Sales Tax Guidance for Out-of State Sellers

This week the Illinois Department of Revenue posted resources for remote (out-of-state) sellers regarding the required collection and remittance of Illinois sales tax beginning October 1, 2018.

Since the Quill v. North Dakota decision in 1992, states did not have the authority to collect sales tax from out-of-state businesses unless the company had a physical location (i.e. store/warehouse) within in the state. This summer the Supreme Court ruling on the Wayfair v. South Dakota case, opened the door for states to collect sales tax on out of state businesses, widening the definition for what is considered having a physical presence with in a state.

In preparation for the decision, Illinois legislators included a section dealing with this issue in the 2018 Budget Implementation Bill (PA 100-0587), which was signed into law on June 4. 2018. This language defines businesses doing “over $100,000 of business or over 200 transactions in Illinois annually as maintaining a pace of business in the state, and therefore requires those businesses to collect and remit sales tax to the state.”

For brick and mortar businesses in Illinois, this levels the playing field, allowing them to compete with online vendors who previously sold products without subjecting their consumers to sales tax. This will create an estimated $200 million in additional revenue for Illinois without creating any new taxes.

Please see the IDOR press release below and visit the online resources here.