a) Failure to file returns. In addition to
any other penalties imposed by the IITA, an employer failing to file a
quarterly return or the annual transmittal form for wage and tax statements
required by IITA Section 704 or regulations promulgated under the statute shall
incur a penalty for each such failure as prescribed by UPIA Section 3-3
[
35 ILCS
735/3-3] . (IITA Section 1104) See 86 Ill. Adm. Code
700.300
for more guidance on the penalty for failure to file quarterly and annual
returns.
b) Failure to pay. UPIA
Section 3-3(b), (b-5), (b-10), (b-15) and (b-20) provides for penalties for
failure to pay amounts shown due on a return on or before the due date for
payment. Pursuant to 86 Ill. Adm. Code
700.500(c),
any payment of taxes withheld during a quarter shall be applied against the
earliest unpaid liability for that quarter under Section
100.7320(b)
or (c) or
100.7325(b)
or (c).
EXAMPLE 1: An employer required to make semi-weekly payments
is required to deposit $500 on the 10th,
18th and 25th day of a
month and on the 3rd day of the following month.
Employer makes a payment of $700 on the 15th of the
month and pays the remaining $1,300 of the liability on the
15th of the following month. No other payments are
made during that period. $500 of the payment on the
15th of the month is applied in satisfaction of the
amount due on the 10th, and the remaining $200 is
applied toward the amount due on the 18th. The
remainder of the amount due on the 18th and the
remaining amounts due are unpaid until the 15th of
the following month. Any amount withheld in the following month and due on or
before the 15th of that month is subject to late
payment penalty because the payment made on the 15th
is applied to amounts due in the first month.
EXAMPLE 2: The employer in Example 1 makes payments of $500
on the 18th and 25th days
of the month and on the 3rd of the following month.
The balance is paid on the 15th of the following
month. The payment made on the 18th is applied to
the amount due on the 10th, the payment made on the
25th is applied to the amount due on the
18th, and the payment made on the
3rd is applied to the amount due on the
25th. The penalty for late payment will therefore
apply to all four amounts.
c) Failure to withhold. If an employer fails
to deduct and withhold any amount of tax as required under Article 7 of the
IITA, and thereafter the tax on account of which such amount was required to be
deducted and withheld is paid, such amount of tax shall not be collected from
the employer, but the employer shall not be relieved from liability for
penalties or interest otherwise applicable in respect of such failure to deduct
and withhold. (IITA Sections 706 and 713) The amount required to be deducted
and withheld during a year shall be considered paid by the employee if the
employee pays his or her entire Illinois income tax liability for that year,
even if that liability is less than the amount required to be deducted and
withheld by the employer. Any employer who fails to deduct and withhold the
required amount of tax shall be liable for any underpayment of tax by the
employee (excluding interest and penalties imposed on the employee), up to the
amount the employer improperly failed to deduct and withhold, together with
interest and penalties for failure to deduct and withhold; provided that the
amount of tax due from the employee shall not be collected more than once under
this provision.
d) Personal
liability penalty. Any person required to collect, truthfully account for, and
pay over the tax required to be paid over under Article 7 of the IITA who
willfully fails to collect such tax or truthfully account for and pay over such
tax or willfully attempts in any manner to evade or defeat the tax or the
payment thereof shall, in addition to other penalties provided by law, be
liable for the penalty imposed by UPIA Section 3-7. (IITA Section 1002(d)) (See
86 Ill. Adm. Code
700.340.)
