What does Illinois require for a drop-shipped sale to be tax-exempt as a sale for resale, and when must a marketplace facilitator collect and remit Illinois sales tax on behalf of marketplace sellers?

Plain-English summary

This GIL is unusual in the same way several other Illinois "Miscellaneous" letters are: the requester was not asking about its own tax situation. It was a national publisher conducting its 15th recurring multistate "Third-Party Drop Shipment Survey" (previously published in 1990 and updated over a dozen times since, most recently 2018) plus a first-ever companion "Marketplace Facilitator/Seller Survey," sent to all 45 sales-tax states and DC and asking each to answer standardized questions and cite the code section it relied on for each answer.

On drop shipments (a Seller Corporation ships directly to a Buyer Corporation's customer, "Other Corporation," on Buyer's instructions), Illinois's answers were: an active registration or resale number on a Certificate of Resale is still preferred, but its absence only creates a rebuttable presumption against resale treatment -- other evidence, including a certificate describing the drop-shipment scenario and confirming the purchaser has no Illinois contacts requiring registration, can still support tax-exempt resale treatment. Illinois doesn't tax based on price paid by the buyer vs. the ultimate customer in a drop-ship chain (that scenario is "not applicable" under its rules), delivery in the seller's own equipment rather than by common carrier doesn't change the analysis, and shipping terms don't matter as long as the underlying sale is a valid sale for resale. A Direct Pay Certificate from the buyer takes the transaction out of drop-shipment treatment entirely and shifts to the Direct Pay Program rules instead (which exclude food/beverages and titled/registered property from "qualifying" property). Neither an affidavit from the ultimate customer nor that customer's own resale certificate, standing alone, satisfies the Certificate of Resale documentation required between the seller and its direct buyer -- the seller must make its own use-or-resale determination about its own buyer at the time of sale. An exempt organization still needs its own active Illinois exemption identification number to buy tax-free, regardless of who is installing or using the property.

On marketplace facilitators, Illinois defined the term (a party that both lists/advertises a marketplace seller's taxable property and collects/transmits payment for it, under 35 ILCS 120/1 and 86 Ill. Adm. Code 131.105) and gave a full effective-date and mechanics rundown: Use Tax Act nexus for marketplace facilitators began January 1, 2020, and Retailers' Occupation Tax Act liability began January 1, 2021. A facilitator that meets either of two thresholds -- $100,000 or more in cumulative Illinois gross receipts, or 200 or more separate Illinois transactions, counted together across the facilitator's own sales and those of the sellers on its marketplace, tested quarterly on a trailing 12-month basis -- becomes a retailer for Illinois Retailers' Occupation Tax purposes and must collect and remit state and local tax on all sales made through its marketplace, whether from out of state or not. Sourcing splits by whose sale it is: sales the facilitator makes on behalf of marketplace sellers are sourced to the destination (where the buyer takes delivery/possession); the facilitator's own inventory sales are sourced to the origin (where the inventory sits or the selling activity occurs), unless neither condition is met, in which case those too fall back to destination sourcing. A facilitator must register and file a return for its own direct sales separately from the return covering sales it makes on behalf of marketplace sellers, and must give each marketplace seller a certification that it is assuming the seller's Retailers' Occupation Tax collection/remittance duties (with specific required content: both parties' names/addresses/Illinois account IDs, the certification's effective date, a description of the taxes covered, and a signature). A facilitator that relies in good faith on incorrect taxability, sourcing, or exemption information supplied by a marketplace seller is not liable for the resulting error -- liability shifts to the marketplace seller instead, and Illinois is barred from collecting the same tax from both parties on one transaction. The same collection/remittance framework extends to the Automobile Renting Occupation Tax and applicable local occupation taxes, but a facilitator remains independently liable for any other taxes or fees (not administered by the Department) that it separately incurs. Illinois does not offer waivers from the facilitator-collection requirement once a threshold is met. Finally, on resale documentation for marketplace sellers themselves: a Certificate of Resale (or, for an unregistered reseller, an application for a resale number) is generally still required from a marketplace seller's own supplier to buy inventory tax-free, regardless of whether the marketplace seller sells exclusively through the marketplace, directly, or both -- unless the supplier itself lacks Illinois nexus, in which case no resale certificate is needed at all.

What this means for you

Sellers who ship inventory directly to a buyer's customer (drop shippers)

Get an active Illinois registration or resale number from your buyer whenever you can -- it's the safest documentation. If your buyer can't provide one (common when the buyer has no Illinois presence), a properly worded Certificate of Resale describing the drop-shipment arrangement can still support treating the sale as exempt, but you're relying on a rebuttable presumption rather than a bright-line rule, so keep the paperwork. Note that only your buyer's registration/resale status matters for your sale -- an affidavit or resale certificate from the ultimate customer down the chain does not substitute for documentation from your own direct buyer.

Marketplace facilitators (platforms that list sellers' goods and collect payment)

Once your combined Illinois gross receipts (yours plus your marketplace sellers') pass $100,000, or your combined Illinois transaction count passes 200, in a trailing 12-month period, you must register, collect, and remit Illinois state and local Retailers' Occupation Tax -- there's no waiver available. Source your own inventory sales to where the inventory sits or the selling activity happens (origin); source sales you're facilitating for marketplace sellers to where the customer takes delivery (destination). File your own direct sales on a separate return from the sales you handle for marketplace sellers, and send each marketplace seller the required certification. If a marketplace seller gives you wrong taxability, location, or exemption information and you rely on it in good faith, you're off the hook for the resulting tax error -- but keep records showing what you were told and when.

Marketplace sellers and remote retailers

If your marketplace facilitator is already collecting and remitting tax on your Illinois sales, you generally still need a Certificate of Resale (or, if unregistered, a resale-number application) from your own inventory supplier to buy tax-free as a reseller -- that requirement doesn't disappear just because your facilitator handles the retail-side tax. The one exception: if your supplier itself has no Illinois nexus, no resale certificate is needed either way.

Accountants and tax professionals researching multistate drop-shipment or marketplace-facilitator questions

This GIL is a rare case where Illinois answered a standardized set of questions with a citation for each answer, making it a useful one-stop map of the cited authorities: 86 Ill. Adm. Code 130.225, 130.1401, and 130.1405 for drop-shipment resale documentation; 35 ILCS 120/1, 2(c)-(i) and 86 Ill. Adm. Code Part 131 (131.105, 131.135, 131.145, 131.150) for marketplace facilitator thresholds, sourcing, certification, and liability protection. As with any GIL, it's not binding Department policy -- treat it as a guide to where to look, not as the final word on your own facts.

Common questions

Q: Do I need an active Illinois registration or resale number to buy for resale in a drop-shipment chain?
A: It's preferred, and its absence creates a rebuttable presumption that the sale isn't for resale -- but Illinois will accept other evidence, such as a Certificate of Resale describing the drop-shipment scenario and confirming the buyer has no Illinois contacts requiring registration, to rebut that presumption.

Q: What Illinois gross-receipts or transaction threshold triggers marketplace facilitator tax collection?
A: $100,000 or more in cumulative Illinois gross receipts, or 200 or more separate Illinois transactions, combining the facilitator's own sales and those of its marketplace sellers, tested quarterly over the preceding 12 months. Either threshold alone is enough.

Q: Once a marketplace facilitator meets a threshold, how does it source its own sales versus sales it makes for marketplace sellers?
A: Its own inventory sales are sourced at the origin (where the inventory or selling activity is located in Illinois); sales it facilitates on behalf of marketplace sellers are sourced at the destination (where the customer takes delivery or possession).

Q: If a marketplace seller gives a facilitator wrong tax information, who is liable for the shortfall?
A: The marketplace seller, not the facilitator -- as long as the facilitator relied on that information in good faith. Illinois cannot collect the same tax from both the facilitator and the marketplace seller on one transaction.

Q: Can a marketplace seller still buy its inventory tax-free as a reseller once its facilitator is collecting retail tax on its sales?
A: Generally yes, but it still needs its own Certificate of Resale (or a resale-number application if unregistered) from its supplier -- unless that supplier has no Illinois nexus, in which case no certificate is required at all.

Citations and references

Drop shipment / resale documentation:

• 86 Ill. Adm. Code 130.225 (resale presumption and documentation for drop shipments)
• 86 Ill. Adm. Code 130.1401 (use-or-resale determination made at time of sale)
• 86 Ill. Adm. Code 130.1405, 130.1415 (Certificate of Resale requirements; resale-number application)
• 86 Ill. Adm. Code 130.2500, 130.2505(c) (Direct Pay Program and its exclusions)
• 86 Ill. Adm. Code 130.2005, 130.2007, 130.2080 (exemption identification number for tax-exempt purchases)

Marketplace facilitators:

• 35 ILCS 120/1 (marketplace facilitator/seller definitions); 86 Ill. Adm. Code 131.105
• 35 ILCS 105/2, 120/3 (Use Tax Act nexus, effective Jan. 1, 2020)
• 35 ILCS 120/2(c), (d), (h), (i) (Retailers' Occupation Tax Act duties, effective Jan. 1, 2021)
• 86 Ill. Adm. Code 131.135(a), (c) ($100,000 / 200-transaction thresholds, tested quarterly)
• 35 ILCS 120/2-12(7); 86 Ill. Adm. Code 131.130(g), 270.115 (destination/origin sourcing)
• 86 Ill. Adm. Code 130.145(b), 131.145(b), (c) (separate registration/returns; certification content)
• 86 Ill. Adm. Code 131.150(b), (c) (good-faith reliance liability protection)
• 86 Ill. Adm. Code 131.107(c); ST 22-0002-PLR (facilitator remains liable for other, separately-incurred taxes/fees)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2023.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2023/ST-23-0006-GIL.pdf

Original ruling text

ST-23-0006-GIL 03/30/2023 MISCELLANEOUS
This letter responds to an annual survey. (This is a GIL.)
March 30, 2023

NAME1
ADDRESS
Dear Ms. XXX:
This letter is in response to your letter dated January 4, 2023, 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:

January 2023
Dear survey recipient,
In May 1990, the COMPANY published its First Edition of the Third-Party
Drop Shipment Survey. In subsequent years, over a dozen updates have
been published, with the most recent, the Fourteenth Edition, conducted in
2018. In these surveys, each of the forty-five states (and the District of
Columbia) that impose sales and use taxes were contacted with questions
based upon a third-party drop shipment scenario. All of the taxing
jurisdictions contacted for the survey responded.
Due to the popular reception of the survey, extensive legislative changes
since 2018, world impacts that prevented a 2020 survey, and increased
requests and need for a Fifteenth Edition, we are contacting you and other
taxing jurisdictions to conduct the survey once again. In addition, due to
legislative and regulatory

COMPANY/NAME1
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March 30, 2023
changes following the Wayfair decision as well as a longer interlude since
the last published edition, we are also conducting the first ever
Marketplace Facilitator/Seller Survey in conjunction with the Third-Party
Drop Shipment Survey.
As you go through the following scenarios and questions, please keep in
mind your answers will assist thousands of taxpayers in their desire to
comply with sales and use taxes when conducting business across the
country. Your responses are not only an invaluable tool to assist taxpayers
conducting business in your taxing jurisdiction, but also an important
reference guide as they navigate unknown and challenging tax scenarios
to help make important business decisions.
The COMPANY is indebted to you and all of the other taxing jurisdictions
for their full cooperation and assistance with these surveys and greatly
appreciate your help in achieving the goal of 100% participation, as we
have always achieved in the past.
Yours Very Truly,
NAME2
President
COMPANY DROP SHIPMENT SURVEY QUESTIONS 2023

SURVEY QUESTIONS:
▪ Please answer each question and provide the code section or
guidance on which the state relies to reach its conclusion in each
answer.
1.

Given that Buyer Corporation is not registered in, and has no nexus
(either physical or economic) with your state (State B), will your

COMPANY/NAME1
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March 30, 2023
state recognize the sale from Seller Corporation to Buyer
Corporation as a sale for resale not subject to sales or use tax in
your state? (“Yes” or “No”).
a.

b.

c.

If the answer is yes, what documentation will your state
accept as evidence that the sale from Seller Corporation to
Buyer Corporation is a sale for resale?
If Seller Corporation is required to collect and/or remit the
tax, is the tax calculated based on the price paid by Buyer
Corporation, or by the price paid by Other Corporation?
If Seller Corporation is required to collect and remit the tax,
and the tax is calculated based on the price paid by Other
Corporation, what is Seller Corporation required to do if it
does not know and has no right to know, the price paid by
the Other Corporation?

2.

If Seller Corporation delivers in its own equipment, rather than by
common carrier, does this affect the Seller Corporation’s tax
requirements?

3.

Do the shipping terms of sale matter in the taxation of this type of
transaction? If so, please explain.

4.

What are the tax consequences if Seller Corporation receives a
State A Direct Pay Certificate from Buyer Corporation instead of a
State A resale certificate?

5.

If Other Corporation is a consumer, would the execution of an
affidavit (see Exhibit A) from Other Corporation to Buyer
Corporation, furnished to Seller Corporation subsequent to the sale,
be sufficient to relieve Seller Corporation from further responsibility
or liability for your state’s tax?

6.

If Other Corporation is reselling as opposed to consuming, can
Buyer Corporation provide Seller Corporation with Other
Corporation’s resale certificate? If either Buyer Corporation or
Other Corporation is an exempt entity or purchasing for an exempt
purpose other than for resale, what documentation will your state
accept as evidence that the sale is exempt?

7.

If Other Corporation is installing the items shipped in the
performance of a construction contract with an exempt agency in
your state, what are the tax requirements for Seller Corporation?

COMPANY/NAME1
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March 30, 2023
8.

In a Marketplace Facilitator/Marketplace Seller business
arrangement, does the Marketplace Seller have the same tax
requirements as the Seller Corporation in a third party drop ship
arrangement in your state?
COMPANY MARKETPLACE FACILITATOR/SELLER SURVEY
QUESTIONS 2023

SURVEY QUESTIONS:
▪

Please answer each question and provide the code section or
guidance on which the state relies to reach its conclusion in
each answer.

1.

What is your state’s definition of a Marketplace Facilitator?

2.

When did your state’s Marketplace Facilitator law become
effective?
a.
If the effective date of your state’s Marketplace Facilitator
law has changed, please explain what date change(s) have
been made (e.g., indicate the effective date under a prior
version of the law).

3.

What threshold(s) must be exceeded by the Marketplace Facilitator
in order for it to be required to collect and remit sales/use tax?
a.
If the threshold(s) for Marketplace Facilitators have changed,
please explain what changes have been made.

4.

Is an out-of-state Marketplace Facilitator required to collect and
remit sales tax or seller’s use tax?
a.
Are there specific circumstances which determine whether
an out-of-state Marketplace Facilitator should collect sales

COMPANY/NAME1
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March 30, 2023

b.

tax vs. seller’s use tax?
If so, what are those
circumstances?
Are there different rates that could apply depending on the
Marketplace Facilitator’s requirement to collect sales tax vs.
seller’s use tax?

5.

Is a Marketplace Facilitator required to obtain a separate
registration for sales made on behalf of marketplace sellers from
the Marketplace Facilitator’s registration for its own direct sales?

6.

Is a Marketplace Facilitator required to identify sales made on
behalf of marketplace sellers separately from its own direct sales
on its return?

7.

With regard to the Marketplace Facilitator’s reporting of facilitated
sales on its return:
a.
Must the Marketplace Facilitator report facilitated sales on
the same return as its direct sales?
b.
Can the Marketplace Facilitator file a separate return for any
third-party sales it facilitates?

8.

Is the Marketplace Facilitator required to provide certification to a
Marketplace Seller that the Marketplace Facilitator will collect and
remit tax on behalf of the Marketplace Seller?
a.
If yes, what language must be included on the Marketplace
Facilitator’s certification to the Marketplace Seller to be
deemed acceptable by your jurisdiction?

9.

Can a Marketplace Facilitator rely on the Marketplace Seller’s tax
decisions, including:
a.
Taxability of the products and services?
b.
State and local location of the delivery/use of the product or
service?
c.
Exemption of the customer and/or exempt use of product or
service?

10.

If the Marketplace Facilitator cannot rely on the Marketplace
Seller’s tax decisions:
a.
Is there joint and several liability for the sales/use tax due on
the sale of goods or services through the marketplace?
b.
What protections does the Marketplace Facilitator have if an
error was made by the Marketplace Seller?

11.

Aside from sales and use tax, is the Marketplace Facilitator
required to collect any other taxes or fees (e.g., accommodation

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March 30, 2023
taxes, food and beverage taxes, electronic waste fees, tire disposal
fees, 911 surcharges)?
a.
If so, which other taxes or fees must the Marketplace
Facilitator collect?
12.

Does your state allow the Marketplace Facilitator and/or
Marketplace Seller to request a waiver from a requirement that the
Marketplace Facilitator must collect tax for sales made through the
marketplace?
a.
If so, what is the procedure for requesting a waiver?
b.
What documentation should the Marketplace Facilitator
maintain if it has been granted a waiver from collecting tax?

13.

If a Marketplace Seller makes sales exclusively through a
marketplace to customers in your state such that any sales tax is
collected/remitted by the
Marketplace Facilitator, what documentation should the
Marketplace Seller provide to its supplier of inventory to exempt the
purchase from sales tax as a sale for resale?
a.
Does your response differ depending on whether the
Marketplace Seller has nexus?

14.

If a Marketplace Seller makes direct sales and sells through a
marketplace to customers in your state, what documentation should
the Marketplace Seller provide to its supplier of inventory to exempt
the purchase from sales tax as a sale for resale?
a.
Does your response differ depending on whether the
Marketplace Seller has nexus?

DEPARTMENT’S RESPONSE - COMPANY DROP SHIPMENT SURVEY QUESTIONS
2023:

COMPANY/NAME1
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March 30, 2023
1.

Given that Buyer Corporation is not registered in, and has no nexus (either
physical or economic) with your state (State B), will your state recognize the sale
from Seller Corporation to Buyer Corporation as a sale for resale not subject to
sales or use tax in your state? (“Yes” or “No”).

DEPARTMENT’S RESPONSE
While active registration or resale numbers on Certificates of Resale are still
preferred, the Illinois Retailers' Occupation Tax Act provides that, “failure to present an
active registration number or resale number and a certification to the seller that a sale is
for resale creates a presumption that a sale is not for resale. This presumption may be
rebutted by other evidence that all of the seller's sales are sales for resale or that a
particular sale is a sale for resale.” See 86 Ill. Adm. Code 130.225(d).
1a.

If the answer is yes, what documentation will your state accept as evidence that
the sale from Seller Corporation to Buyer Corporation is a sale for resale?

DEPARTMENT’S RESPONSE
Documentation could include certifications from purchasers on Certificates of
Resale in lieu of resale numbers that describe the drop-shipment situation. These
certificates should comply with the requirements set out in 86 Ill. Adm. Code
130.1405(b) and state that purchasers have no contact with Illinois that would require
them to be registered and that they do not have an Illinois resale number. This would
constitute evidence that this particular sale is a sale for resale despite the fact that no
registration number or resale number is provided. See 86 Ill. Adm. Code 130.225(d).
For information regarding requirements for Certificates of Resale see 86 Ill. Adm. Code
130.1405(b).
1b.

If Seller Corporation is required to collect and/or remit the tax, is the tax
calculated based on the price paid by Buyer Corporation, or by the price paid by
Other Corporation?

DEPARTMENT’S RESPONSE
Not applicable.
1c.

If Seller Corporation is required to collect and remit the tax, and the tax is
calculated based on the price paid by Other Corporation, what is Seller
Corporation required to do if it does not know and has no right to know, the price
paid by the Other Corporation?

DEPARTMENT’S RESPONSE

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March 30, 2023
Not Applicable. If the Buyer Corporation did not collect Illinois Use Tax from its
customers, the customers would have to pay their tax liability directly to the Department
of Revenue. See 86 Ill. Adm. Code 130.225(c).
2.

If Seller Corporation delivers in its own equipment, rather than by common
carrier, does this affect the Seller Corporation’s tax requirements?

DEPARTMENT’S RESPONSE
No, assuming the seller corporation is registered with the Department of
Revenue. See 86 Ill. Adm. Code 130.225.
3.

Do the shipping terms of sale matter in the taxation of this type of transaction? If
so, please explain.

DEPARTMENT’S RESPONSE
No, assuming the sale from Seller Corporation to Buyer Corporation is a valid
sale for resale.
4.

What are the tax consequences if Seller Corporation receives a State A Direct
Pay Certificate from Buyer Corporation instead of a State A resale certificate?

DEPARTMENT’S RESPONSE
If a Direct Pay Certificate is provided then this is no longer a drop shipment
situation. Applicants who have been approved to participate in the Direct Payment
Program will be issued a Direct Pay Permit (permit) by the Department. Retailers who
are provided with a permit from a permit holder purchasing qualifying tangible personal
property are relieved of their obligation to remit the Retailers' Occupation Tax and are
also relieved of the obligation to collect Use Tax
(including any local occupation tax reimbursements of taxes administered by the
Department) incurred on the sale. See 86 Ill. Adm. Code 130.2500. Qualifying tangible
personal property does not include food or beverages, or tangible personal property
required to be titled or registered with an agency of federal or state government. See
86 Ill. Adm. Code 130.2505(c).
5.

If Other Corporation is a consumer, would the execution of an affidavit (see
Exhibit A) from Other Corporation to Buyer Corporation, furnished to Seller
Corporation subsequent to the sale, be sufficient to relieve Seller Corporation
from further responsibility or liability for your state’s tax?

DEPARTMENT’S RESPONSE

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March 30, 2023
A person who sells tangible personal property to a purchaser who may use or
consume such property but who also may resell such property, must determine, at the
time when it sells the property to such purchaser, whether the purchaser is buying the
property "for use or consumption" or whether the purchaser is buying the property "for
resale". See 86 Ill. Adm. Code 130.1401. An affidavit from the Other Corporation does
not satisfy the resale documentation requirement for the sale between the Seller
Corporation and the Buyer Corporation but may constitute other evidence that the sale
was for resale. See 86 Ill. Adm. Code 130.1405.
6.

If Other Corporation is reselling as opposed to consuming, can Buyer
Corporation provide Seller Corporation with Other Corporation’s resale
certificate? If either Buyer Corporation or Other Corporation is an exempt entity
or purchasing for an exempt purpose other than for resale, what documentation
will your state accept as evidence that the sale is exempt?

DEPARTMENT’S RESPONSE
See response to 5. A seller must determine at the time of sale whether the sale
is for “use or consumption” or for “resale”. 86 Ill. Adm. Code 130.1401. A resale
certificate from the Other Corporation does not satisfy the resale documentation
requirement for the sale between the Seller Corporation and the Buyer Corporation.
See 86 Ill. Adm. Code 130.1405. An entity which would otherwise qualify for taxexempt status on its purchases of tangible personal property for use or consumption
(refer to Section 130.2005 and Section 130.2080) cannot make tax-free purchases
unless it has an active exemption identification number issued by the Department. See
86 Ill. Adm. Code 130.2007.
7.

If Other Corporation is installing the items shipped in the performance of a
construction contract with an exempt agency in your state, what are the tax
requirements for Seller Corporation?

DEPARTMENT’S RESPONSE
The manner of use of the property by Other Corporation does not satisfy the
resale documentation requirement for the sale between the Seller Corporation and the
Buyer Corporation. See 86 Ill. Adm. Code 130.1405.
8.

In a Marketplace Facilitator/Marketplace Seller business arrangement, does the
Marketplace Seller have the same tax requirements as the Seller Corporation in
a third party drop ship arrangement in your state?

DEPARTMENT’S RESPONSE

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March 30, 2023
Assuming the Marketplace Facilitator has met a tax remittance threshold, the
Marketplace Facilitator would be responsible for remitting any tax due on sales through
the marketplace. The Marketplace Facilitator would have the same tax requirements as
the Seller Corporation in a third-party drop ship arrangement. A Marketplace Seller
shall furnish to the Marketplace Facilitator information that is necessary for the
Marketplace Facilitator to correctly remit tax on each sale made on its behalf over the
marketplace. The information may include a certification that an item being sold is
taxable, not taxable, exempt from taxation, or taxable at a specified rate. See 86 Ill.
Adm. Code 131.150(b).

DEPARTMENT’S RESPONSE - COMPANY MARKETPLACE FACILITATOR/SELLER
SURVEY QUESTIONS 2023:

1.

What is your state’s definition of a Marketplace Facilitator?

DEPARTMENT’S RESPONSE
A Marketplace Facilitator is a person who, pursuant to an agreement with an
unrelated third-party marketplace seller, directly or indirectly through one or more
affiliates, facilitates a retail sale by an unrelated third-party marketplace seller by: (1)
listing or advertising for sale, by the marketplace seller in a marketplace, tangible
personal property that is subject to tax under the Retailers' Occupation Tax Act; and (2)
either directly or indirectly, through agreements or
arrangements with third parties, collecting payment from the customer and transmitting
that payment to the marketplace seller regardless of whether the marketplace facilitator
receives compensation or other consideration in exchange for its services. 35 ILCS
120/1; 86 Ill. Adm. Code 131.105.
2.

When did your state’s Marketplace Facilitator law become effective?

DEPARTMENT’S RESPONSE

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Under the Use Tax Act, the law became effective on January 1, 2020. See 35
ILCS 105/2. Under the Retailers’ Occupation Tax Act, the law became effective on
January 1, 2021. See 35 ILCS 120/2.
2a.

If the effective date of your state’s Marketplace Facilitator law has changed,
please explain what date change(s) have been made (e.g., indicate the effective
date under a prior version of the law).

DEPARTMENT’S RESPONSE
Effective January 1, 2020, Illinois expanded the Use Tax Act nexus to include
marketplace facilitators that met certain thresholds. See 35 ILCS 120/3.
Effective January 1, 2021, under the Retailers’ Occupation Tax Act 35 ILCS
120/2(c), marketplace facilitators who met a threshold test became liable for the State
and local taxes administered by the Department.
3.

What threshold(s) must be exceeded by the Marketplace Facilitator in order for it
to be required to collect and remit sales/use tax?

DEPARTMENT’S RESPONSE
Beginning January 1, 2021, a marketplace facilitator is considered a retailer
engaged in the occupation of selling at retail in Illinois for purposes of the Retailers’
Occupation Tax Act if either of following tax remittance thresholds is met:
1)

2)

The cumulative gross receipts from sales of tangible personal property to
purchasers in Illinois made through the marketplace by the marketplace
facilitator and marketplace sellers are $100,000 or more; or
The marketplace facilitator and marketplace sellers selling through the
marketplace cumulatively enter into 200 or more separate transactions
through the marketplace for the sale of tangible personal property to
purchasers in Illinois.

See 86 Ill. Adm. Code 131.135(a).
The marketplace facilitator must determine on a quarterly basis, whether it meets
either threshold for the proceeding 12-month period. See 86 Ill. Adm. Code 131.135(c).
3a.

If the threshold(s) for Marketplace Facilitators have changed, please explain what
changes have been made.

DEPARTMENT’S RESPONSE
No changes have been made. See 86 Ill. Adm. Code 131.135(c).

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4.

Is an out-of-state Marketplace Facilitator required to collect and remit sales tax or
seller’s use tax?

DEPARTMENT’S RESPONSE
If the Marketplace Facilitator meets one of the threshold tests in 86 Ill. Adm.
Code 131.135(a), it is considered a retailer engaged in the occupation of selling at retail
in Illinois and
is required to remit all State and local retailers' occupation taxes which are administered
by the Department.
4a.

Are there specific circumstances which determine whether an out-of-state
Marketplace Facilitator should collect sales tax vs. seller’s use tax? If so, what
are those circumstances?

DEPARTMENT’S RESPONSE
If the Marketplace Facilitator meets either of the thresholds in 86 Ill. Adm. Code
131.135(a), it must remit the State and local Retailers’ Occupation Tax on sales made
over the marketplace on behalf of marketplace sellers, as well as its own sales. See 86
Ill. Adm. Code 131.145.
4b.

Are there different rates that could apply depending on the Marketplace
Facilitator’s requirement to collect sales tax vs. seller’s use tax?

DEPARTMENT’S RESPONSE
Taxes for sales made by a marketplace facilitator on behalf of a marketplace
seller are incurred at the tax rate in effect at the Illinois location to which the tangible
personal property is shipped or delivered or at which possession is taken by the
purchaser (destination rate). This applies to sales made through a marketplace by:
•
•

Illinois retailers
Out-of-state retailers (with or without a physical presence in Illinois)

See 35 ILCS 120/2-12(7).
Sales made over the marketplace by a marketplace facilitator itself are taxed as
follows:
•

For sales that are fulfilled from inventory located in Illinois and for which selling
activities do not otherwise occur in Illinois, the State and local retailers' occupation
taxes are incurred at the tax rate in effect at the location of the Illinois inventory

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•
•

(origin rate).
For sales for which selling activities otherwise occur in Illinois, the State and local
retailers' occupation taxes are incurred at the tax rate in effect at the location of the
selling activities (origin rate).
For sales that are not fulfilled from inventory located in Illinois and for which selling
activities do not otherwise occur in Illinois, the State and local retailers' occupation
taxes are incurred at the tax rate in effect at the Illinois location to which the tangible
personal property is shipped or delivered or at which possession is taken by the
purchaser (destination rate).

See 86 Ill. Adm. Code 131.130(g); 86 Ill. Adm. Code 270.115.
5.

Is a Marketplace Facilitator required to obtain a separate registration for sales
made on behalf of marketplace sellers from the Marketplace Facilitator’s
registration for its own direct sales?

DEPARTMENT’S RESPONSE
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. 86 Ill. Adm. Code
130.145(b).
6.

Is a Marketplace Facilitator required to identify sales made on behalf of
marketplace sellers separately from its own direct sales on its return?

DEPARTMENT’S RESPONSE
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. 35 ILCS 120/2(c).
7.
7a.

With regard to the Marketplace Facilitator’s reporting of facilitated sales on its
return:
Must the Marketplace Facilitator report facilitated sales on the same return as its
direct sales?

DEPARTMENT’S RESPONSE
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. See 86 Ill. Adm. Code
131.145(b).

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7b.

Can the Marketplace Facilitator file a separate return for any third-party sales it
facilitates?

DEPARTMENT’S RESPONSE
A marketplace facilitator is considered a retailer engaged in the occupation of
selling at retail in Illinois. As a retailer, the marketplace facilitator is responsible for filing
a return and is liable for all applicable State and local retailers' occupation taxes
administered by the Department on all sales to Illinois purchasers made over its
marketplace on behalf of marketplace sellers. See 86 Ill. Adm. Code 130.145(b) and
(d).
8.

Is the Marketplace Facilitator required to provide certification to a Marketplace
Seller that the Marketplace Facilitator will collect and remit tax on behalf of the
Marketplace Seller?

DEPARTMENT’S RESPONSE
A marketplace facilitator shall certify to each marketplace seller:
1) That the marketplace facilitator 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 with respect to sales made by the
marketplace seller through the marketplace; and
2) That the marketplace facilitator will remit taxes imposed by the Retailers’
Occupation Tax Act and all applicable local retailers' occupation taxes
administered by the Department for sales made through the marketplace.
See 35 ILCS 120/2(d).
8a.

If yes, what language must be included on the Marketplace Facilitator’s
certification to the Marketplace Seller to be deemed acceptable by your
jurisdiction?

DEPARTMENT’S RESPONSE
All certificates required under shall include the following information:
1) the marketplace seller's name, DBA (if applicable), address, and Illinois Account
ID for sales tax or FEIN, or SSN if the marketplace seller does not have an
Illinois Account ID or FEIN;
2) the marketplace facilitator's name, address, and Illinois Account ID used for sales
on behalf of its marketplace sellers;
3) the effective date of the certification;

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4) a description of the taxes being collected and remitted by the marketplace
facilitator;
5) the marketplace facilitator's signature and date of signing; and
6) any additional information that the Department may reasonably require.
See 86 Ill. Adm. Code 131.145(c).
9.
9a.

Can a Marketplace Facilitator rely on the Marketplace Seller’s tax decisions,
including:
Taxability of the products and services?

DEPARTMENT’S RESPONSE
Marketplace facilitators are not liable for having charged and remitted an
incorrect amount of State and local retailers' occupation tax if, at the time of the sale,
the tax is computed based on incorrect information provided to the marketplace
facilitator by a marketplace seller. See 35 ILCS 120/2(c); 86 Ill. Adm. Code 131.150(b)
and (c).
9b.

State and local location of the delivery/use of the product or service?

DEPARTMENT’S RESPONSE
See response to 9(a).
9c.

Exemption of the customer and/or exempt use of product or service?

DEPARTMENT’S RESPONSE
See response to 9(a).
10.
10a.

If the Marketplace Facilitator cannot rely on the Marketplace Seller’s tax
decisions:
Is there joint and several liability for the sales/use tax due on the sale of goods or
services through the marketplace?

DEPARTMENT’S RESPONSE
The Department is prohibited from collecting State and local retailers' occupation
taxes from both the marketplace seller and the marketplace facilitator on the same
transaction. See 35 ILCS 120/2(h). If, for any reason, the Department is prohibited
from enforcing the marketplace facilitator's duty under this Act to remit taxes pursuant to
this Section, the duty to remit such taxes remains with the marketplace seller. See 35
ILCS 120/2(i).

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10b.

What protections does the Marketplace Facilitator have if an error was made by
the Marketplace Seller?

DEPARTMENT’S RESPONSE
A marketplace facilitator that relies in good faith on the information provided in
subsection (b) by a marketplace seller shall be relieved of liability for the tax on that
transaction. In this case, a marketplace seller is subject to audit on that transaction and
shall be liable for any resulting State and local retailers' occupation taxes due. See 86
Ill. Adm. Code 131.150(c).
11.

11a.

Aside from sales and use tax, is the Marketplace Facilitator required to collect
any other taxes or fees (e.g., accommodation taxes, food and beverage taxes,
electronic waste fees, tire disposal fees, 911 surcharges)?
If so, which other taxes or fees must the Marketplace Facilitator collect?

DEPARTMENT’S RESPONSE
The rules established for marketplace facilitators apply to the remittance of State
Retailers' Occupation Tax, Automobile Renting Occupation Tax, local retailers'
occupation taxes, and local automobile renting occupation taxes administered by the
Department. Marketplace facilitators that incur other taxes or fees administered by the
Department, or other taxes not administered by the Department, remain liable for the
remittance of those taxes to the Department or other taxing authority. See 86 Ill. Adm.
Code 131.107(c), and ST 22-0002-PLR.
12.

12a.

Does your state allow the Marketplace Facilitator and/or Marketplace Seller to
request a waiver from a requirement that the Marketplace Facilitator must collect
tax for sales made through the marketplace?
If so, what is the procedure for requesting a waiver?

DEPARTMENT’S RESPONSE
Marketplace facilitators meeting either of the thresholds in Section 131.135(a)
are required to register with the Department, file returns and remit tax for all sales made
over the marketplace to Illinois purchasers, including their own sales and sales made on
behalf of marketplace sellers. Illinois does not allow waivers of this requirement.
12b.

What documentation should the Marketplace Facilitator maintain if it has been
granted a waiver from collecting tax?

DEPARTMENT’S RESPONSE

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See answer to 12.
13.

If a Marketplace Seller makes sales exclusively through a marketplace to
customers in your state such that any sales tax is collected/remitted by the
Marketplace Facilitator, what documentation should the Marketplace Seller
provide to its supplier of inventory to exempt the purchase from sales tax as a
sale for resale?

DEPARTMENT’S RESPONSE
Generally, a Certificate of Resale is required for proof that no tax is due on any
sale that is made tax free as a sale for resale. The purchaser, at the seller’s request,
must provide the information that is needed to complete this certificate. If the supplier
does not have nexus with Illinois, no resale certificate is necessary. See 86 Ill. Adm.
Code 130.1405.
13a.

Does your response differ depending on whether the Marketplace Seller has
nexus?

DEPARTMENT’S RESPONSE
No. See answer to 13.
14.

If a Marketplace Seller makes direct sales and sells through a marketplace to
customers in your state, what documentation should the Marketplace Seller
provide to its supplier of inventory to exempt the purchase from sales tax as a
sale for resale?

DEPARTMENT’S RESPONSE
Generally, a Certificate of Resale is required for proof that no tax is due on any
sale that is made tax free as a sale for resale. The purchaser, at the seller’s request,
must provide the information that is needed to complete this certificate. See 86 Ill. Adm.
Code 130.1405. If the purchaser is not registered with the Department as a taxpayer
but claims to be a reseller of the
tangible personal property in such a way that such resales are not taxable, such
purchaser who will always resell the property shall apply to the Department for a resale
number. Such applicant shall state facts which will show the Department why such
applicant is not liable for tax on any of its resales and shall furnish such additional
information as the Department may reasonably require. If the supplier does not have
nexus with Illinois, no resale certificate is necessary. See 86 Ill. Adm. Code 130.1415.
14a.

Does your response differ depending on whether the Marketplace Seller has
nexus?

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DEPARTMENT’S RESPONSE
No. See answer to 14.
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,

Tom Grudichak
Associate Counsel
TG:dlb