Most people are familiar with the typical types of taxes collected by federal, state, and local governments – Income Tax, Sales Tax, and Property Tax to name a few. However, one type of tax that many individuals are not aware of, and therefore often fail to pay or to even report, is the Use Tax, as tax which is. In Illinois, the Use Tax is a sales tax that you, as the purchaser, owe on items that you buy for use in Illinois, but which on which purchase you do not pay sales tax. If the seller does not collect this tax, you are required by Illinois law to pay the tax to the Illinois Department of Revenue. The most common purchases on which the seller does not collect Illinois Use Tax are those made via the internet, from a mail order catalog, or made when traveling outside Illinois. The Illinois Use Tax Rate is 6.25% on general merchandise and 1.0% on qualifying food, non-prescription drugs, and medical appliances.


Beginning in 2011, line 22 of the Illinois Income Tax Return will read “Use tax on internet, mail order, or other out-of-state purchases from UT Worksheet or UT Table in the instructions. Do not leave blank.” It is on this line that individuals are required to report their 2010 Illinois Use Tax liability. To do so, they must use records of out-of-state purchases to complete the Use Tax Worksheet provided in the instructions attached to the return. If they do not have sufficient records to complete the worksheet, but did make applicable purchases, individuals can use the Use Tax Table contained in their instructions to estimate and report their Use Tax liability. This table provides a set tax liability based on the taxpayer’s adjusted gross income (i.e. $3 liability for an AGI between $0 and $10,000; $9 liability for an AGI between $10,001 and $20,000; etc.). Taxpayers are permitted to report having no Use Tax liability if they have not made any qualifying out-of state purchases. On the other hand, if taxpayers owe more than $600 in Use Tax, they must report this liability using a separate form ST-44, Illinois Use Tax Return, rather than reporting this liability on their Individual Income Tax Return.


This new push to collect the Illinois Use Tax by the Department of Revenue is due to the fact Illinois is losing an estimated $150 million per year in uncollected Use Taxes. To further the effort to collect these taxes, Illinois is offering Illinois Use Tax Amnesty to taxpayers from January 1, 2011 to October 15, 2011. Under this program, the Department of Revenue will waive all Use Tax penalties and interest for taxpayers who report and pay unreported and unpaid Use Taxes incurred between June 30, 2004, and Dec. 31, 2010. With this new emphasis on collecting Illinois Use Taxes, taxpayers now have one more thing to worry about come April.