Selling Into Illinois From Out of State? The Sales Tax Amnesty Closes October 31

2026-10-19 · RKube Services

Illinois's 2026 Remote Retailer Tax Amnesty runs through October 31: who qualifies, the simplified 9% and 1.75% rates, the look-back to 2021, and how to apply in MyTax Illinois.

If you sell physical products to Illinois customers and you have no store, warehouse or staff in Illinois, there's a good chance you crossed the state's economic nexus line at some point in the last few years without registering. Plenty of online sellers did. Illinois has now given those sellers a short window to settle up without penalties or interest, and that window ends on October 31, 2026.

The program is the 2026 Illinois Remote Retailer Tax Amnesty Program. It runs from August 1 through October 31, 2026, and it covers unpaid sales tax on sales made between January 1, 2021 and June 30, 2026. It also comes with a simplified tax rate, which matters a lot for sellers who never tracked which Illinois city each order shipped to.

This guide explains who qualifies, how the simplified rates work, a worked example, how the payment plan works, and what happens if you skip it. It's written for remote sellers anywhere in the US, from Shopify stores in Indianapolis to Amazon sellers in Texas who ship into Chicago, IL and the suburbs.

Sources: Illinois Department of Revenue Informational Bulletin FY 2026-28, 2026 Illinois Remote Retailer Tax Amnesty Program and Informational Bulletin FY 2026-12, Destination-Based Retailers' Occupation Tax Changes, read in October 2026. The program is in 35 ILCS 120/2-13, added by Public Act 104-0006.

Why Illinois is doing this now

Two changes took effect on January 1, 2026, and the amnesty is the bridge between the old rules and the new ones.

First, Illinois dropped its 200-transaction test for remote sellers. Before 2026, a remote retailer or marketplace facilitator owed Illinois sales tax once it had either $100,000 in gross receipts from sales of tangible goods to Illinois buyers or 200 separate transactions in a 12-month lookback. From 2026, only the $100,000 receipts test applies.

Second, Illinois added a penalty rate for sales it can't place. Illinois sales tax on remote sales is destination-based, which means the local part of the tax depends on where in Illinois the buyer received the goods. If a seller doesn't give the Department enough information to work out the location, IDOR now assesses tax on those sales at 15%. The bulletin says this 15% "undetermined location" rate can be used in an audit for any period under audit, including periods before 2026.

That second change is the stick. A seller with five years of unreported Illinois sales and no clean ship-to records could face a 15% rate on all of it, plus penalties and interest. The amnesty is the carrot: a lower flat rate, no penalties, no interest, if you come in before November.

Who qualifies

You may qualify if all of these are true:

• You sell tangible personal property to customers in Illinois.
• You have no physical presence in Illinois. That's what makes you a "remote retailer" for this program.
• You have unpaid Illinois sales tax on sales made between January 1, 2021 and June 30, 2026.
• You met the remittance threshold for the periods you're claiming.

The threshold depends on the period. For calendar quarters ending after January 1, 2021 and on or before December 31, 2025, it's $100,000 in annual gross receipts from Illinois sales of tangible goods over the 4 preceding quarters, or 200 or more separate Illinois transactions in those 4 quarters. For quarters starting on or after January 1, 2026, it's the $100,000 receipts test only.

You don't have to claim every quarter in the range. If you already paid tax at the correct state and local rates for some periods, or you didn't meet the threshold in some periods, you can claim amnesty only for the months or years where you actually owe.

Eligible taxes are the state Retailers' Occupation Tax (including items that must be titled or registered with a state agency) and the locally imposed retailers' occupation taxes that IDOR administers. The bulletin specifically lists the Chicago Home Rule Municipal Soft Drink Retailers' Occupation Tax as included.

The simplified rates

This is the part that makes the program practical for small sellers. Normally, Illinois sales tax on a remote sale is the 6.25% state rate plus whatever local rates apply at the buyer's address, and those vary across the state. Rebuilding five years of local rates order by order is expensive.

Under the amnesty, you report and pay using two flat rates that combine the state tax with an average local rate:

Two conditions come with the 1.75% rate. You must keep records of every sale you put in that category. If you can't back it up, those sales are treated as general merchandise at 9%.

And if you actually collected more tax from customers than the simplified rate, you have to report and pay the larger amount you collected. The simplified rate can't be used to keep tax you charged a buyer.

A worked example

Here's a made-up seller to show how the numbers can work. A home goods shop based in Ohio sells online and ships to customers across the US, including plenty of buyers around Naperville, IL. It has no Illinois location or staff. Looking back, it finds that it passed the Illinois threshold in early 2022 and never registered.

From the first quarter of 2022 through June 30, 2026, its Illinois sales were:

• $360,000 of general merchandise (towels, candles, kitchen tools)
• $40,000 of packaged snack food, with order records showing each item

Under the amnesty:

• General merchandise: $360,000 x 9% = $32,400
• Snack food: $40,000 x 1.75% = $700
• Total amnesty tax: $33,100, with penalties and interest waived if paid in full

If the shop couldn't document the food sales, all $400,000 would go in at 9%, for $36,000.

Now compare the audit case. If IDOR audited the same periods and the shop couldn't show where in Illinois its orders were delivered, the 15% undetermined-location rate could apply: $400,000 x 15% = $60,000, before penalties and interest. Even with good ship-to records, an audit would mean working out the exact state and local rate on every order, plus penalties and interest on four and a half years of unpaid tax.

The example only shows the math. Your real numbers depend on your own sales records, which periods you met the threshold in, and whether any tax was collected from buyers.

How to apply

Everything happens online in MyTax Illinois. The bulletin is clear that paper returns don't qualify for amnesty relief.

1. Register if you haven't. You must be registered with IDOR as a remote retailer and have an active MyTax Illinois logon. The bulletin says electronic registration usually takes one to two business days, and you can only create the logon after you're registered and get IDOR's confirmation email.
2. Find the application. In MyTax Illinois, next to your ST-1 Sales/Use Tax account, select "View more account options," then under "Account Options" choose "Remote Retailer Amnesty Application."
3. Pick your periods. Enter the periods from January 1, 2021 through June 30, 2026 that you're claiming.
4. Report the liability carefully. The bulletin warns that the amount can't be edited after IDOR processes the application. Check your figures first.
5. Pay, or choose the payment plan. Pay electronically with the application, or select "Payment Plan" as the payment method (see the next section). A verified overpayment or credit memo already on your account can count as a payment.

If you can't find the amnesty application in MyTax, the bulletin says you may not be registered correctly as a remote retailer. IDOR's Central Registration Division handles that.

One practical point: October 31, 2026 falls on a Saturday. With registration taking a day or two and the logon coming after that, a seller starting from zero should not wait for the last week of October.

The payment plan

If you can't pay in full because of financial hardship, you can request a repayment plan, also by October 31, 2026. The rules from the bulletin:

• Choose 6, 12, 18 or 24 monthly installments. Plans can't run longer than 24 months.
• Submit a down payment with the application, along with bank routing and account numbers.
• IDOR shows the installment amount before you authorize automatic withdrawals, which start December 1, 2026.
• Interest starts accruing on the unpaid balance on November 1, 2026, and is collected at the end of the plan in extra installments no larger than your monthly amount.

Missing payments is costly. If the full amount isn't paid as agreed, you lose amnesty: penalties and interest are no longer waived, and your liability is recalculated under the normal Retailers' Occupation Tax rules without the simplified rates.

If you don't take the amnesty

Nothing forces a seller into the program. But the bulletin says remote retailers with eligible liabilities who skip it "may be subject to audit and additional penalties and interest," and the 15% undetermined-location rate is available in those audits.

Separately, if you're over the $100,000 threshold now, you have to be registered and collecting Illinois tax going forward either way. The amnesty only cleans up the past.

A short checklist before October 31

• Pull Illinois sales by quarter from your store, marketplace and payment reports for 2021 through mid-2026, keeping the ship-to city and ZIP code for each IL order.
• Remove sales a marketplace facilitator already collected and remitted tax on.
• Mark the quarters where you met the threshold (receipts or, before 2026, 200 transactions).
• Split out any 1% state-rate items you can document (food for off-site use, medicines, medical appliances).
• Check whether you collected any Illinois tax from buyers, since that amount must be paid if it's higher.
• Register, activate MyTax Illinois, then file the amnesty application and pay or set up the plan.

Common questions

Does this cover sellers with an Illinois warehouse or employee? No. The program is for remote retailers, meaning sellers with no physical presence in Illinois.

What about sales after June 30, 2026? They're outside the amnesty. From July 2026 on, report on regular returns.

Does the amnesty cover Illinois income tax? No. It covers the sales taxes listed in the bulletin, not income or other taxes.

I only sell through Amazon or another marketplace. Do I need this? Usually the marketplace facilitator handles Illinois tax on those sales. The amnesty matters for sales you made directly, through your own site, or through channels that didn't collect.

This guide is general information based on IDOR Informational Bulletins FY 2026-28 and FY 2026-12 as read in October 2026. It isn't tax or legal advice for your situation, and the Department's own program page has the final word on deadlines and steps.

If you want help sorting years of multi-state sales into an amnesty filing, RKube Services does sales tax bookkeeping for online sellers.