Illinois—Sales and Use Tax: Economic Nexus to Apply to Retailers’ Occupation Tax

Illinois has enacted economic nexus for retailers’ occupation tax purposes effective July 1, 2020. Economic nexus already applies to remote retailers and marketplace facilitators with respect to Illinois use and service use tax.

What are the Thresholds?

A remote retailer is engaged in the occupation of selling at retail in Illion if it had in the preceding 12-month period:

• at least $100,000 in sales of personal property to Illinois customers; or
• at least 200 separate sales transactions of personal property to Illinois customers.

If a remote retailer satisfies either threshold, it is liable for applicable state and local (if administered by the IL DOR) retailers' occupation taxes on all retail sales to Illinois purchasers.

What is a "Remote Retailer?"

A "remote retailer" is an out-of-state retailer without direct or indirect in-state physical presence through a subsidiary, office, distribution house, sales house, warehouse, other place of business, agent, representative, or subsidiary’s representative. For purposes of determining whether a retailer is a "remote retailer," it is irrelevant whether a place of business or agent is located in Illinois permanently or temporarily, or whether the retailer or subsidiary is licensed to do business in Illinois.

How are the Thresholds Calculated?

Remote retailers must determine whether they met a threshold in the preceding 12 months. Determinations are made on the quarters ending the last day of March, June, September, and December. If a retailer meets a threshold, it must remit the tax and file all applicable returns for one year. At the end of the one-year period, the retailer must re-determine whether it met a threshold in the preceding 12-months. If it finds it did not meet a threshold, it must perform the quarterly analysis until it determines whether it met a threshold in the preceding 12-months.