HB2899 104TH GENERAL ASSEMBLY

LRB104 03442 HLH 19884 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB2899

Introduced 2/6/2025, by Rep. Curtis J. Tarver, II

SYNOPSIS AS INTRODUCED:

35 ILCS 120/2-13 new

Amends the Retailers' Occupation Tax Act. Creates the Remote Retailer Amnesty Program. Requires the Department of Revenue to establish the Remote Retailer Amnesty Program for remote retailers owing State and local retailers' occupation taxes that are administered by the Department. Provides that the Program shall operate for a period from August 1, 2026 through October 31, 2026. Provides that the Program shall include a simplified retailers' occupation tax rate designed to allow a remote retailer who participates in the Program to report and remit at the authorized simplified retailers' occupation tax rate in lieu of the retailers' occupation tax rate otherwise due on sales made to Illinois customers. Provides that, upon payment by a remote retailer of all taxes due from that remote retailer using the simplified retailers' occupation tax rate for the eligible period, the Department shall abate and not seek to collect any interest or penalties that may be applicable, and the Department shall not seek civil or criminal prosecution against the remote retailer for the period of time for which amnesty has been granted to the taxpayer. Creates conditions for the provision of amnesty and remittance of local retailers' occupation tax under the Program. Provides conditions for the depositing of the net revenue realized under the Program. Provides that the Department shall have exclusive responsibility for reviewing and accepting applications for participation in the Program, as well as reviewing the eligibility of participants in the Program. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Retailers' Occupation Tax Act is amended by adding Section 2-13 as follows:

(35 ILCS 120/2-13 new)

Sec. 2-13. Remote Retailer Amnesty Program.

(a) As used in this Section:

"Eligibility period" means the period from January 1, 2021 through June 30, 2026.

"Eligible transaction" means the sale of tangible personal property by a remote retailer to an Illinois customer that occurs during the eligibility period and that requires the remote retailer to ship or otherwise deliver the tangible personal property to an address in the State.

"Local retailers' occupation tax" means a retailers' occupation tax imposed by a municipality, county, or other unit of local government and administered by the Department.

"Program" means the Remote Retailer Amnesty Program established under this Section.

"Remote retailer" means a remote retailer, as defined in Section 1 of this Act, who has met a tax remittance threshold under subsection (b) of Section 2 of this Act for all or part of the eligibility period and who is participating in the Program established under this Section.

"Remote retailer amnesty period" means the period from August 1, 2026 through October 31, 2026, during which the Department will accept returns and payment of State and local retailers' occupation taxes at the simplified retailers' occupation tax rate for eligible transactions that occur during the eligibility period.

"Simplified retailers' occupation tax rate" means the combined State and average local retailers' occupation tax rate imposed on remote retailers participating in the Program. The simplified retailers' occupation tax rate shall be (i) 9% of the gross receipts from sales of tangible personal property that are subject to the 6.25% State rate of tax imposed by Section 2-10 of this Act or (ii) 1.75% of the gross receipts from sales of tangible personal property that are subject to the 1% State rate of tax imposed by Section 2-10 of this Act.

"Taxing jurisdiction" means a municipality, county, or other unit of local government that imposes a local retailers' occupation tax.

(b) The Department shall establish a Remote Retailer Amnesty Program for remote retailers that owe State or local retailers' occupation taxes on eligible transactions. The Program shall operate during the remote retailer amnesty period.

The Program shall allow a remote retailer who participates in the Program to report and remit, at the simplified retailers' occupation tax rate, State and local retailers' occupation taxes that are due in connection with eligible transactions. The payment shall be made by the remote retailer during the remote retailer amnesty period and shall be in lieu of reporting and remitting State and local retailers' occupation taxes at the rate otherwise provided by law. The payment of the tax at the simplified retailers' occupation tax rate relieves the remote retailer of any additional State or local retailers' occupation taxes with respect to the eligible transaction.

The Program shall provide that, if the remote retailer satisfies its State and local retailers' occupation tax liability during the remote retailer amnesty period by reporting and remitting payment to the Department at the simplified retailers' occupation tax rate, the Department shall abate and not seek to collect any interest or penalties that may be applicable with respect to those eligible transactions, and the Department shall not seek civil or criminal prosecution of the remote retailer for the period of time for which amnesty has been granted to the retailer. The remote retailer must make full payment of all State and local retailers' occupation taxes due with respect to the remote retailer's eligible transactions, using the simplified retailers' occupation tax rate, during the remote retailer amnesty period for amnesty to be granted, unless the remote retailer enters into an approved repayment plan with the Department during the remote retailer amnesty period. In that case, amnesty shall be granted upon successful completion of the repayment plan as long as the taxpayer remains in compliance with the terms of the payment plan throughout its duration. Failure to pay all taxes due using the simplified retailers' occupation tax rate for the eligible period, unless tax has previously been remitted using the applicable State and local retailers' occupation tax rates, shall invalidate any amnesty granted under this Act, and all retailers' occupation tax due for the eligible period shall be due at the applicable State and local rate for the particular selling location.

(c) Amnesty shall be granted only if all amnesty conditions are satisfied by the taxpayer. The amnesty provided by this Section shall be granted to any remote retailer who, during the remote retailer amnesty period, files all returns and remits all State and local retailers' occupation tax on all eligible transactions using the simplified retailers' occupation tax rate or otherwise applicable State and local retailers' occupation tax rates due for all of the remote retailer's eligible transactions. In addition, the following requirements apply to the Program:

(1) to participate in the Program, the remote retailers must be registered with the Department as set out in Section 2a of this Act;

(2) returns filed under the Program shall be filed electronically in the manner prescribed by the Department in Section 3 of this Act and shall be filed only during the remote retailer amnesty period;

(3) the remote retailer shall remit the tax at the simplified retailers' occupation tax rate or, if the tax was collected, in the amount of the tax collected, whichever is greater; the required reporting for each return period from the remote retailer shall include only statewide totals of the retailers' occupation taxes remitted at the simplified retailers' occupation tax rate and shall not require information related to the location of purchasers or amount of sales into a specific taxing jurisdiction;

(4) amnesty is not available for any retailers' occupation tax remitted to the Department prior to the remote retailer amnesty program period by the remote retailer;

(5) amnesty shall not be granted to taxpayers who are a party to any criminal investigation or to any civil or criminal litigation that is pending in any circuit court, any appellate court, or the Supreme Court of this State for nonpayment, delinquency, or fraud in relation to any State tax imposed by any law of the State of Illinois;

(6) amnesty shall not be granted to taxpayers who commit fraud or intentional misrepresentation of a material fact in any document filed under the Remote Retailer Amnesty Program; and

(7) amnesty is applicable only to retailers' occupation taxes due from the remote retailer in his or her capacity as a remote retailer and not to any other taxes that may be owed by the remote retailer pursuant to another tax Act.

(d) Except as otherwise provided in paragraph (3) of subsection (c), no remote retailer shall be required to remit the tax at a rate greater than 9% or 1.75%, as applicable, regardless of the combined actual tax rates that may otherwise be applicable. Additionally, no gross receipts for which State and local retailers' occupation tax is remitted at the simplified retailers' occupation tax rate shall be subject to any additional retailers' occupation tax from any taxing jurisdiction imposing a retailers' occupation tax with respect to the sale of the property, regardless of the actual tax rate that might have otherwise been applicable.

(e) The remote retailer shall remit the State and local retailers' occupation tax at the simplified rate on all gross receipts from sales of tangible personal property into Illinois unless the remote retailer can produce a valid exemption number or certificate, resale certificate, or direct pay permit issued by the Department. The remote retailer shall retain all exemption numbers or certificates, resale certificates, or direct pay permits in its books and records, or in such other manner as directed by the Department.

(f) Remote retailers shall maintain records of all eligible transactions, including copies of invoices showing the purchaser, the purchase amount, the taxes collected, and the retailers' occupation tax remitted. Records must be kept documenting all tangible personal property sold for which the 1.75% simplified retailers' occupation tax rate is used to verify that the tangible personal property qualifies for the 1% State tax rate imposed under Section 2-10 of this Act. Those records shall be made available for review and inspection upon request by the Department. Remote retailers participating in the Program remain subject to audit by the Department as provided in this Act. Remote retailers participating in the Program shall not be subject to audit or review by any unit of local government under the Local Government Revenue Recapture Act.

(g) The net revenue realized at the 9% rate under this Section shall be deposited as follows: (i) notwithstanding the provisions of Section 3 of the Retailer's Occupation Tax Act to the contrary, the net revenue realized from the portion of the rate in excess of 5% shall be deposited into the State and Local Sales Tax Reform Fund and (ii) the net revenue realized from the 5% portion of the rate shall be deposited as provided in this Section 3 of the Retailers' Occupation Tax Act for the 5% portion of the 6.25% general rate imposed under this Act. The net revenue realized at the 1.75% rate under this Section shall be deposited into the State and Local Sales Tax Reform Fund.

(h) The Department may adopt rules related to the implementation, administration, and participation in the Program. The Department shall have exclusive responsibility for reviewing and accepting applications for participation and for the administration, return processing, and review of the eligibility of remote retailers participating in the Program.

Section 99. Effective date. This Act takes effect upon becoming law.