Is Your Business Under an Illinois Tax Audit?
Being notified and going through the procedure of an Illinois tax audit can be a daunting proposition. The process begins with your receipt of a Notice of Intent to Audit Books and Records from the Illinois Department of Revenue (IDOR). The auditor will be looking for violations of Illinois tax law and whether additional taxes, along with penalties and interest, can be assessed against you.
You should understand from the start that a Department of Revenue auditor’s job is NOT to help you accurately determine your tax liabilities. THE AUDITOR’S JOB IS TO FIND ADDITIONAL TAXES DUE. It is that simple. If the auditor can call into question an entry or record, then the auditor will do so – and usually project that one record across the entire three-year audit period, exponentially increasing your proposed Illinois tax assessment.
What Are Illinois Tax Auditors Looking For?
Particularly with a business, the IDOR will look for instances where your business has collected sales tax from customers but failed to remit all or part of these monies to the state. Collecting but not remitting Illinois taxes (think Sales Tax or Unemployment Tax) is one of the worst possible things a business owner can do with regard to Illinois taxes.
If you consider penalties and interest to be painful, then you might be surprised to find out that collecting but not remitting Illinois taxes can land a business owner in jail. Under Illinois law, collecting but not remitting these “trust fund taxes” is considered stealing from the state, and the business owner and employees can be charged with as high as a felony under certain circumstances.
Why You Should Not Handle an Illinois Tax Audit Alone
Even if you feel you have been compliant, we strongly recommend that you do not represent yourself during an Illinois tax audit. The Illinois Department of Revenue auditors have many tricks up their sleeves that can limit your rights under Illinois law.
It is vital to have a knowledgeable and experienced tax professional to assist you through all stages of the audit, from the initial notice through to its conclusion.
Illinois Tax Audit Protection
How We Protect You
The IDOR will ask to either do a “Desk Audit” in one of their offices or a “Field Audit” at your place of business. You should consider saying “NO” to either request, or better yet – let us say no for you. Do not let an auditor into your business; make the auditor come to your tax professional’s office.
We know how to control the audit so the auditor does not go on a “fishing expedition” looking for ways to accuse your business of underpaying taxes.
Common Types of Illinois Taxes Audited
These are commonly the types of Illinois taxes that are audited:
All auditors request certain records and ask questions regarding your business and accounting methods. Often, the auditor will ask for things that (s)he has no right to demand or will ask the taxpayer to sign documents that the taxpayer does not have to sign.
We know the games the Illinois Department of Revenue auditors play and how to defend against them. With more than 5 decades of experience as attorneys and CPAs, our firm strives to assist you no matter the type of tax that is being audited.
The Power of the Illinois Department of Revenue
The Illinois Department of Revenue auditor has the authority to assess:
Additional taxes
Penalties
Interest
They can also refer your case to the DOR criminal investigation division.
Illinois Department of Revenue auditors may be highly trained in tax law, but they have been taught to constantly suspect you are underpaying tax and to find ways to prove it.
Don’t you want your tax professional to have greater knowledge and experience than the auditors, who are coming to your business to look for ways to accuse your business of underpaying Illinois taxes?
Contact Our Attorney
If your business is facing an Illinois tax audit, protect yourself by contacting our experienced Sales Tax Audit Defense Attorney today.
Frequently Asked Questions
What triggers an Illinois tax audit?
An Illinois tax audit is typically triggered when the Illinois Department of Revenue (IDOR) detects discrepancies in tax filings, such as underreported income, unfiled tax returns, or failure to remit collected taxes. Businesses that collect but do not remit sales or unemployment taxes are especially vulnerable to audits.
What should I do after receiving a Notice of Intent to Audit?
Upon receiving a Notice of Intent to Audit Books and Records, it’s crucial to seek assistance from a tax professional or attorney immediately. Do not respond or provide records on your own, as doing so without legal guidance may increase your exposure to penalties or criminal charges.
Can I represent myself during an Illinois tax audit?
While it’s legally possible to represent yourself, it is not advisable. IDOR auditors are trained to find additional taxes due and may use tactics that limit your rights. A knowledgeable tax professional can safeguard your interests and help avoid unnecessary liabilities.
What are the consequences of not remitting collected Illinois taxes?
Failing to remit collected sales or unemployment taxes is treated as theft under Illinois law. Business owners and employees may face severe penalties, including fines, interest, and even felony charges, depending on the amount and intent.
How can a tax attorney help during an audit?
A tax attorney can manage communication with the auditor, prevent unwarranted record demands, and ensure that your rights are protected throughout the process. They can also guide strategic responses and help reduce the risk of criminal referral or excessive assessments.
