Most businesses starting in Illinois that are selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number or sales tax registration.
The sales tax permit is obtained through the Illinois Department of Revenue as a part of applying for an Illinois Business Tax Number.
Check out the rest of this guide to find out who needs a sales tax permit, what products and services are taxable, how to register for a permit and reporting requirements.
Who needs a sales tax permit in Illinois?
A business must register as a retailer in Illinois when:
- A business has “nexus” (significant presence in the state) such as a retail store, office or warehouse where products are produced, stored and/or delivered
- Selling items at craft shows, fairs, seminars, conventions, etc in Illinois
- An online business located in Illinois is selling taxable products to Illinois residents
- An out-of-state business selling to Illinois residents
and one of the following:
- Total sales of tangible personal property to Illinois residents is $100,000 or more; or
- 200 or more transactions of tangible personal property is sold to Illinois residents.
More information on when a sales tax permit is needed is available in Illinois Publication 113.
What products and services are taxable in Illinois?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Illinois. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
- Qualifying food, prescriptions and medical appliances
Certain manufacturing equipment is tax-exempt.
Labor in most cases isn’t taxable in Illinois. For instance, let’s say you broke the screen to your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products, with the exception of canned software (pre-made software), isn’t taxable.
Most services aren’t taxable in Illinois, however there are a few exceptions.
- Short-term lodging
- Automobile rentals
- Coin-operated amusement devices
A list of common sales tax exemptions is found in Publication 104 from the Illinois Department of Revenue.
How to register for a sales tax permit in Illinois
Information needed to register includes:
- Type of business entity (Sole Proprietorship, Partnership, Corporation, LLC)
- Business name
- Names and addresses of owners/officers/members
- Description of what products or services are being sold
- Business address
- Phone number
- North American Industry Classification System (NAICS) code
- Federal Employer Identification Number (FEIN), or SSN if a sole proprietorship with no employees
- Date business activities began or will begin
- Projected monthly sales
- Projected monthly taxable sales
- Employee information
How much does a sales tax permit cost in Illinois?
There is no cost for a sales tax permit in Illinois.
How long does it take to get an Illinois sales tax permit?
Expect 2-3 business days to receive a sales tax permit when registering online through MyTaxIllinois or 2-3 weeks when applying by mail.
After registering, the business will receive an eight-digit number and a Registration Certificate that will need to be prominently displayed at their location.
Do you have to renew your Illinois sales tax permit?
The sales tax permit is a one-time registration and no renewals
Sales tax reporting
How is sales tax collected?
When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Illinois Department of Revenue.
There are two ways to submit sales tax to the Illinois Department of Revenue. One is by filing online through MyTaxIllinois and the other is by mailing form ST-1. The ST-1 is only available to businesses with less than $20,000 in annual sales tax liability.
How much sales tax is charged?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made or shipped from a business located in the state. If the seller is based out of the state, the sales tax rate is based on the buyer’s address.
In addition to the statewide tax, there are additional sales taxes that may be added by cities and municipalities. The Illinois Department of Revenue has a Sales Tax Rate Finder to determine how much sales tax to charge.
When are Illinois sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected volume of annual sales, which will be monthly, quarterly or annually. Generally, a business selling over $30,000 annually in taxable sales will file monthly. The frequency is re-evaluated annually.
Filings are due the 20th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, in which case would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
Sales tax on purchases for resale
A business is able to purchase items to resell without paying state sales tax. The tax liability is passed from the distributor to the retailer who will then charge sales tax to the end user of the item.
Wholesalers and distributors will require a sales tax number and a completed Illinois Certificate of Resale to document the items being purchased are for resale.
If you have questions about the sales tax permit, the Illinois Department of Revenue can be contacted by calling 800 732-8866 or 217 782-3336.
Business owners can also call or visit a regional office. No appointment is necessary.
James R. Thompson Center
100 West Randolph Street
Chicago, Illinois 60601-3274
Maine North Regional Building
9511 Harrison Street FA 203
Des Plaines, Illinois 60016-1563
15 Executive Drive Business Center One, Suite 2
Fairview Heights, Illinois 62208-1331
2309 W. Main Suite 114
Marion, Illinois 62959-1196
200 South Wyman Street
Rockford, Illinois 61101-1237
Willard Ice Building
101 West Jefferson
Springfield, Illinois 62702