Small businesses could face prosecution for crime based on legitimate tax disputes
The Illinois legislatures, concerned over reports that some small businesses, gas stations in particularly, were not paying in to the state sales tax money collected from customers on retail purchases, created a new crime of sales tax evasion.
The offense is based on a finding that a person knowingly attempted “in any manner” to evade or defeat the sales tax. Acts done to evade or defeat the tax are broadly defined as concealing, misrepresenting, falsifying or manipulating any material fact. Penalties under the law are based on the amount of owed sales tax ultimately assessed against the business or person. When the sales tax is less than $500, the crime is a Class 4 felony. For amounts that total $500 or more, the crime becomes a Class 3 felony, if over $10,000, a class 2 felony, and if over $100,000, a Class 1 felony, with progressively greater penalties.
The Illinois Taxpayers’ Federation, a group concerned about fairness in the taxing process, opposed the change in the law, and argued strongly that it was too broad in its language, and could be used unfairly to target innocent businesspeople for criminal prosecution when all they had done was raise a legitimate dispute over the particular amount of taxes due. This was based in part on the possibility that, in raising disputes about the amount of taxes owed, factual statements ultimately rejected as incorrect by taxing authorities could be labeled misrepresentations or attempts to evade, when, in fact, reasonable minds could differ as to their truth or falsity, or they hinged on a complex issue of interpretation of the tax law.
A Chicago criminal lawyer stands ready to provide a strong defense for people in Illinois charged with criminal violations of this or other tax laws, and to make sure that persons raising legitimate disputes about the correct amount of taxes due are not victimized by overzealous prosecutors or tax authorities attempt to improperly punish, by criminal prosecution, those simply asserting their legal rights to dispute a tax assessment. Contact our office at 773-484-3131 or 847-215-2600 if you are facing prosecution on such charges.