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Annexation of Retail Businesses

What information do you need to send the Illinois Department of Revenue when you have annexed land that has a retail business located on it?

When you annex a portion of land that has a retail business located on it, in addition to filing the annexation notice with your county government, you must also notify us that this annexation has occurred.

To do this, send a letter along with a copy of the annexation ordinance to:
LOCAL TAX ALLOCATION DIVISION (3-500)
ILLINOIS DEPARTMENT OF REVENUE
101 WEST JEFFERSON
SPRINGFIELD IL 62702
The letter should include

  • a statement verifying that you have also filed a copy of the annexation ordinance with your county government,
  • the effective date of the annexation,
  • the name and address of any retail business that is located in the annexed area,
  • the name of the business owner,
  • the Illinois business tax (IBT) number, if available, and
  • the FEIN or SSN, if available.

We will use this information to identify the affected businesses and to correct our records to reflect the change in taxing jurisdiction.

Note: Illinois Business Tax (IBT) numbers eventually will be replaced by Account IDs when that tax is included in the new system. At the end of the four-year transition period, use of the term “IBT” will be discontinued.

Why is it important for you to notify us promptly?

Prompt notification of an annexation will ensure the timely and proper allocation of your local share of the sales tax paid by the newly annexed businesses.

Failing to notify us of an annexation may result in the misallocation of sales tax revenue. Currently the law provides for adjustment of only those amounts erroneously disbursed within the six month period prior to the discovery of misallocation. Delays in submitting proper notification of an annexation may result in unrecoverable revenue losses.

For example, if in January 2000, you annexed a portion of land that contained a retail business but you did not notify us that this annexation had occurred until January 2001, we could adjust only the portion of money that had been misallocated between the months of July 2000 and December 2000. Any money that was allocated to the county between January 2000 and June 2000 would not be adjusted.