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By: Rebecca K. Wohltman

The Leveling the Playing Field for Illinois Retail Act takes effect on January 1, 2021. This Act is a new way of applying sales tax requirement to remote retailers and marketplace facilitators.

In essence, remote retailers and marketplace facilitators who exceed the Wayfair thresholds (sales of $100,000 or more to Illinois locations or 200 or more separate transactions sold to Illinois purchasers) will now be obligated to charge and remit state and local sales tax on all transactions in Illinois.

Determining whether a remote retailer or marketplace facilitator meets these thresholds is determined on a rolling quarterly basis. In other words, if you already exceeded these thresholds in 2020, you should be prepared to begin collecting and remitting local sales tax on the first day of 2021.

The challenge for remote retailer will be accurately determining the applicable local sales tax rates for each sale. Although there is a tax database on the IDOR website that will provide this information, navigating the database if the retailer does not have capable software is cumbersome and time-consuming.

You can use a Certified Service Provider (“CSP”) in order to meet these requirements, but none have yet been approved by IDOR. CSPs are not allowed to charge the remote retailer for their services. Their only source of income is they are allowed to keep the 1.75% discount authorized if the returns are timely filed. Whether any CSPs are approved before this tax goes into effect remains to be seen.

Are you confused as to whether or not these new requirements to collect the local sales taxes apply to you? IDOR has created a flowchart that might be helpful (https://www2.illinois.gov/rev/research/taxinformation/sales/Documents/LevelingthePlayingFieldRetailerFlowchart.pdf). If you still have questions about whether you are subject to these new requirements or how you comply, give us a call.

Professional Services Disclaimer: Please note that the information presented here is as an educational service, and while it contains information about legal issues, it is not legal advice. No warranty is made regarding the applicability of the information presented to a particular client situation, and the information set forth is not a substitute for original legal research, analysis and drafting for a particular client situation.