One-Fourth of Illinois Gas Stations Reportedly Withhold Sales Taxes

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One-Fourth of Illinois Gas Stations Reportedly Withhold Sales Taxes


CHICAGO -- More than 27 percent of Illinois' approximately 2,400 gas station operators have under-reported the amount of fuel they've sold at some point in the last four years, according to a Chicago Tribune report. At least 14 of those operators have faced indictments for illegally withholding part of the sales tax that drivers paid when pumping gas.

Five of the 14 indicted operators have pleaded guilty to charges of tax fraud or failing to keep financial records, and some have agreed to testify against two tax preparers who stand accused of assisting six operators with evading $5 million in taxes, according to the report.

It is against Illinois law to publicly name the gas station operators who have not been indicted, but the state's Department of Revenue has reportedly already recouped $54 million in back sales tax, interest and penalties following settlements or admission of guilt under threat of greater penalties.

"I think it's certainly the case that the industry knows that we're on to the widespread cheating," said Illinois Department of Revenue Director Brian Hamer. He also noted that his office has seen many instances in which gas stations have suddenly drastically increased their monthly remittance.

"It's illegal and infuriating," stated Illinois Attorney General Lisa Madigan. "Gas is expensive enough. And if you're not going to give my taxes to the state, you should at least let me keep it."

According to the Tribune, a three-year probe into the widespread fraud was sparked by tips from distributors who also operated gas stations and began wondering how their competitors could offer such cheap prices. Investigators tracked the amount of fuel delivered to each gas station, calculated the stations' sales based on publicly reported average prices in the area, and compared the results to the actual sales reported on the stations' monthly tax returns.

The fraud peaked in 2008, when gas prices spiked. In 2009, Illinois announced a "voluntary disclosure compliance program" that offered gas station operators the chance to file amended tax returns and pay the true owed amount, although amnesty was not necessarily included.

Station operators finally came forward in larger numbers in 2010, when Gov. Pat Quinn signed into law an amnesty program that waived prosecution, interest and penalties against tax cheaters who paid off any owed debt acquired from mid-2002 to mid-2009.