On June 16, 2025, Illinois Governor J.B. Pritzker signed House Bill 2755 (“H.B. 2755”) into law, which includes comprehensive amnesty programs covering taxes administered by both the Illinois Department of Revenue (the “Department”) and the Office of the Secretary of State of Illinois (the “Secretary of State”). The legislation also introduces a new amnesty program for remote retailers under the state’s Remote Retailer Occupation Tax. Under each program, in exchange for payment of any outstanding tax liability, 100% of the penalties and interest will be waived. Notably, taxpayers will not be punished for not participating—for example, Illinois will not impose double penalties and interest on tax assessments issued after the amnesty period closes.
Illinois taxpayers should carefully review their past filings, potential exposure, and consider/quantify the benefits these amnesty programs may provide. Detail regarding each program is outlined below.
The Illinois Department of Revenue’s Tax Amnesty Program
The Department’s tax amnesty program will run from October 1 through November 1, 2025 and covers “any taxable period ending…after June 30, 2018 and before July 1, 2024.” This program applies to “any tax imposed by…any law of the State of Illinois and collected by the Department,” including corporate income tax, individual income tax, sales and use tax, etc. In this regard, “[a]mnesty shall be granted only if all amnesty conditions are satisfied by the taxpayer.”
This program is an extension of the Department’s prior amnesty programs offered in 2003, 2010, and 2019. Taxpayers are ineligible to participate if they are party to any criminal investigation or to any civil or criminal litigation pending in any circuit court, appellate court or Illinois Supreme Court. However, the legislation is silent on whether ineligibility extends to taxpayers who are party to any other executive or administrative proceeding (e.g., the Illinois Independent Tax Tribunal, Department audits, the Informal Conference Board, etc.). While the Department has not yet promulgated regulations or administrative guidance detailing the new amnesty program, we expect additional guidance will be issued closer to the amnesty program start date.
It should be noted that from a practical standpoint, the Department’s amnesty program does not expressly include a limited lookback period for potential liabilities. Therefore, for those taxpayers with longer-term compliance issues, the Department’s voluntary disclosure program may be an alternative option, which generally offers a four-year limited lookback period, along with the elimination of all penalties but not interest.
The Illinois Department of Revenue’s Remote Retailer Amnesty Program
H.B. 2755 also establishes a new amnesty program for remote retailers that will run from August 1 through October 31, 2026 and covers the eligible period from January 1, 2021 through June 30, 2026. Under this program, the “Department will accept returns and payment of State and Local retailer’s occupation taxes at the simplified retailers’ occupation tax rate for eligible transactions.” “Eligible transaction” is generally defined as sales of tangible personal property shipped or otherwise delivered to an Illinois customer during the eligibility period. “Simplified retailers’ occupation tax rate” is generally either (1) a standard 9% tax rate for most taxable sales historically taxed at the state tax rate of 6.25% or (2) a standard 1.75% tax rate for other taxable sales historically subject to the 1% state tax rate.
Additional notable features of the program include: (1) taxpayers must pay all taxes either upfront or through an approved repayment plan; (2) remitting the greater of either the tax at the simplified remote retailers’ occupation tax rate or, if the tax was collected, the amount of tax collected; (3) the return reporting requirement only needs to include the statewide totals and will not require the specific sales breakdown by local taxing jurisdiction. Similar to the programs mentioned above, taxpayers are ineligible if they are a party to any criminal investigation or civil or criminal litigation pending in any circuit court, appellate court, or the Illinois Supreme Court for nonpayment, delinquency, or fraud to any tax imposed by any law of Illinois.
The simplified reporting method offers significant relief to remote sellers, particularly given Illinois has one of the most complex sales tax systems with over 1,400 local taxing jurisdictions. However, this program may result in higher costs for taxpayers due to: (1) the extended amnesty five and half year lookback period compared to the limited four-year lookback under a voluntary disclosure; and (2) the simplified 9% tax rate instead of the standard 6.25% tax rate, plus applicable local tax rates, which may cumulatively be lower. Moreover, this program does not start until August 2026, which could lead to another year of non-compliance risk for remote retailers and potential audits. While the program offers considerable relief, taxpayers should consider its implications carefully. Participating in the program could potentially waive any arguments against discriminatory treatment when challenging the constitutionality of the Department’s destination-based local sourcing rules between in-state and out-of-state sellers.
The Office of the Secretary of State of Illinois’ Tax Amnesty Program
The Secretary of State’s amnesty program applies to franchise tax or license fee liabilities for any tax period ending after June 30, 2019 and on or before June 30, 2025. Like the Department’s program, “[a]mnesty shall be granted only if all amnesty conditions are satisfied by the taxpayer” during the October 1 through November 15, 2025 amnesty period. The Secretary of State’s program comes with restrictive eligibility requirements – taxpayers who have received interrogatories from the Secretary of State’s Department of Business Services or are a party to any civil, administrative, or criminal investigation or litigation are not eligible to participate in this program.
From a practical standpoint, we expect the Secretary of State will issue administrative guidance and an amnesty “petition” similar to the 2007 and 2019 programs. Under the earlier programs, all reports and supporting materials must be submitted within the amnesty period. The Secretary of State historically has not accepted amnesty reports / materials before the October 1st start date. Taxpayers are well advised to prepare the necessary reports and supporting materials as soon as possible to ensure timely submission. Taxpayers should also ensure their amnesty applications to the Secretary of State are complete and accurate. Any additional franchise tax liabilities discovered during the review process may not qualify for penalty and interest relief.
If you have any questions about either of the upcoming Illinois amnesty programs, please reach out to Baker McKenzie’s state and local tax team.
Contact the Authors: Ted Bots, Drew Hemmings and Basile Manikas
