Illinois Administrative Code › Title 86 - REVENUE › Part 150 - USE TAX › Subpart G - REGISTRATION OF OUT-OF-STATE RETAILERS › Section 150.804 - Marketplace Facilitators - Provisions Controlling from January 1, 2020 through December 31, 2020

Current through Register Vol. 48, No. 28, July 12, 2024
a) Definitions
"Affiliate"
or "Affiliated with"
means a person that, with respect to another person:
has a direct or indirect ownership interest of more
				  than 5% in the other person; or
is related to the other person because a third
				  person, or a group of third persons who are affiliated with each other, holds a
				  direct or indirect ownership interest of more than 5% in the related
				  person.
"Marketplace" means a physical or electronic place,
				  forum, platform, application, or other method by which a marketplace seller
				  sells or offers to sell tangible personal property.
Examples of
				  marketplaces include, but are not limited to:
auctions, internet marketplace platforms on which tangible
				  personal property is offered for sale;
antique malls;
home shopping networks selling tangible personal property
				  over television, cable, or satellite networks; or
consignment shops selling tangible personal property on
				  behalf of numerous persons.
"Marketplace facilitator" means a person who,
				  pursuant to an agreement with an unrelated third-party marketplace seller,
				  directly or indirectly through one or more affiliates facilitates a sale by an
				  unrelated third-party marketplace seller by
performing both of the
				  activities outlined in subsection (c)(1).
"Marketplace seller" means a person that sells or
				  offers to sell tangible personal property through a marketplace operated by an
				  unrelated third-party marketplace facilitator.
(Section 2d of the
				  Act)
"Retail sales". For purposes of this Section, all sales made
				  through a marketplace by a marketplace facilitator on behalf of unrelated
				  third-party marketplace sellers are considered sales made by a retailer at
				  retail.
"Unrelated third party", for purposes of this Section, means
				  a person that, with respect to another person, has a direct or indirect
				  ownership interest of 5% or less in the other person. A person is also
				  considered to be an unrelated third party when a third person, or group of
				  third persons who are affiliated with each other, hold a direct or indirect
				  ownership interest of 5% or less in the other person.
b) General Provisions Applicable from January
				1, 2020 through December 31, 2020; Tax Collection
1) Scope of Regulations - Preliminary
				Considerations
A) This Section
				150.804 applies to marketplace
				facilitators and marketplace sellers from January 1, 2020 through December 31,
				2020. Beginning January 1, 2021, provisions of Public Act 101-0604 and Public
				Act 101-0031 take effect and modify the tax obligations of marketplace
				facilitators and marketplace sellers. Beginning January 1, 2021, marketplace
				facilitators who meet a tax remittance threshold in subsection (d) are required
				to remit State and local retailers' occupation tax and are no longer subject
				only to Use Tax collection. Such marketplace facilitators are considered
				Illinois retailers for all sales made through the marketplace. For further
				information on the application of the Retailers' Occupation Tax Act to
				marketplace facilitators, see 86 Ill. Adm. Code
				131.130,
				131.135,
				131.140, and
				131.145.
B) The provisions of this Section apply when
				the only tax required to be remitted to the Department by marketplace
				facilitators for sales made on behalf of marketplace sellers through the
				marketplace is Use Tax. A marketplace facilitator is considered the retailer
				for those sales and must register, collect Use Tax from purchasers, and remit
				that Use Tax to the Department.
C)
				Marketplace facilitators are not considered the retailer for sales made on
				behalf of marketplace sellers through the marketplace that are subject to
				Retailers' Occupation Tax. Marketplace sellers are considered the retailer for
				those sales. The manner in which these transactions may be handled is set out
				in subsection (i).
D) Marketplace
				facilitators and marketplace sellers are not required to remit tax on sales of
				tangible personal property that is required to be registered with an agency of
				this State, including motor vehicles, watercraft, aircraft, and trailers, that
				are made from locations outside Illinois to Illinois purchasers. Taxes on these
				items will continue to be paid, as required by Section 10 of the Use Tax Act
				[35 ILCS
				105 ], by purchasers as a condition of titling or
				registering these items.
EXAMPLE 1: Ponchos for Pooches makes sales of rain gear for
				  dogs through an internet marketplace that meets the requirements of subsection
				  (d). The rain gear is handmade in Portland, Oregon and then shipped directly to
				  Illinois purchasers. Beginning on January 1, 2020, the marketplace facilitator,
				  rather than Ponchos for Pooches, is considered the retailer of the rain gear
				  and must collect and remit Use Tax to the Department.
EXAMPLE 2: Sales made to Illinois purchasers by Ponchos for
				  Pooches have skyrocketed. As a result, the company now has several employees
				  located in Illinois, and the rain gear those employees produce is inventoried
				  in a warehouse located in Kankakee. Sales to Illinois purchasers are frequently
				  shipped from the Kankakee warehouse. Any sales fulfilled from inventory in the
				  Kankakee warehouse are subject to Retailers' Occupation Tax, including local
				  occupation taxes, because the property sold is located in the inventory of
				  Ponchos for Pooches in Kankakee at the time of sale. (See, for example, 86 Ill.
				  Adm. Code 270.115.) Through December 31,
				  2020, the marketplace facilitator is no longer considered the retailer for
				  these sales. Ponchos for Pooches is liable for Retailers' Occupation Tax on
				  these sales and must register with the Department to remit Retailers'
				  Occupation Tax on those sales. In this example, the marketplace facilitator has
				  decided to collect all taxes due from purchasers on these sales (including any
				  local occupation tax reimbursements) and transmits them to Ponchos for Pooches.
				  Ponchos for Pooches then remits Retailers' Occupation Tax on these sales to the
				  Department. In this situation, the marketplace facilitator is held harmless for
				  tax on amounts collected and remitted to Ponchos for Pooches.