Fees, Penalties & Interest for Late Filing of Tax Statements and Late Payment of Taxes
Illinois law provides for penalties and interest if an Illinois surplus line producer fails to file a surplus line tax statement or fire marshal tax statement by the due date and/or fails to pay the full amount due by the due date. If you need copies of your tax statements so that you can file them, you can reprint them on the EFS or you can contact the Association to obtain copies.
Illinois law also provides for penalties and interest if an Illinois industrial insured who has procured insurance directly from an unauthorized insurer fails to make a required filing by the due date and/or fails to pay the full tax amounts due by the due date.
The penalties and interest are assessed by the Illinois Department of Insurance, not by the Surplus Line Association. The Surplus Line Association does not have the authority to waive or adjust penalties and interest.
Tax statements and payments are deemed received as of the date mailed as evidenced by a postmark or other evidence acceptable to the Director of the Illinois Department of Insurance.
Summary
These are the rules that existed before the law was changed on 8/4/2023.
Different fees and penalties now apply to any tax statement whose original due date is on or after 8/4/2023.
Click here to see the new rules.
The following chart is a summary of Fees, Penalties & Interest for Late Filing and Late Payment for tax statements due prior to 8/4/2023.
There are three separate areas where the law imposes fees, penalties and/or interest:
- Late Filing Fee/Penalty;
- Late Payment Fee/Penalty; and
- Late Payment Interest.
A tax statement that is filed late, but has no tax due, is subject only to a Late Filing Fee/Penalty. Where a tax statement has tax due, and both the filing and the payment are late, it is subject to all three late charges.
These are the rules that existed before the law was changed on 8/4/2023.
Different fees and penalties now apply to any tax statement whose original due date is on or after 8/4/2023.
Click here to see the new rules.
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If the Tax Statement, Filing and/or Tax Payment is... |
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1 - 7 Days Late |
8 - 14 Days Late |
15 - 21 Days Late |
More than 21 Days Late |
| 1. Late Filing Fee/Penalty |
Late fee of $400 or 10% of tax, whichever is greater. Maximum of $1000. |
Late fee of $400 or 10% of tax, whichever is greater. Maximum of $1500. |
Late fee of $400 or 10% of Tax, whichever is greater. Maximum of $2000. |
Late penalty of $400 or 10% of tax, whichever is greater, for each month or partial month late. Maximum of $2000 or 50% of tax, whichever is greater. |
| 2. Late Payment Fee/Penalty |
Late fee of 10% of tax. Maximum of $1000. |
Late fee of 10% of tax. Maximum of $1500. |
Late fee of 10% of tax. Maximum of $2000. |
Late penalty of 10% of tax. If wilful, could be more. |
| 3. Late Payment Interest |
Interest of at least 12% per annum. If rate established by Sec. 6621 of Internal Revenue Code is higher, use the higher rate. Calculated from date due, to date paid, without regard to any extensions. |
Details
Late Filing Penalty
Below are excerpts from the statutes as they existed before the changes that were effective on 8/4/2023.
Illinois surplus line producers must file surplus line tax and fire marshal tax statements by the prescribed due dates whether any tax is due or not. A penalty is assessed for failure to file by the due date. Paragraph (2)(b) of Section 412 of the Illinois Insurance Code [215 ILCS 5/412(2)(b)] states that:
(b) When any industrial insured or surplus line producer fails to file any tax return [...] on the date prescribed, including any extensions, there shall be added:
(i) as a late fee, if the return or report is received at least one day but not more than 7 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, the entire fee not to exceed $1,000;
(ii) as a late fee, if the return or report is received at least 8 days but not more than 14 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, the entire fee not to exceed $1,500;
(iii) as a late fee, if the return or report is received at least 15 days but not more than 21 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, the entire fee not to exceed $2,000; or
(iv) as a penalty, if the return or report is received more than 21 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, for each month or part of a month of failure to file, the entire penalty not to exceed $2,000 or 50% of the tax due, whichever is greater.
Late Payment Penalty
The amount due on the surplus line or fire marshal tax statement is based on the filings made with the Surplus Line Association of Illinois in the preceding 6 months (surplus line tax) or calendar year (fire marshal tax). Failure to pay the full amount shown on the tax statement prepared by the Surplus Line Association by the prescribed due date will result in a a late payment penalty. Paragraphs (3)(a-5) and (3)(b) of Section 412 of the Illinois Insurance Code [215 ILCS 5/412(3)(a-5) & (3)(b)] state that:
(a-5) When any industrial insured or surplus line producer fails to pay the full amount due under [...] Sections 121-2.08 or 445 of this Code, or Section 12 of the Fire Investigation Act on the date prescribed, there shall be added:
(i) as a late fee, if the payment is received at least one day but not more than 7 days after the prescribed due date, 10% of the tax due, the entire fee not to exceed $1,000;
(ii) as a late fee, if the payment is received at least 8 days but not more than 14 days after the prescribed due date, 10% of the tax due, the entire fee not to exceed $1,500;
(iii) as a late fee, if the payment is received at least 15 days but not more than 21 days after the prescribed due date, 10% of the tax due, the entire fee not to exceed $2,000; or
(iv) as a penalty, if the return or report is received more than 21 days after the prescribed due date, 10% of the tax due.
(b) If such failure to pay is determined by the Director to be wilful, after a hearing [...], there shall be added to the tax as a penalty an amount equal to the greater of 50% of the deficiency or 10% of the amount due and unpaid for each month or part of a month that the deficiency remains unpaid commencing with the date that the amount becomes due. Such amount shall be in lieu of any determined under paragraph (a) or (a-5).
Late Payment Interest
Late payment interest is added to any amount not paid by the prescribed due date. Section 412(4) of the Illinois Insurance Code [215 ILCS 5/412(4)] states that:
Any insurance company, industrial insured, or surplus line producer that fails to pay the full amount due [...] is liable, in addition to the tax and any late fees and penalties, for interest on such deficiency at the rate of 12% per annum, or at such higher adjusted rates as are or may be established under subsection (b) of Section 6621 of the Internal Revenue Code, from the date that payment of any such tax was due, determined without regard to any extensions, to the date of payment of such amount.
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