Current through Register Vol. 48, No. 38, September 20, 2024
a) Limitations Upon Claims
1) Where a taxpayer under the Service
Occupation Tax Act pays to the Department an amount of tax or penalty or
interest not due under the provisions of the Act, either as the result of a
mistake of fact or an error of law, the taxpayer may file a claim for credit
with the Department. The Department cannot approve any claim for credit unless
the proof submitted in support clearly establishes that the claimant has borne
the burden of the tax erroneously paid or that the claimant has unconditionally
repaid the amount of the tax to the vendee from whom the claimant has collected
the amount. In the latter event, the claimant must also prove that the vendee
has borne the burden of the amount or has unconditionally repaid persons to
whom the vendee has shifted the burden of the amount (see Section 17 of the
Act). In addition, no credit shall be allowed for any amount paid by or
collected from any claimant unless it shall appear that the claimant has
unconditionally repaid, to the purchaser, any amount collected from the
purchaser and retained by the claimant with respect to the same transaction
under the Service Use Tax Act. Claimant will be considered to have satisfied
the unconditional repayment requirement where it provides its purchaser with an
instrument upon which the customer can make a demand upon claimant for payment
of the tax recovered if the claim is allowed. The claimant's provision of
unconditional promissory notes or irrevocable credit memoranda to its
purchasers who paid tax in error would satisfy this requirement. The purpose of
requiring the claimant to make an unconditional repayment to its purchasers is
to prevent unjust enrichment on the part of the claimant. Therefore, in order
to establish that it was not unjustly enriched, the claimant filing a claim for
credit must be able to demonstrate that it gave unconditional promissory notes
or irrevocable credit memoranda to its purchasers who paid tax in error to the
claimant. The Department cannot approve any claim for credit to the extent that
the amount claimed is an amount which has been paid (voluntarily or
involuntarily) in total or partial liquidation of an assessment which had
become final before the claim for credit to recover the amount so paid is filed
with the Department, or if paid in total or partial liquidation of a judgment,
order or decree of court. Also, all claims for credit are subject to the
following statute of limitations;
2) As to any claim for credit filed with the
Department on and after January 1, but on or before June 30 of any given year,
no amount of tax or penalty or interest erroneously paid (either in total or
partial liquidation of a tax or penalty or amount of interest under the Act)
more than 3 years prior to January 1 shall be credited, and as to any claim
filed on and after July 1 but on or before December 31 of any given year, no
amount of tax or penalty or interest erroneously paid (either in total or
partial liquidation of a tax or penalty or amount of interest under the Act)
more than 3 years prior to July 1 shall be credited, except that, if both the
Department and the taxpayer have agreed to an extension of time to issue a
notice of tax liability as provided in Section 4 of the Retailers' Occupation
Tax Act, that claim may be filed at any time prior to the expiration of the
period agreed upon.
3) Beginning
June 25, 2021, for any period included in a claim for credit or refund
for which the statute of limitations for issuing a notice of tax liability
under this Act will expire less than 6 months after the date a taxpayer files
the claim for credit or refund, the statute of limitations is automatically
extended for 6 months from the date it would have otherwise expired.
[35 ILCS
115/19] .
b) Filing of Claims
1) Claims for credit shall be prepared and
filed upon forms provided by the Department and available at
www.tax.illinois.gov. Where the
claimant is a corporation, the claim filed on behalf of the corporation shall
be signed by the president, vice-president, secretary or treasurer or by the
properly accredited agent of the corporation.
2) A claim for credit shall be considered to
have been filed with the Department on the date upon which it is received by
the Department. Upon receipt of any claim for credit filed under the Act, any
officer or employee of the Department, authorized in writing by the Director of
Revenue to acknowledge receipt of the claims on behalf of the Department shall
execute on behalf of the Department, and shall deliver or mail to the claimant
or its duly authorized agent, a written receipt, acknowledging that the claim
has been filed with the Department, describing the claim in sufficient detail
to identify it and stating the date upon which the claim was received by the
Department. The written receipt shall be prima facie evidence that the
Department received the claim described and shall be prima facie evidence of
the date when the claim was received by the Department. In the absence of such
a written receipt, the records of the Department as to when the claim was
received by the Department, or as to whether or not the claim was received at
all by the Department, shall be deemed to be prima facie correct upon these
questions in the event of any dispute between the claimant (or his legal
representative) and the Department concerning these questions. (See Section 17
of the Act.)
c) Procedure
After Filing of Claims
The Department will examine each claim for credit as soon as
practicable after the claim is filed and will notify the claimant (or its legal
representative, if the claim is filed by such legal representative, or if the
claimant has died or become incompetent and the legal representative has
notified the Department of its appointment and qualification as the legal
representative, or if the Department, on its own motion, has substituted the
legal representative in the proceeding for the deceased or incompetent
claimant) of its Tentative Determination of the amount of credit, if any, to
which the claimant or its legal representative is entitled. If the claimant, or
the legal representative of a deceased or incompetent taxpayer, shall, within
60 days after the Department's Notice of Tentative Determination of Claim, file
a protest and request a hearing, the Department shall give notice to the
claimant, or to the legal representative of a deceased or incompetent taxpayer,
of the time and place fixed for such hearing, and shall hold a hearing in
conformity with the provisions of the Act, and pursuant thereto shall issue its
Final Determination of the amount of credit, if any, found to be due as a
result of the hearing, to the claimant, or to the legal representative of a
deceased or incompetent taxpayer. If a protest to the Department's Notice of
Tentative Determination of Claim is not filed within 60 days and a request for
a hearing is not made, the Notice shall become and operate as a "Final
Determination". (See Section 18 of the Service Occupation Tax Act.)
d) Use of Credit Memoranda to
Satisfy Prior Rights of Department
If, following the above procedure, a credit is found to be
due, as evidence of a credit memorandum for the amount shall be issued in the
name of the claimant. If there is an established unpaid assessment or an
admitted unpaid liability, or unpaid penalty or unpaid amount of interest,
against the claimant either under the Retailers' Occupation Tax Act, the Use
Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, any local
occupation or use tax administered by the Department, Section 4 of the Water
Commission Act of 1985 [70 ILCS 3720/4] , subsections
(b), (c), and (d) of Section
5.01 of the Local Mass Transit
District Act [70 ILCS 3610/5.01] , or
subsections (e), (f) and (g) of Section
4.03 of the Regional
Transportation Authority Act [70 ILCS 3615/4.03] , the amount
of the credit shall be credited against the tax or penalty or interest due or
to become due under these Acts from the person who made the erroneous payment.
If the credit is in an amount less than that of the unpaid liability, it shall
be applied toward satisfaction of the unpaid liability. If the amount of the
credit exceeds that of the unpaid liability, after crediting an amount
sufficient to liquidate or cancel out the unpaid liability, a new credit
memorandum shall be issued for an amount representing the difference between
that of the original credit found to be due and that of the liability
liquidated or paid, and the new credit memorandum shall be delivered to the
person entitled to receive delivery, provided that no proceeding is pending
against the claimant to establish an unpaid liability under the Retailers'
Occupation Tax Act, the Use Tax Act, the Service Occupation Tax Act, the
Service Use Tax Act, any local occupation or use tax administered by the
Department, Section 4 of the Water Commission Act of 1985, subsections (b),
(c), and (d) of Section
5.01 of the Local Mass Transit
District Act, or subsections (e), (f) and (g) of Section
4.03 of the Regional
Transportation Authority Act. If a proceeding to establish such an unpaid
liability is pending, the credit memorandum shall be held by the Department
until the proceeding is concluded; and if the proceeding results in the
issuance of an assessment which becomes final, the credit shall be applied by
the Department, to the extent which may be necessary, in liquidation of the
assessment, or any interest that may accrue, and the balance of the credit, if
any (after cancellation of the credit memorandum applied in liquidation of the
liability), shall be issued in the form of a new credit memorandum and
delivered to the person entitled to receive delivery.
