REPORT DIGEST

ILLINOIS INDEPENDENT TAX TRIBUNAL

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2019

Release Date:  December 8, 2020

FINDINGS THIS AUDIT:  4

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  2 -- 1 -- 3
Category 3:  0 -- 0 -- 0
TOTAL:  2 -- 2 -- 4

FINDINGS LAST AUDIT: 6

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park
Plaza, 740 E. Ash Street, Springfield, IL
62703
(217) 782-6046 or TTY (888) 261-2887

This Report Digest and Full Report are
also available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (19-01) The Tribunal did not handle
filing fees received with incorrectly
filed petitions in accordance with State
laws and regulations.
• (19-02) The Tribunal did not comply
with certain statutory requirements
established within the Illinois
Independent Tax Tribunal Act of 2012.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE CONTROL OVER FILING FEES

The Illinois Independent Tax Tribunal
(Tribunal) did not handle filing fees
received with incorrectly filed petitions
in accordance with State laws and
regulations.

During testing, we noted the Tribunal
receives petitions that are either
immediately dismissed or dismissed with
the ability to amend and refile. In
either scenario, the Tribunal returns the
petitioner’s original $500 check or money
order to the taxpayer through the mail.
The Tribunal’s records indicated this
occurred 23 times during Fiscal Year 2018
and 19 times during Fiscal Year 2019.

We noted the following noncompliance
related to this process:

• The Tribunal did not process refunds,
defined as repayments of fees paid in
excess or in error to the State, through
the standard voucher-warrant process.

• The Tribunal did not have appropriation
authority within the Illinois Independent
Tax Tribunal Fund to pay refunds due to
taxpayers in either Fiscal Year 2018 or
Fiscal Year 2019.

We also noted the Tribunal did not timely
remit Treasurer’s Drafts related to
properly filed petitions to the Office of
the Comptroller. Five of 60 (8%) Receipt
Deposit Transmittals (RDTs) tested,
totaling $2,500, were not submitted to
the Comptroller within a reasonable
timeframe upon receipt of the Treasurer’s
Draft. They were submitted between 2 and
22 days late. We determined 30 days to be
a reasonable timeframe. (Finding 1, pages
10-11)

We recommended the Tribunal pay refunds
through the State’s voucher-warrant
process and request an appropriation to
pay refunds due. We also recommended the
Tribunal timely remit Treasurer’s Drafts.

Tribunal officials stated:

We do not agree with the Auditor
General’s recommendation. The Tax
Tribunal cannot deposit checks for
petitions that are deficient and cannot
legally be accepted under the Tribunal
statute. The tax Tribunal has a written
policy for when a petition is initially
rejected for being deficient. If a
petition cannot be accepted, any
accompanying check will not be accepted
as well and will be immediately returned
to the petitioner. The fact a check is
returned in a case that is not accepted
is noted in the case order dismissing the
case as well as in our internal docket
system and our monthly fee/deposits
reconciliations spreadsheets.

We agree with the Auditor General’s
recommendation to timely submit RDT’s to
the Comptroller. Certain RDT’s that were
untimely were due to a conflict with
timing on non-negotiable drafts and
receipt batching. The conflict is now
known to us.

In an accountant’s comment, we stated the
issue within the finding is when a
receipt is considered received under the
State Officers and Employees Money
Disposition Act as opposed to when the
Tribunal can accept a petition given its
limited jurisdiction under the Illinois
Independent Tax Tribunal Act of 2012. To
be received is commonly defined as “to be
given, presented with, or paid,” and our
position is the Tribunal has received a
receipt when the mail is opened and a
check or money order is located with the
incomplete petition. Currently, the State
Officers and Employees Money Disposition
Act requires the Tribunal to deposit the
entire remittance into the State
Treasury.

If the Tribunal continues to disagree
with our position, the Tribunal should
seek a formal written opinion from the
Attorney General.

FAILURE TO FULLY IMPLEMENT THE ILLINOIS
INDEPENDENT TAX TRIBUNAL ACT OF 2012

The Tribunal did not comply with certain
statutory requirements established within
the Illinois Independent Tax Tribunal Act
of 2012.

During testing, we noted the following:

• The Tribunal did not maintain a
principal office located within Sangamon
County.

• The Tribunal did not appoint a clerk or
reporter.

• The Tribunal has not established
requirements for the authentication of
electronic submissions or legal
signatures.  (Finding 2, pages 12-13)

We recommended the Tribunal maintain an
office in Sangamon County, appoint a
clerk and reporter, and establish rules
for the electronic submission of
documents, or seek a legislative remedy.

Tribunal officials stated:

We do not agree with the Auditor
General’s recommendation. The Tax
Tribunal will not hire additional
employees, request that additional judges
be appointed, or secure additional
permanent office space in Springfield
until the need arises and the related
costs can be justified. The Tax Tribunal
has been open for almost seven years and
the statutorily mandated size of the
office was a projection done prior to its
operations commencing. The General
Assembly has been advised through the Tax
Tribunal’s yearly budget submissions and
in budget hearings as to the Tribunal’s
current and potential future staffing and
facility needs. Moreover, our budget
appropriations have been reduced to allow
for a minimal budget to operate just our
one office and with no additional hires.
A legislative remedy to change the
language of the statute should not be
done at this time as being unduly
burdensome and unnecessary as a stand-
alone piece of legislation, but a
legislative remedy will be sought when
other legislative remedies or legislative
enactments are being sought by the Tax
Tribunal in the future.

Electronic signatures are not necessary
to authenticate electronic submissions.
Filings are typically submitted by the
parties by email with expected addresses,
reducing the need for further
verification. No one is allowed to post
any court submission directly to the Tax
Tribunal’s docket system as only the
judges, after reviewing a proposed
filing, post the proposed filing to the
docket. All parties’ public court filings
and the Tax Tribunal’s orders/decisions
are posted on the Tax Tribunal’s website
so any false filing would be immediately
noticeable to the parties and the court.
As with the other sections of the Tax
Tribunal statute listed in this finding
that were enacted prior to the Tax
Tribunal conducting operations, we will
seek to delete this irrelevant statutory
requirement through a legislative remedy
when it is necessary to seek a
legislative remedy to address a relevant
component of the Tax Tribunal’s
operations.

In an accountant’s comment, we noted
that, per the finding, the General
Assembly mandated the Tribunal to have a
principal office in Sangamon County and
required the Tribunal to appoint both a
reporter and a clerk to perform certain
duties at the Tribunal. The primary
responsibility of State agencies is to
administer the functions given to them by
the General Assembly in accordance with
State law, as written. If the Tribunal
believes compliance with a statute would
result in an imprudent use of State
resources, the Tribunal should seek a
legislative remedy. In addition, if the
Tribunal believes electronic signatures
are not necessary and irrelevant to its
operations, the Tribunal should seek a
legislative remedy.

Further, the finding does not recommend
the appointment of additional judges.

OTHER FINDINGS

The remaining findings pertain to
weaknesses in cybersecurity programs and
practices and lack of due diligence over
ERP transition. We will review the
progress the Tribunal’s progress towards
the implementation of our recommendations
in our next compliance examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Tribunal for the two
years ended June 30, 2019, as required by
the Illinois State Auditing Act.  The
accountants qualified their report on
State compliance for Finding 2019-001.
Except for the noncompliance described in
this finding, the accountants stated the
Tribunal complied, in all material
respects, with the requirements described
in the report.

This compliance examination was conducted
by the Office of the Auditor General’s
staff.

JANE CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:sdw