What nexus rules did Illinois describe for remote retailers in 2014, and are those physical-presence rules still current?

Plain-English summary

Four affiliated companies asked IDOR to decide their Illinois Retailers' Occupation Tax and Use Tax nexus. The Department declined, explaining that nexus required a fact-intensive audit investigation.

The GIL then summarized the law as it stood in 2014:

• An Illinois retailer accepting orders in Illinois or holding Illinois inventory used to fill orders owed Retailers' Occupation Tax and collected the purchaser's Use Tax.
• A retailer maintaining a place of business in Illinois under Rule 150.201(i) registered as a Use Tax collector under Rule 150.801, even if it did not owe Retailers' Occupation Tax.
• Under Quill Corp. v. North Dakota, Commerce Clause nexus required physical presence. Illinois treated an agent or representative—not only an office—as physical presence, and repetitive delivery and installation could trigger collection duties.
• A seller without sufficient nexus did not have to collect, but its Illinois customers still owed Use Tax and had to self-assess; the seller could register voluntarily.

Critical currency warning: the U.S. Supreme Court later held that Quill's physical-presence rule was “unsound and incorrect” and overruled it in South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018). This page documents the 2014 letter; it is not current remote-seller nexus guidance.

What this means for you

Remote sellers

Do not use the absence of Illinois personnel or property as a complete current nexus test. The core constitutional rule quoted in this GIL was later overruled.

Accountants and tax professionals

The letter remains useful only as a historical record of IDOR's Quill-era distinctions and its decision not to issue fact-specific nexus determinations through this GIL.

Common questions

Did IDOR decide the companies' nexus? No. It deferred the fact-intensive determination to audit.

Did repetitive delivery or installation count as physical presence in 2014? The GIL said yes.

Is physical presence still constitutionally required? No. Wayfair overruled Quill's physical-presence rule in 2018.

Citations and references

• 86 Ill. Adm. Code 150.201(i) and 150.801
• Quill Corp. v. North Dakota, 504 U.S. 298 (1992)
• South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2014.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2014/st-14-0002.pdf

Original ruling text

ST 14-0002-GIL 01/02/2014 NEXUS
This letter discusses nexus. See Quill Corp. v. North Dakota, 112 S.Ct. 1904 (1992). (This is a
GIL.)
January 2, 2014

Dear Xxxxx:
This letter is in response to your letters dated March 22, 2013, and October 9, 2013, in which
you request information. The Department issues two types of letter rulings. Private Letter Rulings
(“PLRs”) are issued by the Department in response to specific taxpayer inquiries concerning the
application of a tax statute or rule to a particular fact situation. A PLR is binding on the Department,
but only as to the taxpayer who is the subject of the request for ruling and only to the extent the facts
recited in the PLR are correct and complete. Persons seeking PLRs must comply with the
procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code 1200.110. The
purpose of a General Information Letter (“GIL”) is to direct taxpayers to Department regulations or
other sources of information regarding the topic about which they have inquired. A GIL is not a
statement of Department policy and is not binding on the Department. See 2 Ill. Adm. Code
1200.120. You may access our website at www.tax.illinois.gov to review regulations, letter rulings
and other types of information relevant to your inquiry.
The nature of your inquiry and the information you have provide
On behalf of #1 COMPANY (the ‘Company’) #2 COMPANY (the PLATFORM
COMPANY’), #3 COMPANY and #4 COMPANY, we respectfully request the Illinois
Department of Revenue to issue a Private Letter Ruling pursuant to 2 Ill. Adm. Code
1200.110 with respect to the factual situation set forth below.
Preliminary Information


Enclosed please find original Forms IL-2848, Power of Attorney, authorizing us to
represent the Company, PLATFORM COMPANY, #3 COMPANY and #4
COMPANY before the Illinois Department of Revenue (the ‘Department’).



This Private Letter Ruling (‘PLR’) is requested to determine the Retailers'
Occupation Tax and Use Tax consequences of the actual business practices of
the Company, the PLATFORM COMPANY, #3 COMPANY and #4 COMPANY.



To our knowledge, neither the Company, nor the PLATFORM COMPANY, or #3
COMPANY or #4 COMPANY is involved in an audit or litigation pending with the
Department in regard to this or any other tax matter.



To our knowledge, the Department has not previously ruled on the same or
similar issue for the Company, the PLATFORM COMPANY, #3 COMPANY and

4 COMPANY.



In addition, neither the Company, nor the PLATFORM COMPANY, or #3
COMPANY or #4 COMPANY has submitted the same or similar issue to the
Department.



The Company, PLATFORM COMPANY any, #3 COMPANY and #4 COMPANY
request that certain information be redacted from the PLR prior to dissemination
to others. Please delete the name and address of the Company, the
PLATFORM COMPANY, #3 COMPANY and #4 COMPANY, and please delete
the quoted excerpts from the agreements of the Company and the PLATFORM
COMPANY with local retail merchants and #3 COMPANY and #4 COMPANY.
Please also delete amended copies of the website screenshots.



Neither the Company, nor the PLATFORM COMPANY, #3 COMPANY and #4
COMPANY is not aware of any authority contrary to the authorities referred to
and cited below.

Statement of Material Facts
The Company’s Web Platform (Illinois-Retailer-to-Illinois-Customer Online Sales)
The Company provides an internet platform for customers to order specialty food items
and culinary delicacies online from local ‘brick-and-mortar’ retail merchants in Illinois.
The Company’s website, lists for sale a variety of locally grown items, organic foods and
hand-prepared products, including fresh produce, meats, seafood, chocolates, breads
and sauces. The website is designed to enable customers to shop both by perusing
virtual shopping market aisles (i.e., by category of food type) and by reviewing products
listed by local retail merchant vendors.
The web platform provides a retailer-to-consumer online format offering an intuitive,
appealing and user-friendly centralized marketplace for specialty food items. The web
platform serves as an intermediary processing and collection agent for local retail
merchants to reach individual buyers seeking online access to products not offered
among the generic, mass-produced items available at national supermarket chains.
After an order is placed on the web platform, the local retail merchant vendor typically
prepares and packages the items comprising the order for pick-up. An unrelated
logistics company, hired by the Company to provide delivery services, then picks up the
order and brings it to a third-party warehouse, where the Company has rented storage
space, to be sorted and aggregated for delivery to the customer. Some local retail
merchant vendors use the Company’s rented space at the third-party warehouse to
facilitate order fulfillment. (In the case of a local retail merchant vendor’s use of the
Company’s rented storage space, the Company will receive and fulfill the customer’s
order with respect to the stored items on the retailer’s behalf.) Most orders are
delivered to the customer by the logistics provider. A small percentage of the orders,
though, are mailed to the customer via common carrier (FedEx, UPS, USPS).
Certain of the products listed and sold on the Company’s web platform are offered and
fulfilled by a limited liability company under common ownership with the Company, #3
COMPANY. The Company has the same written agreement for the use of its web
platform by #3 COMPANY as it does with each of the unrelated local retail merchant
vendors. #3 COMPANY is operated entirely separate and completely independent of
the Company. #3 COMPANY has its own federal tax identification number and is
registered with the Illinois Department of Revenue for purposes of the Retailers'
Occupation Tax and Illinois Use Tax. The products of #3 COMPANY available on the

web platform currently consist of certain produce items, although these offerings may be
expanded in the future to include a broader variety of items.
The logistics company hired by the Company to deliver orders to Illinois customers is a
for-hire trucking company based in Illinois. The logistics company is responsible for
operating, maintaining and servicing the delivery trucks. However, because of
regulations governing the use of vehicle advertisements, the Company and the logistics
provider agreed that certificate of title with respect to the trucks would be registered in
the Company’s name in order to allow the Company’s name and logo to be displayed
on the trucks. The logistics provider, though, maintains full operational control over the
trucks and the deliveries.
The Company’s agreement with the local retail merchant vendors (including #3
COMPANY) provides that, as the operator of the web platform, the Company must
receive complete information from the local retail merchant vendors for listing correct
Retailers' Occupation Tax (‘ROT’) amounts for the corresponding products sold on the
web platform. Local retail merchant vendors set the pricing schedule for the products
listed on the web platform, although they are required to increase the listed product
prices by up to X%, if and to the extent that, the Company so requests. Customers do
not pay any markup, commission, fee, premium or other charge or compensation for
accessing and using the Company’s web platform. The Company remits (net of its
commissions and other charges) the gross purchase price collected from the customers
to the local retail merchant vendors, plus the ROT amounts calculated on the gross
purchase price. The details of the local retail merchant vendors’ ROT responsibility are
set forth in the Company’s agreement with each of the local retail merchant vendors, as
follows:
[REDACTED].
Interstate (STATE-Retailer-to-Illinois-Customer) Sales on the STATE Web Platform
The PLATFORM COMPANY provides a similarly-formulated and structured parallel web
platform (the ‘STATE Web Platform’) for local retail merchant vendors in the greater
CITY, STATE, area selling specialty food items to individual customers. The STATE
Web Platform, which shares the online address offers customers located in Illinois (and
elsewhere in the U.S.) the ability to purchase products listed for sale by local retail
merchant vendors in CITY. An interstate (STATE-retailer-to-Illinois-customer) order
submitted on the STATE Web Platform is processed and fulfilled in a similar manner as
intrastate Illinois orders submitted on the Company’s web platform, as described above.
When an Illinois customer orders products from a local retail merchant vendor in CITY
using the STATE Web Platform, the corresponding items usually are prepared and
packaged by the CITY retail merchant vendor. (If the STATE local retail merchant
vendor has the particular items ordered warehoused in the PLATFORM COMPANY’s
rented storage space, then the PLATFORM COMPANY will process and fulfill the order
with respect to the particular stored item.) An unrelated logistics company operating in
CITY and hired by the PLATFORM COMPANY picks up the items for intermediary
storage at CITY warehouse space rented by the PLATFORM COMPANY. Theo [sic]
order is then compiled and mailed to the customer in Illinois. All interstate (STATEretailer-to-Illinois-customer) orders are delivered to Illinois customers using common
carrier shipping (FedEx, UPS, USPS).

The PLATFORM COMPANY uses the same agreement as the Company with respect to
its local retail merchant vendors, as described above. The local retail merchant vendors
in CITY do not maintain any business or have any presence in Illinois – they do not
have own or lease any tangible personal property or real estate in Illinois, they do not
employ any individuals or hire any agents or representatives in Illinois and they do not
engage in any other type of commercial activity in Illinois which could be considered a
retail business in Illinois. Thus, in the case of an interstate (STATE-retailer-to-Illinoiscustomer) order sold and fulfilled using the STATE Web Platform, no Illinois Use Tax is
charged and collected from the Illinois customers because no ROT is incurred by the
out-of-state by the local retail merchant vendors in CITY.
In the future, certain of the products listed for sale on the STATE Web Platform may
include offerings of a limited liability company under common ownership with the
PLATFORM COMPANY and the Company, #4 COMPANY.
The PLATFORM
COMPANY has entered into the same written agreement for the anticipated future use
of the STATE Web Platform by #4 COMPANY as the one used for unrelated local retail
merchant vendors in the CITY area. #4 COMPANY is operated entirely separate and
completely independent of both the PLATFORM COMPANY and the Company. #4
COMPANY has its own federal tax identification number and is registered with the
STATE for collecting and remitting the STATE sales and use tax. Although no products
of #4 COMPANY currently are listed on the STATE Web Platform, it is anticipated that
items of #4 COMPANY will soon be available on the STATE Web Platform for purchase
by Illinois customers. Similar to the unrelated local retail merchant vendors in CITY, #4
COMPANY does not maintain any business or have any presence or contacts in Illinois
which could be [sic] give rise to a retail business for purposes of the ROT and Illinois
Use Tax (#4 COMPANY does not and will not own or lease any tangible personal
property or real estate in Illinois, and does not and will not employ any individuals or hire
any agents or representatives in Illinois).
The Contemplated Web Platforms (Out-of-State-Retailer-to-Illinois-Customer Sales)
It is contemplated that not-yet-formed limited liability companies under common
ownership with the Company and the PLATFORM COMPANY (‘Contemplated Web
Platform Companies’) will be used to expand the current network of two web platforms
(namely, the web platform operated by the Company and the STATE Web Platform
operated by the PLATFORM COMPANY) to include additional web platforms for retail
merchant vendors located in states other than Illinois and STATE (the ‘Contemplated
Web Platforms’). In the same manner that the STATE Web Platform in CITY replicates
and operates in parallel fashion to the Company’s web platform in Illinois, the
Contemplated Web Platforms would be formulated and operated as part of the multiple
web platform structure of one-web-platform-per-state in states besides Illinois and
STATE. The Contemplated Web Platforms would enable retail merchant vendors in
other states besides Illinois and STATE to list for sale their specialty food items.
In addition, not-yet-formed limited liability companies under common control with the
Company and the PLATFORM COMPANY (‘Future Affiliated Local Retailers’) may be
separately established and independently operated in other states besides Illinois and
STATE in order to sell specialty food items on the Contemplated Web Platforms to
Illinois customers (as well as non-Illinois customers). If and to the extent that Future

Affiliated Local Retailers are established, they would operate on a single-company-perstate basis, similar to #3 COMPANY and #4 COMPANY, respectively. Each Future
Affiliated Local Retailer would register to collect local sales and use taxes in the
particular state and local jurisdiction in which it operates, and the Future Affiliated Local
Retailers would not charge Illinois Use Tax to Illinois customers with respect to sales on
the Contemplated Web Platforms, since no ROT would be incurred by the Future
Affiliated Local Retailers. Like #4 COMPANY and the unrelated local retail merchant
vendors in CITY, the Future Affiliated Local Retailers would not maintain any business
or have any other presence or contacts in or with Illinois which could give rise to a retail
business for purposes of the ROT. Each of the Future Affiliated Local Retailers would
be completely independent of the particular Contemplated Web Platform Company
which is located in the same state as the local Affiliated Local Retailer as well as the
other Contemplated Web Platform Companies in other states.
Ruling Requested
On behalf of the Company, the PLATFORM COMPANY, #3 COMPANY and #4
COMPANY we respectfully request that the Illinois Department of Revenue provide the
following rulings:



The Company’s Web Platform
The Company will not be liable for the Illinois Retailers' Occupation Tax (‘ROT’)
or Illinois Use Tax with respect to intrastate (Illinois-retailer-to-Illinois-customer)
sales of products by local retail merchant vendors in Illinois (including #3
COMPANY).




3 COMPANY

3 COMPANY, as well as other local retail merchant vendors in Illinois, will only

be liable for the ROT on sales of products on the Company’s web platform to
Illinois customers.
Illinois local retailer merchant vendors, including #3
COMPANY, will not incur any ROT liability with respect to sales of products on
the Company’s web platform to out-of-state customers because delivery of all
such orders will be made by common carrier.



The PLATFORM COMPANY
Neither the Company nor the PLATFORM COMPANY will be liable for the ROT
or the Illinois Use Tax with respect to interstate (STATE-retailer-to-Illinoiscustomer) sales of products by local retail merchant vendors in STATE, including
anticipated sales of products by #4 COMPANY, on the STATE Web Platform.




4 COMPANY

4 COMPANY will not be required to collect and remit the Illinois Use Tax by

reason of its anticipated sales of products on the STATE Web Platform to Illinois
customers, because #4 COMPANY will not be deemed to have nexus to the
state of Illinois for purposes of the ROT.



The Contemplated Web Platforms

The Contemplated Web Platform Companies will not be liable for the ROT or the
Illinois Use Tax with respect to interstate (out-of-state-retailer-to-Illinoiscustomer) sales of products by local retail merchant vendors (including Future
Affiliated Local Retail Companies) in any of the continental United States besides
Illinois and STATE on any of the Contemplated Web Platforms to Illinois
customers.


The Future Retail Companies
The Future Affiliated Retail Companies will not be required to collect and remit
the Illinois Use Tax by reason of its anticipated sales of products on the
Contemplated Web Platforms to Illinois Customers, because none of the Future
Affiliated Retail Companies will be deemed to have nexus to the state of Illinois
for purposes of the ROT.

Relevant Authorities and Factual Analysis
The Illinois Retailers' Occupation Tax is imposed upon persons engaged in Illinois in the
business of selling at retail tangible personal property. 86 Ill. Adm. Code 130.101. The
Illinois Use Tax is imposed on purchasers by taxing the use of tangible personal
property in Illinois purchased at retail from a retailer See 86 Ill. Adm. Code 150.101.
‘Purchase at retail’ means the acquisition of the ownership of, or title to, tangible
personal property through a sale at retail. 86 Ill. Adm. Code 150.201(b). ‘Sale at retail’
means any transfer of the ownership of or title to tangible personal property to a
purchaser, for the purpose of use, and not for the purpose of resale in any form as
tangible personal property for a valuable consideration (See 86 Ill. Adm. Code
150.201(d).
The Company’s Web Platform
Section 130.1915 of the Illinois Department of Revenue Regulations imposes an ROT
obligation on the part of an ‘agent’, ‘auctioneer’ or other intermediary selling agent only
where such agent is ‘acting on behalf of undisclosed principal’ retailer. These
regulations that the state ROT does not apply to an intermediary selling agent who is
‘acting on behalf of a known or disclosed principal’ retailer. Rather, when an
intermediary selling agent is acting for a known or disclosed principle retailer, the
receipts from the sale are taxable only to the principal retailer (as long as such principal
retailer is engaged in the business of selling property). Under the regulations, a
principal retailer is deemed to be disclosed to a purchaser when the principal retailer is
made known to the purchaser at or before the time of the sale. Thus, it is clear that
when an intermediary selling agent makes a sale for a disclosed principal retailer, the
disclosed principal is the only person responsible for ROT on the sale.
In ST 07-0027-GIL (May 16, 2007), the Department discussed whether the provider of
an [sic] web platform for the sale of school yearbooks to students would be liable for the
ROT under 86 Ill. Adm. Code 130.1915 discussed above. The web platform in that
case processed the orders submitted online and billed the school’s students for the
purchased yearbooks. The web platform provider also operated a call center for
assisting with the yearbook sales. Payment for the yearbooks purchased online was
collected by the web platform operator (students made checks out to the order of the

website), and the corresponding amounts were then remitted to the school with a
deduction by the web platform operator for its fee. The Department concluded that the
ROT liability of the web platform operator depended on whether or not the students
purchasing the yearbooks were disclosed or knew that the website was selling the
yearbooks on behalf of the school.
As elaborated on above, the Company’s web platform operates as a retailer-toconsumer virtual marketplace for local specialty food items. The web platform functions
precisely as the type of intermediary selling agent described in 86 Ill. Adm. Code
130.1915. All of the local retail vendor merchants located in Illinois are registered as
retailers with the Department of Revenue.
Every individual item listed for sale on the Company’s web platform is clearly identified
as being sold by the corresponding local retail merchant vendor, including items listed
by #3 COMPANY. In fact, many of the products listed for sale are specifically
associated by customers with particular local retail merchants because of the
specialized or unique nature of the product. Each of the items listed on the web
platform for sale are displayed under a prominent overhead banner specifically
identifying the particular local retail merchant vendor’s name (see website screenshot
attached hereto as Exhibit A). In addition, underneath the display of every item on the
web platform, there is a second graphic listing the name of the corresponding local retail
merchant vendor and providing a link to additional background information on the web
platform about the particular merchant vendor including #3 COMPANY (see website
screenshot attached hereto as Exhibit B).
The STATE Web Platform and The Contemplated Web Platforms
Effective July 1, 2011, an out-of-state entity may be required to register and collect
Illinois Use Tax if such out-of-state entity has a contract with a person in Illinois under
which –




the out-of-state entity sells the same or substantially similar products as the
Illinois resident using an identical or substantially similar name, trade name, or
trademark as the Illinois resident, and
the out-of-state entity pays a commission or other consideration to the Illinois
resident based on the out-of-state entity’s sales of tangible personal property,
and
the out-of-state entity’s cumulative gross receipts from all sales made to Illinois
customers under all such contracts exceed $10,000 over the previous four
quarterly periods.
35 Ill. Comp. Stat. 105/2.

As elaborated on above, the PLATFORM COMPANY and the Company separately
operate and distinctly maintain parallel web platforms. The STATE Web Platform only
lists for sale products offered by local retail merchant vendors in the CITY, STATE area.
The Companies web platform only lists items for sale of local retail merchant vendors in
Illinois. The PLATFORM COMPANY does not enter into contractual agreements,
maintain any business relationship with or pay any commissions to the Company or any
local retail merchant vendors in Illinois (including #3 COMPANY). Likewise the
Company does not enter into any contracts, maintain any other business relationship

with or pay any compensation to retail merchant vendors located in CITY (including #4
COMPANY) or elsewhere outside of Illinois. Customers in Illinois ordering items from
local retail merchant vendors in CITY do so only by accessing and using the STATE
Web Platform. Illinois customers cannot submit orders for any out-of-state local retail
merchant vendors’ products (including any items which may be listed for sale in the
future by #4 COMPANY) on the Company’s web platform. Thus, the PLATFORM
COMPANY is not required to register and collect Illinois Use Tax with respect to
interstate (CITY-to-vendor-to-Illinois-customer) orders, because the PLATFORM
COMPANY does not ‘maintain a place of business’ in Illinois within the meaning of 35
Ill. Comp. Stat. 105/2.
Even if one were to assume that the PLATFORM COMPANY is within the scope of the
application of 35 Ill. Comp. Stat. 105/2 – although, as discussed above, the PLATFORM
COMPANY should be treated as not having nexus with Illinois – the operation of the
STATE Web Platform serves the same intermediary sales agent function under 86 Ill.
Adm. Code 130.1915 as the Company’s web platform, more fully explained above.
Therefore, the PLATFORM COMPANY should have no ROT or Illinois Use Tax liability
under 86 Ill. Adm. Code 130.1915.
Additional web platforms may be established by the Contemplated Web Companies in
states beyond Illinois and STATE, as elaborated on above. These web platforms will be
operated in tandem, according to a similar parallel structure, with the Company’s web
platform and the STATE Web Platform. If and to the extent that the existing web
platform network is expanded to include future web platforms of the Contemplated Web
Platform Companies in additional states, Illinois customers would be able to submit an
interstate order from a local retail merchant vendor located outside of Illinois (and
STATE) only by accessing the Contemplated Web Platform to be operated in the same
state by the corresponding Contemplated Web Platform Company as the particular local
retail merchant vendor is located. The Contemplated Web Platform Companies will not
enter into any contracts, maintain any business relationships or pay any compensation
to the Company or any other person located in Illinois. Accordingly, in the event that
Contemplated Web Platforms are established in other states, the Contemplated Web
Platform Companies (and the Company, as well) should not be required to register and
collect Illinois Use Tax.
Conclusion
We respectfully request that the Department issue the enumerated rulings requested
(under the above-heading ‘Rulings Requested’) for the reasons stated above. If the
Department cannot make either such a ruling, we request that the Department contact
us to determine what additional information is required or allow these ruling requests to
be rescinded.
DEPARTMENT’S RESPONSE:
The Illinois Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in
the business of selling tangible personal property to purchasers for use or consumption. See 86 Ill.
Adm. Code 130.101. In Illinois, Use Tax is imposed on the privilege of using, in this State, any kind of

tangible personal property that is purchased anywhere at retail from a retailer. See 86 Ill. Adm. Code
150.101. These taxes comprise what is commonly known as "sales" tax in Illinois. If the purchases
occur in Illinois, the purchasers must pay Use Tax to the retailer at the time of purchase. The
retailers are then allowed to retain the amount of Use Tax paid to reimburse themselves for the
Retailers’ Occupation Tax liability incurred on those sales.
The Department spent considerable time evaluating your letter ruling request. After reviewing
your request, the Department has decided to decline your request for a nexus determination. We
believe that nexus determinations are best made by auditors who are able to conduct the factintensive investigation that is required to make these determinations. The following information
outlines the principles of nexus. We hope it is helpful to you.
An “Illinois Retailer” is one who either accepts purchase orders in the State of Illinois or
maintains an inventory in Illinois and fills Illinois orders from that inventory. The Illinois Retailer is then
liable for Retailers' Occupation Tax on gross receipts from sales and must collect the corresponding
Use Tax incurred by the purchasers.
Another type of retailer is the retailer maintaining a place of business in Illinois. The definition
of a “retailer maintaining a place of business in Illinois” is described in 86 Ill. Adm. Code 150.201(i).
This type of retailer is required to register with the State as an Illinois Use Tax collector. See 86 Ill.
Adm. Code 150.801. The retailer must collect and remit Use Tax to the State on behalf of the
retailer’s Illinois customers even though the retailer does not incur any Retailers' Occupation Tax
liability.
The United States Supreme Court in Quill Corp. v. North Dakota, 112 S.Ct. 1904 (1992), set
forth the current guidelines for determining what nexus requirements must be met before a person is
properly subject to a state's tax laws. The Supreme Court has set out a 2-prong test for nexus. The
first prong is whether the Due Process Clause is satisfied. Due process will be satisfied if the person
or entity purposely avails itself or himself of the benefits of an economic market in a forum state. Quill
at 1910. The second prong of the Supreme Court's nexus test requires that, if due process
requirements have been satisfied, the person or entity must have physical presence in the forum
state to satisfy the Commerce Clause.
A physical presence is not limited to an office or other physical building. Under Illinois law, it
also includes the presence of any agent or representative of the seller. The representative need not
be a sales representative. Any type of physical presence in the State of Illinois, including the
vendor’s delivery and installation of his product on a repetitive basis, will trigger Use Tax collection
responsibilities. Please refer to Brown’s Furniture, Inc. v. Zehnder, 171 Ill.2d 410, (1996).
The final type of retailer is the out-of-State retailer that does not have sufficient nexus with
Illinois to be required to submit to Illinois tax laws. A retailer in this situation does not incur Retailers’
Occupation Tax on sales into Illinois and is not required to collect Use Tax on behalf of its Illinois
customers. However, the retailer’s Illinois customers will still incur Use Tax liability on the purchase
of the goods and have a duty to self-assess and remit their Use Tax liability directly to the State.
Many retailers that do not have nexus with the State have chosen to voluntarily register as Use Tax
collectors as a courtesy to their Illinois customers so that those customers are not required to file
returns concerning the transactions with those retailers.

I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Richard S Wolters
Associate Counsel
RSW:lkm