Michigan’s Senate approved a bill yesterday to extend the state’s film tax credit program, which was limited and reduced in 2011 and set to expire in 2017. It’s now up to the House to decide whether to proceed. From...
- The Tax Policy Blog
- Illinois Offering Use Tax Amnesty
Illinois Offering Use Tax Amnesty
Every state with a sales tax also has a "use" tax, a tax on the use within a state of an item upon which a sales tax has not been paid. (It appears on many state income tax forms.) Thus, states with less competitive tax systems than their neighbors seek to tax transactions occurring in other states to equalize tax burdens -- essentially a protectionist measure that seeks to undercut the benefits of competition between states on taxes, services, and other factors.
Illinois would like it very much if consumers sent in any unpaid use tax, agreeing to waive penalties for a limited time:
The amnesty program, which will run from Jan. 1 through Oct. 15, will waive all penalties and interest on payments individual taxpayers pay the state on so-called "use" taxes that went unpaid on purchases made between June 30, 2004, and Dec. 31, 2010, from Internet, catalog and any other retailers that didn't collect sales tax on those purchases.[...]
Illinois is also taking a step already taken by several other states in requiring individual state taxpayers to fill out a line in their state tax return to estimate their liability for use tax. In the Illinois 2010 state tax return form, taxpayers will have the option of either using a worksheet to estimate their use tax liability or simply pay about $3 per $10,000 of adjusted gross income. "If everyone pays their $3 per $10,000, it's a lot of money for the state," the spokeswoman says.
Tax data publisher CCH confirms that this is the first use tax amnesty a state has offered. Illinois really wants to get cash in the door any way it can! But maybe Illinois should focus on making its tax system more attractive to business rather than fleecing residents who go out of state to make their purchases.
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.