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Illinois State Tax Forms 2011

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Illinois State Tax Forms 2011

Illinois state tax forms 2011 Publication 556 - Main Content Table of Contents Examination of ReturnsIf Your Return Is Examined Interest Netting Abatement of Interest Due to Error or Delay by the IRS Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Offer in Compromise Appeal RightsAppeal Within the IRS Appeals to the Courts Refund or Credit of Overpayments Before Final Determination Claims for RefundTime for Filing a Claim for Refund Limit on Amount of Refund Processing Claims for Refund Reduced Refund How To Get Tax Help Examination of Returns Your return may be examined for a variety of reasons, and the examination may take place in any one of several ways. Illinois state tax forms 2011 After the examination, if any changes to your tax are proposed, you can either agree with those changes and pay any additional tax you may owe, or you can disagree with the changes and appeal the decision. Illinois state tax forms 2011 Examination selection criteria. Illinois state tax forms 2011   Your return may be selected for examination on the basis of computer scoring. Illinois state tax forms 2011 A computer program called the Discriminant Inventory Function System (DIF) assigns a numeric score to each individual and some corporate tax returns after they have been processed. Illinois state tax forms 2011 If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability. Illinois state tax forms 2011   Your return may also be selected for examination on the basis of information received from third-party documentation, such as Forms 1099 and W-2, that does not match the information reported on your return. Illinois state tax forms 2011 Or, your return may be selected to address both the questionable treatment of an item and to study the behavior of similar taxpayers (a market segment) in handling a tax issue. Illinois state tax forms 2011   In addition, your return may be selected as a result of information received from other sources on potential noncompliance with the tax laws or inaccurate filing. Illinois state tax forms 2011 This information can come from a number of sources, including newspapers, public records, and individuals. Illinois state tax forms 2011 The information is evaluated for reliability and accuracy before it is used as the basis of an examination or investigation. Illinois state tax forms 2011 Notice of IRS contact of third parties. Illinois state tax forms 2011    The IRS must give you reasonable notice before contacting other persons about your tax matters. Illinois state tax forms 2011 You must be given reasonable notice in advance that, in examining or collecting your tax liability, the IRS may contact third parties such as your neighbors, banks, employers, or employees. Illinois state tax forms 2011 The IRS must also give you notice of specific contacts by providing you with a record of persons contacted on both a periodic basis and upon your request. Illinois state tax forms 2011    This provision does not apply: To any pending criminal investigation, When providing notice would jeopardize collection of any tax liability, Where providing notice may result in reprisal against any person, or When you authorized the contact. Illinois state tax forms 2011 Taxpayer Advocate Service. Illinois state tax forms 2011   The Taxpayer Advocate Service is an independent organization within the IRS whose goal is to help taxpayers resolve problems with the IRS. Illinois state tax forms 2011 If you have an ongoing issue with the IRS that has not been resolved through normal processes, or your problems with the IRS are causing financial difficulty, contact the Taxpayer Advocate Service. Illinois state tax forms 2011    Before contacting the Taxpayer Advocate Service, you should first discuss any problem with a supervisor. Illinois state tax forms 2011 Your local Taxpayer Advocate will assist you if you are unable to resolve the problem with the supervisor. Illinois state tax forms 2011   For more information, see Publication 1546. Illinois state tax forms 2011 See How To Get Tax Help , near the end of this publication, for more information about contacting the Taxpayer Advocate Service. Illinois state tax forms 2011 Comments from small business. Illinois state tax forms 2011    The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards have been established to receive comments from small business about federal agency enforcement actions. Illinois state tax forms 2011 The Ombudsman will annually evaluate the enforcement activities of each agency and rate their responsiveness to small business. Illinois state tax forms 2011 If you wish to comment on the enforcement actions of the IRS, you can take any of the following steps. Illinois state tax forms 2011 Fax your comments to 1-202-481-5719. Illinois state tax forms 2011 Write to the following address: Office of the National Ombudsman U. Illinois state tax forms 2011 S. Illinois state tax forms 2011 Small Business Administration 409 3rd Street, SW Washington, DC 20416 Call 1-888-734-3247. Illinois state tax forms 2011 Send an email to ombudsman@sba. Illinois state tax forms 2011 gov. Illinois state tax forms 2011 File a comment or complaint online at www. Illinois state tax forms 2011 sba. Illinois state tax forms 2011 gov/ombudsman. Illinois state tax forms 2011 If Your Return Is Examined Some examinations are handled entirely by mail. Illinois state tax forms 2011 Examinations not handled by mail can take place in your home, your place of business, an Internal Revenue office, or the office of your authorized representative. Illinois state tax forms 2011 If the time, place, or method is not convenient for you, the examiner will try to work out something more suitable. Illinois state tax forms 2011 However, the IRS makes the final determination of when, where, and how the examination will take place. Illinois state tax forms 2011 Throughout the examination, you can act on your own behalf or have someone represent you or accompany you. Illinois state tax forms 2011 If you filed a joint return, either you or your spouse, or both, can meet with the IRS. Illinois state tax forms 2011 The person representing you can be any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled agent (a person enrolled to practice before the IRS), an enrolled actuary, or the person who prepared the return and signed it as the preparer. Illinois state tax forms 2011 If you want someone to represent you in your absence, you must furnish that person with proper written authorization. Illinois state tax forms 2011 You can use Form 2848 or any other properly written authorization. Illinois state tax forms 2011 If you want to consult with an attorney, a certified public accountant, an enrolled agent, or any other person permitted to represent a taxpayer during an interview for examining a tax return or collecting tax, you should make arrangements with that person to be available for the interview. Illinois state tax forms 2011 In most cases, the IRS must suspend the interview and reschedule it. Illinois state tax forms 2011 The IRS cannot suspend the interview if you are there because of an administrative summons. Illinois state tax forms 2011 Third party authorization. Illinois state tax forms 2011   If you checked the box in the signature area of your income tax return (Form 1040, Form 1040A, or Form 1040EZ) to allow the IRS to discuss your return with another person (a third party designee), this authorization does not replace Form 2848. Illinois state tax forms 2011 The box you checked on your return only authorizes the other person to receive information about the processing of your return and the status of your refund during the period your return is being processed. Illinois state tax forms 2011 For more information, see the instructions for your return. Illinois state tax forms 2011 Confidentiality privilege. Illinois state tax forms 2011   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. Illinois state tax forms 2011   Confidential communications are those that: Advise you on tax matters within the scope of the practitioner's authority to practice before the IRS, Would be confidential between an attorney and you, and Relate to noncriminal tax matters before the IRS, or Relate to noncriminal tax proceedings brought in federal court by or against the United States. Illinois state tax forms 2011   In the case of communications in connection with the promotion of a person's participation in a tax shelter, the confidentiality privilege does not apply to written communications between a federally authorized practitioner and that person, any director, officer, employee, agent, or representative of that person, or any other person holding a capital or profits interest in that person. Illinois state tax forms 2011   A tax shelter is any entity, plan, or arrangement, a significant purpose of which is the avoidance or evasion of income tax. Illinois state tax forms 2011 Recordings. Illinois state tax forms 2011    You can make an audio recording of the examination interview. Illinois state tax forms 2011 Your request to record the interview should be made in writing. Illinois state tax forms 2011 You must notify the examiner 10 days in advance and bring your own recording equipment. Illinois state tax forms 2011 The IRS also can record an interview. Illinois state tax forms 2011 If the IRS initiates the recording, you must be notified 10 days in advance and you can get a copy of the recording at your expense. Illinois state tax forms 2011 Transfers to another area. Illinois state tax forms 2011    Generally, your return is examined in the area where you live. Illinois state tax forms 2011 But if your return can be examined more quickly and conveniently in another area, such as where your books and records are located, you can ask to have the case transferred to that area. Illinois state tax forms 2011 Repeat examinations. Illinois state tax forms 2011    The IRS tries to avoid repeat examinations of the same items, but sometimes this happens. Illinois state tax forms 2011 If your tax return was examined for the same items in either of the 2 previous years and no change was proposed to your tax liability, please contact the IRS as soon as possible to see if the examination should be discontinued. Illinois state tax forms 2011 The Examination An examination usually begins when you are notified that your return has been selected. Illinois state tax forms 2011 The IRS will tell you which records you will need. Illinois state tax forms 2011 The examination can proceed more easily if you gather your records before any interview. Illinois state tax forms 2011 Any proposed changes to your return will be explained to you or your authorized representative. Illinois state tax forms 2011 It is important that you understand the reasons for any proposed changes. Illinois state tax forms 2011 You should not hesitate to ask about anything that is unclear to you. Illinois state tax forms 2011 The IRS must follow the tax laws set forth by Congress in the Internal Revenue Code. Illinois state tax forms 2011 The IRS also follows Treasury Regulations, other rules, and procedures that were written to administer the tax laws and court decisions. Illinois state tax forms 2011 However, the IRS can lose cases that involve taxpayers with the same issue and still apply its interpretation of the law to your situation. Illinois state tax forms 2011 Most taxpayers agree to changes proposed by examiners, and the examinations are closed at this level. Illinois state tax forms 2011 If you do not agree, you can appeal any proposed change by following the procedures provided to you by the IRS. Illinois state tax forms 2011 A more complete discussion of appeal rights is found later under Appeal Rights . Illinois state tax forms 2011 If You Agree If you agree with the proposed changes, you can sign an agreement form and pay any additional tax you may owe. Illinois state tax forms 2011 You must pay interest on any additional tax. Illinois state tax forms 2011 If you pay when you sign the agreement, the interest is generally figured from the due date of your return (excluding any extension of time to file) to the date of your payment. Illinois state tax forms 2011 If you do not pay the additional tax when you sign the agreement, you will receive a bill that includes interest. Illinois state tax forms 2011 If you pay the amount due within 10 business days of the billing date, you will not have to pay more interest or penalties. Illinois state tax forms 2011 This period is extended to 21 calendar days if the amount due is less than $100,000. Illinois state tax forms 2011 If you are due a refund, you will receive it sooner if you sign the agreement form. Illinois state tax forms 2011 You will be paid interest on the refund. Illinois state tax forms 2011 If the IRS accepts your tax return as filed, you will receive a letter in a few weeks stating that the examiner proposed no changes to your return. Illinois state tax forms 2011 You should keep this letter with your tax records. Illinois state tax forms 2011 If You Do Not Agree If you do not agree with the proposed changes, the examiner will explain your appeal rights. Illinois state tax forms 2011 If your examination takes place in an IRS office, you can request an immediate meeting with the examiner's supervisor to explain your position. Illinois state tax forms 2011 If an agreement is reached, your case will be closed. Illinois state tax forms 2011 If you cannot reach an agreement with the supervisor at this meeting, or if the examination took place outside of an IRS office, the examiner will write up your case explaining your position and the IRS's position. Illinois state tax forms 2011 The examiner will forward your case for processing. Illinois state tax forms 2011 Fast track mediation. Illinois state tax forms 2011   The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from: Examinations (audits), Offers in compromise, Trust fund recovery penalties, and Other collection actions. Illinois state tax forms 2011   Most cases that are not docketed in any court qualify for fast track mediation. Illinois state tax forms 2011 Mediation can take place at a conference you request with a supervisor, or later. Illinois state tax forms 2011 The process involves an Appeals Officer who has been trained in mediation. Illinois state tax forms 2011 You may represent yourself at the mediation session, or someone else can act as your representative. Illinois state tax forms 2011 For more information, see Publication 3605. Illinois state tax forms 2011 30-day letter and 90-day letter. Illinois state tax forms 2011   Within a few weeks after your closing conference with the examiner and/or supervisor, you will receive a package with: A letter (known as a 30-day letter) notifying you of your right to appeal the proposed changes within 30 days, A copy of the examination report explaining the examiner's proposed changes, An agreement or waiver form, and A copy of Publication 5. Illinois state tax forms 2011 You generally have 30 days from the date of the 30-day letter to tell the IRS whether you will accept or appeal the proposed changes. Illinois state tax forms 2011 The letter will explain what steps you should take, depending on which action you choose. Illinois state tax forms 2011 Be sure to follow the instructions carefully. Illinois state tax forms 2011 Appeal Rights are explained later. Illinois state tax forms 2011 90-day letter. Illinois state tax forms 2011   If you do not respond to the 30-day letter, or if you later do not reach an agreement with an Appeals Officer, the IRS will send you a 90-day letter, which is also known as a notice of deficiency. Illinois state tax forms 2011 You will have 90 days (150 days if it is addressed to you outside the United States) from the date of this notice to file a petition with the Tax Court. Illinois state tax forms 2011 Filing a petition with the Tax Court is discussed later under Appeals to the Courts and Tax Court . Illinois state tax forms 2011 The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. Illinois state tax forms 2011 Suspension of interest and penalties. Illinois state tax forms 2011   Generally, the IRS has 3 years from the date you filed your return (or the date the return was due, if later) to assess any additional tax. Illinois state tax forms 2011 However, if you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you, stating your liability and the basis for that liability, within a 36-month period beginning on the later of: The date on which you filed your tax return, or The due date (without extensions) of your tax return. Illinois state tax forms 2011 If the IRS mails a notice after the 36-month period, interest and certain penalties applicable to the suspension period will be suspended. Illinois state tax forms 2011   The suspension period begins the day after the close of the 36-month period and ends 21 days after the IRS mails a notice to you stating your liability and the basis for that liability. Illinois state tax forms 2011 Also, the suspension period applies separately to each notice stating your liability and the basis for that liability received by you. Illinois state tax forms 2011    The suspension does not apply to a: Failure-to-pay penalty, Fraudulent tax return, Penalty, interest, addition to tax, or additional amount with respect to any tax liability shown on your return or with respect to any gross misstatement, Penalty, interest, addition to tax, or additional amount with respect to any reportable transaction that is not adequately disclosed or any listed transaction, or Criminal penalty. Illinois state tax forms 2011 Seeking relief from improperly assessed interest. Illinois state tax forms 2011   You can seek relief if interest is assessed for periods during which interest should have been suspended because the IRS did not mail a notice to you in a timely manner. Illinois state tax forms 2011   If you believe that interest was assessed with respect to a period during which interest should have been suspended, submit Form 843, writing “Section 6404(g) Notification” at the top of the form, with the IRS Service Center where you filed your return. Illinois state tax forms 2011 The IRS will review the Form 843 and notify you whether interest will be abated. Illinois state tax forms 2011 If the IRS does not abate interest, you can pay the disputed interest assessment and file a claim for refund. Illinois state tax forms 2011 If your claim is denied or not acted upon within 6 months from the date you filed it, you can file suit for a refund in your United States District Court or in the United States Court of Federal Claims. Illinois state tax forms 2011   If you believe that an IRS officer or employee has made an unreasonable error or delay in performing a ministerial or managerial act (discussed later under Abatement of Interest Due to Error or Delay by the IRS ), file Form 843 with the IRS Service Center where you filed the tax return. Illinois state tax forms 2011 If the IRS denies your claim, the Tax Court may be able to review that determination. Illinois state tax forms 2011 See Tax Court can review failure to abate interest later under Abatement of Interest Due to Error or Delay by the IRS . Illinois state tax forms 2011 If you later agree. Illinois state tax forms 2011    If you agree with the examiner's changes after receiving the examination report or the 30-day letter, sign and return either the examination report or the waiver form. Illinois state tax forms 2011 Keep a copy for your records. Illinois state tax forms 2011 You can pay any additional amount you owe without waiting for a bill. Illinois state tax forms 2011 Include interest on the additional tax at the applicable rate. Illinois state tax forms 2011 This interest rate is usually for the period from the due date of the return (excluding any extension of time to file) to the date of payment. Illinois state tax forms 2011 The examiner can tell you the interest rate(s) or help you figure the amount. Illinois state tax forms 2011   You must pay interest on penalties and additions to tax for failing to file returns, for overstating valuations, for understating valuations on estate and gift tax returns, and for substantially understating tax liability. Illinois state tax forms 2011 Interest is generally figured from the date (including extensions) the tax return is required to be filed to the date you pay the penalty and/or additions to tax. Illinois state tax forms 2011   If you pay the amount due within 10 business days after the date of notice and demand for immediate payment, you will not have to pay any additional penalties and interest. Illinois state tax forms 2011 This period is extended to 21 calendar days if the amount due is less than $100,000. Illinois state tax forms 2011 How To Stop Interest From Accruing If you think that you will owe additional tax at the end of the examination, you can stop the further accrual of interest by sending money to the IRS to cover all or part of the amount you think you will owe. Illinois state tax forms 2011 Interest on part or all of any amount you owe will stop accruing on the date the IRS receives your money. Illinois state tax forms 2011 You can send an amount either in the form of a deposit in the nature of a cash bond or as a payment of tax. Illinois state tax forms 2011 Both a deposit and a payment stop any further accrual of interest. Illinois state tax forms 2011 However, making a deposit or payment will stop the accrual of interest on only the amount you sent. Illinois state tax forms 2011 Because of compounding rules, interest will continue to accrue on accrued interest, even though you have paid the underlying tax. Illinois state tax forms 2011 To stop the accrual of interest on both tax and interest, you must make a deposit or payment for both the tax and interest that has accrued as of the date of deposit or payment. Illinois state tax forms 2011 Payment or Deposit Deposits differ from payments in two ways: You can have all or part of your deposit returned to you without filing for a refund. Illinois state tax forms 2011 However, if you request and receive your deposit and the IRS later assesses a deficiency for that period and type of tax, interest will be figured as if the funds were never on deposit. Illinois state tax forms 2011 Also, your deposit will not be returned if one of the following situations applies: The IRS assesses a tax liability. Illinois state tax forms 2011 The IRS determines that, by returning the deposit, it may not be able to collect a future deficiency. Illinois state tax forms 2011 The IRS determines that the deposit should be applied against another tax liability. Illinois state tax forms 2011 Deposits returned to you will include interest based on the Federal short-term rate determined under section 6621(b). Illinois state tax forms 2011 The deposit returned will be treated as a tax payment to the extent of the disputed tax. Illinois state tax forms 2011 A disputed tax means the amount of tax specified at the time of deposit as a reasonable estimate of the maximum amount of any tax owed by you, such as the deficiency proposed in the 30-day letter. Illinois state tax forms 2011 Notice not mailed. Illinois state tax forms 2011    If you send money before the IRS mails you a notice of deficiency, you can ask the IRS to treat it as a deposit. Illinois state tax forms 2011 You must make your request in writing. Illinois state tax forms 2011   If, after being notified of a proposed liability but before the IRS mails you a notice of deficiency, you send an amount large enough to cover the proposed liability, it will be considered a payment unless you request in writing that it be treated as a deposit. Illinois state tax forms 2011 Keep copies of all correspondence you send to the IRS. Illinois state tax forms 2011   If the amount you send is at least as much as the proposed liability and you do not request that it be treated as a deposit, the IRS will not send you a notice of deficiency. Illinois state tax forms 2011 If you do not receive a notice of deficiency, you cannot take your case to the Tax Court. Illinois state tax forms 2011 See Tax Court , later under Appeal Rights . Illinois state tax forms 2011 Notice mailed. Illinois state tax forms 2011    If, after the IRS mails the notice of deficiency, you send money without written instructions, it will be treated as a payment. Illinois state tax forms 2011 You will still be able to petition the Tax Court. Illinois state tax forms 2011   If you send money after receiving a notice of deficiency and you have specified in writing that it is a “deposit in the nature of a cash bond,” the IRS will treat it as a deposit if you send it before either: The close of the 90-day or 150-day period for filing a petition with the Tax Court to appeal the deficiency, or The date the Tax Court decision is final, if you have filed a petition. Illinois state tax forms 2011 Using a Deposit To Pay the Tax If you agree with the examiner's proposed changes after the examination, your deposit will be applied against any amount you may owe. Illinois state tax forms 2011 The IRS will not mail you a notice of deficiency and you will not have the right to take your case to the Tax Court. Illinois state tax forms 2011 If you do not agree to the full amount of the deficiency after the examination, the IRS will mail you a notice of deficiency. Illinois state tax forms 2011 Your deposit will be applied against the proposed deficiency unless you write to the IRS before the end of the 90-day or 150-day period stating that you still want the money to be treated as a deposit. Illinois state tax forms 2011 You will still have the right to take your case to the Tax Court. Illinois state tax forms 2011 Installment Agreement Request You can request a monthly installment plan if you cannot pay the full amount you owe. Illinois state tax forms 2011 To be valid, your request must be approved by the IRS. Illinois state tax forms 2011 However, if you owe $10,000 or less in tax and you meet certain other criteria, the IRS must accept your request. Illinois state tax forms 2011 Before you request an installment agreement, you should consider other less costly alternatives, such as a bank loan. Illinois state tax forms 2011 You will continue to be charged interest and penalties on the amount you owe until it is paid in full. Illinois state tax forms 2011 Unless your income is below a certain level, the fee for an approved installment agreement has increased to $105 ($52 if you make your payments by electronic funds withdrawal). Illinois state tax forms 2011 If your income is below a certain level, you may qualify to pay a reduced fee of $43. Illinois state tax forms 2011 For more information about installment agreements, see Form 9465, Installment Agreement Request. Illinois state tax forms 2011 Interest Netting If you owe interest to the IRS on an underpayment for the same period the IRS owes you interest on an overpayment, the IRS will figure interest on the underpayment and overpayment at the same interest rate (up to the amount of the overpayment). Illinois state tax forms 2011 As a result, the net rate is zero for that period. Illinois state tax forms 2011 Abatement of Interest Due to Error or Delay by the IRS The IRS may abate (reduce) the amount of interest you owe if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act (discussed later). Illinois state tax forms 2011 Only the amount of interest on income, estate, gift, generation-skipping, and certain excise taxes can be reduced. Illinois state tax forms 2011 The amount of interest will not be reduced if you or anyone related to you contributed significantly to the error or delay. Illinois state tax forms 2011 Also, the interest will be reduced only if the error or delay happened after the IRS contacted you in writing about the deficiency or payment on which the interest is based. Illinois state tax forms 2011 An audit notification letter is such a contact. Illinois state tax forms 2011 The IRS cannot reduce the amount of interest due to a general administrative decision, such as a decision on how to organize the processing of tax returns. Illinois state tax forms 2011 Ministerial act. Illinois state tax forms 2011    This is a procedural or mechanical act, not involving the exercise of judgment or discretion, during the processing of a case after all prerequisites (for example, conferences and review by supervisors) have taken place. Illinois state tax forms 2011 A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act. Illinois state tax forms 2011 Example 1. Illinois state tax forms 2011 You move from one state to another before the IRS selects your tax return for examination. Illinois state tax forms 2011 A letter stating that your return has been selected is sent to your old address and then forwarded to your new address. Illinois state tax forms 2011 When you get the letter, you respond with a request that the examination be transferred to the area office closest to your new address. Illinois state tax forms 2011 The examination group manager approves your request. Illinois state tax forms 2011 After your request has been approved, the transfer is a ministerial act. Illinois state tax forms 2011 The IRS can reduce the interest because of any unreasonable delay in transferring the case. Illinois state tax forms 2011 Example 2. Illinois state tax forms 2011 An examination of your return reveals tax due for which a notice of deficiency (90-day letter) will be issued. Illinois state tax forms 2011 After you and the IRS discuss the issues, the notice is prepared and reviewed. Illinois state tax forms 2011 After the review process, issuing the notice of deficiency is a ministerial act. Illinois state tax forms 2011 If there is an unreasonable delay in sending the notice of deficiency to you, the IRS can reduce the interest resulting from the delay. Illinois state tax forms 2011 Managerial act. Illinois state tax forms 2011    This is an administrative act during the processing of a case that involves the loss of records or the exercise of judgment or discretion concerning the management of personnel. Illinois state tax forms 2011 A decision concerning the proper application of federal tax law (or other federal or state law) is not a managerial act. Illinois state tax forms 2011 Example. Illinois state tax forms 2011 A revenue agent is examining your tax return. Illinois state tax forms 2011 During the middle of the examination, the agent is sent to an extended training course. Illinois state tax forms 2011 The agent's supervisor decides not to reassign your case, so the work is unreasonably delayed until the agent returns. Illinois state tax forms 2011 Interest from the unreasonable delay can be abated since both the decision to send the agent to the training class and not to reassign the case are managerial acts. Illinois state tax forms 2011 How to request abatement of interest. Illinois state tax forms 2011    You request an abatement (reduction) of interest on Form 843. Illinois state tax forms 2011 You should file the claim with the IRS Service Center where you filed the tax return that was affected by the error or delay. Illinois state tax forms 2011   If you have already paid the interest and you would like a credit or refund of interest paid, you must file Form 843 within 3 years from the date you filed your original return or 2 years from the date you paid the interest, whichever is later. Illinois state tax forms 2011 If you have not paid any of the interest, these time limitations for filing Form 843 do not apply. Illinois state tax forms 2011   Generally, you should file a separate Form 843 for each tax period and each type of tax. Illinois state tax forms 2011 However, complete only one Form 843 if the interest is from an IRS error or delay that affected your tax for more than one tax period or for more than one type of tax (for example, where 2 or more tax years were being examined). Illinois state tax forms 2011   If your request for abatement of interest is denied, you can appeal the decision to the IRS Appeals Office. Illinois state tax forms 2011 Tax Court can review failure to abate interest. Illinois state tax forms 2011    The Tax Court can review the IRS's refusal to abate (reduce) interest if all of the following requirements are met: You filed a request for abatement of interest (Form 843) with the IRS after July 30,1996. Illinois state tax forms 2011 The IRS has mailed you a notice of final determination or a notice of disallowance. Illinois state tax forms 2011 You file a petition with the Tax Court within 180 days of the mailing of the notice of final determination or the notice of disallowance. Illinois state tax forms 2011   The following requirements must also be met: For individual and estate taxpayers — your net worth must not exceed $2 million as of the filing date of your petition for review. Illinois state tax forms 2011 For this purpose, individuals filing a joint return shall be treated as separate individuals. Illinois state tax forms 2011 For charities and certain cooperatives — you must not have more than 500 employees as of the filing date of your petition for review. Illinois state tax forms 2011 For all other taxpayers — your net worth must not exceed $7 million, and you must not have more than 500 employees as of the filing date of your petition for review. Illinois state tax forms 2011 Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions If you are (or were) affected by a Presidentially declared disaster occurring after 1996 or a terrorist or military action occurring after September 10, 2001, the IRS may abate (reduce) the amount of interest you owe on certain taxes. Illinois state tax forms 2011 The IRS may abate interest for the period of any additional time to file or pay that the IRS provides on account of the disaster or the terrorist or military action. Illinois state tax forms 2011 The IRS will issue a notice or news release indicating who are affected taxpayers and stating the period of relief. Illinois state tax forms 2011 If you are eligible for relief from interest, but were charged interest for the period of relief, the IRS may retroactively abate your interest. Illinois state tax forms 2011 To the extent possible, the IRS can take the following actions: Make appropriate adjustments to your account. Illinois state tax forms 2011 Notify you when the adjustments are made. Illinois state tax forms 2011 Refund any interest paid by you where appropriate. Illinois state tax forms 2011 For more information on disaster area losses, see Disaster Area Losses in Publication 547. Illinois state tax forms 2011 For more information on other tax relief for victims of terrorist attacks, see Publication 3920. Illinois state tax forms 2011 Offer in Compromise In certain circumstances, the IRS will allow you to pay less than the full amount you owe. Illinois state tax forms 2011 If you think you may qualify, you should submit your offer by filing Form 656, Offer in Compromise. Illinois state tax forms 2011 The IRS may accept your offer for any of the following reasons: There is doubt about the amount you owe (or whether you owe it). Illinois state tax forms 2011 There is doubt as to whether you can pay the amount you owe based on your financial situation. Illinois state tax forms 2011 An economic hardship would result if you had to pay the full amount owed. Illinois state tax forms 2011 Your case presents compelling reasons that the IRS determines are a sufficient basis for compromise. Illinois state tax forms 2011 If your offer is rejected, you have 30 days to ask the Appeals Office of the IRS to reconsider your offer. Illinois state tax forms 2011 The IRS offers fast track mediation services to help taxpayers resolve many issues including a dispute regarding an offer in compromise. Illinois state tax forms 2011 For more information, see Publication 3605. Illinois state tax forms 2011 Generally, if you submit an offer in compromise, the IRS will delay certain collection activities. Illinois state tax forms 2011 The IRS usually will not levy (take) your property to settle your tax bill during the following periods: While the IRS is evaluating your offer in compromise. Illinois state tax forms 2011 The 30 days immediately after the offer is rejected. Illinois state tax forms 2011 While your timely-filed appeal is being considered by Appeals. Illinois state tax forms 2011 Also, if the IRS rejects your original offer and you submit a revised offer within 30 days of the rejection, the IRS generally will not levy your property while it considers your revised offer. Illinois state tax forms 2011 For more information about submitting an offer in compromise, see Form 656. Illinois state tax forms 2011 Appeal Rights Because people sometimes disagree on tax matters, the IRS has an appeals system. Illinois state tax forms 2011 Most differences can be settled within this system without expensive and time-consuming court trials. Illinois state tax forms 2011 However, your reasons for disagreeing must come within the scope of the tax laws. Illinois state tax forms 2011 For example, you cannot appeal your case based only on moral, religious, political, constitutional, conscientious, or similar grounds. Illinois state tax forms 2011 In most instances, you may be eligible to take your case to court if you do not reach an agreement at your appeals conference, or if you do not want to appeal your case to the IRS Office of Appeals. Illinois state tax forms 2011 See Appeals to the Courts , later, for more information. Illinois state tax forms 2011 Appeal Within the IRS You can appeal an IRS tax decision to a local Appeals Office, which is separate from and independent of the IRS office taking the action you disagree with. Illinois state tax forms 2011 The Appeals Office is the only level of appeal within the IRS. Illinois state tax forms 2011 Conferences with Appeals Office personnel are held in an informal manner by correspondence, by telephone, or at a personal conference. Illinois state tax forms 2011 If you want an appeals conference, follow the instructions in the letter you received. Illinois state tax forms 2011 Your request will be sent to the Appeals Office to arrange a conference at a convenient time and place. Illinois state tax forms 2011 You or your representative should be prepared to discuss all disputed issues at the conference. Illinois state tax forms 2011 Most differences are settled at this level. Illinois state tax forms 2011 If agreement is not reached at your appeals conference, you may be eligible to take your case to court. Illinois state tax forms 2011 See Appeals to the Courts , later. Illinois state tax forms 2011 Protests and Small Case Requests When you request an Appeals conference, you may also need to file either a formal written protest or a small case request with the office named in the letter you received. Illinois state tax forms 2011 Also, see the special appeal request procedures in Publication 1660. Illinois state tax forms 2011 Written protest. Illinois state tax forms 2011   You need to file a written protest in the following cases: All employee plan and exempt organization cases without regard to the dollar amount at issue. Illinois state tax forms 2011 All partnership and S corporation cases without regard to the dollar amount at issue. Illinois state tax forms 2011 All other cases, unless you qualify for the small case request procedure, or other special appeal procedures such as requesting Appeals consideration of liens, levies, seizures, or installment agreements. Illinois state tax forms 2011   If you must submit a written protest, see the instructions in Publication 5 about the information you need to provide. Illinois state tax forms 2011 The IRS urges you to provide as much information as you can, as it will help speed up your appeal. Illinois state tax forms 2011 That will save you both time and money. Illinois state tax forms 2011    Be sure to send the protest within the time limit specified in the letter you received. Illinois state tax forms 2011 Small case request. Illinois state tax forms 2011   If the total amount for any tax period is not more than $25,000, you may make a small case request instead of filing a formal written protest. Illinois state tax forms 2011 In figuring the total amount, include a proposed increase or decrease in tax (including penalties), or claimed refund. Illinois state tax forms 2011 If you are making an offer in compromise, include total unpaid tax, penalty, and interest due. Illinois state tax forms 2011 For a small case request, follow the instructions in our letter to you by sending a letter: Requesting Appeals consideration, Indicating the changes you do not agree with, and Indicating the reasons why you do not agree. Illinois state tax forms 2011 Representation You can represent yourself at your appeals conference, or you can be represented by any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled actuary, or an enrolled agent. Illinois state tax forms 2011 If your representative attends a conference without you, he or she can receive or inspect confidential information only if you have filed a power of attorney or a tax information authorization. Illinois state tax forms 2011 You can use a Form 2848 or any other properly written power of attorney or authorization. Illinois state tax forms 2011 You can also bring witnesses to support your position. Illinois state tax forms 2011 Confidentiality privilege. Illinois state tax forms 2011   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. Illinois state tax forms 2011 See Confidentiality privilege under If Your Return Is Examined , earlier. Illinois state tax forms 2011 Appeals to the Courts If you and the IRS still disagree after the appeals conference, you may be entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or a United States District Court. Illinois state tax forms 2011 These courts are independent of the IRS. Illinois state tax forms 2011 If you elect to bypass the IRS's appeals system, you may be able to take your case to one of the courts listed above. Illinois state tax forms 2011 However, a case petitioned to the United States Tax Court will normally be considered for settlement by an Appeals Officer before the Tax Court hears the case. Illinois state tax forms 2011 If you unreasonably fail to pursue the IRS's appeals system, or if your case is intended primarily to cause a delay, or your position is frivolous or groundless, the Tax Court may impose a penalty of up to $25,000. Illinois state tax forms 2011 See Appeal Within the IRS, earlier. Illinois state tax forms 2011 Prohibition on requests to taxpayers to give up rights to bring civil action. Illinois state tax forms 2011   The Government cannot ask you to waive your right to sue the United States or a Government officer or employee for any action taken in connection with the tax laws. Illinois state tax forms 2011 However, your right to sue can be waived if: You knowingly and voluntarily waive that right, The request to waive that right is made in writing to your attorney or other federally authorized practitioner, or The request is made in person and your attorney or other representative is present. Illinois state tax forms 2011 Burden of proof. Illinois state tax forms 2011   For court proceedings resulting from examinations started after July 22, 1998, the IRS generally has the burden of proof for any factual issue if you have met the following requirements: You introduced credible evidence relating to the issue. Illinois state tax forms 2011 You complied with all substantiation requirements of the Internal Revenue Code. Illinois state tax forms 2011 You maintained all records required by the Internal Revenue Code. Illinois state tax forms 2011 You cooperated with all reasonable requests by the IRS for information regarding the preparation and related tax treatment of any item reported on your tax return. Illinois state tax forms 2011 You had a net worth of $7 million or less and not more than 500 employees at the time your tax liability is contested in any court proceeding if your tax return is for a corporation, partnership, or trust. Illinois state tax forms 2011    The burden of proof does not change on an issue when another provision of the tax laws requires a specific burden of proof with respect to that issue. Illinois state tax forms 2011 Use of statistical information. Illinois state tax forms 2011   In the case of an individual, the IRS has the burden of proof in court proceedings based on any IRS reconstruction of income solely through the use of statistical information on unrelated taxpayers. Illinois state tax forms 2011 Penalties. Illinois state tax forms 2011   The IRS has the burden of initially producing evidence in court proceedings with respect to the liability of any individual taxpayer for any penalty, addition to tax, or additional amount imposed by the tax laws. Illinois state tax forms 2011 Recovering litigation or administrative costs. Illinois state tax forms 2011   These are the expenses that you pay to defend your position to the IRS or the courts. Illinois state tax forms 2011 You may be able to recover reasonable litigation or administrative costs if all of the following conditions apply: You are the prevailing party. Illinois state tax forms 2011 You exhaust all administrative remedies within the IRS. Illinois state tax forms 2011 Your net worth is below a certain limit (see Net worth requirements , later). Illinois state tax forms 2011 You do not unreasonably delay the proceeding. Illinois state tax forms 2011 You apply for administrative costs within 90 days of the date on which the final decision of the IRS Office of Appeals as to the determination of the tax, interest, or penalty was mailed to you. Illinois state tax forms 2011 You apply for litigation costs within the time frames provided by Tax Court Rule 231, found at http://www. Illinois state tax forms 2011 ustaxcourt. Illinois state tax forms 2011 gov  www. Illinois state tax forms 2011 ustaxcourt. Illinois state tax forms 2011 gov . Illinois state tax forms 2011   Prevailing party, reasonable litigation costs, and reasonable administrative costs are explained later. Illinois state tax forms 2011 Note. Illinois state tax forms 2011 If the IRS denies your award of administrative costs, and you want to appeal, you must petition the Tax Court within 90 days of the date on which the IRS mails the denial notice. Illinois state tax forms 2011 Prevailing party. Illinois state tax forms 2011   Generally, you are the prevailing party if: You substantially prevail with respect to the amount in controversy or on the most significant tax issue or set of issues in question, and You meet the net worth requirements, discussed later. Illinois state tax forms 2011   You will not be treated as the prevailing party if the United States establishes that its position was substantially justified. Illinois state tax forms 2011 The position of the United States is presumed not to be substantially justified if the IRS: Did not follow its applicable published guidance (such as regulations, revenue rulings, notices, announcements, private letter rulings, technical advice memoranda, and determination letters issued to the taxpayer) in the proceeding (This presumption can be overcome by evidence. Illinois state tax forms 2011 ), or Has lost in courts of appeal for other circuits on substantially similar issues. Illinois state tax forms 2011   The court will generally decide who is the prevailing party. Illinois state tax forms 2011 Reasonable litigation costs. Illinois state tax forms 2011   These include the following costs: Reasonable court costs. Illinois state tax forms 2011 The reasonable costs of studies, analyses, engineering reports, tests, or projects found by the court to be necessary for the preparation of your case. Illinois state tax forms 2011 The reasonable costs of expert witnesses. Illinois state tax forms 2011 Attorney fees that generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. Illinois state tax forms 2011 See Attorney fees , later. Illinois state tax forms 2011 Reasonable administrative costs. Illinois state tax forms 2011   These include the following costs: Any administrative fees or similar charges imposed by the IRS. Illinois state tax forms 2011 The reasonable costs of studies, analyses, engineering reports, tests, or projects. Illinois state tax forms 2011 The reasonable costs of expert witnesses. Illinois state tax forms 2011 Attorney fees that generally may not exceed $125 per hour. Illinois state tax forms 2011 See Attorney fees , later. Illinois state tax forms 2011 Timing of costs. Illinois state tax forms 2011    Administrative costs can be awarded for costs incurred after the earliest of: The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the IRS Office of Appeals, The date you receive notice of the IRS Office of Appeals' decision, or The date of the notice of deficiency. Illinois state tax forms 2011 Net worth requirements. Illinois state tax forms 2011   An individual taxpayer may be able to recover litigation or administrative costs if the following requirements are met: For individuals — your net worth does not exceed $2 million as of the filing date of your petition for review. Illinois state tax forms 2011 For this purpose, individuals filing a joint return are treated as separate individuals. Illinois state tax forms 2011 For estates — your net worth does not exceed $2 million as of the date of the decedent's death. Illinois state tax forms 2011 For charities and certain cooperatives — you do not have more than 500 employees as of the filing date of your petition for review. Illinois state tax forms 2011 For all other taxpayers — as of the filing date of your petition for review, your net worth does not exceed $7 million, and you must not have more than 500 employees. Illinois state tax forms 2011 Qualified offer rule. Illinois state tax forms 2011    You can also receive reasonable costs and fees and be treated as a prevailing party in a civil action or proceeding if: You make a qualified offer to the IRS to settle your case, The IRS does not accept that offer, and The tax liability (not including interest, unless interest is at issue) later determined by the court is equal to or less than the amount of your qualified offer. Illinois state tax forms 2011 You must also meet the remaining requirements, including the exhaustion of administrative remedies and the net worth requirement, discussed earlier, to get the benefit of the qualified offer rule. Illinois state tax forms 2011 Qualified offer. Illinois state tax forms 2011    This is a written offer made by you during the qualified offer period. Illinois state tax forms 2011 It must specify both the offered amount of your liability (not including interest) and that it is a qualified offer. Illinois state tax forms 2011   To be a qualified offer, it must remain open from the date it is made until the earliest of: The date it is rejected, The date the trial begins, or 90 days from the date it is made. Illinois state tax forms 2011 Qualified offer period. Illinois state tax forms 2011    This period begins on the day the IRS mails you the first letter of proposed deficiency that allows you to request review by the IRS Office of Appeals. Illinois state tax forms 2011 It ends 30 days before your case is first set for trial. Illinois state tax forms 2011 Attorney fees. Illinois state tax forms 2011   Attorney fees generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. Illinois state tax forms 2011 However, this amount can be higher in certain limited circumstances depending on the level of difficulty of the issues in the case and the local availability of tax expertise. Illinois state tax forms 2011 See IRS. Illinois state tax forms 2011 gov for more information. Illinois state tax forms 2011    Attorney fees include the fees paid by a taxpayer for the services of anyone who is authorized to practice before the Tax Court or before the IRS. Illinois state tax forms 2011 In addition, attorney fees can be awarded in civil actions for unauthorized inspection or disclosure of a taxpayer's return or return information. Illinois state tax forms 2011   Fees can be awarded in excess of the actual amount charged if: You are represented for no fee, or for a nominal fee, as a pro bono service, and The award is paid to your representative or to your representative's employer. Illinois state tax forms 2011 Jurisdiction for determination of employment status. Illinois state tax forms 2011    The Tax Court can review IRS employment status determinations (for example, whether individuals hired by you are in fact your employees or independent contractors) and the amount of employment tax under such determinations. Illinois state tax forms 2011 Tax Court review can take place only if, in connection with an audit of any person, there is a controversy involving a determination by the IRS that either: One or more individuals performing services for that person are employees of that person, or That person is not entitled to relief under Section 530(a) of the Revenue Act of 1978 (discussed later). Illinois state tax forms 2011   The following rules also apply to a Tax Court review of employment status: A Tax Court petition to review these determinations can be filed only by the person for whom the services are performed, If you receive a Notice of Determination by certified or registered mail, you must file a petition for Tax Court review within 90 days of the date of mailing that notice (150 days if the notice is addressed to you outside the United States), If during the Tax Court proceeding, you begin to treat as an employee an individual whose employment status is at issue, the Tax Court will not consider that change in its decision, Assessment and collection of tax is suspended while the Tax Court review is taking place, Payment of the asserted employment tax deficiency is not required to petition the U. Illinois state tax forms 2011 S. Illinois state tax forms 2011 Tax Court for a determination of employment status. Illinois state tax forms 2011 There can be a de novo review by the Tax Court (a review which does not consider IRS administrative findings), and At your request and with the Tax Court's agreement, small tax case procedures (discussed later) are available to simplify the case resolution process when the amount at issue (including additions to tax and penalties) is $50,000 or less for each tax period involved. Illinois state tax forms 2011   For further information, see Publication 3953, Questions and Answers About Tax Court Proceedings for Determination of Employment Status Under IRC Section 7436. Illinois state tax forms 2011 Section 530(a) of the Revenue Act of 1978. Illinois state tax forms 2011   This section relieves an employer of certain employment tax responsibilities for individuals not treated as employees. Illinois state tax forms 2011 It also provides relief to taxpayers under audit or involved in administrative or judicial proceedings. Illinois state tax forms 2011 Tax Court review of request for relief from joint and several liability on a joint return. Illinois state tax forms 2011    As discussed later, at Relief from joint and several liability on a joint return under Claims for Refund, you can request relief from liability for tax you owe, plus related penalties and interest, that you believe should be paid by your spouse (or former spouse). Illinois state tax forms 2011 You also can petition (ask) the Tax Court to review your request for innocent spouse relief or separation of liability if either: The IRS sends you a determination notice denying, in whole or in part, your request, or You do not receive a determination notice from the IRS within 6 months from the date you file Form 8857. Illinois state tax forms 2011   If you receive a determination notice, you must petition the Tax Court to review your request during the 90-day period that begins on the date the IRS mails the notice. Illinois state tax forms 2011 See Publication 971 for more information. Illinois state tax forms 2011 Note. Illinois state tax forms 2011 Your spouse or former spouse may file a written protest and request an Appeals conference to protest your claim of innocent spouse relief or separation of liability. Illinois state tax forms 2011 See Rev. Illinois state tax forms 2011 Proc. Illinois state tax forms 2011 2003-19, which is on page 371 of the Internal Revenue Bulletin 2003-5 at  www. Illinois state tax forms 2011 irs. Illinois state tax forms 2011 gov/pub/irs-irbs/irb03-05. Illinois state tax forms 2011 pdf. Illinois state tax forms 2011 Tax Court You can take your case to the United States Tax Court if you disagree with the IRS over: Income tax, Estate tax, Gift tax, Employment tax involving IRS employment status determinations, or Certain excise taxes of private foundations, public charities, qualified pension and other retirement plans, or real estate investment trusts. Illinois state tax forms 2011 For information on Tax Court review of a determination of employment status, see Jurisdiction for determination of employment status, earlier. Illinois state tax forms 2011 For information on Tax Court review of an IRS refusal to abate interest, see Tax Court can review failure to abate interest, earlier under Examination of Returns. Illinois state tax forms 2011 For information on Tax Court review of Appeals determinations with respect to lien notices and proposed levies, see Publication 1660. Illinois state tax forms 2011 You cannot take your case to the Tax Court before the IRS sends you a notice of deficiency. Illinois state tax forms 2011 You can only appeal your case if you file a petition within 90 days from the date the notice is mailed to you (150 days if it is addressed to you outside the United States). Illinois state tax forms 2011 The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. Illinois state tax forms 2011 Withdrawal of notice of deficiency. Illinois state tax forms 2011 If you consent, the IRS can withdraw a notice of deficiency. Illinois state tax forms 2011 A notice of deficiency may be rescinded if the notice was issued as a result of an administrative error; the taxpayer submits information establishing the actual tax due is less than the amount shown in the notice; the taxpayer specifically requests a conference with the appropriate Appeals office for the purpose of entering into settlement negotiations. Illinois state tax forms 2011 However, the notice may be rescinded only if the appropriate Appeals office first decides that the case is susceptible to agreement. Illinois state tax forms 2011 See Revenue Procedure 98-54 for a more detailed explanation of the requirements. Illinois state tax forms 2011 Once withdrawn, the limits on credits, refunds, and assessments concerning the notice are void, and you and the IRS have the rights and obligations that you had before the notice was issued. Illinois state tax forms 2011 The suspension of any time limitation while the notice of deficiency was issued will not change when the notice is withdrawn. Illinois state tax forms 2011 After the notice is withdrawn, you cannot file a petition with the Tax Court based on the notice. Illinois state tax forms 2011 Also, the IRS can later issue a notice of deficiency in a greater or lesser amount than the amount in the withdrawn deficiency. Illinois state tax forms 2011 Generally, the Tax Court hears cases before any tax has been assessed and paid; however, you can pay the tax after the notice of deficiency has been issued and still petition the Tax Court for review. Illinois state tax forms 2011 If you do not file your petition on time, the proposed tax will be assessed, a bill will be sent, and you will not be able to take your case to the Tax Court. Illinois state tax forms 2011 Under the law, you must pay the tax within 21 days (10 business days if the amount is $100,000 or more). Illinois state tax forms 2011 Collection can proceed even if you think that the amount is excessive. Illinois state tax forms 2011 Publication 594 explains IRS collection procedures. Illinois state tax forms 2011 If you filed your petition on time, the court will schedule your case for trial at a location convenient to you. Illinois state tax forms 2011 You can represent yourself before the Tax Court or you can be represented by anyone admitted to practice before that court. Illinois state tax forms 2011 Small tax case procedure. Illinois state tax forms 2011   If the amount in your case is $50,000 or less for any 1 tax year or period, you can request that your case be handled under the small tax case procedure. Illinois state tax forms 2011 If the Tax Court approves, you can present your case to the Tax Court for a decision that is final and that you cannot appeal. Illinois state tax forms 2011 You can get more information regarding the small tax case procedure and other Tax Court matters from the United States Tax Court, 400 Second Street, N. Illinois state tax forms 2011 W. Illinois state tax forms 2011 , Washington, DC 20217. Illinois state tax forms 2011 More information can be found on the Tax Court's website at www. Illinois state tax forms 2011 ustaxcourt. Illinois state tax forms 2011 gov. Illinois state tax forms 2011 Motion to request redetermination of interest. Illinois state tax forms 2011   In certain cases, you can file a motion asking the Tax Court to redetermine the amount of interest on either an underpayment or an overpayment. Illinois state tax forms 2011 You can do this only in a situation that meets all of the following requirements: The IRS has assessed a deficiency that was determined by the Tax Court. Illinois state tax forms 2011 The assessment included interest. Illinois state tax forms 2011 You have paid the entire amount of the deficiency plus the interest claimed by the IRS. Illinois state tax forms 2011 The Tax Court has found that you made an overpayment. Illinois state tax forms 2011 You must file the motion within one year after the decision of the Tax Court becomes final. Illinois state tax forms 2011 District Court and Court of Federal Claims Generally, the District Courts and the Court of Federal Claims hear tax cases only after you have paid the entire tax and penalties, and filed a claim for a credit or refund. Illinois state tax forms 2011 The taxpayer may litigate certain types of employment tax cases in either the United States District Court or the United States Court of Federal Claims. Illinois state tax forms 2011 Before taxpayers can initiate suit in either of these courts with respect to certain employment taxes, they will have to pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. Illinois state tax forms 2011 Once the claim for refund is denied or 6 months elapse without any action by the IRS, the taxpayer may initiate suit. Illinois state tax forms 2011 As explained later under Claims for Refund, you can file a claim with the IRS for a credit or refund if you think that the tax you paid is incorrect or excessive. Illinois state tax forms 2011 If your claim is totally or partially disallowed by the IRS, you should receive a notice of claim disallowance. Illinois state tax forms 2011 If the IRS does not act on your claim within 6 months from the date you filed it, you can then file suit for a refund. Illinois state tax forms 2011 You generally must file suit for a credit or refund no later than 2 years after the IRS informs you that your claim has been rejected. Illinois state tax forms 2011 However, you can file suit if it has been 6 months since you filed your claim and the IRS has not yet delivered a decision. Illinois state tax forms 2011 You can file suit for a credit or refund in your United States District Court or in the United States Court of Federal Claims. Illinois state tax forms 2011 However, you cannot appeal to the United States Court of Federal Claims if your claim is for credit or refund of a penalty that relates to promoting an abusive tax shelter or to aiding and abetting the understatement of tax liability on someone else's return. Illinois state tax forms 2011 For information about procedures for filing suit in either court, contact the Clerk of your District Court or of the United States Court of Federal Claims. Illinois state tax forms 2011 Refund or Credit of Overpayments Before Final Determination Any court with proper jurisdiction, including the Tax Court, can order the IRS to refund any part of a tax deficiency that the IRS collects from you during a period when the IRS is not permitted to assess that deficiency, or to levy or engage in any court proceeding to collect that deficiency. Illinois state tax forms 2011 In addition, the court can order a refund of any part of an overpayment determined by the Tax Court that is not at issue on appeal to a higher court. Illinois state tax forms 2011 The court can order these refunds before its decision on the case is final. Illinois state tax forms 2011 Taxpayers should thoroughly review IRS settlement offers before signing a Tax Court Decision document to ensure that all adjustments are correct, including the inclusion of any tax credits that the taxpayer is allowed to claim. Illinois state tax forms 2011 Note. Illinois state tax forms 2011 The court may no longer order a refund of an overpayment after the case is final. Illinois state tax forms 2011 Generally, the IRS is not permitted to take action on a tax deficiency during: The 90-day (or 150-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court, or The period that the case is under appeal if a bond is provided. Illinois state tax forms 2011 Claims for Refund If you believe you have overpaid your tax, you have a limited amount of time in which to file a claim for a credit or refund. Illinois state tax forms 2011 You can claim a credit or refund by filing Form 1040X. Illinois state tax forms 2011 See Time for Filing a Claim for Refund , later. Illinois state tax forms 2011 File your claim by mailing it to the IRS Service Center where you filed your original return. Illinois state tax forms 2011 File a separate form for each year or period involved. Illinois state tax forms 2011 Include an explanation of each item of income, deduction, or credit on which you are basing your claim. Illinois state tax forms 2011 Corporations should file Form 1120X, Amended U. Illinois state tax forms 2011 S. Illinois state tax forms 2011 Corporation Income Tax Return, or other form appropriate to the type of credit or refund claimed. Illinois state tax forms 2011 See Publication 3920 for information on filing claims for tax forgiveness for individuals affected by terrorist attacks. Illinois state tax forms 2011 Requesting a copy of your tax return. Illinois state tax forms 2011   You can obtain a copy of the actual return and all attachments you filed with the IRS for an earlier year. Illinois state tax forms 2011 This includes a copy of the Form W-2 or Form 1099 filed with your return. Illinois state tax forms 2011 Use Form 4506 to make your request. Illinois state tax forms 2011 You will be charged a fee, which you must pay when you submit Form 4506. Illinois state tax forms 2011 Requesting a copy of your tax account information. Illinois state tax forms 2011   Use Form 4506-T, Request for Transcript of Tax Return, to request free copies of your tax return transcript, tax account transcript, record of account, verification of nonfiling, or Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. Illinois state tax forms 2011 The tax return transcript contains most of the line items of a tax return. Illinois state tax forms 2011 A tax account transcript contains information on the financial status of the account, such as payments, penalty assessments, and adjustments. Illinois state tax forms 2011 A record of account is a combination of line item information and later adjustments to the account. Illinois state tax forms 2011 Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript contains data from these information returns. Illinois state tax forms 2011 Penalty for erroneous claim for refund. Illinois state tax forms 2011   If you claim an excessive amount of tax refund or credit relating to income tax (other than a claim relating to the earned income credit), you may be liable for a penalty of 20% of the amount that is determined to be excessive. Illinois state tax forms 2011 An excessive amount is the amount of the claim for refund or credit that is more than the amount of claim allowable for the tax year. Illinois state tax forms 2011 The penalty may be waived if you can show that you had a reasonable basis for making the claim. Illinois state tax forms 2011 Time for Filing a Claim for Refund Generally, you must file a claim for a credit or refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. Illinois state tax forms 2011 If you do not file a claim within this period, you may no longer be entitled to a credit or a refund. Illinois state tax forms 2011 If the due date to file a return or a claim for a credit or refund is a Saturday, Sunday, or legal holiday, it is filed on time if it is filed on the next business day. Illinois state tax forms 2011 Returns you filed before the due date are considered filed on the due date. Illinois state tax forms 2011 This is true even when the due date is a Saturday, Sunday, or legal holiday. Illinois state tax forms 2011 Disaster area claims for refund. Illinois state tax forms 2011   If you live in a Presidentially declared disaster area or are affected by terroristic or military action, the deadline to file a claim for a refund may be postponed. Illinois state tax forms 2011 This section discusses the special rules that apply to Presidentially declared disaster area refunds. Illinois state tax forms 2011    A Presidentially declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Disaster Relief and Emergency Assistance Act. Illinois state tax forms 2011 Postponed refund deadlines. Illinois state tax forms 2011   The IRS may postpone for up to 1 year the deadlines for filing a claim for refund. Illinois state tax forms 2011 The postponement can be used by taxpayers who are affected by a Presidentially declared disaster. Illinois state tax forms 2011 The IRS may also postpone deadlines for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Illinois state tax forms 2011 For more information, see Publication 547. Illinois state tax forms 2011   If any deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin. Illinois state tax forms 2011 A list of the areas eligible for assistance under the Disaster Relief and Emergency Assistance Act is available at the Federal Emergency Management Agency (FEMA) website at www. Illinois state tax forms 2011 fema. Illinois state tax forms 2011 gov and at the IRS website at www. Illinois state tax forms 2011 irs. Illinois state tax forms 2011 gov. Illinois state tax forms 2011 Nonfilers can get refund of overpayments paid within 3-year period. Illinois state tax forms 2011   The Tax Court can consider taxes paid during the 3-year period preceding the date of a notice of deficiency for determining any refund due to a nonfiler. Illinois state tax forms 2011 This means that if you do not file your return, and you receive a notice of deficiency in the third year after the due date (with extensions) of your return and file suit with the Tax Court to contest the notice of deficiency, you may be able to receive a refund of excessive amounts paid within the 3-year period preceding the date of the notice of deficiency. Illinois state tax forms 2011 The IRS may postpone for up to 1 year certain tax deadlines, including the time for filing claims for refund, for taxpayers who are affected by a terrorist attack occurring after September 10, 2001. Illinois state tax forms 2011 For more information, see Publication 3920. Illinois state tax forms 2011 Claim for refund by estates electing the installment method of payment. Illinois state tax forms 2011   In certain cases where an estate has elected to make tax payments through the installment method, the executor can file a suit for refund with a U. Illinois state tax forms 2011 S. Illinois state tax forms 2011 District Court or the U. Illinois state tax forms 2011 S. Illinois state tax forms 2011 Court of Federal Claims before all the installment payments have been made. Illinois state tax forms 2011 However, all the following must be true before a suit can be filed: The estate consists largely of an interest in a closely-held business. Illinois state tax forms 2011 All installment payments due on or before the date the suit is filed have been made. Illinois state tax forms 2011 No accelerated installment payments have been made. Illinois state tax forms 2011 No Tax Court case is pending with respect to any estate tax liability. Illinois state tax forms 2011 If a notice of deficiency was issued to the estate regarding its liability for estate tax, the time for petitioning the Tax Court has passed. Illinois state tax forms 2011 No proceeding is pending for a declaratory judgment by the Tax Court on whether the estate is eligible to pay tax in installments. Illinois state tax forms 2011 The executor has not included any previously litigated issues in the current suit for refund. Illinois state tax forms 2011 The executor does not discontinue making installment payments timely, while the court considers the suit for refund. Illinois state tax forms 2011    If in its final decision on the suit for refund the court redetermines the estate's tax liability, the IRS must refund any part of the estate tax amount that is disallowed. Illinois state tax forms 2011 This includes any part of the disallowed amount previously collected by the IRS. Illinois state tax forms 2011 Protective claim for refund. Illinois state tax forms 2011   If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. Illinois state tax forms 2011 A protective claim can be either a formal claim or an amended return for credit or refund. Illinois state tax forms 2011 Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. Illinois state tax forms 2011 A protective claim preserves your right to claim a refund when the contingency is resolved. Illinois state tax forms 2011 A protective claim does not have to state a particular dollar amount or demand an immediate refund. Illinois state tax forms 2011 However, to be valid, a protective claim must: Be in writing and be signed, Include your name, address, social security number or individual taxpayer identification number, and other contact information, Identify and describe the contingencies affecting the claim, Clearly alert the IRS to the essential nature of the claim, and Identify the specific year(s) for which a refund is sought. Illinois state tax forms 2011   Generally, the IRS will delay action on the protective claim until the contingency is resolved. Illinois state tax forms 2011 Once the contingency is resolved, the IRS may obtain additional information necessary to process the claim and then either allow or disallow the claim. Illinois state tax forms 2011   Mail your protective claim for refund to the address listed in the instructions for Form 1040X, under Where To File. Illinois state tax forms 2011 Exceptions The limits on your claim for refund can be affected by the type of item that forms the basis of your claim. Illinois state tax forms 2011 Special refunds. Illinois state tax forms 2011   If you file a claim for refund based on one of the items listed below, the limits discussed earlier under Time for Filing a Claim for Refund may not apply. Illinois state tax forms 2011 These special items are: A bad debt, A worthless security, A payment or accrual of foreign tax, A net operating loss carryback, and A carryback of certain tax credits. Illinois state tax forms 2011   The limits discussed earlier also may not apply if you have signed an agreement to extend the period of assessment of tax. Illinois state tax forms 2011 For information on special rules on filing claims for an individual affected by a terrorist attack, see Publication 3920. Illinois state tax forms 2011 Periods of financial disability. Illinois state tax forms 2011   If you are an individual (not a corporation or other taxpaying entity), the period of limitations on credits and refunds can be suspended during periods when you cannot manage your financial affairs because of physical or mental impairment that is medically determinable and either: Has lasted or can be expected to last continuously for at least 12 months, or Can be expected to result in death. Illinois state tax forms 2011    The period for filing a claim for refund will not be suspended for any time that someone else, such as your spouse or guardian, was authorized to act for you in financial matters. Illinois state tax forms 2011   To claim financial disability, you generally must submit the following statements with your claim for credit or refund: A written statement signed by a physician, qualified to make the determination, that sets forth: The name and a description of your physical or mental impairment, The physician's medical opinion that your physical or mental impairment prevented you from managing your financial affairs, The physician's medical opinion that your physical or mental impairment was or can be expected to result in death, or that it has lasted (or can be expected to last) for a continuous period of not less than 12 months, and To the best of the physician's knowledge, the specific time period during which you were prevented by such physical or mental impairment from managing your financial affairs, and A written statement by the person signing the claim for credit or refund that no person, including your spouse, was authorized to act on your behalf in financial matters during the period described in paragraph (1)(d) of the physician's statement. Illinois state tax forms 2011 Alternatively, if a person was authorized to act on your behalf in financial matters during any part of the period described in that paragraph, the beginning and ending dates of the period of time the person was so authorized. Illinois state tax forms 2011    The period of limitations will not be suspended on any claim for refund that (without regard to this provision) was barred as of July 22, 1998. Illinois state tax forms 2011 Limit on Amount of Refund If you file your claim within 3 years after filing your return, the credit or refund cannot be more than the part of the tax paid wi
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Collection Procedures for Taxpayers Filing and/or Paying Late

The Collection Process and Taxpayer Rights

What do I do if I Cannot File or Pay by the Due Date?

What if the IRS Asks for Financial Information to Determine How Much I Can Pay?

What Options Do I Have if I Cannot Full Pay?

What Can the IRS do if I Will Not File or Pay?

How Can I Prevent Future Tax Liabilities?

Page Last Reviewed or Updated: 27-Jan-2014

The Illinois State Tax Forms 2011

Illinois state tax forms 2011 Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. Illinois state tax forms 2011 For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. Illinois state tax forms 2011 If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. Illinois state tax forms 2011 Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. Illinois state tax forms 2011 A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. Illinois state tax forms 2011 Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. Illinois state tax forms 2011 Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). Illinois state tax forms 2011 It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. Illinois state tax forms 2011 A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. Illinois state tax forms 2011 Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Illinois state tax forms 2011 It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. Illinois state tax forms 2011 Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. Illinois state tax forms 2011 Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. Illinois state tax forms 2011 Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Illinois state tax forms 2011 Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Illinois state tax forms 2011 Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. Illinois state tax forms 2011 Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. Illinois state tax forms 2011 Listed property placed in service before 1987. Illinois state tax forms 2011   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. Illinois state tax forms 2011 Listed property placed in service after 1986. Illinois state tax forms 2011   For information on listed property placed in service after 1986, see Publication 946. Illinois state tax forms 2011 Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. Illinois state tax forms 2011 You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. Illinois state tax forms 2011 The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. Illinois state tax forms 2011 However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. Illinois state tax forms 2011 Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. Illinois state tax forms 2011 Example. Illinois state tax forms 2011 Sarah Bradley uses a home computer 50% of the time to manage her investments. Illinois state tax forms 2011 She also uses the computer 40% of the time in her part-time consumer research business. Illinois state tax forms 2011 Sarah's home computer is listed property because it is not used at a regular business establishment. Illinois state tax forms 2011 Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. Illinois state tax forms 2011 Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. Illinois state tax forms 2011 Her combined rate of business/investment use for determining her depreciation deduction is 90%. Illinois state tax forms 2011 Qualified Business Use A qualified business use is any use in your trade or business. Illinois state tax forms 2011 However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. Illinois state tax forms 2011 See Employees, later. Illinois state tax forms 2011 5% owner. Illinois state tax forms 2011   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. Illinois state tax forms 2011   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Illinois state tax forms 2011 Related person. Illinois state tax forms 2011   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. Illinois state tax forms 2011 Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. Illinois state tax forms 2011 See Publication 463. Illinois state tax forms 2011 Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. Illinois state tax forms 2011 Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. Illinois state tax forms 2011 Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. Illinois state tax forms 2011 Any payment to you for the use of the automobile is treated as a rent payment for 3). Illinois state tax forms 2011 Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. Illinois state tax forms 2011 Use for the employer's convenience. Illinois state tax forms 2011   Whether the use of listed property is for the employer's convenience must be determined from all the facts. Illinois state tax forms 2011 The use is for the employer's convenience if it is for a substantial business reason of the employer. Illinois state tax forms 2011 The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. Illinois state tax forms 2011 Use required as a condition of employment. Illinois state tax forms 2011   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. Illinois state tax forms 2011 The use of property must be required for the employee to perform duties properly. Illinois state tax forms 2011 The employer need not explicitly require the employee to use the property. Illinois state tax forms 2011 A mere statement by the employer that the use of the property is a condition of employment is not sufficient. Illinois state tax forms 2011 Example 1. Illinois state tax forms 2011 Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. Illinois state tax forms 2011 She owns and uses a motorcycle to deliver packages to downtown offices. Illinois state tax forms 2011 We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. Illinois state tax forms 2011 The company reimburses delivery persons for their costs. Illinois state tax forms 2011 Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Illinois state tax forms 2011 Example 2. Illinois state tax forms 2011 Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Illinois state tax forms 2011 He must travel to these sites on a regular basis. Illinois state tax forms 2011 Uplift does not furnish an automobile or explicitly require him to use his own automobile. Illinois state tax forms 2011 However, it reimburses him for any costs he incurs in traveling to the various sites. Illinois state tax forms 2011 The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Illinois state tax forms 2011 Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Illinois state tax forms 2011 You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. Illinois state tax forms 2011 For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. Illinois state tax forms 2011 For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. Illinois state tax forms 2011 Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. Illinois state tax forms 2011 First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. Illinois state tax forms 2011 Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. Illinois state tax forms 2011 It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Illinois state tax forms 2011 Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. Illinois state tax forms 2011 Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. Illinois state tax forms 2011 See Recapture of excess depreciation, next. Illinois state tax forms 2011 Recapture of excess depreciation. Illinois state tax forms 2011   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. Illinois state tax forms 2011 Any excess depreciation must also be added to the adjusted basis of your property. Illinois state tax forms 2011 Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. Illinois state tax forms 2011 This means you figure your depreciation using the percentages fromTable 16 or 17. Illinois state tax forms 2011 For information on investment credit recapture, see the instructions for Form 4255. Illinois state tax forms 2011 Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. Illinois state tax forms 2011 In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. Illinois state tax forms 2011 To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. Illinois state tax forms 2011 See Car Used 50% or Less for Business in Publication 917. Illinois state tax forms 2011 Leased Property The limitations on cost recovery deductions apply to the rental of listed property. Illinois state tax forms 2011 The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). Illinois state tax forms 2011 SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. Illinois state tax forms 2011 Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Illinois state tax forms 2011 A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. Illinois state tax forms 2011 This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. Illinois state tax forms 2011 Occasional or incidental leasing activity is insufficient. Illinois state tax forms 2011 For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. Illinois state tax forms 2011 An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Illinois state tax forms 2011 Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. Illinois state tax forms 2011 Inclusion amount for property leased before 1987. Illinois state tax forms 2011   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. Illinois state tax forms 2011 You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. Illinois state tax forms 2011   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. Illinois state tax forms 2011 For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. Illinois state tax forms 2011 You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. Illinois state tax forms 2011 Special rules. Illinois state tax forms 2011   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. Illinois state tax forms 2011 The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. Illinois state tax forms 2011   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. Illinois state tax forms 2011 Maximum inclusion amount. Illinois state tax forms 2011   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. Illinois state tax forms 2011 What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. Illinois state tax forms 2011 How long to keep records. Illinois state tax forms 2011   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). Illinois state tax forms 2011 Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Illinois state tax forms 2011 It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. Illinois state tax forms 2011 However, your records should back up your receipts in an orderly manner. Illinois state tax forms 2011 Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. Illinois state tax forms 2011 Written documents of your expenditure or use are generally better evidence than oral statements alone. Illinois state tax forms 2011 A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. Illinois state tax forms 2011 A daily log is not required. Illinois state tax forms 2011 However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. Illinois state tax forms 2011 Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. Illinois state tax forms 2011 An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. Illinois state tax forms 2011 For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. Illinois state tax forms 2011 Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. Illinois state tax forms 2011 However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. Illinois state tax forms 2011 A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Illinois state tax forms 2011 For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Illinois state tax forms 2011 Business Use Supported An adequate record contains enough information on each element of every business or investment use. Illinois state tax forms 2011 The amount of detail required to support the use depends on the facts and circumstances. Illinois state tax forms 2011 For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Illinois state tax forms 2011 Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. Illinois state tax forms 2011 Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. Illinois state tax forms 2011 However, repeated uses can be combined as a single item. Illinois state tax forms 2011 Each expenditure is recorded as a separate item and not combined with other expenditures. Illinois state tax forms 2011 If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. Illinois state tax forms 2011 If these expenses are combined, you do not need to support the business purpose of each expense. Illinois state tax forms 2011 Instead, you can divide the expenses based on the total business use of the listed property. Illinois state tax forms 2011 Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. Illinois state tax forms 2011 For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. Illinois state tax forms 2011 Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. Illinois state tax forms 2011 Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Illinois state tax forms 2011 Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. Illinois state tax forms 2011 It must be kept elsewhere and made available as support to the district director on request. Illinois state tax forms 2011 Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. Illinois state tax forms 2011 If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. Illinois state tax forms 2011 If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Illinois state tax forms 2011 If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Illinois state tax forms 2011 Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. Illinois state tax forms 2011 Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Illinois state tax forms 2011 Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. Illinois state tax forms 2011 If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. Illinois state tax forms 2011 Employees. Illinois state tax forms 2011   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. Illinois state tax forms 2011 Employees claiming the standard mileage rate may be able to use Form 2106–EZ. Illinois state tax forms 2011 Employer who provides vehicles to employees. Illinois state tax forms 2011   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. Illinois state tax forms 2011   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. Illinois state tax forms 2011 Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. Illinois state tax forms 2011   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. Illinois state tax forms 2011 See the instructions for Form 4562. Illinois state tax forms 2011 Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. Illinois state tax forms 2011 In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. Illinois state tax forms 2011 In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. Illinois state tax forms 2011 For more information about deductions after the recovery period for automobiles, see Publication 917. Illinois state tax forms 2011 Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. Illinois state tax forms 2011 Table 1. Illinois state tax forms 2011 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. Illinois state tax forms 2011 Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications