Most businesses starting in Illinois 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 and use 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 determine 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 sales tax nexus. Nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- 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:
- Making total sales of tangible personal property to Illinois residents is $100,000 or more; or
- Shipping 200 or more transactions of tangible personal property 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, Limited Liability Company (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) from the IRS, or owner’s Social Security Number (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 are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Revenue.
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the company 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.
The due date for filings is the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which 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.
Sales tax on purchases for resale
A business can 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 (also referred to as a resale certificate or sales tax exemption certificate) to document the items being purchased are for resale.
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Illinois. Learn what business licenses are needed in Illinois.
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