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Illinois State Tax Updates

For the latest news and updates on Illinois state and local tax

November 16, 2020

Illinois Annual Sales and Use Tax Nexus Summary

The Illinois Department of Revenue issued a general information in November on ST 20-0017-GIL in response to the annual survey. In the letter, the Department notes that nexus in Illinois includes marketplace facilitators who have met the thresholds of $100,000 in sales or the cumulatively reaching 200 or more separate transactions through the marketplace for sales of tangible personal property. The thresholds are determined by examining gross receipts and number of transactions excluding sales for reseal, sales of tangible personal property that are required to be registered with an Illinois agency such as vehicles or watercrafts, and sales made through the marketplace on behalf of a marketplace seller or marketplace facilitator subject to Retailers’ occupation Tax.

The General Letter provides a definition for marketplace sellers as a person or business that sells or offers tangible personal property through a marketplace operated by an unrelated third-party marketplace facilitator. A marketplace seller is only responsible for Illinois Use Tax liability on sales to Illinois customers and will not be held responsible for the collection and remittance of Illinois Use Tax when a marketplace facilitator fails to correctly collect and remit tax. If the marketplace facilitator can demonstrate the incorrect calculations is due to the marketplace sellers incorrect or insufficient information, the marketplace seller is held liable for any Illinois Use Tax due.

The Department clarified that viewing and downloading of videos, text, and other data over the interest is not considered to be tangible personal property subject to Retailers’ Occupation Tax and Use tax liability. The transfer of canned software, or updates to canned software is considered transfer of tangible personal property and therefore subject to Retailers’ Occupation Tax and Use tax liability. This would include sales of canned software downloaded electronically which would be taxable.

March 21, 2020

Relief for Eating and Drinking Establishments

In an effort to assist eating and drinking establishments impacted by the COVID-19 outbreak, effective immediately, the Illinois Department of Revenue (IDOR) is waiving any penalty and interest that would have been imposed on late Sales Tax payments from qualified taxpayers.

Taxpayers who are eligible for relief from penalties and interest on late Sales Tax payments are those operating eating and drinking establishments that incurred a total Sales Tax liability of less than $75,000 in calendar year 2019.

Qualified taxpayers will not be charged penalties or interest on late payments for Sales Tax liabilities reported on Form ST-1, Sales and Use Tax and E911 Surcharge Return, that are due for the February, March, and April 2020 reporting periods.

For most qualified taxpayers, IDOR will automatically waive penalties and interest. If a taxpayer receives a notice from IDOR that imposes penalties and interest that should have qualified for a waiver, the taxpayer can respond to the notice indicating as such. IDOR will review the response and grant relief, if appropriate. Qualified taxpayers are required to file Form ST-1 for each reporting period by their original due dates, even if they are unable to make a payment. To qualify for relief, taxpayers must pay their liabilities due in March, April, and May 2020 on four dates starting on May 20, 2020.

The required payment schedule for liabilities reported on Form ST-1 is as follows:

  • One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due May 20, 2020.
  • One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due June 22, 2020.
  • One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due July 20, 2020.
  • One quarter (1/4) of the liability for the February, March, and April 2020 reporting periods is due August 20, 2020.

This includes quarterly filers reporting liabilities on Form ST-1 for January, February, and March. Taxpayers must begin making full payment on the scheduled due date for liabilities beginning with the May 2020 reporting period, which is due June 22, 2020, and all reporting periods following. Learn more here.

July 2019

Marketplace Facilitator – Sales Tax Requirements

Beginning January 1, 2020, marketplace facilitators are now required to collect and remit sales tax if sales total $100,000 or more or have more than 200 sales in the state.

Graduated Income Tax Rate System

Effective January 1, 2021 a plan to implement a graduated income tax rate system is in place. Individuals, trusts and estates will now follow a tiered tax rate structure.

Proposed Tax on Video Streaming and its Potential Effects

Illinois has proposed two new state-wide taxes, the “Video Service Tax Modernization Act” and the “Entertainment Tax Fairness Act”. Both targeted at web streaming subscription services such as Netflix, Hulu, etc… Withum has a full writeup with details here (require link to article).

Amnesty

Illinois will be offering a Tax Amnesty program from October 1 through November 15, 2019 for all tax types. Periods covered under the program includes periods ending after June 30, 2011 through prior to July 1, 2018. The Department will abate all interest and penalties related to the delinquent periods.

SALT Updates

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