2026 Illinois Sales Tax Amnesty Program
Summary
Pursuant to 35 ILCS 120/2-13, the Illinois Department of Revenue (“Department”, or “IDOR”) is launching a remote retailer amnesty program for Retailers’ Occupation Tax. The program will take place from August 1, 2026 through October 31, 2026. During this period taxpayers can file and pay sales tax returns for previously unreported 2021 – 2026 transactions and the Department will waive all penalties and interest. This is an ideal opportunity for taxpayers to address noncompliance and mitigate sales tax exposure without needing a formal Voluntary Disclosure Agreement (VDA). A VDA commonly waives late filing and payment penalties, but not interest.
Be aware that this amnesty program is entirely separate and unrelated to the previous 2025 Illinois Tax Delinquency Amnesty Act, which ended as of 17 November 2025.
About the Amnesty Program
35 ILCS 120/2-13(a) defines the eligibility period as January 1, 2021 through June 30, 2026 for remote retailers who would like to take advantage of this opportunity to bring their sales tax compliance up to date. This can be done without needing to go through the formal Voluntary Disclosure Agreement process that would otherwise be required to address concerns related to tax exposure for previously unfiled Illinois Retailers’ Occupation Tax returns.
What this means for remote retailers shipping tangible property to customers located within Illinois is that between August 2026 and October 2026, any unfiled sales tax returns dating as far back as January 2021 and as recent as June 2026 can be filed without incurring any penalties or interest related to late payments. This relief can be substantial for some taxpayers, as it is common for penalties and interest alone to exceed the original sales tax liability when faced with an Illinois auditor’s assessment determination.
How it Works
In lieu of reporting and remitting retailers’ occupation taxes at the rate otherwise provided by law, taxpayer may use a “simplified retailers’ occupation tax rate” of 9% on all eligible transactions. This payment will relieve taxpayers of any additional sales tax related to the eligible transaction.
Once this is done, the Department will waive any related penalties or interest for the eligible transaction. Additionally, the IDOR will not seek any civil or criminal prosecution related to non-compliance for the eligibility period. The amnesty provided by 35 ILCS 120/2-13 will be granted to any eligible taxpayer who files all sales tax returns and remits all related tax payments using the simplified tax rate for all eligible transactions during the eligibility period. Transactions that qualify for an exemption are not subject to tax so long as the taxpayer can provide a valid exemption certificate or exemption number.
Eligibility
The Department provides specific criteria to be eligible for amnesty. To participate in the program (1) The taxpayer must be registered with the Illinois Department of Revenue to pay Retailers’ Occupation Tax. (2) All delinquent sales tax returns must be filed electronically. And (3) the taxpayer must remit the greater of tax calculated using the simplified tax rate, or the amount of sales tax actually collected.
Additionally, 35 ILCS 120/1 defines a remote retailer as “a retailer that does not maintain within this State, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business..”. Lastly, the remote retailer must have met the economic nexus thresholds as described in 35 120/2(b). This threshold is generally met by any remote retailer with Illinois sales exceeding $100,000, or 200 separate transactions. Taxpayers should be aware that as of calendar year 2026, the 200 transaction threshold is no longer applicable.
The state also calls out certain taxpayers who are not eligible to participate in the amnesty program. Taxpayers who cannot participate include (1) taxpayers reporting transactions that occurred prior to the eligibility period. (2) Taxpayers who are involved in any criminal or civil investigation or litigation. And (3) taxpayers who have committed fraud or intentional misrepresentations of material facts.
For additional guidance related to documentation requirements, compliance reporting, or any taxpayer-specific nuances, please reach out to FGMK’s State and Local Tax team, ARodriguez@fgmk.com.
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