Illinois – Common Errors Identified in Tax Audits

SALT Report 1252 – The Illinois Department of Revenue released an informational guide regarding sales and use tax returns and audit prevention.  The Department found that a significant number of taxpayers are incorrectly exempting items that are taxable in Illinois. Many of the most common mistakes are found in sales and use tax compliance.

Sales Tax

Exemption documentation is the number one source of mistakes found during an audit. Taxpayers claiming deductions either on a return or by elimination must maintain and have available any documentation received to support the deductions during the audit process. Examples of acceptable documentation include:

  • Sales for Resale – A completed CRT-61 Certificate of Resale with valid information
  • Sales to Exempt Organizations – The Tax Exempt Identification Letter issued by the Illinois Department of Revenue
  • Sales in Interstate Commerce – Bills of Lading, UPS or comparable business shipment log books, and delivery log books for the businesses vehicles must be complete and available for review

Use Tax

All taxpayers need to voluntarily comply with Illinois’ use tax laws and remit use tax to the Department if the supplier or vendor of tangible personal property for use or consumption fails to collect use tax from the purchaser. Illinois residents who make purchases of tangible personal property from non-registered out-of-state retailers or those who make purchases of tangible personal property from servicepersons who do not pay use tax directly to the DOR must file Form ST-44, Illinois Use Tax Return.

You may complete Form ST-44 electronically on the Department’s website.  If you owe less than $600 the return and tax will be due April 15th of the year following the year in which the purchase was made. If the total tax liability for the year is more than $600, the return and tax will be due the last day of the month following the month in which the purchase was made.

For More Information:

Illinois Department of Revenue – Common Errors Identified in Tax Audits