Illinois - Double interest amnesty penalty applies to tax liability assessed following an IRS audit

August 2012


The Illinois Appellate Court held that a taxpayer failing to pay a tax liability under the state's 2003 amnesty was subject to a 200% interest penalty even though the taxpayer did not know it owed the tax until after a federal audit. A divided appeals court reached the opposite conclusion in a recent case, Metropolitan Life, holding the penalty did not apply when the taxpayer's tax obligation was determined as a result of a federal audit that concluded after the amnesty period. The conflicting opinions, coming from different divisions of the same Illinois Appellate Court District, may make an Illinois Supreme Court review on this matter likely. [Marriott International Inc. v. Hamer, Ill. App. Ct. No. 1-11-1406 (8/22/12)]

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