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A. If a tax ordinance does not provide for a credit or refund, and it appears that an amount of tax, interest or penalty has been paid or remitted in error to the department, the taxpayer or tax collector may file a claim for credit or refund; provided, however, that no person shall be eligible for a credit or refund unless the person paid or remitted the tax, interest or penalty directly to the department.
B. Any claim for a credit or refund must be filed in writing on forms provided by the department not later than four years from the date on which payment or remittance in error was made.
C. The department shall allow a claim for credit or refund only for sums paid or remitted through a mistake of fact, an error of law or as provided by subsection D. of this section.
D. In the event that a court of competent jurisdiction has declared a tax unconstitutional and the judgment of constitutional invalidity is final and all rights to appeal open to the department have expired or have been exhausted, then the department shall allow a claim for credit or refund but only if the claim is filed by a taxpayer or tax collector who, at the time of payment or remittance (1) paid or remitted the tax under written protest, or (2) paid or remitted the tax into an escrow account established by administrative order.
E. No credit or refund shall be allowed for any amount paid or remitted in error unless:
(1) In the case of a claim for credit or refund by a taxpayer, the taxpayer either:
a) Bore the burden of paying the tax and did not shift the burden to another person, or
b) Shifted the burden of paying the tax to another person, but has unconditionally repaid the tax to that person;
(2) In the case of a claim for credit or refund by a tax collector, the tax collector has unconditionally repaid the tax collected to the person from whom it was collected.
F. Any credit or refund allowed under this section will bear simple interest at the rate of three percent per annum, calculated daily, based on a 365 day calendar year, from the date the department received the erroneous payment or remittance until the date the comptroller approves in writing a credit or refund; provided, however, that interest will not accrue on a credit or refund resulting from overpayments of an annual return tax, requested pursuant to Section 3-4-186(H) of this chapter.
G. (1) Except as provided in Section 3-4-330 of this chapter or by order of court, no credit or refund shall be allowed for any sum paid or remitted in satisfaction of a final assessment or in settlement of any claim for taxes, interest or penalties asserted by the department.
(2) No credit or refund shall be allowed if a claimant owes the city a debt, as defined by Section 4-4-150 of this Code; provided, however, that the department may allow a credit or refund if the comptroller determines that: (a) the claimant has entered into an agreement with the department or other appropriate city department for the payment of all debts owed the city and such claimant is in compliance with the agreement; or (b) the claimant is contesting liability for or the amount of the debt in a pending administrative or judicial proceeding; or (c) the claimant has filed a petition in bankruptcy and the debts owed to the city are dischargeable in bankruptcy.
H. A claim for credit or refund shall be acknowledged in writing by the comptroller. The written acknowledgment shall identify the claim and state the date upon which it was received.
I. (1) As soon as practicable after a claim for credit or refund is filed, the comptroller shall examine the credit or refund request and determine the amount of credit or refund due, if any, and shall issue a written notice to the claimant of a tentative determination.
(2) The tentative determination of claim shall be prima facie correct and the claimant shall have the burden of proving with books, records, or other documentary evidence that the determination is incorrect.
(3) If the claimant disagrees with the tentative determination, the claimant may file with the department a written protest. The written protest which shall be on a form prescribed by the comptroller must be filed within 35 days of receiving the written notice of tentative determination of a claim.
(4) If a timely protest is filed with the department, the comptroller shall refer the protest to the department of administrative hearings upon the written request of the taxpayer or tax collector or at such earlier time as the comptroller deems appropriate. The department of administrative hearings thereupon shall fix the time and place for a hearing, give written notice thereof, and appoint an administrative law officer who shall conduct the hearing. The director of the department of administrative hearings may also promulgate additional governing procedures for the conduct of hearings held under this section.
(5) Any hearing held under this subsection shall be governed by the procedures set forth in Section 3-4-340 of this chapter.
(6) Upon conclusion of the hearing, the administrative law officer shall issue a final determination. Written notice of the administrative law officer's final determination shall be given to the claimant.
(7) If the claimant fails to file a timely written protest, the tentative determination shall become final without further notice.
J. The comptroller may issue to a claimant a letter of credit if the comptroller determines that a claimant may be able to use the credit in the foreseeable future or may issue a refund, in lieu of a letter of credit. Refunds shall be paid in the order of issuance from funds appropriated to the department for that purpose.
K. Application of credits to tax liabilities from periods either before or after the period for which credits are associated shall be made as follows:
1. If there are no liabilities to net against the credits, or the credits are greater than the liabilities in the same period, the credits will first be applied as payments to liabilities in prior periods.
2. The application of credits will begin in the oldest liability period within the statute of limitations, as set forth in Section 3-4-120, and apply within that period first to interest, next to tax, and finally to penalties. If credits remain, they will be applied to the next oldest period in the same manner, until all prior liabilities are paid or the credits are extinguished.
3. If a credit remains after all preceding liabilities have been satisfied, and the taxpayer is current in all tax filings, applicable interest will be calculated, and a refund will be issued for the resulting amount.
4. When a credit is applied to a tax liability in a prior period, the liability will continue to accrue interest through the due date of the credit period. Unpaid tax balances after application of a credit will continue to accrue interest through the due date of the next applied credit or the payment postmark date.
5. When a credit is applied to a later liability period, any unpaid balance will continue to accrue applicable interest through the date of the next applied credit.
6. When a credit is applied to a later liability period, the credit will accrue applicable interest through the due date of the liability period in which the credit was applied. If there is a remaining credit balance, it will continue to accrue applicable interest until applied to another deficiency or refunded.
7. Application of a credit to tax liabilities where more than one type of tax liability exists shall be divided proportionately between the tax liabilities so that each tax liability shall share the credit on the basis of the amount due for each tax liability.
(Added Coun. J. 11-14-91, p. 7458; Amend Coun. J. 11-17-93, p. 42192; Amend Coun. J. 7-10-96, p. 24982; Amend Coun. J. 11-12-97, p. 56813; Amend Coun. J. 4-29-98, p. 66564; Amend Coun. J. 5-12-99, p. 106; Amend Coun. J. 11-17-99, p. 18040, § 1.2; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3; Amend Coun. J. 11-16-16, p. 38042, Art. III, § 1)