Banner Shapes

New Illinois Tax Amnesty Programs

Posted by : and on : October 9, 2019 | 8:00 am

Two one-time Illinois tax amnesty programs began October 1, 2019 and will be available through the close of business on November 15, 2019. Each program offers those taxpayers with outstanding Illinois tax debt relief from penalty and interest for certain taxes paid to either the Department of Revenue or the Secretary of State during the amnesty period. The following outlines some key components of each program.

 

Illinois Department of Revenue (“IDOR”) Program

 

Eligible Taxes and Periods

 

Taxes not otherwise excluded (see below for excluded taxes and other debts) that are due to the IDOR from periods ending after June 30, 2011, and prior to July 1, 2018, are eligible for payment under the amnesty program. Taxpayers owing only penalties and interest, and not tax, are not eligible for the program.

 

Participation and Benefits

 

To participate in the program, taxpayers with outstanding taxes and related penalties and interest from eligible tax periods should make full payments of such tax amounts as well as file any missing original or amended tax returns, as appropriate, during the amnesty period. Separate payments for each outstanding tax liability for each tax type and period is encouraged to ensure correct application of payments. Taxpayers paying outstanding tax from eligible tax periods will not be subject to related penalties and interest otherwise due. Also, in exchange for a taxpayer’s participation in the program, the IDOR will not seek criminal or civil prosecution.

 

Excluded Taxes and Other Debts

 

Certain taxes and other debts are not covered by the IDOR amnesty program, including, but not limited to, taxes not collected by the IDOR (e.g., property taxes, estate taxes, franchise taxes, insurance-related taxes, and local taxes paid directly to the local government), certain fees (e.g., collection agency service fees), and any other liability that is not a tax.

 

Notable Provisions

 

Key elements of the program include:

 

  • Eligible tax periods included in previous or current audits where there are outstanding tax liabilities are available for amnesty;
  • Outstanding taxes due pursuant to cases pending with the Illinois Board of Appeals, administrative hearing processes, or independent tax tribunals are eligible for amnesty relief;
  • Income tax credits, the manufacturer’s purchase credit, and net operating losses may be used to reduce tax liabilities ultimately paid under the amnesty program;
  • Taxpayers may estimate amnesty liabilities and will receive a refund or credit of any overpaid tax when actual tax liability for eligible periods is later established;
  • Pending refunds are unable to be directed toward amnesty tax liability; a payment of tax must be made toward the amnesty liability during the amnesty period, and;
  • Unlike prior Illinois amnesty programs, double penalties and interest will not be imposed on those taxpayers with outstanding tax debts who fail to come forward and pay tax under the program.

 

Illinois Secretary of State (“SOS”) Program

 

Eligible Taxes and Periods

 

Franchise tax liabilities that are due to the SOS from corporate taxpayers for periods ending after March 15, 2008, and prior to June 30, 2019, are eligible for payment under the amnesty program. The SOS indicates that it will also include certain necessary franchise tax amendments for periods ending on or before March 15, 2008 in the amnesty program (e.g., increases to paid-in capital that occurred 20 years ago).

 

Participation and Benefits

 

Domestic or foreign for-profit corporations (authorized and unauthorized to transact business) with outstanding franchise tax liabilities from any eligible tax period that are seeking amnesty should submit an Amnesty Petition, Form C 353, to the SOS and make full payment of tax. If such outstanding franchise tax is paid, the SOS will waive penalties and interest relating to unreported increases in paid-in capital, annual franchise tax, any increase in paid-in capital or issued shares pursuant to Section 14.30 (Cumulative Report of Changes in Issued Shares and Paid-in Capital) or Section 14.35 (Report Following Merger or Consolidation), and initial franchise tax. Further, the SOS will only collect the initial tax and the last seven years of annual tax.

 

Excluded Taxes and Other Debts

 

Amnesty only applies to penalties and interest on the franchise tax.

 

Notable Provisions

 

The Amnesty Petition must include a date falling within the October 1, 2019 through November 15, 2019 amnesty period. If the Amnesty Petition is not correctly dated and completed properly, the petition will be rejected.

 

As a reminder, the franchise tax will begin phasing out as of January 1, 2020 and will be completely eliminated by 2024.

 

If you have additional questions, please contact FGMK’s State and Local Tax (“SALT”) team.

 

Matthew T. Fuller

Partner

847.444.8491

MFuller@fgmk.com

Carolyn Puzella

Director

312.239.3413

CPuzella@fgmk.com

 

The summary information in this document is being provided for education purposes only. Recipients may not rely  on this summary other than for the purpose intended, and the contents should not be construed as accounting, tax, investment, or legal advice. We encourage any recipients to contact the authors for any inquiries regarding the contents. FGMK (and its related entities and partners) shall not be responsible for any loss incurred by any person that relies on this publication.

 

About FGMK

 

FGMK is a leading professional services firm providing assurance, tax and advisory services to privately held businesses, global public companies, entrepreneurs, high-net-worth individuals and not-for-profit organizations. FGMK is among the largest accounting firms in Chicago and one of the top ranked accounting firms in the United States. For 50 years, FGMK has recommended strategies that give our clients a competitive edge. Our value proposition is to offer clients a hands-on operating model, with our most senior professionals actively involved in client service delivery. Please visit our website for our complete list of services.