Illinois law requires used car dealers that sell, repair, rent, or provide services to act as an agent to the state and they must remit all sales tax collected to state of Illinois. Car dealers are a major source of sales tax revenue for the state of Illinois and, as such, face close scrutiny from the Illinois Department of Revenue, since each item sold holds a large dollar value of sales tax collected. Car dealers throughout Illinois are at risk because the IDOR has records directly from the DMV as to 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.
Most importantly, Illinois sales tax is required to be separately stated on the customers invoice and Illinois law mandates that the taxes collected be the property of the state from the moment it is collected from the customer. Therefore, despite putting these amounts in their own checking accounts, business owners must segregate sales tax collect and remit it to the state in a timely fashion.
Call our office to discuss your audit at 312-265-5626.