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Sales & Use Taxes

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Definitions

The term "sales tax" actually refers to several tax acts. Sales tax is a combination of "occupation" taxes that are imposed on retailers' receipts and "use" taxes that are imposed on amounts paid by purchasers. Retailers owe the occupation tax to the department; they reimburse themselves for this liability by collecting use tax from the buyers. "Sales tax" is the combination of all state, local, mass transit, home rule occupation and use, non-home rule occupation and use, park district, county public safety and facilities, county school facility tax, and business district taxes.

"Sales tax" is imposed on a retailer's receipts from sales of tangible personal property for use or consumption. Tangible personal property does not include real estate, stocks, bonds, or other "paper" assets representing an interest.

If the retailer does not charge Illinois Sales Tax on a sale of tangible personal property, an Illinois purchaser must pay "use" tax for the purchase directly to the department. 

Types of retailers

An Illinois (in-state) retailer (e.g., brick and mortar) is a retailer who makes sales of tangible personal property in Illinois. An Illinois retailer's inventory and headquarters are generally in Illinois. They must collect and remit state and local retailers' occupation tax at the origin rate.

An out-of-state seller is an out-of-state retailer who has physical presence in Illinois. Physical presence in Illinois means having or maintaining within Illinois, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business, or any agent or other representative operating within Illinois under the authority of the retailer or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such retailer or subsidiary is licensed to do business in Illinois [35 ILCS 105/2 (1)]. For other forms of physical presence, see 35 ILCS 105/2 (1.1) and (1.2). Out-of-state sellers must determine on a sale-by-sale basis if their selling activities take place in Illinois or not.

  • If selling activities occur in Illinois (for example, sales are filled from inventory in Illinois or other selling activities occur in Illinois; see, e.g., 86 Ill. Adm. Code 270.115), then state and local retailers' occupation tax is calculated using the origin rate for that sale.
  • If selling activities occur outside Illinois, then use tax must be collected and remitted for that sale.

A remote retailer is an out-of-state retailer with no physical presence in Illinois who meets a tax remittance threshold of

  • $100,000 or more in cumulative gross receipts from sales of tangible personal property to purchasers in Illinois; or
  • 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois.

A remote retailer shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether it meets or exceeds either threshold for the preceding 12-month period. If the remote retailer meets or exceeds either threshold for a 12-month period, it is required to collect and remit all applicable state and local retailers' occupation tax administered by the Illinois Department of Revenue (IDOR) on all retail sales to Illinois purchasers and to file all applicable returns for one year. Remote retailers must collect and remit state and local retailers' occupation tax at the destination rate.

A marketplace is a physical or electronic place, forum, platform, application, or other method by which a marketplace seller sells or offers to sell items.

A marketplace seller is a person that makes sales through a marketplace operated by an unrelated third-party marketplace facilitator. A person that is an affiliate of a marketplace facilitator is not a marketplace seller.

A marketplace facilitator is a person who, pursuant to an agreement with an unrelated third-party marketplace seller, directly or indirectly through one or more affiliates facilitates a retail sale by an unrelated third-party marketplace seller by:

  • Listing or advertising for sale by the marketplace seller in a marketplace, tangible personal property that is subject to tax under the Retailers' Occupation Tax Act (ROT); and
  • Either directly or indirectly, through agreements or arrangements with third parties, collecting payment from the customer and transmitting that payment to the marketplace seller regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services.

Marketplace facilitators must determine on a quarterly basis, ending on the last day of March, June, September, and December, whether it meets or exceeds a tax remittance threshold for the preceding 12-month period. The tax remittance thresholds are:

  • $100,000 or more in cumulative gross receipts from sales of tangible personal property to purchasers in Illinois; or
  • 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois.

Marketplace facilitators meeting a tax remittance threshold must then determine on a sale-by-sale basis if the sale through their marketplace is a sale on behalf of a marketplace seller or their own sale.

  • Taxes for sales made by a marketplace facilitator on behalf of a marketplace seller are incurred at the tax rate in effect at the purchaser's location (destination rate). This applies to sales made through a marketplace by:
    • Illinois retailers
    • Out-of-state retailers (with or without physical presence)
  • Sales made over the marketplace by a marketplace facilitator itself are taxed as follows:
    • For sales that are fulfilled from inventory located in Illinois and for which selling activities do not otherwise occur in Illinois (see, e.g., 86 Ill. Adm. Code 270.115), state and local retailers' occupation taxes are incurred at the tax rate in effect at the location of the Illinois inventory (origin rate);
    • For sales for which selling activities otherwise occur in Illinois (see, e.g., 86 Ill. Adm. Code 270.115), state and local retailers' occupation taxes are incurred at the tax rate in effect at the location of the selling activities (origin rate);
    • For sales that are not fulfilled from inventory located in Illinois and for which selling activities do not otherwise occur in Illinois (see, e.g., 86 Ill. Adm. Code 270.115), state and local retailers' occupation taxes are incurred at the tax rate in effect at the purchaser's location (destination rate).

Resellers

A sale for resale transaction occurs when tangible personal property is sold to a purchaser (reseller) for the purpose of resale (this transaction is also referred to as a sale at wholesale). In this instance, the property is not initially subject to a use for which it was purchased, and the transaction is not subject to Retailers’ Occupation Tax or Use Tax.

Such sales for resale cannot be made tax-free unless the purchaser (except in the case of an out-of-State purchaser who will always resell and deliver the property to customers outside Illinois) has an active registration number or active resale number from the Department and gives such number to the supplier in connection with certifying that the transaction is nontaxable as a purchase for resale. Failure to present an active registration number or resale number and a certification to the seller that a purchase is for resale creates a presumption that a purchase is not for resale. This presumption may be rebutted by other evidence that all of the seller's sales are sales for resale, or that a particular sale is a sale for resale. Form CRT-61, Certificate of Resale, can be used to document resale transactions. See 86 Ill. Adm. Code 130.210 and 35 ILCS 120/2c for more information on sale for resale transactions.

Note: It is the seller’s responsibility to verify that the purchaser’s Illinois account ID (Illinois registration or resale number) is valid and active. Use our online look-up tool "Verify a Registered Business."

Tax rates

For purposes of this document, Illinois Sales Tax has three rate structures — one for qualifying food, drugs, and medical appliances; one for items required to be titled or registered; and another for all other general merchandise.

"Qualifying food, drugs, and medical appliances" include

  • food that has not been prepared for immediate consumption, such as most food sold at grocery stores, excluding hot foods, alcoholic beverages, candy, and soft drinks;
  • prescription medicines and nonprescription items claimed to have medicinal value, such as aspirin, cough medicine, and medicated hand lotion, excluding grooming and hygiene products; and
  • prescription and nonprescription medical appliances that directly replace a malfunctioning part of the human body, such as corrective eyewear, contact lenses, prostheses, insulin syringes, and dentures.

"Items required to be titled or registered" include motor vehicles, ATVs, watercraft, aircraft, trailers, and manufactured (mobile) homes. 

"General merchandise" includes sales of most tangible personal property including sales of

  • soft drinks and candy (see Regulation 130.310 for details);
  • prepared food such as food purchased at a restaurant;
  • photo processing (getting pictures developed);
  • prewritten and "canned" computer software;
  • prepaid telephone calling cards and other prepaid telephone calling arrangements;
  • repair parts and other items transferred or sold in conjunction with providing a service under certain circumstances based on the actual selling price; and
  • grooming and hygiene products.

Use the Tax Rate Finder in MyTax Illinois to look up location specific tax rates. Depending upon the location of the sale, the actual sales tax rate may be higher than the fundamental rate because of home rule, non-home rule, mass transit, park district, county public safety, public facilities or transportation, and county school facility tax. Local tax rates are generally subject to change twice a year on January 1 and July 1. For additional options, see the Tax Rate Database.

Illinois (in-state) retailers see the Illinois (In-State) Retailer's Sales Tax Responsibilities Flowchart to determine your tax rate liabilities. 

Remote (out-of-state) retailers and marketplace facilitators see the Remote (Out-of-State) Retailer Flowchart to determine your tax rate liabilities. 

Please Note: Taxes listed on our Tax Rate Finder are taxes that are collected by IDOR. Units of local governments may impose additional taxes and fees that IDOR does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay any additional taxes or fees not collected by IDOR. 

Prepaid sales tax

Motor fuel distributors must collect “prepaid sales tax” on the motor fuel sold for resale to a retailer who is not an Illinois licensed motor fuel distributor or supplier of diesel and dieselhol. The retailer prepays the sales tax to the motor fuel distributor and then claims a credit for the prepaid tax when the sales tax return is filed. Click here for Prepaid Sales Tax Rates.

Local taxes

Units of local government may impose taxes or fees, which the department does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay any additional taxes or fees not listed below. The following local taxes, which the department collects, may be imposed.

  • Business District Tax
  • Chicago Home Rule Municipal Soft Drink Retailers’ Occupation Tax
  • Chicago Home Rule Use Tax on titled and registered items
  • County Motor Fuel Tax
  • Home Rule County Taxes
  • Home Rule or Non-home Rule Municipal Taxes
  • Mass Transit District Taxes (Metro-East Mass Transit (MED) Taxes and Regional Transportation Authority (RTA) Taxes)
  • Metro-East Park and Recreation District Taxes
  • Metropolitan Pier and Exposition Authority (MPEA) Food and Beverage Tax
  • Special County Retailers’ Occupation Tax for Public Safety, Public Facilities, Mental Health, Substance Abuse, and Transportation
  • County School Facility Tax

Exemptions

Sales — The following list contains some of the most common examples of transactions that are exempt from tax. (See the Illinois Administrative Code, Section 130.120 for a comprehensive list.) 

  • Sales to state, local, and federal governments
  • Sales to not-for-profit organizations that are exclusively charitable, religious, or educational
  • Sales of newspapers and magazines
  • Sales to out-of-state buyers (Nonresidents may not claim the out-of-state buyer exemption if the motor vehicle or trailer will be titled in a state that does not give Illinois residents an out of state buyer exemption on purchases in that state of motor vehicles or trailers that will be titled in Illinois.)
  • Sales of tangible personal property to interstate carriers for hire used as rolling stock (e.g., semi‑tractor trailers, railroad cars)
  • Sales of machinery and equipment that will be used primarily in
    • manufacturing or assembling of tangible personal property for wholesale or retail sale or lease, and
    • production agriculture
  • Qualified sales of building materials that will be incorporated into real estate as part of a project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the enterprise zone administrator
  • Qualifying purchases of tangible personal property used in a manufacturing or assembling process by businesses located in an enterprise zone and certified by the Department of Commerce and Economic Opportunity as qualifying to make these purchases because jobs will be created or retained
  • Sales of legal tender, medallions, and gold bullion issued by qualifying governments
  • Fuel used for international flights

Organizations — Qualified organizations, as determined by the department, are exempt from paying sales and use taxes on most purchases in Illinois. Upon approval, we issue each organization a sales tax exemption number. The organization must give this number to a merchant in order to make certain purchases tax‑free. 

Filing and payment requirements

Returns

Titled or registered items — Illinois retailers selling items that are of the type that must be titled or registered by an agency of Illinois state government (i.e., vehicles, watercraft, aircraft, trailers, and manufactured (mobile) homes) must register with the Department to report these sales using Form ST 556, Sales Tax Transaction Return. Illinois retailers that sell such items for lease must report these sales for lease using Form ST 556-LSE, Transaction Return for Leases. Forms ST-556 and ST-556-LSE must be filed and taxes paid within 20 days of the date of delivery. Persons who are in the business of leasing or renting motor vehicles, watercraft, aircraft, or trailers that are required to be registered with an agency of Illinois state government and who, in connection with such business, sell any such item to a retailer for the purpose of resale can bulk file these transactions using Form ST-556-D.

Forms ST-556 and ST-556-LSE can be filed electronically using MyTax Illinois. Alternatively, registered dealers can obtain ST-556 and ST-556-LSE forms preprinted for their business locations by calling our Central Registration Division at 217 785-3707. Form ST-556-D must be filed electronically using MyTax Illinois.

Individuals or businesses purchasing an item that must be titled or registered by an agency of Illinois state government from an out-of-state retailer or marketplace facilitator must determine whether that out-of-state retailer or marketplace facilitator has reported the tax on that purchase using Form ST-556 or Form ST-556-LSE (for sales for leases). If the tax for the purchase has not already been reported on Form ST-556 or Form ST-556-LSE, then the individual or business purchasing the item must file Form RUT-25, Vehicle Use Tax Transaction Return (or in the case of a purchase for lease, Form RUT-25-LSE, Use Tax Return for Lease Transactions) to report the transaction. Forms RUT-25 and RUT-25-LSE must be filed and taxes must be paid on the date the Illinois title and registration is applied for, but not more than 30 days after the date the item is brought into Illinois.

Individuals or businesses that purchase (or acquire by gift or transfer) motor vehicles that must be titled or registered from another individual or private party must file Form RUT‑50, Private Party Vehicle Use Tax Transaction Return, within 30 days from the date the vehicle is purchased or acquired. Individuals or businesses that acquire (by gift, donation, transfer, or non-retail purchase) aircraft or watercraft that must be registered must file Form RUT-75, Aircraft/Watercraft Use Tax Return, no later than 30 days from the date the item was acquired or the date the item was brought into Illinois, whichever is later.

Forms RUT-25, RUT-25-LSE, RUT-50, and RUT-75 are generally obtained when you license and title your vehicle at the applicable state facility or at a currency exchange. These forms are available at the offices of the Illinois Secretary of State, the Illinois Department of Transportation or the Illinois Department of Natural Resources. If you need to obtain the forms prior to registering the vehicle, send us an email request or call our 24-hour Forms Order Line at 1 800 356-6302. Include in your request your name and mailing address and the type of form you are requesting. Note that we cannot email or fax you the requested form. Instead, we will complete your request via the U.S. Postal Service. Do not make copies of the forms prior to completing. These forms have unique transaction numbers that should not be duplicated. Doing so could delay processing.

Prepaid sales tax on motor fuel — Motor fuel distributors file Form PST-1, Prepaid Sales Tax Return, monthly on the 20th day of the month following the month for which the return is filed.

NOTE: Retailers claim a credit for the amount of prepaid sales tax on Form ST-1, Sales and Use Tax and E911 Surcharge Return, Line 17.

Qualifying food, drugs, and medical appliances and other general merchandise — 

Retailers reporting sales of general merchandise and qualifying food, drugs, and medical appliances must file Form ST-1, Sales and Use Tax and E911 Surcharge Return. 

  • A monthly return is due the 20th day of the month following the month for which the return is filed.
  • A quarterly return is due the 20th day of the month following the quarter for which the return is filed.
  • An annual return is due January 20th of the year following the year for which the return is filed.

Illinois residents who make purchases of tangible personal from non-registered out-of-state retailers or those who make purchases of tangible personal property from service persons who do not pay use tax directly to us must file Form ST-44, Illinois Use Tax Return.

  • If $600 or less is owed, the return and tax is due April 15th of the year following the year in which the purchase was made.
  • If the total tax liability for the year is more than $600, the return and tax is due the last day of the
    month following the month in which the purchase was made.

Tangible personal property sold at retail over the internet is taxed in the same manner as any other retail sale. Generally, if the item of tangible personal property is purchased from an

  • Illinois retailer, out-of-state retailer*, or marketplace facilitator**, the retailer is responsible for collecting and remitting Illinois sales tax.
  • out-of-state retailer*** who does not collect Illinois sales tax, the purchaser owes use tax and is responsible for paying use tax directly to the department using Form ST‑44.

*          Meeting or exceeding a tax remittance threshold or having physical presence in Illinois
**        Meeting or exceeding a tax remittance threshold
***      Not meeting or exceeding a tax remittance threshold and not having physical presence in Illinois.

Payments

Quarter-monthly payments — If a retailer or service-person’s average monthly liability is $20,000 or more, quarter-monthly payments must be made. Payments are due the 7th, 15th, 22nd, and last day of the month. Because the statutory threshold for mandated electronic funds transfer (EFT) program participation is $20,000 annual liability, most taxpayers will remit their quarter-monthly payments by EFT. Taxpayers who mail their quarter-monthly remittances to the department must complete Form RR-3, Sales and Use Tax Quarter-monthly Payment.

NOTE: Electronic funds transfer program participants do not complete or mail Form RR-3.

If a motor fuel distributor’s average monthly liability is $20,000 or more, quarter-monthly payments must be made. Payments are due the 7th, 15th, 22nd, and last day of the month. Because the statutory threshold for mandated electronic funds transfer (EFT) program participation is $200,000 annual liability, most taxpayers will remit their quarter-monthly payments by EFT. Taxpayers who mail their quarter-monthly remittances to the department must complete Form PST-3, Prepaid Sales Tax on Motor Fuel.

NOTE: Electronic funds transfer program participants do not complete or mail Form PST-3.

For additional information regarding quarter-monthly (accelerated) payments, refer to the Guidelines for Quarter-monthly (Accelerated) Payments.

Additional Forms & Resources

Questions?

  • Call us at: 1 800 732-8866 or 1 217 782-3336
  • Call TTY: 1 800 544-5304