What does Illinois GIL ST 21-0042-GIL say about sales tax nexus, marketplace facilitators, and various exemptions?

Plain-English summary

This letter is Illinois' answer to an annual national multistate tax survey (the kind of survey used to compile a nationwide state-tax reference guide). Rather than answer the survey in its original checkbox format, the Illinois Department of Revenue restated each question and gave a substantive answer, so the letter ends up covering several unrelated sales/use tax topics in one document:

• Remote workers and nexus. An out-of-state seller has Illinois nexus (and must collect Use Tax or Retailers' Occupation Tax) if it has any physical presence here, directly or through a subsidiary or agent — permanent or temporary. The Department's answer does not carve out a special COVID-era exception; ordinary physical-presence nexus rules apply. Property sitting at a printer's Illinois premises (the final printed product, materials that become part of it, or copy used to produce it) does not, by itself, create nexus for the seller.
• Marketplace facilitators. Once a marketplace facilitator meets the Section 131.135(a) volume/transaction threshold, it is treated as the retailer for all sales made over its marketplace (its own sales and sales on behalf of marketplace sellers) and must collect and remit state and local Retailers' Occupation Tax. It gets any credits, deductions, or price adjustments a marketplace seller would otherwise get, and it must register, file, and remit separately for its own sales versus marketplace sales. Food-delivery services that qualify as marketplace facilitators must certify to each restaurant that they've assumed the retailer's collection duties.
• Precious metals and safety equipment. Both are generally taxable retail sales. The exceptions are narrow: legal tender, currency, medallions, government-issued coinage, and bullion are exempt; and safety/protective equipment (hard hats, safety glasses, steel-toe boots, etc.) is exempt only when it falls under the manufacturing and assembling machinery and equipment exemption (i.e., used or consumed within a manufacturing facility).
• Digital advertising tax and EV charging stations. Illinois has neither a separate excise tax on digital advertising nor a special sales/use tax exemption for machinery and equipment used to build electric-vehicle charging stations; proceeds from charging stations are taxable like any other retail sale.
• Medical equipment. There is no blanket exemption for medical equipment such as respirators or ventilators. Sales to qualifying governmental bodies, charitable/religious/educational organizations, or (temporarily, through July 1, 2022) certain hospitals can still be exempt under other provisions. A "medical appliance" that substitutes for a lost or impaired body part is taxed at the reduced 1% rate rather than the general rate.
• Common filing mistakes. The Department flagged that many retailers were misreporting sales — putting Retailers' Occupation Tax sales on the return lines meant for Use Tax — especially after the Leveling the Playing Field for Illinois Retail Act introduced destination sourcing for certain sales made on or after January 1, 2021.

What this means for you

Out-of-state and online retailers

If you have any physical presence in Illinois — an office, warehouse, agent, or an employee working from an Illinois home, even temporarily — you likely have nexus and an obligation to register and collect Illinois Use Tax or Retailers' Occupation Tax. Contracting with an Illinois printer, by itself, does not create nexus over the printed materials at the printer's premises.

Marketplace facilitators and online marketplace sellers

If your marketplace facilitator business meets the Section 131.135(a) threshold, you must register separately from any of your own direct retail sales, collect and remit tax on all sales made over your marketplace (including on behalf of third-party sellers), and pass along any credits or deductions the seller would have received. Food-delivery platforms need to give restaurants a certification confirming they've taken on the collection duty.

Retailers of specialty goods (precious metals, safety equipment, medical items) and manufacturers

Don't assume a "safety" or "medical" label makes an item exempt. Precious metals are taxable unless they are legal tender, currency, or bullion. Safety equipment is taxable unless it qualifies under the manufacturing machinery and equipment exemption. Medical appliances that substitute for a body part get the reduced 1% rate, but general medical supplies like respirators and ventilators have no standalone exemption — exemption instead depends on who the buyer is (governmental, charitable, or a qualifying hospital).

Accountants and tax professionals filing Form ST-1

Double-check that Retailers' Occupation Tax sales are reported on the correct lines of Form ST-1, not the Use Tax lines. Since the Leveling the Playing Field for Illinois Retail Act, some sales made on or after January 1, 2021 use destination sourcing, which changes how state and local tax should be calculated and reported.

Common questions

Q: Does an employee working from home in Illinois create nexus for an out-of-state company?
A: Yes, potentially. Illinois nexus is based on physical presence — an office, warehouse, agent, or representative operating in the state, whether permanent or temporary. The Department's response doesn't limit this to particular work arrangements (convenience of employer vs. employee, regular vs. occasional), so any Illinois-based employee activity can support nexus depending on the facts.

Q: Who has to collect tax when a customer orders from a restaurant through a delivery app, or buys from an online marketplace?
A: If the food delivery service or online marketplace facilitator meets the Department's volume/transaction threshold, it — not the restaurant or the individual online retailer — is treated as the retailer responsible for collecting and remitting Illinois Retailers' Occupation Tax on those sales, and it must certify this to the restaurants/sellers it works with.

Q: How should a marketplace facilitator report its own sales versus marketplace sales?
A: Separately. Marketplace facilitators must register with the Department and file/report tax on their own direct sales on a return separate from the return covering sales made on behalf of marketplace sellers.

Q: Are precious metals and safety equipment purchases taxable in Illinois?
A: Generally yes. Precious metals are exempt only if they're legal tender, currency, medallions, government-issued coinage, or bullion. Safety equipment (hard hats, safety glasses, steel-toe boots) is exempt only when it qualifies for the manufacturing and assembling machinery and equipment exemption (used or consumed within a manufacturing facility).

Q: Does Illinois tax digital advertising separately, or exempt EV charging stations?
A: No to both. Illinois has no separate excise tax on digital advertising, and it has no specific sales/use tax exemption for machinery and equipment used to build electric-vehicle charging stations — proceeds from those charging stations are taxable.

Q: Is medical equipment like respirators and ventilators exempt from sales tax?
A: There's no blanket exemption for that category. Exemption instead depends on the buyer: sales to qualifying governmental bodies, charitable/religious/educational organizations, or (temporarily, until July 1, 2022) certain hospital owners under 35 ILCS 120/2-9 can be exempt. A "medical appliance" replacing a lost or malfunctioning body part is instead taxed at the reduced 1% rate.

Q: What's a common mistake retailers make when filing Illinois sales/use tax returns?
A: Reporting Retailers' Occupation Tax sales on the Form ST-1 lines meant for Use Tax. The Department also flagged that, since the Leveling the Playing Field for Illinois Retail Act, some post-January 1, 2021 sales must use destination sourcing for state and local tax purposes.

Citations and references

Statutes and rules:

• 86 Ill. Adm. Code 131.107(a)(4) (out-of-state seller physical-presence nexus)
• 86 Ill. Adm. Code 131.105 (printer's premises property does not create nexus)
• 86 Ill. Adm. Code 131.107(c)(1)(C)(ii); 35 ILCS 120/2-12(7) (marketplace facilitator certification for food delivery)
• 86 Ill. Adm. Code 131.130(d); 131.135(a) (marketplace facilitator treated as retailer above threshold)
• 86 Ill. Adm. Code 131.145(f), (h) (marketplace facilitator credits/deductions and separate filing)
• 35 ILCS 120/2(c) (marketplace facilitator separate registration)
• 86 Ill. Adm. Code 130.1910(c) (legal tender, currency, bullion exemption)
• 86 Ill. Adm. Code 130.330(h)(2)(C) (manufacturing machinery/equipment safety-gear exemption)
• 35 ILCS 120/2-5(11) (governmental/charitable/religious/educational exemption)
• 35 ILCS 120/2-9 (temporary hospital exemption, expiring July 1, 2022)
• 86 Ill. Adm. Code 130.311(e)(1) (medical appliance 1% rate)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2021.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2021/st21-0042-gil.pdf

Original ruling text

ST-21-0042 08/06/2021 MISCELLANEOUS
This letter responds to an annual survey. (This is a GIL.)
Dear NAME
This letter is in response to your letter received June 14, 2021, 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:
Each year, the UNIVERSITY, in conjunction with COMPANY, collects and
disseminates information regarding the tax laws of each state. The results
of the annual survey are published in the GUIDE, which has been one of
the premier state tax reference books for nearly 40 years.
Your assistance in the preparation of the 2022 edition is essential. Please
complete the attached corporate income tax and sales tax questionnaires
by August 2, 2021, and email them to E-MAIL. If your responses to last
year’s questionnaire would be helpful, please let us know and we will send
you a copy.
All new questions are highlighted in red font. Due to time constraints,
please respond only to the new questions and to the prior year questions
that require a change. All unanswered questions will be considered to
have the same response as last year, unless otherwise noted.
Please acknowledge receipt of this email.
Also, please send us your responses to the following questions:

1. Who is the state respondent for the corporate income tax
   questionnaire?
2. Who is the state respondent for the sales tax questionnaire?
3. Do you prefer a complimentary hardcopy of the GUIDE or should we
   send you an access code for an eBook?

UNIVERSITY
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August 6, 2021
Please contact us at E-MAIL if you have any questions, and thank you for
your continued support of this important tax reference book.
Sincerely,
We are unable to respond to your survey in the format provided. However, we
hope you find the following information helpful.
REMOTE WORKERS. If a corporation’s sole activity in your state is an employee working from
home under the circumstances described below, does the activity create an obligation to collect
and remit sales/use tax (check each activity that would, by itself, create sales/use tax nexus)?
 For the convenience of the employer
 For the convenience of the employee
 On a regular but temporary basis
 Occasionally and intermittently
 Permanently
▪ Is sales tax nexus created by an employee working from home due to COVID restrictions?
 Yes  No
DEPARTMENT’S RESPONSE
Out-of-state sellers with a physical presence in Illinois have nexus with the State
and incur either a Use Tax or Retailers’ Occupation Tax obligation on sales made to
Illinois purchasers depending on their selling activities. See 86 Ill. Adm. Code
131.107(a)(4), amended by emergency rule at 45 Ill. Reg. 9625, effective July 13, 2021.
An out-of-state seller is a seller located outside Illinois but that has or maintains within
Illinois, 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 the authority of the seller or its subsidiary, irrespective of whether such
place of business or agent or other representative is located here permanently or
temporarily, or whether such seller or subsidiary is licensed to do business in this State.
However, the ownership of property that is located at the premises of a printer with
which the seller has contracted for printing and that consists of the final printed product,
property that becomes a part of the final printed product, or copy from which the printed
product is produced shall not result in the seller being deemed to have or maintain an
office, distribution house, sales house, warehouse, or other place of business within this
State. See 86 Ill. Adm. Code Section 131.105, amended by emergency rule at 45 Ill.
Reg. 9625, effective July 13, 2021.
MARKETPLACE FACILITATORS
▪ When purchasing meals delivered from a restaurant, who is responsible for the collection of
the tax?
 Delivery service Restaurant

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August 6, 2021
▪ When purchasing tangible personal property from an online retailer through a marketplace
facilitator, who is responsible for the collection of the tax?
 The online retailer
 The marketplace facilitator
▪ When purchasing tangible personal property from an online retailer through a marketplace
facilitator, which party may claim a bad debt deduction?
 The online retailer
 The marketplace facilitator
 Neither
▪ How are a seller’s marketplace facilitator sales reported on the seller’s return?
 A subtraction from total sales
 Total sales are reported net of marketplace facilitator sales
 Other, please describe
DEPARTMENT’S RESPONSE
Food delivery services considered to be marketplace facilitators (meeting a tax
remittance threshold), must provide a certification to each food service establishment
that sells over its marketplace that it assumes the rights and duties of a retailer under
the Retailers’ Occupation Tax Act and all applicable local retailers' occupation taxes
administered by the Department. See 86 Ill. Adm. Code Section 131.107(c)(1)(C)(ii),
amended by emergency rule at 45 Ill. Reg. 9625, effective July 13, 2021; See also 35
ILCS 120/2-12(7).
After January 1, 2021, a marketplace facilitator that meets either of the
thresholds in Section 131.135(a) is considered a retailer engaged in the occupation of
selling at retail in Illinois and is liable for all applicable State and local retailers'
occupation taxes administered by the Department on all sales to Illinois purchasers
made over the marketplace, including its own sales and sales made over the
marketplace on behalf of marketplace sellers. See 86 Ill. Adm. Code Section
131.130(d); See also 86 Ill. Adm. Code Section 131.135(a), amended by emergency
rule at 45 Ill. Reg. 9625, effective July 13, 2021.
As would otherwise be provided to the marketplace seller, a marketplace
facilitator is entitled to any credits, deductions, or adjustments to the sales price. See 86
Ill. Adm. Code Section 131.145(h), amended by emergency rule at 45 Ill. Reg. 9625,
effective July 13, 2021.
Marketplace facilitators shall file returns and remit tax on sales made over the
marketplace to Illinois purchasers on behalf of marketplace sellers separately from any
sales made directly by the marketplace facilitator itself. Marketplace facilitators must
separately register with the Department to file and pay tax on their own sales; tax on
those sales shall be reported and paid on a return separate from the return filed on
behalf of marketplace sellers. [35 ILCS 120/2(c)]; See 86 Ill. Adm. Code Section
131.145(f), amended by emergency rule at 45 Ill. Reg. 9625, effective July 13, 2021.

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[1] TAXABLE ITEMS
 Precious metals purchased for investment
boots
 Safety equipment – Safety glasses

 Safety equipment – Steel toe
 Safety equipment – Hard hats

DEPARTMENT’S RESPONSE
Generally, gross receipts from the retail sale of precious metals for investment
purposes are subject to tax. However, gross receipts from the sales of legal tender,
currency, medallions, or gold or silver coinage issued by the State of Illinois, the
government of the United States of America, or the government of any foreign country,
and bullion are exempt from Retailers' Occupation Tax. See 86 Ill. Adm. Code Section
130.1910(c).
Generally, gross receipts from the retail sale of safety equipment purchased are
subject to tax. However, the manufacturing and assembling machinery and equipment
exemption includes hand tools, protective apparel, and fire and safety equipment used
or consumed within a manufacturing facility. See 86 Ill. Adm. Code 130.330(h)(2)(C).
DIGITAL ADVERTISING
▪ Does your state tax digital advertising under an excise tax separate from sales/use tax?
 Yes  No
▪ If YES, what is the tax rate?
▪ If YES, what is the tax base?
DEPARTMENT’S RESPONSE
No.
CHARGING STATIONS FOR ELECTRIC MOTOR VEHICLES
▪ Does your state have an exemption or exclusion for machinery and equipment used to equip
charging stations for electric motor vehicles?
 Yes

No
▪ Are the proceeds from charging stations for electric motor vehicles subject to sales/use tax?
 Yes

No
DEPARTMENT’S RESPONSE
No.
[71] MEDICAL EQUIPMENT, SUPPLIES, AND OTHER TRANSACTIONS BY
DOCTORS AND CLINICS

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 Personal protective equipment – Respirators
 Personal protective equipment – Ventilators
DEPARTMENT’S RESPONSE
There is no specific exemption relating to the purchase of medical equipment,
such as respirators and ventilators. However, the Retailers’ Occupation Tax Act does
contain an exemption for personal property sold to a governmental body, to a
corporation, society, association, foundation, or institution organized and operated
exclusively for charitable, religious, or educational purposes, or to a not-for-profit
corporation, society, association, foundation, institution, or organization that has no
compensated officers or employees and that is organized and operated primarily for the
recreation of persons 55 years of age or older. 35 ILCS 120/2-5(11). Until July 1, 2022,
tangible personal property sold to or used by a hospital owner that owns one or more
hospitals licensed under the Hospital Licensing Act or operated under the University of
Illinois Hospital Act, or a hospital affiliate that is not already exempt under another
provision of the Retailers’ Occupation Tax Act and meets the criteria for an exemption
under Section 2-9 of the Act, is exempt from taxation under the Act. 35 ILCS 120/2-9.
A medical appliance is an item that is used to directly substitute for a
malfunctioning part of the human body that is lost or diminished because of congenital
defects, trauma, infection, tumors or disease. A medical appliance is subject to
Retailers' Occupation Tax at the 1% rate, plus applicable local taxes. See 86 Ill. Adm.
Code 130.311(e)(1).
[74] COMMON MISTAKES CORPORATIONS MAKE IN FILING RETURNS AND REMITTING
TAXES
▪ What are the most common mistakes that corporations make in filing sales and use tax
returns
and
remitting
sales
and use taxes? For ease of presentation in a chart, please organize your response as a bullet
point list, as follows:
1.

2.

3.

and so on
DEPARTMENT’S RESPONSE

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The Illinois Department of Revenue has identified a large number of retailers who
have filed Form ST-1, with sales amounts reported on the lines used to report sales
subject to Illinois Use Tax. With the enactment of the Leveling the Playing Field for
Illinois Retail Act, some sales made on or after January 1, 2021, may be subject to
State and local retailers' occupation tax using destination sourcing for sales made to
purchasers in Illinois. See Compliance Alert 2021-05.
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,
Thomas Grudichak
Associate Counsel