Illinois department of revenue releases 2025 amnesty guidance

Exclusions from amnesty

There are several situations in which certain taxes that are owed do not qualify for amnesty. This amnesty program does not cover taxes that are not collected by the Department (including property, estate, franchise and insurance taxes), motor fuels taxes, and local taxes paid to local government, along with items that are not considered taxes.⁴ In addition, participation is not allowed if the only amounts owed are penalty and interest. Tax balances for amounts outside the designated amnesty period are not eligible for amnesty.

Making amnesty payments

Payments in amnesty may be made in a variety of ways. Electronic payments are made through the MyTax Illinois portal (mytax.illinois.gov). Credit card payments are allowed under amnesty but are only available for individual income tax payments, and a convenience fee is charged on these payments. Checks or money orders are also accepted and are payable to the Department. Finally, checks and guaranteed remittances are accepted in person at the Department, along with cash at the Department’s Springfield and Chicago locations.

Treatment of existing tax attributes and payments in amnesty

With respect to income taxes, participants may use income tax credits and net operating losses, including federal capital losses, to reduce tax liabilities. To be eligible for amnesty, however, the credit or loss cannot reduce the tax liability to zero, as at least some level of eligible tax liability must be owed following application of the credit or loss. For purposes of sales, use and excise taxes, existing verified overpayments or credit memoranda on a participant’s account may be treated as a qualified payment that could be used to satisfy an eligible tax liability. Participants cannot designate pending refunds to pay amnesty liabilities. Finally, as a means to provide a level of relief for participants that overpay their tax liabilities during the amnesty process, such overpayments may be refunded or potentially credited, but interest will not be paid on the overpaid amount. 

Treatment of matters in controversy

The program envisions that participants may currently be in live controversies with the Department. For audits that are complete or will be completed before the end of the amnesty program, the full amount of audit tax liability must be paid during the amnesty period to qualify. For audits currently in process that will not be completed prior to the end of the amnesty period, a tax liability is required to be estimated and paid with the filing of the appropriate tax return. If the final audit tax liability is greater than the paid estimate, penalties and interest on the unpaid amount are not waivable.

For matters pending at the Department’s Board of Appeals, the Department’s Administrative Hearings level, or the Illinois Independent Tax Tribunal, participation in the amnesty is allowed. The Department’s guidance makes clear that matters at the Administrative Hearings level or the Illinois Independent Tax Tribunal must be withdrawn, and the tax must be paid in full to qualify for amnesty. Matters in bankruptcy may also qualify for amnesty, pending bankruptcy court approval. If a controversy is being heard in regular court, participation in the amnesty program is only allowed for tax-related civil cases that are dismissed before the end of the amnesty period. For all matters in controversy, participation in the amnesty program typically will require coordination with the Department’s representatives who are involved in the particular controversy at issue.⁵

Commentary

Businesses and individuals that are subject to Illinois tax but have not timely paid and/or filed tax returns should strongly consider participation in the Department’s upcoming amnesty program. The terms of this program are intended to drive participation that will result in significant revenue to the state, and are compelling in that all penalties and interest associated with tax liability are eliminated upon successful completion of the amnesty program. Further, the ability to obtain a refund or potentially a credit based on an overpayment made in the amnesty program is an important component of the program, particularly for participants that may be uncertain about how much tax liability is actually owed and must be paid to complete the amnesty process.

The Illinois Tax Delinquency Amnesty program is one of three programs being administered in Illinois during 2025 and 2026. The second amnesty program will be administered later this year by the Illinois Secretary of State, covering franchise tax and license fees imposed under the Business Corporation Act (BCA).⁶ Since the second amnesty program relates to franchise tax and license fees administered by the Secretary of State, businesses that participate in that program cannot participate in the amnesty program administered by the Department.