2026 tax amnesty programs

• Take advantage of limited-time tax amnesties. Illinois, Indiana, New York, and Washington are offering 2026 tax amnesty or penalty relief programs that allow businesses to clear outstanding tax liabilities while reducing or eliminating penalties or interest.
• Understand eligibility and deadlines. Each state’s program has specific requirements: Illinois is only offering amnesty to qualifying remote retailers; Indiana is excluding past amnesty participants; and Washington’s penalty relief program is only for businesses affected by services that became taxable in October 2025 under ESSB 5814.
• Consider whether participation is right for your business. Participation windows are strict. Missing deadlines could result in missed opportunities to reduce fees, interest, or penalties.

• Program dates: August 1–October 31, 2026
• Amnesty period: January 1, 2021–June 30, 2026

The Illinois remote retailer tax amnesty program is only for remote retailers with a tax obligation, meaning businesses with no physical presence in Illinois that have sales tax nexus. To participate, remote retailers must meet the required tax remittance threshold and have unpaid sales tax for sales made between January 1, 2021, through June 30, 2026.

There are two different tax remittance thresholds (aka economic nexus thresholds):

• $100,000 or more in annual gross receipts or at least 200 separate transactions from sales of tangible personal property (TPP) to purchasers in Illinois during the four preceding calendar quarters for any calendar quarter ending after January 1, 2021, and on or before December 31, 2025.
• $100,000 or more in annual gross receipts from sales of TPP to purchasers in Illinois during the four preceding calendar quarters for any calendar quarter starting on or after January 1, 2026.

Why participate?

• Simplified reporting and waived penalties and interest

Participating retailers will pay the following simplified tax rates for sales made between January 1, 2021, and June 30, 2026:

• 9% for general merchandise
• 1.75% for sales of items normally subject to a 1% state tax, such as food for offsite consumption, drugs and medical appliances, and prescription and nonprescription medicines

The simplified sales tax rates will simplify reporting, as Illinois sales tax rates vary by jurisdiction and currently range from 6.25% to 11%. Additionally, the Illinois Department of Revenue will waive penalties and interest for businesses that successfully fulfill the terms of the remote retailer tax amnesty program.

Participation could also stave off additional penalties and interest, for it allows remote retailers that may not have the records necessary to determine the location of their selling activities in Illinois to come into compliance.

As of January 1, 2026, the Illinois Department of Revenue requires remote retailers to provide sufficient information to determine the proper location for destination-based sales, which is typically the delivery address. If audited, businesses subject to destination sourcing rules that cannot properly validate the location of their sales may be assessed a 15% tax rate on undetermined tax locations, even for reporting periods prior to January 2026.

Businesses that successfully participate in the tax amnesty program shouldn’t be assessed the 15% tax rate for the amnesty period.

See the Illinois Department of Revenue for additional information about the 2026 remote retailer tax amnesty.

• Program dates: July 15–September 9, 2026
• Amnesty period: All periods prior to January 1, 2024

The Indiana tax amnesty 2026 program is for individuals and businesses with outstanding tax liabilities for tax periods ending before January 1, 2024. However, if you participated in Indiana’s 2005 or 2015 tax amnesty programs, you cannot take part in the 2026 tax amnesty.

All Indiana state taxes paid to the Indiana Department of Revenue or Motor Carrier Services are eligible for tax amnesty, provided they’re for tax periods ending prior to January 1, 2024.

Why participate?

• Waiver of related collection fees, interest, and penalties

The Indiana Department of Revenue will waive all related collection fees, interest, and penalties upon successful completion of amnesty. Furthermore, the department will release any related liens once amnesty-eligible liabilities are paid in full.

See the Indiana Department of Revenue Tax Amnesty 2026 webpage for additional information and to check your eligibility status for Tax Amnesty 2026.

• Program dates: Effective “immediately” through December 31, 2030
• Amnesty period: A liability for sales and use taxes that’s fixed and final on or before September 1, 2026

Part N of New York’s fiscal year 2027 budget bill tasks the New York Department of Taxation and Finance with establishing a vendor sales tax reregistration program and a corresponding sales and use tax penalty and interest discount program by December 31, 2030.

The budget bill requires the commissioner of taxation and finance to issue a notice of expiration to holders of current certificates of authority “to ensure the integrity and qualifications of registrants.” Such expiration notices shall be issued to holders at least 180 days prior to the date of expiration. Holders must then file with the commissioner a completed certificate of registration for a new certificate of authority at least 90 days prior to the current certificate’s expiration date.

Within 30 days of receipt of a certificate of registration for a new certificate of authority, the commissioner shall either:

• Issue, without charge, a new certificate of authority empowering the recipient to collect sales tax for a specified term of no less than three years; or
• Propose to refuse to issue a certificate of authority due to certain circumstances.

We bring this up here because the budget bill also requires the commissioner to administer a sales and use tax penalty and interest discount program for eligible taxpayers with eligible tax liabilities.

An eligible taxpayer is any person holding a current certificate of authority subject to the reregistration program who 1) has an eligible tax liability, and 2) meets the conditions of this section.

An eligible tax liability is a liability for sales and use taxes, including any related interest or penalties, that’s “fixed and final on or before September 1, 2026, such that the taxpayer no longer has any right to an administrative or judicial review.”

For an eligible taxpayer with an eligible tax liability, the discounted amount due under the sales and use tax penalty and interest discount program shall be the sales or use tax liability plus 50% of the interest accrued through December 31, 2026.

An eligible taxpayer that’s entered into an installment payment agreement related to an eligible tax liability may participate in the sales and use tax penalty and interest discount program provided they pay the discounted amount due under such program in full by December 31, 2026.

Why participate?

Participation in the vendor reregistration program will be mandatory for taxpayers that receive a vendor reregistration notice. The penalty and interest discount program is a bonus for eligible taxpayers with eligible tax liability.

The New York Department of Taxation and Finance is expected to provide additional guidance soon.

• Program dates: Applications must be submitted by September 30, 2027.
• Amnesty period: Reporting periods from October 1, 2025, through December 31, 2026.

This penalty relief program is only for businesses with uncollected retail sales tax and unpaid use tax caused by ESSB 5814. Businesses seeking penalty relief must submit an application by September 30, 2027.

Many previously exempt services became subject to Washington sales tax starting October 1, 2025, under ESSB 5814. The Washington State Department of Revenue determined that these tax changes were “challenging for many businesses to understand and follow before the law took effect.” Consequently, it’s offering a temporary program to waive certain penalties for businesses that voluntarily report and pay retail sales and use taxes for these services.

Participating businesses must pay the tax due along with any applicable interest. As its name suggests, the penalty relief program only waives certain penalties.

Why participate?

• Waiver of penalties owed on unpaid retail sales tax on services that became subject to tax under ESSB 5814.

For additional details, visit the Washington Department of Revenue ESSB 5814 Penalty Relief Program webpage.

• Program dates: To be determined
• Amnesty period: To be determined

Public Law 38-115 authorizes the Guam Department of Revenue and Taxation (DRT) to provide a tax amnesty program for taxes due in 2025.

For successful participants of the tax amnesty program, the DRT can waive all civil penalties and interest on eligible delinquent taxes. The DRT may also include incentives for early payment and limited installment plans for eligible participants.

All taxes administered under Chapter 26 and Chapter 24 of Title 11, Guam Code Annotated, will be eligible for the amnesty program. Chapter 26 is business privilege tax law; Chapter 24 is real property tax. This is the first time Guam will include real property tax in a tax amnesty.

Why participate?

• Waiver of eligible interest and penalties

The Guam Department of Revenue and Taxation should provide additional information at some point.

Tax amnesty programs offer businesses a valuable chance to catch up on past liabilities, but the best way to handle tax penalties is to avoid them entirely. Visit avalara.com to discover how automated tax compliance solutions can simplify your reporting, keep your business audit-ready, and ensure you won’t need to rely on a future amnesty program.