Resource Page for Marketplace Facilitators, Marketplace Sellers, and Remote Sellers

Overview

Public Acts (P.A.) 101-0009 and 101-0604 expand nexus in Illinois to include marketplace facilitators, who by definition meet certain thresholds. As a result, marketplace, are required to register to collect and remit Illinois Use Tax for sales made through their marketplace. Marketplace sellers selling through the marketplace are not responsible for collecting and remitting Illinois Use Tax on these sales. See emergency rule 86 Ill. Adm. Code 150.804 for more information. 

Definitions 

Marketplace means 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.

Marketplace facilitator means a person who meets either 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 for sale by the marketplace seller in a marketplace, tangible personal property that is subject to Illinois Use Tax; 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 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. 

Affiliate is a person that, with respect to another person:

  • has a direct or indirect ownership of more than 5 percent in the other person; or
  • is related to the other person because a third person, or a group of third persons who are affiliated with each other, holds a direct or indirect ownership interest of more than 5 percent in the related person. 

Marketplace Facilitators

Effective January 1, 2020, Public Acts 101-0009 and 101-0604 amended the Illinois Use Tax Act to state that marketplace facilitators meeting certain gross receipts/transaction thresholds are considered the retailers for sales made over their marketplace by marketplace sellers for which Use Tax is due.  As a result, these marketplace facilitators. A marketplace facilitator must register to collect and remit Illinois Use Tax to the Illinois Department of Revenue (IDOR).

These new requirements apply when Illinois Use Tax is the only tax required to be remitted to IDOR by marketplace facilitators for sales made through the marketplace. 

Note about sales made through the marketplace resulting in Illinois Retailers' Occupation Tax (sales tax) liability: Sales to Illinois purchasers made through the marketplace resulting in Illinois Retailers' Occupation Tax (sales tax) liability  are the responsibility of the marketplace seller. In this case, the marketplace seller is considered the retailer for sales resulting in Retailers' Occupation Tax (sales tax) liability and the marketplace seller must register to remit Illinois Retailers' Occupation Tax (sales tax) to IDOR. 

Thresholds

A marketplace facilitator must meet either of the following thresholds to be considered the retailer for each sale of tangible personal property made through its marketplace on behalf of marketplace sellers:

  • the cumulative gross receipts from retail 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.

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 must be excluded, and
  • sales made through the marketplace on behalf of a marketplace seller or by a marketplace facilitator that are subject to Retailers' Occupation Tax (sales tax) must be excluded (i.e., sales made through a marketplace on behalf of an out-of-state 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) on such sales. A marketplace facilitator making its own retail sales of tangible personal property through the marketplace that are subject to Illinois Retailers' Occupation Tax (sales tax) must be registered for Retailers' Occupation Tax (sales tax) and remit 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.

How to determine if you meet a threshold

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 (ending on 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 with IDOR as a marketplace facilitator and begin collecting and remitting Illinois Use Tax for all sales made through its marketplace  beginning on the first day of the following quarter. 

If at the end of the one-year period, a marketplace facilitator determines it met either of the thresholds during the preceding 12-month period, it is still considered a retailer maintaining a place of business in Illinois and is required to continue to collect and remit Illinois Use Tax and file returns for the subsequent year for all sales subject to Illinois Use Tax made over its marketplace.

If at the end of the one-year period, a marketplace facilitator who was required to collect and remit Illinois Use Tax, determines it did not meet either of the thresholds during the preceding 12-month period, then going forward, the marketplace facilitator shall determine on a quarterly basis (ending on 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 determines it  does not meet a threshold and does not inform IDOR of this change, then IDOR will still consider them to be a marketplace facilitator who must report and remit Illinois Use Taxes for all sales made through the marketplace.

Requirements for marketplace facilitators

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.  
  • collect and remit Illinois Use Tax for sales made through its marketplace based on information provided by marketplace sellers. When 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 (sales tax) reimbursements, and transmit it to the marketplace seller for remittance to IDOR as Retailers' Occupation Tax (sales tax).  
  • register with IDOR for sales made through the marketplace by marketplace sellers and file returns in accordance with procedures required by the Illinois Use Tax Act. We encourage a marketplace facilitator to report its own sales separately from the sales made through the marketplace on behalf of marketplace sellers.

See 86 Ill. Adm. Code 150.804(h) for additional requirements.

Marketplace Sellers/Remote Sellers

Under Wayfair (economic) nexus, a remote seller making sales to Illinois purchasers from locations outside Illinois is required to register with IDOR to collect and remit Illinois Use Tax on those sales if it falls within the definition of a "retailer maintaining a place of business in this State" in 35 ILCS 105/2 . There are two groups of remote sellers that must collect tax on sales to Illinois purchasers:

  • Remote sellers with a physical presence in Illinois. Remote sellers that have a physical presence in Illinois are required to register with IDOR to collect and remit Illinois Use Tax on sales to Illinois purchasers.

  • Remote sellers without a physical presence in Illinois (See 86 Ill. Adm. Code 150.803, Wayfair (economic) nexus, for more information).  On and after October 1, 2018, remote sellers without a physical presence in Illinois are required to register to collect and remit Illinois Use Tax for sales of tangible personal property to Illinois purchaser if they meet either of the  following thresholds:

  • cumulative gross receipts of $100,000 or more from sales to Illinois purchasers, or
  • 200 or more separate transactions with Illinois purchasers.

Note: Marketplace sellers and remote sellers may already be collecting and remitting Illinois Use Tax under Wayfair (economic) nexus; however, your collection obligations may have changed effective January 1, 2020.

Change effective January 1, 2020

With the new marketplace law under P.A. 101-0009 and P.A. 101-0604, a marketplace facilitator is required to collect and remit Illinois Use Tax on all sales subject to Illinois Use Tax made by all marketplace sellers through its marketplace. A marketplace seller will no longer be required to report these sales. However, if you also make sales outside the marketplace or if the marketplace facilitator is not required to collect Illinois Use Tax because it does not meet either of the marketplace thresholds, you are required to collect and remit Illinois Use Tax on those sales if you are a "retailer maintaining a place of business" in Illinois (i.e., you have nexus, including, but not limited to, Wayfair [economic] nexus). When determining if you a marketplace seller or remote seller meet a Wayfair (economic) nexus threshold, you should not include the gross receipts nor the number of separate transactions for sales to Illinois purchasers made through a registered marketplace. 

Requirements for marketplace sellers

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.
  • determine if it is required to separately register and collect and remit Illinois Use Tax on sales to Illinois purchasers in addition to those made through a marketplace. 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 a marketplace seller has Wayfair (economic) nexus (see 86 Ill. Adm. Code 150.803), 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 registered marketplace facilitator and for which it has received a certification from the marketplace facilitator shall be included for purposes of determining whether it meets the Wayfair (economic) nexus thresholds.      
  • separately register and remit tax on all sales of tangible personal property, including those made  over a registered marketplace, that result in Retailers' Occupation Tax (sales tax). For sales made through the marketplace that result in Illinois Retailers' Occupation Tax (sales tax), the marketplace seller is considered the retailer and must report and remit tax on such sales as provided in the 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 required to remit tax to IDOR on such sales. However, the marketplace facilitator may collect these taxes from the purchaser and transmit them to the marketplace seller for reporting and remittance to IDOR as Retailers' Occupation Tax (sales tax).

See 86 Ill. Adm. Code 150.804(i) for additional requirements.

Hold Harmless Provisions

marketplace seller shall be held harmless for liability for the collection and remittance of Illinois Use Tax when a marketplace facilitator fails to correctly collect and remit tax after having been provided with information by a marketplace seller to correctly collect and remit tax.

If a marketplace facilitator demonstrates to the satisfaction of IDOR that its failure to correctly collect and remit Illinois Use Tax on a sale resulted from its good faith reliance on incorrect or insufficient information provided by a marketplace seller, it shall be relieved of liability for the tax on that sale.  In this case, a marketplace seller is liable for any resulting Illinois Use Tax due.

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