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:
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)
UPDATE: Illinois has published a new certificate for sales through marketplace facilitators. Marketplace facilitators must provide this certificate to the marketplace seller when they assume the role of a retailer. The seller will then maintain the certificate. Other forms can still be used in place of this certificate (with certain requirements). Illinois released an Information Bulletin regarding retailers’ occupation tax guidance for remote retailers and marketplace facilitators because of the Illinois Retail Act. Public Acts 101-31 and 101-604 were intended to “level the playing field” between Illinois-based and remote retailers. (Illinois Department of Revenue, CRT-63 Sales Through Marketplace Facilitator Certificate, Retailers’ Occupation Tax Guidance for Remote Retailers and Marketplace Facilitators as set forth by the Leveling the Playing Field for Illinois Retail Act Information Bulletin, October 2021)