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Illinois Tax Dollars Being Syphoned at the Pump

  • Oct 12, 2012 | Gail Cole

Tax dollars have been illegally syphoned at gas pumps for years in the state of Illinois. However, since an investigation into gas station tax fraud began in 2008, the rate is slowing down.

A voluntary disclosure compliance program encouraged gas station owners from across the state to step forward in October of 2009, although voluntary participation "does not eliminate the State's ability to pursue criminal charges."  By 2010, more than $12 million in unpaid sales tax had been collected from 66 gas station owners. To date, more than $70 million has been recouped, and 35 gas stations owners and operators have faced criminal charges.

Gasoline sales are reported monthly in Illinois. The Office of the Attorney General and the Department of Revenue discovered through investigations that "a fraudulent practice had developed of evading the payment of the taxes by falsely reporting gasoline sales figures… ." As a result, millions of dollars that should have been paid to the state ended up in the pockets of gas station owners and operators. Attorney General Lisa Madigan called the practice of gas station tax evasion "pervasive" and "shocking" during an interview with CBS 2's Brad Edwards.

Madigan made it clear in 2010 that "if you defraud the people of Illinois by not paying sales tax, you will be aggressively prosecuted." She has kept her word.

The Attorney General's efforts are now backed by a new law. The new crime of Sales Tax Evasion was enacted in Illinois in the summer of 2012. It imposes graduated penalties based on the amount of sales taxes evaded. Those facing charges for tax evasion can expect the following punishments:

  • Class 4 felony: one to three years in prison for amounts less than $500.
  • Class 3 felony: two to five years in prison for amounts less than $10,000.
  • Class 2 felony: three to seven years in prison for amounts less than $100,000.
  • Class 1 felony: six to thirty years in prison for amounts more than $100,000.

Read more about the Illinois sales tax fraud crack down here.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.