                                                    SIXTH DIVISION
                                                    March 30, 2007



No. 1-05-0157



FARID SWEILEM and KHALIL SWEILEM, )    Appeal from the
                                  )    Circuit Court
     Petitioners-Appellants,      )    of Cook County.
                                  )
     v.                           )    Nos. 01 L 51089 and
                                  )         01 L 51090
ILLINOIS DEPARTMENT OF REVENUE,   )
ILLINOIS DEPARTMENT OF REVENUE    )
BOARD OF APPEALS; and DIRECTOR of )
THE ILLINOIS DEPARTMENT OF        )
REVENUE,                          )    The Honorable
                                  )    Alexander P. White,
     Respondents-Appellees.       )    Judge Presiding.



     JUSTICE O'MALLEY delivered the opinion of the court:

     Appellant-taxpayers Farid and Khalil Sweilem (taxpayers)

appeal the judgment of the circuit court of Cook County affirming

the denial by the Illinois Department of Revenue (the Department)

of taxpayers' request to vacate notices of penalty liability

(NPL) and remand the matter to the Department for a hearing on

the issue of taxpayers' personal liability.   Taxpayers allege

that the Department's NPL's were ineffective because it failed to

notify their attorneys pursuant to statute and, alternatively, if

the NPL's were properly issued to taxpayers, the Department

failed to meet due process requirements for notice under the

Illinois and the United States Constitutions.

     For the reasons that follow, we reverse the judgment of the
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circuit court and the ruling of the board of appeals and remand

this matter for further proceedings.

                              BACKGROUND

     In 1977 taxpayers purchased Jet Food Market, a grocery store

in Chicago, Illinois.    Farid was the president of Jet Foods Inc.,

and Khalil was the secretary.    On December 2, 1984, the

Department issued a notice of taxpayer liability to Jet Foods for

deficiencies for a period of time beginning in July 1978, through

November 1981, pursuant to the Retailers' Occupation Tax Act (the

Act) (Ill. Rev. Stat. 1981, ch. 120, par. 440 et seq. (currently

35 ILCS 120/1 et seq. (West Supp. 2005)).    The amount of

liability assessed against Jet Foods, including interest,

deficiency penalties, fraud penalties and the underlying tax

owed, was $476,622.63.    Taxpayers hired the law firm of Barnstein

& Berman to represent Jet Foods in the proceedings initiated by

the Department.

     In December 1986, a hearing commenced but was continued,

when taxpayers discharged their law firm during the course of the

hearing.    Taxpayers hired the law firm of Burke & Smith and

proceeded with the hearing on June 4, 1987.    Following the June

4, 1987 hearing, the administrative law judge (ALJ) found that

Jet Foods was liable for the unpaid sales tax and assessed

against taxpayers an amount of $431,272.39.    The amount



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represented liability for the underlying sales tax, deficiency

penalty and interest; however, the ALJ specifically held that the

evidence did not support the imposition of a 20% civil fraud

penalty.    The Department attempted to collect the debt from Jet

Foods in 1988, but was unsuccessful because the corporation had

been involuntarily dissolved by the Illinois Secretary of State

prior to 1987 and was insolvent.

     On October 13, 1989, the Department issued NPL's to

taxpayers based on their liability as corporate officers for Jet

Foods' unpaid sales tax amounting to $149,612.06, penalties of

$8,441.60 and interest of $477,218.97, totaling $635,272.63.      The

NPL's were sent to addresses listed on taxpayers' most recent

Illinois income tax returns.    Farid's NPL was returned to the

Department marked "undeliverable" by the United States Postal

Service.    Khalil's NPL was returned by the post office to the

Department on October 19, 1989, and bore a sticker indicating

that Khalil had moved to a new address and notifying the

Department of the new address.    The Department chose not to

forward the NPL to Khalil's new address.    On October 31, 1989,

Farid directed attorney John Wickert from the law firm of Burke &

Smith to file a power of attorney with the Department reflecting

Farid's new address and signature as president of Jet Foods.

     On June 1, 1990, taxpayers filed petitions with the



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Department seeking to vacate the NPL's, reopen the matters and

hold hearings on taxpayers' personal liability for the corporate

tax deficiency.   Both taxpayers alleged that the NPL's were not

received and should have been delivered to their attorneys Burke

& Smith.    Khalil alleged that he was not a responsible person and

Farid alleged that his failure to pay taxes on behalf of the

corporation was not willful.   The Department summarily denied

both petitions.

     Taxpayers filed separate petitions for writs of certiorari

in the circuit court and following several successful motions to

dismiss by the Department, the circuit court granted both writs

for certiorari in 1997.    Following a review of the matter, the

circuit court remanded it back to the ALJ for a hearing to

determine whether the Department complied with section 12 of the

Act (Ill. Rev. Stat. 1989, ch. 120, par. 451).   Section 12 of the

Act provides, in pertinent part:

        "Whenever notice is required by this Act, such notice may

     be given by United States registered or certified mail,

     addressed to the person concerned at his last known address,

     and proof of such mailing shall be sufficient for the

     purposes of this Act. Notice of any hearing provided for by

     this Act shall be so given not less than 7 days prior to the

     day fixed for the hearing. Following the initial contact of



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     a person represented by an attorney, the Department shall

     not contact the person concerned but shall only contact the

     attorney representing the person concerned."    Ill. Rev.

     Stat. 1989, ch. 120, par. 451.

     On December 2, 1999, a hearing was held before a Department

ALJ pursuant to the circuit court's remand order.    Taxpayers

called attorney Richard Miller, Farid and Khalil Sweilem and

Carol Harper as witnesses.   Attorney Miller testified that he

represented Jet Foods and taxpayers individually in 1987.    He

testified that in or around April 1987, a document was issued by

the Department commanding the appearance of taxpayers before an

ALJ for a hearing.   Attorney Miller stated that it was the same

ALJ that ultimately heard the case against Jet Foods on June 4,

1987.   He testified that he was engaged by taxpayers to represent

them individually at this hearing.    Attorney Miller characterized

the meeting as unusual and "much more informal than the

subsequent one that [was] had in terms of witnesses were not

sworn in, there was no court reporter.   It was more in the order

of a hearing, if you will, to show probable cause why the

brothers should not be added to the Jet Foods lawsuit that was

underway, and in which there was a formal charge of fraud

[pending] for years ***."

     Attorney Miller testified that he, taxpayers,



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representatives from the Department and the ALJ were present.

During the course of the hearing, the issue was limited to

whether or not taxpayers could be liable for the corporate tax

deficiency.   He stated during his testimony that "[his] clients

were very visibly pleased because essentially the whole issue of

why we were there was whether or not in their personal capacity

they should be responsible for substantial dollars in potential

tax revenue which was going to be the subject of the subsequent

adjudication against Jet Foods."       Attorney Miller argued that

taxpayers should not be held personally liable and, according to

his testimony, the ALJ agreed finding that there was no basis to

pursue the individuals.

     On cross-examination, the Department asked whether attorney

Miller filed a power of attorney with the Department indicating

that he represented taxpayers personally.       Attorney Miller could

not recall whether he filed a power of attorney on behalf of

taxpayers.    The Department further inquired as to whether or not

attorney Miller knew that the original proceeding commenced in

December of 1986 and was continued when taxpayers fired their

original attorney.   He acknowledged this fact.      On redirect,

attorney Miller stated that he informed the Department that he

was representing taxpayers individually and that his practice was

to leave his business card with the Department.



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1-05-0157

     Khalil testified that he, his brother Farid and Jet Foods

were represented by the firm of Burke & Smith and that attorney

Miller was the attorney who handled the matters that arose before

the Department on their behalf.    He further testified that a

conference was held in the spring of 1987 where attorney Miller

represented him and his brother.       Khalil testified that the issue

discussed at the meeting was whether or not he and his brother

Farid should be personally liable in the Jet Foods matter.

Khalil testified that the outcome of the hearing was that he and

Farid would not be personally liable for Jet Foods' tax

liability.   He also testified that he and Farid celebrated

following this hearing.

     Khalil testified that he was contacted by a Department

collection agent in 1990.    He told the agent that he was

represented by Burke & Smith and that it surprised him that he

was being contacted about this tax matter because he believed

that it had been resolved.    Khalil denied ever receiving an NPL

from the Department and testified that he moved in July 1989 and

notified the post office of his forwarding address.

     Farid testified that he, his brother and Jet Foods were

represented by Burke & Smith in 1987.      Farid indicated that he

moved from Illinois to Arizona due to health problems in 1989.

Farid denied ever receiving an NPL from the department.      Farid



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stated he, his brother and attorney Miller attended a meeting in

the spring of 1987, a few months before the Jet Foods hearing on

June 4, 1987.     Farid testified that the purpose of the meeting

was to determine if he and Khalil would be personally responsible

for the tax liability in the Jet Foods matter.     He told the ALJ,

"After we finished meeting I asked the judge, 'What can I do

now?'   She said 'Go and live your life.    Congratulations, nothing

against you.'     Then I went outside, told my brother what's

happening, we celebrate [sic] and went home."     Subsequently, the

following colloquy occurred between Farid and his attorney:

        "MR. SMITH: Q. Did Rick Miller continue to represent Jet

     Foods at the hearing in June?

        A. I remember he said about two months I'm going to

     leave, and Mr. Burke & Smith going [sic] to represent me and

     my brother, too.

        Q. And when did you first have anything to do with Burke

     & Smith, to the best of your memory?

        A. It's about - - when did we start with Burke & Smith,

     do you mean [sic]?

        Q. Yes.    Was it '86 or '87?   When was it approximately?

        A. Before '86.

        A. Did they have power of attorney?     Did Burke & Smith

     have power of attorney on your behalf with the Department of



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     Revenue?

        A. Yes, sir.

        Q. Around that time?

        A. Yes, sir.

        Q. And so in addition to Mr. Miller representing you

     individually on that date, Burke & Smith had a power of

     attorney on file at that time too, in the spring of 1987; is

     that right?

        A. Yes, sir."

     On cross-examination, the Department asked Farid if he had

copies of the powers of attorney that he testified were filed on

his behalf by the firms of Barnstein & Berman and Burke & Smith.

Farid testified that he did not and that all documents were filed

with the Department by his attorneys.   Farid further testified

that he did not notify the Department of his move to Arizona, but

that he informed his attorneys at Burke & Smith.   He also

testified that he lost his driver's license in 1989 and had to

apply for a new license in Illinois in order to receive a

driver's license in Arizona.   He used his former Illinois address

to obtain a new license though he no longer lived in Illinois.

     Taxpayers called attorney Wickert who testified that he was

an attorney for the law firm of Burke & Smith from 1984 until

1992.   He testified that during the late 1980s Burke & Smith



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represented taxpayers and Jet Foods and he was assigned to do

work on the case as an associate.     Attorney Wickert testified

that he filed a power of attorney on behalf of Jet Foods at

Farid's direction relative to an income tax matter on October 31,

1989.

     Taxpayers then called Carol Harper, a public service

administrator for the Department in the 100% penalty unit.

Harper testified that the Department attempts to notify and

collect payment from the responsible taxpayer, in this case Jet

Foods.    If efforts are unsuccessful, the collections bureau

attempts to collect the debt from the responsible taxpayer.     Once

it is determined that collection from the responsible taxpayer is

not possible, the matter will be referred to the 100% penalty

unit.    Harper testified that the unit will issue NPL's to the

responsible officers.    Harper also explained the methods used to

obtain information about responsible officers including checking

tax returns, filings with the Secretary of State and checks

issued to the Department for taxes.

     Harper also testified that she was asked by counsel to check

the Jet Foods files.    She ordered the Jet Foods files and learned

that the audit file had been destroyed and the general file had

been "purged" or, according to Harper, nothing was in the file.

In this case Harper testified that she relied on filings from the



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Illinois Secretary of State.   Harper further testified that had

she received the NPL that was returned with a forwarding address

that she would resend the NPL out of fairness and reasonableness.

She did, however, acknowledge on cross-examination that she was

not required to do so under any policy or regulations in place

within the Department.

     Throughout the hearing, the Department objected to any

mention of a hearing that took place in the spring of 1987

contending that no procedure existed in the regulations that

allowed for such a hearing.    The parties do not dispute that the

spring 1987 hearing took place before the June 4, 1987

disposition of Jet Foods' liability.   The Department asserted

that a determination of individual liability of corporate

officers could not be made until the liability of the corporation

was established.   The Department, however,   presented no

testimony or evidence that negated a meeting with the Department,

taxpayers, attorney Miller from Burke & Smith as taxpayers'

personal attorney and an ALJ during which taxpayers were made

aware of their potential liability for Jet Foods' tax liability.

     Following the hearing after the circuit court's first remand

and further briefing by the parties, the ALJ ruled that taxpayers

were required to file a power of attorney with the Department

pursuant to Sweis v. Sweet, 269 Ill. App. 3d 1 (1995); taxpayers



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could not produce a copy of the power of attorney; testimony

offered by attorney Miller and taxpayers was not credible;

section 200.110 of the Department's regulations prohibits anyone

from appearing on behalf of a taxpayer without first filing a

power of attorney relative to the particular matter; and even if

the meeting took place, initial contact occurred when the NPL was

sent because corporate liability must be determined first and

corporate officers' liability cannot be intermingled with

corporate liability.

     Taxpayers appealed this ruling and the matter was fully

briefed before the circuit court.    The circuit court held that

the ALJ erred in excluding the testimony of attorney Miller

concerning the hearing alleged to have taken place in the spring

of 1987; his testimony was relevant and should have been

considered by the ALJ in determining whether the Department had

complied with section 12 of the Act.    The court ordered the

matter remanded a second time to the Department's board of

appeals and that the testimony of attorney Miller be admitted

into evidence.   The ALJ was instructed to review the testimony of

attorney Miller and the rest of the record to determine whether

taxpayers were personally represented by Burke & Smith at the

time of the 1987 meeting and whether this meeting or any other

contact by the Department occurred prior to the issuance of the



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NPL's during which taxpayers were made aware of their potential

for individual liability within the meaning of Sweis.     The

Department was given leave of court to present evidence or

testimony to rebut the testimony of attorney Miller.

     On the second remand, the Department indicated to the ALJ

that it would not call any witnesses or seek to admit any

evidence.   The Department explained to the court that:

        "The ALJ in that particular case to our best

     understanding is a federal administrative law judge, and the

     department did not think it was appropriate policy to go

     about calling federal officers, judges, indirectly as

     witnesses in departmental hearings.

        We don't believe that that's an appropriate role for a

     federal judge or an appropriate role for a federal ALJ nor

     is it an appropriate role for a department ALJ to become a

     witness.   Nor do we feel that we want to expose in the

     future our litigating attorneys to becoming potential

     witnesses about conversations or things that happened within

     the scope of hearings.

        So for that reason, from a policy prospective, we didn't

     think that was an appropriate way to go.

        As it turns out, the ALJ in that case is Valerie Bablick

     (phonetic), and it is also our understanding that she is in



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     either Kentucky or West Virginia and may have been difficult

     to find and would have been more difficult to subpoena if

     she didn't want to come.    But we didn't really want to get

     into that kind of an issue."

     The Department continued to argue that no procedural

mechanism existed for a hearing or meeting to discuss personal

liability of a responsible officer prior to a disposition in the

underlying corporate liability case.   The Department asked the

ALJ to take judicial notice that no regulations or statutes exist

that permit such a proceeding.

     On August 8, 2001, the ALJ ruled that the Department was not

legally required to mail the NPL's to taxpayers' attorneys.   The

ALJ based her conclusion on the fact that taxpayers could not

produce a copy of a power of attorney filed with the Department

on their behalf; attorney Miller's testimony was contradicted by

an affidavit filed in the circuit court in 1996 by Farid wherein

he indicated that the hearing at issue occurred in 1988 as

opposed to 1987; taxpayers could not be joined in the

Department's case against Jet Foods because the corporation must

be found liable first and "you simply cannot combine a cause of

action that does not yet exist and over which an ALJ has no

authority with a pending action on another issue" (Emphasis in

original.); and attorney Miller's testimony regarding the unusual



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proceeding was indicative of his "ignorance with regards to the

mechanics of the issuance and finalization of *** notices and

their interrelation and serves to undermine the credibility of

his testimony and his rendition of the events."   Taxpayers

appealed this ruling to the circuit court.

     On December 22, 2004, the circuit court issued an order

confirming the board of appeals' August 8, 2001 decision.     The

circuit court, however, specifically found that the ALJ's finding

that attorney Miller's testimony was not credible and not

entitled to any weight was against the manifest weight of the

evidence.   The court, in a 28-page written order, wrote the

following relative to attorney Miller's testimony:

        "Although the events in Miller's testimony occurred more

     than twelve years before his testimony, Miller testified

     that in anticipation of being a witness in this case, he

     went through his files of the case he handled at Burke &

     Smith in 1987.   After he left Burke & Smith in August 1987,

     he did not work for the Sweilems and, therefore, these

     events had to occur before August 1987.   The most important

     self-corroborating factor of Miller's testimony is the

     minute details he related concerning what happened before

     and at this spring 1987 meeting.   Miller's testimony cannot

     be the result of a faulty memory or an unfamiliarity with



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    procedures.

       If Miller's testimony is not true, he is guilty of

    perjury.   Everything in Miller's career belies such a

    conclusion.   Miller, who has gone on to a completely new

    position, had no incentive to lie as an officer of this

    Court on behalf of the Sweilems.   Miller never spoke with

    the Sweilems from August of 1987 until moments before his

    testimony in 1999.   Yet we see the similarities in their

    statements: (1) Farid said in the affidavit there was a

    meeting that he attended at the State of Illinois Building

    between the Attorneys for [sic] Burke & Smith and the

    Department; and (2) Farid says in an affidavit that he was

    told by the Department it would not pursue him as an

    individual for the tax liability of Jet Foods.   Miller's

    testimony is uncontradictory.

       The only differences present are: (1) Farid says in the

    affidavit that the meeting occurred in April of 1988 while

    Miler says that it occurred one year earlier.    We know that

    Miller is correct because he left Burke & Smith in August of

    1987.   It is likely that in 1996 when Farid filed this

    affidavit, he forgot the meeting was in April of 1987

    instead of April of 1988.   Farid's memory of an April

    meeting corroborates Miller's testimony that the meeting



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     occurred in the months before June of 1987; and (2) Farid,

     in an affidavit prepared by his attorneys, Burke, Burns &

     Pinelli in 1996, said he was told by the Department at this

     meeting that there would be no individual liability because

     there was no finding of fraud against Jet Foods.   The Burke

     firm did not interview Miller prior to filing the 1996

     affidavit.    Miller testified that at the spring 1987 meeting

     he convinced the ALJ the Sweilems should not be held

     individually responsible and the ALJ so informed the

     Sweilems.    This was corroborated by the Sweilems testimony.

        The Department presented no testimony or evidence that

     negated a meeting at the State of Illinois Building among

     the Department, the Sweilems and Burke & Smith at which the

     Sweilems, with Burke & Smith as their attorneys, were made

     aware of their potential individual liability for Jet Foods'

     taxes."     (Emphasis added).

     The circuit court, notwithstanding its finding, held that

the hearing could not have been an "initial contact" because

there had been no determination that Jet Foods was liable for the

taxes owed, there was no power of attorney on file and there was

no previous proceedings commenced against taxpayers individually.

The court held that the potential for individual liability that

was the basis for the court's decision in Sweis was not present



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in this case, and the ALJ's ultimate finding that the

Department's initial contact was not at the spring 1987 meeting

was not against the manifest weight of the evidence.       Taxpayers

filed the instant appeal.

                               ANALYSIS

                         I. STANDARD OF REVIEW

     Despite the fact that the parties collectively identify 12

issues on appeal which they contend must be answered by this

court, we are of the view that the central question is whether

there was an initial contact made by the Department prior to

issuance of the NPL's to taxpayers.       In order to answer this

question, we must resolve both questions of fact and law.       "As a

preliminary matter, we note that this court reviews the

administrative agency's decision and not the circuit court's

decision."   Wigginton v. White, 364 Ill. App. 3d 900, 905 (2006),

citing Lindsey v. Board of Education, 354 Ill. App. 3d 971, 978

(2004).   The standard of review applied to an administrative

agency's decision depends upon whether the issue presented is one

of fact or one of law.     Carpetland U.S.A., Inc. v. Illinois

Department of Employment Security, 201 Ill. 2d 351, 369 (2002).

An administrative agency's factual findings are reviewed by

applying a manifest weight of the evidence standard.       Lindsey,

354 Ill. App. 3d at 978.    An administrative agency's legal



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conclusions, on the other hand, are reviewed de novo.   Lindsey,

354 Ill. App. 3d at 979.

     The framework for deciding whether the Department made an

initial contact with taxpayers pursuant to section 12 of the Act

requires two analyses.   First we must decide whether it was

permissible for the ALJ to disregard attorney Miller's and

taxpayers' unrebutted testimony that a proceeding took place

during which they were informed of their potential future tax

liability.   If not, we must then determine whether the proceeding

was sufficient to constitute an initial contact pursuant to Sweis

v. Sweet, 269 Ill. App. 3d 1 (1995).

                     II. UNREBUTTED TESTIMONY

     Because we have previously recounted the facts, we need not

revisit the evidence again in detail which the circuit court

relied upon.   We agree with the circuit court’s conclusion that

the Department failed to produce any evidence to rebut taxpayers’

assertion that a proceeding took place during which they were

informed of their potential responsibility for future tax

liability.

     Our supreme court has clearly indicated that in Illinois a

finder of fact may not simply reject unrebutted testimony.

Bucktown Partners v. Johnson, 119 Ill. App. 3d 346, 353-55

(1983), citing People ex rel. Brown v. Baker, 88 Ill. 2d 81, 85



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(1981); Bazydlo v. Volant, 164 Ill. 2d 207, 215 (1995).      As the

Illinois Supreme Court has explained, although "the credibility

of witnesses and the weight to be accorded their testimony are

typically jury considerations [citations], a jury cannot

arbitrarily or capriciously reject the testimony of an

unimpeached witness [citations]."    People ex. rel. Brown, 88 Ill.

2d at 85.   This is true even though the witness may be an

interested party or an employee of one of the parties.     Chicago &

Alton R.R. Co. v. Gretzner, 46 Ill. 74, 80 (1867); Bucktown

Partners v. Johnson, 119 Ill. App. 3d at 352.

     Under the standards announced in Bucktown Partners and

People ex rel. Brown, a fact finder may not discount witness

testimony unless it was impeached, contradicted by positive

testimony or by circumstances, or found to be inherently

improbable.   Bucktown Partners, 119 Ill. App. 3d at 353, citing

People ex rel. Brown, 88 Ill. 2d at 85.   "Under Illinois law, a

witness' testimony is inherently improbable if it is

'contradictory of the laws of nature or universal human

experience, so as to be incredible and beyond the limits of human

belief, or if facts stated by the witness demonstrate the falsity

of the testimony.' "   Bucktown Partners, 119 Ill. App. 3d at 354,

quoting Kelly v. Jones, 290 Ill. 375, 378 (1919).

     In our view, it is not inherently improbable that the



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Department attempted to join or pursue taxpayers individually.

It is conceivable that the Department attempted to hold taxpayers

responsible in the suit against Jet Foods especially since the

corporation had been dissolved and was insolvent prior to the

June 4, 1987 hearing.   The fact that the Department regulations

do not provide a specific framework for such a procedure neither

renders the corroborated testimony of three witnesses inherently

improbable nor conclusively proves that it could not occur.

     Taxpayers produced evidence that following the commencement

of the Jet Foods tax matter they received a summons to appear

before an ALJ.   At this proceeding, they were represented by

their attorney who argued on their behalf explaining why they

should not be personally liable for the Jet Foods tax liability.

In our view, it is more likely that the Department, in its

thorough and zealous representation of the state, unsuccessfully

attempted to hold taxpayers responsible for the tax liability of

the bankrupt corporation prior to the completion of the Jet Foods

tax liability determination.   It is less likely that three

witnesses, one of whom is entirely independent, would fabricate

corroborative testimony of an event that took place more than 10

years ago without speaking to each other in over 12 years.

Consequently, we find that it was not incredible testimony beyond

the limits of human belief that is contrary to the laws of nature



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or human experience.   Bucktown Partners, 119 Ill. App. 3d at 354.

     The fact that no supporting documents were produced such as

the summons or a power of attorney does not persuade this court

that the proceeding did not occur.   Nor is it proof by

circumstances that refutes taxpayers’ evidence.   We point out

that the Department destroyed the audit file while this matter

was still pending before the Department’s appeals board and the

circuit court.   The master file also was purged of all

information prior to the hearing ordered by the circuit court on

its first remand.   Moreover, the Department had the opportunity

to rebut the testimonial evidence offered by taxpayers by calling

the ALJ who allegedly presided over the meeting at issue.

     The Department argues that taxpayers had the same

opportunity to call the ALJ who presided over the spring 1987

proceeding and should have done so to prove their case.     We

reject this argument for two reasons.   First, taxpayers produced

more than sufficient evidence that the proceeding occurred in the

form of unrebutted testimony from three witnesses.   Second, after

taxpayers produced the only evidence during the first hearing on

remand, the circuit court ordered a limited remand a second time

specifically indicating that only the Department was granted

leave to call additional witnesses or admit evidence.     The

Department, without explanation, simply stated that it was



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improper, in its view, to call a former ALJ or seek to obtain an

affidavit to rebut taxpayers’ evidence and chose to stand on its

theory that it could not have happened because no statutory

mechanism existed to facilitate it.

     When assessing the hearing officer's fact determinations, we

apply a manifest weight of the evidence standard of review.

Wigginton, 364 Ill. App. 3d 900, 911 (2006), citing Lindsey, 354

Ill. App. 3d at 978.   However, in the absence of any evidence

contradicting taxpayer's testimony or a showing that it is

inherently improbable pursuant to Bucktown Partners, 119 Ill.

App. 3d at 353-55, and People ex rel. Brown v. Baker, 88 Ill. 2d

at 85, we find that an ALJ cannot reject the evidence under any

standard of review.    Wigginton, 364 Ill. App. 3d at 911.   We thus

hold that the ALJ erred in rejecting the testimony of attorney

Miller, Farid and Khalil and the unrebutted evidence must be

taken as true.

                        III. INITIAL CONTACT

     Taxpayers contend that the NPL's were ineffective because

they were sent directly to them instead of to their attorneys

pursuant to section 12 of the Act because the spring of 1987

proceeding was an initial contact.    The Department argues that

pursuant to section 12 of the Act and the Sweis case, it is only

required to send NPL's to a representative of a taxpayer after



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(1) an initial contact has been made; and (2) when a taxpayer has

a power of attorney on file with the department.      Both the

circuit court and the Department ruled that personal liability is

not possible until the hearing on the corporation's tax liability

is completed.    We disagree.

     Section 12 of the Act states: "Following the initial contact

of a person represented by an attorney, the Department shall not

contact the person concerned but shall only contact the attorney

representing the person concerned.      Ill. Rev. Stat. 1989, ch.

120, par. 451.

     The purpose of the Act is to collect a tax and, as a result,

the rights and liabilities of the parties accrue at the time the

tax becomes due and owing, even though the exact amount of the

taxes may not have yet been determined.      Sweis, 269 Ill. App. 3d

at 6.   In the instant case, the taxes at issue became due in

1978, 1979, 1980 and 1981.      Jet Foods' tax liability was set at

that time and the Department was entitled to payment of the tax,

and any officers or employees' potential future liability sprung

to life.    Sweis, 269 Ill. App. 3d at 6.    We also noted that

"[s]ection 13 1/2 clearly designates that personal liability

'represents the tax unpaid by the corporation,' and this

corporate tax is the sole 'basis of such penalty liability.'        The

exact amount of liability is based on either (1) the final or



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revised final assessment, or (2) the corporate taxpayer's return

filed with the Department."   Sweis, 269 Ill. App. 3d at 6.

     The Act, as we pointed out in Sweis, gives the Department

three methods to collect taxes where a corporation has not timely

and/or accurately paid its taxes:    (1) collect the unpaid amount

from the corporate taxpayer; (2) institute criminal proceedings

against the corporate taxpayer and/or responsible officers and

employees; and (3) collect the unpaid amount from the responsible

officers or employees under section 13 1/2.   Although these

alternatives may encompass separate proceedings, they are

nonetheless connected and dependent upon the unpaid corporate

taxes.   Sweis, 269 Ill. App. 3d at 7.   Due to the interconnected

nature of these proceedings we characterized them as "different

spokes of the same wheel," and found that "initial contact occurs

when the Department for the first time advises or notifies an

officer or employee that he or she may be potentially liable for

any unpaid taxes of the corporation."    Sweis, 269 Ill. App. 3d at

7.   Based on the testimony of attorney Miller, Farid and Khalil

that the Department communicated its intent to hold Khalil and

Farid personally responsible for Jet Foods' deficiency, we hold

that the initial contact occurred in the spring of 1987.

     We also find that the protections of section 12 do not

depend exclusively upon the execution of a valid power of



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attorney.   In our view, it is important to accentuate the fact

that, contrary to the Department's assertion, neither the Sweis

case nor section 12 of the Act requires a taxpayer to submit a

power of attorney as a prerequisite to receiving the protections

contemplated therein.    The statute and the Sweis case require the

protections at issue here following an initial contact.    Sweis

269 Ill. App. 3d at 9.   Simply put, the Department cannot limit

the protections created by the legislature by reading

requirements into the statute which do not exist.   Undoubtedly,

the fact that the taxpayer in Sweis previously submitted a valid

power of attorney for the relevant period and matter was

particularly damning to the Department's position in there.

Sweis, 269 Ill. App. 3d at 9, citing Pape v. Department of

Revenue, 40 Ill. 2d 442, 452 (1968) (holding that section 12 of

the Act required the Department to rely on the information in its

files and a valid power of attorney which the taxpayer had

previously executed).    In our view, the production of a power of

attorney for the relevant time and matter in Sweis was

conclusive, but not necessarily requisite proof.

     In the instant case, however, the only testimony presented

relative to this issue was that taxpayers received a notice to

appear on a certain day in the State of Illinois Building, they

appeared represented by counsel, who had previously represented



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Jet Foods in various other matters with the Department and,

according to Farid's unrebutted testimony, filed a power of

attorney with the Department.   Moreover, we will not presume, in

the Department's favor, that a power of attorney never existed

when it destroyed the files and documents that would serve as

evidence to support or refute the claim.

     Additionally, we emphasized in Sweis the protective nature

of section 12 of the Act:

        "Prior to 1975, section 12 allowed the Department to

     contact and send notices merely to the 'person concerned.'

     However, in an effort to provide greater protection for

     individuals and to ensure that their rights were safeguarded

     and preserved, Senate Bill 55 was introduced.   The debates

     surrounding this bill clearly indicate that the legislature

     intended to give greater protection to taxpayers and others

     concerned against the government's imposition and collection

     of this tax.   (See 79th Ill. Gen. Assem., House Proceedings,

     June 9, 1975, at 11; June 11, 1975, at 104-06; November 20,

     1975, at 72-79; November 21, 1975, at 136-48; Senate

     Proceedings, June 20, 1975, at 73; November 5, 1975, at

     12-16.) ***.   [Relative to] the language pertinent here[,]

     Senator Nudelman stated: '[T]he amendment to Senate Bill 55,

     requires only that once there has been a proceeding started



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    that the department have contact with *** the respondent's

    lawyer, if in fact he has a lawyer who has filed an

    appearance.'   (79th Ill. Gen. Assem., Senate Proceedings,

    June 20, 1975, at 73.)    The debate in the House is more

    enlightening. ***.

       'Madison:   Representative Kosinski, ah *** it seems like

    in the discussion on this Bill an aspect of this Bill has

    been left out which seems to me to be very important.     As I

    understand it, this Bill also prohibits the Department of

    Revenue from contacting a person represented by an attorney

    except from the initial contact.      Is that not true?

                             *   *    *

       Kosinski:   You're understanding, Mr. Madison, is

    perfectly correct.   This was in the form of an Amendment

    offered by Representative Berman on the premise that once

    the taxpayer is contacted by the Department of Revenue and

    has the good judgment to turn this over to a competent

    attorney, in the future, the Department would then deal

    through the attorney so that the taxpayer is properly

    represented and the answers are correct.      You're right, Mr.

    Madison.

       Madison:    Ah *** What is your reaction to the argument,

    Representative Kosinski, that this procedure interferes with



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     the individual[']s rights of being informed of the status of

     a suit or hearing?

        Kosinski:   Ah *** I have a negative reaction to that

     statement in that the taxpayer is originally contacted.

     His rights are told him.    He knows the subject of the case.

     He knows the problems of the case and only after that and

     after consideration of thought does he turn it over to a tax

     ah *** attorney to represent him, and I think that man is

     most fitted properly to represent the taxpayer.'   (79th Ill.

     Gen. Assem., House Proceedings, November 20, 1975, at

     75-76.)

     This exchange confirms that the legislature intended, in

     amending section 12, to protect individuals from such

     disastrous results as occurred in this case.   Although the

     legislature did not explicitly discuss what it meant by

     initial contact, the legislature did not limit it to initial

     contact per notice or proceeding."   (Emphasis added.) Sweis,

     269 Ill. App. 3d at 8-9.

     It is clear from the plain language of section 12 of the Act

and its legislative history that the intention of the legislature

was to protect the taxpayer from technically defaulting in a

matter with potentially catastrophic financial implications.

Indeed, in this case where taxpayers defaulted for failure to



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respond within 20 days, the initial tax liability exclusive of

penalties and interest which amounted to less than $150,000 grew

exponentially to nearly $1 million.    This is an amount that the

Department seeks to recover from taxpayers without the benefit of

a hearing on whether the individuals are legally responsible for

the corporation's deficiency.   Based on the unrebutted evidence

of a proceeding held in the spring of 1987 where taxpayers were

represented by counsel and informed of their potential liability

for Jet Foods' tax, we hold that the Department made an initial

contact with taxpayers within the meaning of section 12 of the

Act and Sweis.   The Department, as a result, violated section 12

of the Act by not mailing the NPL's to taxpayers' attorneys.

Thus, the NPL's did not become final and taxpayers have not

waived their rights to contest them.    Sweis, 269 Ill. App. 3d at

5.

                          IV. CONCLUSION

     For the foregoing reasons, we hold that the ALJ was not

entitled to disregard the unrebutted testimony presented by

taxpayers; the proceeding to which taxpayers and attorney Miller

testified was an initial contact as contemplated by section 12 of

the Act and Sweis, 269 Ill. App. 3d at 6; the Department violated

section 12 of the Act by failing to mail the NPL's to taxpayers'

attorneys and taxpayers have not waived their right to contest



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1-05-0157

the NPL's.   Because this matter is remanded for further

proceedings, we need not address taxpayers' due process claims.

Accordingly, the judgment of the circuit court is reversed and

this matter is remanded to the Department's board of appeals for

further proceedings consistent with this opinion.

     Reversed and remanded with directions.

     JOSEPH GORDON and McNULTY, JJ., concur.




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