This is just a reminder that the Chicago, IL sales tax rate is increasing to 9% effective 7/1/05. In addition the hotel tax is increasing from 3% to 3.5%. However, it appears that the City did not increase the Non-Titled Use Tax rate which applies to consumers on purchases made from vendors located outside the City. The increase will apply to Titled Use Tax which applies to vehicles that require title and registration.
If you are selling items from within Chicago for delivery anywhere in Illinois this new rate will impact you. Don’t forget to update your tax billing systems. If you are purchasing from a Chicago vendor and taking delivery in Illinois, this new rate will impact you. If you are purchasing for use in Chicago from a vendor located outside of Chicago, this rate will NOT impact you.
The sales tax increase applies to transactions occurring on and after July 1, 2005. A transaction is deemed to occur on the data of delivery unless payment is made at an earlier date prior to delivery or if there is a deposit or prepayment and there is a binding purchase order. In order to qualify as a binding purchase order, the seller must identify the property to the contract and specifically mark it as belonging to the customer and there must have been a payment towards the purchase price.
For the Illinois Department of Revenue Bulletin, please visit http://www.revenue.state.il.us/publications/bulletins/2005/Fy200515.pdf
If you can expedite any major transactions to occur prior to 7/1/05, you can save 0.25% tax on the transaction if you are purchasing from a vendor located in Chicago.