Hi all, I've come to realize that the states are a different beast when it comes to dealing with lawful money. Illinois does not like what I did so they took it upon them selves to "correct" my return and it is well within their rights to do so as they have it written

(35 ILCS 120/4) (from Ch. 120, par. 443) Sec. 4. As soon as practicable after any return is filed, the Department shall examine such return and shall, if necessary, correct such return according to its best judgment and information.

They sent me a notice of their correction last year because on their 1040 the Federal adjusted gross income showed up as 0 and it probably was a mistake on my part because I used TurboTax and everything automatically carries over with the exception of attaching schedule M to show my demand. Even though they saw my attached W2 and it clearly shows I have income it just wasn't taxable, they decided to drop everything to just 0 instead of giving me my refund of $2924.

Since I didn't agree I sent them my Fed 1040 as they requested, and I did receive my full refund from them the Fed. I spoke to a live person on the phone about the status of my Illinois refund and they said it was still being reviewed and that it may take 120 to 240 days to get a response in writing so now it's a little overdue.

I have no problems with an audit because if the error was mine then I should have an opportunity to correct it. I've studied their laws with the sales tax exemption of bullion (gold and silver) AKA lawful money. I have a feeling they're testing my resolve to see if I will give up, give in and just go away.

35 ILCS 120/2-20) (from Ch. 120, par. 441-20)
Sec. 2-20. Bullion. For purposes of this Act, "bullion" means gold, silver, or platinum in a bulk state with a purity of not less than 980 parts per 1,000.

Illinois Department of Revenue Regulations Title 86 Part 130 Section 130.120 Nontaxable Transactions TITLE 86: REVENUE CHAPTER I: DEPARTMENT OF REVENUE PART 130 RETAILERS’ OCCUPATION TAX Section 130.120 Nontaxable Transactions The tax does not apply to receipts from sales:
of legal tender, currency, medallions, or gold or silver coinage issued by the State of Illinois, the government of the United States of America or the government of any foreign country and bullion [35 ILCS 120/2-5(18)], unless the items are transferred as jewelry and therefore subject to tax. This exemption existed prior to the enactment of Section 2-70 and will not sunset;

I'm debating how best to resolve this. Should I send them a detailed explanation of the laws 12 U.S.C. 411, 31 U.S.C. 5112, 31 U.S.C. 5115, 31 U.S.C 5119?

I'm just trying to abide by their laws.

Thanks everyone

Joseph