Sales Tax Updates in Illinois

Tax Professionals' Resource
December 4, 2012 — 1,397 views  
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Deciding how much additional sales tax should be added to a receipt depends on the items that are being calculated.

Illinois assesses its state sales tax based on three categories. Those categories include food and prescription and non-prescription drugs, vehicles, and other kinds of merchandise, such as soft drinks, candy, grooming and hygiene products and prepared food bought at a restaurant.

The rate that these items are taxed depends on these categories. For example, food, drug and medical appliances are taxed at a one percent base rate while vehicles, items that require title and registration and other merchandise typically fall at the 6.25 percent tax rate.

Communities may apply their own additional sales taxes. The tax rate may be higher depending upon the location of the sale. The actual sales tax rate may be at a higher rate because of a tax implemented by the community to raise funds for a certain purpose, such as a new jail (county public safety and facility).

The sales tax takes many state and local scenarios into consideration, including:

  • State Regulations
  • Local Regulations
  • Mass Transit
  • Water Commission
  • Home Rule or Non-Home Rule Occupation and Use
  • County Public Safety and Facilities
  • County School Facility Tax
  • Park District
  • Business District

Changes in technology have forced the state of Illinois to reexamine how online businesses conduct sales in state. In March 2011, Gov. Pat Quinn signed into law a measure that all companies conducting business in Illinois be required to collect and remit the legally required sales tax. House Bill 3659 was also known as the Main Street Fairness Bill, named derived from the push by brick and mortar retailers to create a "level playing field." This law impacted sales over the Internet and through online catalogue sales through the state affiliates.

According to the state of Illinois' website, Illinois collects sales tax revenue from more than 20,000 retailers, each with a physical presence inside the state.

Proponents of the bill lauded the legislation as a way for the business to compete with the Internet merchants, while big affiliate sites like Amazon and state that the legislation "compels" them to terminate business with its Illinois affiliates.

Along with the legislation, the state created a website -- -- to help Illinois affiliates expand the customer base.


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