Illinois Is Rolling Out Amnesty
Illinois is rolling out an amnesty program with their Illinois Tax Delinquency Amnesty Act. If you have existing tax liability after June 30, 2011, and prior to July 1, 2018, this program could be a great option for you! You can only make payments between October 1, 2019, and November 15, 2019, and time is moving quickly. How do you know if this amnesty program is a good option for you?
Amnesty: A Buzzword
When we hear the word amnesty we like it. We all want forgiveness for our past mistakes and/or lack of knowledge. We find that when people hear about an amnesty program, they jump at the chance to take it. However, it’s not always the best option out there. For instance, when a state offers a VDA program, the look-back period is usually limited to three to four years. For companies that have been around for longer than that, the VDA can be a better fit, as amnesty programs generally don’t limit the look-back period. You could actually end up paying seven to ten years of back taxes in an amnesty. In this particular amnesty, you could end up paying a little more than eight years of tax if you have had nexus that long. It’s easy to get caught up in the details when this choice comes up, as most state VDAs don’t generally waive interest, while amnesty programs often waive some or all interest. It’s important to iron out the details in a situation like this. In this amnesty program, if an eligible tax liability is paid in full between October 1, 2019, and November 15, 2019, eligible penalties and interest will be waived.
Who is eligible for this amnesty program?
A taxpayer may participate in the amnesty program selectively, provided that the taxpayer completely satisfies its eligible liability for the tax type and tax period for which amnesty is sought. Thus, a taxpayer may participate in the amnesty program if:
The tax is one administered by the DOR; and
The periods in question fall between June 30, 2011, July 1, 2018;
The amount due is not just penalty and interest. Back tax must be due; and
The periods in question have not been the subject of a recent audit.
It’s important to keep in mind that the Illinois state tax department has no duty to inform you of your liability or if you qualify for the amnesty program. If you did not report or incorrectly reported you can find the steps for doing so along with a list of FAQs here.
Summary
In summary, the Illinois Tax Delinquency Act may be a good option for you. However, a VDA may be an even better option. It’s important to review your specific facts and your potential liability and exposure before moving forward. It is important to note that states often step up their discovery and enforcement actions after offering an amnesty. So if you do have exposure, it pays to act.
If you have a question because your tax situation is not as straightforward as you would like, we offer consultations here.
By: Ellie Moffat
This blog is intended for educational purposes and not as tax advice. Tax policies and procedures change frequently, so specific information, such as thresholds, rates, etc. included in this blog may have changed since it was originally published. Please request a consultation for more in-depth information.