Can a marketplace facilitator subtract its own currency-exchange, payment-processing, and platform fees from taxable gross receipts, since those fees are charged to marketplace sellers rather than buyers?

Plain-English summary

A marketplace facilitator charges its marketplace SELLERS (not the end buyers) three kinds of fees, each recouped as a percentage of the sale: a currency-exchange fee when a transaction involves converting currency, a payment-processing fee, and a platform fee for listing the seller's goods or services. The facilitator asked whether any of these seller-side fees are themselves subject to Illinois sales tax, since they're deducted from what the seller ultimately receives rather than charged on top of what the buyer pays.

The Department's answer works from how marketplace facilitators are taxed in the first place. A marketplace facilitator that has met Illinois's remittance threshold -- $100,000 in cumulative gross receipts from sales made through the marketplace (the separate 200-transaction threshold was removed by P.A. 104-0006) -- is treated AS THE RETAILER for every sale made over that marketplace, not just a payment intermediary. "Gross receipts" for that retailer role means the TOTAL consideration actually received from a sale. Critically, no deduction is allowed from that gross-receipts figure for the retailer's own costs of doing business -- and the Department specifically classified service fees a marketplace facilitator retains from the seller's proceeds (things like the fees at issue here) as exactly that kind of non-deductible cost of doing business, even when separately stated on a bill.

So the answer isn't about whether the FEES themselves are a separately taxed "service" -- it's that the facilitator can't use these fees to shrink the taxable gross receipts figure on the underlying retail sale. The full consideration received from the sale is taxed, regardless of how the facilitator internally allocates or recoups its costs from the seller's side of the transaction.

What this means for you

Marketplace facilitators (e-commerce platforms, payment processors)

Don't structure fee arrangements with your sellers expecting to shrink your Illinois taxable gross receipts. Once you're over the $100,000 threshold and acting as the retailer for marketplace sales, your tax base is the full consideration received from each sale -- currency-exchange, processing, and platform fees you retain from the seller's side don't reduce that base, even if they're separately itemized.

Marketplace sellers

Understand that your platform's tax remittance is calculated on the FULL sale amount, not the net amount you receive after the platform's fees -- this GIL doesn't change your own obligations, but it clarifies why your facilitator's tax calculations use the gross transaction amount.

Accountants and tax professionals advising e-commerce clients

The 200-transaction threshold for marketplace facilitator remittance obligations was removed by P.A. 104-0006 (Article 25) -- only the $100,000 cumulative gross receipts threshold remains. Make sure clients' nexus/remittance analyses reflect this current single-threshold test.

Common questions

Q: Can a marketplace facilitator deduct its own processing or platform fees from taxable gross receipts?
A: No. Gross receipts include all consideration actually received from a sale, and costs of doing business -- including fees the facilitator retains from a seller's proceeds -- aren't deductible, even if separately stated.

Q: Does it matter that these fees are charged to the seller rather than the buyer?
A: No. The Department's answer treats the facilitator's retained fees as part of its own cost of doing business regardless of which side of the transaction they're formally billed to.

Q: When does a marketplace facilitator become the "retailer" responsible for tax on marketplace sales?
A: Once its cumulative gross receipts from Illinois sales made through the marketplace (by itself and by its marketplace sellers combined) reach $100,000. The separate 200-transaction threshold no longer applies.

Q: What counts as a "marketplace facilitator" under Illinois law?
A: A person who, under an agreement with an unrelated third-party marketplace seller, both lists/advertises the seller's taxable property on a marketplace AND collects payment from the customer and transmits it to the seller.

Citations and references

Statutes:

• 35 ILCS 120/1 (definitions -- "marketplace," "gross receipts")
• 35 ILCS 120/2 (marketplace facilitator remittance threshold, P.A. 104-0006 Article 25)
• 35 ILCS 105/2 (definition of "selling price")

Regulations:

• 86 Ill. Adm. Code 130.401 (gross receipts)
• 86 Ill. Adm. Code 130.410 (costs of doing business not deductible from gross receipts)
• 86 Ill. Adm. Code 131.105 (marketplace / marketplace seller definitions)
• 86 Ill. Adm. Code 131.130 (marketplace facilitator definition)
• 86 Ill. Adm. Code 131.135 (marketplace facilitator treated as retailer)

Source

• Landing page: Illinois 2025 Sales Tax Letter Rulings
• Original PDF: ST25-0068-GIL.pdf

Original ruling text

ST 25-0068-GIL

12/12/2025

MARKETPLACE FACILITATORS

A marketplace facilitator who has met the tax remittance threshold is the retailer for
all sales made over its marketplace. The gross receipts for sales made over such a
marketplace include all the consideration actually received by the marketplace
facilitator from a sale. This includes costs of doing business as a marketplace
facilitator, such as service fees retained by marketplace facilitators from the selling
price paid by marketplace customers. 86 Ill. Adm. Code 130.401 and 131.135 (This
is a GIL).
December 12, 2025
NAME
TITLE
COMPANY
EMAIL
Dear NAME:
This letter is in response to your email dated October 23, 2025, 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:
I hope all is well, I am writing to request clarification regarding the sales
tax treatment of certain fees charged by marketplace facilitators to
marketplace sellers under Illinois sales tax laws and regulations.
Specifically, I seek guidance on whether the following fees are subject
to Illinois sales tax:

1. Currency Exchange Fee

COMPANY
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December 12, 2025
A marketplace facilitator charges a currency exchange fee to
marketplace sellers when transactions involve currency conversion. This fee
may be recouped by the facilitator as a percentage of the sales price of goods
or services retailed through the platform.

2. Payment Processing Fee
   A marketplace facilitator charges a payment processing fee to
   marketplace sellers for processing customer payments. This fee is at least
   partially recouped as a percentage of the sales price of goods or services
   retailed by the facilitator through the platform.
3. Marketplace Platform Fee
   A marketplace facilitator charges a platform fee to marketplace sellers
   for the privilege of listing the sellers’ products or services on the facilitator’s
   platform. This fee is recouped as a percentage of the sales price retailed by
   the facilitator. This platform fee is distinct from and in addition to separately
   billed service charges for payment processing, currency exchange, and other
   specific marketplace services.
   The platform fee covers the use of the marketplace platform and is
   calculated as a percentage of successfully processed memberships and onetime purchases of services and goods.
   Please note: These fees are based on a percentage of the overall sales
   transaction being processed and are not directly paid by the marketplace
   seller rather the marketplace seller receives revenue as the remainder of the
   sales transaction price after these fees have been deducted.
   Our Understanding of Applicable Law:
   It is our understanding that “selling price” means "the consideration
   for a sale valued in money whether received in money or otherwise, including
   cash, credits, property other than as hereinafter provided, and services;” See
   35 ILCS 105/2. Such charges could include mandatory fees like currency
   exchange, payment processing, and platform fees. However, it is unclear
   whether this rule would apply to transactions between the marketplace
   provider and marketplace seller when the fee is directly tied to sales between
   a seller and purchaser that takes place through the marketplace.
   Questions for Clarification:

COMPANY
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1. Are any or all of these fees subject to Illinois sales tax when charged
   to marketplace sellers?
2. Do the currency exchange, payment processing, and marketplace
   platform fees described above constitute "charges by the seller for any
   services necessary to complete the sale" under 35 ILCS 105/2, thereby
   making them part of the taxable sales price?
3. Are there any specific exemptions or exclusions that would apply to
   these types of marketplace facilitator fees?
   I would greatly appreciate your written guidance on these matters to
   ensure proper compliance with Illinois sales and use tax laws. If additional
   information is needed to provide a complete response, please contact me at
   the information provided below.
   Thank you for your attention to this matter. I look forward to your
   response.
   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:
   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

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December 12, 2025
receives compensation or other consideration in exchange for its services. 86
Ill. Adm. Code 131.130(a)(1).
A marketplace seller is a person who makes sales through a marketplace operated
by an unrelated third-party marketplace facilitator 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.
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
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. See 35 ILCS 120/2 as amended by P.A. 104-0006, Article 25 to
remove the 200-transactions tax remittance threshold for marketplace facilitators.
“Gross receipts” from the sales of tangible personal property at retail means the total
selling price or the amount of such sales. 35 ILCS 120/1. The Department, in its own
administrative rules, has further clarified the definition of “gross receipts” as all the
consideration actually received by the retailer, except traded-in tangible personal property.
86 Ill. Adm. Code 130.401. Moreover, no deductions shall be made by a marketplace
facilitator from gross receipts or selling prices on account of expenses from costs of doing
business. These costs, such as service costs, overhead costs, and processing charges, are
elements of retailer’s cost of doing business subject to tax even if separately stated on the
bill to the customer. See 86 Ill. Adm. Code 130.410. A marketplace facilitator who has met
the tax remittance threshold is the retailer for all sales made over its marketplace. The gross
receipts for sales made over such a marketplace include all the consideration actually
received by the marketplace facilitator from a sale. This includes costs of doing business as
a marketplace facilitator, such as service fees retained by marketplace facilitators from the
selling price paid by marketplace customers.
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 800-732-8866.
Very truly yours,
George L. Encarnacion, Jr.
Associate Counsel
GLE:sce