Is an online auction listing service a 'marketplace facilitator' in Illinois if the seller processes payment directly?

Plain-English summary

An operator of an online auction listing service asked the Department to confirm a narrow reading of Illinois' "marketplace facilitator" rules — essentially, that a platform is not a marketplace facilitator unless it directly handles payment, and that "indirectly" collecting payment requires a formal agreement with a third party. On its facts, sellers processed payments through their own merchant accounts, and the platform said it only let the seller view the buyer's card details and charged the buyer a separate fee for running the auction.

The Department declined to adopt that narrow reading — but it also declined to decide the platform's status without seeing the actual contracts.

What the definition requires

Under 35 ILCS 120/1 and 86 Ill. Adm. Code 131.130(a)(1), a marketplace facilitator is a person who, under an agreement with an unrelated third-party marketplace seller, facilitates a retail sale by:

1. listing or advertising the seller's taxable tangible personal property in a marketplace; and
2. either directly or indirectly, through agreements or arrangements with third parties, collecting the buyer's payment and transmitting it to the seller — regardless of whether the facilitator is compensated.

Since January 1, 2021, an internet auction listing service that meets this definition and one of the tax-remittance thresholds is a marketplace facilitator subject to state and local retailers' occupation taxes. The thresholds (measured over the preceding four quarters) are $100,000 or more in cumulative gross receipts from Illinois sales, or 200 or more separate transactions.

The Department's reasoning

The Department emphasized that the statute and rules use broad terms — "facilitates," "indirectly," "arrangement," and "provision." Accordingly, a facilitator's participation in the collection-and-payment process is not limited to cases where the buyer pays the facilitator directly and the facilitator directly remits to the seller. The Department said a restrictive reading like the one the requester proposed "would be contrary to the language in 35 ILCS 120/1, and 86 Ill. Adm. Code 131.130(a)(1)(B)."

Crucially, though, this is a General Information Letter, and the Department did not resolve the requester's own status:

"Based on the limited information provided in your letter, the Department cannot determine the exact nature of the arrangement between your client and the marketplace sellers. Without reviewing the actual contractual arrangements... the Department cannot provide an opinion in a GIL whether your client would be considered a marketplace facilitator."

So the operative takeaway is the broad interpretive rule, not a determination that this particular auction platform is (or is not) a marketplace facilitator.

Common questions

Q: Does a platform avoid marketplace-facilitator status just because sellers run payments through their own accounts?

A: Not necessarily. The Department rejected that narrow reading — "indirect" collection through agreements or arrangements can still count. Whether a specific platform qualifies depends on its actual contracts.

Q: What are the Illinois thresholds?

A: $100,000 or more in cumulative gross receipts from Illinois sales, or 200 or more separate transactions, measured over the preceding four quarters.

Q: Did the Department decide this taxpayer was a marketplace facilitator?

A: No. It said it could not decide in a GIL without reviewing the actual contractual arrangements.

Q: Could a binding answer be obtained?

A: A GIL is not binding and does not resolve specific facts. A taxpayer seeking a binding determination on its own facts would need a Private Letter Ruling under 2 Ill. Adm. Code 1200.110.

Citations and references

• 35 ILCS 120/1 — definitions of "marketplace," "marketplace facilitator," and "marketplace seller"
• 86 Ill. Adm. Code 131.130(a)(1) — marketplace facilitator definition and the $100,000 / 200-transaction thresholds
• 86 Ill. Adm. Code 131.130(a)(1)(B) — collecting and transmitting the buyer's payment, directly or indirectly

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2025.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2025/st25-0005-gil.pdf

Original ruling text

ST 25-0005-GIL 02/03/2025 MARKETPLACE FACILITATOR
An internet auction listing service meeting the requirements of a marketplace
facilitator, including one of the tax remittance thresholds, is considered a
marketplace facilitator. See 86 Ill. Adm. Code 130.1915(c); 86 Ill. Adm. Code
131.105; 86 Ill. Adm. Code 131.135. The participation of a marketplace facilitator in
the collection and payment process under 86 Ill. Adm. Code 131.130(a)(1)(B) is not
limited to instances where the purchaser directly pays the marketplace facilitator,
and the marketplace facilitator directly remits the payment to the marketplace seller.
See 86 Ill. Adm. Code 131.130(a)(1)(B). (This is a GIL.)
February 3, 2025
COMPANY
NAME
ADDRESS
EMAIL
Dear NAME:
This letter is in response to your letter dated May 18, 2024, 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
https://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:
The undersigned, as the authorized representative of his unnamed client
(“Taxpayer”), is requesting the Illinois Department of Revenue (“Department”)
issue a General Information Letter pursuant to 2 Ill. Adm. Code 1200.120
regarding the questions raised herein.
QUESTIONS RAISED

COMPANY/ NAME
Page 2
February 3, 2025
A. Whether the definition of “marketplace facilitator” under Illinois Compiled
Statutes 35 ILCS 120/1 requires a person to both collect and transmit
payment from the purchaser to the marketplace seller in order to satisfy the
definition of “marketplace facilitator.”
B. Whether the term “indirectly” under paragraph (2) of the definition of
“marketplace facilitator” 35 ILCS 120/1 requires the existence of an
agreement or arrangement with a third party in order for a person to be treated
as indirectly collecting payment from a purchaser and transmitting the
payment to a marketplace seller. Stated differently, if the facilitator has not
entered into any agreement or arrangement with a third party to collect and
transmit payment from the purchaser to the seller, then such facilitator
cannot be treated as indirectly collecting and transmitting payment from a
purchaser to a marketplace seller.
C. Whether the definition of “third party” as used in the definition of
“marketplace facilitator” under 35 ILCS 120/1 excludes the purchaser and
marketplace seller from falling within the definition of “third party.”
D. Whether a person who lists or advertises a sellers tangible personal
property is treated as either directly or indirectly collecting and transmitting
payment to the marketplace seller under the definition of marketplace
facilitator under Section 35 ILCS 120/1 where (1) such person’s
“marketplace” (as defined under 35 ILCS 120/1) is used to communicate the
purchaser’s credit card digits and identity to the seller, (2) the seller uses its
own credit card processing merchant account to process purchaser’s
payment, and (3) the facilitator has not entered into any agreement or
arrangement with a third party to transmit the purchaser’s identity and credit
card digits to the marketplace seller.
PROPOSED ANSWER TO QUESTION RAISED
A. In order to satisfy the definition of “marketplace facilitator” under 35 ILCS
120/1, the statutory definition requires as a necessary condition a person to
both collect and transmit either directly or indirectly payment from the
purchaser to the seller with respect to the sale of tangible person property
(“TPP”). If the purchaser itself directly pays the purchase price to the seller,
the person who facilitates the sale is not a marketplace facilitator even though
such person satisfies the elements under paragraph (1) of the definition of
“marketplace facilitator.”

COMPANY/ NAME
Page 3
February 3, 2025
B. In order for a person to be treated as indirectly collecting and transmitting
payment under paragraph (2) of the definition of “marketplace facilitator”
under 35 ILCS 120/1, the statutory language requires the existence of an
agreement or arrangement between the facilitator and a third party. The
phrase “through agreements or arrangements with third parties” modifies the
word “indirectly” and not “directly”. As such, a facilitator could satisfy the
definition of marketplace facilitator by directly collecting payment from the
purchaser and directly transmitting such payment to the seller without
entering into any agreement or arrangement with a third party. However, to be
treated as “indirectly” collecting and transmitting payment, the definition of
“marketplace facilitator” requires the existence of either an agreement or an
arrangement with a third party. If the facilitator has not entered into an
agreement or arrangement with a third party to collect and transmit payment,
then such facilitator cannot be treated as “indirectly” collecting and
transmitting payment.
C. The statutory use of the term “third party” within the context of the
definition of
“marketplace facilitator” under 35 ICLS 120/1 excludes the purchaser and the
marketplace seller from falling within such definition.
D. A person who lists or advertises (and thus satisfies paragraph (1) of the
definition of marketplace facilitator under 35 ILCS 120/1) is not treated as
either directly or indirectly collecting and transmitting payment from the
purchaser to the seller where the purchaser’s identity and credit card digits
are communicated to the seller through such facilitator’s “marketplace” (i.e.
website) and the seller uses of its own credit card processing merchant
account to process payment. The use of the facilitator’s website to
communicate the purchaser’s identity and credit card digits does not rise to
level of either directly or indirectly “collecting” and “transmitting” payment
from the purchaser to the seller. The actual processing of the credit card
information is completed by the seller on its own credit card merchant
account. In no event does the facilitator use its or an affiliated party’s
merchant account to process payment of the purchase price. Furthermore,
the facilitator has not entered into any agreement or arrangement with a third
party to collect and transmit payment from the purchaser to the seller.
LAW
Illinois Compiled Statutes 35 ILCS 120/1 defines the following terms:

COMPANY/ NAME
Page 4
February 3, 2025
“Marketplace” means a physical or electronic place, forum, platform,
application, or other method by which a marketplace seller sells or offers to
sell items.
“Marketplace facilitator” means 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
this 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.
“Marketplace seller” means a person that makes sales through a marketplace
operated by an unrelated third party marketplace facilitator.
FACTS
General background on the Taxpayer.
The Taxpayer is an entity formed under the laws of a State outside of Illinois.
The Taxpayer has no employee, representative, agent, salesperson,
canvasser, facilitator, solicitor, warehouse, or physical presence in Illinois.
The Taxpayer owns and operates an auction-type website on which potential
sellers post TPP for potential purchasers to place a bid.
Auction process.
Sellers and bidders typically interact with the Taxpayer’s website in the
following manner:

1. Sellers submit pictures of TPP (owned by the seller) to the Taxpayer.
   The Taxpayer evaluates the pictures and the TPP to determine whether
   the TPP is appropriate to place for auction on the Taxpayer’s website.
   If the Taxpayer determines the TPP is appropriate to place for auction,
   the seller pays a flat listing fee of $XX.XX to the Taxpayer to list the TPP

COMPANY/ NAME
Page 5
February 3, 2025
for auction. The Taxpayer and seller work together to prepare an
accurate description and listing of the TPP. The TPP is placed on the
Taxpayer’s website for live bidding. The Taxpayer’s website contains a
photo gallery and a description of the TPP open for bidding. The
Taxpayer never takes possession or title of the TPP either before,
during, or after the auction process. The Taxpayer does not operate,
control, or own any fulfillment center.

2. At the end of the auction, the seller can decide to accept the highest
   bidder’s offer or make a counteroffer. If the purchaser and seller agree
   to a deal at the end of the auction, the Taxpayer qualifies the purchaser
   as being financially capable of making the purchase. The purchaser
   has the option to instruct the seller to ship the TPP to the purchaser or
   to deliver the TPP to a third party that is unaffiliated and unrelated to
   the Taxpayer to verify that the TPP has been accurately represented.
3. If the purchaser forgoes the third-party authentication process, the
   purchaser instructs the seller where to deliver the TPP. Seller uses the
   Taxpayer’s website to inform the purchaser on the available method of
   payment that the seller will accept. Prior to shipping, the purchaser
   selects a method of payment, such as wire transfer, physical check,
   cash, Zelle, crypto, or credit card. If the parties agree on a credit card
   payment, the Taxpayer’s website allows (but does not require) the
   purchaser to enter the purchaser’s credit card information. The seller
   uses the Taxpayer’s website to view such credit card information. Any
   charging, collecting, or processing of the purchaser’s credit card is
   done by the seller using the seller’s own merchant credit card
   processing system. The Taxpayer’s website merely allows the seller to
   view the purchaser’s name and credit card number. In no event does
   the Taxpayer process, collect, or charge in any manner the credit card
   payment or any other payment from the purchaser for the purchase of
   the TPP. In addition, the Taxpayer has no agreement or arrangement
   with any party to indirectly collect or transmit purchaser’s payment to
   the seller.
4. If the purchaser chooses to have the TPP authenticated by a third
   party, the purchaser instructs the seller to deliver the TPP to the thirdparty verification center. Upon authentication, the Taxpayer informs
   the purchaser that the TPP has been authenticated and the seller’s
   accepted payment options are sent to the purchaser. The purchaser
   pays the seller directly in one of the manners as described in #3 above.
   Like the payment methods described in #3 above, the Taxpayer never

COMPANY/ NAME
Page 6
February 3, 2025
collects, charges, processes, or transmits the payment from the
purchaser to the seller. After the seller confirms receipt of payment,
the Taxpayer communicates to the authentication center to release
the TPP to the purchaser. The purchaser may (1) pick up the TPP in
person at the location of the authentication center, (2) provide the
shipping address to the authentication center and pay the
authentication center directly for shipping, or (3) provide the
purchaser’s own shipping label to the authentication center.
Registration of bidders.
All bidders must register with the Taxpayer before they can place a bid.
Bidders provide credit card information to the Taxpayer as part of the
registration process. When a bid is placed, the Taxpayer places a hold on the
credit card on file for X percent of the bid amount. When the auction closes, if
there is a winner, the hold is released for all bidders except for the winner. The
purchaser (typically the highest bidder) pays the Taxpayer a fee equal to X% of
the total purchase price of the TPP. This X percent fee is paid directly to the
Taxpayer for operating the auction-type website. The X percent fee does not
get subtracted from the purchase price upon the sale of the TPP. In no event
is any of the X percent fee remitted to the seller. The purchaser is charged and
obligated to pay the X percent fee to the Taxpayer even if the deal between the
seller and purchaser falls through. To illustrate, if the deal between purchaser
and seller is $10,000, the Taxpayer charges $500 to the credit card of the
purchaser to manage the closing of the transaction and the purchaser pays
the seller $10,000 directly via a payment method of their choice as described
above. As stated above, even if the deal fails to consummate for any reason,
the purchaser is obligated to pay the Taxpayer the X percent fee.
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. Code 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.
Beginning January 1, 2021, an internet auction listing service meeting the
requirements of a marketplace facilitator, including one of the tax remittance thresholds, is
considered a marketplace facilitator subject to State and local retailers’ occupation taxes

COMPANY/ NAME
Page 7
February 3, 2025
on sales made on its marketplace to purchasers in Illinois. See 86 Ill. Adm. Code
130.1915(c); 86 Ill. Adm. Code 131.105; 86 Ill. Adm. Code 131.135.
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:
A)

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

B)

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.
Provision on a marketplace of functionality for connection to a payment
mechanism meets the requirements of this subsection.

See 86 Ill. Adm. Code 131.130(a)(1).
Beginning January 1, 2021, an internet auction listing service meeting the
requirements of a marketplace facilitator, as defined in Section 131.130(a)(1), 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 was met during the preceding four
quarterly periods ending on the last day of March, June, September, and December:
A)

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

B)

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

See 86 Ill. Adm. Code 131.135.
The Department has encountered various marketing and payment arrangements
used by ecommerce marketplace facilitators. Your inquiry concerns the participation of a
marketplace facilitator in the collection and payment processes for sales over a
marketplace on behalf of an identified marketplace seller. See 86 Ill. Adm. Code
131.130(a)(1)(B). Notably, the language in the statute and administrative rules dealing with
this process includes such broad terms as: “facilitates”, “indirectly”, “arrangement”, and
“provision”. See 35 ILCS 120/1; 86 Ill. Adm. Code 131.130(a)(1)(B). Accordingly, under
Section131.130(a)(1)(B), the participation of a marketplace is not limited to only those

COMPANY/ NAME
Page 8
February 3, 2025
instances where the purchaser directly pays the marketplace facilitator and in turn, the
marketplace facilitator directly remits the payment to the marketplace seller. Such a
restrictive reading would be contrary to the language in 35 ILCS 120/1, and 86 Ill. Adm. Code
131.130(a)(1)(B).
Based on the limited information provided in your letter, the Department cannot
determine the exact nature of the arrangement between your client and the marketplace
sellers. Without reviewing the actual contractual arrangements between your client and the
marketplace sellers, the Department cannot provide an opinion in a GIL whether your client
would be considered a marketplace facilitator under 86 Ill. Adm. Code 131.130(a)(1).
I hope this information is helpful. If you require additional information, please visit
our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer Information
Division at (217) 782-3336.
Very truly yours,
Thomas Grudichak
Associate Counsel
TG:slc