Indiana and Illinois have opened limited-time tax amnesty programs that allow eligible businesses to remediate historical tax liabilities, including sales tax, while waiving penalties and interest.

Indiana's Tax Amnesty 2026 Program Runs Through September 9, 2026

Indiana's “Tax Amnesty 2026” program, which addresses all taxes administered by the Department of Revenue, including sales tax, commenced July 15, 2026, and runs through September 9, 2026 (2025 H.B. 1001, modified by S.B. 243).

• The amnesty period covers taxes due for tax periods ending before January 1, 2024.
• Both registered and non-registered companies are eligible to participate in the 2026 amnesty, provided the company has filed all required Indiana returns and did not participate in Indiana’s previous amnesty programs in 2005 or 2015.
• Taxpayers who enroll in the amnesty program and remit amnesty period tax liabilities in full by September 9, 2026, or who enter into a payment plan and pay it off by June 7, 2027, will have amnesty period penalties, interest, and collection fees waived.
• Eligible companies that do not participate in the 2026 amnesty may be subject to standard penalties for late paid and/or non-filed tax plus an additional amnesty non-participation penalty equal to the standard penalty, i.e., double penalties may apply for non-participation, in addition to interest.

Illinois Remote Retailer Amnesty Runs Through October 31, 2026

Illinois's 2026 Remote Retailer Tax Amnesty Program commenced on August 1, 2026, and will run through October 31, 2026 (H.B. 2755).

• The Remote Retailer Amnesty is available to remote retailers, that have no physical presence in Illinois, and that have met the Illinois economic nexus threshold of $100,000 in the amnesty periods.
• The amnesty period covers January 1, 2021, through June 30, 2026.
• Amnesty waives interest and penalties and provides that the Illinois Department of Revenue (IDOR) will not pursue civil or criminal enforcement actions related to liabilities disclosed and paid through the program.
• Simplified reporting at simplified tax rates: Remote Retailer Amnesty participants receive the benefit of reporting and paying sales tax due at a simplified rate of 9% and 1.75% for certain qualified items such as medicines and medical appliances. Given the state’s actual combined state and local rates range from 6.25% to 11%, the Amnesty simplified sales tax rates may render sales tax due that is higher or lower than if reported under a voluntary disclosure agreement (VDA).
• Destination reporting by location and local tax rate applies to post-Amnesty periods.
• Avoidance of “Undetermined Location” Sales tax rates: The Amnesty allows retailers with undetermined Illinois customer locations to avoid the state’s new “Undetermined Location” rates that apply when a retailer cannot identify an Illinois customer’s address.
• “Undetermined Location” Sales tax rates. Under Illinois law which took effect January 1, 2026 (H.B. 2755), when a retailer cannot produce documentation showing where its products were delivered, the state can now apply a flat 15% tax rate to affected “Undetermined Location” sales, rather than the applicable state and local rate that would apply to a documented delivery address. The Undetermined Location sales tax rates can be applied to any period under audit, including reporting periods prior to January 2026 (Illinois Department of Revenue, FY 2026-12, Destination-Based Retailers' Occupation Tax Changes (eff. Jan. 1, 2026) [1].
• For remote sellers with incomplete sales records, the amnesty program may be the most cost-effective path to compliance, offering penalty and interest relief while avoiding the risk of a future 15% flat-rate assessment for “undetermined location” sales.
• The Remote Retailer Amnesty program covers five-and-a-half-years, the Amnesty should be compared to the state’s Voluntary Disclosure program, which usually covers four years.

Businesses should model both alternatives before electing amnesty and should reconfirm the availability of an Illinois VDA.

A&M Tax Says

As with most amnesty programs, companies should consider whether the states voluntary disclosure programs are available and might provide a more suitable alternative to the amnesty programs. While the Indiana Department of Revenue has informally indicated its VDA program remains available, Illinois has not addressed whether a VDA remains available to amnesty-eligible remote retailers. Companies should also keep in mind that a standard VDA generally waives penalties but not interest, unlike the amnesty programs, which abate both.

One frequently overlooked consideration is that a sales tax remediation effort for a non-registered company can have the effect of bringing a company’s non-compliance for other tax types such as state income tax, to the attention of a taxing authority. Businesses should consider other tax types which may require remediation in addition to sales tax, as once a Company becomes registered with a taxing authority, its presence in the state’s database invites inquiries from the state with respect to other tax types.

Businesses with potential Indiana sales tax exposure and remote sellers with Illinois sales tax exposure should consider their remediation options as soon as possible while the amnesty programs remain available. If you are not sure whether your business has Indiana or Illinois sales tax obligations or need help remediating sales tax exposure, A&M Tax can help.

References

[1] Illinois Department of Revenue, FY 2026-12, Destination-Based Retailers' Occupation Tax Changes (eff. Jan. 1, 2026)