Illinois Requires Remote Sellers to Collect Local and State Use Taxes

The Illinois Department of Revenue altered its sales tax regime affecting remote sellers across the country. As of January 1, 2021, remote sellers are required to collect all local and state use taxes.

The regulation applies to:

· Remote retailers or marketplace facilitators that do not have a physical presence in the state must administer and collect the 6.25% sales and use tax, and all local taxes (up to 13%).

Sellers with physical presence in the state that fulfill orders from outside the state, continue to collect tax at Illinois’ use tax rate of 6.25%, without collecting any additional local tax. This appears, on the surface, to make this a “discriminatory” tax which probably will be challenged on the basis that an in-state company with orders fulfilled from out of state is excluded from the local tax collection, where as only remote sellers and marketplace facilitators are required to collect the local taxes which appears burdensome to only taxpayers outside the state.

Currently, there has been an uptick in audit activity with the Illinois Department of Revenue and remote sellers. Navigating the compliance and calculations for each jurisdiction in Illinois is a time consuming, arduous process.

Our national sales and use tax professionals are staying on top of this evolving legislation and advising our clients on next steps. If your business qualifies as a remote seller in the state of Illinois, and you’d like our help with this and other sales and use tax matters, please contact us by completing the form below.

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