Illinois Remote Retailer Amnesty Program: Penalties Waived Through October 31, 2026

What Is the Illinois Remote Retailer Amnesty Program?

Remote retailers that sell into Illinois without a physical presence in the state have a limited window to clean up past sales tax exposure at a favorable cost. As part of the budget legislation Governor Pritzker signed in 2025 (House Bill 2755), the Illinois Department of Revenue has launched the new Illinois Remote Retailer Amnesty Program that runs from August 1, 2026 through October 31, 2026. During that window, qualifying remote retailers can pay eligible retailers’ occupation tax liabilities using a simplified rate and have all related penalties and interest waived.

Who is eligible for the Illinois Remote Retailer Amnesty Program?

The program is aimed at out-of-state sellers that have established economic nexus with Illinois, have no physical presence in the state, and sell tangible personal property to Illinois customers. A remote retailer generally crosses the economic nexus threshold once it has $100,000 or more in cumulative gross receipts from sales into Illinois during the applicable lookback period. Through the end of 2025, a seller could also trigger an obligation by reaching 200 or more separate transactions, but that transaction count test no longer applies as of January 1, 2026. Eligible liabilities cover unpaid tax on sales made between January 1, 2021, and June 30, 2026, and they include both the state retailers’ occupation tax and the locally imposed retailers’ occupation taxes that the Department administers.

How Do You Apply for the Illinois Remote Retailer Amnesty Program?

Participation runs through MyTax Illinois. A retailer must be registered with the Department and then submit the Remote Retailer Amnesty Application electronically during the program period. Rather than sourcing and reporting sales to every local jurisdiction, participants report at a simplified 9% rate on general merchandise, which blends the 6.25% state rate with an average local rate, or at 1.75% on qualifying food, drug, and medical appliance sales. If a retailer files all required returns and pays the tax in full during the amnesty period, or enters into and successfully completes an approved repayment plan, the Department will abate the related penalties and interest and will not pursue civil or criminal prosecution for the covered periods.

What happens if you don’t participate?

Declining to participate in the program carries real risk. Separate from amnesty, Illinois now applies a 15% default rate to the gross receipts of destination-based sales when a taxpayer cannot produce the records needed to determine where those sales should be sourced. Beginning January 1, 2026, the Department may apply that 15% undetermined location rate during an audit for any period under review, including reporting periods that predate 2026. A remote retailer that declines the simplified 9% amnesty rate and is later audited without complete sourcing documentation could therefore face tax at 15% on the same historical sales, on top of the penalties and interest that amnesty would have waived.

Next Steps

For remote sellers with Illinois exposure, the near-term steps are straightforward. Companies should evaluate whether they crossed the economic nexus threshold during any part of the eligibility period, quantify the unpaid state and local tax on those sales, confirm or complete their Illinois registration, and prepare to file and pay through MyTax Illinois before the window closes. The three-month period may feel generous, but pulling historical sales data, calculating liabilities across the 2021 through 2026 period, and completing registration routinely take time, and the October 31 deadline is firm.

KBF Advisory, LLC constantly monitors changes like these in state sales and use tax laws so our clients are never caught off guard. If your business sells into Illinois and you are weighing whether the Illinois Remote Retailer Amnesty Program is the right way to resolve past exposure, our state and local tax team is here to help you assess eligibility, quantify liability, and file before the deadline. Please reach out to Troy Bluske at tbluske@kbfadvisory.com or Tracey Stewart at tstewart@kbfadvisory.com to discuss how the program may affect your business and how to prepare before the October 31, 2026 deadline.