Illinois Use Tax Amnesty set to expire on 10/15/11

By Jean Gerstbrein

Illinois Use Tax does not only apply to businesses but to individual taxpayers as well.  The Illinois Department of Revenue (IDOR) is stepping up enforcement efforts to collect Use Tax from Illinois taxpayers.

What is Use Tax and how does it apply to the Illinois individual taxpayer?

Use Tax is a sales tax that a purchaser owes on items that they buy and use in Illinois.  If a seller does not collect at least 6.25% in sales tax, the purchaser must pay the difference to the Illinois Department of Revenue.  For example, if a taxpayer purchased a boat or jewelry in a state bordering Illinois, such as Iowa or Kentucky, and pays a sales tax rate lower than 6.25%, the taxpayer has an obligation to pay the State of Illinois the difference.  Other common purchases on which a seller may not collect Illinois Use Tax are those made via the internet, from a mail order catalog or made when traveling outside of Illinois, even purchases made while traveling abroad.  The Illinois Department of Revenue requires a purchaser to keep the receipts for these types of purchases and pay the applicable Use Tax to the State of Illinois.  This obligation of the Illinois taxpayer has been in existence since 1955 when the General Assembly passed the Use Tax Act.  However, many taxpayers have not been aware of their obligation to pay this tax.  The State of Illinois is now increasing its Use Tax collection efforts.  According to the IDOR website, the Department conducts routine audits based on information received from third parties, including the U.S. Customs Service and from other states.

What is the Use Tax Amnesty Program?

The Illinois Use Tax Amnesty Program allows taxpayers to pay their past outstanding use tax liabilities and to have the penalties and interest waived for taxes paid in full during the amnesty period.  The current Use Tax Amnesty program covers purchases a taxpayer made from July 1, 2004 through December 31, 2010.  To avoid penalty and interest charges a taxpayer must file and pay any outstanding Use Tax obligations by October 15th, 2011.

How to file and request Amnesty?

If a taxpayer determines that they have made purchases during the period July 1, 2004 through December 31, 2010 on which they have not paid the Use Tax and would like to request amnesty, they should file an Illinois Use Tax Return (Form ST-44) for the applicable years and purchases.  On top of the Use Tax Return, they should write “Amnesty” in red. The form ST-44 can be found on the Illinois Department of Revenue website (http://tax.illinois.gov/taxforms/Sales/ST-44.pdf).

Remember that this Amnesty program is only for individual taxpayers and not businesses. The Amnesty period expires on October 15, 2011.  If you determine that you have outstanding Use Tax liabilities please consider taking advantage of this program.  If you need assistance completing the Illinois Use Tax return please consult your BSD client account manager.