Illinois Business Sales & Use Tax, Chicago Rental Tax, and IRS Income Tax, Payroll Tax OVDP / FBAR Attorneys in Chicagoland.
As a Tax Law Firm in the Midwest, we work with the following departments:
IRS, Illinois Department of Revenue, Michigan Department of Treasury, and Ohio Department of Taxation, U.S. Tax Court, Illinois Tax Tribunal.
The Ansari Tax Law Firm LLC works with IDOR, MDOT, ODOT, IDES, Sales Tax, IRS audits, tax-debt restructuring, and offshore bank account disclosures. With years of experience dealing with Federal and State sales and income tax matters, our tax lawyers carefully design solutions for our clients using the most cutting edge technology for research, defense, and client management. We pride ourselves on our ability to quickly resolve IRS tax controversy cases. This involves cooperation from three parties: 1) Client 2) IRS or IDOR, and 3) Our law firm. For this reason, we only work with clients that understand that problems that have taken years to accrue, will also take time to resolve.
Sampling method used in Illinois sales tax audits
Sampling? Does it make any sense at all that the Auditor would audit your sales, then, when it came time to look through all of your books and records, that they would only pick 1-3 months out of a given year and then estimate the sales and profits for the entire year? If you think this is an entirely unfair and incompetent method, you are right. If you think this is fair, then, you are probably an auditor for the State and are enjoy getting paid for doing at best half your job.
Below are a few examples of how sampling will determine your sales tax liability:
Sampling for gross revenue:
Sampling to determine gross revenue works like this. The auditor takes your gross sales for January, June, and September, for a given year. They will add up the three months and then take an average sale. For example:
Average Sale: $8000.00
Do you notice the problem here? Our client in the example above is poised to make gross revenues of $96000.00 in sales; assuming the sales tax rate is 8.5%, their sales tax collection will be determined to be $8160.00. When the auditor takes the average sales figure, then, applies the sales tax rate for your county, you are left with the balance owed per the Auditor. Obviously, penalties and interest will apply to the difference in what you collected versus the Auditor’s findings.
Estimating your prices is even more ridiculous. It works like this. The auditor will looks to similar stores just like yours in your area, and there is no clear indication of what the “area” encompasses. However, they compare prices at other businesses and suggest that you should be selling the items at the same price. This does not take into account your clientele, sales, specials, giveaways – do you get the picture? However, the auditor will use these prices and profit margins of other businesses and compare them to yours. If you sell for less, then, the difference in estimated profits will be used to determine the difference in sales tax.
Estimating cash sales:
I intentionally saved the best for last. If all of your sales are on debit or credit card, then, you are out of luck. The Auditor will compare the amount of cash sales of similarly situated businesses to your cash sales. If they determine that the number of cash sales in the area is 5%, then, you have now lied to the auditor, as you are considered to be hiding an extra 5% of your gross sales. Again, tack 5% worth of gross sales to your liability and add penalties and interest.
As you can see, a sales tax audit can almost never go well without at least an appeal if not a managed audit by a sales tax attorney. You are guilty until proven innocent. The remedy is to file your case at the Illinois Tax Tribunal for a better outcome.
Illinois Cigarette sales tax and little cigars:
Despite opposition by aldermen from the city’s South and West Sides who have made the case that Mayor Rahm Emanuel’s tobacco-tax hike will lead to more black-market sales and violence, the Committee on Finance held a recessed meeting on Feb. 10, just minutes before the full City Council meeting, and passed the mayor’s plan by a roll-call vote of 22-9.Alderman Leslie Hairston, 5th Ward, and Alderman Brendan Reilly, 42nd Ward, made a motion to defer and publish the ordinance, effectively delaying a full City Council vote until March.
The average cost of a pack of cigarettes purchased in the city of Chicago is $12, $7.17 of which is taxes. The mayor’s plan would set a minimum price on a pack of cigarettes at $11.50, add a 15-cent tax per “little cigar,” impose a 90-cent tax on larger cigars, add a tax of $1.80 per ounce on smokeless tobacco, and a $6.60-per-ounce tax on roll-your-own tobacco. The new tax would fund a new summer orientation program for Chicago Public Schools freshmen, smoking cessation programs, and a remedial program for at-risk eighth graders.
Illinois Liquor License Revocation
If you have unpaid, under reported, or uncollected sales tax that is due to the state of Illinois, then, your Illinois Liquor License will be revoked. In a recent case, an honest client made a very honest mistake. As his profits began to dwindle during the recession, he fired his accountant. He then began filing his own ST-1 forms on a monthly basis. Two days before his liquor license renewal, he was contacted by the IDOR and was told that he was about $20,000.00 short on his sales tax deposits over the last four years. As a result, his license was suspended and he was forced to closed down his business for the next two days. He hired our firm to get his sales tax account straightened out with the IDOR. It was a great achievement for our firm as well as the client, when two days later, we scanned a copy of the new liquor license to our client’s place of business. Our office is located just blocks away from the Thompson center in downtown Chicago. We will fight your battle face-to-face with the Illinois Department of Revenue to get your Liquor License back on your wall and put you back in business!
If you are facing an audit, need to set up taxes and payroll for your business, or simply want to speak with us to see if you need a tax lawyer or not, give us a call today. Our local tax resolution Attorneys know how to help.
Mansoor Ansari J.D., LL.M. – Tax Attorney Chicago – Tax Attorney Rolling Meadows, Schaumburg, Lombard, Lisle, Naperville, Warrenville, Oak Brook;