The Illinois Department of Revenue (Department) will administer a time-limited tax amnesty program from October 1, 2025, through November 17, 2025.¹ Amnesty applies to taxes administered by the Department 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 and will not seek civil or criminal prosecution of those who participate in, and comply with the terms of, the amnesty program.

Amnesty eligible taxes include: income tax, sales/use tax (both state and most local taxes), telecommunications taxes, and most other taxes. The telecommunications infrastructure maintenance fee is also eligible for amnesty.

Taxes that do not qualify for amnesty include the franchise tax, which is administered by the Illinois Secretary of State (a separate amnesty program will be available for franchise tax), property tax, estate tax, insurance taxes, motor fuel use tax, and local taxes paid directly to local governments. Amnesty also does not apply to liabilities that are not a tax (e.g., licensing fees, tire user fees), penalties and interest on tax liabilities that were paid in full before the start of the amnesty program, and various other penalties and fees that are not based on a tax liability (e.g., frivolous return penalties, abusive tax shelter penalties).

To qualify for amnesty, a taxpayer must pay all taxes due and complete and file the appropriate return (with any supporting documentation attached) during the amnesty period. Failure to pay the full amount due will invalidate any amnesty granted under the program. Amnesty also 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. A taxpayer that owes only penalties and interest does not qualify for the amnesty program.

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 so long as the tax period's statute of limitation is still open or the refund claim is filed within one year of making the amnesty payment. In addition, an amnesty payment for a non-final, estimated federal change pursuant to 35 ILCS 5/506(b) can also act as a refund claim if certain language, specified by the Department in its amnesty regulation, is included in the amended return that reports the amnesty payment.

Other points to consider:

• Payment of "all taxes due" means the entire Illinois tax liability for a particular tax type owed for the tax period, whether the Department or the taxpayer knows of the liability.
• Refund claims based on subsequent federal changes or a loss carryback are allowed.
• Taxpayers under audit (federal or state) can participate in the amnesty program, regardless of whether the Department has assessed tax, provided the tax amount has not yet been paid.
• A taxpayer with a case pending in court during the amnesty period is not eligible for amnesty unless the matter is dismissed before the end of the amnesty period.
• A taxpayer with a case pending before the Department's Board of Appeals may participate in the amnesty program for eligible liabilities.
• A taxpayer with a matter pending before the Department's Office of Administrative Hearings or the Illinois Independent Tax Tribunal are eligible for the amnesty program; the taxpayer, however, must stipulate to a judgment in favor of the Department with respect to that liability, and pay the liability, on or before November 17, 2025.
• The Department's proposed rules (to be codified at Ill. Admin Code tit. 86, §§ 520.101 and 520.105) governing the amnesty program address program procedures and clarify various issues, including the refund provisions and provisions concerning payments made while under audit.

The Department's guidance on the amnesty program is available here.

Other upcoming Illinois tax amnesty programs

A separate franchise tax amnesty program will be administrated by the Illinois Secretary of State from October 1, 2025 through November 17, 2025. The franchise tax amnesty program 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. For more on the franchise tax amnesty program, see Tax Alert 2025-1926.

While eligible remote sellers may participate in this general tax amnesty program, an amnesty program specific to remote retailers 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 rate² for eligible transactions³ 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 it relieves the remote retailer of any additional state or local ROT with respect to eligible transactions. For more on the remote retailer amnesty programs, see Tax Alert 2025-1373.

Implications

There is a small window of time to participate in the Department's amnesty program. While there are no penalties for non-participation, eligible taxpayers should consider participating in the general tax amnesty program 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. Remote retailers should compare the terms of the general amnesty program and those of the remote retailer amnesty program to see which program is more beneficial.

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.