A quote from the Office of the Attorney General:
“An ongoing investigation launched by the Attorney General’s Office and Department of Revenue’s Criminal Investigations Bureau in November 2009 has resulted in $67 million dollars recovered by prosecutors since they targeted gas-station offenders beginning in late 2009.”
The Challenge for Gas Station Owners
As an owner of a gas station in the Chicago-land area, you are most likely consumed with running your business at a profit versus keeping track of the sales tax that you remit on a monthly basis. Of course, you are trying to:
- Make sure that your employees get paid
- Maintain your costly business permits
- Take something back home to the wife and kids
The Illinois Department of Revenue heavily scrutinizes gas station owners for underpayment of sales tax related to Sales and Use Tax on Qualified Motor Fuel and Diesel Motor Fuel.
Collecting sales tax and remitting a lower amount to the State is tax fraud.
Legislative Response: Amendment 2 to House Bill 5289
Proposed Offense: Sales Tax Evasion
Amendment 2 to House Bill 5289 proposes a new offense of Sales Tax Evasion to prosecute serious offenders who evade paying Illinois sales tax. It is designed to pursue those who:
- Knowingly and willfully take action to conceal, misrepresent, falsify, or manipulate sales-tax returns or
- Engage in practices that under-report and reduce their tax revenue collections, documents, or payments
Enhanced Enforcement and Penalties
The new Sales Tax Evasion offense:
- Increases the ability to find and pursue sales-tax offenders
- Increases punishment and fine levels
- Extends the statute of limitations from 3 years to 5 years, aligning it with other evasion statutes for income taxes and motor fuel taxes
Frequently Asked Questions
What are the main risks for gas station owners in Illinois regarding sales tax?
Gas station owners in Illinois, particularly in the Chicago-land area, face significant scrutiny from the Illinois Department of Revenue for underpayment of sales tax on Qualified Motor Fuel and Diesel Motor Fuel. Underreporting or failing to remit collected sales tax can result in investigations, heavy penalties, and even criminal charges for tax fraud.
What is considered sales tax fraud for gas stations?
Sales tax fraud occurs when a gas station collects sales tax from customers but intentionally reports and remits a lower amount to the state. This includes any actions to conceal, misrepresent, falsify, or manipulate sales-tax returns to reduce the business’s tax liability.
What is Amendment 2 to House Bill 5289?
Amendment 2 to House Bill 5289 introduces a specific offense called “Sales Tax Evasion.” This law targets individuals and businesses that knowingly and willfully engage in actions to avoid paying the correct amount of Illinois sales tax, through methods like falsifying documents or under-reporting taxable revenue.
How has the enforcement of sales tax laws changed for gas stations?
The enforcement has become significantly stricter. The Sales Tax Evasion law increases the statute of limitations from 3 to 5 years and aligns penalties with those for income and motor fuel tax evasion. It enhances the state’s ability to detect and prosecute offenders and imposes harsher fines and punishments.
How much has the Illinois Attorney General recovered from gas station sales tax fraud investigations?
Since investigations began in 2009, the Illinois Attorney General’s Office, in collaboration with the Department of Revenue’s Criminal Investigations Bureau, has recovered approximately $67 million from gas station owners involved in sales tax fraud. This underscores the seriousness with which Illinois authorities pursue these violations.