Illinois Administrative Code › Title 86 - REVENUE › Part 131 - LEVELING THE PLAYING FIELD FOR ILLINOIS RETAIL ACT › Section 131.110 - Remote Retailers - General Provisions

Current through Register Vol. 48, No. 28, July 12, 2024
a)
			 On and after January 1, 2021, a remote retailer that meets either of the
			 thresholds in Section
			 131.115(a)
			 is considered a retailer engaged in the occupation of selling at retail in
			 Illinois for purposes of ROTA and is liable for all applicable State and local
			 retailers' occupation taxes administered by the Department on all retail sales
			 shipped or delivered to Illinois purchasers.
b) Remote retailers are deemed to be engaged
			 in the business of selling at the Illinois location to which the tangible
			 personal property is shipped or delivered or at which possession is taken by
			 the purchaser. State and local retailers' occupation taxes are incurred at the
			 rate in effect at this location. (See Section
			 131.155.)
c) Provisions of this Part - when not
			 applicable. The provisions of this part do not apply to remote retailers who
			 exclusively make nontaxable sales (i.e., 100% of their sales to Illinois
			 purchasers are exempt). If a remote retailer makes any taxable sales, however,
			 the provisions of this Part apply and it must determine whether it meets either
			 of the tax remittance thresholds in Section 131.115. The rules provided in
			 Section
			 131.120
			 must be applied when making this determination.
EXAMPLE: If Remote Retailer A's only activities are sales of
				exempt manufacturing machinery and equipment to Illinois manufacturers, the
				provisions of this Part do not apply and it is not required to register with
				the Department and file returns. If Remote Retailer A makes any taxable sales,
				however, the provisions of this Part apply and it must determine whether it
				meets either of the tax remittance thresholds in Section 131.115. The rules
				provided in Section
				131.120
				must be applied when making this determination. For example, for purposes of
				determining if it has met either of the tax remittance thresholds, it must
				include its exempt sales as provided in Section
				131.120(b)(5).
d) Remote retailers are often multichannel
			 retailers. That is, they may also sell their products through a marketplace and
			 so are considered marketplace sellers. Marketplace facilitators required to
			 register with the Department, as provided in Section
			 131.135,
			 incur State and local retailers' occupation taxes on sales made to Illinois
			 purchasers on behalf of remote retailers making sales over the marketplace.
			 Remote retailers do not incur tax on these sales. (See Section
			 131.150.)
e) Beginning February 1, 2022, sales of
			 tangible personal property that is required to be titled or registered with an
			 agency of the State of Illinois, including motor vehicles, watercraft,
			 aircraft, and trailers, that are made by remote retailers to purchasers in
			 Illinois are subject to the provisions of this Part. This Part does not apply
			 when a retailer ships or delivers titled or registered items to purchasers in
			 Illinois using its own delivery vehicle. In addition, for a transaction in
			 which an Illinois purchaser travels to an out-of-state location to take
			 possession of an item that is required to be titled or registered with an
			 agency of the State of Illinois, the provisions of this Part do not apply. In
			 these cases, only Use Tax is incurred.
f) Examples.
EXAMPLE 1: On December 31, 2020, ABC Wines, an Illinois Liquor
				Control Commission Winery Shipper's License holder located in New York that has
				no physical presence in Illinois, determines that it has made sales to Illinois
				purchasers for the preceding 12 months that exceed $100,000. Beginning January
				1, 2021, ABC Wines must collect and remit State and local retailers' occupation
				tax in effect at the Illinois address to which its products are shipped or
				delivered or at which possession is taken by the purchaser ("destination
				sourcing") for sales to Illinois purchasers for one year.
EXAMPLE 2: Ponchos for Pooches.com is a retailer of rain gear
				for dogs. Its sales are made exclusively from its manufacturing facility in
				Portland, Oregon. It has no physical presence in Illinois. Its annual gross
				receipts from sales to Illinois purchasers exceed $100,000. Ponchos for
				Pooches.com is a remote retailer and is required to register with the
				Department and remit State and local retailers' occupation taxes in effect at
				the address to which its products are shipped or delivered or at which
				possession is taken by the purchaser ("destination sourcing").
EXAMPLE 3: Rain gear sold to Illinois purchasers by Ponchos for
				Pooches.com has skyrocketed. As a result, the company has begun sending sales
				representatives to Illinois to market its products through local pet stores. As
				a result of these activities, Ponchos for Pooches.com is no longer considered a
				remote retailer because it has a physical presence in Illinois due to the
				presence of its sales reps. At this point, its tax liability changes. It no
				longer incurs State and local retailers' occupation taxes on its sales. It
				instead incurs an obligation to collect and remit only the Use Tax (6.25 %) on
				its sales.
EXAMPLE 4: Ponchos for Pooches.com has become so popular with
				Illinois purchasers that the company decides to open up a manufacturing
				facility in Illinois. Sales to Illinois purchasers are sometimes fulfilled from
				this facility. For all sales to Illinois purchasers that are fulfilled from its
				Illinois manufacturing facility, Ponchos for Pooches.com incurs State and local
				retailers' occupation taxes in effect at the location of the manufacturing
				facility ("origin sourcing"). In addition, Ponchos for Pooches.com incurs only
				a Use Tax collection obligation (6.25%) on sales made from its Oregon
				manufacturing facility. As illustrated in Example 3, Ponchos for Pooches.com is
				not considered a remote retailer because it has a physical presence in Illinois
				(its manufacturing facility).
EXAMPLE 5: Ponchos for Pooches.com decides to sell its products
				over a marketplace. The marketplace meets the tax remittance requirements of
				Section
				131.135(a)
				and so is required to remit State and local retailers' occupation taxes to the
				Department on all sales made over its marketplace to Illinois purchasers by its
				marketplace sellers. Ponchos for Pooches.com is not responsible for reporting
				and remitting tax on sales made over the marketplace. As provided in Example 4,
				Ponchos for Pooches.com maintains a physical presence in Illinois due to its
				manufacturing facility. Ponchos for Pooches.com incurs State and local
				retailers' occupation taxes for all sales it makes to Illinois purchasers
				outside the marketplace that are fulfilled from its Illinois manufacturing
				facility ("origin sourcing"). In addition, Ponchos for Pooches.com incurs only
				a Use Tax collection obligation (6.25%) on sales it makes outside the
				marketplace to Illinois purchasers that are fulfilled from its Oregon
				manufacturing facility.