Sales Tax Revocation

By: Mansoor Ansari, Chicago Tax Attorney

Immediate Action Required

If the Illinois Department of Revenue has revoked your sales tax certificate of registration, contact our law firm immediately. This problem will not resolve itself and can result in your business being shut down overnight.

A common cause of revocation is when a vendor fails to report a sale within the required timeframe. Under 35 ILCS 120/5j, the Act states:

If any taxpayer, outside the course of his business, sells or transfers the major part of any one or more of:

(A) The stock of goods which he is engaged in the business of selling, or
(B) The furniture or fixtures
(C) The machinery and equipment
(D) The real property

of any business that is subject to the provisions of this Act, the purchaser or transferee of such asset shall, no later than 10 days after the sale or transfer, file a notice of sale or transfer of business assets with the Chicago office of the Department…

If the purchaser or transferee fails to file the above-described notice within the prescribed time, they shall be personally liable for the amount owed by the seller or transferor to the Department, up to the amount of the reasonable value of the property acquired… (emphasis added)

Rejection of Application for Certificate

In certain cases, a retailer’s application for a sales tax certificate of registration may also be rejected.

Under Section 2a of the Retailers’ Occupation Tax Act (ROTA) (35 ILCS 120/1 et seq.), it states:

It is unlawful for any person to engage in the business of selling tangible personal property at retail in this State without a certificate of registration from the Department.

No certificate of registration shall be issued to any person who is in default to the State of Illinois for money due under this Act or under any other State tax law or municipal or county tax ordinance or resolution, under which the certificate of registration would otherwise permit the applicant to operate without registering separately under such other law, ordinance, or resolution.  35 ILCS 120/2a

Additionally, Section 5 of the ROTA provides that the Department’s determination regarding a tax liability is prima facie correct (35 ILCS 120/5).

Once the Department establishes its prima facie case, the burden shifts to the taxpayer to prove , through sufficient documentary evidence , that the Department’s determination is incorrect.

See:

• Mel-Park Drugs, Inc. v. Department of Revenue, 218 Ill.App.3d 203, 217 (1st Dist. 1991)

• Lakeland Construction Co., Inc. v. Department of Revenue, 62 Ill.App.3d 1036, 1039 (2nd Dist. 1978)

Legal Help to Restore Certification

If your business has had its Illinois sales tax certification of registration revoked, our attorneys can assist you in getting it back.

Contact our attorney

Frequently Asked Questions

What should I do if my Illinois sales tax certificate of registration is revoked?

If your certificate has been revoked, you should immediately contact a qualified tax attorney. The issue will not resolve on its own and may lead to your business being shut down quickly. Prompt legal assistance can help initiate corrective actions and restore your certification.

Why does the Illinois Department of Revenue revoke sales tax certificates?

One of the most common reasons is failure to report a sale of business assets in a timely manner. If a vendor sells or transfers major parts of their business assets without notifying the Department within 10 days, both the buyer and seller may face liability. This often leads to revocation of the certificate.

Can my application for a sales tax certificate be denied?

Yes, under Section 2a of the Retailers’ Occupation Tax Act (ROTA), the Department can reject your application if you owe taxes to the state or local government. You must be in good standing with all relevant tax obligations to be eligible for a certificate.

How can I challenge a tax liability determined by the Department?

Once the Department determines a liability, it is presumed correct. The burden is on you, the taxpayer, to prove otherwise with proper documentary evidence. This typically requires legal guidance to effectively dispute the determination.

Is it possible to restore my revoked sales tax certificate?

Yes, with the help of an experienced tax attorney, you can take steps to restore your certification. This may involve addressing outstanding issues, submitting proper documentation, and negotiating with the Department of Revenue to reinstate your registration.