Illinois Administrative Code
Title 86 - REVENUE
Part 100 - INCOME TAX
Subpart Z - ASSESSMENT
Section 100.9200 - Assessment (IITA Section 903)
Universal Citation: 86 IL Admin Code ยง 100.9200
Current through Register Vol. 48, No. 38, September 20, 2024
a) In general.
1) Returns.
A) The amount of tax shown to be due on a
taxpayer's return shall be deemed assessed on the date of the filing of the
return. If upon verifying the taxpayer's properly filed return the Department
finds that it contains no tax computation or, upon verifying the tax
computation on the return, finds that due to a mathematical error (see
subparagraph (2) below) the amount of tax shown thereon is understated, it is
to notify the taxpayer that the amount of tax or the additional amount required
to correct the amount shown as tax, as the case may be, has been assessed and
is due. The taxpayer has no right of protest against such notice inasmuch as it
does not constitute a notice of deficiency within the meaning of that term as
used in IITA Section 904. (See 86 Ill. Adm. Code
100.9300.)
With respect to tentative returns (Applications for Extension of Time to File
(Form IL-505)) showing the amount properly estimated as the tax for the taxable
year as provided in IITA Section 602(a):
i)
the amount of properly estimated tax reported on a tentative return shall be
deemed assessed on the filing date (the date payment is required)
thereof,
ii) the payment of all or
any part of such amount is in respect of and constitutes tax imposed by the Act
payable into the General Revenue Fund in the State Treasury (and not a taxpayer
deposit), and
iii) interest on any
overpayment in accordance with 86 Ill. Adm. Code
100.9400(c)
) .
B) Refer to 86 Ill. Adm. Code
100.9320(f)
and
100.9410(c)
respecting extension by agreement at the
Department's request of the limitations period for issuance of a notice of
deficiency or the filing of a claim for refund by the taxpayer. An examination
of a return ordinarily will not be conducted or begun until after the last day
prescribed for timely filing of the final return (extensions included). Within
the context and meaning of IITA Sections 505 (time and place for filing),
602(a) (tentative payments), 904(b) (no return filed), 905(a) (limitation on
notices of deficiency), 911(a) (limitations on claims for refund), and 1001
(penalty for failure to file), "return", "tax return", or "any tax return"
refers to the taxpayer's final return and not to a tentative return. For
purposes of commencement of the limitations period for issuing notices of
deficiency by the Department (see IITA Section 905(a) and (h)), and for filing
claims for refund by the taxpayers (see IITA Section 911(a) and (e)), a return
filed prior to the statutory due date (when no extension has been granted) is
deemed filed as of the statutory due date, and a return filed prior to an
extended due date is deemed filed as of the extended due date.
2) Mathematical error defined and
illustrated.
A) Mathematical errors are to be
distinguished from adjustments based on a Department determination of correct
tax liability for the taxable year resulting from an examination (i.e., an
audit) of the return (together with the taxpayer's books and records) after it
is accepted and processed. (See paragraph (1) above and 86 Ill. Adm. Code
100.9300
below.)
B) The term "mathematical
error", calling for informal inquiry to the taxpayer in apparently appropriate
cases or for issuance of a notice of tax due in addition to the tax liability
shown on or paid with the original return, is of substantial administrative
importance. Its use enables the Department with a minimum of correspondence and
inconvenience to taxpayers to process or to complete the processing of returns
containing defects, such as:
i) arithmetic
errors or incorrect computations on the return or supporting
schedules;
ii) entries on the wrong
lines;
iii) omission of required
supporting forms or schedules or of the information in whole or part called for
thereon; and
iv) an attempt to
claim, exclude, deduct, or improperly report, in a manner directly contrary to
the provisions of the Act and related regulations, any item of income,
exemption, deduction or credit.
C) The proper response to a mathematical
error notice of additional tax due is for the taxpayer promptly, within the
time specified in the notice (to avoid other collection efforts and the
assessment of interest thereon under IITA Section 1003), to pay the amount due
unless the defect(s) can be corrected by the taxpayer's furnishing correcting
information including, for example, any supporting forms or schedules indicated
to have been omitted from the return. If the Department timely receives payment
or correcting information which satisfactorily corrects all of the defects
indicated, it shall cancel the previously issued notice of additional tax due;
if the information received only partially corrects the defects indicated in
the notice, an appropriately amended notice may be issued.
D) Referring to the type of defect described
under subsection (B)(iv) above, if in filing the original return the taxpayer
views applicable provisions of the Act as unconstitutional or otherwise
disagrees with the interpretation of the Act provided in the Illinois Income
Tax Regulations prescribed by the Department, the taxpayer should file the
return in accord with the Act and the Department's interpretive regulations.
Thereafter, the taxpayer properly can test the meaning or validity of the Act
and regulations by filing an appropriate claim for refund of tax overpayment.
(See 86 Ill. Adm. Code
100.9400(f),
et seq.)
E) Situations illustrating
defects such as those referred to in paragraph (D) above, for example, include
but are not necessarily limited to a failure to report, as modifications to the
taxpayer's federal adjusted gross or taxable income (provided in IITA Section
203), the additions provided for representing amounts excluded from federal
taxation but taxable by Illinois or attempts to report subtractions other than
those expressly provided for.
3) Notice of deficiency. If a notice of
deficiency has been issued and a protest thereto is not filed, the amount of
deficiency is to be deemed assessed as provided in IITA Section 903(a), which
is upon the expiration of 45 days (150 days if the taxpayer is outside the
United States) from the statutory notice issue date. If a notice of deficiency
is issued and a protest is filed, the amount of the deficiency is to be deemed
assessed when the Department's decisions thereon becomes final (see 86 Ill.
Adm. Code
100.9100(b)(1)
and (3)) . Under IITA Section 908 the
Department's action on the protest, if no hearing was requested, becomes final
30 days after the mailing of a notice of decision. If a hearing was requested,
the Department's action becomes final 30 days after the mailing of a notice of
decision unless a rehearing was requested within that 30-day period. If, within
that 30-day period, the taxpayer requests a rehearing on the decision, the
Department's action is to become final either upon its issuance (within 10 days
after the rehearing request is received) of a denial of the request or, if such
a denial is not issued within that 10-day period, upon the Department's
issuance (as soon as practicable after a rehearing or, if granted in lieu
thereof, a Departmental review) of a notice of final decision. (86 Ill. Adm.
Code
100.9100(d).)
4) Federal change. If a taxpayer concedes the
accuracy of a change or correction affecting the computation of his Illinois
base or net income (viz., a change of tax liability reported on his federal
income tax return or of any item of income, deduction, or loss on which such
liability is based, or of the number of personal exemptions to which he is
entitled under
26 U.S.C.
151) , any deficiency in Illinois income tax
liability resulting from the taxpayer's report of the federal change on Form
IL-506, Form IL-1040X, or Form IL-1120X, as required under the provisions of
IITA Section 506(b), is to be deemed assessed on the date of filing such report
and the assessment is to be deemed timely irrespective of any other provision
of the Act. IITA Section 203(a), (b), and (d) defines "base income" as a
person's properly reportable federal adjusted gross income or taxable income,
as the case may be, subject to certain specified modification; see IITA Section
204 for "net income" respecting individual taxpayers. Thus, it shall be the
Department's position and practice to rely upon and accept the federal Internal
Revenue Service determination as to the amount of a taxpayer's adjusted gross
or taxable income and the number of exemptions to which he is entitled for
federal income tax purposes. Adherence to that position shall be subject to
exception only in rare circumstances such as where the Internal Revenue Service
for some reason (e.g., where no change in federal tax liability would result)
might fail or decline to act, or where the 18-month statutory period of
limitations for prosecution would expire before action by IRS. IITA Section
506(b) also requires that a notification of the alteration, showing the
taxpayer's address and signed by him or his representative, be filed with the
Department not later than 120 days after such alteration has been agreed to or
finally determined or after any federal income tax deficiency or refund,
abatement, tentative carryback adjustment or credit resulting therefrom, has
been assessed or paid for federal income tax purposes. Such finality also
exists where a taxpayer executes (and IRS accepts) a Form 870 agreement waiving
the restrictions on assessment or pays any asserted tax increase, even if it is
his intent thereafter to file a claim for refund for all or part of such tax
(in such instance, the claim would constitute a separate case), or after any
federal income tax deficiency or refund, abatement, tentative carryback
adjustment or credit resulting therefrom, has been assessed or paid for federal
income tax purposes.
b) Limitations on assessment. No deficiency is to be assessed respecting a taxable year for which a return was filed unless a notice of deficiency for such year was issued not later than the date prescribed in IITA Section 905. (See 86 Ill. Adm. Code 100.9320.)
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