Confirming Business Locations
Why are business locations confirmed?
A law was established in an effort to encourage local and state cooperation to confirm business locations for sales tax purposes. Its ultimate goal was to eliminate the need for tax allocation adjustment. This law added responsibilities for the Illinois Department of Revenue, municipal and county governments, and businesses which collect sales tax. Proper allocation of sales tax money can be accomplished only if all three parties do their part.
Why is it important for you to notify us promptly when you discover any errors in business locations?
There is a six-month time limit on adjustments of erroneous disbursements. If you do not notify us promptly of any discrepancies on your various taxpayer address lists, you could lose revenues through erroneous disbursements.
For example, if you received your annual taxpayer location address list and when verifying it discovered a business that started operating in your jurisdiction was not listed, you should immediately notify us in writing. For a period of six months prior to your notification, any sales tax money generated by that business that was disbursed to another location will be adjusted. Any disbursements that occurred outside of that six-month time period will not be adjusted.
What is the retailer's responsibility?
Retailers are required to advise us of specific location addresses. This information is a required part of the registration application which we provide. In addition, anytime an address is changed or an existing location is closed, retailers are required to inform us.
What is the Illinois Department of Revenue's responsibility?
We must maintain this information and submit comprehensive lists to you. We publish two different types of notification involving taxpayers that are within your jurisdiction.
A list of the various forms of notification follows:
- annual taxpayer location address list (RIS702-01)
- monthly municipal/county verification letters and accompanying lists (Letter 508)
What is your responsibility?
You must thoroughly review all of the lists that you receive and verify to us that the information is accurate.
Will there be businesses that do not appear on your lists?
Yes. There are many businesses that will not appear on your lists because they do not sell at retail or are service businesses, such as repair shops or printing businesses, that are not required to charge sales tax.
A service business is required to charge sales tax on the merchandise it transfers(sells) to its customers as part of the service it provides when the annual aggregate cost of the merchandise reaches a specified percentage of the total charge for both merchandise transferred and service provided. For most service businesses, the annual aggregate cost must be 35 percent or more of annual gross receipts. In the case of pharmacists and persons engaged in graphic arts production, the required percentage increases to 75 percent. Some businesses that do not meet these percentage requirements elect to register and charge sales tax anyway.
Service businesses that do not meet these registration requirements, and who are not also in business as retailers, pay tax to their supplier on the items they purchase and ultimately transfer to their customers as an incident to the service they provide.
Your list will represent all retailers and service businesses registered to charge and collect sales tax.
Types of businesses that you are not likely to find on the list are:
- Wholesalers These businesses generally make tax-free sales to other wholesalers and retailers.
- Construction contractors They are considered users rather than sellers of the property which they convert into real estate. They are required to pay sales tax directly to their suppliers. Beauty and barber shops They are not required to register unless they sell items such as shampoo, hairspray, curling irons, etc. over the counter.
Businesses that are discontinued, have had a change of ownership, or were registered in error will not appear on your list.