The state of the State
Unpopular tax but big revenue source

"APRIL IS the cruellest month," wrote T. S. Eliot in the opening lines of The Waste Land, but he was thinking in a poetic context — not, as many of us will do, in the terms of April 15, the due date for the 1040 forms which represent the final return for federal and state income taxes.

The state income tax became effective seven years ago and its net receipts have become the second biggest state revenue source, exceeded only by the sales tax. Money from the income tax is almost equal to the total that the state receives from the federal government for high- ways, public assistance, education, etc.

The peak months
April, May and June are the peak months for income tax receipts for the state. Last year the receipts that flowed into the treasury from the income tax during these three months were more than $500 million, or almost one-third of the total income tax receipts for the entire 1975 fiscal year. During the same three months, sales tax receipts totaled $367 million, and other general fund revenues (excluding federal aid), came to $229 million.

The importance of the state income tax can be judged from one comparison: Last fiscal year, this tax brought in almost $1.6 billion, but the state spent almost $1.7 billion for elementary and secondary education and the state education agency. (Note: Education spending is financed by several funds, including federal aid, and not solely by the income tax. But without the income tax, state aid to education on its present scale is inconceivable.)

One-twelfth of income tax receipts goes to municipalities and counties as a form of state revenue sharing; it is estimated that about $130 million will be paid out for this purpose this fiscal year.

Many taxpayers will be entitled to refunds of the income tax, and this year the state Department of Revenue expects to refund about $110 million. Anyone who thinks he is entitled to a refund should file his IL-1040 form as early as possible. The average time to process an accurate income tax return is between six and eight weeks. Processing slows as the April 15 deadline approaches and the department becomes swamped with returns. The experience of the department indicates that about one-quarter of all taxpayers — and there are about 4.6 million individual income taxpayers in Illinois this year — will wait until April to file their returns.

A mistake can delay processing a return. Here are the six most common errors, according to the department:

1. Mistakes in arithmetic.

2. Failure to sign the return or, in the case of joint returns, failure of the spouse to sign.

3. Transposed digits in the social security number.

4. Failure to indicate whether it is a single or joint return.

5. Failure to notify the department of a change of address. The department is still holding some 1975 refunds that weren't delivered because the taxpayer moved and didn't tell the department. If the same taxpayer files an Illinois return this year, he will get credit, of course.

6. Failure to attach documents that support credits claimed. This is especially important for pensioners. Nearly all pensions are tax-exempt in Illinois, but pensioners must verify the credit claimed. A box on the reverse of the return lists acceptable verification documents. As many as one in five pensioners, though, don't provide the documentation and their returns are delayed in processing. If the pensioner is expecting a refund, that could be delayed.

Income tax enforcement
Anyone who files a federal income tax return in Illinois is required to file a state return. This is the basic enforcement tool used in collecting the state tax. Illinois began using federal computer tapes to cross-check against state tapes in November 1973. The program has produced $2.1 million in collections in its first two years, another $2.2 million in additional tax liability (unpaid taxes), and has returned $600,000 in refunds to taxpayers.

The department is reportedly looking into an enforcement program to collect tax liabilities reported on Illinois returns but for which the taxpayer failed to remit the money with the return. Section 1109 of the income tax act provides for seizure and sale of real and personal property of the delinquent taxpayer in order to collect the state income tax. This would be used in cases where the department's ordinary procedures have failed. The seizure program would be aimed at individuals and also at employers who have withheld income taxes from employees' pay- checks but failed to remit the money to the state.

Taxpayer assistance
Telephone assistance can be obtained by calling 641-2150 in Cook County or the statewide toll-free number, 1-800- 252-8972. It's best to call early in the morning or in the afternoon between 3:30 and 4:30. Last year 382,000 calls were received. Tax forms can be requested by mail from the Illinois Department of Revenue, Box 3545, Springfield, 111. 62708. In addition, taxpayer assistance is available in the department's district offices in Champaign, Chicago (four offices). East St. Louis, Lincolnwood, Peoria, Rockford, Rock Island, Wauconda, Wheaton, and, of course, Springfield. ž

24 / April 1976 / Illinois Issues