Illinois Sales Tax Guide
Chapter 7: How to manage late Illinois sales tax return filing
Hopefully you don't need to worry about this chapter because you're getting your Illinois sales tax filing and remittance done on time and submitted without incident. However, in the real world, mistakes happen. In this chapter, we'll talk about how to avoid costly penalties and fines if you've missed your assigned filing deadline.What do I do if I missed my Illinois sales tax filing deadline?
The first thing to do is get your return filed. This is definitely one of those situations where things are "better late than never." As long as you don't submit your tax filing paperwork, or hold on to the tax dollars you've collected, you may be accruing fines and interest. It's always best to get your filing done and deal with any penalties and interest payments later.What penalties and interest payments are imposed by the Illinois Department of Revenue?
The Illinois Department of Revenue uses a tiered system for assessing sales tax penalties and interest. The following shows the tiers for late-filing or non-filing penalties.
- Tier 1: The lesser of $250 or 2% of the tax required to be shown due on the return and reduced by timely payments or credits. If the return is timely filed but cannot be processed, you will have 30 days to correct the return before penalty is due.
- Tier 2: If you do not file a return within 30 days after receiving a notice of non-filing, an additional penalty will be imposed equal to the greater of $250 or 2% of the tax shown due on the return without regard to timely payments. The additional penalty may not exceed $5,000. The penalty will be assessed even if there is no tax due.
Penalties for failing to remit collected sales tax are based on the number of days the outstanding tax is late (1 – 30 days: 2%, 31 + days: 10%). However, the penalty is 15% of any amount that is not paid until after the initiation of an audit or investigation of your liability and 20% of any amount that is not paid within 30 days after the issuance of an audit-prepared amended return or Form IL-870, Waiver of Restrictions at the conclusion of the audit or investigation. The 20% penalty rate also applies to any amount paid within the 30-day period if you fail to sign and return the amended return within that period or if you pay the liability under protest or subsequently file a claim or refund of the payment.If I acquire a business, am I responsible for any outstanding sales tax debts, penalties, and interest?
Yes! If you are acquiring a business, it is strongly recommended that you contact the Illinois Department of Revenue and inquire about the current state of the potential acquisition. Once you've purchased the business, you will be held responsible for any and all outstanding Illinois sales and use tax liability.