Could a company stop filing monthly Illinois ST-1 returns because its shipments were international and its returns showed no sales-tax liability?

Plain-English summary

A company that had been filing zero-liability Illinois sales-tax returns said its products were either shipped directly to international customers or first received by the company outside Illinois and then shipped internationally. It asked whether it could stop filing monthly Form ST-1 returns.

IDOR could not determine the exact nature or taxability of the transactions from the limited facts. It noted that property originating in Illinois generally can be exempt when the seller delivers it outside the state and it never returns, but did not conclude that all of this company's sales qualified.

The GIL says every person engaged in Illinois retail sales must register and generally file Form ST-1 monthly by the 20th day of the following month; there is no minimum-dollar threshold before that obligation begins. IDOR may authorize quarterly filing when average monthly liability does not exceed $200, or annual filing when it does not exceed $50. Even without taxable retail sales, a registrant may still need an ST-1 for Use Tax not paid directly to suppliers.

Common questions

Did zero tax due let the company stop filing? IDOR did not say so; it lacked enough facts and explained that registration and filing duties may continue.

Can a retailer choose quarterly or annual filing itself? No. The GIL says IDOR authorizes those frequencies based on the retailer's average monthly liability and Department information.

Citations and references

• 86 Ill. Adm. Code 130.501, 130.502, and 130.510
• 86 Ill. Adm. Code 130.605(d)
• 86 Ill. Adm. Code 130.701

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2013.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2013/st-13-0067.pdf

Original ruling text

ST 13-0067-GIL 11/27/2013 RETURNS
This letter discusses the rules regarding when a retailer must file a monthly return. See 86 III.
Adm. Code 130.501. (This is a GIL.)

November 27, 2013

Dear XxXxxx:

This letter is in response to your letter dated October 9, 2013, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”)
are issued by the Department in response to specific taxpayer inquiries concerning the
application of a tax statute or rule to a particular fact situation. A PLR is binding on the
Department, but only as to the taxpayer who is the subject of the request for ruling and only to
the extent the facts recited in the PLR are correct and complete. Persons seeking PLRs must
comply with the procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code
1200.110. The purpose of a General Information Letter (“GIL”) is to direct taxpayers to
Department regulations or other sources of information regarding the topic about which they
have inquired. A GIL is not a statement of Department policy and is not binding on the
Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant
to your inquiry.

The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:

In reviewing our file I noticed that our company has been filing Zero Sales Tax
Liability returns for some time. I would appreciate it very much, if you would
assist us in the following:

COMPANY B purchases PRODUCT 1, PRODUCT 2, PRODUCT 3 and
PRODUCT 4 from our parent company, COMPANY A. 50% of the time,
these products are shipped direct to our customers internationally. The
other 50% of the time these products are received by us here in STATE and
then are shipped to our customer also internationally.

Therefore I believe that there is no requirement for us to complete a monthly ST-1
Sales and Use Tax return in the future. Kindly advise us.

DEPARTMENT?’S RESPONSE:

We cannot determine the exact nature of the transactions you engage in from the limited
information contained in your letter. Based on the information provided in your letter, it seems
that you make only international sales. Sales of property originating in Illinois are generally not
taxable when the property is delivered out of state, and the property never returns to Illinois. See
86 Il. Adm. Code 130.605(d). I hope you will find the following general information regarding
registration and the filing of returns helpful.

It is unlawful for any person to engage in the business of selling tangible personal
property at retail in this State without a certificate of registration from the Department. See 86 IIl.
Adm. Code 130.701. A registration must be obtained prior to making retail sales. If a person is
not making retail sales, no registration is necessary. It is unclear from the limited information
provided in your letter whether you are making any taxable retail sales in Illinois.

There is no dollar threshold that must be met before a retailer is required to register and
remit Use Tax to the State. Every person engaged in the business of selling tangible personal
property at retail must file a Form ST-1 on a monthly basis on or before the 20th day of each
month as required by 86 Ill. Adm. Code 130.501. A taxpayer can be authorized by the
Department to file a quarterly return if provisions for filing quarterly (average monthly liability
does not exceed $200) are fulfilled. Furthermore, if a retailer's average monthly tax liability to
the Department does not exceed $50, the Department may determine that returns should be filed
on an annual basis. The provisions are described in 86 Il. Adm. Code 130.502 and 86 II. Adm.
Code 130.510. The decision to permit quarterly or annual filing will be based on information
collected by the Department such as registration and audit information regarding the retailer’s
average monthly liability. In the event that you are not making any taxable retail sales in Illinois,
you may still be required to file an ST-1 if you have use tax liability that is not satisfied by
paying use tax directly to your suppliers. Again, we do not have enough information about the
sales that you make in Illinois to determine whether you should continue filing monthly returns.

I hope this information is helpful. If you require additional information, please visit our
website at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at
(217) 782-3336.

Very truly yours,

Cara Bishop
Associate Counsel