What Is Illinois Sale Tax On Services?

sale tax definition

For information about the Leveling the Playing Field for Illinois Retail Act, visit the resources page.

Legal References

Statutory

Retailers' Occupation Tax - 35 ILCS 120/1 to 120/xiv
Service Occupation Revenue enhancement - 35 ILCS 115/i to 115/21
Service Use Tax - 35 ILCS 110/i to 110/21
Utilise Tax - 35 ILCS 105/one to 105/22
Leveling the Playing Field for Illinois Retail - 35 ILCS 185/5 - 185/99

Regulations

Retailers' Occupation Tax - Role 130
Service Occupation Tax - Part 140
Service Use Tax - Part 160
Use Taxation - Function 150
Leveling the Playing Field for Illinois Retail - Function 131

Electronic Services

MyTax Illinois
Tax-Prep Software
Approved Third-Party Software Vendors

Definitions

The term "sales taxation" actually refers to several taxation acts. Sales tax is a combination of "occupation" taxes that are imposed on retailers' receipts and "use" taxes that are imposed on amounts paid by purchasers. Retailers owe the occupation tax to the department; they reimburse themselves for this liability by collecting employ taxation from the buyers. "Sales tax" is the combination of all country, local, mass transit, domicile rule occupation and use, non-home dominion occupation and use, park district, county public safety and facilities, canton school facility taxation, and business organization district taxes.

"Sales revenue enhancement" is imposed on a retailer's receipts from sales of tangible personal holding for utilize or consumption. Tangible personal property does not include real estate, stocks, bonds, or other "newspaper" assets representing an interest.

If the retailer does not charge Illinois Sales Revenue enhancement on a sale of tangible personal property, an Illinois purchaser must pay "employ" tax for the purchase direct to the department.

Types of retailers

An Illinois (in-state) retailer (e.g., brick and mortar) is a retailer who makes sales of tangible personal property in Illinois. An Illinois retailer's inventory and headquarters are generally in Illinois. They must collect and remit state and local retailers' occupation tax at the origin charge per unit.

An out-of-country seller is an out-of-state retailer who has physical presence in Illinois. Physical presence in Illinois means having or maintaining within Illinois, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business organization, or any amanuensis or other representative operating within Illinois under the authorization of the retailer or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such retailer or subsidiary is licensed to do business in Illinois [35 ILCS 105/2 (i)]. For other forms of physical presence, see 35 ILCS 105/2 (1.one) and (1.2). Out-of-state sellers must determine on a sale-by-auction basis if their selling activities take place in Illinois or non.

If selling activities occur in Illinois (for example, sales are filled from inventory in Illinois or other selling activities occur in Illinois; see, e.g., 86 Ill. Adm. Code 270.115), so state and local retailers' occupation taxation is calculated using the origin charge per unit for that auction.
If selling activities occur outside Illinois, then use taxation must be nerveless and remitted for that sale.

A remote retailer is an out-of-country retailer with no physical presence in Illinois who meets a tax remittance threshold of

$100,000 or more than in cumulative gross receipts from sales of tangible personal belongings to purchasers in Illinois; or
200 or more than divide transactions for the sale of tangible personal property to purchasers in Illinois.

A remote retailer shall determine on a quarterly basis, ending on the last day of March, June, September, and Dec, whether information technology meets or exceeds either threshold for the preceding 12-month period. If the remote retailer meets or exceeds either threshold for a 12-calendar month period, it is required to collect and remit all applicable state and local retailers' occupation tax administered by the Illinois Department of Revenue (IDOR) on all retail sales to Illinois purchasers and to file all applicable returns for one yr. Remote retailers must collect and remit state and local retailers' occupation taxation at the destination rate.

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

A marketplace seller is a person that makes sales through a marketplace operated by an unrelated 3rd-party marketplace facilitator. A person that is an chapter of a marketplace facilitator is not a marketplace seller.

A marketplace facilitator is a person who, pursuant to an agreement with an unrelated 3rd-party marketplace seller, directly or indirectly through i or more affiliates facilitates a retail sale by an unrelated third-political party marketplace seller by:

List or advertising for sale past the market place seller in a marketplace, tangible personal belongings that is subject area to taxation nether the Retailers' Occupation Revenue enhancement Act (ROT); and
Either direct or indirectly, through agreements or arrangements with tertiary parties, collecting payment from the client and transmitting that payment to the market seller regardless of whether the market facilitator receives compensation or other consideration in exchange for its services.

Marketplace facilitators must determine on a quarterly footing, ending on the last 24-hour interval of March, June, September, and December, whether it meets or exceeds a tax remittance threshold for the preceding 12-month period. The tax remittance thresholds are:

$100,000 or more in cumulative gross receipts from sales of tangible personal holding to purchasers in Illinois; or
200 or more than dissever transactions for the sale of tangible personal property to purchasers in Illinois.

Marketplace facilitators meeting a taxation remittance threshold must then make up one's mind on a sale-by-sale basis if the sale through their market place is a auction on behalf of a marketplace seller or their ain sale.

Taxes for sales made by a marketplace facilitator on behalf of a marketplace seller are incurred at the tax rate in issue at the purchaser's location (destination rate). This applies to sales made through a marketplace past:

Illinois retailers
Out-of-country retailers (with or without physical presence)

Sales made over the market place by a market facilitator itself are taxed as follows:

For sales that are fulfilled from inventory located in Illinois and for which selling activities practise not otherwise occur in Illinois (see, e.g., 86 Ill. Adm. Code 270.115), land and local retailers' occupation taxes are incurred at the taxation rate in effect at the location of the Illinois inventory (origin rate);
For sales for which selling activities otherwise occur in Illinois (run across, eastward.g., 86 Ill. Adm. Code 270.115), country and local retailers' occupation taxes are incurred at the tax rate in result at the location of the selling activities (origin rate);
For sales that are non fulfilled from inventory located in Illinois and for which selling activities practice not otherwise occur in Illinois (run into, eastward.g., 86 Ill. Adm. Code 270.115), country and local retailers' occupation taxes are incurred at the taxation rate in effect at the purchaser's location (destination rate).

Taxation rates

For purposes of this certificate, Illinois Sales Tax has 3 charge per unit structures — one for qualifying food, drugs, and medical appliances; ane for items required to exist titled or registered; and another for all other general merchandise.

"Qualifying food, drugs, and medical appliances" include

food that has not been prepared for immediate consumption, such every bit near food sold at grocery stores, excluding hot foods, alcoholic beverages, processed, 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 supercede a malfunctioning role of the human body, such as corrective eyewear, contact lenses, prostheses, insulin syringes, and dentures.

"Items required to exist titled or registered" include motor vehicles, ATVs, watercraft, aircraft, trailers, and mobile homes.

"General merchandise" includes sales of virtually tangible personal property including sales of

soft drinks and candy (see Regulation 130.310 for details);
prepared food such as food purchased at a eating place;
photograph processing (getting pictures developed);
prewritten and "canned" computer software;
prepaid phone calling cards and other prepaid phone calling arrangements;
repair parts and other items transferred or sold in conjunction with providing a service nether certain circumstances based on the bodily selling price; and
grooming and hygiene products.

Use the Tax Rate Finder in MyTax Illinois to look up location specific taxation rates. Depending upon the location of the sale, the bodily sales tax rate may be higher than the fundamental charge per unit because of home rule, non-home dominion, mass transit, park district, county public safety, public facilities or transportation, and county school facility tax. Local taxation rates are mostly subject area to change twice a year on Jan 1 and July 1. For additional options, encounter the Tax Rate Database.

Illinois (in-state) retailers run across the Illinois (In-Country) Retailer's Sales Tax Responsibilities Flowchart to determine your tax rate liabilities.

Remote (out-of-state) retailers and marketplace facilitators see the Remote (Out-of-State) Retailer Flowchart to determine your taxation rate liabilities.

Delight Notation : Taxes listed on our Revenue enhancement Rate Finder are taxes that are nerveless by IDOR. Units of local governments may impose additional taxes and fees that IDOR does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay any additional taxes or fees not collected past IDOR.

Prepaid sales tax

Motor fuel distributors must collect "prepaid sales tax" on the motor fuel sold for resale to a retailer who is not an Illinois licensed motor fuel distributor or supplier of diesel and dieselhol. The retailer prepays the sales tax to the motor fuel distributor and then claims a credit for the prepaid taxation when the sales taxation render is filed. Click here for Prepaid Sales Tax Rates.

Local taxes

Units of local government may impose taxes or fees, which the department does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay whatsoever additional taxes or fees not listed beneath. The following local taxes, which the department collects, may be imposed.

Business organization Commune Revenue enhancement
Chicago Home Rule Municipal Soft Drink Retailers' Occupation Tax
Chicago Dwelling Rule Use Tax on titled and registered items
County Motor Fuel Tax
Home Rule County Taxes
Abode Dominion or Non-home Rule Municipal Taxes
Mass Transit District Taxes (Metro-East Mass Transit (MED) Taxes and Regional Transportation Authorization (RTA) Taxes)
Metro-Eastward Park and Recreation District Taxes
Metropolitan Pier and Exposition Authority (MPEA) Food and Beverage Tax
Special County Retailers' Occupation Tax for Public Safety, Public Facilities, Mental Health, Substance Abuse, and Transportation
County Schoolhouse Facility Revenue enhancement

Exemptions

Sales — The following list contains some of the most common examples of transactions that are exempt from tax. (Run across the Illinois Administrative Code, Section 130.120 for a comprehensive list.) For more than information about common exemptions, meet Publication 104, Mutual Sales and Use Tax Exemptions.

Sales to state, local, and federal governments
Sales to not-for-profit organizations that are exclusively charitable, religious, or educational
Sales of newspapers and magazines
Sales to out-of-state buyers (Nonresidents may not claim the out-of-state heir-apparent exemption if the motor vehicle or trailer will be titled in a state that does not give Illinois residents an out of state buyer exemption on purchases in that state of motor vehicles or trailers that will be titled in Illinois.)
Sales of tangible personal property to interstate carriers for hire used as rolling stock (e.g., semi‑tractor trailers, railroad cars)
Sales of machinery and equipment that will exist used primarily in
- manufacturing or assembling of tangible personal property for wholesale or retail auction or lease, and
- production agriculture
Qualified sales of building materials that will be incorporated into real estate equally part of a projection for which a Document of Eligibility for Sales Revenue enhancement Exemption has been issued by the enterprise zone administrator
Qualifying purchases of tangible personal property used in a manufacturing or assembling process by businesses located in an enterprise zone and certified by the Department of Commerce and Economic Opportunity as qualifying to make these purchases because jobs will be created or retained
Sales of legal tender, medallions, and gilded bullion issued by qualifying governments
Fuel used for international flights

Organizations — Qualified organizations, as determined by the department, are exempt from paying sales and utilise taxes on most purchases in Illinois. Upon approval, we issue each organization a sales tax exemption number. The organization must requite this number to a merchant in society to make sure purchases taxation‑free.

Filing and payment requirements

Returns

Titled or registered items — Illinois retailers selling items that are of the blazon that must exist titled or registered by an bureau of Illinois state government (i.eastward., vehicles, watercraft, aircraft, trailers, and mobile homes) must annals with the Department to report these sales using Form ST 556, Sales Revenue enhancement Transaction Return. Illinois retailers that sell such items for lease must report these sales for charter using Course ST 556-LSE, Transaction Return for Leases. Forms ST-556 and ST-556-LSE must exist filed and taxes paid inside 20 days of the date of delivery. Persons who are in the business of leasing or renting motor vehicles, watercraft, shipping, or trailers that are required to be registered with an agency of Illinois state government and who, in connection with such business, sell whatsoever such detail to a retailer for the purpose of resale tin bulk file these transactions using Form ST-556-D.

Forms ST-556 and ST-556-LSE can exist filed electronically using MyTax Illinois. Alternatively, registered dealers can obtain ST-556 and ST-556-LSE forms preprinted for their business locations by calling our Central Registration Sectionalisation at 217 785-3707. Form ST-556-D must be filed electronically using MyTax Illinois .

Individuals or businesses purchasing an item that must be titled or registered by an bureau of Illinois state government from an out-of-country retailer or marketplace facilitator must determine whether that out-of-state retailer or market facilitator has reported the taxation on that buy using Class ST-556 or Form ST-556-LSE (for sales for leases). If the revenue enhancement for the purchase has not already been reported on Grade ST-556 or Class ST-556-LSE, and then the individual or business organization purchasing the item must file Class Rut-25, Vehicle Utilise Revenue enhancement Transaction Return (or in the example of a purchase for lease, Form Estrus-25-LSE, Use Tax Return for Lease Transactions) to report the transaction. Forms RUT-25 and RUT-25-LSE must be filed and taxes must be paid on the date the Illinois championship and registration is practical for, merely non more than 30 days after the date the item is brought into Illinois.

Individuals or businesses that purchase (or acquire by gift or transfer) motor vehicles that must be titled or registered from another individual or private party must file Class RUT‑l, Private Party Vehicle Use Tax Transaction Return, within thirty days from the date the vehicle is purchased or caused. Individuals or businesses that acquire (by souvenir, donation, transfer, or non-retail purchase) aircraft or watercraft that must be registered must file Form RUT-75, Shipping/Watercraft Use Taxation Return, no afterward than thirty days from the date the item was acquired or the date the particular was brought into Illinois, whichever is later.

Forms Heat-25, Estrus-25-LSE, Estrus-50, and Estrus-75 are by and large obtained when yous license and title your vehicle at the applicative land facility or at a currency exchange. These forms are available at the offices of the Illinois Secretary of Country, the Illinois Department of Transportation or the Illinois Department of Natural Resources. If you need to obtain the forms prior to registering the vehicle, send us an email asking or phone call our 24-hour Forms Order Line at 1 800 356-6302. Include in your asking your proper name and mailing address and the blazon of form you are requesting. Note that we cannot email or fax you the requested class. Instead, we will consummate your request via the U.S. Mail service. Practice not make copies of the forms prior to completing. These forms have unique transaction numbers that should not be duplicated. Doing and so could filibuster processing.

Prepaid sales revenue enhancement on motor fuel — Motor fuel distributors file Grade PST-1, Prepaid Sales Tax Return, monthly on the 20th day of the month following the month for which the render is filed.

Note: Retailers claim a credit for the amount of prepaid sales tax on Course ST-1, Sales and Use Tax and E911 Surcharge Render, Line 17.

Qualifying food, drugs, and medical appliances and other general merchandise —Retailers reporting sales of general merchandise and qualifying nutrient, drugs, and medical appliances must file Form ST-1, Sales and Apply Tax and E911 Surcharge Return.

A monthly render is due the 20th day of the calendar month post-obit the month for which the return is filed.
A quarterly return is due the 20th mean solar day of the month following the quarter for which the render is filed.
An annual return is due January 20th of the year following the twelvemonth for which the return is filed.

Illinois residents who make purchases of tangible personal from not-registered out-of-state retailers or those who make purchases of tangible personal property from service persons who practise not pay use tax direct to us must file Form ST-44, Illinois Use Tax Return. You may complete Class ST-44 electronically on our web site.

If $600 or less is owed, the return and taxation is due April 15th of the year following the twelvemonth in which the purchase was made.
If the total tax liability for the year is more $600, the render and tax is due the concluding day of the
month following the month in which the purchase was made.

Tangible personal property sold at retail over the internet is taxed in the same fashion equally any other retail sale. More often than not, if the item of tangible personal property is purchased from an

Illinois retailer, out-of-state retailer * , or market place facilitator ** , the retailer is responsible for collecting and remitting Illinois sales tax.
out-of-state retailer *** who does non collect Illinois sales tax, the purchaser owes apply tax and is responsible for paying use revenue enhancement directly to the department using Course ST‑44.

*          Meeting or exceeding a tax remittance threshold or having physical presence in Illinois
**        Meeting or exceeding a taxation remittance threshold
***      Not meeting or exceeding a revenue enhancement remittance threshold and non having physical presence in Illinois.

Payments

Quarter-monthly payments — If a retailer or service-person's average monthly liability is $20,000 or more, quarter-monthly payments must be made. Payments are due the 7th, 15th, 22nd, and last twenty-four hour period of the calendar month. Because the statutory threshold for mandated electronic funds transfer (EFT) programme participation is $20,000 almanac liability, most taxpayers will remit their quarter-monthly payments by EFT. Taxpayers who mail their quarter-monthly remittances to the department must consummate Form RR-three, Sales and Apply Tax Quarter-monthly Payment.

NOTE: Electronic funds transfer program participants do non complete or mail Course RR-3.

If a motor fuel benefactor'due south average monthly liability is $twenty,000 or more than, quarter-monthly payments must exist made. Payments are due the 7th, 15th, 22nd, and final day of the month. Because the statutory threshold for mandated electronic funds transfer (EFT) programme participation is $200,000 annual liability, about taxpayers volition remit their quarter-monthly payments past EFT. Taxpayers who mail their quarter-monthly remittances to the section must complete Form PST-3, Prepaid Sales Revenue enhancement on Motor Fuel.

Note: Electronic funds transfer programme participants do non complete or post Form PST-3.

For additional information regarding quarter-monthly (accelerated) payments, refer to the Guidelines for Quarter-monthly (Accelerated) Payments.

Additional Forms & Resources

Form ST-1, Sales and Use Taxation and E911 Surcharge Return | Instructions
Grade ST-1-Ten, Amended Sales and Use Revenue enhancement and E911 Surcharge Return | Instructions
Form ST-2, Multiple Site Form | Instructions
Form ST-2-10, Amended Multiple Site Class
For more information regarding the Leveling the Playing Field for Illinois Retail Human action, see the Resource Page for the "Leveling the Playing Field for Illinois Retail Deed"
Publication 104 - Common Sales and Employ Revenue enhancement Exemptions
Publication 113 - Retailer'south Overview of Sales and Employ Revenue enhancement, Prepaid Wireless E911 Surcharge, and Illinois Telecommunications Access Corporation (ITAC) Assessment
Notice for Motor Fuel Retailers - Sign Requirements
Notice for Grocery Retailers - Statement Requirement

Questions?

Call u.s.a. at: 1 800 732-8866 or one 217 782-3336
Call TDD: i 800 544-5304
Mail your ST-ane forms to:
ILLINOIS DEPARTMENT OF REVENUE
RETAILERS OCCUPATION Taxation
SPRINGFIELD IL 62796-0001
Post your ST-1-10 forms to:
ILLINOIS Section OF Acquirement
PO BOX 19034
SPRINGFIELD IL 62794-9034