Press Room: Tax Release

August 10, 2011

Illinois Aggressively Collecting Taxes on Out-of-State Purchases

Have you purchased artwork, jewelry, furs, or other large ticket items from businesses located outside Illinois and either brought them or had them shipped to you inside the state?  Have you purchased an automobile, boat or aircraft for use in Illinois that you registered out of state to avoid the sales tax?  If you did not pay sales tax to the retailer in any of the above scenarios, you probably have an Illinois Use Tax obligation.  States like Illinois are aggressively going after individuals to collect use tax plus interest and penalties, which may end up being more than the tax that was originally due.  For example, the Illinois tax due on the purchase of $250,000 of artwork or jewelry would be more than $15,000 in tax plus interest, civil penalties (2%-50% of tax) and possible criminal penalties.

This is an ever increasing issue as Internal Revenue Service Commissioner, Douglas Shulman, announced an audit program specifically designed “to crack down on tax evasion and increase the overall tax compliance of wealthy Americans.” For more on that initiative, read our September 2010 newsletter article, The IRS "Holistic" Audit: A Misnomer?

Beginning January 1, 2011 through October 15, 2011, The State of Illinois has instituted a Use Tax amnesty program which is available to individual taxpayers to remit their outstanding use tax liabilities.  This program is available only to individuals and applies to use tax owed on purchases of tangible personal property used in the state of Illinois.

Some Specifics about the Illinois Use Tax Amnesty:

  • The amnesty application period runs from January 1, 2011 through October 15, 2011.
  • Amnesty applies to use taxes due for purchases made between June 30, 2004 and prior to January 1, 2011.
  • Amnesty is applicable for use tax owed on purchases of tangible personal property from a retailer for use in Illinois.
  • If an eligible tax liability is paid in full during the amnesty period, penalties and interest will be waived. 

Once you are contacted by the Illinois Department of Revenue, you are no longer eligible to participate. If you feel that you may be affected by this tax issue, please contact your tax advisor as soon as possible.