Is a mobile app that lets truck drivers buy discounted fuel from partner fuel stops -- without itself selling, holding, or delivering the fuel -- a 'marketplace facilitator' that must collect and remit Illinois sales and use tax?

Plain-English summary

An attorney wrote to the Illinois Department of Revenue on behalf of an out-of-state company (referred to here as Company) that operates a free mobile app for independent owner-operator truck drivers and small fleets ("operators"). The app itself is free to download and use, and Company does not charge operators any fees to use it. The app lets operators buy fuel at a discounted price from fuel stops that have partnered with Company, because those fuel stops want more business from operators and are willing to sell fuel to app users at a discount.

When an operator stops at a partnered fuel stop, the operator opens the app, selects that stop, and the app generates a numeric code unique to that operator and that fuel stop. The clerk verifies the code, turns on the pump, and once the fuel is pumped, the app charges the operator's debit or credit card on file; the operator can then get an emailed or paper receipt. Company said it does not itself sell, purchase, distribute, receive, import, supply, use, produce, refine, blend, compound, or manufacture fuel, and does not hold any fuel inventory. According to Company, the fuel stops sell the fuel to operators, receive the sale proceeds, pay all applicable per-gallon fuel tax, and collect, report, and remit all applicable sales tax themselves. Company said it earns money solely from commissions the fuel stops pay it when operators use the app to buy discounted fuel.

Company argued in its letter that it should not be liable for Illinois sales tax on motor fuel (35 ILCS 120/2d; 55 ILCS 5/5-1035.1; 65 ILCS 5/8-11-2/3) because it is not itself engaged in the business of selling motor fuel in Illinois, and that it should not qualify as a "marketplace facilitator" liable for sales and use tax under 35 ILCS 120/1, because it is merely advertising the fuel stops' fuel rather than facilitating retail sales the way a marketplace facilitator does. Company asked the Department to confirm whether it is liable for sales and use tax, responsible for remitting it, or required to obtain any state sales/use tax licenses.

The Department's response walks through the Retailers' Occupation Tax Act (which taxes persons engaged in selling tangible personal property at retail, 86 Ill. Adm. Code 130.101) and the Use Tax Act (which taxes the privilege of using property purchased at retail, 86 Ill. Adm. Code 150.101) -- together commonly called Illinois "sales tax." It then explains the marketplace facilitator regime: a "marketplace" is a physical or electronic place, forum, platform, or application through which a "marketplace seller" sells or offers to sell items (35 ILCS 120/1; 86 Ill. Adm. Code 131.105); a "marketplace facilitator" is a person who, under an agreement with an unrelated third-party marketplace seller, facilitates a retail sale by listing or advertising the seller's taxable tangible personal property and (directly or indirectly, through agreements or arrangements with third parties) collects payment from the customer and transmits it to the marketplace seller, regardless of whether it is compensated for that service. Since January 1, 2021, a marketplace facilitator meeting either of two thresholds -- $100,000 or more in cumulative gross receipts from Illinois sales made through the marketplace, or 200 or more separate transactions -- is treated as a retailer engaged in the business of selling at retail in Illinois (86 Ill. Adm. Code 131.135(a)) and must register, file returns, and remit state and local Retailers' Occupation Tax on all sales made through the marketplace, including the marketplace seller's sales (86 Ill. Adm. Code 131.145(a), (c)). A marketplace seller is generally not liable for those taxes itself (86 Ill. Adm. Code 131.145(b), 131.150(a)), unless it gives the facilitator incorrect information (131.145(d)); the Department cannot collect the same tax from both the facilitator and the seller on the same transaction (35 ILCS 120/2(h); 86 Ill. Adm. Code 131.145(k), 131.150(h)). The Department also noted the 131 rules only govern state and local Retailers' Occupation Tax remittance -- a marketplace seller remains separately liable for any other taxes or fees the Department (or another taxing authority) administers (86 Ill. Adm. Code 131.107(c)).

Rather than applying this framework to Company's specific facts, the Department explained that it has recently seen a number of similar arrangements where companies provide new services to established businesses through apps -- for example connecting consumers to hotel rooms, vacation rentals, and parking spaces -- and that because these arrangements are unique, the Department needs a complete and thorough explanation of the actual contractual relationship between the parties before it can classify them. Based on the limited facts in the letter -- including that "the app charges the debit card or credit card on file" once fuel is pumped, while the fuel stops receive the sale proceeds -- the Department said it could not determine the exact nature of the arrangement between a fuel stop and Company, and therefore could not say in a GIL whether Company is liable for remitting sales and use tax or required to register for it. The Department invited Company to request a binding Private Letter Ruling instead, under 2 Ill. Adm. Code 1200.110.

What this means for you

Fuel-discount, rebate, and referral apps serving truckers or other drivers

If your app connects drivers to fuel stops (or similar retailers) for a discount, and you take a commission rather than selling the product yourself, this GIL shows the two live legal questions: (1) are you engaged in the business of selling motor fuel yourself (probably not, if you never buy, hold, or sell fuel), and (2) are you a "marketplace facilitator" because you list/advertise the fuel stop's product and are involved -- even indirectly, through agreements or arrangements with third parties -- in collecting the customer's payment and transmitting it to the seller. The Department did not resolve question (2) here because the letter's description of the payment flow (the app charging the customer's card, while the fuel stop receives the proceeds) left the actual contractual arrangement unclear. If your app's payment mechanics work the same way, expect the Department to want the same level of contractual detail before giving you a real answer.

Other app-based platforms connecting consumers to hotels, vacation rentals, parking, and similar services

The Department expressly flagged that it is seeing more of these hybrid app arrangements and evaluates them case by case based on the actual contracts, not just a general description. If your business model resembles Company's -- you advertise/list a third party's product or service and are involved in the payment flow, but argue you're "just" a marketing or payment-processing layer -- do not assume you're safely outside the marketplace facilitator definition; the Department's answer will turn on facts this GIL didn't have.

Accountants and tax professionals

This GIL is a useful primer on the marketplace facilitator/marketplace seller framework (86 Ill. Adm. Code 131) and the $100,000-receipts / 200-transactions economic nexus thresholds (131.135(a)), but it resolves nothing about this particular taxpayer's liability. Because this is a GIL, not a PLR, clients with a similar fuel-discount, rebate, or app-facilitated sales model need their own binding PLR under 2 Ill. Adm. Code 1200.110 -- and should be prepared to hand over the actual agreements with the retailers/fuel stops, since that's what the Department said it needed here.

Common questions

Q: Did the Department decide whether this fuel-discount app company is a "marketplace facilitator"?
A: No. The Department explained the Retailers' Occupation Tax, Use Tax, and marketplace facilitator rules in detail, but said that based on the limited information provided it could not determine the exact nature of the arrangement between the fuel stops and the company, and so could not say in a GIL whether the company is liable for sales and use tax or must register. It invited the company to request a binding Private Letter Ruling instead.

Q: What is a "marketplace facilitator" under Illinois law?
A: Per 35 ILCS 120/1 and 86 Ill. Adm. Code 131.105, a marketplace facilitator is a person who, under an agreement with an unrelated third-party marketplace seller, facilitates a retail sale of taxable tangible personal property by listing or advertising it in a marketplace, and who -- directly or indirectly, including through agreements or arrangements with third parties -- collects payment from the customer and transmits it to the marketplace seller, regardless of whether it's compensated for that service.

Q: When must a marketplace facilitator register and collect Illinois sales tax?
A: Since January 1, 2021, a marketplace facilitator is treated as a retailer engaged in selling at retail in Illinois, and must register, file returns, and remit state and local Retailers' Occupation Tax on all marketplace sales, if it meets either economic nexus threshold under 86 Ill. Adm. Code 131.135(a): $100,000 or more in cumulative gross receipts from Illinois sales made through the marketplace (by the facilitator and marketplace sellers combined), or 200 or more separate transactions into Illinois.

Q: If a marketplace facilitator collects and remits the tax, is the marketplace seller (here, the fuel stop) also on the hook?
A: Generally no. Per 86 Ill. Adm. Code 131.145(b) and 131.150(a), a marketplace seller is generally not liable for state and local Retailers' Occupation Tax on sales made through the marketplace, unless it gave the facilitator incorrect information (131.145(d)). The Department is barred from collecting the same tax from both the facilitator and the seller on the same transaction (35 ILCS 120/2(h)).

Q: Why didn't the Department just answer the company's question?
A: Because the company asked the Department to apply the law to its own specific facts, which calls for a binding Private Letter Ruling (2 Ill. Adm. Code 1200.110), not a GIL. The Department said arrangements like this -- apps that advertise a third party's product and are somehow involved in the payment flow -- are unique enough that it needs the actual contracts between the parties before it can classify the relationship, and a GIL (2 Ill. Adm. Code 1200.120) is not a vehicle for that fact-specific determination.

Citations and references

Statutes:

• 35 ILCS 120/1 (Retailers' Occupation Tax Act; definitions of marketplace, marketplace facilitator, marketplace seller)
• 35 ILCS 120/2(h) (bar on collecting Retailers' Occupation Tax from both marketplace facilitator and marketplace seller on same transaction)
• 35 ILCS 120/2d (sales tax on motor fuel)
• 55 ILCS 5/5-1035.1 (county motor fuel tax)
• 65 ILCS 5/8-11-2/3 (municipal motor fuel tax)

Regulations:

• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax imposition)
• 86 Ill. Adm. Code 131.105 (definitions: marketplace, marketplace facilitator, marketplace seller)
• 86 Ill. Adm. Code 131.107(c) (other taxes/fees remain marketplace seller's own responsibility)
• 86 Ill. Adm. Code 131.135(a) (economic nexus thresholds for marketplace facilitators)
• 86 Ill. Adm. Code 131.145(a), (c), (d), (k) (marketplace facilitator registration, filing, audit, and liability)
• 86 Ill. Adm. Code 131.150(a), (h) (marketplace seller liability)
• 86 Ill. Adm. Code 150.101 (Use Tax imposition)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedure)

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/st23-0037-gil.pdf

Original ruling text

ST-23-0037-GIL 11/17/2023 RETAILERS’ OCCUPATION TAX
This letter provides information regarding Retailers’ Occupation Tax collection
obligation of Marketplace Facilitators. See 86 Ill. Adm. Code 131. (This is a GIL.)
November 17, 2023
NAME
COMPANY
ADDRESS
RE: Marketplace Facilitators
Dear NAME:
This letter is in response to your letter dated April 28, 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:
I represent a company located outside of Illinois (“Company”) and,
on behalf of Company, am requesting a General Information Letter
regarding the tax treatment in the scenario described below.
FACTS
Company is incorporated in the State of STATE. Company
manages a mobile app for independent owner-operator truck drivers and
for small fleets (collectively, the “operator(s)”). The app is free to
download, free to use after download, and otherwise does not charge any
fees.
The app allows operators to purchase fuel at a discounted price
from specified fuel stops. The fuel is available to operators at a
discounted price because Company partners with fuel stops, who want to

COMPANY/NAME
Page 2
November 17, 2023
earn more business from operators and who are willing to sell the fuel to
operators at a discounted price.
Operators interested in the discounted fuel price must download the
app. When an operator stops at a qualifying stop, which has partnered
with Company, the operator opens the app and selected [sic] the fuel stop
where they are purchasing fuel.
The app then generates a fuel code, which is a numeric code
unique to that operator and that fuel stop. The operator shows the code to
the fuel stop clerk, who verifies the operator has the Company’s app.
From there, the pump is turned on for the operator to pump the fuel. Once
the fuel is pumped, the app charges the debit or credit card on file, and the
operator can either obtain an emailed receipt or paper receipt from the
stop.
Although the app provides operators with access to discounted fuel,
Company does not sell fuel to operators. Rather, the fuel stops sell fuel to
the operators and receive the proceeds from the sale. The fuel stops also
pay all applicable fuel tax on a per gallon basis; and collect, report, and
remit all applicable sales tax. Company makes its money solely on
commissions paid by the fuel stops when operators use the app to
purchase fuel from the stop.
Moreover, Company does not purchase fuel, does not distribute
fuel; does not receive fuel; does not import fuel; does not supply fuel; does
not use fuel; and does not produce, refine, blend, compound, or
manufacture fuel. Nor does Company maintain or possess any inventory
of fuel in storage.
REQUEST
Illinois imposes a sales tax on motor fuel, which is imposed on any
person engaged in the business of selling motor fuel. 35 ILCS 120/2d; 55
ILCS 5/5-1035.1; 65 ILCS 5/8-11-2/3. Company does not appear to be
liable for sales tax under this statutory provision because Company is not
engaged in the business of selling motor fuel in Illinois.
Moreover, Illinois provides that a “marketplace facilitator” is liable
for sales and use tax. 35 ILCS 120/1. 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”
listing or advertising items for sale and collects payment from the
customer and transmits that payment to the marketplace seller. 35 ILCS

COMPANY/NAME
Page 3
November 17, 2023
120/1. A “marketplace seller” is defined as “a person that makes sales
through a marketplace operated by an unrelated third party marketplace
facilitator.” 35 ILCS 120/1.
Company does not appear to be liable as a “marketplace facilitator”
because Company is providing a service to fuel stops by advertising their
fuel. The fuel stops provide and sell the motor fuel to operators, and
collect, report, and remit all applicable sales tax.
Nevertheless, please advise whether the Department believes
Company is liable for sales and use tax, Company is responsible for
remitting sales and use tax, and Company is required to obtain any state
licenses for sales and use tax.
CONCLUSION
Your advice on this matter is greatly appreciated. If you should
have any questions, please do not hesitate to call me at PHONE.
DEPARTMENT’S RESPONSE:
The Retailers’ Occupation Tax Act imposes a tax upon persons engaged in this
State in the business of selling tangible personal property at retail to purchasers for use
or consumption. See 86 Ill. Adm. Cod 130.101. Use Tax is imposed on the privilege of
using, in this State, any kind of tangible personal property that is purchased anywhere
at retail from a retailer. See 86 Ill. Adm. Code 150.101. These taxes comprise what is
commonly known as “sales tax” in Illinois. Purchases of tangible personal property are
subject to Illinois sales tax unless a purchase qualifies for an exemption under Illinois
law.
A marketplace is a physical or electronic place, forum, platform, application, or
other method by which a marketplace seller sells or offers to sell items. See 35 ILCS
120/1; 86 Ill. Adm. Code 131.105. 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 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 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. See 35
ILCS 120/1; 86 Ill. Adm. Code 131.105. A marketplace seller is a person who makes
sales through a marketplace operated by an unrelated third-party marketplace facilitator

COMPANY/NAME
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November 17, 2023
and who has obtained a certification from the marketplace facilitator as provided in
Section 131.145. See 35 ILCS 120/1; 86 Ill. Adm. Code 131.105.
Beginning January 1, 2021, a marketplace facilitator, as defined above, 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 thresholds is met:
1)

The cumulative gross receipts from sales of tangible personal
property to purchasers in Illinois made through the marketplace by
the marketplace facilitator and by marketplace sellers are $100,000
or more; or

2)

The marketplace facilitator and marketplace sellers selling through
the marketplace cumulatively enter into 200 or more separate
transactions for the sale of tangible personal property to purchasers
in Illinois.

See 86 Ill. Adm. Code 131.135(a).
A marketplace facilitator meeting both of these thresholds, is required to register
with the Department, file returns, and remit all applicable State and local retailers’
occupation taxes administered by the Department for all sales made over the
marketplace to Illinois purchasers, including their own sales and sales made on behalf
of marketplace sellers. See 86 Ill. Adm. Code 131.145(a) and 131.145(c). Further,
marketplace facilitators are subject to audit on all such sales. Section 131.145(c)
Generally, a marketplace seller is not liable for State and local retailers’
occupation taxes for sales of tangible personal property sold to Illinois purchasers
through a marketplace. See 86 Ill. Adm. Code 131.145(b) and 131.150(a). The
marketplace facilitator would be liable for the applicable taxes on these sales unless the
marketplace seller provides it with incorrect information. See Section 131.145(d). The
Department is prohibited from collecting State and local retailers’ occupation taxes from
both the marketplace facilitator and the marketplace seller on the same transaction.
See 35 ILCS 120/2(h); 86 Ill. Adm. Code 131.145(k); 86 Ill. Adm. Code 131.150(h).
Please note that the rules established under 86 Ill. Adm. Code 131 apply only to
the remittance of State Retailers’ Occupation Tax and local retailers’ occupation taxes
administered by the Department. Marketplace sellers 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).
Recently, the Department has encountered a number of arrangements where
companies are providing new services to established businesses through the use of
apps downloaded on mobile devices of consumers seeking, for example, hotel rooms,

COMPANY/NAME
Page 5
November 17, 2023
vacation rentals, and parking spaces. Because these new arrangements are unique,
the Department requires a complete and thorough explanation of the contractual
relationship between the parties.
Based on the limited information provided in your letter, the Department cannot
determine the exact nature the arrangement between a fuel stop and the Company.
Your letter states that, “[o]nce the fuel is pumped, the app charges the debit card or
credit card on file”. Your letter also states the fuel stops receive the proceeds from the
sale. As noted above, without reviewing the actual contractual arrangements between
the Company and the fuel stops, the Department cannot provide an opinion in a GIL
whether the Company is liable for remitting sales and use tax or Company is required to
register for sales and use tax.
You may submit a request for a binding private letter ruling. Please review the
requirements for obtaining a private letter ruling at 2 Ill. Adm. Code 1200.110.
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,
Richard S. Wolters
Associate Counsel
RSW:dlb