Illinois Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Illinois Revenue
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Illinois, and if so, how best to tackle the sales tax situation in the Prairie State.
After reading this, you’ll know:
- Do you or don’t you need to collect Illinois sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Illinois sales tax!
Do you have sales tax nexus in Illinois?
Good news! You only have to begin thinking about Illinois sales tax if you have sales tax nexus in Illinois.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Illinois considers a seller to have sales tax nexus in the state if you have any of the following in the state:
- An office, warehouse or place of business
- An employee, contractor, salesperson, agent or representative in Illinois
- A 3rd party affiliate in Illinois
You can click here to read exactly what the Illinois Department of Revenue (Illinois’s taxing authority) has to say about what constitutes sales tax nexus in Illinois starting on p.2 of this guide.
Do you have sales tax nexus in Illinois if you sell on FBA?
Online retailers are increasingly using Fulfillment by Amazon to sell their products. According to Illinois’s rules of nexus, a seller who stores items in a physical location in the state – including an Amazon Fulfillment Center – has sales tax nexus there and must collect sales tax from Illinois buyers. Amazon recently opened their first fulfillment center in Illinois, and is slated to open at least two more by early 2017.
To determine if Amazon is storing your products in Illinois:
- Login to Amazon Seller Central and pull your inventory report
- Try a 30-day free trial of TaxJar and we’ll show you the states from where your items are shipping with our Amazon badge feature
The current Illinois Amazon fulfillment centers are located at:
|Warehouse Code||Address||County||Tax Rate|
|MDW4||250 Emerald Dr., Joliet, IL 60433||Will||8.75%|
|MDW6||1125 W Remington Blvd, Romeoville, IL 60446||Will||8.5%|
|STL4||3050 Gateway Commerce Center Dr S, Edwardsville, IL||Madison||8.1%|
|STL6||3931 Lakeview Corporate Dr., Edwardsville, IL 62025||Madison||8.1%|
|STL7||3931 Lakeview Corporate Dr., Edwardsville, IL 62025||Madison||8.1%|
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Illinois. Your next step is to determine if what you’re selling is even taxable.
Services in Illinois are generally not taxable. So if you’re a pet groomer or a masseuse, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Illinois , with a few exceptions, such as some machinery, equipment and building materials that will be used for certain projects.
So if you sell handmade furniture, then charge sales tax to your Illinois customers.
But if you’re a pet groomer, don’t charge sales tax to your Illinois customers (unless you also sell them a tangible product!).
If you have sales tax nexus in Illinois and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Illinois
Sellers with sales tax nexus in Illinois must apply for an Illinois sales tax permit.
Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Illinois.
How to Collect Sales Tax in Illinois
So you’ve determined that you have sales tax nexus in Illinois and what you’re selling is taxable. And you’re all set and registered for your Illinois sales tax permit.
The next step is to determine how much sales tax to collect.
Be sure to note: The sales tax rate you collect in Illinois depends on whether you are based in Illinois or out-of-state.
How to Collect Sales Tax in Illinois if You are Based in Illinois
Illinois is an origin-based sales tax state. So if you live in Illinois, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located.
Example: You live and run your business in Joliet, Illinois in the 60431 zip code. The tax rate there is the total of the 6.25% Illinois state sales tax rate, the .75% Will County Rate and 1.75% Joliet rate, for a total of 8.75% sales tax. Since Illinois is an origin-based state, you would charge all of your buyers in Illinois that 8.75% rate.
If you have more than one location in Illinois, then you would base the sales tax rate you charge on the point of origin of your sale.
How to Collect Sales Tax in Illinois if you are Not Based in Illinois
This is where things get trickier for online sellers. Illinois wants sellers who made a sale into Illinois from outside the state charge a flat Illinois “use tax” rate of 6.25%. (“Use tax” is very similar to sales tax, but collected by sellers based out-of-state.) You are not required to charge any local sales tax rates.
Example: You live in Colorado, but have sales tax nexus in Illinois due to a salesperson there. If you make a sale to a buyer in Wheaton, Illinois you would charge the buyer the 6.25% Illinois state rate.
What are the Amazon sales tax settings for Illinois?
If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your sales tax settings set up correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.
|If you are a…||State tax||County tax||City tax||District tax||Custom rate||Is shipping taxable?||Is gift wrapping taxable?|
|Seller living in Illinois||X||X||X||X||N/A||Yes||No|
|Seller living outside of Illinois||X||X||X||X||N/A||Yes||No|
Should you collect sales tax on shipping charges in Illinois?
Shipping is generally taxable in the state of Illinois. Read a full explanation of sales tax on shipping in Illinois here.
Caption: Top 20 Most Populous Cities in Illinois and their Sales Tax Rates
When are Illinois Sales Tax Returns Due?
Illinois sales tax returns are always due on the 20th of the month following the taxable period. For example, your April sales tax return would be due May 20th.
To break it down:
2016 Illinois Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 201*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
2016 Illinois Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Illinois Annual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
How to File Sales Tax in Illinois
When it comes time to file sales tax in Illinois you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
How to Calculate How Much Sales Tax You Owe in Illinois
Calculating how much sales tax you should remit to the state of Illinois is easy with TaxJar’s Illinois sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Illinois sales tax return will be waiting for you in TaxJar. Try a 30-day free trial of TaxJar today!
How to File and Pay Sales Tax in Illinois
You have two options for filing and paying your Illinois sales tax:
- File online - File online at MyTax Illinois. You can remit your payment through their online system.
- File by mail - You can use Form ST-1 and file and pay through the mail.
Other Facts You Should Know about Illinois Sales Tax Filing
There are a few more things you should know about sales tax in Illinois:
- Late Filing Penalty - 2% of the tax due
- Late Payment Penalty - 2% of tax due if paid within 30 days; 10% of tax due if paid after 30 days but within 90 days; 15% of tax due if paid after 90 days but within 180 days; 20% of tax due if paid after 180 days.
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Illinois requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Click here for a list of states that require zero sales tax returns.
Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Illinois, the discount for paying on time is the greater of 1.75% of tax due or $5 for the calendar year. Click here for more about state sales tax discounts.
And that’s it. You’ve mastered Illinois sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Illinois Sales Tax Resources
For more about Illinois sales tax, check out the Illinois section of the TaxJar blog.