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09/07/94 PEOPLE STATE ILLINOIS EX REL. ROLAND

September 7, 1994

THE PEOPLE OF THE STATE OF ILLINOIS EX REL. ROLAND BURRIS, PLAINTIFF-APPELLANT,
v.
BERNICE BOEGER, INDIV. AND AS EX'R OF THE ESTATE OF HARVEY BOEGER, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Du Page County. No. 91-IT-1. Honorable S. Keith Lewis, Judge, Presiding.

Colwell, Woodward, Bowman

The opinion of the court was delivered by: Colwell

JUSTICE COLWELL delivered the opinion of the court:

The plaintiff, the People of the State of Illinois ex rel. Roland Burris, the Attorney General of the State of Illinois (the State), appeals from the orders of the circuit court of Du Page County granting the defendant's motion for summary judgment and denying the State's motion for summary judgment. We reverse.

On March 11, 1988, the estate of Harvey Boeger (the Estate) filed a timely estate tax return and paid the State tax of $345,153. An Internal Revenue Service (IRS) audit of the Estate's tax return revealed that an additional tax was due both the IRS in the amount of $50,258.96 and the State in the amount of $12,851.59. On August 9, 1990, pursuant to the audit and a report of estate tax examination changes, the Estate signed an IRS Form 890 waiver of restrictions on assessment and collection of deficiency and acceptance of overassessment-estate and gift tax (the acceptance of the overassessment). However, the report of estate tax examination changes showed that no penalties had been assessed against the Estate for the late filing or late payment of any taxes by the Estate.

On November 6, 1991, the State filed a complaint to collect amounts due under the Illinois Estate and Generation-Skipping Transfer Tax Act (the Act) (35 ILCS 405/1-18 (West 1992)) against the defendant, Bernice Boeger, both personally, and as executor of the Estate of Harvey Boeger. The complaint alleged that, on May 8, 1991, the State had made a request to the Estate to file a supplemental tax return and pay the additional tax of $12,851.59, and that, as of the date of the filing of the complaint, the additional tax due had not been paid. The complaint sought judgment in the amount of $12,851.59 plus interest and penalties as provided by the Act.

The Estate filed its answer and admitted that an additional tax was due in the amount of $12,851.59. The Estate alleged that, on May 15, 1992, it paid the amount due and attached a copy of the treasurer's receipt as an exhibit to the answer showing that the tax had been paid. The Estate requested that the complaint be dismissed.

The State filed a motion for summary judgment to collect interest and penalties on the additional tax due. In response to the motion for summary judgment, the Estate set forth facts showing that on May 15, 1992, it paid the additional tax and that on November 16, 1992, it filed the supplemental return and paid the interest on the additional tax. The Estate argued: (1) that the IRS waived penalties by not assessing any penalties for the late filing or late payment by the Estate of any taxes; and (2) that this waiver constituted reasonable cause within the meaning of section 8(d)(1) of the Act (35 ILCS 405/8(d) (West 1992)) for the late filing of the supplemental State return and the late payment of the additional State taxes due.

On January 13, 1993, the circuit court held a hearing on the State's motion for summary judgment. On February 9, 1993, the circuit court issued a letter ruling denying the State's motion for summary judgment and stating in relevant part:

"The Court is convinced that Exhibit A [Department of the Treasury - Internal Revenue Service REPORT OF ESTATE TAX EXAMINATION CHANGES] to Defendant's Answers to the Motion for Summary Judgment constitutes a tacit waiver of penalty and therefore constitutes '. . . reasonable cause . . .' as referred to and cited in Defendant's Answer.

The Plaintiff's Motion for Summary Judgment is therefore denied and prevailing counsel must prepare an order so reflecting."

On March 29, 1993, the Estate submitted a written order denying the State's motion for summary judgment. On that same date, the Estate filed its own motion for summary judgment. The Estate argued that there was no genuine issue of material fact, that the letter opinion of February 9, 1993, was the rule of the case, and that the letter should govern the ultimate Disposition of the only issue in question--the waiver of penalties.

On April 13, 1993, the State filed a motion to reconsider the circuit court's denial of its motion for summary judgment and a memorandum in support of its motion to reconsider and in opposition to the Estate's motion for summary judgment. On May 27, 1993, the circuit court heard argument on the Estate's motion for summary judgment and the State's motion to reconsider. On June 1, 1993, two orders were entered by the circuit court; one granted the Estate's motion for summary judgment, and the other denied the State's motion for summary judgment.

On June 4, 1993, the circuit court entered an order by mail, denying the State's motion for reconsideration and again granting the Estate's motion for summary judgment. On June 30, 1993, the State filed a timely notice of appeal ...


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