Audit of BACP’s Business Compliance and Enforcement Division

The Business Affairs and Consumer Protection Department plays an important role in protecting the public’s health and safety as well as City revenues. BACP inspects businesses for code violations, expired food, expired baby formula, and unstamped (or untaxed) cigarettes, among other items. The sale of unstamped cigarettes is a particularly challenging problem for Chicago, which has the nation’s highest cumulative cigarette tax. The tax, currently $7.17 per pack, includes levies at the city, county, state, and federal levels.

With a relatively small team, BACP plays a critical role in tax enforcement. For instance, between January and September 2013, BACP confiscated 31,000 packs of unstamped cigarettes which allowed the City to issue more than $292,000 in fines, or over eight times the missed tax revenue. BACP deserves credit for the careful handling, tracking, and storage of confiscated property that both protects the public from harm and supports the administrative hearing process for these fines. However, while not the subject of our audit, it is unclear whether the City has both devoted enough resources to enforcement and created high enough evasion fines to curb the black market—rather than merely created a high tax jurisdiction and high tax evasion.

In addition to finding that BACP effectively safeguarded confiscated property throughout its custodianship, our audit concluded that BACP’s policies and processes reflected best practices. BACP’s operations met the standards promulgated by the International Association for Property and Evidence as well as the professional practices of the Illinois State Police.