January 29, 2007

Use this!

What is the Illinois use tax? Well until today I had never heard about it. Now that I have, it just confirms that governments would rather squeeze every penny they can get out of their citizens. The Illinois Use tax basically means that if you buy anything outside the state of Illinois physically or online and you are charged less then the 6.25% base sales tax, you are supposed to claim that on your annual tax forms and mail the difference to the state.

n Wisconsin, you pay a base sales tax rate of 5 percent on those purchases. Since Illinois base sales tax rate is 6.25 percent, you are required to pay Illinois 1.25 percent on all of those purchases when you file your yearly income taxes.

What this means is that if I go on a vacation to states that have a lesser sales tax rate then Illinois, which I think is most of them, then Im supposed to keep tract of all of my receipts and when I do my annual taxes send that extra money to the state government. When I take my annual pilgrimage to Green Bay to see the Packers play, Im supposed to send extra money to the State. If I buy something online, and am not charged sales tax or charged a lesser amount. Im supposed to track it and send it to the state. If I purchase something online and am not charged sales tax over Illinois 6.25%, you got it, I send money to the state. Think Im kidding? Heres the State of Illinois official guide to the Use Tax. The most interesting things on this is that this law has been around since 1955,yet Im just now learning of it.

In the article in the Rockford Register Star, a representative of the state claims;

Its a self-reported tax and we realize many people dont know they owe it, Klemens said. We work hard at getting the word out. We send notices to tax preparers to remind them. We have it in our tax booklet. In fact, we project well collect about 10 percent more this year because we displayed it prominently on our cover. We believe 90 percent of the people will pay the tax if they realize they owe it.
Emphasis Mine

Shyea, right. Ive always joked that Illinois bureaucrats are on crack, but I never thought Id get confirmation. The state of Illinois is bleeding its people dry with all the different taxes. What makes them think that these people are going to voluntarily fork over more money? According to a couple of sources online, the only states with a higher Income tax then Illinois are California, Mississippi, New Jersey, Tennessee, Rhode Island, Minnesota and Washington. Alabama and Texas have the same rate as Illinois. I highly doubt that the citizens of the state of Illinois are going to start forking over money because they went on a vacation to any one of the other 40 states not listed and bought a souvenir, gift or anything else to bring home.

First off, who is going to keep all those receipts for a year just to pay extra money? Secondly, who is going to keep all those receipts at all? Hell, when I buy something I generally toss the receipt as soon as its out of the checkbook. If I pay in cash, I tend to toss the receipt as soon as I see a trashcan. The chances are that by the time I take my next out of state trip, Im going to forget this law even exists. The sad thing is that apparently there are a lot of other states that have the same or similar law. So keep that in mind when you travel, especially if you live in one of the states I listed above.

Posted by Contagion in Things that make me go, "GUH?!?!" at January 29, 2007 05:50 PM | TrackBack

wow. Un'frickn'believable.

Posted by: vw bug at January 29, 2007 07:12 PM

They can go fuck themselves.

Posted by: graumagus at January 30, 2007 01:03 AM

As far as I'm aware, almost all states have a use tax, and have for quite a long time.
However, it's hardly ever enforced, and thus hardly anybody knows it exists.
The use taxes started to come a little more into light when officials started suggesting an "internet sales tax" - and people started raises there hands and going "Uuhhhhh... we sorta already have one of those, if you'd bother enforcing it."
I've known about it for many years - but I can definately say I've never, ever sent a tax payment to another state, and I buy a crapload of stuff online.

Posted by: Shadoglare at January 30, 2007 07:34 AM

Michigan has had this for a loooooong time. We got caught up in it and were fined because we took to long to pay it.

We bought lights in Canada and had them shipped to us, a year later we got a letter stating that we didn't pay sales tax.

Called the state and found that for whatever you buy where ever you are suppose to come home and pay the 6% Michigan sales tax on top of the sales tax you paid elsewhere.

Posted by: Quality Weenie at January 30, 2007 09:05 AM

Shadoglare: I know a lot of states have it, hence the second to last line in the post.

QW:Illinois has had it for a long time too, 51 years. Yet I never knew about it until now. However, Michigan making you pay the 6% on top of what the other state sells you at is just extortion. If you bought something in California and brought it back to Michigan, that would mean you'd have to pay 13.25% sales tax!

Posted by: Contagion at January 30, 2007 05:33 PM

The way the use tax is supposed to work is that you're only supposed to pay it if you didn't pay tax in the state it came from. It does not apply to stuff you already got taxed on in the other state. If you're getting taxed twice, you're getting robbed :P

Posted by: Shadoglare at January 30, 2007 10:52 PM

At least, to my understanding, but then I'm not a tax lawyer or accountant either :P

Posted by: Shadoglare at January 30, 2007 10:52 PM

This, once again, is a prime example of why I always pay cash.

Cash does not bounce, you aren't charged interest or late fees on cash, and (unless you're buying something with a title like a car) cash leaves no paper trail.

The less information the government has about me the happier I am.

Posted by: graumagus at January 31, 2007 12:07 PM