2001 Practitioners' Questions and Answers

Administrative Hearings

Note: The answers by the Department of Revenue to the questions below are not to be relied upon by taxpayers in lieu of a Private Letter Ruling and are not the kind of written information upon which a taxpayer may rely to request an abatement under the Taxpayer Bill of Rights. Where a conflict appears to exist between these answers and a form, instruction, regulation or bulletin issued by the Department, taxpayers are advised to follow the form, instruction, regulation or bulletin, contact the Department's Business Hotline at (217) 524-4772, or seek a Private Letter Ruling.


1.	The burden of proof taxpayers have to overcome when they seek court review of the Department's administrative decisions involving fact questions has always been a substantial disincentive for taxpayers to use the administrative process. But a history of unreasonable interrogatory practices in the Administrative Hearing Division, coupled with the Department's advocacy of a new "clearly erroneous" standard of review for decisions raising pure legal issues, have made the Department's administrative process very unattractive for business taxpayers. What figures does DOR have on the percent of larger cases going through the administrative hearing process, versus going to court, in the last year or so? Is the Department comfortable with having the administrative hearing process used almost exclusively by small taxpayers and business taxpayers who can't afford the Protest Act option?
	Response:	Without having some guideline as to what is meant by "larger cases" we can make no guess as to the percentage of such cases going directly to court as opposed to the administrative process. Second, even if we did have statistics on this diversity, it would be meaningless without knowing why any particular case was taken in any given direction. We do know that the number of cases filed under the Protest Monies Act has increased over the last few years, but not by any significant margin. In 1997 there were approximately 11 new protest action cases filed, that number increased to a high of 26 new protest case filings in 1999. In the last 22 months the filings have been below the 1999 numbers. Finally, there is no justification to the conclusion drawn that the administrative hearing process is now used almost exclusively by small and poorer taxpayers. That just is not the case. We are handling protests filed by Fortune 500 companies just as much as we are for smaller individuals. The administrative process still outnumbers Protest Act cases filed by more than 10-1. It should be pointed out here that the Department does not "advocate" any burden of proof. The courts establish a burden of proof as a matter of law which the Department must follow just as any other legal precept.
2.	What is the current administrative hearing caseload? How has it changed over the past three years? What type of cases are going to hearing now? Has the Circuit Court protest case docket increased greatly over the same period?
	Response:	The current caseload within the Office of Administrative Hearings is approximately 600 cases statewide. That number has declined approximately 10% from where it stood at the same time in 1998. However, the reasons for the decline are numerous and cannot be attributed solely to preferences for the circuit court over the administrative process. Much of the 10% decline is due to greater efficiencies, changed practices and a larger number of cases being resolved prior to hearing. The cases going to hearing now represent a cross section of all tax types and issues. There has been no change in that aspect. The Circuit Court protest docket has increased somewhat over the last three years, but not enough to categorize it as a major or an irreversible trend.
3.	Administrative Hearings: What types of procedural issues are the most common? Is the Department considering any changes to its hearing rules? For example, it could be helpful to add a provision stating that the circuit court procedural rules will apply unless the Department's rules expressly provide otherwise.
	Response:	The procedural issues most often encountered in the administrative hearing process are normally related to discovery problems. Since the department's rules in this area already mirror supreme court rules as well as circuit court practice, there is little need to change them or adopt a broader inclusion, other than perhaps minor amendments to bring them up to date. Changes to other aspects of the hearing rules are in the planning and drafting stage. Most of the contemplated changes are directed at making better use of electronic media in the service and delivery of notices, orders and decisions rather than by mail or courier delivery.