86 Ill. Adm. Code 5200.520.105
Amnesty Program Requirements
TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 520 AMNESTY REGULATIONS
SECTION 520.105 AMNESTY PROGRAM REQUIREMENTS
Section 520.105 Amnesty
Program Requirements
a) The Department has no duty to notify
taxpayers of liabilities that may make them eligible for participation in the
Amnesty Program. Failure of the Department to notify a taxpayer of the existence
or correct amount of a liability eligible for amnesty shall not preclude the
taxpayer from participating in the Amnesty Program.
b) Participation
in the Amnesty Program
1)
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
with respect to:
A) particular
types of tax liability, but not others (e.g., Illinois Income Tax, but not
Illinois Retailers' Occupation Tax); or
B) particular
tax periods but not others (e.g., 2019 Illinois Income Tax but not 2020
Illinois Income Tax, or July 2020 to December 2020 Retailers’ Occupation Tax
but not January 2021 to June 2021 Retailers’ Occupation Tax).
EXAMPLE: Taxpayer has an
established liability for tax years 2019, 2020 and 2021. Taxpayer has a protest
pending at the Illinois Independent Tax Tribunal related to the 2020 liability
but wishes to participate in the Amnesty Program for the other years. The
Taxpayer may pay the full amount of tax due for 2019 and 2021, and any interest
or penalties on those periods will be abated. Continuing to protest the 2020
liability will not affect the amnesty relief awarded in 2019 and 2021.
2)
Except as otherwise expressly provided in this Section:
A) In the case of an eligible liability
that has been assessed or has otherwise become subject to collection action by
the Department, the taxpayer participates in the Amnesty Program by paying the eligible
liability during the Amnesty Program period.
B) In the case of an eligible liability
that has not been assessed or otherwise become subject to collection action by
the Department, the taxpayer participates in the Amnesty Program by filing the
appropriate return or amended tax return to report the eligible liability and
making payment of the eligible liability to the Department during the Amnesty
Program period. Unless a special form or schedule is provided by the
Department for filing an original or amended return to report an eligible
liability, the taxpayer must use the form ordinarily prescribed by the
Department for that return or amended return.
3) Separate payments should be made for
each eligible liability to ensure proper application by the Department. A
single payment that is made for multiple eligible liabilities must be accompanied
by a clear identification of the liabilities to which the payment is to be
applied, and in what amounts it is to be applied. Any portion of any payment
that is not expressly designated by the taxpayer as applicable to a
specifically-identified liability will be applied against liabilities of the
taxpayer in accordance with 86 Ill. Adm. Code 700.500, which may result in
failure of the taxpayer to pay all eligible liabilities it intended to pay.
c)
Form of Payment.
Payments
must be made by cash, check, guaranteed remittance, or ACH debit
. (ITDAA
Section 10)
1) The
reduction of a liability that results from claiming a credit or the carryover
of a credit under IITA Article 2 or Section 601(b)(3) or (b)(4), from claiming
a federal capital or net operating loss or Illinois net loss under IITA Section
207, or from the use of a Manufacturer's Purchase Credit under Section 3-85 of
the Use Tax Act [35 ILCS 105], is not a payment of tax. Therefore, if the
taxpayer is entitled to an income tax credit or loss or to a Manufacturer's
Purchase Credit that reduces the taxpayer's unpaid liability for a tax in a
particular period to zero, the application of the credit or loss is not a
payment that may qualify under amnesty.
2) Payments
by check that are returned due to insufficient funds in the taxpayer's account
do not qualify as payments during the Amnesty Program period.
3) Payments
of amounts due from individuals under the IITA may be made by credit card,
provided that the
taxpayer must pay any discount fee charged by the credit
card issuer
. (IITA Section 605)
4) Other
forms of payment:
A) The
Department will treat the following items as payments qualifying under the
Amnesty Program:
i) Offset
of a verified overpayment or credit memorandum relating to sales and excise
taxes, to the extent available to the taxpayer prior to the end of the Amnesty
Program period; or
ii) For
a taxpayer under audit (including matters pending in the Fast Track Resolution
Program or before the Informal Conference Board), an overpayment tentatively
determined by the Department for a tax period in the audit may be offset
against an
eligible liability
for
another tax period in the same audit.
B) The
return, amended return or other allowable amnesty filing reporting the
eligible liability
to be offset must
identify each verified overpayment, credit memorandum, or overpayment
tentatively determined by the Department in an audit to be used as an Amnesty
Program payment by tax type, period and amount.
5) The
Department will not offset an unrefunded overpayment of income tax shown on a
return or refund claim filed by a taxpayer prior to the beginning of the
Amnesty Program period against an
eligible liability
.
Except as otherwise provided in this Section if a taxpayer has reported an
income tax overpayment for a taxable year that has not been paid or denied as
of the beginning of the Amnesty Program period, and wishes to report and pay an
eligible liability
for the same
taxable year, the taxpayer must file an amended return, reporting its corrected
liability taking into account all adjustments that must be made to its original
return, including any adjustments reported on its refund claim and any additional
adjustments creating the
eligible liability
,
and pay the increase in tax reported on the amended return, as if it had
already received a refund of the previously-reported overpayment. The taxpayer
may preserve its claim for refund of that overpayment by writing in the
explanation section of its amended return it files under the ITDAA, "This
amended return is filed for purposes of Amnesty, and does not take into account
an overpayment in the amount of [dollar amount] reported on [date]. This amended
return shall be treated as a claim for refund of this amount, and as a
confirmation of any outstanding claim for refund." The refund claim will
be allowable to the same extent it would have been allowed had no Amnesty
Program report and payment been made, and shall accrue interest without regard
to the provisions in subsection (k)(5).
d) Civil
Cases Pending in State Courts. ITDAA Section 10 provides that
amnesty shall
not be granted to a taxpayer that is
a party to any civil litigation
that is pending in any circuit court or appellate court or the Supreme Court of
this State
with respect to an otherwise
eligible
liability
.
1) A
payment made
under
the Protest Act
initiates a civil suit in circuit court. Accordingly, payment of a liability
under the Protest Act disqualifies the taxpayer from participation in the
Amnesty Program with respect to that liability, even if the liability would
otherwise be an
eligible liability
and the payment is made during the Amnesty Program period.
2) A
taxpayer that is ineligible for the Amnesty Program under this Section becomes
eligible if the taxpayer ceases to be a party to a civil action by dismissing
the action prior to the end of the Amnesty Program period. The action is
dismissed on or before the November 17, 2025, deadline if the taxpayer has
executed an agreed order stipulating to judgment in favor of the Department,
and during the Amnesty Program period has either paid the
eligible liability
that is the subject of
the action, or, in a Protest Act case, agreed to a dissolution of the
injunction and a court order that directs the amount of the
eligible liability
to be released to the
Department. A taxpayer participating in the Amnesty Program under this subsection
(d)(2) need not file a return or amended return under subsection (b) with
respect to the liability that is the subject of the litigation, but must
specify in its motion to dismiss the action that it is doing so in order to
participate in the Amnesty Program and its payment of the
eligible liability
must be accompanied by
a statement that the payment is being made under the Amnesty Program and must
identify the
eligible liability
being paid.
3) Bankruptcy
proceedings take place in federal courts, and a taxpayer in bankruptcy may be
eligible to participate in the Amnesty Program.
4) While
a taxpayer that is a party to civil litigation in an Illinois court is not
eligible to participate in the Amnesty Program with respect to a liability in
dispute in that litigation, that taxpayer may still participate in the Amnesty
Program with respect to other liabilities.
e) Matters
Pending in the Department's Office of Administrative Hearings or at the
Illinois Independent Tax Tribunal. Matters pending in the Department's Office
of Administrative Hearings or at the Illinois Independent Tax Tribunal are not
pending
in any circuit court or appellate court or the Supreme Court of this State
.
(ITDAA Section 10) Therefore, a tax liability that is being contested before
one of the Department's or Tribunal's Administrative Law Judges is
eligible
for the Amnesty Program.
1) A
taxpayer who wishes to participate in the Amnesty Program with respect to an
eligible liability
at issue in a matter
pending in the Office of Administrative Hearings or Illinois Independent Tax
Tribunal must stipulate to judgment in favor of the Department with respect to
that liability on or before November 17, 2025 and pay that liability during the
Amnesty Program Period.
2) A
taxpayer participating in the Amnesty Program under this subsection (e)(2) need
not file a return or amended return under subsection (b) with respect to the
liability that is the subject of the proceeding, but must specify in the
stipulation that it is participating in the Amnesty Program and
pay the eligible liability to the Department
during the Amnesty Program period
.
3) A
liability being contested in the Office of Administrative Hearings or at the
Illinois Independent Tax Tribunal is an established liability, and no refund of
the payment is allowed with respect to an amnesty issue.
f) Matters
Under Audit or Pending in the Fast Track Resolution Program or Before the
Informal Conference Board. A tax liability under audit (including audits under
review in the Fast Track Resolution Program or before the Informal Conference
Board) is eligible for the Amnesty Program.
1) After
an audit has been concluded, by the issuance of an amended return or waiver of
restrictions on assessment that becomes final prior to the beginning of the
Amnesty Program period, the liability determined by the Department is an established
liability so that no refund with respect to an amnesty issue will be allowed.
2) Prior
to the issuance of an amended return or waiver of restrictions on assessment
after the conclusion of an audit, a taxpayer may participate in the Amnesty
Program by reporting the amount of
eligible
liability
that it estimates will result from the audit on an original or
amended return, and paying that amount during the Amnesty Program period. The
Department will continue with the audit (including any proceedings in the Fast
Track Resolution Program or before the Informal Conference Board) in the same
manner as if no amnesty payment had been made, except that the interest and
penalties related to the amnesty payment will be abated.
3) Examples.
The principles for participating in the Amnesty Program for an
eligible liability
that is currently under
audit may be illustrated as follows:
EXAMPLE 1. As of the beginning of
the Amnesty Program Period, the Department is auditing Taxpayer for occupation
and use taxes due for the periods July 1, 2021 through June 30, 2023. The
audit will not be completed before the end of the Amnesty Program period.
After consulting with the Department's auditor, Taxpayer estimates that it owes
an additional Use Tax obligation of $300 for each of the months of July, August
and September of 2022. During the Amnesty Program period, Taxpayer files
amended returns and pays the additional $300 in tax for each month. After the
audit is completed (including any proceedings in the Fast Track Resolution
Program or before the Informal Conference Board) in 2026, the Department
determines that, taking into account the $300 payments made during the Amnesty
Program period, Taxpayer has overpaid its Use Tax obligation for July of 2022
by $150 and owes an additional $50 in Use Tax for August of 2022. As provided
in subsection (k), Taxpayer may receive a refund of the overpayment for July of
2022. Also, if Taxpayer unsuccessfully contests any portion of the $50
underpayment after the conclusion of the audit, or fails to pay in full the $50
no later than the due date for payment of the demand for payment made by the
Department, amnesty will be denied on the $300 amount paid during the Amnesty
Program period with respect to August of 2022, as provided in subsection
(j)(3). The abatement of penalties and interest with respect to the $300 paid
for September of 2022 is not affected by any changes or proceedings related to
the liabilities for July or August of 2022. The Department will offset the $50
in additional tax for August of 2022 against the overpayment for July of 2022
and allow a refund or credit of the remaining overpayment for July of 2022, to the
extent the refund or credit is not otherwise barred. Taxpayer may also claim a
refund or credit for some or all of the $50 additional tax for August of 2022,
or for any other amount for July or August of 2022, providing the refund or
credit would otherwise be allowable.
EXAMPLE 2: During an audit of
Taxpayer's corporate income tax returns, the Department issued a Notice of
Proposed Deficiency to Taxpayer, proposing deficiencies of $500 with respect to
its 2021 liability and $800 with respect to 2022. Taxpayer timely requested
review of both deficiencies by the Informal Conference Board under 35 Ill.
Adm. Code 215.115, and the review had not been completed as of the beginning of
the Amnesty Program period. Taxpayer decides to participate in the Amnesty
Program by paying the entire $500 for 2021 in full, but only pays $600 for 2022
during the Amnesty Program period. After the Department receives the payment
for 2021, penalties and interest related to the 2021 deficiency will be
abated. The Informal Conference Board review and the remaining audit processes
for 2022 will continue. If, at the conclusion of the audit, the Department
determines that the 2022 deficiency was the $600 paid by Taxpayer during the
Amnesty Program period, penalties and interest related to 2022 will be abated.
If the Department determines that the 2022 deficiency was greater than the $600
paid by Taxpayer, amnesty will be denied for 2022, as provided in subsection
(j)(3). If the Department determines that the 2022 deficiency was less than
the $600 paid by Taxpayer, a refund or credit will be granted, providing the
refund or credit would otherwise be allowable.
g) Criminal
Investigation or Case. ITDAA Section 10 provides that amnesty may not be
granted to taxpayers that are a party to
any criminal investigation for
nonpayment, delinquency or fraud in relation to any State tax imposed by any
law of the State of Illinois
with respect to an otherwise
eligible liability
. A taxpayer who is a
party to a pending investigation or case is ineligible to participate in the
Amnesty Program with respect to the specific taxes and tax periods under
investigation or contained in the complaint, information, or indictment.
h) Eligible
Liabilities. Under ITDAA Section 10, the Amnesty Program applies to
any
tax,
except for the motor fuel use tax imposed under Section 13a of the
Motor Fuel Tax Law
[35 ILCS 505]
, imposed by reason of or pursuant to
authorization by any law of the State of Illinois and collected by the
Department
. Each liability that comes within this definition and meets the
other criteria for a taxpayer to participate in the Amnesty Program is generally
divisible into two parts: the
eligible
liability
that must be paid during the Amnesty Program and the penalty
and interest that may be abated under the Amnesty Program. An exception to
this rule is the reimbursement of collection expenses incurred by the
Department, when those expenses are not deemed by statute to be part of the
related tax liabilities. The obligation to pay these expenses is not a penalty
that may be abated by participation in the Amnesty Program, nor does failure to
pay one of these expenses during the Amnesty Program period disqualify the
taxpayer from the benefits of amnesty. The following examples are illustrative
of items that may be characterized as
eligible
liabilities
or as penalties or interest that may be abated, or as
expenses that are neither
eligible liabilities
nor penalties:
1) A
taxpayer who has paid all of the tax due for a period, but has not yet paid all
of the penalty and interest associated with the liability, may not participate
in the Amnesty Program with respect to the penalty or interest. This subsection
(h)(l) applies regardless of the reason the tax has been paid, but not the
penalty or interest, including instances when the taxpayer filed a return and
paid its tax late, and so incurred late filing and late payment penalties, or
because amounts paid by or collected from the taxpayer were applied against tax
before being applied against penalty and interest pursuant to 86 Ill. Adm. Code
700.500. A taxpayer may not seek to retroactively reapply payments previously
made to the Department for the purpose of creating
eligible liabilities
eligible for the Amnesty Program or
increasing the amount of penalties and interest that will be abated as the
result of the taxpayer's participation in the Amnesty Program.
2) Over-collections of Use Tax that are
required to be remitted to the Department by reason of Section 2-40 of the
Retailers' Occupation Tax Act are tax liabilities that may be eligible
liabilities rather than penalties
that may be abated if the related eligible
liability is paid during the Amnesty Program period
.
3) The
vendor's discount from tax allowed in Section 3 of the Retailers' Occupation
Tax for the expenses of collecting and remitting is forfeited when the tax is
not properly and timely paid. Any lost discount is a tax liability that may be
an
eligible liability
rather than a
penalty that may be abated if the related
eligible
liability
is paid during the Amnesty Program period.
4) A
collection agency fee that is added to a taxpayer's tax liability under Section
2505-400(a) of the Department of Revenue Law [20 ILCS 2505] is not a penalty,
but is a tax liability that may be an
eligible
liability
. If an
eligible liability
has been referred to a collection agency and the fee is owed to the collection
agency, the fee related to the
eligible
liability
must be paid during the Amnesty Program period in order for
the taxpayer to qualify for abatement of penalties and interest.
5) The
recording fees that must be paid by a taxpayer before a lien for unpaid taxes
may be released under Section 1105(a) of the Illinois Income Tax Act [35 ILCS
5] or under Section 5a, 5b or 5c of the Retailers' Occupation Tax Act [35 ILCS
120] are not added to the tax liability of the taxpayer, and are neither tax
liabilities nor penalties. A taxpayer's obligation to pay these fees is not
abated by participation in the Amnesty Program, nor is failure to pay one of
these fees grounds for denying the abatement of penalties and interest under
the Amnesty Program.
6) Responsible
officer penalties imposed pursuant to UPIA Section 3-7 for failure to collect,
account for and pay over trust taxes are penalties imposed on the responsible
officer, even though the penalty includes unpaid tax, and therefore cannot be
eligible liabilities
of the responsible
officer. However, a responsible officer's employer may participate in the
Amnesty Program. If the underlying trust tax liability of the employer is paid
under the Amnesty Program, the related penalties and interest, and therefore
the responsible officer penalty, will be abated.
i) Eligible Periods. Only taxes due for
a taxable period
ending after June 30, 2018 and prior to July 1,
2024
are eligible for amnesty.
The
following examples are illustrative:
1) The
usual taxable period for Retailers' Occupation Tax purposes is the calendar
month. A taxpayer reporting and paying Retailers' Occupation Tax on a monthly
basis may participate in the Amnesty Program with respect to a liability based
on taxable receipts received after June 30, 2018 and prior to July 1, 2024.
A) One exception
to this general rule is the case of a taxpayer authorized to pay and who does
pay Retailers' Occupation Tax liability on an annual or quarterly basis. The taxable
period for annual taxpayers of Retailers' Occupation Tax is the calendar year
during which gross receipts from retail sales were received. Consequently,
annual taxpayers of Retailers' Occupation Tax may participate in the Amnesty
Program with respect to a liability based on receipts received on and before December
31, 2023, but not with respect to a liability based on receipts received on and
after January 1, 2024. Liabilities for receipts received by an annual taxpayer
at any time during the 2018 taxable year are eligible for amnesty. The taxable
period for quarterly taxpayers is the quarterly period in which gross receipts
from retail sales were received.
B) Another
exception to this general rule is the case of a taxpayer required to file and
pay occupation or use tax liabilities from the sale or use of an aircraft,
watercraft, motor vehicle or trailer on a separate transaction reporting
return. Each liability required to be reported on a separate transaction
reporting return is a separate liability for purposes of the ITDAA, and the taxable
period for that liability is the date of delivery or date the vehicle is
brought into this State.
2) The taxable
period for Illinois Income Tax purposes is the taxable year. Taxpayers whose
taxable year is the calendar year may participate in the Amnesty Program with
respect to a liability based on income earned or received after December 31,
2017 and on and before December 31, 2023, but not with respect to a liability
based on income earned or received on and after January 1, 2024. Taxpayers
whose taxable year is a fiscal year may participate in the Amnesty Program for
taxable years ending after June 30, 2018 and prior to July 1, 2024.
j) Payment
of All Taxes Due for a Taxable Period. ITDAA Section 10 provides that
failure
to pay all taxes due to the State for a taxable period shall invalidate any
amnesty granted under the Act
. In order to participate in the Amnesty
Program a taxpayer must pay the entire
eligible
liability
for a tax type and tax period, irrespective of whether that
liability is known to the Department or the taxpayer, or whether the Department
has assessed it.
1) The requirement that the eligible
liability be paid in full precludes a taxpayer from receiving abatement of
penalties and interest by entering into an installment payment agreement with
the Department under which the eligible liability will not be paid until after
the end of the Amnesty Program period. A taxpayer who has been making
installment payments under an agreement with the Department may participate in
the Amnesty Program by paying during Amnesty Program period any eligible
liability that remains unpaid.
2) A taxpayer may participate in the
Amnesty Program with respect to an established liability only by paying during
the Amnesty Program period the full amount of the established liability that is
actually due. If a taxpayer pays only a portion of an established liability
during the Amnesty Program period, and it is subsequently determined that the
taxpayer has not paid the full amount of the eligible liability, abatement of
penalties and interest for that tax period will be revoked.
3) Except
in the case of an established liability, the taxpayer should make a good faith
estimate of the
eligible liability
,
report that amount on an original or amended return as required under subsection
(b)(2)(B), and pay the reported amount in full. A taxpayer that fails to pay
the reported amount of
eligible liability
in full during the Amnesty Program period does not qualify for amnesty.
A) If the
taxpayer later determines that its Amnesty Program payment was less than the
total
eligible liability
, and
voluntarily reports and pays the additional amount due, penalties and interest
will be assessed only with respect to the additional amount of tax due
.
B)
If
the Department later determines that a
payment made during the Amnesty Program period is insufficient to completely
satisfy the
eligible liability
, and
the applicable statute of limitations has not yet expired, the Department will
assess the additional liability and issue a demand for payment to the taxpayer
for the remaining taxes due, following the procedures applicable to that
liability. If the taxpayer does not contest the assessment and pays the
additional tax due no later than the due date shown on the demand for payment,
the Department will assess penalties and interest only with respect to the
portion of the
eligible liability
that was not paid during the Amnesty Program period. A taxpayer who
unsuccessfully contests any portion of the additional liability (whether by
protesting the notice of deficiency or notice of tax liability by filing an
action under the Protest Act, by paying the liability and filing a claim for
refund, or by any other means) or who fails to pay any portion of the
additional liability by the due date on the demand for payment will be liable
for penalties and interest as if no payment had been made during the Amnesty
Program period. For purposes of this subsection (j)(3)(B), requesting review
by the Informal Conference Board is not contesting an additional liability.
Also, a taxpayer may contest the imposition or the amount of interest or
penalty due with respect to a tax liability. However, failure to pay any
assessed amount of interest or penalty within 30 days after receiving a notice
and demand for payment of that amount will subject the taxpayer to penalties
and interest as if no payment had been made during the Amnesty Program period.
C) Subsections
(j)(3)(A) and (B) do not apply to an underpayment of an established liability,
which must be paid in full, except in the case where the underpayment is caused
solely by the disallowance of some or all of an offset requested by the
taxpayer in good faith under subsection (c)(4).
D) If the
payment made during the Amnesty Program period is less than the
eligible liability
because the taxpayer
failed to report and pay a
liability resulting from a
federal change that was not final as of the end of the Amnesty Program period, and
if the taxpayer fails to timely report and pay the liability as required under
IITA Section 506(b), or to pay any related interest and
penalties no later than 30 days after receiving a notice and demand from the
Department for payment of those amounts, the abatement of penalties and
interest originally allowed under the Amnesty Program for that income tax
liability will be forfeited and the abated amounts will be deemed assessed and
payable.
4) The
following examples are illustrative:
EXAMPLE 1: During the Amnesty
Program period, Taxpayer files an amended Illinois income tax return reporting
an estimated federal change liability of $10,000 it believes it will owe once
an IRS audit of its 2023 federal income tax return is completed. When the IRS
audit is completed in 2026, the changes determined by the IRS increase Taxpayer's
Illinois income tax liability by an additional $1,000. If Taxpayer timely
reports the $1,000 under IITA Section 506(b) and pays the tax and any related
interest and penalties resulting from the federal change no later than 30 days
after the Department has issued a notice and demand for payment, any interest
and penalties abated as a result of the Taxpayer's participation in the Amnesty
Program will remain abated. If, however, Taxpayer fails to timely report and
pay the $1,000 or fails to pay any related interest or penalties within 30 days
after the Department issues a notice and demand for payment, any Amnesty
Program abatement interest and penalties related to Taxpayer's 2023 income tax
liability will be forfeited, and those amounts will be deemed assessed and
immediately collectible by the Department. If Taxpayer believes the interest
or penalties in the notice and demand are incorrect for any reason, it may pay
those amounts within 30 days after the issuance of the notice and demand and
file a refund claim in order to contest those amounts without forfeiting the
original abatement of interest or penalties.
EXAMPLE 2: An individual files
his original income tax return for 2023 during the Amnesty Program period, and
pays the full amount of tax reported on the return. The Department determines
that the individual erroneously transcribed the amount of Illinois income tax
withholding reported on his Form W-2, and issues a notice and demand for
payment of the resulting underpayment, plus interest and penalty for late
payment computed on the underpayment. If the individual pays the entire amount
shown on the notice and demand by the due date for payment shown in the notice
and demand, no penalty or interest will be imposed on the amount paid with the
return.
k) Overpayments
of Eligible Liabilities.
Participation in the
Amnesty Program shall not preclude a taxpayer from claiming a refund for an
overpayment of an
established
liability
based on an issue that is not an
amnesty issue, an overpayment of an
eligible liability
that is not an established liability, or an overpayment of an estimated federal
change liability
.
(ITDAA Section
10)
1) Amnesty
Issues. An issue is an amnesty issue unless it is
unrelated to the issues
for which the taxpayer claimed amnesty.
(ITDAA Section 10) An amnesty
issue is therefore every issue of law that must be resolved in determining the
amount of an
eligible liability
paid
during the Amnesty Program and all facts relevant to those issues, as in
existence as of the time the amnesty payment is made.
A) The
amount and nature of any item of income, gross receipt or other positive item
included in the tax base in computing the amount paid by the taxpayer under the
Amnesty Program is an amnesty issue, except to the extent that item is properly
reduced after taking into account only facts not in existence as of the time
the amnesty payment is made.
B) The
taxpayer's entitlement to any deduction, exclusion, credit or other item
reducing the amount of tax paid by the taxpayer under the Amnesty Program, and
the amount of that item, is an amnesty issue, except to the extent that item is
properly allowable or altered after taking into account only facts not in
existence as of the time the amnesty payment is made.
C) An
overpayment of tax does not result from an amnesty issue to the extent the
overpayment results from the taxpayer's payment during the Amnesty Program period
of the amount of a liability shown in a statement issued by the Department that
failed to take into account either a payment made by the taxpayer prior to the
issuance of the statement or an amount collected by the Department by
garnishment, levy, offset or other collection action.
D) An
overpayment of tax does not result from an amnesty issue to the extent the
overpayment results from a clerical or transcription error made by the taxpayer
on a return or amended return filed as part of the Amnesty Program or in
completing the check or other method of payment of an
eligible liability
during the Amnesty Program period.
E) In
order to qualify for a refund or credit of an overpayment, a taxpayer must
provide clear and convincing evidence that the overpayment did not result from
an amnesty issue.
F) Examples.
The principles for determining whether an item is an amnesty issue may be
illustrated as follows:
EXAMPLE 1: On its Illinois income tax return for calendar 2023, Taxpayer claimed $2,000 in enterprise zone
investment credits under IITA Section 203(f) that were earned in 2022 and
carried forward to 2023 because Taxpayer had credits in excess of its liability
for 2022. Taxpayer determines that, because of an error in computing its 2023
sales factor, it has underpaid its 2023 Illinois income tax liability by
$1,000, and it pays that amount under the Amnesty Program. Taxpayer
subsequently determines that it had failed to claim a subtraction for interest
on federal obligations for 2022. Taking the subtraction reduces its pre-credit
liability by $400 and increases its allowable enterprise zone investment credit
carryover to 2023 by $400. No refund for 2023 is allowed, because the
reduction in base income for 2022 is based on facts that were in existence as
of the time the amnesty payment is made.
EXAMPLE 2: If, in Example 1,
Taxpayer is an individual whose 2023 base income is reduced by a carryback to 2023
of a federal net operating loss incurred in calendar 2025, the refund from
carrying forward the additional credit results from the fact of the 2025 loss,
which was not in existence as of the time the amnesty payment is made, and the 2023
refund is allowable.
EXAMPLE 3: If Taxpayer in Example
1 receives a Schedule K-1-P from a partnership in 2026 reporting that Taxpayer
was entitled to a credit for 2023 or for 2022 and the credit may be carried
forward to 2023, and the credit had not previously been reported to Taxpayer,
Taxpayer may claim a refund based on that credit.
EXAMPLE 4: On its Retailers'
Occupation Tax return for January 2024, Taxpayer reports $1,000,000 in taxable
gross receipts. During the Amnesty Program period, Taxpayer pays an established
liability equal to the tax on an additional $50,000 in taxable receipts that
had been included in an amended return filed after the conclusion of an audit.
Taxpayer subsequently discovers that its records contain a resale certificate
for a sale of $20,000 in January 2024, which it had erroneously reported as
taxable. No refund is allowed in this instance, whether the $20,000 in
receipts were included in the original return or only in the amended return,
because the facts in existence as of the time the amnesty payment is made
indicated that the receipts were not taxable.
EXAMPLE 5: If, subsequent to the
end of the Amnesty Program period, one of the customers of the Taxpayer in
Example 4 presents a resale certificate for a purchase made during January 2024
for which Taxpayer had collected Use Tax because no resale certificate had been
provided at that time, Taxpayer may refund the Use Tax to the customer and
claim a refund for its Retailers' Occupation Tax. The reduction in Taxpayer's
liability results from a fact that was not in existence as of the time the
amnesty payment is made.
EXAMPLE 6: On September 15, 2025,
the Department issues a statement to Taxpayer indicating that it has an
outstanding tax liability of $2,000. On September 20, 2025, the Department
collects $300 of the liability by offsetting against it an overpayment of a
different tax. If Taxpayer pays the entire $2,000 shown in the statement
during the Amnesty Program period, the resulting $300 overpayment of the
liability is not the result of an amnesty issue.
EXAMPLE 7: During the Amnesty
Program period, Taxpayer files a return reporting an
eligible liability
. Due to an arithmetic error made in completing
the return, Taxpayer reports an
eligible
liability
of $2,530 rather than $2,350. The $180 overpayment resulting
from this error is not the result of an amnesty issue. Similarly, if the
return reported a $2,350 liability, but Taxpayer paid $2,530 with the return,
the $180 overpayment is not the result of an amnesty issue.
2) Estimated
Federal Change Liabilities. A taxpayer may file a claim for refund of the
overpayment that results from the finalization of a federal change that was not
final as of the end of the Amnesty Program period, even if the taxpayer
participated in the Amnesty Program based on an estimated federal change
liability and the facts related to the determination of its federal change were
in existence before the end of the Amnesty Program period.
3) If a
taxpayer participates in the Amnesty Program with respect to an
eligible liability
that is under audit
during the Amnesty Program period, the refund or credit allowable for the
taxable period may not exceed the amount determined by the audit, except to the
extent the refund results from an issue that is not an amnesty issue or from
the finalization of a federal change after the Amnesty Program period. For
example:
EXAMPLE 1: Taxpayer's income tax
return for the calendar year 2021 is under audit during the Amnesty Program period,
but no established liability has been created. Taxpayer participates in the
Amnesty Program for 2021. After the audit is concluded, the Department
determines that Taxpayer has overpaid its 2021 liability by $300. Taxpayer may
receive a refund of that $300, but no additional refund is allowable unless the
additional refund results from an issue that is not an amnesty issue or from
the finalization of a federal change after the Amnesty Program period.
EXAMPLE 2: If Taxpayer in Example
1 also participates in the Amnesty Program for 2022, a year that is not under
audit during the Amnesty Program period and for which there is no established
liability, Taxpayer's participation in the Amnesty Program for 2021 does not
limit Taxpayer's right to a refund for 2022.
4) No
refunds are allowed for any tax liability and period with respect to which the
taxpayer participated in amnesty other than as allowed under this subsection
(k).
5) No
interest is payable by the Department on any refund or credit allowed for a tax
and period for which the taxpayer participated in the Amnesty Program. (See UPIA
Section 3-2(h).) However, interest will be allowed on any refund or credit
based on a refund claim that was outstanding as of the beginning of the Amnesty
Program period, as described in subsection (c)(5).
l) Statutes
of Limitation and Other Filing Periods. Participation in the Amnesty Program
does not toll or extend any applicable statute of limitations or other time
period for the filing of refund claims, protests with the Department, or
actions in circuit court under the Protest Act. The Taxpayers' Bill of Rights
does not toll or extend any applicable statute of limitations. A statute of
limitations or other time period that expires during or after the Amnesty
Program period cannot be revived, even if the taxpayer has failed to satisfy
all the requirements of the Amnesty Program. The Department's procedures for
obtaining waivers of statutes of limitations for taxpayers under audit shall
continue to apply.
1) The
following examples are illustrative:
A) Corporation
A reported federal taxable income of $1,000,000 on its calendar 2022 federal
and Illinois income tax returns. During November 2025, Corporation A is
undergoing a federal income tax audit of its 2022 federal income tax return,
which it expects will result in an increase in its federal taxable income to as
much as $1,500,000. In order to participate in the Amnesty Program,
Corporation A files an amended Illinois income tax return on November 14, 2025
that reports federal taxable income of $1,500,000, and pays the estimated
federal change liability resulting from the increase in its federal taxable
income.
B) If, as
a result of the federal audit, its federal taxable income is determined to be
$1,300,000, Corporation A will be allowed to file a refund claim under
subsection (k) for the amount it paid under the Amnesty Program in excess of
the tax liability computed using $1,300,000 in federal taxable income.
However, because participation in the Amnesty Program does not toll or extend
the statute of limitations for filing the refund claim, the claim must be
denied unless it was filed within one year after the date of the Amnesty
Program payment under IITA Section 911(a)(2) or the Corporation A and the
Department have entered into an agreement under IITA Section 911(c) extending
the period for filing a refund claim. Although the statute of limitations for
filing a refund claim is reopened under IITA Section 911(b) as a result of the
conclusion of the federal audit, IITA Section 911(b)(1) provides that the claim
is limited to the overpayment that results from the federal change. In this
case, the federal change is an increase in federal taxable income of $300,000,
and the overpayment attributable to that increase is zero. The difference
between the $1,500,000 in federal taxable income reported on the amended return
filed in the Amnesty Program and the $1,300,000 finally determined is not a
federal change that reopens the limitations period for filing a refund claim
because, for federal income tax purposes, the $1,500,000 was never reported or
finally determined to be Corporation A's federal taxable income.
C) If, as
a result of the federal audit, its federal taxable income is determined to be
$900,000, Corporation A will be entitled to file a refund claim for the
overpayment that results from the $100,000 reduction in its federal taxable
income from the $1,000,000 amount reported on its original federal income tax
return, provided that its claim is filed within the period set by IITA Section
911(b). The difference between the $1,500,000 in federal taxable income
reported on the amended return filed in the Amnesty Program and the $1,000,000
reported on its original federal income tax return is not a federal change that
reopens the limitations period for filing a refund claim, and the overpayment
resulting from that $500,000 difference must be claimed within one year after
the payment date unless Corporation A and the Department have entered into an
agreement extending the limitations period.
2) A
taxpayer who reports and pays an estimated federal change liability under the
IITA may claim a refund of any excess of the estimated federal change liability
over the liability resulting from the final federal change by writing in the
explanation section of its amended return it files under the ITDAA, "This
amended return reports an estimated federal change liability for purposes of amnesty,
and is a claim for refund of any excess of the estimated federal change
liability over the liability resulting from the final federal change."
When the federal change becomes final under IITA Section 506(a), the taxpayer
should then file another amended return, reporting the difference between the
final federal change and the estimated federal change liability, and paying any
increased liability reported or requesting a refund of any decreased
liability.
3) A
taxpayer who reports and pays an estimated federal change liability under the
IITA and fails to follow the procedures in subsection (l)(2) should file a
claim for refund no later than one year after making the amnesty payment in
order to protect its rights to any refund resulting from the finalized federal
change. If the federal change has not become final by the time the claim is
filed, the taxpayer should include in the explanation section language stating,
"This amended return modifies an amended return filed during the Amnesty
Program period to report an estimated federal change liability, and is a claim
for refund of any excess of the estimated federal change liability over the
liability resulting from the federal change, which has not yet become final."
m) Reasonable Cause
1) Nothing
in the ITDAA or this Section is intended to change the meaning of "reasonable
cause" as that term is used in UPIA Section 3-8. Taxpayers needing
clarification of "reasonable cause" should consult 86 Ill. Adm. Code 700.400.
2) A
taxpayer who would be entitled to abatement of a penalty due to "reasonable
cause" for its delinquency remains entitled to abatement of that penalty
even if it failed to participate in the Amnesty Program with respect to any
unpaid liability associated with that penalty.
3) A
taxpayer who has "reasonable cause" for its failure to participate in
the Amnesty Program with respect to an
eligible
liability
will remain subject to any penalties otherwise applicable to
that liability. "Reasonable cause" abatement under UPIA Section 3-8
does not apply to interest, so any underpayment interest on the
eligible liability
will accrue even if the
taxpayer had reasonable cause for failing to participate in the amnesty. The
inability of a taxpayer in bankruptcy to obtain permission from the federal
courts to participate in the Amnesty Program shall constitute reasonable cause
for not participating. Failure of the Department to notify a taxpayer of its
eligibility to participate in the Amnesty Program or of the correct amount of
its
eligible liability
does not
constitute reasonable cause for the taxpayer's failure to participate in the
Amnesty Program.