With the recent passage of HB 2755, Illinois will be offering two different amnesty programs within the next 16 months, pending approval by the governor. The first program will run from October 1 through November 15, 2025. This program is an extension of Illinois' previous amnesty programs that ran in 2003, 2010 and 2019. The second, however, is an amnesty program from August 1 to October 31, 2026, specifically aimed at remote retailers that have not collected the state or local Retailer's Occupation Tax. The period of eligibility is January 1, 2021, through June 30, 2026. Importantly, the law provides that a standard rate of 9% will apply to all sales historically subject to the 6.25% use tax rate. Many commentators have suggested this is good news for remote retailers, but I'm not so sure. 

Prior to January 1, 2021, remote sellers were required to collect Illinois use tax from Illinois customers at a rate of 6.25%. With the adoption of the Leveling the Playing Field for Illinois Retail Act, the state requires remote sellers to collect the local ROT on a destination basis. In-state sellers, however, continue to use origination sourcing rules. It's not a close call that this disparate treatment between out-of-state sellers and in-state sellers is unconstitutional. In Associated Industries of Mo. v. Lohman, 511 U.S. 641, the Supreme Court made clear that the Constitution does not permit a circumstance in which an out-of-state seller's tax rate can be higher than an in-state seller's. Under the state's current paradigm in the amnesty program, sellers will be required to collect at a rate of 9% despite the fact that many in-state sellers will be required to collect at a much lower rate. 

Participation in the amnesty program, however, could potentially waive any argument against this discriminatory treatment. It is an attempt to reach as much revenue as possible before one the pending cases challenging the discrimination in Leveling the Playing Field ultimately see the disparate sourcing rules struck down. While it may make sense for many taxpayers to participate in amnesty, they should be wary of the impact participating may have on disparate tax rates between in-state and out-of-state sellers.