Who is a remote seller?
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:
Remote sellers with a physical presence in Illinois
Remote sellers with a physical presence in Illinois are required to register with IDOR to remit Illinois taxes on sales to Illinois purchasers.
Remote sellers without a physical presence in Illinois
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. Within the last 12 months as determined by a quarterly review, the thresholds are
cumulative gross receipts of $100,000 or more from sales to Illinois purchasers or
200 or more separate transactions with Illinois purchasers.
Note: Online sellers operating in Illinois are
not considered remote sellers when selling to Illinois purchasers, these sellers are retailers.
If a remote seller sells to Illinois purchasers from inventory in Illinois, then the remote seller is subject to Retailers' Occupation Tax and not Use Tax.
What activities should a remote seller examine to determine whether they have physical presence in Illinois?
Physical presence nexus includes, but is not limited to, the following:
- having an office or other facility in Illinois (including inventory located in Illinois),
- having employees in Illinois, or
- having other representatives operating in Illinois.
86 Ill Adm. Code 150.201 for the definition of a "retailer maintaining a place of business in this State." If a remote seller determines it has physical presence nexus in Illinois, the remote seller is required to register to collect Use Taxes.
What are the required review periods for sellers not currently registered?
The remote seller must determine, on a quarterly basis, whether it is obligated to begin collecting Illinois Use Tax. For each quarter ending on the last day of March, June, September, and December, the remote seller must examine its sales to Illinois purchasers for the immediately preceding 12-month period to determine if either of the thresholds apply
What sales are excluded from the threshold determination?
As part of the threshold determination, a remote seller must exclude the following types of sales:
- sales for resale (see
86 Ill. Adm. Code 130. 201),
- sales of tangible personal property that is required to be registered with an agency of this State, including motor vehicles, watercraft, aircraft, and trailers, when these sales are made from locations outside Illinois to Illinois purchasers,
- occasional sales (see
86 Ill. Adm. Code 130.110), and
- sales made by a remote seller that are subject to Retailers' Occupation Tax must be excluded. For example, sales made by a remote seller at an Illinois trade show that are subject to Retailers' Occupation Tax.
All sales other than these, 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 Use Tax rate?
The Use Tax rate is 6.25% for general merchandise and 1% for qualifying food, drugs and medical appliances. See 86 Ill. Adm. Code
130.311 for information about what items qualify as food, drugs, and medical appliances. To determine the appropriate Use Tax rate for a sale, refer to the
Illinois Remote Sellers 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 Use Tax?
Illinois Remote Seller 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 sold by remote sellers includes, but is not limited to, the following:
- soft drinks;
- 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.
If a remote seller is already voluntarily collecting and remitting Use Tax, should it continue?
IDOR strongly recommends that remote sellers continue collecting the Use Tax as a courtesy to their Illinois purchasers, as those purchasers incur a Use Tax liability which the purchaser must otherwise self-assess and remit directly to IDOR. However, if the remote seller meets either threshold, the registration status with IDOR changes to a mandatory Use Tax collector. Remote sellers must contact IDOR to update their registration. This will not affect the way Use Tax is collected and remitted to IDOR. Once a remote seller meets either threshold causing a registration status change to a mandatory Use Tax collector the remote seller will be subject to all provisions of the Use Tax Act
Are remote sellers liable for Use Tax on all sales into Illinois?
Remote sellers who meet either threshold are required to collect and remit 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.
150.803) or the sales are subject to Retailers' Occupation Tax (e.g., trade shows, 86 Ill. Adm.
Are remote sellers required to collect and remit local sales and use taxes?
Local sales taxes apply if the tangible personal property to be sold to an Illinois purchaser is in the inventory of the 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 seller is an Illinois retailer with respect to this transaction and will incur Retailers' Occupation Tax, including any applicable local retailers' occupation taxes See
86 Ill. Adm. Code 270.115(d). Retailers should use the
Tax Rate Finder to determine the correct sales tax rate based on their location of the inventory.
Is a remote seller liable for Illinois 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 retailers or remote sellers for some administrative expenses of Use Tax collection?
A retailer or remote seller may deduct 1.75% of the Use Tax due on timely filed and paid returns. The discount is not allowed on excess tax collected (i.e., tax improperly collected). In the case of partial payment or accelerated payors, 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.
What is an example of a required registration?
Remote Seller A begins making sales to Illinois purchasers on May 1, 2019. On June 30, 2019 (the first quarterly period after sales to Illinois purchasers began), Remote Seller A determines it has not met either threshold for the previous 12 months. At the end of September 2019 (the next quarterly period), however, Remote Seller A determines it made $200,000 in sales to Illinois purchasers during the preceding 12-month period. As a result, Remote Seller A is required to register to collect and remit Use Tax on sales to Illinois purchasers for the one-year period beginning October 1, 2019, through September 30, 2020.
Common Registration Examples for Remote Sellers and Retailers
If a remote seller make sales through a personal website, must the remote seller register to collect Illinois tax?
A remote seller will be required to register to collect and remit Illinois Use Tax, even if the remote seller does not have inventory in Illinois, provided the remote seller meets either threshold from the sale of tangible personal property to Illinois purchasers. If the remote seller does not meet either threshold, we strongly recommend that the remote seller collect Illinois Use Tax as a courtesy to its Illinois purchasers.
If a remote seller makes sales from a personal website into Illinois from inventory in Illinois, then the remote seller is no longer considered a remote seller. In this case, the remote seller is considered an Illinois retailer who is required to remit Illinois Retailers' Occupation Tax on sales to Illinois purchasers.
How does a remote seller register with IDOR?
Register with IDOR electronically using MyTax Illinois available at
- To register a new business, click on the blue button that says "Registration," and then click "Register a New Business" to complete Form REG-1, Illinois Business Registration Application. Allow one business day after the remote seller receives an email that the application has been processed, before signing up for MyTax Illinois. To create a MyTax Illinois account, click on the "Sign up Now" button, and submit the requested information.
If the remote seller already has a MyTax Illinois account, it can register for new tax types by simply logging into its MyTax Illinois account and clicking on "Register for New Tax Accounts" to complete the registration.
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.
Once a 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 remote seller's reporting period. Once registration is complete, the remote seller will receive a letter with its specific filing frequency.
How does a remote seller file and pay the tax due?
Once the 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 remote seller can also file Form ST-1 using a
third-party software vendor or through our
Electronic Filing Program.
Remote sellers must report Use Tax on Form ST-1, Step 3:
- Line 6a for general merchandise sales, and
- Line 7a for food, drug, and medical appliance sales.
What if a remote seller has been selling in Illinois for a while, must the remote seller remit tax for prior sales?
Effective October 1, 2018 and after, the remote seller must determine whether the preceding 12 months of sales to Illinois purchasers meets either threshold during the quarterly review at the end of every March, June, September, and December. At that time, if the remote seller meets either threshold, the remote seller must start collecting and remitting Illinois Use Tax at the beginning of the immediately following quarter and continue to do so for one year. At the end of that year, the remote seller must begin this process again
How often are remote sellers required to file Use Tax returns?
A remote seller's filing frequency is based on the information provided with registration. Remote sellers will be notified by IDOR of their filing frequency (monthly or quarterly) based on their registration. IDOR may review a remote seller's filing frequency on an annual basis and change the filing frequency based on the remote seller's filing history. IDOR will notify the remote seller if the filing frequency changes.
Are remote sellers subject to audit by IDOR?
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 remote sales to multiple 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.
What if an Illinois resident purchases tangible personal property over the internet?
If an Illinois resident is not charged Illinois Use Tax on tangible personal property ordered over the internet and shipped into Illinois, the purchaser must report 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.