The discriminatory effect of P.A. 101-0031 is easily illustrated by comparing the sales tax rate due on a widget sale to a Chicago customer by a remote retailer with that by an Illinois-based retailer. P.A. 101-0031 requires a remote retailer to charge its Chicago customer a 10.25 percent sales tax (the rate in Chicago), while an out-of-state retailer making a sale through a marketplace facilitator would only have to charge a 6.25 percent state use tax rate. Also, a brick-and-mortar retailer located in Illinois, but outside Chicago in a low-rate taxing jurisdiction, would only have to charge that same Chicago customer tax based on the rate at the retailer’s location, which could also be as low as 6.25 percent. What’s more, P.A. 101-0031 saddles remote retailers with the administrative hardships and costs of having to determine the sales tax rate for the approximately 7,000 local taxing jurisdictions in Illinois.3
In 2019 Illinois enacted P.A. 101-0031, which required, among other things, remote retailers1 to charge sales tax based on the tax rate where their customer is located (that is, destination). As enacted, P.A. 101-0031 had an effective date of July 1, 2020 and was intended to apply only to remote retailers that (1) would make direct sales to Illinois customers (that is, sales into Illinois not made through marketplace facilitators), and (2) had economic nexus2 with Illinois. All other vendors, such as brick-and-mortar and remote retailers making indirect Illinois sales through marketplace facilitators, were not subject to P.A. 101-0031, and thus would continue to charge tax on their Illinois sales using the origination tax rate. Although P.A. 101-0031 is titled the Leveling the Playing Field for Illinois Retail Act, the consensus in the taxpayer community was that P.A. 101-0031 failed to level the playing field and, in fact, discriminated against remote retailers.