Chicago’s Department of Finance currently is offering an amnesty program called the Debt Relief Program (Program). The Program gives individuals and businesses the opportunity to resolve outstanding debt and avoid certain interest and penalties. The Program is outlined in Article IV of the Management Ordinance enacted with the City of Chicago’s (City’s) Fiscal Year 2016 Budget. It is unrelated to the Chicago Department of Finance’s recent Voluntary Disclosure offer to providers and customers with respect to the Personal Property Lease Transaction Tax, which we covered in a previous blog post.
The Program runs from November 15, 2015 to December 31, 2015, and offers amnesty for three types of “debt,” defined as follows:
- Unregistered Taxpayers or Unregistered Tax Collectors: Includes tax liabilities for tax periods prior to January 1, 2012, for any taxpayer or tax collector that is not currently registered with the City for the tax.
- Final Tax Assessments: Includes tax assessments issued prior to January 1, 2012, where the taxpayer failed to respond to the Department of Finance’s findings that taxes were owed.
- Real Property Transfer Taxes: Includes real property transfers that took place prior to January 1, 2012.
We think the better reading of the City’s reference to “unregistered” taxpayers is that the registration is tax specific, meaning that a taxpayer registered to pay a particular tax would not, by the fact of that registration, be precluded from participating in the amnesty program with respect to another type of tax for which the taxpayer had not registered. (City of Chicago Debt Relief Ordinance of 2015, Section 2; Form 2015 Debt Relief Application – Unregistered Taxpayers and Tax Collectors, Section 2).
The Program’s main benefit includes the waiving of interest and penalties. In order to receive this benefit, the eligible tax debt must be paid in full and the applicable tax returns must be filed with the City by December 31, 2015. If the eligible tax debt is not paid in full by December 31, 2015, regular interest and penalty amounts will be assessed.
The following taxes are not eligible for the Program: regulatory, compensation or franchise fees, special assessments, the cigarette tax, the automatic amusement device tax, wheel tax license fees, the Chicago Transit Authority portion of the real property transfer tax, and the Metropolitan Pier and Exposition Authority airport departure tax. Also ineligible are tax debts in pending legal activity or for which the City has obtained an order from the Department of Administrative Hearings or a judgment from a court of competent jurisdiction. All other taxes imposed under the Municipal Code of Chicago or by ordinance passed by the Chicago City Council are eligible for the Program.
Unregistered taxpayers and taxpayers with outstanding tax debts to the City of Chicago should consider whether to participate in the Program. To apply for tax debt relief through the Program, taxpayers need to complete a Tax Debt Relief application with the City, accompanied by the applicable tax returns. The Tax Debt Relief applications can be found here.