HB3545 94TH GENERAL ASSEMBLY

LRB094 03898 MKM 33910 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB3545

Introduced 2/23/2005, by Rep. Gary Hannig

SYNOPSIS AS INTRODUCED:

35 ILCS 5/1109	from Ch. 120, par. 11-1109
35 ILCS 120/5f	from Ch. 120, par. 444f

Amends the Illinois Income Tax Act. Authorizes the Department of Revenue to seek a conditional judgment against a taxpayer's employer if the employer is served with a levy on the taxpayer's salary, wages, commissions, and bonuses by the Department and the employer fails to answer the levy. Authorizes the Department to seek a confirmation of the conditional judgment. Amends the Retailers' Occupation Tax Act. Authorizes the Department of Revenue to seek a conditional judgment against a financial institution or other person that is served with a levy by the Department of Revenue and fails to answer the levy. Authorizes the Department of Revenue to seek a confirmation of the conditional judgment. Effective July 1, 2005.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning taxes.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by changing Section 1109 as follows:

(35 ILCS 5/1109) (from Ch. 120, par. 11-1109)

Sec. 1109. Demand and Seizure. In addition to any other remedy provided for by the laws of this State, if the tax imposed by this Act is not paid within the time required by this Act, the Department, or some person designated by it, may cause a demand to be made on the taxpayer for the payment thereof. If such tax remains unpaid for 10 days after such demand has been made and no proceedings have been taken to review the same, the Department may issue a warrant directed to any sheriff or other person authorized to serve process, commanding the sheriff or other person to levy upon the property and rights to property (whether real or personal, tangible or intangible) of the taxpayer, without exemption, found within his jurisdiction, for the payment of the amount thereof with the added penalties, interest and the cost of executing the warrant. The term "levy" includes the power of distraint and seizure by any means. In any case in which the warrant to levy has been issued, the sheriff or other person to whom the warrant was directed may seize and sell such property or rights to property. Such warrant shall be returned to the Department together with the money collected by virtue thereof within the time therein specified, which shall not be less than 20 nor more than 90 days from the date of the warrant. The sheriff or other person to whom such warrant is directed shall proceed in the same manner as prescribed by law in respect to the enforcement against property upon judgments by a court, and shall be entitled to the same fees for his services in executing the warrant, to be collected in the same manner. The Department, or some officer, employee or agent designated by it, is hereby authorized to bid for and purchase any property sold under the provisions hereof. No proceedings for a levy under this Section shall be commenced more than 20 years after the latest date for filing of the notice of lien under the provisions of Section 1103, without regard to whether such notice was actually filed.

Any officer or employee of the Department designated in writing by the Director is authorized to serve process under this Section to levy upon accounts or other intangible assets of a taxpayer held by a financial organization, as defined in Section 1501 of this Act. In addition to any other provisions of this Section, any officer or employee of the Department designated in writing by the Director may levy upon the following property and rights to property belonging to a taxpayer: contractual payments, accounts and notes receivable and other evidences of debt, and interest on bonds, by serving a notice of levy on the person making such payment. Levy shall not be made until the Department has caused a demand to be made on the taxpayer in the manner provided above. In addition to any other provisions of this Section, any officer or employee of the Department designated in writing by the Director, may levy upon the salary, wages, commissions and bonuses of any employee, including officers, employees, or elected officials of the United States as authorized by Section 5520a of the Government Organization and Employees Act (5 U.S.C. 5520a), but not upon the salary or wages of officers, employees, or elected officials of any state other than this State, by serving a notice of levy on the employer, as defined in Section 701(d). Levy shall not be made until the Department has caused a demand to be made on the employee in the manner provided above. The provisions of Section 12-803 of the Code of Civil Procedure relating to maximum compensation subject to collection under wage deduction orders shall apply to all levies made upon compensation under this Section. To the extent of the amount due on the levy, the employer or other person making payments to the taxpayer shall hold any non-exempt wages or other payments due or which subsequently come due. The levy or balance due thereon is a lien on wages or other payments due at the time of the service of the notice of levy, and such lien shall continue as to subsequent earnings and other payments until the total amount due upon the levy is paid, except that such lien on subsequent earnings or other payments shall terminate sooner if the employment relationship is terminated or if the notice of levy is rescinded or modified. The employer or other person making payments to the taxpayer shall file, on or before the return dates stated in the notice of levy (which shall not be more often than bimonthly) a written answer under oath to interrogatories, setting forth the amount due as wages or other payments to the taxpayer for the payment periods ending immediately prior to the appropriate return date. A lien obtained hereunder shall have priority over any subsequent lien obtained pursuant to Section 12-808 of the Code of Civil Procedure, except that liens for the support of a spouse or dependent children shall have priority over all liens obtained hereunder.

If a taxpayer's employer fails to answer a levy on the taxpayer's salary, wages, commissions and bonuses as required by this Section, the Department may seek in the circuit court a conditional judgment against the employer for the amount claimed under the levy in accordance with the procedures set forth in Section 12-807 of the Code of Civil Procedure. Following the entry of a conditional judgment, the Department may seek to confirm the conditional judgment in accordance with the procedures set forth in Section 12-807 of the Code of Civil Procedure.

In any case where property or rights to property have been seized by an officer of the Illinois Department of State Police, or successor agency thereto, under the authority of a warrant to levy issued by the Department of Revenue, the Department of Revenue may take possession of and may sell such property or rights to property and the Department of Revenue may contract with third persons to conduct sales of such property or rights to the property. In the conduct of such sales, the Department of Revenue shall proceed in the same manner as is prescribed by law for proceeding against property to enforce judgments which are entered by a circuit court of this State. If, in the Department of Revenue's opinion, no offer to purchase at such sale is acceptable and the State's interest would be better served by retaining the property for sale at a later date, then the Department may decline to accept any bid and may retain the property for sale at a later date.

(Source: P.A. 89-399, eff. 8-20-95.)

Section 10. The Retailers' Occupation Tax Act is amended by changing Section 5f as follows:

(35 ILCS 120/5f) (from Ch. 120, par. 444f)

Sec. 5f. In addition to any other remedy provided for by the laws of this State, if the tax imposed by this Act is not paid within the time required by this Act, the Department, or some person designated by it, may cause a demand to be made on the taxpayer for the payment of the tax. If the tax remains unpaid for 10 days after demand has been made and no proceedings have been taken for review, the Department may issue a warrant directed to the sheriff of any county of the State or to any State officer authorized to serve process, commanding the sheriff or other officer to levy upon property and rights to property (whether real or personal, tangible or intangible) of the taxpayer, without exemption, found within his or her jurisdiction, for the payment of the amount of unpaid tax with the added penalties, interest and the cost of executing the warrant. The term "levy" includes the power of distraint and seizure by any means. In any case in which the warrant to levy has been issued, the sheriff or other person to whom the warrant was directed may seize and sell such property or rights to property. Such warrant shall be returned to the Department together with the money collected by virtue of the warrant within the time specified in the warrant, which may not be less than 20 nor more than 90 days from the date of the warrant. The sheriff or other officer to whom such warrant is directed shall proceed in the same manner as is prescribed by law for proceeding against property to enforce judgments which are entered by a circuit court of this State, and is entitled to the same fees for his or her services in executing the warrant, to be collected in the same manner. The Department, or some officer, employee or agent designated by it, may bid for and purchase any such property sold.

No proceedings for a levy under this Section may be commenced more than 20 years after the latest date for filing of the notice of lien under Section 5b of this Act, without regard to whether such notice was actually filed.

Any officer or employee of the Department designated in writing by the Director is authorized to serve process under this Section to levy upon accounts or other intangible assets of a taxpayer held by a financial organization, as defined by Section 1501 of the Illinois Income Tax Act. In addition to any other provisions of this Section, any officer or employee of the Department designated in writing by the Director may levy upon the following property and rights to property belonging to a taxpayer: contractual payments, accounts and notes receivable and other evidences of debt, and interest on bonds, by serving a notice of levy on the person making such payment. Levy shall not be made until the Department has caused a demand to be made on the taxpayer in the manner provided above. In addition to any other provisions of this Section, any officer or employee of the Department designated in writing by the Director, may levy upon the salary, wages, commissions and bonuses of any employee, including officers, employees, or elected officials of the United States as authorized by Section 5520a of the Government Organization and Employees Act (5 U.S.C. 5520a), but not upon the salary or wages of officers, employees, or elected officials of any state other than this State, by serving a notice of levy on the employer. Levy shall not be made until the Department has caused a demand to be made on the employee in the manner provided above. The provisions of Section 12-803 of the Code of Civil Procedure relating to maximum compensation subject to collection under wage deduction orders shall apply to all levies made upon compensation under this Section. To the extent of the amount due on the levy, the employer or other person making payments to the taxpayer shall hold any non-exempt wages or other payments due or which subsequently come due. The levy or balance due thereon is a lien on wages or other payments due at the time of the service of the notice of levy, and such lien shall continue as to subsequent earnings and other payments until the total amount due upon the levy is paid, except that such lien on subsequent earnings or other payments shall terminate sooner if the employment relationship is terminated or if the notice of levy is rescinded or modified. The employer or other person making payments to the taxpayer shall file, on or before the return dates stated in the notice of levy (which shall not be more often than bimonthly) a written answer under oath to interrogatories, setting forth the amount due as wages or other payments to the taxpayer for the payment periods ending immediately prior to the appropriate return date. A lien obtained hereunder shall have priority over any subsequent lien obtained pursuant to Section 12-808 of the Code of Civil Procedure, except that liens for the support of a spouse or dependent children shall have priority over all liens obtained hereunder.

If a financial institution or other person served with a levy by the department fails to answer as required by this Section, the Department may seek in the circuit court a conditional judgment against that financial institution or other person for the amount claimed under the levy in accordance with the procedures set forth in Section 12-706 of the Code of Civil Procedure. Following the entry of a conditional judgment, the Department may seek to confirm the conditional judgment in accordance with the procedures set forth in Section 12-706.

In any case where property or rights to property have been seized by an officer of the Illinois Department of Law Enforcement, or successor agency thereto, under the authority of a warrant to levy issued by the Department of Revenue, the Department of Revenue may take possession of and may sell such property or rights to property and the Department of Revenue may contract with third persons to conduct sales of such property or rights to the property. In the conduct of such sales, the Department of Revenue shall proceed in the same manner as is prescribed by law for proceeding against property to enforce judgments which are entered by a circuit court of this State. If, in the Department's opinion, no offer to purchase at such sale is acceptable and the State's interest would be better served by retaining the property for sale at a later date, then the Department may decline to accept any bid and may retain the property for sale at a later date.

(Source: P.A. 89-399, eff. 8-20-95.)

Section 99. Effective date. This Act takes effect July 1, 2005.