What statutes govern sales and use tax in Illinois?

Four different tax acts specify how sales tax is collected and on what types of sales or transactions sales tax is due. The Retailers’ Occupation Tax Act and Use Tax Act govern taxes that apply to sales and purchases at retail. The Service Occupation Tax Act and Service Use Tax Act govern the taxes that apply to sales and use of tangible personal property transferred incident to sales and purchases of service. (Other tax acts govern sales taxes imposed by units of local government.)

Two different tax acts specify how the tax on sales of tangible personal property in this state is imposed. The Retailers' Occupation Tax Act governs sales of tangible personal property made by retailers, and the Service Occupation Tax Act governs merchandise that is transferred as part of a sale of service. See 86 Ill. Admin. Code Parts 130 and 140.

Two different tax acts specify how the tax on the priviledge of using tangible personal property in this state is imposed and on what types of sales or transactions use tax is due. The Use Tax Act governs purchases from retailers. It also imposes a tax on a business that removes merchandise that is it would have sold but instead uses in its business.  The Service Use Tax Act governs merchandise that is received as part of a purchase of service.  See 86 Ill. Admin. Code Parts 150 and 160

A key difference between sales tax and use tax is that sales tax is remitted to the Illinois Department of Revenue by a registered retailer or service person, but use tax is paid directly to the Department of Revenue by the purchaser because tax was not collected when the merchandise was sold. For additional information, see our Sales and Use Tax Information page.

Note: The Leveling the Playing Field for Illinois Retail Act requires remote retailers and marketplace facilitators that meet certain thresholds to register to remit Retailers' Occupation Tax for sales of tangible personal property to Illinois customers made on or after January 1, 2021.  For more information, see our Resource Page for the "Leveling the Playing Field for Illinois Retail Act".

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