Sales Tax Enforcement in Chicago
Since May 2012, the Illinois Department of Revenue has been on a rampage collecting “unpaid” sales tax. However, this process of statistical sampling on the side of the IDOR is a direct result of a lack of documentation.
In recent times, we have had clients purchase goods for their stores from Jewel Osco and Ultra Foods. By not holding onto the receipts, the IDOR has levied “unpaid” sales tax with a penalty and interest simply for the reason that there is no proof of sales tax paid on the purchases from the local grocery stores.
Hold onto your receipts!
Frequently Asked Questions
What is the Illinois Department of Revenue (IDOR) focusing on with sales tax audits?
The Illinois Department of Revenue (IDOR) has been aggressively pursuing unpaid sales tax since May 2012. Their primary focus is on businesses that lack proper documentation, often using statistical sampling methods to assess unpaid taxes.
Why are grocery store purchases like Jewel Osco and Ultra Foods being questioned in audits?
Purchases from stores like Jewel Osco and Ultra Foods are commonly questioned because businesses fail to retain receipts. Without proof that sales tax was paid on these purchases, IDOR assumes tax was not paid and levies penalties accordingly.
What penalties can occur from lacking proper receipts for purchases?
If you don’t keep receipts for your purchases, the IDOR may assess unpaid sales tax and add penalties and interest. This can significantly increase your financial liability during an audit.
How can I protect my business from sales tax audits in Chicago?
The best protection is maintaining thorough records, especially receipts for all purchases. This documentation serves as evidence that the appropriate sales tax has been paid.
Who can help if I’m facing a sales tax audit in Illinois?
Consulting with a qualified tax attorney, such as Mansoor Ansari J.D., LL.M.(TAX), who has experience dealing with IDOR audits and enforcement actions, can help you navigate the process and protect your interests.