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.
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. The business owner and employees can be charged with as high as a felony under certain circumstances.
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.
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).
These are commonly the types of Illinois taxes that are audited:
Sales Tax
Unemployment Tax
Corporate Income Tax
Other state-assessed taxes
All auditors request certain records and ask questions regarding your business and accounting methods. Often the auditor will ask for things that they have 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 five decades of experience as attorneys and CPAs, our firm strives to assist you no matter the type of tax that is being audited.
The Illinois Department of Revenue auditor has the authority to assess additional taxes plus penalties and interest. They can also give your case over 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 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?
If your business is facing an Illinois sales tax audit, contact our experienced attorneys today to protect your rights and minimize your risk.
An Illinois tax audit is typically triggered by discrepancies in tax filings, random selection, or red flags such as unremitted sales tax. Once flagged, the Illinois Department of Revenue (IDOR) sends a “Notice of Intent to Audit Books and Records” to begin the process.
A Desk Audit is conducted at an IDOR office, while a Field Audit takes place at the business location. However, it is often advisable to redirect the audit to your tax professional’s office to maintain control over the process and avoid unnecessary scrutiny.
Yes. Collecting sales tax from customers but failing to remit it to the state is considered theft under Illinois law. Depending on the circumstances, this offense can result in felony charges and potential jail time.
It is strongly discouraged to represent yourself. IDOR auditors are trained to identify underreported taxes and may use strategies that limit your rights. Having an experienced tax attorney or CPA ensures your rights are protected and minimizes potential liabilities.
The Illinois Department of Revenue frequently audits sales tax, unemployment tax, corporate income tax, and other state-assessed taxes. They may also scrutinize accounting methods and documentation to uncover additional liabilities.
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Ansari Law Firm is a multi-state business and state tax law firm, with offices in Texas (Dallas, Fort Worth, San Antonio & Houston), Georgia and Illinois.
Ansari Law Firm is a multi-state business and state tax law firm, with offices in Texas (Dallas, Fort Worth, San Antonio & Houston), Georgia and Illinois.
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