Designed to promote fairness among remote and local retailers, the Leveling the Playing Field for Illinois Retail Act is reshaping the retail sector in Illinois. By implementing the Retailers' Occupation Tax (ROT) amendments, it has been positioning tax responsibility equally for all retailers.
The Illinois Department of Revenue highlights, the Act necessitates that remote retailers and marketplace facilitators examine their tangible personal property sales made over the past 12 months to Illinois purchasers. The aim, to determine if they've reached a tax obligation threshold, and then remit state and local ROT from January 1, 2021, if so. This stated threshold pertains to retailers having accumulated either:
- Sales figures of $100,000 or more from tangible personal property sold to Illinois buyers, or,
- Qualified sales transactions to Illinois buyers reaching or exceeding 200.
Those meeting these criteria, as the Illinois Department of Revenue outlines, leader holding responsibility for all mandatory state and local taxes under the Department’s administration. The Retailers need to register, file tax returns, and pay taxes on all sales to Illinois buyers.
The Act also affects marketplace facilitators, as they engage in retail sales with unaffiliated third-party marketplace sellers. For them, too, the task remains the same - determining, with the same process, whether the preceding 12 months have resulted in meeting or exceeding the tax remittance thresholds. If they meet or overcome the thresholds, they must gather and remit relevant state and local ROT for each retail sale made to Illinois buyers. Interestingly there is no such thing as "occasional sales" for sales made through a marketplace which results in a unique approach to tax remittance threshold determination.
Efficiency in managing transactions can be achieved with the help to, remote retailers. Certified service providers (CSPs) can be solicited to compute and fulfill their ROT obligations, or certified automated systems (CASs) for assistance in ROT calculations can be deployed - both options provided by the Illinois Department of Revenue.
A notable point, the Act pushes for remote retailers and marketplace facilitators for conducting a quarterly evaluation of their sales figures. Their objective is to determine whether or not they have met or exceeded the specified tax remittance limits. If not, they need to notify the Department and will no longer be required to remit state and local ROT. They have, however, the choice to voluntarily stay registered and continue paying use tax, benefitting their Illinois customers who would otherwise have to self-assess and remit it directly.
It's furthermore essential that remote retailers and marketplace facilitators use the ROT rate based on destination sourcing, which means the rate effective at the location of the shipment or delivery of the tangible personal property, or where the buyer takes possession. This practice ensures transparency and maintaining consistency in the tax obligation process across Illinois.
