What does Illinois General Information Letter ST 20-0029-GIL conclude about Nexus?

Plain-English summary

This General Information Letter answers a question from a taxpayer who moved their business from Illinois to another state but planned to keep servicing their Illinois customers, and wanted to know what sales tax rate to charge going forward. Because the question required explaining the Department's general nexus framework rather than resolving a specific dispute, the Department responded with a GIL instead of a binding Private Letter Ruling.

The letter lays out two ways a retailer can be required to collect Illinois Use Tax or Retailers' Occupation Tax. First, a retailer with a physical presence in Illinois — even "more than the slightest," per the Illinois Supreme Court's 1996 Brown's Furniture decision — is a "retailer maintaining a place of business in Illinois" under the Use Tax Act and must register and collect tax. Second, since the U.S. Supreme Court's 2018 Wayfair decision abolished the old physical-presence-only rule, Illinois adopted its own economic nexus standard (effective October 1, 2018, under Public Act 100-587): an out-of-state retailer with no physical presence in Illinois must still register and collect Use Tax once it has $100,000 or more in cumulative gross receipts from Illinois sales, or 200 or more separate transactions with Illinois purchasers, in the preceding 12 months.

The letter also flags a further change: beginning January 1, 2021, under the Leveling the Playing Field for Illinois Retail Act (Public Acts 101-0031 and 101-0604), "remote retailers" that meet those same $100,000/200-transaction thresholds must collect and remit state and local Retailers' Occupation Tax (not just Use Tax), putting them on the same footing as Illinois-based retailers. A "remote retailer" is one with no office, warehouse, or other place of business or agent operating in Illinois.

Because the letter is a GIL responding to a general nexus question, it does not tell the specific taxpayer exactly which rate to charge — it directs them instead to the underlying statutes and regulations and to the Department's Taxpayer Information Division for further help.

What this means for you

Out-of-state or relocating business owners

If you used to have a physical presence in Illinois and still sell to Illinois customers after moving out of state, your obligations don't automatically disappear — you may still owe Use Tax collection duties if you retain any physical-presence contacts, and even without any physical presence you can trigger Illinois nexus once your Illinois sales cross $100,000 or 200 transactions in a rolling 12-month period. Since January 1, 2021, crossing that same threshold as a "remote retailer" also means you must collect state and local Retailers' Occupation Tax, not just Use Tax.

Accountants and tax professionals

This GIL is a useful roadmap of Illinois' post-Wayfair nexus rules, but remember it is not binding and does not resolve a specific taxpayer's rate question — it points to 86 Ill. Adm. Code 150.801-.803 for registration and threshold mechanics and to 35 ILCS 120/2(b) for the current Retailers' Occupation Tax remote-retailer thresholds. Track both the physical-presence rules (Section 2 of the Use Tax Act, 35 ILCS 105/2) and the newer economic-nexus rules together, since a taxpayer can be swept in by either.

Common questions

Q: Does moving my business out of Illinois end my Illinois sales tax obligations?
A: Not necessarily. If you retain any physical presence contacts in Illinois, you can still be a "retailer maintaining a place of business in Illinois" under 35 ILCS 105/2. Even without physical presence, selling $100,000 or more or completing 200 or more transactions to Illinois purchasers in the trailing 12 months creates economic nexus under Illinois' Wayfair-based rules.

Q: What are the economic nexus thresholds and how are they measured?
A: $100,000 or more in cumulative gross receipts from Illinois sales, or 200 or more separate transactions with Illinois purchasers, measured on a rolling 12-month basis and checked quarterly (ending the last day of March, June, September, and December). See 86 Ill. Adm. Code 150.803.

Q: What's the difference between Use Tax and Retailers' Occupation Tax collection duties here?
A: A retailer with a physical presence, or a remote retailer meeting the Wayfair economic-nexus thresholds before 2021, collects and remits Use Tax on behalf of Illinois purchasers. Starting January 1, 2021, under the Leveling the Playing Field for Illinois Retail Act, a "remote retailer" meeting the same $100,000/200-transaction thresholds must instead collect and remit state and local Retailers' Occupation Tax, matching the treatment of in-state retailers.

Q: Are all of a remote retailer's sales counted toward the threshold, even nontaxable ones?
A: Yes, with some exceptions. If a remote retailer makes exclusively nontaxable sales, it is not subject to the Wayfair nexus requirements at all. But if it makes both taxable and nontaxable sales into Illinois, all sales count toward the threshold — including nontaxable sales — other than sales for resale and certain other sales specified at 86 Ill. Adm. Code 150.803(c)(3)(E).

Q: Is this letter binding on the Department?
A: No. It is a General Information Letter issued under 2 Ill. Adm. Code 1200.120, meant only to point the taxpayer to relevant regulations and sources of information. It is not a statement of Department policy and does not bind the Department the way a Private Letter Ruling would.

Citations and references

• 35 ILCS 105/2 (Use Tax Act definition of "retailer maintaining a place of business in this State")
• 35 ILCS 120/1 (definition of "remote retailer")
• 35 ILCS 120/2(b) (Retailers' Occupation Tax Act economic nexus thresholds)
• 86 Ill. Adm. Code 150.201 (retailer maintaining a place of business in Illinois)
• 86 Ill. Adm. Code 150.801 (Use Tax collector registration)
• 86 Ill. Adm. Code 150.802 (physical presence nexus)
• 86 Ill. Adm. Code 150.803, including 150.803(c)(2) and 150.803(c)(3)(E) (remote retailer nexus thresholds)
• 86 Ill. Adm. Code 270.115 (selling activities triggering Retailers' Occupation Tax liability)
• 86 Ill. Adm. Code 131 (proposed rules for remote retailers and marketplace facilitators)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedures)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedures)
• South Dakota v. Wayfair, Inc., 585 U.S. ___, 138 S. Ct. 2080 (2018)
• Hartney Fuel Oil Co. v. Hamer, 2013 IL 115130
• Scripto v. Carson, 362 U.S. 207 (1960)
• National Bellas Hess v. Department of Revenue of the State of Illinois, 386 U.S. 753 (1967)
• Quill Corporation v. North Dakota, 504 U.S. 298 (1992)
• Brown's Furniture v. Wagner, 171 Ill.2d 410 (1996)
• Illinois Public Act 100-587 (Wayfair economic nexus standards, effective October 1, 2018)
• Illinois Public Acts 101-0031 and 101-0604 (Leveling the Playing Field for Illinois Retail Act)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2020.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2020/st20-0029-gil.pdf

Original ruling text

ST 20-0029-GIL 10/20/2020

NEXUS

This letter discusses nexus. See South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018). See 86
Ill. Adm. Code 150.803. This is a GIL

October 20, 2020

Dear Xxxx:
This letter is in response to your letter dated January 24, 2020, in which you requested
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:
On December 6, 20XX, I moved my residence and business, COMPANY, from Illinois to
STATE.
My Illinois residence and business address was:
ADDRESS
The new STATE residence and business address is:
ADDRESS
I am pursuing with the state of STATE a conversion of COMPANY from an Illinois
corporation to a STATE corporation, but will continue to service my Illinois accounts,
collect and pay Illinois state sales tax.
At the suggestion of the IL Department of Revenue, I am contacting your office to
determine sales tax rates I should be charging my Illinois customers. I assume I will
continue to collect the amount I did while in Illinois less the COUNTY local tax rate that
was included in the 7.75% rate. So, I would collect 6.25% on stock items, and 1.5%
less on custom items.
Would you please verify if this is correct, or what tax rates I should be charging?
DEPARTMENT’S RESPONSE:

ST 20-0029-GIL
Page 2

An “Illinois Retailer” is one who makes sales of tangible personal property in Illinois. The
Illinois Retailer is then liable for Retailers' Occupation Tax on gross receipts from sales and must
collect the corresponding Use Tax incurred by the purchasers. Our regulations were amended in
response to the Illinois Supreme Court’s decision in Hartney Fuel Oil Co. v. Hamer, 2013 IL 115130.
The regulations specify the selling activities that trigger Retailers’ Occupation Tax liability in Illinois.
See, e.g., 86 Ill. Adm. Code 270.115.
Another type of retailer is a retailer maintaining a place of business in Illinois. The definition of
a “retailer maintaining a place of business in Illinois” is found at 35 ILCS 105/2 and described further,
in part, in 86 Ill. Adm. Code 150.201. This type of retailer is required to register with the State as an
Illinois Use Tax collector. See 86 Ill. Adm. Code 150.801. The retailer must collect and remit Use
Tax to the State on behalf of the retailer’s Illinois customers even though the retailer does not incur
any Retailers' Occupation Tax liability.
An out-of-State retailer making sales to Illinois purchasers from locations outside Illinois is
required to register with the Department and collect and remit Use Tax on those sales if it falls within
the definition of a “retailer maintaining a place of business in this State” in Section 2 of the Use Tax
Act, 35 ILCS 105/2. The Department is authorized to require these retailers to act as tax collectors
because they have established sufficient contacts, or nexus, with Illinois. There are two groups of
remote retailers that must collect Use Tax on sales to Illinois purchasers:
1)

Remote retailers with a physical presence in Illinois. Prior to October 1, 2018,
remote retailers had to have a physical presence in Illinois before they could be
required to collect Use Tax. The types of activities constituting a physical
presence, as limited by the series of court cases described below, are found in
Section 2 of the Use Tax Act’s definition of a “retailer maintaining a place of
business” in Illinois. See, 35 ILCS 105/2. The physical presence requirement
was established in a series of United States Supreme Court decisions. See, for
example, Scripto v. Carson, 362 U.S. 207 (1960); National Bellas Hess v.
Department of Revenue of the State of Illinois, 386 U.S. 753 (1967); Quill
Corporation v. North Dakota, 504 U.S. 298 (1992). In 1996, the Illinois Supreme
Court ruled that remote retailers need only “more than the slightest” physical
presence to be required to collect Use Tax. See Brown’s Furniture v. Wagner,
171 Ill.2d 410 (1996). Any remote retailer that has a physical presence in Illinois
will to be required to act as a Use Tax collector. Regulations describing these
types of retailers are found at 86 Ill. Adm. Code 150.801 and 150.802.
A retailer is required to collect Use Tax if it has a contract with a person
located in this State under which the person, for a commission or other
consideration based upon the sale of tangible personal property by the retailer,
directly or indirectly refers potential customers to the retailer by providing to the
potential customers a promotional code or other mechanism that allows the
retailer to track purchases referred by such persons. Examples of mechanisms
that allow a retailer to track purchases referred by such persons include but are
not limited to the use of a link on the person's Internet website, promotional
codes distributed through the person's hand-delivered or mailed material, and
promotional codes distributed by the person through radio or other broadcast

ST 20-0029-GIL
Page 3

media. The provisions of this paragraph apply only if the cumulative gross
receipts from sales of tangible personal property by the retailer to customers who
are referred to the retailer by all persons in this state under such contracts
exceed $10,000 during the preceding four quarterly calendar ending on the last
day of March, June, September, and December;
A retailer is required to collect Use Tax if it has a contract with a person
located in this State under which:
A)

the retailer sells the same or substantially similar line of products as the
person located in this state and does so using an identical or substantially
similar name, trade name, or trademark as the person located in this state;
and

B)

the retailer provides a commission or other consideration to the person
located in this state based upon the sale of tangible personal property by
the retailer.

The provisions of this paragraph apply only if the cumulative gross receipts from
sales of tangible personal property to customers in this state under all such
contracts exceed $10,000 during the preceding four quarterly periods ending on
the last day of March, June, September, and December.
2)

Remote retailers without a physical presence in Illinois. In South Dakota v.
Wayfair, Inc., 585 U.S. ___ (2018), 138 S. Ct. 2080, the U.S. Supreme Court
upheld a South Dakota statute that imposed tax collection obligations on remote
retailers that met specific selling thresholds but had no physical presence in the
state. This decision abrogated the longstanding physical presence requirement
of Quill, deeming it “unsound and incorrect.” Illinois Public Act 100-587 enacted
nexus standards, effective October 1, 2018, that are virtually identical to those
upheld in Wayfair. This non-physical presence nexus we will call “Wayfair
nexus.”

Public Act 100-587 implemented the U.S. Supreme Court Wayfair nexus standards. It requires
out-of-state retailers with no physical presence in Illinois to register and collect and remit Use Tax, as
provided below:
1)

Beginning October 1, 2018, a retailer making sales of tangible personal property
to purchasers in Illinois from outside of Illinois must register with the Department
and collect and remit Use Tax if:
a)

The cumulative gross receipts from sales of tangible personal property to
purchasers in Illinois are $100,000 or more; or

b)

The retailer enters into 200 or more separate transactions for the sale of
tangible personal property to purchasers in Illinois.

ST 20-0029-GIL
Page 4

2)

A retailer shall determine on a quarterly basis, ending on the last day of March,
June, September, and December, whether he or she meets either of the criteria
of paragraph (1) for the preceding 12-month period. If the retailer meets either of
the criteria of paragraph (1) for a 12-month period, he or she is considered a
retailer maintaining a place of business in Illinois and is required to collect and
remit the Use Tax and file returns for one year.
a)

At the end of that one-year period, the retailer shall determine whether he
or she met either of the criteria of paragraph (1) during the preceding 12month period. If the retailer met either of the criteria in paragraph (1) for
the preceding 12-month period, he or she is considered a retailer
maintaining a place of business in Illinois and is required to collect and
remit Use Tax and file returns for the subsequent year.

b)

If at the end of a one-year period a retailer that was required to collect and
remit the Use Tax determines that he or she did not meet either of the
criteria in paragraph (1) during the preceding 12-month period, the retailer
shall subsequently determine on a quarterly basis, ending on the last day
of March, June, September, and December, whether he or she meets
either of the criteria of paragraph (1) for the preceding 12-month period.

In determining whether a remote retailer meets the thresholds above, see 86 Ill. Adm. Code
150.803(c)(3)(E)(i). In addition, if a remote retailer makes exclusively nontaxable sales, he or she is
not subject to the Wayfair nexus requirements. See 86 Ill. Adm. Code 150.803(c)(2). If, however, the
remote retailer makes both taxable and nontaxable sales into Illinois, all sales are included, including
the nontaxable sales (other than sales for resale and other sales specified at 86 Ill. Adm. Code
150.803(c)(3)(E)). See 86 Ill. Adm. Code 150.803(c)(3)(E)(v).
Public Acts 101-0031 and 101-0604 enacted the Leveling the Playing Field for Illinois Retail
Act. The Act implements a series of structural changes to the Illinois sales tax law that are intended
to “level the playing field” between Illinois-based retailers and remote retailers by imposing State and
local retailers’ occupation taxes on Illinois retailers, remote retailers and marketplace facilitators alike.
Public Acts 101-0031 and 101-0604 require “remote retailers” to collect and remit State and local
retailers’ occupation taxes. Beginning January 1, 2021, you must remit Retailers’ Occupation Tax if
you are a remote retailer and either of the following thresholds was met during the preceding four
quarterly periods ending on the last day of March, June, September, and December:
1)

The cumulative gross receipts from sales of tangible personal property by you to
purchasers in Illinois was $100,000 or more; or

2)

you entered into 200 or more separate transactions for the sale of tangible personal
property to purchasers in Illinois. [35 ILCS 120/2(b)]

You are a “remote retailer” if you do not maintain within this State, directly or by a subsidiary, an
office, distribution house, sales house, warehouse or other place of business, or any agent or other
representative operating within this State under your authority or a subsidiary of yours, irrespective of

ST 20-0029-GIL
Page 5

whether such place of business or agent is located here permanently or temporarily or whether you or
your subsidiary is licensed to do business in this State. 35 ILCS 120/1.
The Department has filed proposed rules implementing the new requirements for remote
retailers and marketplace facilitators. The proposed rules can be found on the Department’s website.
86 Ill. Adm. Code 131.
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,

Debra M. Boggess
Associate Counsel
DMB:bkl