27 June 2025 Illinois establishes three separate tax amnesty programs
On June 16, 2025, Illinois governor JB Pritzker signed Public Act 104-0006 (HB 2755), an omnibus tax bill containing changes impacting both businesses and individuals, including three tax amnesty programs — a general tax amnesty program, a franchise tax amnesty program and a remote retailer amnesty program. This Tax Alert discusses the newly enacted tax amnesty programs; Tax Alert 2025-1374 discusses changes to the state's income and sales and use taxes, as well as select state tax incentives. The Department of Revenue (Department) will administer a time-limited tax amnesty program from October 1, 2025, through November 15, 2025, for taxes that were due for any tax period ending after June 30, 2018, and before July 1, 2024. The Department will waive all interest and penalties otherwise due for those who participate in, and comply with the terms of, the amnesty program and will not seek civil or criminal prosecution. Amnesty applies to all taxes collected by the Department, including income tax, sales/use tax (both state and most local taxes), telecommunications taxes, and most other taxes. It does not apply to the franchise tax, which is administered by the Illinois Secretary of State, or the motor fuel use tax. A separate amnesty program, discussed subsequently, will be available for franchise tax. To qualify for amnesty, a taxpayer must pay all taxes due. Failure to pay the full amount due will invalidate any amnesty granted under the program. Further, amnesty will not be granted to taxpayers that are party to any criminal investigation or to any civil or criminal litigation that is pending in an Illinois court for nonpayment, delinquency or fraud related to any tax imposed by the state. Like previous amnesty programs offered by the Department, participation in this program does not preclude a taxpayer from filing a refund claim for overpayment of tax on issues unrelated to amnesty or for an overpayment of tax where the amount due for a non-final liability was estimated pursuant to 35 ILCS 5/506(b). The Secretary of State (Secretary) will administer a time-limited franchise tax amnesty program from October 1, 2025 through November 15, 2025, that applies to all taxpayers owing a franchise tax or license fee imposed under Art. XV of the Business Corporation Act of 1983 (Art. XV) for any tax period ending after June 30, 2019, and on or before June 30, 2025. In exchange for participating in the franchise tax amnesty program and paying all franchise tax liabilities due, the Secretary will waive applicable penalties and interest and will not pursue civil or criminal prosecution for the time period that amnesty has been granted. Amnesty will not be granted to taxpayers that are a party to any civil, administrative or criminal investigation or to any civil, administrative or criminal litigation that is pending in any circuit court, appellate court, or the Illinois Supreme Court for nonpayment, delinquency, or fraud in relation to any franchise tax or license fee imposed under Art. XV. (Emphasis added to note a broadening of the exclusion language from the prior franchise tax amnesty program.) A "civil, administrative or criminal investigation" includes, but is not limited to, the Secretary's Department of Business Services sending interrogatories to a taxpayer. The bill also establishes a remote retailer amnesty program that will run August 1, 2026 through October 31, 2026. During this amnesty program, the Department will accept returns and payment of State and local retailers' occupation taxes (ROTs) at the simplified ROT rate1 for eligible transactions2 occurring during the eligibility period — i.e., the period from January 1, 2021 through June 30, 2026. Payments at the simplified ROT rate are in lieu of reporting and remitting state and local ROT at the rate otherwise provided by law and relieve the remote retailer of any additional state or local ROT with respect to eligible transactions. For remote retailers that satisfy their state and local ROT during the amnesty program, the Department will abate and not seek to collect interest or penalties on eligible transactions and it will not seek civil or criminal prosecution of the remote retailer for the period for which amnesty has been granted. For amnesty to be granted, the remote retailer must file all returns and make full payment of all state and local ROT for its eligible transactions using the simplified ROT rate during the amnesty period, unless the retailer enters into an approved repayment plan. A remote retailer also may produce a valid exemption certificate, resale certificate or direct pay permit issued by the Department. Failure to pay all tax due using the simplified ROT rate, unless previously remitted using the applicable state and local ROT rate, will invalidate any amnesty granted. To participate in the remote retailer amnesty program, the remote retailer also must be registered with the Department and file amnesty-related returns electronically during the amnesty period.
Amnesty is only available for ROT due from a remote retailer in its capacity as a remote retailer and not any other taxes owed by the remote retailer. The Department and Secretary will likely issue additional guidance and amnesty forms closer to the start of the respective programs. There is a small window of time to participate in the amnesty programs. While there are no penalties for non-participation, eligible taxpayers should consider participating in the general and franchise tax amnesty programs to have otherwise applicable penalties and interest waived and be protected from civil or criminal prosecution for the tax period for which amnesty is granted. Alternative to the general tax amnesty program, non-filers that wish to pursue a voluntary disclosure agreement (VDA) with the state, which generally includes penalty relief and limited lookback, should consider doing so immediately, so that tax can be calculated and paid during the amnesty window and interest on any VDA liability can be abated.
Document ID: 2025-1373 | ||||||||
