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| 1. | Does the Illinois Department of Revenue have a large backlog of refund claims? A couple of years ago we had a few instances of taxpayers which had either been audited by, or had entered into voluntary disclosure agreements (covering past periods) with, other states. In these situations, the amount of income apportioned to Illinois decreased and amended returns, resulting in refunds claims, were filed to reflect a decreased amount of income being apportioned to Illinois. Seemingly, these changes to Illinois taxable income would be easy to verify without exhaustive audits. | |
| Response: | The simple answer is "no". The department is current in its processing of 1040 refunds. In fact, we had one of our best years ever in terms of getting refund returns processed and sending vouchers to the Comptroller. All timely filed 1040"s without errors were sent to the Comptroller well in advance of the statutory date for computing interest (July 15). However, it may seem to taxpayers that there is a backlog if they are not receiving their refund checks expeditiously after filing a claim. There are several reasons that a refund may be delayed. 1.) The volume of tax-related payments being processed through the Comptroller in recent months has been extraordinary. Normal income tax refunds volumes have been dwarfed by the processing and issuance of income tax rebate checks as required by the recently enacted PA-91-901. 2.) Cash flow has also been an issue at times. Depending on the adequacy of the balance in the refund fund, we may not be able to send all the vouchers to the Comptroller for payment. Obviously, this may delay some refunds. 3.) Business refund claims are sometimes problematic. It is not unusual for the Department to require several months to complete processing. This occurs, in large part, because of our emphasis on processing correctly filed original returns first. In certain situations, claim processing can be extended even further by the type of variables being changed on the amended return or by the need to verify certain data via audit activity, e.g. apportionment changes. In addition, some claims may be randomly selected for audit. Most claims, however, do not require the additional audit step We continue to strive to get the taxpayer's refunds sent to them expeditiously. We would welcome any constructive ideas you may have on that issue. |
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| 2. | Are there any statistical results from the publication of tax delinquencies on the Internet? | |
| Response: | Since the first letters went out in March of 1999, 2,304 taxpayers who received notice have paid $17.6 million. Of those taxpayers, 241 have agreed to payment plans that have produced another $15.4 million. And, 805 taxpayers have provided documentation that let us take $9.8 million off our books. |
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| 3. | Would the Department be willing to support legislation that limited the look-back period for uncollected Retailers' Occupation Tax to 6 years? | |
| Response: | No. The Department is opposed to limiting the statute of limitations for failure to pay Retailers' Occupation Tax. The current law is the correct treatment for such failures. Persons who are in the business of selling tangible personal property at retail should be aware of their tax obligations and should be required to meet these obligations. These obligations should not be ignored because such persons are successful in escaping detection for a certain period of time. | |
| 4. | The stated purpose of the Informal Conference Unit was to provide a forum for communication between the Department and the taxpayers. ICU had no binding authority - why is it necessary to close this forum for a significant period of time? | |
| Response: | The Department agrees that the concept of an Informal Conference Unit has utility and can be a valuable forum for the resolution of factual disputes prior to the issuance of a tax assessment. The statutory authority upon which the ICU is based requires that ICU is to be operated according to administrative rules adopted in conformance with the Illinois Administrative Procedure Act. The Department had no validly adopted rules for ICU. Prior Department administrators allowed ICU to begin operations and continue operations without rules. In light of recent comments received by the Department for the Illinois General Assembly's Joint Committee on Administrative Rules with respect to implementation of policies and procedures prior to the adoption of rulemaking, the Director determined that it would be appropriate to suspend the operations of ICU temporarily until rules are adopted. We have drafted rules for ICU. In addition, a group of well respected tax practitioners got together and have presented us with a proposal for how ICU should continue to operate. We will be discussing both our draft rules and that proposal in our Director's Advisory Group Meeting of October 25. It is our goal to have ICU up and running again shortly after the first of the year. |
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| 5. | Would the Department revisit the allowance of the Voluntary Disclosure Program to entities that are outside compliance, but that have historically filed returns? Since it is unlikely that any significant number of taxpayers would knowingly risk a period of intentional disregard in order to abuse voluntary disclosure, it would appear more important to repatriate as many taxpayers as possible, even if they effectively achieve some tax relief. | |
| Response: | While we are always willing to entertain proposals to enhance current programs, we have not yet seen a proposal for amendment of the voluntary disclosure program to allow participation by prior filers that did not carry with it the potential for abuse. We do not want to provide incentives for noncompliance by providing a "pass" to non-compliant taxpayers that successfully escape detection for a particular period of time. | |