The Illinois Department of Revenue has been investigating sales tax evasion among gas station owners since 2008.  Last month that investigation produced its latest string of indictments.  Six owners were indicted, each with multiple counts of sales tax fraud.  This brings the total number of gas station owners indicted since 2008 up to 66.  IDOR reports it has collected almost $13 million worth of unpaid sales taxes so far.

The penalties for tax evasion can be severe.  Each of the six owners indicted last month, if charged, faces a 2 to 5 year prison sentence for each count of tax evasion.  Tax evasion is taken seriously in any state—a government, after all, has a vested interest in protecting its revenue stream—but the situation in Illinois is made more difficult by our complex sales tax laws.  This is most pronounced in Chicago which has the distinction of having both the highest sales tax in the country but also of having one of the most complicated system.  There’s a base tax rate of 9.75%.  Certain essential items, food and medical supplies, are taxed at 2%.  A variety of items then incur additional taxed including cigarettes, alcohol, soft drinks and bottled water.  Finally, anything purchased within a set proximity to downtown or at O’Hare or Midway airports incurs an additional tax.

Although the investigation begun in 2008 that produced six arrests last month is focusing on gas stations, IDOR routinely audits businesses of all types to ensure they have been paying their taxes.  Attorney General Lisa Madigan has indicated  that all tax evaders will be brought to justice.

If you are currently being audited by the Illinois Department of Revenue or the IRS, have unpaid tax issues, or for more information about sales tax, income tax or  other tax concerns, contact the Chicago Tax Attorneys of Horowitz & Weinstein.

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