Illinois State Tax Appeals

Have you received a Notice from the Illinois Department of Revenue stating you have a large tax liability and payment is demanded immediately?  This is common and there are many reasons for you to receive such a Notice.  The good news is there are several ways to dispute the tax liability.

In order to dispute an Illinois tax liability, you must follow the formal procedures stipulated by the appropriate taxing jurisdictions.  There are only two taxing jurisdictions in Illinois: the Illinois Tax Tribunal and the Department of Revenue.

If you are getting ready to file a Complaint at the Illinois Tax Tribunal, note that this is just like state court. A Complaint must be filed as would a Complaint in any other formal Court.  The Complaint must state the Jurisdiction of the Court and the matters to be litigated.  Robert Thomas was filed several Complaints at the Illinois Tax Tribunal and will confidently represent your case before the Illinois Tax Tribunal.

Each allegation of wrong doing on the part of the auditor is stated as allegations by Robert Thomas and then addressed in court, including but not limited to principal, sampling errors, and penalties. Remember, a Complaint must be filed after the statutory notice of liability has been issued by the appropriate taxing jurisdiction. If your Illinois sales tax audit has not yet been closed, your case is not ready for the Illinois Tax Tribunal. You must first exhaust the Informal Conference Board Hearing, which Robert Thomas also has extensive experience in handling.

If you complete the administrative hearing or tax tribunal process and do not agree with the outcome, you may appeal the decision. Decisions of the administrative hearings with the Illinois Department of Revenue may be appealed to the Illinois circuit court. Decisions of the Illinois Independent Tax Tribunal may be appealed to the Illinois appellate court.

 

Illinois Independent Tax Tribunal

The Illinois Independent Tax Tribunal (Tribunal) began on November 18, 2013, in Chicago. The Illinois Independent Tax Tribunal is conveniently located at: Room N506, Illinois Independent Tax Tribunal, 160 N LaSalle St, Chicago Il 60601. Phone: 312 814-4285. Fax: 312 814-4768. Email: ITT.TaxTribunal@illinois.gov.  The Tribunal is executed by the Chief Administrative Law Judge.  Simply stated, the purpose of the Tribunal is to foster the settlement of tax disputes between the Illinois Department of Revenue and its taxpayers, and, in cases where litigation is necessary, provide taxpayers with a fair, independent, and tax-expert forum to resolve disputes between taxpayers and the Illinois Department of Revenue.

The Tax Tribunal is an independent agency: it is separate from the authority of the Director of Revenue and the Illinois Department of Revenue.  The Tax Tribunal cannot assess attorney fees incurred by on party again the other party.  Mediation of the dispute is available in the Tax Tribunal. There are two types of mediation.  First, another Judge would conduct the mediation to try to reach a settlement. Second, the Judge hearing the case would advise the parties to the strengths and weaknesses of their case.

History of the Illinois Independent Tax Tribunal

Before the Tribunal was organized and opened in 2013, the Illinois Department of Revenue had inadequate business rules, policies, and procedures for using moneys within the Illinois Independent Tax Tribunal Fund.  The internal accounting records were inaccurate.  There was a lack of required staff, there was no office in Sangamon County, and Judges were not serving proper terms.

Mission of the Illinois Independent Tax Tribunal

As formally stated in 35 ILCS 1010/1-5, the purpose of the Tribunal is “(a) To increase public confidence in the fairness of the State tax system, the State shall provide an independent administrative tribunal with tax expertise to resolve tax disputes between the Department of Revenue and taxpayers prior to requiring the taxpayer to pay the amounts in issue. By establishing an independent tax tribunal, this Act provides taxpayers with a means of resolving controversies that ensures both the appearance and the reality of due process and fundamental fairness; (b) The Illinois Independent Tax Tribunal shall provide administrative hearings in all tax matters except those matters reserved to the Department of Revenue or another entity by statute, and shall render decisions and orders relating to matters under its jurisdiction. A Tax Tribunal administrative hearing shall be commenced by the filing of a petition with the Tribunal protesting a tax determination made by the Department of Revenue; and (c) It is the intent of the General Assembly that this Act foster the settlement or other resolution of tax disputes to the extent possible and, in cases in which litigation is necessary, to provide the people of this State with a fair, independent, and tax-expert forum to determine tax disputes with the Department of Revenue. The Act shall be liberally construed to further this intent.”

Administrative Judges of the Tribunal

The Governor shall, with the advice and consent of the Senate, appoint a Chief Administrative Law Judge to be the executive of the Tax Tribunal. The Chief Administrative Law Judge shall serve a 5-year term. The Governor may appoint additional administrative law judges, with the advice and consent of the Senate, as necessary to carry out the provisions of this Act, provided that no more than 4 administrative law judges, including the Chief Administrative Law Judge, shall serve at the same time. The administrative law judges, other than the Chief Administrative Law Judge, shall initially be appointed to staggered terms of no greater than 4 years. After the initial terms of office, all administrative law judges, other than the Chief Administrative Law Judge, shall be appointed for terms of 4 years. Each administrative law judge is eligible for reappointment.

Jurisdiction of the Illinois Independent Tax Tribunal

The Illinois Tax Tribunal has jurisdiction over cases when the Illinois Department of Revenue issues a Notice of Deficiency, Notice of Tax Liability, Notice of Claim Denial, or Notice of Penalty Liability to a taxpayer and when the aggregate amount for a tax year or audit period exceeds $15,000, exclusive of any interest and penalties imposed on the taxpayer.

In cases where only interest and/or penalties are assessed, jurisdiction is conferred when the aggregate total of interest and penalties exceeds $15,000.

The Tax Tribunal’s jurisdiction is limited to certain types of taxes imposed (also referred to Illinois taxing statutes).  The Tax Tribunal has jurisdiction to hear the following taxing matters:

  1. Illinois Income Tax
  2. Use Tax
  3. Service Use Tax
  4. Service Occupation Tax
  5. Retailer’s Occupation Tax
  6. Cigarette Tax
  7. Cigarette Use Tax
  8. Tobacco Products Tax
  9. Hotel Operators’ Occupation Tax
  10. Motor Fuel
  11. Automobile Renting Occupation and Use Tax
  12. Coin-Operated Amusement Device and Redemption Machine Tax
  13. Gas Revenue Tax
  14. Water Company Invested Capital Tax
  15. Telecommunications Excise Tax
  16. Telecommunications Infrastructure Maintenance Fee
  17. Public Utilities Revenue
  18. Electricity Excise Tax
  19. Aircraft Use Tax
  20. Watercraft Use Tax
  21. Gas Use Tax
  22. Uniform Penalty and Interest

 

Department of Revenue

All other taxes may only be protested with the Department of Revenue:

  1. Bingo Tax
  2. Cigarette Machine Operators’ Occupation Tax
  3. Charitable Games Tax
  4. Chicago Home Rule Municipal Soft Drink Retailers’ Occupation Tax
  5. County Motor Fuel Tax
  6. Dry Cleaning Solvent Tax
  7. Energy Assistance Charges – Electric and Gas
  8. Illinois Hydraulic Fracturing Tax Liquor Taxes
  9. Live Adult Entertainment Facility Surcharge
  10. Medical Cannabis Cultivation Privilege Tax
  11. Metropolitan Pier and Exposition Authority (MPEA) Food & Beverage Tax
  12. Private Party Vehicle Use Tax
  13. Pull Tabs Tax
  14. Real Estate Transfer Tax
  15. Renewal Energy Resources and Coal Technology Development Assistance Charge
  16. Rental Housing Support Program Surcharge
  17. Tire User Fee

 

Appealing the Illinois Department of Revenues Decision

File a Complaint

You may file a Complaint with the Illinois Independent Tax Tribunal within the time specified on your notice if the tax you owe falls into one of the categories the Tribunal has jurisdiction over, the amount of your tax liability, exclusive of penalty and interest, is more than $15,000, or if no tax liability is assessed but the total penalties and interest is more than $15,000. You are not required to the tax liability before filing the Complaint. Please contact the Law Office of Robert Thomas for assistance.

In all other cases that do not fall within the jurisdiction of the Illinois Independent Tax Tribunal, those cases will fall within the jurisdiction of the Illinois Department of Revenue.  Robert Thomas will prepare and file a compelling protest within the time specific on the notice and request an administrative hearing with either the Illinois Department of Revenue or a hearing with the Illinois Independent Tax Tribunal. To file a protest, call the Law Office of Robert Thomas.  Robert Thomas has experience bringing cases before both jurisdictions.  He will expertly represent you and your case in the Administrative hearing. An administrative hearing is a formal legal proceeding conducted pursuant to the rules adopted by the Department and is presided over by an administrative law judge.

Pay the Total Tax Liability and Then File a Complaint

You may decide to pay the total liability but formally protest the amount of the tax liability.  Robert Thomas will assist you with payment and preparing and filing Form RR-374, Notice of Payment Under Protest. This method allows you to pay the tax liability in full while protesting your Notice.  Once Form RR-374 is filed, then Robert will file a complaint with the circuit court for a review of the Department of Revenue’s determination of your tax liability.

Informal Conference Board during an Active Audit

You also have another option available to you if you are under audit. If you do not agree with the results and the audit is not yet closed, you have the option to request a review with the Informal Conference Board (ICB). The purpose of the ICB is to review adjustments proposed by the Department’s Audit Bureau before a notice is issued. The ICB process allows you the opportunity to resolve disagreements after a liability has been proposed but before the formal protest and administrative hearing or tax tribunal process. For more information, see PIO-58, Informal Conference Board Review.

Board of Appeals After Your Administrative Hearing

If you went through the administrative hearing or tax tribunal process and still do not agree with the outcome, you may appeal the decision. Decisions of the administrative hearings with the Illinois Department of Revenue may be appealed to the Illinois circuit court. Decisions of the Illinois Independent Tax Tribunal may be appealed to the Illinois appellate court.

If all other forms of protest have been exhausted (i.e., administrative hearing or Tax Tribunal decision and any appeal of that decision to the courts) or the time allowed for taking such action has expired, you may petition the Board of Appeals (BOA). The purpose of the BOA is to ensure that you have been treated fairly and to provide relief when appropriate. The BOA does not have the authority to re-determine your final liability or to review administrative hearings, Tax Tribunal decisions, or any appeal of that decision to the courts. The BOA has the authority to waive penalties and interest and to reduce a tax liability if it is likely the full debt cannot be collected.

The Law Office of Robert Thomas has extensive experience protesting Complaints with the Internal Revenue Service, Illinois Tax Tribunal and the Illinois Department of Revenue.  If you have received Notices from either the Internal Revenue Service for unpaid federal taxes or you have received Notices from the state of Illinois’ Department of Revenue for unpaid state taxes, please call the Law Office of Robert Thomas today at 847-392-5893 for a free consultation.