United States

Illinois tax amnesty programs kick off on Oct. 1, 2019

INSIGHT ARTICLE  | 

On June 5, 2019, Illinois Gov. J.B. Pritzker signed legislation enacting two tax amnesty programs, a general state tax amnesty program applicable to taxes administered by the Illinois Department of Revenue, and an amnesty program for the franchise tax and license fees administered by the Illinois Secretary of State. Both programs are scheduled to run from Oct. 1, 2019, through Nov. 15, 2019.

General state tax amnesty program

The general state tax amnesty program allows qualifying applicants to pay certain outstanding tax liabilities and receive a complete waiver of interest and penalties. Eligible tax liabilities are those administered by the department and unreported or paid for tax periods ending after June 30, 2011, and prior to July 1, 2018. Failure to pay the taxes due for applicable periods will invalidate any penalties or interest amnesty granted.

Additionally, participation in the amnesty program does not prohibit a taxpayer from claiming a refund for an issue unrelated to the issues for which the taxpayer is claiming amnesty. Taxpayers may also claim a refund for any overpayment of tax resulting from estimating a non-final liability for the amnesty program pursuant to the state provisions relating to federal adjustments.

Illinois is the first state to enact a general tax amnesty program in 2019. It is also the state’s first amnesty since 2010. The department has yet to publish detailed guidance and rules on applying for the general tax amnesty program, but has recently established the 2019 Illinois Tax Amnesty Program website.

Tax amnesty and voluntary disclosure programs can be extremely beneficial to taxpayers with outstanding liabilities. However, due to differences between the programs, such as look-back periods, taxpayers may find one program more beneficial than the other. Taxpayers that have or could have Illinois tax liabilities are strongly urged to speak to their tax advisers about the potential benefits of the program.

Franchise tax and license fee amnesty program

The franchise tax and license fee amnesty is scheduled to occur over the same period as the general tax amnesty program, and is limited to franchise tax or license fee liabilities for tax periods ending after March 15, 2008, and on or before June 30, 2019. The Illinois Secretary of State will waive all interest and penalties upon payment of the franchise tax and license fees due.

The legislation enacting the amnesty programs also phases out the franchise tax over the next few years until it is completely eliminated in 2024. Taxpayers should consider that the phase-out of the franchise tax does not mitigate any past exposure.

Additional information on both amnesty programs is expected in the next few weeks. For more information on recent changes to Illinois state tax laws, please read our article, Illinois enacts broad tax changes.

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