Illinois Compiled Statutes 50 ILCS 355/10-20 – Local government revenue recapture certified audit project
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(a) The Department shall initiate a certified audit pilot project to further enhance tax compliance reviews performed by qualified practitioners and to encourage taxpayers to hire qualified practitioners at their own expense to review and report on certain aspects of their sales tax and use tax compliance in cases where the Department has notified the taxpayer that it has received a tax compliance referral from a municipality, county, or third party under this Act. The nature of the certified audit work performed by qualified practitioners shall be agreed-upon procedures of a Compliance Attestation in which the Department is the specified user of the resulting report. Qualified practitioners are prohibited from using information obtained from audit manuals, training materials, or any other materials provided by the Department under this Act for any purpose other than to perform the tax compliance reviews under the certified audit pilot program under this Act.
The tax compliance reviews shall be limited in scope and may include only: (i) whether the taxpayer is reporting receipts in the proper jurisdiction; (ii) whether tangible personal property purchases that were used or consumed by the taxpayer were taxed properly; (iii) an evaluation of sales reported as exempt from tax; (iv) whether the proper tax rate was charged; (v) whether the tax was properly reported as retailers’ occupation tax or use tax; and (vi) any other factor that impacts the Department’s allocation of sales and use tax revenues to the jurisdiction in which the taxpayer reports sales or use tax.
(b) As an incentive for taxpayers to incur the costs of a certified audit, the Department shall abate penalties due on any tax liabilities revealed by a certified audit, except that this authority to abate penalties shall not apply to any liability for taxes that were collected by the participating taxpayer but not remitted to the Department, nor shall the Department have the authority to abate fraud penalties.
(c) The certified audit pilot project shall apply only to taxpayers who have been notified that an audit referral has been received by the Department under this Act and only to occupation and use taxes administered and collected by the Department.
(c-5) The Department shall charge a fee of $2,500 to each participant in the certification program under this Article.
(d) The certified audit pilot project shall begin with audit referrals received on and after January 1, 2021. Upon obtaining proper certification, qualified practitioners may initiate certified audits beginning January 1, 2021.
The tax compliance reviews shall be limited in scope and may include only: (i) whether the taxpayer is reporting receipts in the proper jurisdiction; (ii) whether tangible personal property purchases that were used or consumed by the taxpayer were taxed properly; (iii) an evaluation of sales reported as exempt from tax; (iv) whether the proper tax rate was charged; (v) whether the tax was properly reported as retailers’ occupation tax or use tax; and (vi) any other factor that impacts the Department’s allocation of sales and use tax revenues to the jurisdiction in which the taxpayer reports sales or use tax.
Terms Used In Illinois Compiled Statutes 50 ILCS 355/10-20
- Audit: means an agreed-upon procedures engagement in accordance with Statements on Standards for Attestation Engagements (AICPA Professional Standards, AT-C Section 315 (Compliance Attestation)). See Illinois Compiled Statutes 50 ILCS 355/10-15
- Certification program: means an instructional curriculum, examination, and process for certification, recertification, and revocation of certification of certified public accountants that is administered by the Department with the assistance of the Illinois CPA Society and that is officially approved by the Department to ensure that a certified public accountant possesses the necessary skills and abilities to successfully perform an attestation engagement for a limited-scope tax compliance review in a certified audit project under this Act. See Illinois Compiled Statutes 50 ILCS 355/10-15
- Department: means the Department of Revenue. See Illinois Compiled Statutes 50 ILCS 355/10-15
- Fraud: Intentional deception resulting in injury to another.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Participating taxpayer: means any person subject to the revenue laws administered by the Department who is the subject of a tax compliance referral by a municipality, county, or third party, who enters into an engagement with a qualified practitioner for a limited-scope tax compliance review under this Act, and who is approved by the Department under the local government revenue recapture certified audit pilot project. See Illinois Compiled Statutes 50 ILCS 355/10-15
- Personal property: All property that is not real property.
(b) As an incentive for taxpayers to incur the costs of a certified audit, the Department shall abate penalties due on any tax liabilities revealed by a certified audit, except that this authority to abate penalties shall not apply to any liability for taxes that were collected by the participating taxpayer but not remitted to the Department, nor shall the Department have the authority to abate fraud penalties.
(c) The certified audit pilot project shall apply only to taxpayers who have been notified that an audit referral has been received by the Department under this Act and only to occupation and use taxes administered and collected by the Department.
(c-5) The Department shall charge a fee of $2,500 to each participant in the certification program under this Article.
(d) The certified audit pilot project shall begin with audit referrals received on and after January 1, 2021. Upon obtaining proper certification, qualified practitioners may initiate certified audits beginning January 1, 2021.