Illinois Sales Tax – The Complete Guide

It is known that the current sales tax rate in Illinois is 6.25%. However, this could vary as much as 11% depending on the local municipalities. All businesses selling the tangible personal property at retail are to be registered with the Illinois Department of Revenue.

If you are a business owner who sells taxable goods or services, you are expected to act as an agent and collect tax dollars from customers and pass it along to the state and local tax authority. Sales tax is collected in Illinois on the sale of tangible goods and for some services. The seller collects the taxes and remits it to state and local tax authorities.

When do I need to collect sales tax in Illinois?

When you have a nexus in Illinois

  • A seller is said to have sales tax nexus in Illinois if:
  • You have an office, warehouse or place of business
  • If you have a 3rd party affiliate in Illinois
  • You have an employee, salesperson, contractor or representative in Illinois
  • When you sell taxable goods or services to Illinois residents

How do you register to collect sales tax in Illinois?

Businesses are required to register for an Illinois Sales Tax License in two ways.

Online – This is done by visiting the Illinois Department of Revenue and following the instructions carefully.

Mail – You can also get registered for a Sales Tax License by completing and mailing in a Business Registration Application. However, the online method is preferred since it’s fast, free and reliable.

What information is required when you register for an Illinois Sales Tax License?

Some of the most important information required is:

  • Name of the business
  • Business Entity
  • Date of beginning
  • Mailing address
  • Contact Info of business
  • FEIN
  • Name, SSN, Driver license number, personal address
  • Names of partners, trustees etc.
  • Employment Information

Cost of registration is $0.

How do you collect sales tax in Illinois?

  • When you sell on marketplaces like Amazon you can set things up on your dashboard and let the provider do the deduction.
  • Hosted stores like Shopify offer sellers a dashboard environment where they can manage their sales tax.
  • Brick and mortar stores allow users to set a prevailing sales tax rate that applies to the store location.
  • Remember there are certain good exempt from tax like everyday clothing items, medical supplies, and drugs.

Who is eligible for sales tax exemptions in Illinois?

  • All taxable goods are eligible for sales tax exemption depending on the type of buyer or the manner in which the goods will be used.
  • Other places exempt from sales tax include government agencies, non-profit organizations, religious groups, and out-of-state buyers.

How is an Illinois sales tax return filed?

Filing Illinois sales tax returns is done by submitting the required sales data and then remitting the collected tax dollars to state and local tax authorities. This can also be done online. When you file for sales tax returns, as a business owner you have to provide details of total sales, the amount of sales tax collected, and from where they’re collected to Illinois Department of Revenue.

By completing filing of monthly, quarterly, or annual sales tax returns, they get to keep track of your company’s growth.

The Illinois Department of Revenue will assign you a filing frequency determined by the size of your business. Larger businesses need to file more frequently. Business owners may take the help of third parties to file taxes or delegate it to an accountant or bookkeeper. It helps owners save time and avoid any mistakes due to lack of experience.

When is the due date to file Illinois sales tax?

The Illinois Department of Revenue expects all sales tax filing to be completed by the 20th of any month following the assigned filing period.

For quarterly and annual filing here’s the list of due dates.

2018 Quarterly Filing Due Dates

Tax Collection PeriodFiling Deadline
Q1April 20, 2018
Q2July 20, 2018
Q3October 22, 2018
Q4January 22, 2019

2018 Annual Filing Due Dates

Tax Collection PeriodFiling Deadline
2018 (Months vary for some states)January 22, 2019

Penalties for late filing by the Illinois Department of Revenue

  • Tier 1: The lesser of $250 or 2% of the tax required to be shown due on the return and reduced by timely payments or credits.
  • Tier 2: If you do not file a return within 30 days after receiving a notice of non-filing, an additional penalty will be imposed equal to the greater of $250 or 2% of the tax shown due on the return without regard to timely payments. The additional penalty may not exceed $5,000.