Sales Tax Duties for Gas Station Owners
As a gas station owner in Chicago, Illinois, you have duties to report your sales tax collected, like any other retail business. Over the last two years, the Attorney General has been coming down hard on unremitted sales tax. Over the last year, they went from imposing civil penalties to criminal tax fraud charges; upon conviction, there can be jail time.
Facing Sales Tax Fraud Charges
If you have been charged or have now found yourself under the scrutiny of the Illinois Department of Revenue for sales tax fraud, call our office to discuss your case. You may be looking at civil penalties or a criminal prosecution. These are two different types of cases that need to be handled in an entirely different court room and procedure.
Sales Tax Evasion: Crime and Punishment
The Illinois Attorney General created the new crime of Sales Tax Evasion and imposed graduated penalties based on the amount of sales taxes that were evaded.
Penalty Breakdown
- Less than $500
Class 4 felony, punishable by one to three years in prison - Less than $10,000
Class 3 felony, punishable by two to five years - Less than $100,000
Class 2 felony, punishable by three to seven years - More than $100,000
Class 1 felony, punishable by six to 30 years
Case Example: Sultan Gilani
In August 2012, under the new law, Sultan Gilani, 61, of Chicago, was formally charged in Cook County Circuit Court with four counts of sales tax fraud and four counts of mail fraud, each a Class 3 felony punishable by two to five years in the Illinois Department of Corrections.
The state alleges that from 2009 to 2011, the defendant defrauded the state of Illinois of more than $324,000 in sales taxes for gasoline sold at his Crestwood gas station, Synergy Oil Corporation, 13830 S. Pulaski Rd.
In August 2010, Madigan and the Department of Revenue launched the criminal enforcement operation to recoup millions of dollars in sales tax losses after discovering hundreds of gas stations throughout Illinois underreported their revenues to avoid paying taxes to the state.
Possible Violations and Penalties
IFTA Civil Violations
- Failure to display your motor fuel use tax (IFTA) license:
- First Offense: Traffic citation + $1,000 penalty (minimum)
- Second/Subsequent: Traffic citation + $2,000 penalty (minimum)
- Failure to display your IFTA decals:
- First Offense: Traffic citation + $1,000 penalty (minimum)
- Second/Subsequent: Traffic citation + $2,000 penalty (minimum)
- Operating without a single-trip permit:
- First Offense: Traffic citation + $1,000 penalty (minimum)
- Second/Subsequent: Traffic citation + $2,000 penalty (minimum)
- Operating with a revoked IFTA license
IFTA Criminal Offenses
- Operating without a valid motor fuel use tax license
- Failure to file a quarterly motor fuel use tax return
- Failure to make payment of motor fuel use taxes due
- Filing a false quarterly motor fuel use tax return
- Filing a false motor fuel use tax application or decal order form
- Failure to keep books and records
- Refusing upon demand to submit required books and records for inspection
Dyed Diesel Violations
An agent of the Illinois Department of Revenue may ask to inspect your fuel tanks for any presence of dye. Refusing inspection results in a $1,000 penalty per refusal, and your Motor Fuel Tax license or permit may be revoked.
Specific Violations Include:
- Knowingly selling or attempting to sell dyed diesel fuel for highway use:
- First Offense: $2,500 fine, Class A misdemeanor
- Second/Subsequent: $5,000 fine, Class 4 felony
- Knowingly sell, store, or transport dyed diesel without required notices:
- First Offense: $500 fine
- Second/Subsequent: $1,000 fine
- Having dyed diesel in fuel tanks of a licensed motor vehicle:
- First Offense: $1,000 fine, Class A misdemeanor
- Second/Subsequent: $5,000 fine, Class 4 felony
- Knowingly selling or attempting to sell dyed diesel for use in recreational watercraft:
- First Offense: $1,000 fine, Class 4 felony
- Second/Subsequent: $5,000 fine, Class 2 felony
- Knowingly possessing dyed diesel for use in recreational-type watercraft:
- First Offense: $1,000 fine, Class A misdemeanor
- Second/Subsequent: $5,000 fine, Class 2 felony
Contact Our Law Firm
Call (888) 577-1482 to discuss your case
Frequently Asked Questions
What are the sales tax obligations for gas station owners in Illinois?
Gas station owners in Illinois, like all retail businesses, are required to collect and remit sales tax on applicable transactions. Failure to do so can lead to severe penalties, including civil fines and potential criminal charges if tax evasion is involved.
What are the potential criminal penalties for sales tax evasion?
Illinois law imposes graduated penalties for sales tax evasion, ranging from a Class 4 felony for amounts under $500 (1-3 years imprisonment) to a Class 1 felony for evasion over $100,000 (6-30 years imprisonment). These penalties can include both prison time and substantial fines.
What is the Illinois Department of Revenue’s role in fuel tax enforcement?
The Illinois Department of Revenue actively inspects gas stations for compliance with sales and fuel tax laws. This includes verifying the proper display of IFTA licenses and decals, and ensuring there is no unlawful use or sale of dyed diesel fuel.
What are the penalties for violations related to dyed diesel fuel?
Knowingly selling, storing, or using dyed diesel fuel improperly can result in fines ranging from $500 to $5,000 and criminal charges from a Class A misdemeanor to a Class 2 felony, depending on the severity and repeat offenses.
What should I do if I’m facing sales tax fraud or fuel tax violation charges?
If you’re under investigation or have been charged with sales tax fraud or related offenses, it’s critical to consult with an experienced tax attorney. Contacting a law firm like Mansoor Ansari, J.D., LL.M. (TAX), can help you understand your legal options and potential defenses.