Sales and Use Tax Definitions

FAQ Index

    Frequently Asked Questions

    ​Certified Automated System (CAS) 

    An automated software system that is certified by the Illinois Department of Revenue (IDOR) as meeting all performance and tax calculation standards.

    Certified Service Provider (CSP) 

    An agent certified by IDOR to perform the remote retailer's use and occupation tax functions, as outlined in the contract between IDOR and the CSP. 

    General merchandise 

    Most tangible personal property including sales of

    • soft drinks and candy; 
    • 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; and 
    • grooming and hygiene products.

    Gross receipts 

    The total selling price or the amount of such sales from the sales of tangible personal property at retail.

    Illinois purchaser 

    A person in Illinois who, through a sale at retail, acquires the ownership of tangible personal property for a valuable consideration.

    In-state (Illinois) retailer

    A person, who has a physical location (generally brick and mortar) in Illinois, that sells tangible personal property at retail to Illinois purchasers. 

    Items required to be titled or registered 

    Includes motor vehicles, ATVs, watercraft, aircraft, snowmobiles, trailers, and mobile homes.

    Marketplace

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

    Marketplace facilitator 

    A person who has an agreement with a marketplace seller and facilitates a retail sale by a marketplace seller through:

    1. 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; and 
    2. either directly or indirectly, collecting payment for the tangible personal property 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 service. 

    When a marketplace facilitator meets a tax remittance threshold, the marketplace facilitator is required to collect and remit state and local retailers' occupation tax to IDOR. 

    Marketplace seller 

    A person who makes sales through a marketplace operated by an unrelated third-party marketplace facilitator and who has obtained a certification from the marketplace facilitator that the marketplace facilitator will collect and remit all Illinois taxes. 

    Out-of-state seller    

    1. A seller located outside Illinois but that has or maintains 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 seller or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such seller or subsidiary is licensed to do business in Illinois; or 

    2. A seller located outside Illinois but that has a contract with a person located in Illinois under which the person, for a commission or other consideration based upon the sale of tangible personal property by the seller, directly or indirectly refers potential customers to the seller by providing to the potential customers a promotional code or other mechanism that allows the seller to track purchases referred by such persons. The provisions of this paragraph (2) shall apply only if the cumulative gross receipts from sales of tangible personal property by the seller to customers who are referred to the seller by all persons in Illinois under such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December. A seller meeting the requirements of this paragraph (2) shall be presumed to be an out-of-state seller but may rebut this presumption by submitting proof that the referrals or other activities pursued within Illinois by such persons were not sufficient to meet the nexus standards of the United States Constitution during the preceding 4 quarterly periods; or 

    3. A seller located outside Illinois but that has a contract with a person located in Illinois under which:

      1. the seller sells the same or substantially similar line of products as the person located in Illinois and does so using an identical or substantially similar name, trade name, or trademark as the person located in Illinois; and
      2. the retailer provides a commission or other consideration to the person located in Illinois based upon the sale of tangible personal property by the retailer.
      The provisions of this paragraph (3) shall apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to purchasers in Illinois under all such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December.

    Person 

    Any natural individual, firm, partnership, association, joint stock company, joint adventure, public or private corporation, limited liability company, or a receiver, executor, trustee, guardian or other representative appointed by order of any court.

    Physical presence 

    Maintains 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. See 35 ILCS 105/2 for more information. 

    Purchaser

    Anyone who, through a sale at retail, acquires the ownership of or title to tangible personal property for a valuable consideration.

    Qualifying food, drugs, and medical appliances subject to the preferential lower tax rate

    • 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.

    Remote retailer

    A retailer, who does not have a physical presence or any selling activities in Illinois (see 86 Ill. Adm. Code 270.115), that sells tangible personal property to Illinois purchasers and meets a tax remittance threshold. A remote retailer is considered an Illinois retailer and is liable for all applicable state and local sales tax administered by IDOR on all retail sales to Illinois purchasers. A retailer that fulfills any orders from its inventory in Illinois is not a "remote retailer".

    Reseller (wholesaler) 

    Any person engaged in the business of selling tangible personal property to another person other than for use or consumption. 

    Sale at retail 

    Any transfer of the ownership, for a valuable consideration, of tangible personal property to a purchaser (end-user) who will use or consume the tangible personal property. 

    Sales Tax (Retailers' Occupation Tax [ROT]) 

    A tax imposed on retailers selling tangible personal property to purchasers in Illinois. It includes the taxes levied under the Retailers' Occupation Tax Act (35 ILCS 120) and all applicable local retailers' occupation taxes administered by IDOR. Out-of-state sellers, remote retailers, and marketplace facilitators, see the Leveling the Playing Field for Illinois Retail Act Flowchart to determine which tax you are to collect. There is no authority for remote retailers to voluntarily collect sales tax. 

    Destination rate sales tax - The tax rate in effect at the location to which the tangible personal property 

    • is shipped or delivered or 
    • at which possession is taken by the purchaser.

    Origin rate sales tax - The tax rate in effect at the location of the Illinois inventory from 

    • which a sale is fulfilled or 
    • where selling activities occur (e.g., brick and mortar store in Illinois or your home office in Illinois). 

    Tax remittance thresholds - marketplace facilitator 

    A marketplace facilitator selling tangible personal property at retail in Illinois is subject to Illinois sales tax if either of the following thresholds is met:

    • $100,000 or more in cumulative gross receipts from sales of tangible personal property to purchasers in Illinois made through the marketplace by the marketplace facilitator and by marketplace sellers; or 

    • 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois by the marketplace facilitator and marketplace sellers selling through the marketplace.

    Tax remittance thresholds - remote retailer

    A remote retailer selling tangible personal property at retail in Illinois is subject to state and local sales tax if either of the following thresholds is met:

    • $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.

    Use 

    The exercise by any person of any right or power over tangible personal property incident to the ownership of that property.

    Use Tax 

    A tax imposed upon the privilege of using in Illinois tangible personal property purchased at retail from a retailer. Use Tax is not a destination-based tax. It is flat rate throughout the state of 6.25% for general merchandise and 1% for qualifying food, drugs and medical appliances. Out-of-state sellers, remote retailers, and marketplace facilitators, see the Leveling the Playing Field for Illinois Retail Act Flowchart to determine which tax you are to collect. 

    Voluntary use tax collector 

    Although not required, a remote retailer who does not meet either threshold may collect Illinois Use Tax as a courtesy to its customers. Illinois purchasers incur an Illinois Use Tax liability on out-of-state purchases that do not have Illinois sales or use tax collected and remitted by the seller. 


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