Current through Register Vol. 48, No. 38, September 20, 2024
a)
Different Types of Retailers On and After January 1, 2021. Public Acts 101-0031
and 101-0604 added several new types of retailers with different tax
liabilities to the State's existing sales tax structure. As a result, retailers
now include the following:
1) Remote retailers
incurring State and local retailers' occupation tax using destination sourcing
for sales made to Illinois purchasers; a marketplace seller that makes sales
over a marketplace that meets either of the required tax remittance thresholds
in Section
131.115
of this Part and that also makes sales outside of that marketplace may also be
considered a remote retailer for sales outside of the marketplace;
2) Marketplace facilitators incurring State
and local retailers' occupation tax using destination sourcing for sales made
over the marketplace on behalf of marketplace sellers to Illinois
purchasers;
3) Marketplace
facilitators incurring State and local retailers' occupation tax using origin
sourcing for their own sales that are either fulfilled from inventory located
in Illinois or for which selling activities otherwise occur in Illinois (the
location at which the State and local retailers' occupation tax is incurred
must be determined by applying the provisions of 86 Ill. Adm. Code
270.115(c) and
(d)); and incurring State and local
retailers' occupation tax using destination sourcing for all other sales of its
own;
4) Out-of-State sellers with a
physical presence in Illinois incurring a Use Tax collection obligation for
sales they make outside Illinois and ship or deliver to Illinois purchasers;
such sellers however, incur State and local retailers' occupation taxes using
origin sourcing for sales for which their selling activities occur in Illinois
(see, e.g., 86 Ill. Adm. Code
270.115(c) and
(d)); if such sellers also make sales over a
marketplace, they are considered marketplace sellers and the marketplace
facilitator will incur State and local retailers' occupation tax liability
based on destination sourcing for these sales;
5) Illinois retailers, including brick and
mortar retailers, incurring no State or local retailers' occupation taxes for
sales made over a marketplace (the marketplace facilitator will now incur State
and local retailers' occupation tax liability based on destination sourcing for
these sales); and
6) Illinois
retailers, including brick and mortar retailers, incurring State and local
retailers' occupation taxes based on origin sourcing for sales made in
Illinois.
7) Illinois retailers,
including brick and mortar retailers, incurring a Use Tax collection obligation
for sales fulfilled from out-of-state inventory and for which selling
activities occur out of state.
b) As a result of these differing tax
obligations, it is critical that retailers examine their selling activities to
determine their specific tax liabilities. This is especially important for
retailers that engage in multichannel retailing (for example, retailers that
engage in selling through their own website, as well as through a marketplace,
or Illinois brick and mortar retailers that also sell over a
marketplace).
c) Scope of
Regulations. The rules established in this Part for remote retailers,
marketplace facilitators, and marketplace sellers apply only to the remittance
of State Retailers' Occupation Tax and local retailers' occupation taxes
administered by the Department. Remote retailers, marketplace facilitators or
marketplace sellers that incur other taxes or fees administered by the
Department, or other taxes not administered by the Department, remain liable
for the remittance of those taxes to the Department or other taxing authority.
1) Taxes required to be remitted under this
Part include the State and local retailers' occupation taxes commonly referred
to as "sales taxes." These taxes include, but are not limited to:
A) the State Retailers' Occupation Tax and,
except as otherwise provided in this subsection, all other local retailers'
occupation taxes administered by the Department, including but not limited to,
the Home Rule Municipal Retailers' Occupation Tax and the Regional
Transportation Authority Retailers' Occupation Tax; and
B) beginning October 1, 2021, the Home Rule
Municipal Soft Drink Retailers' Occupation Tax imposed at 65 ILCS 8 -11-6b(b)
("Chicago Soft Drink ROT"). Remote retailers that meet a tax remittance
threshold (see Section
131.115(a))
are deemed to be engaged in the business of selling soft drinks at the Illinois
location to which the soft drinks are shipped or delivered or at which
possession is taken by the purchaser. If that location is in Chicago, the
remote retailer incurs and must register and remit the Chicago Soft Drink ROT.
Similarly, the Chicago Soft Drink ROT is required to be remitted by marketplace
facilitators making sales on behalf of marketplace sellers if the soft drinks
are shipped or delivered to an address in Chicago, or if possession of the soft
drinks is taken by the purchaser in Chicago. Marketplace facilitators making
their own sales of soft drinks incur the Chicago Soft Drink ROT if the soft
drinks are shipped or delivered to a location in Chicago or if possession is
taken by the purchaser in Chicago, or if the selling activities of the
marketplace facilitator occur in Chicago (see, e.g., 86 Ill. Adm. Code
270.115(c) and
(d)); and
C) beginning October 1, 2021, the tax imposed
at
70 ILCS
210/13 upon persons engaged in the business of selling
food, alcoholic beverages and soft drinks within the boundaries of the
Metropolitan Pier and Exposition Authority (MPEA ROT). Food delivery services
that are considered marketplace facilitators are required to remit the MPEA ROT
on sales made on behalf of a restaurant or other food establishment that is
subject to the MPEA ROT.
i) Food delivery
services that are considered marketplace facilitators meeting a tax remittance
threshold in Section
131.135
of this Part are required to remit the 1% MPEA ROT only if the sale to a
purchaser is made by a restaurant located within the MPEA district. The State
ROT and local sales taxes (such as the Home Rule Municipal ROT or the Home Rule
County or Regional Transportation Authority ROT) are required to be remitted,
however, at the rate in effect at the location to which the food or beverages
are shipped or delivered or at which possession is taken by the purchaser
(destination rate).
ii) Food
delivery services considered marketplace facilitators must provide a
certification to each food service establishment that sells over its
marketplace that it assumes the rights and duties of a retailer under the ROTA
and all applicable local retailers' occupation taxes administered by the
Department (including the MPEA ROT and the Chicago Soft Drink Tax, if
applicable) with respect to sales made by the food establishment through the
marketplace; and that it will remit taxes imposed by the retailers' occupation
tax and all applicable local retailers' occupation taxes administered by the
Department (including the MPEA ROT and the Chicago Soft Drink Tax) for sales
made through the marketplace. This certification must also contain the name,
address, and Illinois Account ID number for the sales tax account of the
marketplace facilitator and the name, address and Illinois Account ID number
for the sales tax account of the food service establishment. Food service
establishments that have obtained this certification shall be relieved of
liability for tax on sales made over the marketplace unless the marketplace
facilitator seeks relief from liability as a result of good faith reliance on
incorrect information provided to it by the marketplace seller [35 ILCS 120/2] (see
Section 131.150(b)-(c) of this Part), or until the food service establishment
has been notified by a marketplace facilitator that the marketplace facilitator
is no longer required to remit tax as provided in Section
131.135(f)
of this Part.
2) Taxes or fees administered by the
Department that are not subject to the provisions of this Part. Remote
retailers, marketplace sellers and marketplace facilitators often sell tangible
personal property that is subject to additional taxes, other than State and
local retailers' occupation taxes which are required to be remitted under
Section 2 of the Retailers' Occupation Tax Act. They must determine whether
they incur these additional taxes by examining the specific provisions of these
additional tax acts. These additional taxes may commonly include, but are not
limited to:
A) the Prepaid Wireless 9-1-1
Surcharge (E911 Surcharge) imposed at
50 ILCS
753/15 and
B) the Illinois Telecommunications Access
Corporation Assessment (ITAC Assessment) imposed at
220
ILCS 5/13-703.
3) Taxes not administered by the Department
include, but are not limited to, taxes imposed and administered by a home rule
municipality on food prepared for immediate consumption and on alcoholic
beverages under the authority of 65 ILCS 5/8-11 -6a.
4) Remote retailers, marketplace sellers and
marketplace facilitators that remain liable for Department-administered taxes
not subject to this Part as described in subsection (c)(2) must register with
the Department to remit those taxes. Remote retailers, marketplace sellers and
marketplace facilitators must review the statutes imposing these taxes to
determine whether they are required to register and remit them. In the case of
marketplace sellers incurring these additional taxes for tangible personal
property sold over a marketplace, the Department strongly encourages them to
work with their marketplace facilitators to make arrangements allowing the
marketplace facilitator to collect these taxes and remit them to the
marketplace seller, along with the gross receipts from the sale, so that the
marketplace seller can then remit the taxes to the Department as
required.
5) Remote retailers,
marketplace sellers, and marketplace facilitators that remain liable for taxes
not administered by the Department are strongly encouraged to contact the
appropriate local taxing authority with questions related to registration and
remittance of tax.
EXAMPLE 1: T-Cell, Inc. sells prepaid mobile phones over a
marketplace that is required to remit tax to the Department under this Part. A
Chicago resident purchases a prepaid mobile phone which is delivered to her
Chicago address. Her purchase is subject to both the Prepaid Wireless 911
Surcharge and the ITAC Assessment. These taxes are incurred because the laws
imposing these surcharges/assessments provide that the surcharges/assessments
are incurred whenever the sale of the tangible personal property is treated as
occurring in Illinois for purposes of the Retailers' Occupation Tax Act (under
the provisions of Section 2 of the Retailers' Occupation Tax Act this is the
case). Although the marketplace facilitator is required to collect and remit
State and local retailers' occupation taxes on this sale, it is not required to
collect and remit the E911 Surcharge or the ITAC Assessment. T-Cell, Inc. must
register with the Department to collect and remit the E911 Surcharge and ITAC
Assessment.
EXAMPLE 2: Greet N Eat is a food delivery service that is
considered a marketplace facilitator required to remit tax under this Part. A
customer in Oak Park orders a pizza and a liter bottle of a soft drink over
Greet N Eat's application from a pizzeria in Chicago that is subject to the
MPEA ROT. Greet N Eat incurs the State ROT (6.25 %), the Home Rule Municipal
ROT in Oak Park, the County Home Rule ROT for Cook County, and the RTA ROT for
Cook County on this transaction. It also incurs the 1% MPEA ROT, since the
pizzeria is subject to the MPEA ROT. It does not, however, incur the Chicago
Soft Drink Tax, because the soft drink is not delivered to a purchaser within
the City of Chicago.
EXAMPLE 3: Greet N Eat is a food delivery service that is
considered a marketplace facilitator required to remit tax under this Part. A
customer in the MPEA ROT district orders a pizza and a liter bottle of a soft
drink over Greet N Eat's application from a pizzeria in Oak Park that is not
subject to the MPEA ROT. Greet N Eat incurs the State ROT (6.25%), the Home
Rule Municipal ROT in Chicago, the County Home Rule ROT for Cook County, and
the RTA ROT for Cook County on this transaction. It incurs the Chicago Soft
Drink Tax, because the soft drink is delivered to a purchaser within the City
of Chicago. It does not, however, incur the 1% MPEA ROT since the pizzeria is
not subject to the MPEA ROT.
