Current through Register Vol. 48, No. 12, March 22, 2024
a) When Purchasers May File Claims
If it shall appear that an amount of tax or penalty or
interest has been paid in error under the Use Tax Act to the Department by a
purchaser, as distinguished from the retailer, whether the amount be paid
through a mistake of fact or an error of law, the purchaser may file a claim
for credit with the Department.
b) When Retailers May File Claims - Unjust
Enrichment Prohibited
1) If it shall appear
that an amount of tax or penalty or interest has been paid in error to the
Department under the Use Tax Act by a retailer who is required or authorized to
collect and remit the Use Tax, whether the amount be paid through a mistake of
fact or an error of law, the retailer may file a claim for credit with the
Department, provided that no credit shall be allowed for any amount paid by any
such retailer unless it shall appear that the retailer bore the burden of the
amount and did not shift the burden to anyone else (as in the case of a
duplicated tax payment which the retailer made to the Department and did not
collect from anyone else), or unless it shall appear that the retailer or its
legal representative has unconditionally repaid the amount to its vendee:
A) who bore the burden and has not shifted
the burden directly or indirectly in any manner whatsoever;
B) who, if the retailer has shifted the
burden, has repaid unconditionally the amount to its own vendee; and
C) who is not entitled to receive any
reimbursement from any other source than from its vendor, nor to be relieved of
the burden in any other manner whatsoever.
2) If it shall appear that an amount of tax
has been paid in error under the Use Tax Act by the purchaser to a retailer,
who retained the tax as reimbursement for its tax liability on the same sale
under the Retailers' Occupation Tax Act, and who remitted the amount involved
to the Department under the Retailers' Occupation Tax Act, whether the amount
be paid through a mistake of fact or an error of law, the procedure for
recovering the tax shall be that prescribed in Sections 6, 6a, 6b and 6c of the
Retailers' Occupation Tax Act.
3)
The retailer will be considered to have satisfied the unconditional repayment
requirement where it provides its purchaser with an instrument upon which the
purchaser can make a demand upon the retailer/claimant for payment of the tax
recovered if the claim is allowed. The retailer'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 retailer
to make an unconditional repayment to its purchasers is to prevent unjust
enrichment on the part of the retailer. Therefore, in order to establish that
it was not unjustly enriched, the retailer 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
retailer.
c) Time Limit
On The Filing Of Claims
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 Use Tax 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 Use Tax Act) more than 3 years
prior to July 1 shall be credited or refunded, 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 this Act, such claim may be
filed at any time prior to the expiration of the period agreed upon.
[35 ILCS
120/4 ] No claim shall be allowed for any amount paid
to the Department, whether paid voluntarily or involuntarily, if paid 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.
d) 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
105/21 ].
e) Procedure For 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.
3) 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.
4) The written receipt
shall be prima facie evidence that the Department received the claim described
in the receipt and shall be prima facie evidence of the date when the claim was
received by the Department.
5) In
the absence of 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 its
legal representative) and the Department concerning these questions. (See
Section 19 of the Act.)
f) Procedure After Filing Of Claims
1) 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 the legal
representative, or if the claimant has died or become incompetent and the legal
representative has notified the Department of his 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.
2) 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 the hearing, and shall hold a hearing in
conformity with the provisions of the Act, and 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.
3) 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 as provided in
subsection (e)(2), the Notice shall become and operate as a Final
Determination. (See Section 20 of the Act.)
g) Use of Credit Memoranda to Satisfy Prior
Rights of Department
1) If, following the
above procedure, a credit is found to be due, 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 under the Use Tax Act, the
Retailers' Occupation Tax Act, the Service Occupation Tax Act, or the Service
Use Tax Act, or under a local Retailers' Occupation Tax or Service Occupation
Tax administered by the Department against the claimant, or unpaid penalty, or
unpaid interest, the amount of the credit shall be credited against the tax or
penalty or interest due. If the credit is in an amount less than that of the
unpaid liability, it shall be applied pro tanto.
2) 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
thereof, provided that no proceeding is pending against the claimant to
establish an unpaid liability under the Use Tax Act, the Retailers' Occupation
Tax Act, the Service Occupation Tax Act, or the Service Use Tax Act, or under a
local Retailers' Occupation Tax or Service Occupation Tax administered by the
Department.
3) If a proceeding to
establish 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.
4) If a taxpayer is notified that due to
overpayments, a verified credit balance is available, the taxpayer may file a
claim for credit.