Frequently Asked Questions (FAQs) for Marketplace Facilitators, Marketplace Sellers, and Remote Sellers

FAQ Index

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    What is a marketplace?

    A marketplace is a physical or electronic place, forum, platform, application, or other method by which a marketplace seller sells or offers to sell tangible personal property. Examples of marketplaces include, but are not limited to, auctions, internet marketplace platforms on which tangible personal property is offered for sale; antique malls, home shopping networks selling tangible personal property over television, cable or satellite networks; or consignment shops selling tangible personal property on behalf of numerous persons. If a marketplace's sales are subject to only Illinois Retailers' Occupation Tax (sales tax), the provisions of 86 Ill. Adm. Code 150.804 do not apply (example: an antique mall located in Marion, Illinois and making only over-the-counter sales subject to Illinois Retailers' Occupation Tax (sales tax) is a marketplace facilitator but is not subject to the provisions of 86 Ill. Adm. Code 150.804). 

    Who is a marketplace facilitator?

    A marketplace facilitator is a person who, meets one of the thresholds and pursuant to an agreement with an unrelated third-party marketplace seller, directly or indirectly through one or more affiliates, facilitates a sale by an unrelated third-party marketplace seller by doing both of the following:

    • listing or advertising tangible personal property for sale by the marketplace seller in a marketplace; and
    • either directly or indirectly, through agreements or arrangements with third parties, collecting payment from the purchaser and transmitting that payment to the marketplace seller regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services.

    Who is a marketplace seller?

    A marketplace seller means a person that sells or offers to sell tangible personal property through a marketplace operated by an unrelated third-party marketplace facilitator. A marketplace seller only includes persons who incur an Illinois Use Tax liability on their sales to Illinois purchasers. Persons making sales to Illinois purchasers that are subject to Illinois Retailers' Occupation Tax (sales tax) are not considered to be "marketplace sellers"  for those sales; however, they do incur and must report Retailers' Occupation Tax on those sales. A marketplace seller or remote seller that uses a marketplace facilitator will not include sales resulting in Illinois Use Tax made through the marketplace in its threshold determination. 

    Who is a remote seller? 

    A remote seller refers to an out-of-state retailer that sells tangible personal property to Illinois purchasers from an out-of-state location. There are two groups of remote sellers that must collect tax on sales to Illinois purchasers:

    1)    Remote sellers with a physical presence in Illinois

    Remote sellers with a physical presence in Illinois are required to register with the Illinois Department of Revenue (IDOR) to remit Illinois taxes on sales to Illinois purchasers.

    2)    Remote sellers without a physical presence in Illinois (Wayfair [economic] nexus)

    Remote sellers without a physical presence in Illinois that meet either threshold are required to register to collect and remit Illinois Use Tax for sales of tangible personal property made on or after October 1, 2018. The thresholds, as determined by a quarterly review using the previous 12 months, are

    • cumulative gross receipts of $100,000 or more from sales to Illinois purchasers or                                         
    • 200 or more separate transactions with Illinois purchasers.
    Effective January 1, 2020 - Do not include the gross receipts nor the number of separate transactions for sales made to purchasers in Illinois that are made through a marketplace facilitator when determining whether you meet either of the thresholds. 

    NoteIf a remote seller sells to Illinois purchasers from inventory in Illinois, then the remote seller is subject to Illinois Retailers' Occupation Tax (sales tax) and not Illinois Use Tax.

    What are the marketplace facilitator thresholds?

    A marketplace facilitator must meet either of the following thresholds to be considered the retailer for each sale of tangible personal property subject to Illinois Use Tax made through its marketplace on behalf of marketplace sellers:
    • the cumulative gross receipts from sales of tangible personal property to purchasers in Illinois made through the marketplace by both the marketplace facilitator and marketplace sellers are $100,000 or more; or
    • the marketplace facilitator and marketplace sellers selling through the marketplace cumulatively enter into 200 or more separate transactions through the marketplace for the sale of tangible personal property to purchasers in Illinois.

    What are the obligations of a marketplace facilitator?

    • A marketplace facilitator shall enter into an agreement with each of its marketplace sellers to facilitate sales of tangible personal property by that marketplace seller. The agreement shall contain a certification by the marketplace facilitator that the marketplace facilitator assumes the rights and duties of a retailer under the Illinois Use Tax Act with respect to collection and remittance of Illinois Use Tax on sales made by the marketplace seller through the marketplace. The marketplace facilitator shall maintain the agreement in its books and records for review and inspection upon demand by IDOR.
    • A marketplace facilitator must maintain books and records containing the name, address and FEIN number of all marketplace sellers making sales through its marketplace and provide such records to IDOR upon demand.
    • A marketplace facilitator shall collect Illinois Use Tax for sales made through its marketplace, based on information provided by marketplace sellers. When Illinois Retailers' Occupation Tax (sales tax) is incurred on a sale made through the marketplace on behalf of a marketplace seller, a marketplace facilitator may collect Illinois Use Tax from the purchaser, along with any local tax reimbursements, and transmit the tax to the marketplace seller for reporting and remittance to IDOR as Illinois Retailers' Occupation Tax (sales tax).
    • A marketplace facilitator shall register with IDOR and file returns in accordance with procedures required by the Use Tax Act.
    • A marketplace facilitator shall maintain books and records for all sales made through a marketplace on behalf of marketplace sellers.
    • A marketplace facilitator may file a separate return for its own sales made over the marketplace, apart from the return for sales made through the marketplace on behalf of marketplace sellers.

    What are the obligations of a marketplace seller? 

    • A marketplace seller shall furnish to the marketplace facilitator information that is necessary for the marketplace facilitator to correctly collect and remit Illinois Use Tax on each sale. The information may include a certification that an item being sold is taxable, not taxable, exempt from taxation, or taxable at a specified rate.
    • Books and records. Each marketplace seller shall maintain books and records for all sales made through a marketplace in accordance with the Illinois Use Tax Act. Each marketplace seller shall furnish such books and records to the marketplace facilitator upon the reasonable request of the marketplace facilitator.
    • A marketplace seller that makes sales to Illinois purchasers in addition to those made through a marketplace must determine if it is required to separately register to collect and remit Illinois Use Tax on those sales. If the marketplace seller is a "retailer maintaining a place of business in this State" under Section 2 of the Illinois Use Tax Act, it is required to separately register and remit Illinois Use Tax on such sales to Illinois purchasers. In determining if it has Wayfair (economic) nexus, neither the gross receipts from nor the number of separate transactions for sales of tangible personal property to purchasers in Illinois that a marketplace seller makes through a marketplace facilitator shall be included.
    • A marketplace seller must separately register and remit tax on all sales of tangible personal property, including those made over a marketplace, that result in Illinois Retailers' Occupation Tax (sales tax).
    • For sales made over the marketplace that result in Illinois Retailers' Occupation Tax (sales tax), the marketplace seller is considered the retailer and must remit tax on such sales as provided in the Illinois Retailers' Occupation Tax Act, as well as applicable local occupation taxes. The marketplace facilitator is not considered the retailer with respect to such sales and is not authorized to remit tax to IDOR on such sales.
    • If a marketplace seller is required to remit Illinois Retailers' Occupation Tax (sales tax) for sales to Illinois purchasers made through a marketplace, the marketplace facilitator is authorized to collect all taxes due from the purchaser on such sales, including local tax reimbursements, and transmit them to the marketplace seller for reporting and remittance to IDOR as Retailers' Occupation Tax (sales tax). If a marketplace facilitator collects and transmits tax in this manner, it is not liable for tax on amounts so collected and remitted.

    What are the required review periods for a marketplace facilitator?

    A marketplace facilitator must examine its selling activities in Illinois for the period of January 1, 2019, through December 31, 2019. If, during this period, the marketplace facilitator meets either of the thresholds, the marketplace facilitator must register as a marketplace facilitator with IDOR to collect and remit Illinois Use Tax beginning January 1, 2020, for one year.

    If the marketplace facilitator does not meet either threshold effective January 1, 2020, the marketplace facilitator must determine on a quarterly basis (the last day of March, June, September, and December) whether it meets either of the thresholds for the preceding 12-month period. If the marketplace facilitator meets either of the thresholds for the preceding 12-month period, the marketplace facilitator must register as a marketplace facilitator with IDOR and begin collecting and remitting Illinois Use Tax on the first day of the following quarter.

    What are the review periods for a marketplace seller or remote seller?

    A marketplace seller or remote seller must examine its selling activities in Illinois for the preceding 12-month period on a quarterly basis (the last day of March, June, September, and December). If the marketplace seller or remote seller meets either of the Wayfair (economic) nexus thresholds, the marketplace seller or remote seller must register with IDOR to collect and remit Illinois Use Tax beginning the first day of the next quarter.

    If the marketplace seller or remote seller does not meet either Wayfair (economic) nexus threshold during a quarterly review, then the marketplace seller or remote seller must determine on an ongoing quarterly basis (the last day of March, June, September, and December) whether it meets either of the Wayfair (economic) nexus thresholds for the preceding 12-month period. If the marketplace seller or remote seller meets either of the Wayfair (economic) nexus thresholds for the preceding 12-month period, the marketplace seller or remote seller must register with IDOR and begin collecting and remitting Illinois Use Tax on the first day of the following quarter.

    What sales are excluded from the threshold determination? 

    The thresholds are determined by examining the gross receipts and number of separate transactions (see 86 Ill. Adm. Code 150.804(f) for more information) and must include or exclude the following types of sales:

    • sales for resale must be excluded (for additional information see 86 Ill. Adm. Code 130. 201), 
    • sales of tangible personal property that are required to be registered with an Illinois agency, including motor vehicles, watercraft, aircraft, and trailers, when these sales are made from locations outside Illinois to Illinois purchasers are excluded, and 
    • sales made through the marketplace on behalf of a marketplace seller or by a marketplace facilitator that are subject to Illinois Retailers' Occupation Tax (sales tax) must be excluded. For example, sales made through a marketplace on behalf of a marketplace seller that are filled from inventory located in an Illinois warehouse. Marketplace sellers making such sales through the marketplace are required to register with IDOR and remit Illinois Retailers' Occupation Tax (sales tax) such sales. A marketplace facilitator making its own sales of tangible personal property through the marketplace that are subject to Illinois Retailers' Occupation Tax (sales tax) must be registered for Illinois Retailers' Occupation Tax (sales tax) and remit Illinois Retailers' Occupation Tax (sales tax) on such sales. 

    All sales of tangible personal property, except those listed above, even if they are exempt from tax, must be included for purposes of calculating the thresholds.

    What are gross receipts?

     Gross receipts means all consideration actually received for a sale by a retailer. See 86 Ill. Adm. Code 130.401

    What is the Illinois Use Tax rate?

    The Illinois Use Tax rate is 6.25% for general merchandise and 1% for qualifying food, drugs and medical appliances. See 86 Ill. Adm. Code 130.310 and 130.311 for information about what items qualify as food, drugs, and medical appliances. To determine the appropriate Illinois Use Tax rate for a sale, refer to the Illinois Use Tax Matrix.

    Who is an Illinois purchaser?

    An Illinois purchaser is a person in Illinois who, through a sale at retail, acquires the ownership of tangible personal property, to be used or consumed in Illinois, for a valuable consideration.

    Is there a list detailing what tangible personal property is taxable and nontaxable for Illinois Use Tax?

    Yes, the Illinois Use Tax Matrix is a good resource, identifying the most frequently inquired about items and whether they are subject to tax. Tangible personal property commonly includes, but is not limited to, the following:

    • soft drinks;
    • candy;
    • grooming and hygiene products;
    • grocery-type food not prepared for immediate consumption;
    • books, DVDs, and computer games;
    • prewritten and "canned" computer software;
    • prepaid telephone calling cards and other prepaid telephone calling arrangements.

    Are marketplace facilitators, marketplace sellers, and remote sellers liable for Illinois Use Tax on all sales into Illinois?

    Marketplace facilitators, marketplace sellers, and remote sellers who meet a threshold are required to collect and remit Illinois Use Tax on all sales of tangible personal property to Illinois purchasers, unless an exemption applies (e.g., a sale for resale, 86 Ill. Adm. Code 130.201) or the sales are subject to Illinois Retailers' Occupation Tax (sales tax) (e.g., trade shows, 86 Ill. Adm. Code 150.802).

    Are marketplace facilitators, marketplace sellers, or remote sellers required to remit local sales tax?

    Local sales taxes apply if the selling activities take place in Illinois. This happens most frequently when the tangible personal property to be sold to an Illinois purchaser is in the inventory of the marketplace facilitator, marketplace seller, or remote seller and the inventory is located in Illinois at the time of its sale (or is subsequently produced by the retailer in Illinois). In this case, the marketplace facilitator, marketplace seller, or remote seller is an Illinois retailer with respect to this transaction and will incur Illinois Retailers' Occupation Tax (sales tax), including any applicable local retailers' occupations taxes (sales tax). See 86 Ill. Adm. Code 270.115(d). Retailers should use the Tax Rate Finder to determine the correct sales tax rate based on the location of their inventory.

    Is a marketplace facilitator, marketplace seller, or remote seller liable for Business or Individual Income Tax in Illinois?

    In general, a resident of Illinois will always be subject to these taxes. Activity conducted in interstate commerce may establish sufficient nexus with Illinois to permit imposition of these taxes on a non-resident taxpayer, as well, when the nonresident earns or receives income in Illinois. The fact that the Illinois Income Tax Act requires a nonresident taxpayer to allocate or apportion income to Illinois does not create a presumption that the taxpayer has nexus. See 86 Ill. Adm. Code Parts 100.3000 through 100.3500.

    Does Illinois provide compensation to reimburse marketplace facilitators, retailers, marketplace sellers, or remote sellers for some administrative expenses of Illinois Use Tax collection?

    A marketplace facilitator, retailer, marketplace seller, or remote seller may deduct 1.75% of the Illinois Use Tax collected on sales from locations outside of Illinois and Illinois Retailers' Occupation Tax (sales tax) on sales from locations inside Illinois due on timely filed and paid returns. The discount is not allowed on excess tax collected (i.e., tax improperly collected) or use tax paid on purchases for used in the business. In the case of partial payment or accelerated payers, the discount will be calculated on the portion of timely paid tax. If a taxpayer is mandated to file electronically and fails to electronically file Form ST-1, the taxpayer cannot claim this discount.

    If a marketplace seller or remote seller make sales through its own website, must the marketplace seller or remote seller register to collect Illinois Use Tax?

    A marketplace seller or remote seller will be required to register to collect and remit Illinois Use Tax if the marketplace seller or remote seller meets either Wayfair (economic) nexus threshold from the sale of tangible personal property to Illinois purchasers from its own website. The marketplace seller or remote seller will not include sales made by a marketplace facilitator in its determinations of meeting either threshold. If the marketplace seller or remote seller does not meet either threshold, the marketplace seller or remote seller will need to review its sales for the preceding 12-month period on the last day of every quarter (March, June, September, December). 

    If a marketplace seller or remote seller makes sales from its own website into Illinois from inventory in Illinois, then the transaction would not be subject to Illinois Use Tax. In this case, the marketplace seller or remote seller is considered an Illinois retailer who is required to remit Illinois Retailers' Occupation Tax (sales tax) on sales to Illinois purchasers. 

    What is an example of a required registration for a remote seller?

    Sam Jones is a Kentucky resident who makes and sells fishing lures from his home through his own website. On March 31, 2020, Sam Jones determines that he has had 281 separate transactions to Illinois purchasers from his own website for the period April 1, 2019, through March 31, 2020. Because he has more than 200 separate transactions for the preceding 12-month period, Sam Jones will need to register to collect and remit Illinois Use Tax beginning April 1, 2020. 

    What is an example of a required registration for a marketplace seller?

    Painted Glass, Inc., a California business, begins making sales to Illinois purchasers from both its own website and through a marketplace facilitator in May 2020. The marketplace facilitator meets one of the thresholds and is required to collect Illinois Use Tax. Painted Glass, Inc. must tell the marketplace facilitator if Illinois Use Tax is required be collected on sales through the marketplace (e.g., if the sale is taxable or not)

    What is an example of a required registration for a marketplace facilitator?

    Ponchos for Pooches makes sales of rain gear for dogs through an internet marketplace that meets the thresholds for a marketplace facilitator effective December 31, 2019. The rain gear is handmade in Portland, Oregon and then shipped directly to Illinois purchasers. Beginning January 1, 2020, the marketplace facilitator is considered the retailer of the rain gear and must register to collect and remit Illinois Use Tax to IDOR. 

    I am a marketplace seller and only sell through a marketplace that meets a threshold. Do I need to register to collect and remit Illinois Use Tax?

    If you only make sales to Illinois purchasers through a marketplace that is registered with IDOR as a marketplace facilitator, then the marketplace facilitator is responsible for collecting and remitting Illinois Use Tax. However, if you make sales outside the marketplace to Illinois purchasers, you must follow the guidance in 86 Ill. Adm. Code 150.803 to determine your Illinois tax obligation. 

    I am a remote seller with no physical presence in Illinois. I sell through a marketplace and my own website. What are my Illinois tax responsibilities?

    Assuming the marketplace facilitator meets either threshold requiring them to register with IDOR, the marketplace facilitator will collect and remit Illinois Use Tax for all sales through the marketplace. You must determine if your sales to Illinois purchasers made through your own website and other sources meet either of the Wayfair (economic) nexus thresholds as of December 31, 2019 (on a quarterly basis - the last day of March, June, September, and December). If you meet either of the thresholds, you must collect and remit Illinois Use Tax on those sales beginning the first day of the next quarter. 

    I am a remote seller with inventory in Illinois. I sell through a marketplace and my own website. What are my Illinois tax responsibilities?

    Assuming the marketplace facilitator meets either threshold requiring them to register as a marketplace facilitator with IDOR, the marketplace facilitator will collect and remit Illinois Use Tax for all sales subject to Illinois Use Tax made through the marketplace. Sales subject to Illinois Retailers' Occupation Tax must be reported and taxes remitted to IDOR by you, the remote seller.  

    How does a marketplace facilitator register with IDOR? 

    Register with IDOR electronically using MyTax Illinois, available at mytax.illinois.gov:

    • If you do not have a MyTax Illinois account, click on "Registration," and then "Register a New Business" and complete Form REG-1, Illinois Business Registration Application. After you receive an email that your application has been processed, allow one business day before signing up for a MyTax Illinois account. To create a MyTax Illinois account, return to MyTax Illinois, click the "Sign up Now" button, and then submit the requested information. 
    • If you have an active MyTax Illinois account, log into your MyTax Illinois account and click "Register for New Tax Accounts" to update your registration to include marketplace facilitator. 

    When completing the "Sales and Use Tax" section of Business Activities in the registration, you will need to indicate that you make "Retail" sales of "General Merchandise" as well as indicate you are a "Marketplace Facilitator".

    Contact our Central Registration Division at 217 785-3707 for information or assistance with registering a business.

    Note: There is no charge to register with IDOR. 

    How does a marketplace seller or remote seller register with IDOR? 

    Register with IDOR electronically using MyTax Illinois, available at mytax.illinois.gov.

    • To register your business with Illinois, click on "Registration," and then "Register a New Business" to complete Form REG-1, Illinois Business Registration Application. After you receive an email that the application has been processed, allow one business day before signing up for a MyTax Illinois account. To create a MyTax Illinois account, return to MyTax Illinois, click the "Sign up Now" button, and then submit the requested information. 
    • Corporations, S-Corps, Partnerships, or LLC organization types with active MyTax Illinois accounts can register for new tax types, or licenses, by simply logging into their MyTax Illinois account and clicking on "Register for New Tax Accounts" to complete the registration.
    • Sole Proprietorships can register electronically by selecting "Registration" in the upper right corner of the MyTax home page and then selecting "Register a New Business."

    Contact IDOR's Central Registration Division at 217 785-3707 for information or assistance with registering your business.

    Note: There is no charge to register with IDOR. 

    Once a marketplace facilitator, marketplace seller, or remote seller registers with IDOR, when is the tax due?

    Form ST-1, Sales and Use Tax and E911 Surcharge Return, along with any payment owed, is due on or before the 20th day of the month following the end of the marketplace facilitator's, marketplace seller's or remote seller's reporting period. Once registration is complete, the marketplace facilitator, marketplace seller, or remote seller will receive a letter from IDOR with its specific filing frequency. 

    How does a marketplace seller or remote seller file and pay the tax due?

    Once the marketplace seller or remote seller is registered with IDOR, it can use MyTax Illinois, available at mytax.illinois.gov, to file Form ST-1. MyTax Illinois also allows for electronic payment of any tax due.

    A marketplace seller or remote seller can also file Form ST-1 using a third-party software vendor or through our Electronic Filing Program.

    Marketplace sellers or remote sellers must report their sales from locations within Illinois on Lines 4a and 5a and sales from locations outside of Illinois on Lines 6a and 7a.

    How does a marketplace facilitator file and pay the tax due?

    Once the marketplace facilitator is registered with IDOR, it can use MyTax Illinois, available at mytax.illinois.gov, to file Form ST-1. MyTax Illinois also allows for electronic payment of any tax due.

    A marketplace facilitator can also file Form ST-1 using a third-party software vendor or through our Electronic Filing Program.

    Marketplace facilitators may report their own sales and use tax separately from the Illinois Use Tax collected on sales made through their marketplace by marketplace sellers. If you want to file a combined liability return, then you must indicate that when you register as a marketplace facilitator. 

    How often are marketplace facilitators, marketplace sellers, and remote sellers required to file returns?

    A marketplace facilitator'smarketplace seller's, or remote seller's filing frequency is based on the information provided with their registration. Marketplace facilitators, marketplace sellers, and remote sellers will be notified by IDOR of their filing frequency (monthly or quarterly) based on their registration. IDOR may review a marketplace facilitator's, marketplace seller's, or remote seller's filing frequency on an annual basis and change the filing frequency based on the marketplace facilitator's, marketplace seller's, or remote seller's filing history. IDOR will notify the marketplace facilitator, marketplace seller, or remote seller if the filing frequency changes.

    Are marketplace facilitators, marketplace sellers, and remote sellers subject to audit by IDOR?

    Marketplace facilitatorsmarketplace sellers, and remote sellers are subject to audit like any other business.

    Has Illinois signed the Streamlined Sales Tax Agreement?

    Illinois has not signed the Streamlined Sales Tax Agreement and is not a participating state.

    An Illinois retailer makes marketplace sales to purchasers in other states, is there an easy way to register in those states?

    We recommend the retailer contact each state in which it has sales. See https://www.taxadmin.org/state-tax-agencies for contact information. 

    If I do not have a physical presence in Illinois and do not have Wayfair (economic) nexus and do not charge sales or use tax, am I liable if my Illinois purchaser does not pay Illinois Use Tax?

    No, if you are a retailer and have not established nexus with Illinois, then you are not required to register, collect or remit sales or use tax. The Illinois purchaser is liable for the Illinois Use Tax.

    IDOR strongly recommends that marketplace and remote sellers voluntarily collect Illinois Use Tax on their own sales as a courtesy to their Illinois purchasers. Illinois purchasers incur an Illinois Use Tax liability on marketplace purchases that do not have Illinois Use Tax collected and remitted by the marketplace or seller. Marketplace and remote sellers must register if they choose to voluntarily collect Illinois Use Tax.

    However, if the marketplace facilitator, marketplace seller, or remote seller meets either threshold or is otherwise a retailer maintaining a place of business in Illinois, the registration status with IDOR changes to a mandatory Illinois Use Tax collector. Once a marketplace facilitator, marketplace seller, or remote seller becomes a mandatory Illinois Use Tax collector, the marketplace facilitator, marketplace seller, or remote seller will be subject to all provisions of the Illinois Use Tax Act.

    What if an Illinois purchaser buys tangible personal property over the internet and is not charged Illinois Use Tax?

    If an Illinois purchaser is not charged Illinois Use Tax on tangible personal property ordered over the internet and shipped into Illinois, the purchaser must report and pay Illinois Use Tax on the purchase price directly to the Illinois Department of Revenue. The individual should report the Illinois Use Tax on Form IL-1040, Individual Income Tax Return, or ST-44, Illinois Use Tax Return.

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