Overview of Illinois Sales Tax Obligations
Illinois law requires used car dealers that sell, repair, rent, or provide services to act as an agent to the state. These dealers must remit all sales tax collected to the State of Illinois.
Car dealers are a major source of sales tax revenue for the state and, as such, face close scrutiny from the Illinois Department of Revenue (IDOR). This is primarily because each item sold typically involves a high dollar value and corresponding amount of sales tax collected.
IDOR Scrutiny and DMV Records
Car dealers throughout Illinois are at risk of audits because the IDOR has direct access to DMV records, which detail exactly which vehicles are sold by a dealer.
In fact, the IDOR announced plans to start a statewide audit campaign on the used car dealer industry starting late summer, 2014.
If you are in this industry, then please take your sales tax responsibilities very, very seriously.
Sales Tax Collection and Remittance
Separate Statement Requirement
Illinois sales tax is required to be separately stated on the customer’s invoice.
Ownership of Collected Tax
Illinois law mandates that the taxes collected be the property of the state from the moment it is collected from the customer.
Therefore, despite placing these amounts into their own checking accounts, business owners must:
- Segregate sales tax collected
- Remit it to the state in a timely fashion
Get Legal Help
Call our office to discuss your audit at (888) 577-1482.
Frequently Asked Questions
What are Illinois car dealers’ responsibilities for collecting sales tax?
Illinois car dealers are legally required to collect sales tax on vehicle sales and related services. This sales tax must be separately stated on the customer’s invoice and properly remitted to the State of Illinois.
Why are Illinois used car dealers frequently audited by the IDOR?
The Illinois Department of Revenue (IDOR) often audits used car dealers because they have direct access to DMV records, which show exactly which vehicles were sold. Since car sales typically involve large transactions, they represent significant sales tax revenue, prompting close scrutiny.
How should collected sales tax be handled by Illinois car dealers?
Collected sales tax is considered the property of the State of Illinois from the moment it is collected. Dealers must segregate these funds from other business revenues and ensure timely remittance to avoid legal complications.
What is the separate statement requirement for Illinois sales tax?
Illinois law mandates that sales tax must be listed as a separate line item on customer invoices. This ensures transparency and compliance with state regulations for both the dealer and the customer.
What should I do if I’m facing a sales tax audit in Illinois?
If you are facing a sales tax audit in Illinois, it is advisable to seek professional legal assistance. You can contact our office at (888) 577-1482 to discuss your specific situation and receive guidance on how to proceed.