IDOR Launches Managed Compliance Initiative Program for Use Tax

4/26/2019

What is the Managed Compliance Initiative Program for Use Tax?

The Managed Compliance Initiative (MCI) Program at the Illinois Department of Revenue (IDOR) is an alternative to a traditional on-site audit. This program aims to educate taxpayers and increase compliance under the Illinois Use Tax Act by assisting the taxpayer in self-assessing any Use Tax due.

How is the Managed Compliance Initiative Program initiated?

  1. An IDOR auditor will contact you to inform you that your business has been selected for review.
  2. The auditor will explain the review process and provide a copy of the IDOR publication, “Illinois Use Tax Compliance,” along with an Illinois Use Tax Fact Sheet for Businesses.
    1. Based on your registration status under either the Retailers’ Occupation Tax Act or the Use Tax Act, your auditor will determine the review period. The customary lookback period will be reduced from a three-and-a-half-year to a six-year period to a two-year to two-and-a-half-year period for taxpayers registered for Retailers’ Occupation Tax or Use Tax and four-year to a four-and-a- half-year period for unregistered taxpayers.
    2. The auditor will instruct you to provide copies of documents within two weeks.
  3. The auditor will review your documents and set up a meeting to discuss the results of the review.
    1. For unregistered businesses, when applicable, the auditor will assist you in completing the Form REG-1, Illinois Business Registration Application.
    2. If applicable, your auditor will present you with the calculations to complete any applicable returns (i.e., Form ST-1, Sales and Use Tax and E911 Surcharge Return, or Form ST-1-X, Amended Sales and Use Tax and E911 Surcharge Return). You must file the returns.
  4. After the returns have been processed, IDOR will assess any interest or late-payment or late-filing penalties and notify you of any balances due, if applicable.

What are the benefits of this program?

Participants in the MCI program will benefit from a reduced lookback period and avoid additional audit penalties that would be assessed in a traditional audit. 

What happens if I choose to not participate in this program?

If you do not participate in this program, and you are not in compliance with your use tax liability and/or registration status, you may be referred for an audit and be subject to additional penalties and interest.

For more information regarding this program, please contact your auditor.