Illinois Unfiled Sales Tax Returns Checklist
Introduction
If your business has not filed required sales tax returns with Illinois, the state Department of
Revenue will take steps to bring your account into compliance. An unfiled sales tax return means you have not submitted a return for one or more reporting periods, even if no sales occurred during that time.
This matters because Illinois law requires all registered sales tax collectors to file returns on schedule, regardless of sales activity or payment status. Ignoring unfiled returns results in penalties, interest charges, enforcement notices, and potential collection action. Understanding what unfiled returns mean, why they occur, and what comes next helps you take appropriate steps before the state escalates collection efforts.
What This Issue Means
An unfiled sales tax return means you have not submitted a required return form to the Illinois
Department of Revenue for one or more of your assigned reporting periods. A reporting period is typically monthly, but may vary based on your sales volume and the terms of your registration.
The state has a record that you registered as a sales tax collector, but no returns are on file for certain months or quarters. This is a filing compliance issue, not necessarily a payment issue.
The state may or may not know whether you owe sales tax for that period because the return itself provides the calculation of tax owed.
Why the State Requires This
Illinois law requires all registered sales tax collectors to file returns for each assigned reporting period, even if sales were zero during that time. This applies whether or not payment is due.
The state issues unfiled return notices or takes collection action because registration creates a legal obligation to file. Common triggers for identifying unfiled returns include automated scanning of filing schedules, taxpayer inquiries, collection notices sent for other reasons, or routine compliance reviews.
What Happens If This Is Ignored
If unfiled returns remain unaddressed, the state escalates collection activity. This may include additional notices, penalty assessments, and referral to the Department of Revenue’s
enforcement or collection division. In many cases, interest accrues on any tax ultimately determined to be owed, and late-filing penalties are added to the account. The state may also place your account on a collection hold, which can affect your ability to conduct certain business transactions or renew licenses. Ignoring notices does not resolve the underlying filing obligation and makes the situation more difficult to resolve.
What This Does NOT Mean
An unfiled return notice does not mean your registration has been revoked or that your business license is automatically invalid. It does not automatically mean criminal charges will be filed. It does not mean the state has already assessed a specific dollar amount of tax owed without your input. This notice reflects a filing gap, not a final determination of liability or a completed collection action. You still have the opportunity to file the missing returns and explain any circumstances related to non-filing.
Steps to Address Unfiled Returns
Step 1: Review the Notice
Locate and review the notice or letter from the Illinois Department of Revenue. Note the specific reporting periods listed as unfiled and any deadline mentioned in the letter.
Step 2: Gather Sales Records
Gather your sales records, invoices, and accounting documents for each unfiled reporting period. You will need these to complete the return forms accurately.
Step 3: Confirm Your Reporting Schedule
Contact the Department of Revenue at 1-800-732-8866 or 217-782-3336 to confirm whether your account is on a monthly, quarterly, or another schedule. You can also access information through MyTax Illinois at mytax.illinois.gov or visit the official website at tax.illinois.gov.
Step 4: Obtain the Correct Form
Obtain the correct sales tax return form for Illinois. The standard form is Form ST-1 (Illinois
Sales and Use Tax and E911 Surcharge Return). Specific transaction returns may require Form
ST-556 (Sales Tax Transaction Return) or Form ST-556-LSE (Transaction Return for Leases).
Most retailers use Form ST-1 for reporting sales and use tax. Download forms from the
Department of Revenue website or request them by phone. Confirm the correct form for your specific filing requirement.
Step 5: Calculate Sales and Tax Liability
Calculate your total sales, taxable sales, and tax liability for each unfiled period. Use your accounting records or software to determine accurate figures.
Step 6: Complete Returns
Complete the appropriate form for each unfiled reporting period separately. Enter the period dates, sales figures, and tax calculations as required by the form instructions.
Step 7: Determine Payment Amount
Determine the payment amount due, if any. If your records show no tax was owed for a period, the return may show zero liability. If tax is owed, calculate the total, including any penalties and interest assessed by the state.
Step 8: Submit All Returns
Submit all unfiled returns to the Department of Revenue. Mail them to the address listed in the notice or on the Department website. Illinois mandates electronic filing for many businesses; confirm whether your account is subject to mandatory e-filing requirements. Electronic filing is available through MyTax Illinois or approved tax preparation software. Keep copies for your records.
Step 9: Include Written Explanation if Needed
Include a written explanation if there are circumstances related to non-filing. For example, if the business closed, was inactive, or had a filing error, a brief explanation may be included with the returns.
Step 10: Retain Proof of Submission
Retain proof of submission. If mailing, send returns by certified mail with a return receipt requested. If submitting electronically, keep the confirmation or receipt number.
Step 11: Monitor for State Correspondence
Monitor your account for state correspondence after filing. The state may send notices acknowledging receipt of returns or requesting additional information. Check your MyTax Illinois account regularly.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 12: Pay Any Balance Due
Pay any balance due within the time specified in state notices. If the state assesses additional penalties or interest, pay according to the payment terms provided.
What Happens After Filing
After you submit unfiled returns, the Department of Revenue processes them and reviews the information against available records. The state will calculate any final tax liability, penalties, and interest owed. You may receive a notice showing the state’s determination, including any assessment adjustments if needed.
The state may also adjust your filing schedule going forward if your sales volume or account status has changed. If all returns are now filed and any balance due is paid, your account moves into current compliance status.
Common Mistakes to Avoid
Submitting incomplete returns that are missing required information, signatures, or calculations may result in rejection or a return for correction, delaying compliance. If the state sets a specific deadline for filing unfiled returns, submitting after that date may result in additional penalties or enforcement action.
Responding promptly to follow-up notices prevents further escalation. Double-check your sales calculations and tax computations before submission, as errors may require amended returns later.
Maintain records of every submitted return and the date of submission, in case the state questions whether a return was received. Even periods with zero sales require a filed return showing zero tax liability. File each unfiled reporting period as a separate return using the correct dates and figures for that specific period.
Frequently Asked Questions
How long does the Department take to process unfiled returns after I submit them?
The Department of Revenue does not publish specific processing timeframes. Processing may take several weeks to several months, depending on staffing, complexity, and workload. You may contact the Department at 1-800-732-8866 or 217-782-3336 to inquire about the status.
You can also verify your account status through MyTax Illinois at mytax.illinois.gov.
If I file unfiled returns now, will penalties and interest be waived?
The Department of Revenue provides detailed guidance on penalty abatement in Publication
103. Penalty relief is not automatic but has specific criteria. Taxpayers who filed or paid late and demonstrate good faith may request abatement of the late-filing or late-payment penalty by providing a detailed explanation and supporting documentation.
For returns filed more frequently than annually, if the failure is non-fraudulent and no other failure occurred in the prior two years, the late-filing penalty is abated. Interest generally cannot be abated except in very limited circumstances.
Can I file unfiled returns electronically?
Illinois mandates electronic filing for many businesses. Electronic filing is available through
MyTax Illinois or approved tax preparation software. Contact the Department at 1-800-732-8866 or 217-782-3336 to confirm whether your account is subject to mandatory e-filing requirements or is eligible for voluntary e-filing.
What if I cannot locate my sales records for the unfiled periods?
You may file a return based on the available information and explain in writing that certain records are unavailable. The state may request additional documentation or conduct a review.
Filing what you can determine is better than leaving returns unfiled.
If my business closed, do I still need to file unfiled returns from when it was open?
Yes, even if your business is no longer operating, unfiled returns from periods when it was active are still required. You may file a final return and note that the business has closed.
Contact the Department about closing your sales tax account once returns are filed.
Will filing unfiled returns trigger an audit?
Filing unfiled returns does not automatically trigger an audit. However, the Department may conduct a review to verify accuracy or request supporting documentation. This method is a normal administrative process, separate from a formal audit.
What is the difference between an unfiled return and a late return?
A late return was filed after its due date but was eventually submitted. An unfiled return has not been submitted. Both may result in penalties, but the state’s response process may differ.
Unfiled returns require the filing step first.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and aren’t sure how to respond, our team can help you understand your options and next steps.
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