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Can I collect sales tax from customers in different states without violating tax laws in Illinois? What are the requirements?

To collect sales tax from customers in different states without violating tax laws in Illinois, you must comply with the Streamlined Sales and Use Tax Agreement (SSUTA) [1.1]. Illinois is a member of the SSUTA, which requires each state to establish uniform standards for the sourcing of transactions to taxing jurisdictions, the administration of exempt sales, sales and use tax returns and remittances, and central registration [1.1].

To comply with the SSUTA, you must register with the central registration system and collect and remit sales and use taxes for all signatory states [1.1]. However, registration with the central registration system and the collection of sales and use taxes in the signatory states will not be used as a factor in determining whether the seller has nexus with a state for any tax [1.1].

Illinois imposes a Retailers’ Occupation Tax Act, which imposes a tax on retailers for the privilege of selling tangible personal property at retail in Illinois [2.1]. The Act applies to all retailers, including those who sell tangible personal property to purchasers in other states [2.1].

The location where a retailer is deemed to be engaged in the business of selling tangible personal property is specified in Section 2-12 of the Retailers’ Occupation Tax Act [2.2]. If a remote retailer makes retail sales of tangible personal property that meet or exceed the thresholds established in paragraph (1) or (2) of subsection (b) of Section 2 of the Act, the retailer is engaged in the business of selling at the Illinois location to which the tangible personal property is shipped or delivered or at which possession is taken by the purchaser [2.2].

The Illinois Department of Revenue has the power to hold investigations and hearings concerning any matters covered by the Retailers’ Occupation Tax Act and may examine any books, papers, records, or memoranda bearing upon the sales of tangible personal property or services of any such person [2.4].

Therefore, to collect sales tax from customers in different states without violating tax laws in Illinois, you must comply with the SSUTA requirements, register with the central registration system, and collect and remit sales and use taxes for all signatory states. Additionally, you must comply with the Retailers’ Occupation Tax Act and the location where a retailer is deemed to be engaged in the business of selling tangible personal property. If you have any further questions, you may contact the Illinois Department of Revenue for assistance.

Source(s):
Jurisdiction

Illinois