Chicago is infamous for its sales tax. The rate of 10.75%, which was recently lowered to 9.75% in July, was the highest of any major city in the US and was often used as a reference point for the rest of the nation. Sales taxes in Chicago are known for being complicated. A five dollar sandwich bought in Uptown costs $5.50 after tax. The same sandwich bought near our office in River North, costs $5.55 thanks to a 1% tax increase on everything within a certain radius of downtown.
Sales tax can be confusing and inconvenient for consumers, but it is business owners who bare the responsibility of ensuring they collect and pay to the state the required sales taxes.
Last month the Illinois Attorney General announced indictments against six gas station owners on multiple counts of sales tax fraud each. These six were the latest in an investigation the Illinois Department of Revenue (IDOR) has been conducting since 2008 and which has charged 66 gas station owners and collected nearly $13 million in unpaid sales taxes. The Illinois government has made it clear it taking sales tax evasion seriously. Attorney General Lisa Madigan has said tax evaders “will be aggressively prosecuted.” Illinois law allows a jail sentence of two to five years for each count of sales tax evasion.
IDOR is obviously interested in more than just gas station owners. Sales tax audits are routinely conducted to make sure businesses have paid their taxes and they are often conducted at random.
If you are currently be audited or for more information regarding sales tax or other tax issues, contact the tax attorneys of Horowitz & Weinstein.