4 States Offering Limited Windows for Tax Amnesty
Four states are currently offering programs that can eliminate or reduce sales and use tax penalties and interest are presently open. Indiana closes first, on September 9, 2026, while Illinois, New York, and Washington run later into 2026 under narrower terms.
The benefit of open amnesty over a voluntary disclosure agreement (VDA) is highly dependent. Amnesty waives penalties and interest but generally requires the full tax with no lookback limit and closes once the state makes contact. A voluntary disclosure agreement usually caps the lookback at three to four years, offer reduced or eliminated penalties for failure to file and or pay, and some offer reductions in interest due on tax owed. VDA’s also add audit protection for the covered period. More recent exposure can favor amnesty, while historic exposure often favors the capped lookback periods offered in a VDA.
Indiana Tax Amnesty 2026 (closing September 9, 2026)
Running July 15 through September 9, 2026, the program waives penalties, interest, and collection fees on liabilities for periods ending before January 1, 2024. It covers income, sales and use, and other Department of Revenue administered taxes. Participants must be current on filings and pay in full or set an approved plan during the window. Participants in Indiana’s 2005 or 2015 amnesty programs are excluded, and the Department recently moved the closing date up from September 15 to September 9.
Illinois Remote Retailer Amnesty (August 1 – October 31, 2026)
Under 86 Ill. Adm. Code 131.185, remote retailers with economic nexus and no Illinois physical presence may resolve unpaid state and local Retailers’ Occupation Tax (ROT) on sales from January 1, 2021, to June 30, 2026, remitting at a simplified rate with penalties and abated interest. Servicepersons and physical-presence retailers are ineligible.
New York Vendor Reregistration Discount (due December 31, 2026)
The fiscal year 2026 to 2027 budget grants a 100 percent penalty abatement and a 50 percent interest reduction on sales and use tax liabilities paid in full by December 31, 2026, under the state’s new vendor reregistration program. The full tax amount is still due.
Washington ESSB 5814 Relief (ends September 30, 2027)
Relief covers unpaid retail sales and use tax for periods from October 1, 2025, to December 31, 2026, for businesses affected by the services made taxable on October 1, 2025, with penalties waived and interest still due.
Source Advisors can assess your specific situation and identify and quantify historic sales and use tax liabilities. Taxpayers with varying levels of exposure in multiple states can benefit from the assistance in determining the best patch forward. Source Advisors can also facilitate VDA’s, offers in compromise or waivers, as well as navigating State administered amnesty programs.
