Beginning next month, Illinois will offer a tax amnesty. The program will run from October 1, 2010 to November 8, 2010. It includes all taxes administered by the Illinois Department of Revenue (“Department”), such as personal and corporate income taxes, and sales tax. It covers taxes due for the periods ending after June 30, 2002 and before July 1, 2009. It does not include taxes that the Department is not responsible for collecting, such as property, estate, franchise, and insurance taxes, and local taxes.
Excluded from amnesty are taxpayers who are parties to a criminal investigation or to any civil or criminal litigation that is pending in any circuit court or appellate court or the Supreme Court of Illinois for nonpayment, delinquency, or fraud in relation to any Illinois tax. According to information published by the Department, parties to civil litigation may participate in the amnesty program if the litigation is dismissed before the end of the amnesty period.
Under the terms of the program, if payment of tax is made between October 1 and November 8, 2010, all interest and penalties will be abated. In addition to this carrot, there is a stick. Eligible tax obligations which are not paid through the amnesty program will have the interest and penalties doubled. (An exception is made for payment of the estimated Illinois tax due for a non-final federal change, in which case normal interest and penalties apply.)
Refunds are possible only for an overpayment of tax on an issue unrelated to the issues for which the taxpayer claimed amnesty or for an overpayment of estimated Illinois tax relating to a non-final federal change.
If no return was filed, an original return must be filed and payment of tax made between October 1, 2010 and November 8, 2010. If income was omitted from a tax return (for instance if income and gain from an offshore bank account were not reported on a filed return), an amended return must be filed and payment of the additional tax must be made between these dates.
The amnesty program offers concerned taxpayers an opportunity to resolve outstanding Illinois tax liabilities without payment of penalty and interest. The offer of tax only for those who come forward, but doubled interest and penalties for those who do not, merits serious consideration by eligible taxpayers.