Probably. Illinois has an incredibly complicated tax system. While most states have a sales tax and a complementary use tax, Illinois has the following:
- Retailers’ occupation tax (state and local) on the retail sale of tangible personal property
- Service occupation tax (state and local) on the retail sale of taxable services
- Use tax (state only) on tangible personal property
- Service use tax (state only) on services
Prior to January 1, 2021, remote retailers with a tax collection obligation in Illinois were generally required to collect the state use tax, which is one reason some marketplace sales were taxed twice in 2020: While out-of-state marketplace facilitators collected the use tax, in-state marketplace sellers had to collect the retailers’ occupation tax.
A change that took effect January 1, 2021, helped prevent further double-tax trouble: Remote retailers with an obligation to collect are now generally liable for state and local retailers’ occupation tax. The local portion is usually based on the rate in effect at the point of delivery, though different rules may apply to out-of-state retailers with inventory in Illinois.
The tax structure is so complicated that the Illinois Department of Revenue created a flow chart to help out-of-state retailers — and especially marketplace facilitators and sellers — determine which tax they owe and at what rate. It then had to update the flowchart. You can get more details in this article and this Wacky Tax Wednesday post if you’re interested. If you’re feeling brave, jump to the Department of Revenue’s Level the Playing Field for Illinois Retail Act Flowchart.
Retailers in Illinois are generally permitted to retain any use tax collected from consumers, so long as they’ve remitted the applicable retailers’ occupation tax to the state. Therefore, SB 2066 doesn’t require marketplace sellers to offer a refund to their customers after they receive the tax credit.
