When does a marketplace facilitator have to register and collect Illinois state and local sales tax on behalf of its marketplace sellers?

Plain-English summary

An Illinois public accounting firm asked the Department how its clients should handle local (city and county) sales tax once they start selling as "Marketplace Facilitators" on a business's platform, above and beyond the 6.25% state sales tax the platform already collects. The Department responded with a General Information Letter (GIL) walking through Illinois's marketplace facilitator rules under 86 Ill. Adm. Code 131.

The key point: since January 1, 2021, a marketplace facilitator — a person who, under an agreement with an unrelated third-party seller, lists or advertises the seller's taxable goods and collects payment from the customer — is treated as the retailer for Illinois Retailers' Occupation Tax purposes once it (combined with its marketplace sellers) crosses either of two thresholds in a marketplace: $100,000 or more in cumulative gross receipts from Illinois sales, or 200 or more separate transactions with Illinois purchasers.

Once either threshold is met, the marketplace facilitator must register with the Department, file returns, and remit all applicable state and local Retailers' Occupation Tax on sales made through the marketplace — both its own sales and those made on behalf of marketplace sellers — and it is subject to audit on those sales. A marketplace seller who has properly obtained a certification from the facilitator is generally not liable for that state and local tax itself; the facilitator is, unless the seller gave it incorrect information. The Department will not collect the same tax twice from both the facilitator and the seller on one transaction. The GIL also flags that these rules only cover Retailers' Occupation Tax and local sales taxes the Department administers — any other taxes or fees a seller owes are unaffected.

What this means for you

Marketplace sellers

If you sell through a marketplace facilitator's platform, the facilitator — not you — is generally responsible for collecting and remitting Illinois state and local sales tax on those sales, once the facilitator/marketplace crosses the $100,000 or 200-transaction threshold. To get that liability relief, you need to have obtained the required certification from the facilitator under 86 Ill. Adm. Code 131.145(b)/131.150(a) before your sales. You still remain responsible for any other taxes or fees not covered by these marketplace rules.

Marketplace facilitators and platform operators

If your combined marketplace sales into Illinois (yours plus your sellers') reach $100,000 or 200 separate transactions in a year, you must register with the Illinois Department of Revenue and collect, file, and remit both the state Retailers' Occupation Tax and all applicable local (city/county) retailers' occupation taxes on those sales — not just the 6.25% state rate. This applies to your own sales through the marketplace as well as sales made on behalf of your marketplace sellers, and the Department can audit all of it.

Accountants and tax professionals advising sellers

When a client is deciding whether to sell through a marketplace facilitator, confirm (1) whether the facilitator has crossed the 86 Ill. Adm. Code 131.135(a) thresholds, and (2) whether your client has obtained the certification from the facilitator described in 86 Ill. Adm. Code 131.145/131.150 that shifts state and local ROT collection duty to the facilitator. Remember the rules in Part 131 only reach Retailers' Occupation Tax and Department-administered local sales tax — other tax obligations aren't addressed by this framework.

Common questions

Q: Who has to collect the local city and county sales tax above the 6.25% state rate — the facilitator or the individual seller?
A: Once the marketplace facilitator's combined sales meet the $100,000 or 200-transaction threshold, the facilitator must collect, file, and remit both the state Retailers' Occupation Tax and all applicable local retailers' occupation taxes on sales made through the marketplace, including sales made on behalf of its marketplace sellers.

Q: What are the two thresholds that trigger a marketplace facilitator's registration duty?
A: Under 86 Ill. Adm. Code 131.135(a), a marketplace facilitator is treated as a retailer if either (1) cumulative gross receipts from Illinois sales made through the marketplace (by the facilitator and its sellers combined) are $100,000 or more, or (2) the facilitator and its sellers cumulatively make 200 or more separate transactions with Illinois purchasers.

Q: Can the Department collect the same tax from both the marketplace facilitator and the marketplace seller?
A: No. Under 35 ILCS 120/2(h) and 86 Ill. Adm. Code 131.145(k)/131.150(h), the Department is prohibited from collecting state and local retailers' occupation tax from both the facilitator and the seller on the same transaction.

Q: Does a marketplace seller ever remain liable for the tax on its own marketplace sales?
A: Generally no, if it has obtained the required certification from the marketplace facilitator before the sale. But the facilitator can shift liability back to the seller if the seller gave the facilitator incorrect information (86 Ill. Adm. Code 131.145(d)).

Q: Does this GIL cover every tax a marketplace seller might owe?
A: No. The Part 131 marketplace rules apply only to state Retailers' Occupation Tax and local retailers' occupation taxes administered by the Department. Other taxes or fees the Department administers, or taxes not administered by the Department at all, still have to be handled separately by the marketplace seller.

Q: Is this GIL binding on the Department?
A: No. As a General Information Letter issued under 2 Ill. Adm. Code 1200.120, it only points the requester to the relevant regulations; it is not a statement of Department policy and does not bind the Department the way a Private Letter Ruling would.

Citations and references

Statutes and rules:

• 35 ILCS 120/1 (definitions of marketplace, marketplace facilitator, marketplace seller)
• 35 ILCS 120/2(h) (no double collection from facilitator and seller on same sale)
• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax imposition)
• 86 Ill. Adm. Code 150.101 (Use Tax imposition)
• 86 Ill. Adm. Code 131.105 (marketplace/facilitator/seller definitions)
• 86 Ill. Adm. Code 131.135(a) ($100,000 / 200-transaction economic nexus thresholds)
• 86 Ill. Adm. Code 131.145 (facilitator registration, filing, remittance, audit)
• 86 Ill. Adm. Code 131.150 (seller certification and liability relief)
• 86 Ill. Adm. Code 131.107(c) (taxes/fees outside the marketplace rules)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedure)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2021.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2021/st21-0026-gil.pdf

Original ruling text

ST-21-GC-0026 07/28/2021 RETAILERS’ OCCUPATION TAX
This provides information regarding Retailers’ Occupation Tax Collection
operation of Marketplace Facilitators. See 86 Ill. Adm. Code 131. (This is a
GIL.)
July 29, 2021
Dear NAME:
This letter is in response to your letter received September 28, 2020, in which
you requested 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 provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
RE: Sales Tax -BUSINESS Marketplace Facilitator
To Whom It May Concern,
We are a public accounting firm with a number of sales tax clients.
Some of our clients are interested in selling their products on
BUSINESS by becoming Marketplace Facilitators. This letter is a
request for documentation on how to proceed with filing and paying
the local city and/or county sales tax for our clients that is above the
Illinois sales tax of 6.25%, which the state requires BUSINESS to
collect, file and pay on behalf of our clients.
Please feel free to contact me or my staff at PHONE# if you require
further details. We appreciate your time.
DEPARTMENT’S RESPONSE:
The Retailers’ Occupation Tax Act imposes a tax upon persons engaged in this
State in the business of selling tangible personal property at retail to purchasers for use
or consumption. See 86 Ill. Adm. Cod 130.101. 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

COMPANY/NAME-TITLE
Page 2
July 29, 2021
commonly known as “sales tax” in Illinois. Purchases of tangible personal property are
subject to Illinois sales tax unless a purchase qualifies for an exemption under Illinois
law.
A marketplace is a physical or electronic place, forum, platform, application, or
other method by which a marketplace seller sells or offers to sell items. See 35 ILCS
120/1; 86 Ill. Adm. Code 131.105. A marketplace facilitator is a person who, pursuant to
an agreement with an unrelated third-party marketplace seller, directly or indirectly
through one or more affiliates, facilitates a retail sale by an unrelated third-party
marketplace seller by listing or advertising for sale, by the marketplace seller in a
marketplace, tangible personal property that is subject to tax under the Retailers'
Occupation Tax Act; and either directly or indirectly, through agreements or
arrangements with third parties, collecting payment from the customer and transmitting
that payment to the marketplace seller regardless of whether the marketplace facilitator
receives compensation or other consideration in exchange for its services. See 35
ILCS 120/1; 86 Ill. Adm. Code 131.105, amended by emergency rule at 45 Ill. Reg.
9625, effective July 13, 2021, for a maximum of 150 days. A marketplace seller is a
person who makes sales through a marketplace operated by an unrelated third-party
marketplace facilitator and who has obtained a certification from the marketplace
facilitator as provided in Section 131.145. See 35 ILCS 120/1; 86 Ill. Adm. Code
131.105.
Beginning January 1, 2021, a marketplace facilitator, as defined above, is
considered a retailer engaged in the occupation of selling at retail in Illinois for purposes
of the Retailers’ Occupation Tax Act if either of following thresholds is met:
1)
2)

The cumulative gross receipts from sales of tangible personal property to
purchasers in Illinois made through the marketplace by the marketplace
facilitator and by marketplace sellers are $100,000 or more; or
The marketplace facilitator and marketplace sellers selling through the
marketplace cumulatively enter into 200 or more separate transactions for
the sale of tangible personal property to purchasers in Illinois.

See 86 Ill. Adm. Code 131.135(a).
A marketplace facilitator meeting both of these thresholds, is required to register
with the Department, file returns, and remit all applicable State and local retailers'
occupation taxes administered by the Department for all sales made over the
marketplace to Illinois purchasers, including their own sales and sales made on behalf
of marketplace sellers. See 86 Ill. Adm. Code 131.145(a) and 131.145(c). Further,
marketplace facilitators are subject to audit on all such sales. Section 131.145(c)
Generally, a marketplace seller is not liable for State and local retailers'
occupation taxes for sales of tangible personal property sold to Illinois purchasers
through a marketplace, provided that, prior to its sales, it has obtained a certification

COMPANY/NAME-TITLE
Page 3
July 29, 2021
from the marketplace facilitator. See 86 Ill. Adm. Code 131.145(b) and 131.150(a). The
marketplace facilitator would be liable for the applicable taxes on these sales unless the
marketplace seller provides it with incorrect information. See Section 131.145(d). The
Department is prohibited from collecting State and local retailers' occupation taxes from
both the marketplace facilitator and the marketplace seller on the same transaction.
See 35 ILCS 120/2(h); 86 Ill. Adm. Code 131.145(k); 86 Ill. Adm. Code 131.150(h).
Please note that the rules established under 86 Ill. Adm. Code 131 apply only to
the remittance of State Retailers’ Occupation Tax and local retailers’ occupation taxes
administered by the Department. Marketplace sellers that incur other taxes or fees
administered by the Department, or other taxes not administered by the Department,
remain liable for the remittance of those taxes to the Department or other taxing
authority. See 86 Ill. Adm. Code 131.107(c), amended by emergency rule at 45 Ill. Reg.
9625, effective July 13, 2021, for a maximum of 150 days.
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.

Alexis K. Overstreet
Associate Counsel

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