Illinois use tax - what do YOU do?

[Roland Slugg]

California is yet another state that has a table for this now, although there has been a "use tax" line on the California returns for several years. Unlike some of the states mentioned above, however, it doesn't require an entry or a "0" on that line, nor is a certification required.

Many people will object to this on a number of potentially legitimate grounds, primarily constitutional. Also, the state income tax returns are just that: INCOME tax returns, not combination income AND sales tax returns. I even wonder if the various states have the legislative authority to demand this information on income tax returns. This whole subject may be ripe for lawsuits challenging its bona fides.

[Lion]

My clients are NOT subject to unlimited audits on use tax issues. I always require them to answer my questions, and I always fill in the amounts they give me -- even if 0. So, they have filed all their use tax returns under my watch.

[Gary2]

California is yet another state that has a table for this now, although there has been a "use tax" line on the California returns for several years. Unlike some of the states mentioned above, however, it doesn't require an entry or a "0" on that line, nor is a certification required.

Many people will object to this on a number of potentially legitimate grounds, primarily constitutional. Also, the state income tax returns are just that: INCOME tax returns, not combination income AND sales tax returns. I even wonder if the various states have the legislative authority to demand this information on income tax returns. This whole subject may be ripe for lawsuits challenging its bona fides.

How could the states not have the authority to demand the information on their own tax returns? There is no master law that says states are only allowed to design income tax returns to collect income tax, or that they must use separate forms for collecting use tax.

Constitutionality takes more effort to analyze, but my recollection is that if they don't discriminate in favor of their own businesses, then it's not considered a tax or interference on interstate commerce.

[Nashville]

Dead in the Water

Many people will object to this on a number of potentially legitimate grounds, primarily constitutional. Also, the state income tax returns are just that: INCOME tax returns, not combination income AND sales tax returns.

Sluggo, of all people, you ougrta know better than this. Estoppel of use tax collection on grounds that they didn't create a special form just for collection of the tax? Bear in mind also that such a challenge would FIRST have to be heard in a state court, which would be a slam-dunk for the state. If it EVER survived the process to get into Federal Court of Appeals, and were elevated, the Supreme Court wouldn't even hear it.

I do understand where you're coming from - The state is trying to mix a vat of 20 proof with a vat of 86 proof and package it in one bottle, but even THAT scenario would be perfectly legal, given honest labeling.

[Nashville]

For those in Illinois, and who contend with this issue on a regular basis, what is your suggestion? I've heard everything from it's extortion money, to paying a "protection fee," to ignore it and let them come after me.
FE

My suggestion would be to let this be the clients' problem to deal with, and just report what the client tells you.

Whereas these things are relatively new, most of the "Use Tax" laws have been on the books a long time, and this is yet another "Big Brother" practice from various governments.

Something to think about: TN, TX, FL, SD, WA, NV, NH, WY, AK in general do not have state income tax forms, so they can't "tack on" a line item to collect Sales Tax. Will be interesting to see how these states come after the money.