Tax Notes State

During the spring 2019 session, the Illinois General Assembly passed two laws aimed directly at online retailers, Public Act 101-0009 (S.B. 689) and Public Act 101-0031 (S.B. 690). S.B. 689 makes a marketplace facilitator — a business that contracts with sellers to promote their sale of wares on its marketplace — responsible for collecting and remitting Illinois use tax for sales made on their platforms by marketplace sellers.

Authors: David P. Dorner

S.B. 690 requires remote retailers — sellers without a physical presence in Illinois that do not use a marketplace facilitator — to collect and remit Illinois’s retailers’ occupation tax including any applicable local tax (collectively, sales tax) based on the destination of the Illinois sale. Before this change, remote retailers with Illinois nexus generally collected only state use tax at the rate of 6.25 percent, because, outside Chicago, there is no local use tax in Illinois.

Marketplace Sellers

Beginning January 1, 2020, S.B. 689 requires marketplace facilitators and their affiliates with Wayfair1 nexus in Illinois ($100,000 in sales or 200 separate transactions) to collect use tax on Illinois sales facilitated through their marketplaces. A marketplace is defined as a physical or electronic place, platform, or forum, by which a marketplace seller sells or offers to sell items. A marketplace facilitator facilitates sales by listing items for sale and processing the sale or payment for the marketplace seller. The marketplace facilitator is the party responsible for maintaining books and records for sales made through a marketplace and remitting the collected tax to the state.

However, marketplace sellers are required to provide the marketplace facilitator with the information (low rate of tax, high rate of tax, or purchaser exemption) necessary for the marketplace facilitator to correctly collect and remit tax on the items sold through the marketplace. Sales made through a marketplace facilitator’s platform do not count as the marketplace seller’s sales for purposes of Illinois’s Wayfair nexus dollar or transaction thresholds. Accordingly, a marketplace seller will not have to also file Illinois sales or use tax returns on its own behalf, unless its sales not made through a marketplace facilitator independently establish Illinois nexus.

This article was originally published by Tax Analysts. To read the full article, download the PDF below.

  1. South Dakota v. Wayfair Inc., 138 S. Ct. 2080 (2018).