VOLUNTARY DISCLOSURE AGREEMENT BETWEEN THE CITY OF CHICAGO AND INFORMATION BULLETIN OFFER 2 IRIS ACCOUNT # This Voluntary Disclosure Agreement ("Agreement") is made and entered into effective as of this, 2016, by and between the City of Chicago (the "City") and (the "Taxpayer"), located at. RECITALS WHEREAS, the City, through its Department of Finance ( Department ) issued an Information Bulletin ( Bulletin ) on November 19, 2015, that provides guidance with respect to Personal Property Lease Transaction Tax Ruling #12 (Ruling #12) issued by the Department on June 9, 2015; WHEREAS, Ruling #12 and the Bulletin concerned the application of the Personal Property Lease Transaction Tax ( Lease Tax ), chapter 3-32 of the Municipal Code of Chicago, to nonpossessory computer leases; WHEREAS, the Bulletin included the following offer: Any provider or customer that files a voluntary disclosure application by January 1, 2016, and that qualifies for the City's standard voluntary disclosure program (e.g., has not received a written notice of tax audit or tax investigation) will receive the following terms, provided that it comes into compliance with the Lease Tax Ordinance and Ruling #12 by January 1, 2016 (or such later date that the Department may agree to for good cause): 1. As to charges for nonpossessory computer leases that qualified for Exemption 11 under the Department's interpretation of the exemption before the issuance of Ruling #12, no liability for Tax, interest or penalties based on those charges for Page 1 of 6
any periods ending before January 1, 2016. 2. As to charges for other nonpossessory computer leases (i.e., charges for nonpossessory computer leases that do not meet the requirements of paragraph 1 above), payment of Tax for the period of January 1, 2015 through December 31, 2015 (one year), and no liability for interest or penalties. 3. As to any other taxes owed (in other words, Lease Tax based on leases other than nonpossessory computer leases, or taxes other than Lease Tax), the terms of the City's standard voluntary disclosure program will apply. Thus, for those other tax liabilities, penalties will be waived, and there will be no more than four years of liability for tax and interest. WHEREAS, the Taxpayer has notified the Department that it wishes to accept the Department s offer as to charges described in paragraph 2 of the Department s offer, quoted above ( Category 2 ); WHEREAS, the Taxpayer is voluntarily notifying the City of its liability for Category 2 under the Lease Tax; WHEREAS, the Taxpayer has submitted a completed Tax Registration Form that registers the Taxpayer with the Department to collect and remit (hereafter collectively collect ) and/or pay, as appropriate, all applicable Chicago taxes for which it is liable; WHEREAS, the Taxpayer warrants that it is not the subject of any audit or other investigation by the Department, or that the Department has expressly waived that limitation; WHEREAS, the Taxpayer warrants that its liability for the Lease Tax being disclosed in this Agreement is not the subject of any audit or other investigation by the Department including any audit or other investigation by the Department involving a person or entity which was involved with the Taxpayer in a bulk sale of assets (as defined in section 3-4-140 of the Code), or that the Department has expressly waived that limitation; Page 2 of 6
WHEREAS, the City and the Department are administratively convenienced by the Taxpayer's voluntary disclosure of its liability for the Lease Tax; and WHEREAS, the City stands to derive substantial revenue that otherwise might not have been collected without the Taxpayer's voluntary disclosure; NOW, THEREFORE, the City and the Taxpayer hereby agree as follows: 1. The foregoing recitals are hereby incorporated herein and made an express part of this Agreement. 2. The Taxpayer has determined that the amount of its tax liability for the Lease Tax for Category 2 for the period January 1, 2015 through December 31, 2015, inclusively (the "Self- Assessment Period"), is (its "Tax Liability"). 3. The Department will not assess the Taxpayer for any possible Lease Tax that may have accrued for Category 2 prior to the Self-Assessment Period; provided, however, that no term of this Agreement is breached and that no material misrepresentation was made to the Department by Taxpayer with respect to its Tax Liability to induce the Department to enter into this Agreement. 4. On or before, 2016, the Taxpayer shall pay to the City the amount of its Tax Liability. 5. Except as otherwise provided herein, all penalties and interest otherwise attributable to Taxpayer's Tax Liability for the Self-assessment Period shall be waived by the City. 6. The Taxpayer's determination of its Tax Liability under paragraph 2, including the methodology used by Taxpayer, has been documented in a form which has been reviewed by Page 3 of 6
the Department. All submissions to the Department by the Taxpayer in accordance with this paragraph 6 shall be deemed to form a part of this Agreement. 7. No provision of this Agreement shall preclude the Department from conducting an audit or other investigation of the Taxpayer, within the appropriate statutory period, with respect the Taxpayer's Tax Liability. 8. If the Taxpayer violates any of the provisions of this Agreement, or if pursuant to an audit or other investigation, Taxpayer's liability for the Lease Tax for the Self-Assessment Period (its "Revised Tax Liability") exceeds the amount determined under paragraph 2 by ten percent (10%) or more, then neither paragraph 3 nor paragraph 5 shall apply to Taxpayer, and Taxpayer shall be liable to the City in the amount of Taxpayer's Revised Tax Liability plus interest and penalties on the Revised Tax Liability, less amounts paid under this Agreement. If the Taxpayer's Revised Tax Liability exceeds the amount determined under Paragraph 2 by less than ten percent (10%), then Taxpayer shall be liable to the City in the amount of such difference, plus interest and penalties on the difference. 9. If the audit or other investigation results in a finding that Taxpayer has a Lease Tax liability for periods subsequent to the Self-Assessment Period, then Taxpayer shall be liable to the City in the amount of such Lease Tax, plus interest and penalties thereon. 10. Except as provided in paragraphs 11 and 12, the Taxpayer hereby waives its right to an administrative hearing before the Chicago Department of Administrative Hearings, its right to claim a credit or refund from the Department, and its right to file or join any lawsuit, with respect to payment of the amounts set forth in paragraph 2. 11. If the Taxpayer is a lessee/customer under a nonpossessory computer lease, and Page 4 of 6
the Taxpayer s lessor/provider of such lease is also taking advantage of the offer set forth in the Bulletin and has voluntarily notified the City of the same liability as set forth in this Agreement, then the City will refund the amount of such liability to the Taxpayer s Lessor, provided the Taxpayer and Taxpayer s lessor/provider provide sufficient proof to the Department that such liability has been paid twice. 12. If the Taxpayer is a lessor/provider of a nonpossessory computer lease, and the Taxpayer s lessee/customer of such lease is also taking advantage of the offer set forth in the Bulletin and has voluntarily notified the City of the same liability as set forth in this Agreement, then the City will refund the amount of such liability to the Taxpayer, provided the Taxpayer and Taxpayer s lessee/customer provide sufficient proof to the Department that such liability has been paid twice. 13. This Agreement shall be effective upon execution by the parties to this Agreement and, thereafter, shall be binding upon the City, the Taxpayer, and the Taxpayer's successors and assigns. 14. Except as otherwise may be provided by law, and as may be required in either paragraph 11 or 12, Taxpayer expressly agrees not to disclose any of the terms and conditions of this Agreement to anyone not in the employ of or engaged to represent the Taxpayer without the prior written approval of the City. 15. The persons signing this Agreement certify and warrant that they have the power to enter into and execute this Agreement. 16. This Agreement may be executed in one or more counterparts each of which shall be considered an original. Page 5 of 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written. TAXPAYER By: (Print Name) (Title) CITY OF CHICAGO DEPARTMENT OF FINANCE By: DEPARTMENT OF LAW By: Page 6 of 6