A furniture ecommerce company selling across 40 states faced a major Illinois sales tax audit caused by a misconfigured sales tax software setup.
The audit was triggered after Illinois found that the business was collecting 6.25% seller’s use tax instead of the full Retailers’ Occupation Tax (ROT) required for destination-based sales.
Because of this under collection, the amount remitted to Illinois was lower than what the state expected based on the company’s sales activity.
Business relied on automated sales tax software
Business relied on automated sales tax software
Incorrect setup collected seller’s use tax instead of ROT
Resulted in missing local Illinois tax obligations
Resulted in missing local Illinois tax obligations
Under-collection across multiple jurisdictions
The audit began in February 2025 and was substantially resolved within six months after review, reconciliation, and negotiations with the state. Final payment was completed in November 2025. TaxHero managed the entire end-to-end process, saving the company 45 hours of compliance work.
Back taxes
$40,175.00Interest
$5,519.30Penalties
$8,220.60
Total Liability
* Additional $3000 in estimated company operational cost.
Identified incorrect sales tax configuration:
• Use tax collected instead of ROT
• Missing local tax across Illinois jurisdictions
Shopify Sales Tax Support
• Extracted transaction-level Shopify data
• Rebuilt accurate tax calculations per delivery location
• Aligned filings with actual order history
TaxHero was granted power of attorney
• Direct communication with Illinois auditors
• Submitted verified supporting documentation
• Prevented inflated estimated assessments
• Applied Illinois Tax Amnesty Program
• Paid principal tax liability only
• Eliminated penalties and interest
After resolution, the client’s Shopify sales tax configuration was corrected and multi-state compliance settings were verified to ensure accurate tax collection across all jurisdictions. This also prevented the need for hundreds of internal hours of work and saved the company thousands of dollars in additional operational cost that would have been required to manage the audit and corrections in-house.
If you operate a multi-state ecommerce business, you may already have sales tax exposure without realizing it. If you are currently under audit or suspect there may be issues with your sales tax setup, taking early action can significantly reduce financial impact and prevent penalties from escalating.
