Illinois has enacted changes to the taxation of wine sales to Illinois purchasers by certain winery shipper’s license holders. Beginning January 1, 2021, Illinois Liquor Control Commission (ILCC) Winery Shipper’s License holders who do not have a physical presence in Illinois and meet either of two specified tax remittance thresholds are required to remit state and local Retailers’ Occupation Tax (ROT) on sales to Illinois purchasers at the rate in effect at the location where the tangible personal property is shipped or delivered or at which possession is taken by the purchaser, in addition to any liquor taxes. This is commonly referred to as destination sourcing.
The tax remittance thresholds are:
Winery Shipper’s License holders who meet or exceed either threshold shall be liable for all applicable state and locally imposed ROT on all retail sales to Illinois purchasers. They must determine, on a quarterly basis, whether they meet one of the tax remittance thresholds. For each quarter ending on the last day of March, June, September, and December, they must examine their sales to Illinois purchasers for the immediately preceding 12-month period. If they meet either threshold for a 12-month period, they are required to collect and remit all applicable state and locally imposed ROT on all retail sales to Illinois purchasers and to file all applicable returns for one year. They must start collecting taxes for sales beginning on the first day of the quarter immediately following the end of the 12-month lookback period.
For Winery Shipper’s License holders who have physical presence in Illinois, nothing changes. They are still required to collect and remit Illinois use tax on all sales to Illinois purchasers. (Informational Bulletin FY 2021-06, Illinois Department of Revenue, November 2020)