State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

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Illinois (IL)

IL Sales Tax - Name of Tax and General Application:

Illinois imposes a tax on sales of tangible personal property at retail and sales of services in the state. This is referred to as "sales tax". An additional tax is imposed on the privilege of using tangible personal property or on services received as an incident to a provider. This is referred to as "use tax".

IL Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

Illinois requires all retailers who maintain a place of business in Illinois to collect use tax. To fit the requirements for maintaining a business, the retailer would have or maintain an office, warehouse or other place of business in the state, recurrently solicit orders for tangible personal property by mail, TV or other telecommunication means, or would have a franchisee operating under its trade name in the state.

IL Local Tax - Do Localities Impose Tax?

Yes, Illinois imposes local sales tax.

IL Resale Certificate Renewal Agreements:

There is no specific resale certificate in Illinois. There are other forms that may be used in place of a resale certificate. To be valid the form or statement must include the purchaser's name, a description of the property being purchased, a statement that the property is being purchased for resale, signatures and an Illinois registration number.

IL Resale Certificate Renewal Periods

Illinois does not have a specific resale certificate form and makes no reference to renewal periods. In the case of blanket certificates, they last indefinitely but should be renewed at least every three years.

IL Statute of Limitations

Three years from the month or period in which the taxable gross receipts were received (assessments issued on January 1 or July 1).