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Client Alert: Illinois Secretary of State Ramps Up Franchise Tax Enforcement

Amnesty Program Ends November 15, 2019

Action Items


Financial Institutions That Should Be Concerned:

Increased Efforts to Collect Franchise Taxes

The Illinois Secretary of State's office has ramped up its efforts to collect corporate franchise taxes. In recent months, the office has sent out interrogatories to corporations that are holding companies — such as bank holding companies — asking whether the corporations are reporting they hold property outside the state of Illinois based on the physical location of the stock certificates representing ownership of their subsidiaries.

What Does This Mean for Your Financial Institution?

These interrogatories signal a potential change by the Secretary of State's office from a prior interpretation of Illinois franchise tax law that holding the stock certificates of a subsidiary in another state can reduce the value of a company's gross assets held in Illinois by the value of the underlying subsidiary. Under this prior interpretation, and as self-reported on a company's annual reports, the company's Illinois franchise taxes would be reduced by the percentage of the value of its gross assets held outside the state of Illinois.

Failure to resolve issues regarding a company's Illinois franchise taxes could result in the Secretary of State's office refusing to issue a good standing certificate or to accept for filing a company's articles of merger, articles of dissolution, an annual or cumulative report, or any other required corporate filing.

Amnesty Program In Effect

The Illinois Secretary of State's office is currently offering an amnesty program until November 15, 2019, to allow companies to pay any franchise taxes owed for past years, without interest or penalties.

We Can Help You

If you would like to discuss this further, or need assistance in requesting amnesty, please contact us. We have addressed the Illinois franchise tax amnesty program in a recent Client Alert:

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