Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart D - GROSS RECEIPTS › Section 130.401 - Meaning of Gross Receipts

Current through Register Vol. 48, No. 28, July 12, 2024
"Gross receipts" means all the consideration actually
				  received by the seller, except traded-in tangible personal property.
a) Filing Returns on Gross Sales Basis
Deferred payments made by purchasers are not required to be
				  included in gross receipts until actually received by the seller. The preferred
				  method of reporting receipts from sales is to report them when payment is
				  actually received (i.e., gross receipts basis). However, if a seller keeps his
				  books on a gross sales basis, rather than on a gross receipts basis, and
				  desires to file returns on a gross sales basis, he shall notify the Department,
				  in writing, of his intention to change reporting methods. When a seller makes
				  this change, it should use the "wash-out" procedure to reduce reporting
				  problems when receipts on account are received in a month subsequent to the
				  month of sale when a reporting change basis has been made.
EXAMPLE: Assume a seller wishes to make a change effective
				  with the reporting month of August 1990. Under the "wash-out" procedure, it
				  should calculate the unpaid taxable accounts receivable on its books as of the
				  end of the last business day (July 31, 1990) prior to the first of the month
				  (August 1, 1990) change-over from the accrual to the receipts basis. The
				  taxpayer should then consider all taxable receipts on account to be receipts on
				  which the tax has already been paid (on a sales basis prior to the change-over)
				  until such time as those receipts equal the total of the taxable accounts
				  receivable that it had previously calculated on July 31, 1990 (the day prior to
				  the change-over). Once that point is reached, all subsequent receipts, even
				  those from sales prior to the change-over, should be reported as taxable
				  receipts.
b) Returned
				Merchandise and Cancellations
Any seller may deduct from his gross receipts any refunds
				  made by him during the preceding return period to purchasers, on account of
				  tangible personal property returned to the seller, in case the seller had
				  theretofore included the receipts from the sale of such tangible personal
				  property in a return made by him, and had paid the tax imposed by the
				  Retailers' Occupation Tax Act with respect to such receipts. However, if the
				  seller collected the Use Tax on such a sale, he should refund such tax to his
				  customer to whom he makes a refund of the selling price. When the seller makes
				  a charge for restocking or reshelving returned merchandise, the receipts
				  retained by the seller to cover the restocking or reshelving fee are not
				  considered taxable gross receipts. When customers return merchandise, sellers
				  should refund all of the sales tax to the customer, even though they will not
				  be refunding all of the purchase price because of the restocking or reshelving
				  policy. Cancellation fees should be handled in the same manner.
c) Reward Credits
Reward credits, sometimes referred to as hostess dollars,
				  awarded to a host or hostess for sponsoring a party for friends at which
				  sellers may show and solicit orders for their merchandise, and which are
				  awarded based upon the amount of sales generated at the party, are included in
				  gross receipts subject to tax when applied toward purchases of the seller's
				  merchandise. The value of the reward credit equals the dollar amount credited
				  when the reward credit is applied.
d) Membership Fees
Membership fees are not gross receipts from the sale of
				  tangible personal property. Membership fees are gross receipts received in
				  exchange for an intangible. For example, when membership fees "buy" purchasers
				  the right to purchase products at wholesale, but are not applied to the
				  purchase price of tangible personal property, they are not subject to sales
				  tax. However, when membership fees represent the sale of tangible personal
				  property, they are subject to tax. For example, if a country club charges a
				  member $100 each month as a "minimum charge" for food services at the club, but
				  the member only consumes $75 worth of food in a particular month, tax is due on
				  $75.
e) Accounts Receivable
				Assigned to a Wholly Owned Subsidiary
With regard to receipts or other consideration received by a
				  seller from the sale, transfer or assignment of accounts receivable to a wholly
				  owned subsidiary, such receipts are not considered to be gross receipts subject
				  to tax until the purchaser makes payment on such accounts.