Skip to comments.Illinois wants web shoppers to report, pay online sales tax
Posted on 03/09/2011 5:57:14 PM PST by Freedumb
If you think making purchases online means you dont have to worry about paying the state sales tax, think again.
As the state continues to grapple with a big deficit the Illinois Department of Revenue this year has begun targeting those purchases on state tax forms and is seeking to collect.
This year, for the first time, taxpayers are being asked how much they owe in so-called use taxes on the Illinois 1040 tax form. The law already required taxpayers to pay the use tax, but it wasnt listed on the basic form.
A use tax is a form of sales tax that applies to purchases made outside Illinois, but used in the state. The tax, which is 6.25 percent of the purchase price, applies to online purchases made from businesses that dont have brick and mortar locations in the state and that dont charge Illinois sales taxes, according to the Illinois Department of Revenue. That includes companies like Amazon.com, but not Barnes & Noble or Macys, who charge sales taxes online. The use tax also applies to catalog and home shopping network purchases from out-of-state companies that dont charge sales taxes.
The state expects to collect $5 million to $6 million in such taxes this year, said department spokeswoman Susan Hofer.
For taxpayers who know how much they spent, the 1040 instruction forms include a worksheet to help calculate what is owed.
If you made such purchases but are clueless on how much you spent, the forms include a guide in estimating how much you owe, based on adjusted gross income. For individuals with income between $50,001 and $75,000, the state estimates that such purchases amounted to $608, and the estimated tax owed is $38. For those with incomes between $20,001 and $30,000, purchases are estimated at $240, and the tax owed is estimated at $15.
The state expects filers to honestly report what they owe. And if the state later finds out that you owe more, you can face penalties and interest, Hofer noted.
While the amounts arent much, the tax still kind of hit people between the eyes because they didnt expect it, said Judi Strauss, an enrolled agent and owner of Strauss Tax Service with offices in Chicago and Downers Grove.
Taxpayers cant leave Line 22 blank on the 1040 form, but they can put in zero if they dont owe anything, she said.
Strauss advises consumers going forward to keep track of what they actually do buy from virtual stores online. Look to see if the store charges sales tax, when you check out, she said. Keep a running total all year.
The tax law is not new nor is it unique to Illinois, said Carol Kokinis-Graves, senior writer analyst with Riverwoods-based CCH, a provider of tax and audit services.
In most states, the use tax was enacted at the same time the sales tax was enacted, she said. However many people are simply unaware of their use tax obligation and dont pay it.
Illinois is offering an amnesty program on the tax covering purchases made from July 1, 2004, through the end of last year.
The state isnt alone in trying to collect. Many states are experiencing severe budget crises, Kokinis-Graves said. As a result, they are aggressively looking for additional methods to collect taxes they are owed.
"yeah like that's gonna happen....so here I am fillin out this here tax form"...dummies
Kinda have that already, at least in GA. If you make an online purchase and there is any brick-and-mortar presence in the state, the store itself assesses the sales tax.
Jenny and pals gave us this one in MI years ago. Nothing new, just another Dem gimmmie all ya got.
Chicago thugs are no doubt ordering the puppet in the White house to implement similar restrictions.
Aw crap. I'm wrong. These guys are going for money they have no right to go for.
God, I'm glad Illinois is dust on my shoes.
“This year, for the first time, taxpayers are being asked how much they owe in so-called use taxes on the Illinois 1040 tax form. “
Funny, we don’t have that form here in Texas. Ooops, I forgot, we also don’t have a state sales tax.
Make that INCOME TAX, here in Texas.
(but even our sales tax is less than 5% on big-ticket items, like cars)
The way the thing is worded it sounds like it could apply to any sort of thing you walked into a store and bought in the next state and presumably paid their sales tax for there, and then took home with you.
We’ve had use taxes in California for years.
The only regret I have about quitting smoking in August 2008, is that I can no longer screw Illinois out of taxes by buying all my cigarettes in Missouri.
Lets just say, like most West Virginians I've never paid a cent. Did I owe any? I plead the fifth! (now I'm heading over to ebay and Amazon.com)...
“Weve had use taxes in California for years.”
And here in Texas too. But the difference is that we don’t have to “report” our income and state taxes paid to Austin. What’s going on now in high-tax states, like California is an extra line on their 540 Form (in their case), that reads like the following:
“Use Tax: 25 Use tax. This is not a total line. See instructions, page 8 . . 25”
Then you sign the form under penalty of perjury. In non-income tax states people can (legitimately) plead ignorance...in California, you better not get caught, because they have your signature.
The vendor I like best is somewhere in the west and they employ people with mild mental disabilities to package and ship the books I order. I think it is a win win situation for everyone and the state can't waste the tax income like they do everything else.
Use tax is an unconstitutional tarif.
That is a very interesting argument that I had not heard made before. Has anyone had any success with it?
I didn't think conservatives were of the opinion that is is OK to break the law, so long as someone else is breaking the law.
Well, we know that some democrats are tax cheats that refuse to pay their share; but most americans do what is legally required. The problem here was that people didn't know they were legally required to pay these taxes.
The state is making a good move by bringing it front and center, so that the citizens who follow the law aren't being burdened by higher taxes because of others who, by ignorance or law-breaking, haven't been paying their legally required taxes.
Don't know which feels better . . . helping a friend or screwing Springfield.