Illinois Enacts Marketplace Nexus Legislation

Illinois has enacted legislation under the Use Tax and Service Use Tax Acts including marketplace nexus provisions. Effective January 1, 2020, a marketplace facilitator who meets either of the following criteria is considered the retailer responsible for collecting and remitting sales tax on sales made on the marketplace:

  • Cumulative gross receipts from sales to Illinois purchasers by the marketplace facilitator and by marketplace sellers are $100,000 or more; or
  • The marketplace facilitator and marketplace sellers cumulatively enter into 200 or more separate sales transactions to Illinois purchasers.

A marketplace facilitator should determine on a quarterly basis – ending on the last day of March, June, September and December – whether they meet either of the above criteria for the preceding 12-month period. If the marketplace facilitator meets either of the above criteria for a 12-month period, they are required to collect and remit tax and file returns for one year. At the end of that 12-month period, the facilitator should determine whether they meet either of the above criteria for the preceding 12-month period. If they don’t meet either of the criteria, then they should determine on a quarterly basis whether they do for the preceding 12-month period.

Marketplace facilitators must certify to each marketplace seller that the facilitator assumes the rights and duties of a retailer with respect to sales made by the marketplace seller through the marketplace.

Marketplace sellers should retain books and records for all sales made through the marketplace. Marketplace sellers must furnish to the marketplace facilitator information that is necessary for the facilitator to correctly collect and remit tax on the sales. A marketplace seller will be held harmless for tax liability when a facilitator fails to correctly collect and remit tax after having been provided with information by the marketplace seller to correctly collect and remit tax.

If a marketplace facilitator can demonstrate to the satisfaction of the Department of Revenue that a failure to correctly collect and remit tax resulted from good faith reliance on incorrect or insufficient information provided by a marketplace seller, the marketplace facilitator will be relieved of liability and the marketplace seller is liable for any tax due.

A marketplace facilitator and marketplace seller that are affiliates are jointly and severally liable for tax liability resulting from a sale made by the affiliated marketplace seller. (S.B. 689, Laws 2019)

Posted on June 19, 2019