2001 Practitioners' Questions and Answers

Audit Bureau

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.	When will the Department implement the "certified audit program"? What will the requirements be for certification? How will the program be administered? What problems are envisioned?
	Response:	The Department has opened dialog with the Illinois CPA Society regarding the Certified Audit Program. The pilot project will require a testing and certification program to be in place before certified audits may begin. The Department is committed to working with all interested parties to define the programs certification and operational standards. We are still too early in the process to give an anticipated starting date. The Department's Legal Services Office is in the early stages of the rule drafting process.
2.	What have been the results of "cash basis" audits? Are they an effective use of resources?
	Response:	We continue to pursue noncompliant "cash" businesses. Our activities in this industry continue to show high levels of noncompliance. While we believe we are having a positive impact, the reality is that we simply do not have enough resources to bring this industry's voluntary compliance rate to acceptable levels. We believe the most effective way to increase compliance is through a prepaid sales tax on all wholesale liquor sales.
3.	We have recently noticed that the audit section has been issuing 60 day notice of demand for documentary evidence letters on a routine basis as a follow up to initial audit inquiry letters. These demands are being issued prior to any audit appointments, preliminary assessments or other follow-up contacts. In the past, the Department, when faced with legislation to curtail its use of 60 day letters, promised that its use of these letters would be very limited and would be carefully reviewed internally prior to being issued. Has Department policy changed? This procedure appears to be a deliberate attempt at a very early stage by the office audit or discovery section to foreclose a taxpayer's right to present its evidence at future proceedings.
	Response:	The Department has no intention of deliberately attempting to foreclose a taxpayers right to produce evidence. In fact, the cases to which you refer are cases where the taxpayers and/or practitioners have routinely failed to respond to our request for written documentation to support claimed exemptions on corporate aircraft. A review of Office Program case files show that in the past year fewer than 1.1% of all cases had 60 day letters issued (65 out of 5,465 total cases worked). The Division Manager of Office Programs has been directed to personally review and approve all 60 day letters issued.