Sales Tax Fraud Attorney in Chicago

By: Mansoor Ansari, Chicago Tax Attorney

As a business owner Chicago, Illinois, you have duties to report your sales tax collected, like any other retail business. Over the last two years, the Attorney General has been coming down hard on unremitted sales tax. Over the last year, they went from imposing civil penalties to criminal tax fraud charges; upon conviction, there can be jail time.

If you have been charged or have now found yourself under the scrutiny of the Illinois Department of Revenue for sales tax fraud, call our office to discuss your case. You may be looking at civil penalties or a criminal prosecution. These are two different types of cases that need to be handled in an entirely different court room and procedure. The Illinois Attorney General created the new crime of Sales Tax Evasion and imposed graduated penalties based on the amount of sales taxes that were evaded. Below is a breakdown of the crime and punishment:

  1.  For amounts less than $500, a Class 4 felony punishable by one to three years in prison
  2.  For amounts less than $10,000, a Class 3 felony punishable by two to five years;
  3.  for amounts less than $100,000, a Class 2 felony punishable by three to seven years
  4.  For more than $100,000, a Class 1 felony punishable by six to 30 years.

In August 2012, under the new law, Sultan Gilani, 61, of Chicago, was formally charged today in Cook County Circuit Court with four counts of sales tax fraud and four counts of mail fraud, each a Class 3 felony punishable by two to five years in the Illinois Department of Corrections.

The state alleges that from 2009 to 2011, the defendant, defrauded the state of Illinois of more than $324,000 in sales taxes for gasoline sold at his Crestwood gas station, Synergy Oil Corporation, 13830 S. Pulaski Rd.  In August 2010, Madigan and the Department of Revenue launched the criminal enforcement operation to recoup millions of dollars in sales tax losses after discovering hundreds of gas stations throughout Illinois underreported their revenues to avoid paying taxes to the state.

Below is a list of possible violations and their penalties.

IFTA Civil Violations

Failure to display your motor fuel use tax (IFTA) license: First Offense: Traffic citation plus $1,000 penalty (minimum) Second or Subsequent Offense: Traffic citation plus $2,000 penalty (minimum) Failure to display your motor fuel use tax (IFTA) decals. First Offense: Traffic citation plus $1,000 penalty (minimum) Second or Subsequent Offense: Traffic citation plus $2,000 penalty (minimum) Operating without a single-trip permit. First Offense: Traffic citation plus $1,000 penalty (minimum) Second or Subsequent Offense: Traffic citation plus $2,000 penalty (minimum) Operating with a revoked motor fuel use tax (IFTA) license.

IFTA Criminal Offenses

Operating without a valid motor fuel use tax license. Failure to file a quarterly motor fuel use tax return. Failure to make payment of motor fuel use taxes due.Filing a false quarterly motor fuel use tax return. Filing a false motor fuel use tax application or decal order form. Failure to keep books and records. Refusing upon demand to submit for inspection and examination the required books and records.

Dyed Diesel Violations

An agent of the Illinois Department of Revenue may ask to inspect your fuel tanks for any presence of dye. Persons refusing to allow an inspection shall pay a $1,000 penalty for each refusal. Any license or permit issued under the Motor Fuel Tax Law may be revoked for refusing to allow an inspection.  Specific violations for dyed diesel include:

Knowingly selling or attempting to sell dyed diesel fuel for highway use: First Offense: $2,500 fine Class A misdemeanor. Second or Subsequent Offense: $5,000 fine Class 4 felony.Knowingly sell, store, or transport dyed diesel fuel without the required notices: First Offense: $500 fine Second or Subsequent Offense: $1,000 fine Having dyed diesel in the fuel tanks attached to a licensed motor vehicle: First Offense: $1,000 fine, Class A misdemeanor Second or Subsequent Offense: $5,000 Class 4 felony Knowingly selling or attempting to sell dyed diesel fuel for use in a recreational-type watercraft: First Offense: $1,000 fine Class 4 felony. Second or Subsequent Offense: $5,000 fine Class 2 felony Knowingly possessing dyed diesel for use in recreational-type watercraft: First Offense: $1,000 fine Class A misdemeanor Second or Subsequent Offense: $5,000 Class 2 felony Contact our law firm at (312) 265-5626 to discuss your case with Mansoor Ansari J.D., LL.M. (TAX).