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Are you able to answer Illinois sales tax questions? I am…

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Are you able to answer Illinois sales tax questions?

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I am the cfo of a kentucky based c Corp. Recently the state of Illinois completed a sales tax audit. The auditor is telling me I need to pay use tax on all of the equipment I brought into Il in doing the jobs we completed. I have been a register business in IL for years and have been collecting sales tax for everything I billed in the state. I did not purchase the equipment to use specifically in Il but do jobs all over the US. In each state i pay sales tax on the revenue I generate on the equipment but now Illinois wants 6.25% on the cost of the equip I use one time in that state. Crazy? There has to be some way my situation excludes me from paying this tax.

Submitted: 25 days ago.Category: Tax
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5/30/2018
Tax Professional: Lev, Tax Advisor replied 25 days ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,985
Experience: Taxes, Immigration, Labor Relations
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Indeed IL applies Use tax - and there is NO difference from other states.

You owe Illinois Use Tax if you purchase an item for use or consumption in Illinois.
If for any reason - that equipment was originally used in a different state - and use taxed were paid to THAT state - the credit is allowed for taxes properly due and paid to other states.

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Customer reply replied 25 days ago
Ky does not require use tax to be paid but the items are taxable for sales tax. It seems that the illinois law seeks to capture the tax on situation where the equipment is purchase stricture for illinois, rather than my situation where the use in Illinois is a small part of the overall use of the equipment. I guess I'm looking for an exclusion for the situation I'm in.
Tax Professional: Lev, Tax Advisor replied 25 days ago

Indeed - KY applies 6% use tax for items purchased for storage, use or other consumption in Kentucky and for which state sales tax were not paid to the seller at the time of purchase.
If so - you may be able to claim a credit - and substantially reduce IL sales tax liability.
There is no exclusion from IL sales tax as you expected. Sorry.

.

What we may suggest in your situation.
1. So - we might need to be clear - if you paid KY sales tax when that equipment was originally purchased? If you have original invoice - that may be verified.
2. Another issue to consider that IL sales/use tax is based on the value of your equipment brought into the state. So - you will need to determine that value after depreciation/amortization - that may reduce the actual use tax amount.

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Tax Professional: Lev, Tax Advisor replied 25 days ago

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all Social Security / Tax related issues.
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