Illinois Recoups Millions in White Collar Crime Sales Tax Evasion Prosecutions

 Posted on November 19, 2014 in Criminal Law

The Illinois Department of Revenue (IDOR) just announced a recent victory in its white collar crimes investigations. An assortment of Chicago-area gas stations have been charged and successfully prosecuted for illegally profiting from over $1 million worth of fraudulent sales tax evasion activities. The operation has been spearheaded by Attorney General Lisa Madigan, and has already led to the recovery of over $100 million in funds that can now be used for the benefit of the state of Illinois. These lost tax profits were hidden by owners who under-reported revenues that they received in order to avoid having to pay additional taxes based on their original revenue amounts for gas sales. The funds were recouped via IDOR audits of the gas station owners, and subsequent prosecutions by the Attorney General. Fifty gas station owners in Illinois have been charged so far as part of these ongoing investigations, and 40 defendants have already been convicted, some even imprisoned.

Illinois New Sales Tax Evasion Law

A new law that took effect in Illinois this January created stronger penalties and enhanced prosecutorial discretion to pursue Illinois business owners and retailers who are suspected of sales tax evasion. This law officially made sales tax evasion a crime under Illinois law and also imposed graduated penalties for violations of the law. This law has created an additional white collar crime in Illinois, a state that currently faces an uphill fiscal crisis of epic proportion. The law also marks a great win for Attorney General Madigan's broader initiatives that have included the amassing of over $10 billion in revenue collections. These revenue collections have been primarily conducted through the use of both litigation and right-to-collection actions. The new sales tax evasion law will serve to strengthen both means currently utilized to recoup evaded sales tax revenue.

The crackdown on station owners who under-reported gas sales in order to evade tax payments has been the culmination of three years worth of joint efforts between the Attorney General's Office and the IDOR. Just this month, four more defendants were charged for evading gas sales tax payments, and these defendants will be charged under the new law, which imposes stiff penalties. If the defendants are found guilty under the new law, a felony sentence will be imposed. The charges against this newest round of gas station owner prosecutions include:

• One Lincolnwood gas station is accused of perpetrating a scheme to defraud Illinois out of $500,000 in taxes. The owner has been charged with 31 counts of filing a fraudulent state tax returns, as well as two counts of mail fraud;
• A Chicago-area gas station was charged with 29 counts of filing a fraudulent state tax return, and two counts of mail fraud. This gas station owner is accused of evading over $300,000 in takes over the course of four and a half years;
• A Rockford-area gas station was charged with five counts of filing a fraudulent state tax return, and two counts of mail fraud. This owner is accused of evading over $180,000 in taxes; and
• A Villa Park gas station was accused of 18 counts of filing a fraudulent state tax return and for evading $90,000 in state taxes.