Tax Amnesty for Online Sales Ends Saturday

by Kristina Rasmussen October 15 — this Saturday — is the last day of Illinois’s amnesty program for consumers to pay use tax for Internet purchases where sales tax was not collected. From an oldState Journal-Register article: The state will offer a sales tax amnesty from Jan. 1 through Oct. 15. Under legislation passed last year and...

by Kristina Rasmussen

October 15 — this Saturday — is the last day of Illinois’s amnesty program for consumers to pay use tax for Internet purchases where sales tax was not collected. From an oldState Journal-Register article:

The state will offer a sales tax amnesty from Jan. 1 through Oct. 15. Under legislation passed last year and signed by Gov. Pat Quinn, people who bought goods online, through the mail or over the phone and didn’t pay sales tax on them between June 20, 2004 and the end of 2010 can pay what they owe without penalty during that period.

If you purchase stuff from out-of-state online retailers (like Amazon or Overstock), there is usually no sales tax line on your order confirmation. Instead, you are required to declare and pay state use tax when filing personal tax returns each year. Why? A 1992 Supreme Court decision ruled that businesses who do not have “nexus” or significant physical presence in a given state were not required to collect taxes in that state because doing so would be a burden on interstate commerce.

Considering the amount that Illinois says it loses in uncollected sales tax each year, I’ve been surprised how little I’ve heard about this amnesty offer. Recent media reports have indicated that voluntary compliance has doubled this year, although there’s still a long way to go.

The Illinois Department of Revenue admitted early on it was never going to collect all tax that was due, but considering how much could be gained, you’d think the governor or his revenue chiefs would be out in force reminding people to pay up by week’s end. Doing so would have the double benefit of 1) raising revenue without raising rates, and 2) help taxpayers move into compliance without forcing everyone into a problematic national collection system.

The form to pay your use tax is available here.