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sale tax definition

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Definitions

The term “sales tax” actually refers to several tax acts. Sales tax is a combination of “occupation” taxes that are imposed on sellers’ receipts and “use” taxes that are imposed on amounts paid by purchasers. Sellers owe the occupation tax to the department; they reimburse themselves for this liability by collecting use tax from the buyers. “Sales tax” is the combination of all state, local, mass transit, water commission, home rule occupation and use, non-home rule occupation and use, park district, county public safety and facilities, county school facility tax, and business district taxes.

“Sales tax” is imposed on a seller’s receipts from sales of tangible personal property for use or consumption. Tangible personal property does not include real estate, stocks, bonds, or other “paper” assets representing an interest.

If the seller (typically an out-of-state business, such as a catalog company or a retailer making sales on the internet) does not charge Illinois Sales Tax, the purchaser must pay the tax directly to the department. For purposes of this document, Illinois Sales Tax has three rate structures — one for qualifying food, drugs, and medical appliances; one for items required to be titled or registered; and another for all other general merchandise.

“Qualifying food, drugs, and medical appliances” include

“Vehicles” include motor vehicles, ATVs, watercraft, aircraft, trailers, and mobile homes. See the STS‑76, Illinois Aircraft/Watercraft and Vehicle Tax Information Guide, for complete definitions and tax applications.
“General merchandise” includes sales of most tangible personal property including sales of

Tax rates

Use the Tax Rate Database to look up location specific tax rates. Depending upon the location of the sale, the actual sales tax rate may be higher than the fundamental rate because of home rule, non-home rule, water commission, mass transit, park district, county public safety, public facilities or transportation, and county school facility tax.

Prepaid sales tax

Motor fuel distributors must collect “prepaid sales tax” on the motor fuel sold for resale to a retailer who is not an Illinois licensed motor fuel distributor or supplier of diesel and dieselhol. The retailer prepays the sales tax to the motor fuel distributor and then claims a credit for the prepaid tax when the sales tax return is filed. Click here for Prepaid Sales Tax Motor Fuel Rates.

Local taxes

Units of local government may impose taxes or fees, which the department does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay any additional taxes or fees not listed below. The following local taxes, which the department collects, may be imposed. Except as noted below, the preprinted rate on the return will include any locally imposed taxes.

Exemptions

Sales — The following list contains some of the most common examples of transactions that are exempt from tax. (See the Illinois Administrative Code, Section 130.120 and Publication 104, Common Sales Tax Exemptions for a comprehensive list.)


Organizations —
Qualified organizations, as determined by the department, are exempt from paying sales and use taxes in Illinois. Upon approval, we issue each organization a sales tax exemption number. The organization must give this number to a merchant in order to make purchases tax‑free. Examples of exempt organizations are listed below.


Examples of organizations that do not have to collect sales tax on their retail sales

Filing and payment requirements


Returns

Titled or registered items — Registered Illinois dealers who sell vehicles, watercraft, aircraft, trailers, and mobile homes must file Form ST‑556, Sales Tax Transaction Return, within 20 days of the delivery date.

Individuals who purchase items that must be titled or registered in Illinois from an out-of-state retailer (i.e., dealer, lending institution, leasing company selling at retail, or leasing company leasing items to Illinois residents) must file Form RUT-25, Vehicle Use Tax Transaction Return, on the date the Illinois title and registration is applied for, but not more than 30 days after the date the item is brought into Illinois.

Individuals who purchase (or acquire by gift or transfer) motor vehicles that must be titled or registered from another individual or private party must file Form RUT‑50, Private Party Vehicle Use Tax Transaction Return, within 30 days from the date the vehicle is purchased or acquired. Individuals who acquire (by gift, donation, transfer, or non-retail purchase) aircraft or watercraft that must be registered must file Form RUT-75, Aircraft/Watercraft Use Tax Return, no later than 30 days from the date the item was acquired or the date the item was brought into Illinois, whichever is later.

Prepaid sales tax on motor fuel — Motor fuel distributors file Form PST-1, Prepaid Sales Tax Return, monthly on the 20th day of the month following the month for which the return is filed.

NOTE: Retailers claim a credit for the amount of prepaid sales tax on Form ST-1, Sales and Use Tax and E911 Surcharge Return, Line 17.

Qualifying food, drugs, and medical appliances and other general merchandise — Registered Illinois retailers and service persons file Form ST-1, Sales and Use Tax and E911 Surcharge Return, monthly, quarterly, or annually, based on the taxpayer’s average monthly liability. The department determines how often a return must be filed.

Illinois residents who make purchases of tangible personal from non-registered out-of-state retailers (such as catalog or internet transactions) or those who make purchases of tangible personal property from service persons who do not pay use tax directly to us must file Form ST-44, Illinois Use Tax Return. You may complete Form ST-44 electronically on our web site.

Tangible personal property sold at retail over the internet is taxed in the same manner as any other retail sale. Generally, if the item of tangible personal property is purchased from an

Quarter-monthly payments — If a retailer or service-person’s average monthly liability is $20,000 or more, quarter-monthly payments must be made. Payments are due the 7th, 15th, 22nd, and last day of the month. Because the statutory threshold for mandated electronic funds transfer (EFT) program participation is $20,000 annual liability, most taxpayers will remit their quarter-monthly payments by EFT. Taxpayers who mail their quarter-monthly remittances to the department must complete Form RR-3, Sales and Use Tax Quarter-monthly Payment.

NOTE: Electronic funds transfer program participants do not complete or mail Form RR-3.

If a motor fuel distributor’s average monthly liability is $20,000 or more, quarter-monthly payments must be made. Payments are due the 7th, 15th, 22nd, and last day of the month. Because the statutory threshold for mandated electronic funds transfer (EFT) program participation is $200,000 annual liability, most taxpayers will remit their quarter-monthly payments by EFT. Taxpayers who mail their quarter-monthly remittances to the department must complete Form PST-3, Prepaid Sales Tax on Motor Fuel.

NOTE: Electronic funds transfer program participants do not complete or mail Form PST-3.

Additional Forms & Resources

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