a retailer on a purchase for use or
consumption by representing to that retailer that it would pay
all applicable taxes directly to the Department shall pay
those taxes to the Department not later than the 20th day of
the month following the month in which the purchase was made.
Permit holders making such purchases are subject to all
provisions of this Act, and the tax must be reported and paid
as retailers' occupation tax in the same manner that the
retailer from whom the purchases were made would have reported
and paid it, including any local retailers' occupation taxes

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applicable to that retail sale. Notwithstanding any other
provision of this Act, Permit holders shall make all payments
to the Department through the use of electronic funds
transfer.
(h) By March 31, 2025, and by March 31 of each year
thereafter, each holder of a Direct Pay Permit shall review
its purchase activity to verify that the purchases made during
the 12-month period ending on December 31 of the immediately
preceding calendar year were sourced correctly and that the
correct tax rate was applied. If the holder of the Direct Pay
Permit discovers an error in sourcing or the tax rate during
the review process, then, by April 20 of the calendar year in
which the review under this subsection occurs, the holder of
the Direct Pay Permit shall file an amended return to correct
the error. If, for any 12-month review period under this
subsection, a holder of a Direct Pay Permit fails to properly
verify purchase activity and correct sourcing and tax rate
errors as required by this subsection and the rules adopted by
the Department, then the Direct Pay Permit holder is liable to
pay a penalty of $6,000 to the Department, for deposit into the
Tax Compliance and Administration Fund. However, the penalty
under this subsection shall not be imposed if the Department
finds that 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

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prudence. For the purposes of this subsection, ordinary
business care and prudence shall be determined in accordance
with Section 3-8 of the Uniform Penalty and Interest Act. The
Department may adopt rules to administer the penalties under
this Section.
(Source: P.A. 92-484, eff. 8-23-01.)