From August 1, 2026, through October 31, 2026, Illinois will provide a remote retailer tax amnesty program for the period January 1, 2021, through June 30, 2026.
To be eligible to participate in the tax amnesty program, a remote retailer must have had economic nexus with Illinois for all or part of the eligibility period (January 1, 2021–June 30, 2026) and be registered with the Illinois Department of Revenue. An “eligible transaction” is a sale of tangible personal property that occurred during the eligibility period and required shipment or delivery to an address in Illinois.
For eligible retailers that fulfill the terms of the tax amnesty, Illinois will not seek to collect any applicable interest or penalties on eligible transactions. That’s typically how tax amnesty programs work, though some states only waive the penalties, or a portion of the interest or penalties owed.
“By law, very few states allow their department of revenue to waive interest because of the time value of money,” explains Scott Peterson, VP of Government Relations at Avalara. “Amnesties are different because they are always created by law. Waiving interest is one of the criticisms of amnesties because the state regularly requires interest payments from normal taxpayers who are late or make a mistake.”
In a somewhat unusual twist, eligible retailers will pay and report a simplified retailers’ occupation tax rate. Ordinarily, a state requires businesses to pay the full amount of applicable state and local taxes due, at whatever rates generally apply under the law. Illinois does not generally offer a simplified retailers’ occupation tax rate.
The retailers’ occupation tax is a sales tax. Illinois has two separate but complementary taxes on the sale and use of tangible personal property: the retailers’ occupation tax and the use tax. See the Illinois Department of Revenue for more details.
What is the simplified retailers’ occupation tax rate?
Per HB 2755, the simplified retailers’ occupation tax rate is the combined state and average local retailers’ occupation tax rate imposed on remote retailers participating in the tax amnesty program. This is either:
- 9% of the gross receipts from sales of tangible personal property subject to the 6.25% state rate, or
- 1.75% for qualifying food and tangible personal property subject to the 1% state tax rate
No remote retailer is required to remit tax at a rate higher than 9% or 1.75%, as applicable — unless the retailer collected a higher tax rate during the eligible period then failed to remit the collected taxes. In that case, the retailer must remit whichever is greater: the simplified retailers’ occupation tax or the rate actually collected.
What are the reporting requirements?
Remote retailers participating in the tax amnesty program should report only statewide totals of the retailers’ occupation taxes remitted at the simplified retailers’ occupation tax rate, according to the bill. They’re not required to report any information related to the location of purchasers or the amount of their sales into a specific taxing jurisdiction.
This is quite different from what’s ordinarily required of remote retailers. Businesses that ship goods to locations in Illinois from locations outside the state must report the location of all sales into the state and the amount of sales made in each tax jurisdiction.
