Form Mf 04-8 - Recommendation Form For Disposition Page 8

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The Department contends that the taxpayer is not entitled to interest on the
overpayment to Illinois. The Department maintains that interest on overpayments cannot
begin to accrue until the amount of the overpayment is established, and the overpayment
amount was not established until the Department finished re-examining the taxpayer’s
books and records. Until the re-examination was complete, there was no basis upon
which to calculate the amount of the taxpayer’s overpayment. Even if there was a basis
on which to calculate a refund, the Department argues that the overpayment must first be
applied to amounts the taxpayer owes other jurisdictions. Credits and refunds will be
made only when all motor fuel use tax liabilities owed to other jurisdictions have been
satisfied. 86 Ill.Admin.Code §500.340. Under Illinois law, interest on overpayments
does not begin to accrue until more than 90 days have elapsed since the taxpayer requests
a refund that is determined to be properly due. Id.
Furthermore, the Department notes that the Articles of Agreement require
taxpayers to maintain adequate records of miles traveled and fuel purchased and to pay to
the base jurisdiction the proper tax. Ex. 4, Article 12, ¶R1230. Taxpayers are required to
file quarterly returns setting forth the number of miles actually traveled in each
jurisdiction and to pay the tax. Ex. 4, Article 9. The Department claims that if the
taxpayer in this case had kept records of actual mileage, neither the initial audit nor the
re-audit would have revealed hundreds of thousands of dollars of tax overpayments and
underpayments based on faulty reporting of mileage. In the Department’s view, it should
not bear the burden of the taxpayer’s own failure to maintain its records in accord with
the IFTA requirements.
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Parent category: Legal