Current through Register Vol. 48, No. 38, September 20, 2024
a) Definitions
1) Income Tax Return Preparer
A) The term "income tax return preparer"
means any person who prepares for compensation, or who employs one or
more persons to prepare for compensation, any return of tax imposed by the IITA
or any claim for refund of tax imposed by the IITA. The preparation of a
substantial portion of a return or claim for refund shall be treated as the
preparation of that return or claim for refund. (IITA Section
1501(a)(26)(A))
B)
A person
is not an income tax return preparer if all he or she does is the
following:
i)
furnish
typing, reproducing, or other mechanical assistance;
ii)
prepare returns or claims for
refunds of the employer by whom he or she is regularly and continuously
employed;
iii)
prepare as a fiduciary returns or claims for refunds for any person;
or
iv)
prepare
claims for refunds for a taxpayer in response to a notice of deficiency issued
to that taxpayer or in response to any waiver of restriction after the
commencement of an audit of that taxpayer or of another taxpayer if a
determination in the audit of the other taxpayer directly or indirectly affects
the tax liability of the taxpayer whose claims he or she is preparing.
(IITA Section 1501(a)(26)(B))
2) PTIN. Section 5 of the State Tax Preparer
Oversight Act (STPOA) provides that the term "Preparer Tax Identification
Number" or "PTIN" means the identifying number required under
26
CFR 1.6109-2(d). (STPOA
Section 5)
3) EIN. The term
"Employer Identification Number" or "EIN" means the identifying number assigned
to an employer under 26 CFR
31.6011(b)-1.
b) Requirement to Sign Return.
If a return required under the IITA is prepared by an income tax return
preparer for a taxpayer, that preparer shall sign the return as preparer of
that return. (IITA Section 503) This requirement shall apply only to
the preparer who would be considered the "signing tax return preparer" with
respect to the return by applying the provisions of
26 CFR
301.7701-15. In addition, if there is an
employment relationship or association between the individual required to sign
a return under this subsection and another person, the signature of that other
person must be included on the filed return when required by Department
forms.
c) Requirement to Include
PTIN. For taxable years beginning on or after January 1, 2017, any
income tax return preparer must include his or her PTIN on any tax return
prepared by the income tax return preparer and filed under the IITA or any
claim for refund of tax imposed by the IITA. (STPOA Section 10) This
requirement shall apply only to the preparer who would be considered the
"signing tax return preparer" with respect to the return or claim for refund by
applying the provisions of
26 CFR
301.7701-15(b)(1), and only
with respect to an income tax return preparer who holds an active PTIN at the
time of filing the Illinois return or claim for refund.
d) Requirement to Include EIN. If there is an
employment relationship or association between the individual required to sign
a return under subsection (b) and another person, the name and EIN of that
other person must be included on the filed return or claim for refund when
required by Department forms.
e)
Oversight Program. The Department will use the PTIN information required to be
included on a filed return or claim for refund under subsection (c) for
purposes of administering the enforcement provisions of subsection (f). The
PTIN information allows the Department to identify preparers who prepare
fraudulent or otherwise erroneous returns, and returns reflecting
unsubstantiated tax positions. The Department will share and exchange
PTIN information with the Internal Revenue Service on income tax return
preparers who are suspected of fraud, disciplined, or barred from filing tax
returns with the Department or the Internal Revenue Service. (STPOA
Section 10) The Department will share similar enforcement or discipline
information with other states.
f)
Enforcement
1) Misconduct Investigations.
The Department may investigate the actions of any income tax return
preparer doing business in the State and may bar or suspend an income tax
return preparer from filing returns with the Department for good
cause. (STPOA Section 15) Good cause to bar or suspend an income tax
return preparer may be found when a preparer engages in conduct described in
26 USC
7407(b)(1) (other than
conduct subject to penalty under
26
USC 6695(a) (failure to
provide the taxpayer with a copy of the return), (d) (failure to retain copies
or lists of returns prepared by the preparer), (e) (failure to correct
information returns) and (f) (negotiation of checks issued to taxpayers)), as
if
26 USC
7407(b)(1) applied for
purposes of the IITA.
2) Misconduct
Hearings. Prior to imposing the enforcement provisions of subsection (f)(1),
the Department will hold a hearing as provided in this subsection (f)(2).
The Department shall, at least 30 days before the date set for the
hearing: notify the accused in writing of the charges made and the time and
place for the hearing on the charges; direct him or her to file a written
answer to the charges with the Department under oath within 20 days after the
service on him or her of the notice; and inform the accused that, if he or she
fails to answer, disciplinary action shall be taken against him or her, as the
Department may consider proper. At the time and place fixed in the notice, the
Department shall proceed to hear the charges and the parties or their counsel
shall be accorded ample opportunity to present any pertinent statements,
testimony, evidence, and arguments. The Department may continue the hearing
from time to time. In the case the person, after receiving the notice, fails to
file an answer, he or she may be subject to the disciplinary action set forth
in the notice. The written notice may be served by registered or certified mail
to the person's address of record. All final administrative decisions of the
Department under this Section shall be subject to judicial review pursuant to
the Administrative Review Law [ 735 ILCS 5 /Art. III]. The
term "administrative decision" shall have the meaning ascribed in Section 3-101
of that Law. Proceedings for judicial review shall be commenced in the Circuit
Court of the county in which the party applying for review resides; provided
that, if the party is not a resident of this State, the venue shall be in
Sangamon or Cook County. (STPOA Section 15)
3) Penalty for Omitting PTIN
A)
In addition to any other penalty
provided by law, any individual violating the STPOA by failing to provide his
or her PTIN shall pay a civil penalty to the Department in the amount of $50
per offense, but not to exceed $25,000 per calendar year; however, no such
penalty shall be imposed if it is shown that the failure is due to reasonable
cause and not due to willful neglect, as determined by the Department.
(STPOA Section 15(a)) The penalty under this subsection (f)(3)(A) shall apply
only with respect to an income tax return preparer who holds an active PTIN at
the time of filing the Illinois return or claim for refund. The penalty does
not apply to an income tax return preparer who does not have an active PTIN,
whether or not the preparer is required to obtain a PTIN. Reasonable cause
shall be determined under the standards set forth in 86 Ill. Adm. Code
700.400. The
penalty imposed under this subsection (f)(3)(A) shall not be considered tax
imposed under the IITA.
B) The
Department shall issue a notice of penalty liability for the amount claimed by
the Department determined pursuant to subsection (f)(3)(A). Procedures for
protest and review of a notice of penalty liability issued pursuant to this
subsection (f)(3)(B) and assessment of the penalty due under this subsection
(f)(3)(B) shall be the same as those prescribed for protest and review of a
notice of deficiency set forth in IITA Section 908.
