Illinois Department of Revenue  |  Illinois State Refund  |  Taxes In Illinois

Resolving Back Taxes and Reviewing Tax Relief Options in the State of Illinois

Illinois Department of Revenue (the "DOR") collects all the taxes for the State of Illinois.  This includes the income taxes.  Once taxes become due, either due to the taxpayer filing a tax return with a balance owing or an audit assessment, the State Department of Revenue (DOR) will send the taxpayer a Notice of Collection.  If the taxpayer does not respond to the State Department of Revenue by the letter's due date, the DOR will begin enforced collection.  These actions may include a wage garnishment, bank account levy, or a tax lien placed on all assets.  Enforced collections may also include the seizure of personal property, revocation or suspension of business licenses, and utilizing outside collection agencies.

Tax Relief Options for Illinois Back Taxes

Taxpayers with delinquent income taxes in the State of Illinois have four resolutions available;

• Installment Payment Plan – If you can't pay your back taxes in full, you can arrange a fair monthly payment plan with the Illinois Department of Revenue (DOR) over time instead of paying them all at once to the State.  Once a state Payment Plan (also known as an Installment Agreement) is established, the State of Illinois (DOR) will not take enforced collection measures, counting the levy of bank accounts or wage garnishments, as long as you stay up to date with all filing and payment obligations.
• Offer-in-Compromise (OIC) – An Offer-in-Compromise (OIC) is a program established to help taxpayers who owe more than they could ever afford to pay the opportunity to pay a smaller amount as a full and final settlement and get a fresh start. This settlement could potentially include specific payroll tax liabilities, ALL back tax liabilities, penalties, and interest.  Tax liens may be removed if a settlement is approved and the settled amount is paid in full.
• Penalty Abatement – This is a request by the taxpayer to the DOR asking them to reduce or eliminate tax penalties assessed.
• Innocent Spouse Relief - Tax relief for an innocent spouse or ex-spouse is available; however, understanding, complying, and submitting a "Request for Innocent Spouse Claim" within the IRS guidelines is best handled by an experienced Certified Tax Resolution Specialist.  Claims must typically be submitted within two years from the start of the collection activity.

Innocent Spouse Relief

In Illinois, Innocent Spouse Relief provides a way for taxpayers to be relieved from joint liability when they shouldn't be held accountable for their spouse's overdue taxes.  Both spouses who file a joint tax return are typically responsible for the full joint tax amount, regardless of who earned the income.  However, one spouse can seek Innocent Spouse Relief (ISR) to be exempt from this joint liability.

Resolve Back Taxes By Filing An Innocent Spouse Claim with the Illinois DOR

Taxpayers often get in trouble with the State because of their spouses or ex-spouse's actions.

The State realizes that these situations do, in fact, occur.

If you're eligible for innocent spouse relief, you might not be required to pay the State's back taxes, interest, and penalties related to your spouse (or former spouse).

Once you file for an Innocent Spouse Claim, the State will send you a questionnaire to verify your story's validity.  Our expert team of Specialists can help you through the process to ensure you meet the requirements.

Guidelines for Innocent Spouse Tax Relief

If taxpayers can prove they meet the guidelines for innocent spouse tax relief, they might not be liable for the taxes resulting from their spouses or ex-spouses.

The State has developed guidelines to help taxpayers who are subjected to IRS problems due to their spouses' actions.

We can help you determine if you qualify for innocent spouse tax relief by helping you understand and meet these IRS guidelines.

If you had no idea about the financial activity of your spouse and how your spouse was manipulating the financial records, you could qualify for innocent spouse tax relief.  This means:

1. You did not share bank account- you had no access to his/her account activity
2. Your spouse had a separate business that he/she operated independently.
3. You did not benefit from the extra money from tax manipulation.

How to qualify for Tax Relief as an Innocent Spouse

Our experienced Certified Tax Resolution Specialists can help you file for innocent spouse protection and dramatically increase your chances of qualifying for tax relief.  In addition to taking over all communication with the State, we will help you show that you meet all of the following conditions:

Filing of a joint tax return listing an understatement of tax.
An understatement of tax must be due to erroneous items from your spouse.
You must establish that when you signed the joint return, you did not know, had no reason to know, that there was an understatement of tax.
Taking all the facts and circumstances into account, it wouldn't be fair to hold you responsible for the tax understatement.

Act Fast to Qualify for Innocent Spouse Tax Relief

To qualify, you must request IRS innocent spouse relief within two years after the date on which the State first began collection activity.

1. spouse qualification is a very detailed and fact-specific petition; if you get it wrong, you may be subjected to criminal prosecution. This is definitely something that we would NOT suggest that you tackle on your own. If this is your situation, call us TODAY at 800-829-7483 or 800-TAX-SITE.

For more on Innocent Spouse Relief, see Innocent Spouses FAQs.

If you feel that you can handle this on your own but perhaps need some guidance, check out our DIY site for the

DIY Innocent Spouse Guide

Check out the link below if you feel you're over your head and need representation. There, you will be able to reach out to us for one of our Tax Resolution Specialists to take this burden off your hands

If you would like to engage our services, call us at 800-829-7483.

Click here to see a series of four videos regarding Innocent Spouse.

Download Our Special Report- How To Qualify For Innocent Spouse Relief

Requirements for Innocent Spouse Relief Request

To request Innocent Spouse Relief in Illinois, taxpayers must submit Form IL-8857, Request for Innocent Spouse Relief.  A copy is required for each year the taxpayer seeks relief.  The Form IL 8857 must have the following attached;

• An original copy of U.S. and Illinois state income tax returns
• An original copy of any amended U.S. and Illinois state income tax returns
• Any notice of determination of the taxpayer's federal or Illinois state tax liability was received.  This should include the granting or denial of Federal innocent spouse relief and
• Any other supporting documentation that would assist the State in deciding on your  eligibility
• A copy of IRS Form 8857, Request for Innocent Spouse Relief filed, if the taxpayer also petitioned the IRS for Innocent Spouse Relief

A taxpayer seeking Innocent Spouse Relief with the State of Illinois has the burden of proof to establish they are not liable for the taxes owed.  Once the Illinois DOR has received the Innocent Spouse Relief request, it will notify the other spouse listed on the joint return for the tax year(s) at issue.  The notice will state that a taxpayer requested relief under an innocent spouse petition.  The respondent's spouse has 60 days from the notification date to provide documentation or further information that could help the DOR make a decision.

Once the DOR Decides

Once the DOR makes a decision, both spouses will be notified of any changes to their joint return liabilities.  An innocent spouse might be eligible for a refund due to an overpayment resulting from the relief, but the standard refund rules still stand.  There's no time limit for submitting an "innocent spouse" petition.  Still, the DOR won't refund taxes paid by a spouse choosing the election unless it's filed within the refund statute's timeframe.

If the IRS has already granted the taxpayer Innocent Spouse Relief, the State presumes the innocent spouse request to be valid without further questioning.

The petitioning taxpayers should send the completed form IL-8857, along with any supporting documents, to the following address by mail:

Illinois Department of Revenue
Problems Resolution Division
PO Box 19014, Springfield, IL 62794.

Statute of Limitations

Illinois's general collection statute of limitation is 20 years from the assessment date.  However, the 20-year collection statute may be reduced if one of the following applies:

• The DOR filed a tax lien
• The Attorney General entered a judgment
• Other specific enforcement actions were used

Other Options That May Be Available in the State of Illinois

Challenging the Assessment

Taxpayers have the option to appeal a proposed assessment to the Independent Tax Tribunal if it stems from a State audit and the additional tax amount exceeds $15,000.  The taxpayer can file the petition online here.  If a resolution isn't reached with the Independent Tax Tribunal, the taxpayer retains the right to plea to the Illinois Circuit Court.

Bankruptcy

Taxpayers might want to consider Bankruptcy if they have considerable personal debt and taxes owed.  Note: Certain types of taxes are not dischargeable in Bankruptcy.  In essence, taxpayers may not discharge certain taxes through bankruptcy.  Hence, it's advisable for taxpayers to consult with a knowledgeable bankruptcy lawyer.

The Illinois Tax Amnesty Program

Illinois has a track record of providing tax amnesties in the past.  A Tax Amnesty Program enables taxpayers to reduce or waive certain penalties and interest by becoming compliant with filing and payment requirements.  At present, Illinois does not have any active amnesty programs available.

Nevertheless, Illinois does offer a Voluntary Disclosure Program.  To join the program, you need to reach out to the DOR before they initiate an audit, tax assessment, or investigation against you.  Afterward, you submit a voluntary disclosure application.  If the State approves your application, you'll only need to file returns for the past four years, known as the lookback period.  If admitted to the program, you won't face any punishments.

Top of Form

Appeal Rights

As mentioned, the DOR has a Board of Appeals (BOA) set up within its structure to handle Penalty Abatement and Offer-in-Compromise requests.  BOA decisions are not subject to further appeal, making them final and leaving taxpayers whose requests are denied with limited recourse.

On a practical note, taxpayers shouldn't hesitate to bring up contentious matters with a DOR supervisor.

Lien Releases

The DOR will only release a tax lien after:

• they have received confirmation that the past due liability has been paid in full or
• satisfied via an approved Offer-in-Compromise payment.

Failing to Pay Taxes in Illinois can Lead to Various Consequences

Failing to settle your taxes upon filing your tax return will prompt the Illinois Department of Revenue to issue you a bill.  Similarly, if there's an error on your tax return resulting in owed tax, you'll receive a bill from the agency.  This initial bill specifies the amount due and details your rights.  Should you miss the payment deadline, the department will escalate with further notices and initiate collection procedures against you.  Here's the consequence of not paying taxes in Illinois.

Illinois State Tax Liens

A tax lien represents the State's claim on your outstanding tax debt.  This lien encompasses the overdue taxes along with interest and penalties, applying to both your real estate and personal property.  Having a lien can complicate selling assets or securing loans against them.  Once established, it remains active for 20 years.  While the lien generally doesn't show up on your credit report, it is publicly accessible, so lenders and potential buyers can discover it.  Moreover, if you attempt to sell any assets, prospective buyers will be aware of the existing lien on them.

Asset Seizure for Unpaid Illinois Taxes

The Illinois Department of Revenue has the authority to confiscate both your personal and business assets.  They are required to provide a 10-day notice prior to any seizure.  Should you fail to settle the debt within this period, the State has the right to claim your assets.  Subsequently, the department must retain the assets for 20 days before putting them up for auction.  Yet, for perishable items like food inventory from a restaurant, the State can auction them off within 24 hours following the seizure.

Asset and Wage Levies in Illinois

If you owe unpaid taxes in Illinois, the IL DOR has the authority to levy or seize your assets and income.  "Levy" is essentially another term for seizure.  This means the State can garnish your wages or freeze the funds in your bank account.  Bank account levies can encompass funds in your checking or savings accounts, CDs, interest from insurance policies, contractual payments, bond interests, or rent due from tenants.  Once a levy is in place, reversing it can be challenging, if not outright impossible.  It's advisable to consult with an Illinois tax professional before a levy is enacted for optimal outcomes.

Personal Liability for Business Taxes

In Illinois, the State can hold individuals personally accountable for business taxes.  This liability can extend to business owners, partners, officers, and anyone tasked with filing and remitting sales and withholding taxes.

Loss of Sales Tax Certificate

The State has the authority to cancel your sales tax license due to unfiled sales tax returns or outstanding sales tax payments.  This action prohibits you from conducting taxable sales.  If you persist in making sales after this, you could face a Class A misdemeanor charge.  Additionally, the Department of Revenue can display a notice at your business location indicating unpaid sales tax and stating that operating under these conditions is illegal.

Liquor License Revocation

Likewise, the State has the authority to rescind your liquor license.  This action can occur if you fail to pay sales taxes or other business-related taxes, like Illinois State withholding taxes.  Once your license is revoked, purchasing inventory becomes illegal.  Wholesalers, brewers, and manufacturers are prohibited from supplying products to businesses lacking a valid liquor license.

Loss of Other Illinois Business Licenses

Neglecting to pay business taxes in Illinois can result in additional consequences.  Specifically, you could lose your lottery license, your corporate charter might not get renewed, and the Secretary of State could decline to renew your dealer's license.  Essentially, failing to pay your taxes can hinder your ability to run your business.

Offset for Back Taxes in Illinois

The IL DOR employs offsets as a method to recover back taxes.  If you submit a state tax return expecting a refund, the State can withhold that refund and put it towards your tax debt.  Additionally, if you owe taxes to Illinois but not to the IRS, the IRS may redirect your federal refund to the IL DOR.

The IL DOR may also assign your overdue tax debt to a collection agency.  This means you'll be responsible for the tax amount, along with interest and penalties, as well as the fees charged by the collection agency.  Moreover, the State has the authority to list your name on a delinquent taxpayer roster, and in certain instances, they might even dispatch a collector to your residence or place of business.