Illinois Tax Refund for Businesses

Do you have unused Illinois sales tax credits for which you’re unable to receive a cash refund? Moss Adams can help you convert your credits into cash by transferring them to another taxpayer.

How Illinois Credits Are Generated

Taxpayers that have overpaid Illinois retailers’ occupation tax (the state sales tax) and are unable to apply it to future liabilities may convert the overpayment to a credit memorandum. Subsequently, memorandums may be refunded or transferred to another taxpayer. 

Due to budget shortfalls, Illinois has been slow or unable to issue refunds for these memorandums. As a result, the best option remaining may be to sell the credit to another taxpayer, converting it into cash you can use now. Depending on the amount of credit, purchasers typically expect a purchase price discount of 5 percent to 15 percent of the credit amount.

How Do You Know If You Have Unused Credits?

The Illinois Department of Revenue issues taxpayer statements listing any unpaid balance, available credits, or returns you haven’t filed as these items arise. Companies with sales tax overpayments resulting from, for example, tax paid on otherwise exempt purchases—will want to pay particular attention to these statements, because the credit must be converted to a memorandum and transferred within the statute of limitations. This period includes the current month plus 30 or 36 months from the time the credit was created or determined by the state, depending on when the request is made.

The Transfer Process

If you have sales tax overpayments in Illinois and approach the process efficiently, you can expect a turnaround time of 30 to 45 days from the moment you request the credit memorandum until you receive cash from a buyer in exchange for your credit.

Moss Adams can facilitate the process by helping you:

  • Apply for a credit memorandum confirming the full credit amount, including interest owed by the state
  • Secure a buyer
  • Negotiate the purchase and sale agreement
  • Complete the transfer request
  • Submit transfer paperwork to the state

It’s a safe and transparent process that will result in more cash on hand to reinvest in your business.

How We Can Help

If you’re interested in leveraging this opportunity, Moss Adams can help you review available credits, identify potential purchasers, and navigate the transfer process in Illinois as well as other states. Since 2007 we’ve helped clients transfer more than $800 million in credits nationwide and performed incentive compliance and audit services for eligible projects in excess of $3 billion of total project costs.

Additionally, we can review your Illinois sales tax determinations to ensure appropriate tax is being charged and leverage applicable exemptions so you avoid future overpayments.

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