Accounting Articles > Illinois Sales and Use Tax Audit:
Chicago Sales Tax Audits
The term “sales tax audit” is actually misnamed. All of the taxes collected by the Illinois Department of Revenue will generally be examined. They are not just looking to enforce existing sales tax law, but also income tax, use tax, and payroll taxes.
Remember that the Illinois Department of Revenue is where you send your state income tax return. In addition, they generally look for any use tax that hasn’t been paid. Use tax is when you purchase something for use in your business from outside of the state of Illinois, and didn’t pay sales tax on the item. You are required to pay tax for its use inside the state. Also, they will generally make sure that you are handling your payroll taxes properly.
The whole point is that no matter what business you are in, because they are generally enforcing four different types of tax law, a sales tax audit is not a laughing matter. If you are a manufacturer, a general contractor, or another business that has never collected a dime of sales tax, take this seriously. If you are not handling your payroll taxes properly, this will turn into a nightmare. If you haven’t reported all of your income, you could be guilty of income tax evasion.
Recently we have had a large increase in the number of sales tax audits occurring, not just in Chicago, but throughout the state of Illinois. It seems that whenever the state runs out of money, they simply increase the number of audits, which in turn increases their revenues.
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