Any business that sells goods or taxable services within the state of Illinois to customers located in Illinois is required to collect sales tax from that buyer. This will include all online businesses. Any seller which conducts business and has a major presence within the state must collect sales tax in Illinois must pay taxes to the state. Therefore, these sellers required to file for a Sales tax certificate. By not doing so the business may face sanctions or other types of penalties. Additionally, depending on the businesses location and tax jurisdiction, localities such as counties, cities, and other districts can also add additional sales and use taxes.
Do you need to get a Sales Tax certificate in Illinois?
You may need a Sales Tax Certificate if any of the following apply your business:
- You have a physical office or place you conduct
- You sell or ship products to a buyer in Illinois
- You have a distribution location such as a storage area or warehouse space
- You have employees physically present in Illinois (including independent contractors, Sales persons, representatives, or agents)
- Your business has a 3rd party affiliate located inside the state of Illinois
- Your business manufactures products for retail sale
- Your business purchases wholesale items for resale in the state of Illinois
- Your business provides taxable services within the state of Illinois
What constitutes taxable services in Illinois State?
The majority of service businesses are not taxable in Illinois. The exceptions would be service businesses that manufacture tangible parts or products and sells them at retail. A good example of this would be a HVAC company that services and sells air conditioning units and their parts.
Why do I need a Sales Tax Certificate to purchase wholesale items for Resale in the State of Illinois?
As a wholesale company conducting business in the state of Illinois, you are required to have a sales tax certificate when purchasing items at wholesale prices, Therefore, suppliers must request a copy of your resale certificate before selling you items at wholesale prices.
Do you have to collect Sales Taxes from out of state buyers?
While you may not collect sales taxes from your out of state customers, you are still required to collect their information and report it to Illinois.
If you an online seller, do you need to collect sales tax on shipping and handling of merchandise?
Shipping and handling charges are generally not taxable if you separate it from the purchase price of the item being sold on the invoice.
Is there sales tax on drop shipments in the state of Illinois?
A drop shipment is where a seller ( most times out of state ) sells a product which is then delivered to a consumer by a third party shipper. In most instances, drop shipments in Illinois may or may not be required to have sales tax added
Are there any exemptions to taxable items sold?
Certain specific medical devices, raw materials and machinery, newspapers and magazines, and custom downloadable software are tax exempt
Register for an Illinois sales/use tax number
Illinois state, county, city, & municipal tax rate table