Paying Sales Tax on Time in IL = Discount
- July 31, 2016 | Stephanie Faris
Some taxpayers always pay their taxes early, while others are rushing to the post office on deadline day, payment in hand. For Illinois businesses, there’s an extra incentive to get sales tax payments in early. Each business that pays on time receives a 1.75 percent discount on the taxes being paid.
To qualify for the discount, businesses, must both have filed and paid by the deadline. They then can deduct 1.75 percent of all taxes they’re paying on receipts from the sale of tangible personal property. Businesses will need to itemize the deduction on Form ST-1, Step 4. For businesses that have a small amount of annual sales tax liability, there is a $5 minimum discount. They can round up to five dollars if the percentage earns them a discount that is any amount lower.
The Illinois Department of Revenue has a caution for businesses with more than $20,000 in tax liability each year. Those businesses are mandated to pay electronically, which means their taxes are considered paid on the day the state receives them, regardless of the date it was postmarked. So those businesses that disregard the mandate and send their taxes by mail could lose the discount if their payment arrives after the tax deadline.
There are two other sales tax areas that are subject to the discount. Businesses that specialize in prepaid wireless telecommunications services must pay an E911 surcharge. Paying this surcharge on time earns a business a 3 percent discount on the taxes collected from customers. Businesses responsible for collecting the additional sales tax attached to soda sales in Illinois can also deduct a 1.75 percent discount on those taxes.
Illinois businesses should take note of the discounts available for early payment and make sure they get their taxes in on time. Over the course of a year, they could save substantial money simply by changing the date they file.