2001 Practitioners' Questions and Answers

Miscellaneous

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 web page individual income tax refund-tracking feature is great. Will it be expanded to corporate refunds and assessment information for other taxes? What are the Department's plans?
	Response:	We agree the individual income tax refund-tracking feature has worked well. In calendar year 2001 we had almost 190,000 refund inquiries via the Internet. We had another 239,000 refund inquiries made via the automated voice response unit (VRU). We also provided further explanation of bills and notices on the Internet and VRU, handling over 56,000 inquiries this year. Our plans for next year include implementing an Internet business registration application which would enable new businesses to register with the state of Illinois to do business, and apply for and receive a Federal Employer Identification Number (FEIN). We are renaming our Website to ILTAX.COM, with navigation changes that make it easier for individuals, businesses, and tax practitioners to find what they need with one or two clicks. At this time, we do not have any plans to automate corporate refund inquiry.
2.	What is being planned to improve collections and the collection systems? What sectors have been targeted and which produce the most revenue?
	Response:	Overall, the Department of Revenue is reviewing all aspects of the collection process searching for ways to become more effective and efficient while at the same time improving taxpayer service. Some of our improvements will come from automation, while others come from process changes - like centralizing functions in one location. Here are a few examples of recent or up-coming changes. Installment agreements In the future all installment agreements will be monitored in Springfield, regardless of where the agreement was initiated. This allows us to make better use of automation, makes it easier to follow up, and gives the taxpayer a single point of contact. We have also recently revised our approach to installment agreement requirements. The change is designed to produce an agreement that a taxpayer is committed to and can actually meet. For example, in the past collectors insisted on a 25% down payment and duration not to exceed 12 months. Under the new approach down payments are the exception not the rule, and duration can be up to 5 years for individuals and 2 years for businesses. This approach will also apply to financial statement requirements. In general, short duration, smaller dollar agreements will not require a financial statement. The forms and instructions for installment agreement requests can be found on the Department of Revenue web site. In the near future we hope to have a page on our web site dedicated to installment agreements. The page may include a request form that can be completed on-line and printed on the taxpayer's printer. Case Managers Another major change that is currently in the pilot stage involves our case flow. Today our cases flow through various programs and various people within these programs. Under our pilot, cases will remain with a case manager, from beginning to end. The taxpayer benefits because he/she will have only one person to communicate with instead of many. We gain better accountability and the ability to initiate multiple actions at the same time. Electronic Liens Technology may provide a better way to deal with the process of filing and releasing liens. We are working with the Illinois Association of County Clerks and Recorders to determine the feasibility of filing and releasing liens electronically. This could relieve the taxpayer's burden of having to prove to the County that a lien has been released by the Department. It would also eliminate the many follow up contacts that are made to the Department because a taxpayer has lost a lien release. Liquor Several months ago the Liquor revocation and renewal program was centralized in the Thompson Center. This helped the Department save resources. It helps the taxpayer and the Illinois Liquor Commission by limiting their contacts.
3.	What is the Department's position regarding identification of taxpayers that have been and are under audit? Texas makes this information available to the public. If financial and return information is not released, a list of names does not appear to violate the confidentiality statute.
	Response:	IITA Section 917 and ROTA Section 11 make all taxpayer information from returns and investigations confidential, and prohibit disclosure except as provided in those sections. Both sections contain an exception that permits the publication of the names and addresses of taxpayers filing returns. Publishing any additional information - such as the fact that the taxpayer is under audit - is not permitted by these exceptions.
4.	Informal Conference Board ("ICB"): Who is on the ICB and how has it been working so far? Will the Department publish a form for requesting ICB review? What happened to the cases that were previously pending at the old ICU?
	Response:	The ICB is composed of the General Counsel - Keith Staats, the Chairman of the Board of Appeals - Phil Howe and one other person appointed by the Director - Mike Scaduto. The ICB should become operational during the month of November. A draft form for requesting ICB review has been completed and was included in your information packet. We will finalize the form and instructions in the next couple of weeks. The cases that were pending at the old ICU were transferred to the ICB and will be worked by the ICB staff.
5.	Department's Website: Would it be possible to reorganize the site or to add a more powerful search engine to make it easier to find everything that's in there? For example, the Florida Department of Revenue's tax library website allows you to limit your search to a type of tax or a type of authority for a specific tax, e.g. only regulations on sales tax. See http://sun6.dms.state.fl.us/dor/ This would be very helpful to practitioners because the content at the Department's site is great, it's just hard to find everything in it.
	Response:	We have asked the Department's webmaster to determine if the search engine can be modified.
6.	A problem arose during last year's tax filing season. It seems that a lot of attachments to IL-1040s were "lost." Especially page 1 of the federal 1040 where there was pension income that was a subtraction on the IL form. What will the Department do to prevent those things from happening? What can we do as practitioners to help ensure that the forms don't get lost?
	Response:	We didn't notice an increase of complaints of this type from prior years. The Department continues to do everything possible in terms of quality control of our processing operation to ensure that attachments are not lost. It is has been our experience that it is very rare that an attachment is lost. Increased use of electronic filing of returns is a very important way in which the volume of paper returns filed, along with associated attachments, may be reduced. We would suggest that as practitioners you should promote the use of electronic filing to cut down on the volume paper filed with and processed by the Department.
7.	Personal Income Tax - Attachments to the IL-1040. It seems that when IL1040s are electronically filed, it is necessary for the practitioner to keep what would normally be attachments to the form, attached to form IL-8463 which must only be kept in the practitioner's office. If these attachments are not necessary for the electronically filed IL-1040, why are they necessary for the paper filed IL-140. I am especially referring to the items necessary to prove the U.S. Government interest on line 8 which would include 1099s and the mutual fund schedule of the percent of dividends that are U.S. Government interest. This is a very cumbersome part of office preparation of the tax return usually involving very small amounts of tax and if it is not really necessary it should be handled in the same manner for both electronically filed and paper filed returns.
	Response:	As a practical matter, the Illinois Department of Revenue lacks the resources to conduct a detailed examination of every attachment to every return. However, we do require attachments to document certain items, and we do examine a portion of those attachments. In the case of electronically filed returns, we allow the Electronic Return Originator ("the ERO") to retain certain paper documents subject to the Department's right of review and verification. Our electronic filing division contacts a number of EROs each year, verifies that they are obtaining and retaining the information that is required to be attached to paper returns and we also review the documents retained. Therefore, we are treating both electronically filed returns and paper returns similarly in the sense that in each case we do a detailed review of the attachments to a certain number of the returns filed. We have the ability to allow EROs to retain certain paper attachments for us because unlike tax practitioners in general, we regulate EROs. If EROs do not retain appropriate attachments and respond to our requests to verify that retention, they will not be allowed to act as EROs in future years. Because we do not regulate other tax practitioners, we have no enforcement mechanism to ensure that practitioners, or individuals for that matter, would possess and retain appropriate documentation. Therefore, we have not extended the ability to retain attachments to practitioners who file paper returns or to individuals who file paper returns.
8.	Cooperation with the Secretary of State: What exactly is the Department doing with the Secretary of State to uncover nonfilers?
	Response:	The Department is working with the Secretary of State's Business Corporations Division to develop methods to compare those corporations registered with the Secretary of State to those taxpayers registered with the Department of Revenue. Based upon that comparison, the Department may be able to identify persons registered to do business in Illinois with the Secretary of State who may not be filing tax returns and use that information to attempt to determine whether those persons may have tax filing obligations with Illinois. Similarly, the Secretary of State may be able to identify persons who are paying taxes to Illinois, who may not have registered properly with the Secretary of State.
9.	How long are ROT and Corporate income tax refunds being delayed?
	Response:	For ROT, refunds are not being delayed and the Department of Revenue is effectively current on sales tax hardship refund requests. On the corporate income tax side, there are delays caused by lack of cash in the Refund Fund. The economic slowdown has not only slowed payments into the Refund Fund but also increased the amount of refund claims. The department is paying non-unitary refunds in four to six weeks and unitary refunds on a first-in, first-out basis, about a year from receipt of the return.