Illinois ICB: A New Administrative Forum

Illinois created an Informal Conference Board (ICB) on April 2, 2001. The ICB replaced the Informal Conference Unit (ICU) discontinued on Aug. 1, 2000. Many taxpayers presently using the ICU can now use the ICB to resolve their cases. As a goodwill gesture, the ICB waived interest from Aug. 1, 2000–Jan. 31, 2002 for taxpayers that receive an ICB final action decision.

ICU

The ICU became operational in 1995. It gave taxpayers a forum to review proposed tax assessments prior to the issuance of a formal deficiency notice or refund denial. However, the ICU could not render "formal" written decisions, address "precedential" tax issues or propose or consider percentage or dollar settlement offers.

The ICU's limits offered taxpayers little (if any) opportunity to resolve controversial audit issues at the ICU level. In reality, it was an internal audit "quality control" function, rather than a forum to dispute audit issues.

Many taxpayers voiced dissatisfaction with the ICU process, which had no formal procedural regulations. As a result, Illinois suspended the ICU program on Aug. 1, 2000, while it considered other administrative options.

ICB

On April 2, 2001, Illinois created the ICB to replace the ICU. It empowered the ICB to "resolve" disputes at the earliest opportunity possible in the administrative process through the liberal exercise of discretion (Ill. Adm. Code Section 215.100).

The ICB is a separate and distinct division of the Department of Revenue, and is not a unit or division of the Audit Bureau. It is currently staffed by:

1. Keith Staats, General Counsel-Legal Services;

2. Philip Howe, Chairman of the Board of Appeals; and

3. Mike Scaduto, Manager-Audit Bureau.

On Nov. 1, 2001, John Malach became the first ICB Administrator. To date, he has selected three ICB Conferees to be informal conference "reviewers," and they have been appointed. Like the ICU, taxpayers can request an informal review with the ICB by completing Form ICB-1. The taxpayer can represent himself at the review process or appoint either an attorney or a non-attorney representative designated on an executed Illinois power of attorney.

The ICB conducts reviews on the basis of a proposed deficiency notice, liability notice or a proposed claim notice. Taxpayers must file a request for an ICB conference within 60 days of a notice's mailing date.

Taxpayers must document their ICB review request (Form ICB-1, Step 4) with specific reasons for disagreeing with the proposed assessment (including applicable legal authority). They must also submit additional supporting documentation relevant to the disputed issues (86 Ill. Adm. Code Section 215.120 (c) and (d)).

When filing the Form ICB-1, taxpayers should also consider whether to request an in-person conference or to submit an offer to settle the dispute.

Either the taxpayer or the ICB can request an in-person conference, which the ICB will schedule within 45 days after receipt of the request (86 Ill. Adm. Code Section 215.130).

The ICB may request additional information either via a written request or at the in-person conference. The taxpayer has the duty to respond to requests within 30 days (or longer, if mutually agreed on by the parties). Failure to respond in a timely fashion may result in denial of the requested relief. Any documentation that the taxpayer submits to the ICB will not become part of the case's formal record or forwarded to any other administrative or judicial body (86 Ill. Adm. Code Section 215.130).

Taxpayers must submit any initial settlement offer on a Form ICB-2, which both the assigned ICB conferee and administrator will review. This is an "offer in disposition." The ICB will consider an offer-in-disposition only if there is a "legitimate uncertainty" as to the facts or law in the case, and the resolution of the matter would be in the state's best interest. The taxpayer should submit all necessary legal and factual data to support its settlement proposition.

The taxpayer can propose an "offer" either when it requests ICB review or at any time prior to the ICB's final decision. The ICB will either accept or reject the offer, or make a written counteroffer (86 Ill. Adm. Code Section 215.125(b)).

The ICB will issue written action decisions within 90 days of the taxpayer's request (or longer if mutually agreed). The action decision requires the approval of no less than the three-member board and is binding on the Department (86 Ill. Adm. Code 215.120(e)).

Conclusion

From the taxpayers' perspective, the ultimate success of the ICB will likely hinge on its true independence from the Audit Bureau. The use of "discretion" by the ICB can resolve many taxpayer disputes much earlier in the review process, alleviating the need to use Illinois' burdensome and costly appeals process.

From L. James Margner, CPA, Chicago, IL