What does Illinois General Information Letter ST 24-0031-GIL say about how the state's sales, use, and hotel taxes apply to prepayments, refunds, marketplace nexus, tax appeals, and specific products and services?

Plain-English summary

This General Information Letter is not a response to one taxpayer's specific fact pattern. It's the Illinois Department of Revenue's answer to a nationwide law firm's annual "Multistate Corporate Tax Guide" survey, which asks every state the same battery of sales/use tax administration questions so practitioners can compare states side by side. Illinois declined to fill out the survey form itself but instead answered the individual questions in narrative form, each grounded in an actual Illinois statute or regulation.

The topics covered include: the dollar threshold ($20,000/month) that triggers accelerated sales tax prepayments; how interest is calculated on sales/use tax refunds (currently 8%, tied to the federal underpayment rate); whether storing inventory with a marketplace facilitator such as Amazon's "Fulfillment by Amazon" program creates nexus (it does not, when the marketplace itself remits the tax); what it takes to appeal a sales tax assessment to the Illinois Independent Tax Tribunal or Circuit Court, including bond and payment-under-protest rules; how Illinois taxes hotel stays and short-term rentals (including new 2024 rules on "re-renters"); and confirmation that Illinois has no sales tax on admission services or digital advertising. It closes with a rundown of which everyday personal care products are taxed at the general 6.25% rate versus the reduced 1% medicine/drug rate, plus the standing exemption for menstrual products, and a note on which services (printing, floristry, catering, etc.) are or aren't taxable under the Service Occupation Tax Act.

Because this letter answers so many unrelated questions in one document, there's no single holding to apply to a specific taxpayer's situation. Instead, it functions as a citation index: each answer names the controlling statute or regulation so a business or its advisor can look up the exact rule for whatever topic is relevant to them.

What this means for you

Sellers and retailers with recurring sales tax liability

If your average monthly Retailers'/Use/Service Occupation/Service Use Tax liability has been $20,000 or more over the preceding four calendar quarters, you must prepay on the 7th, 15th, 22nd, and last day of each month rather than filing and paying on the normal monthly schedule (86 Ill. Adm. Code 130.535(b)). If you're owed a refund or credit, interest doesn't start accruing until 90 days after your return's due date, and it runs from the latest of the original due date, the date you filed a processable return, or the date of overpayment, at a rate tied to the federal underpayment rate under IRC Section 6621 (currently 8% through the end of 2024).

Online sellers using marketplace fulfillment services

Simply having inventory stored in Illinois through a marketplace facilitator's fulfillment network (for example, Amazon FBA) does not by itself create sales/use tax nexus, as long as the marketplace facilitator meets Illinois's tax remittance threshold and is treated as the retailer for those marketplace sales (86 Ill. Adm. Code 131.105, 131.135(a)). This has applied since January 1, 2021.

Hotel operators, short-term rental hosts, and hosting platforms

Illinois's Hotel Operators' Occupation Tax reaches traditional hotels and, as of July 1, 2024, also reaches "re-renters" of hotel rooms (including remote re-renters that meet a sales threshold). However, hosting platforms that facilitate renting of owner- or tenant-occupied dwellings — where at least one room is rented for under 30 consecutive days with everything booked in advance — are specifically excluded from the tax. Chicago-area operators should also be aware of three additional local hotel taxes the Department itself administers (Metropolitan Pier and Exposition Authority, Illinois Sports Facilities Authority, and Chicago Municipal), separate from other local hotel taxes that local governments administer on their own.

Common questions

Q: Is this a binding ruling I can rely on for my own business?
A: No. It's a General Information Letter answering a generic multistate survey, not a ruling on anyone's specific facts. It's useful as a map to the controlling statutes and rules, but you should confirm how they apply to your situation, ideally with a tax professional.

Q: Does keeping inventory in an Amazon warehouse in Illinois make me responsible for collecting Illinois sales tax?
A: Not by itself. If your only Illinois activity is inventory storage through a marketplace facilitator that meets Illinois's remittance threshold, that facilitator (not you) is treated as the retailer, so that alone doesn't create nexus for you.

Q: Does Illinois tax digital advertising or tickets/admissions?
A: No to both. The letter confirms Illinois does not impose a state tax on digital advertising and does not impose sales tax on admission services (concerts, movies, sporting events, museums, etc.).

Q: How is a personal care product like an allergy medicine or diaper taxed?
A: If the product qualifies as a drug, medicine, or medical appliance (generally, something making a written medicinal claim on its label), it's taxed at the reduced 1% state rate plus local taxes. Otherwise it's taxed at the general 6.25% merchandise rate. Grooming and hygiene products are taxed at 6.25% regardless of medicinal claims. Menstrual pads, tampons, and menstrual cups are fully exempt from Retailers' Occupation Tax from January 1, 2017 through December 31, 2026.

Q: If I want to challenge a sales tax assessment, do I have to post a bond first?
A: Only in some paths. Appealing an assessment over $15,000 (excluding interest/penalties) to the Independent Tax Tribunal can require posting a bond equal to 25% of the disputed liability (or a lien in lieu of a bond) if the Department moves for it and the Tribunal agrees it's warranted. Appeals to Circuit Court may or may not require a bond, and you can also pay the assessment in full and file a notice of protest to preserve refund rights.

Citations and references

• 86 Ill. Adm. Code 130.535(b) — accelerated prepayment threshold ($20,000/month)
• 86 Ill. Adm. Code 700.230; 700.210 — refund interest computation and rate (tied to IRC § 6621)
• 86 Ill. Adm. Code 131.105; 131.135(a) — marketplace facilitator nexus rules
• 35 ILCS 1010/1-45(c) — Independent Tax Tribunal bond requirement
• 735 ILCS 5/3-111 — Circuit Court appeal of final administrative decisions
• 30 ILCS 230/2a.1 — payment under protest / notice of protest procedure
• 35 ILCS 145/2, 145/2(10), 145/3, 145/3(b-5) — Hotel Operators' Occupation Tax Act definitions, short-term rentals, re-renters
• 70 ILCS 210/13(c); 70 ILCS 3205/19; 65 ILCS 5/8-3-13 — Chicago-area local hotel taxes administered by the Department
• 35 ILCS 120/2-10 — Retailers' Occupation Tax rate on medicines/drugs (1%) vs. general merchandise (6.25%)
• 86 Ill. Adm. Code 130.311 — qualifying drugs, medicines, and medical appliances
• 86 Ill. Adm. Code 130.120(vv) — menstrual product exemption (2017–2026)
• 86 Ill. Adm. Code 130.101; 140.101 — Retailers' Occupation Tax and Service Occupation Tax bases

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2024.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2024/ST24-0031-GIL.pdf

Original ruling text

ST 24-0031-GIL 10/10/2024 MISCELLANEOUS
This letter responds to an annual survey. (This is a GIL.)
October 10, 2024
NAME
EMAIL1
EMAIL2
Re:

Multistate Corporate Tax Guide Survey of State Tax Departments

Dear NAME:
This letter is in response to your email dated July 25, 2024, 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:
Each year, COMPANY collects and disseminates information regarding the tax
laws of each state. The results of the annual survey are published in the
PUBLICATION, which has been one of the premier state tax reference books
for over 40 years. Your assistance in the preparation of the 2025 edition is
essential and greatly appreciated by the users of the Guide.
Please complete the attached corporate income tax and sales tax
questionnaires and email the completed questionnaires to EMAIL2by DATE.
All new questions are highlighted in red font. To save time, please respond
only to the new questions and to the prior year questions that require a
change. All unanswered questions will be considered to have the same
response as last year, unless otherwise noted. If your responses to last year’s
questionnaire would be helpful, let us know and we will send you a copy.

COMPANY/NAME
Page 2
October 10, 2024
Instructions
All new questions are highlighted in red font. To save time, please respond
only to the new questions and to the prior year questions that require a
change. All unanswered questions will be considered to have the same
response as last year, unless otherwise noted.
Provide answers based on the state laws in effect on July 1, 2024.
Please list the state employee(s) to contact if we have a question regarding a
response: information you have previously recorded in the comments
section, please make those modifications in red font.
Please email the completed questionnaire to EMAIL2by DATE.
If you have any questions, contact NAME at EMAIL1
DEPARTMENT’S RESPONSE:
We are unable to respond to your survey in the format provided. However, we hope
you find the following information regarding the updated questions helpful.

A. SALES AND USE TAX ADMINISTRATION

[4] TAX RETURNS AND PAYMENTS
▪ Does your state require high-volume taxpayers to make advance or accelerated prepayments of
sales tax?
 Yes  No
▪ If YES: ▪ At what sales volume must prepayments be made?
▪ What are the due dates for prepayment?

DEPARTMENT’S RESPONSE
If a taxpayer’s average monthly tax liability to the Department under the Retailers’
Occupation Tax Act, Use Tax Act, Service Occupation Tax Act, and Service Use Tax Act was
$20,000 or more during the preceding four complete calendar quarters, the taxpayer is

COMPANY/NAME
Page 3
October 10, 2024
required to make payment to the Department on or before the 7th, 15th, 22nd and last day of
the month during which such liability is incurred. See 86 Ill. Adm. Code 130.535(b).
[8] REFUNDS
▪ Where does a taxpayer compute a sales/use tax refund (e.g., for returned merchandise)?
 As an adjustment on the next timely filed sales tax return
 By amending the
original sales tax return
 By filing a separate claim-for-refund form (Form __)
 Other,
explain:
▪ Is interest paid on sales tax refunds on amended returns?
 Yes  No
▪ Is interest paid on use tax refunds on amended returns?
 Yes  No
▪ If YES, at what rate is interest paid?

DEPARTMENT’S RESPONSE
Unless an overpayment is refunded or a credit is approved within 90 days after the
return due date, interest paid to the taxpayer, pursuant to the filing of an amended return or
claim for refund, is determined from the later of the due date of the original return, the date
a processable return is filed, or the date of overpayment. Interest continues to accrue until
the overpayment is refunded, applied to a liability, or converted to a credit memorandum,
whichever is the latest. See 86 Ill. Adm. Code 700.230. Interest paid by the Department to
taxpayers is based on the underpayment rate established under Section 6621 of the Internal
Revenue Code. See 86 Ill. Adm. Code 700.210. The current interest rate through December
31, 2024, is 8%.
[16] NEXUS. If a corporation’s sole activity in your state is the activity identified below, does the
activity create an obligation to collect and remit sales/use tax (check each activity that would, by
itself, create sales/use tax nexus)?
 Inventory assignment and storage by a third party - Fulfillment by Amazon (FBA)
DEPARTMENT’S RESPONSE
Beginning on January 1, 2021, a remote retailer’s inventory at the location of a
marketplace facilitator in Illinois does not create a physical presence nexus when used
exclusively to fulfill orders made over a marketplace that meets a tax remittance threshold
under 86 Ill. Adm. Code 131.135(a) because the marketplace facilitator is considered the
retailer with respect to sales over the marketplace. See 86 Ill. Adm. Code 131.105.

COMPANY/NAME
Page 4
October 10, 2024

[26] PAY-TO-PLAY APPEAL RIGHTS
▪Does your state require the payment of tax or the posting of a bond for the tax before an
assessment
appeal can progress to an independent hearing body (e.g., circuit court or appeals board)?
 Yes  No
▪ If YES, the taxpayer:  Must pay tax  Must post bond  Must pay tax or post bond

DEPARTMENT’S RESPONSE
Taxpayers may appeal sales tax assessments over $15,000, excluding interest and
penalties, to the Independent Tax Tribunal, which may require the taxpayer to post a bond
equal to 25% of the liability at issue upon motion of the Department and a finding by the Tax
Tribunal that a posting of a bond is warranted under the facts presented. The Tax Tribunal
may allow the filing of a lien in lieu of a bond. 35 ILCS 1010/1-45(c). Taxpayers may also
appeal final administrative decisions to Circuit Courts, which may or may not require a
bond. See 735 ILCS 5/3-111. Taxpayers may also choose to pay the full amount of the
deficiency and file a notice of protest in Circuit Court pursuant to 30 ILCS 230/2a.1. The
notice must express the taxpayer’s intention to file a complaint in circuit court and obtain
an injunction within 30 days of the date of the protested payment to preserve the taxpayer’s
right to a refund. 30 ILCS 230/2a.1.
[28] SHORT-TERM RENTALS
▪ Does your state impose sales tax on short-term rentals of real property?
 Yes  No
▪ Do your local jurisdictions (county, city, etc.) impose sales tax on short-term rentals of real
property?
 Yes  No
▪ Does your state impose other taxes on short-term rentals of real property (check all that apply)?
 Hotel tax  Lodging tax  Accommodation tax  Occupancy tax  Transient tax
 Tourist tax
▪ Do your local jurisdictions (county, city, etc.) impose other taxes on short-term rentals of real
property
(check all that apply)?
 Hotel tax  Lodging tax  Accommodation tax  Occupancy tax  Transient tax
 Tourist tax

DEPARTMENT’S RESPONSE

COMPANY/NAME
Page 5
October 10, 2024
The Hotel Operators’ Occupation Tax Act is imposed upon hotel operators engaged
in the business of renting, leasing, or letting rooms in a hotel. 35 ILCS 145/3. A hotel
includes any building or buildings in which the public may, for a consideration, obtain living
quarters, sleeping, or housekeeping accommodations. 35 ILCS 145/2. The definition of
hotel covers short-term rentals; however, effective July 1, 2024, for the purposes of rerenters of hotel rooms only, “hotel” does not include a short-term rental. 35 ILCS 145/2.
Further, effective July 1, 2024, the definition of a hotel operator subject to the tax has been
expanded to include re-renters of hotel rooms, including remote re-renters meeting a
threshold test under 35 ILCS 145/3(b-5). Specifically excluded from the tax are hosting
platforms which facilitate the renting of owner-occupied, tenant-occupied, or non-owneroccupied dwellings where at least one room in the dwelling is rented to an occupant for a
period of less than 30 consecutive days and all accommodations are reserved in advance.
35 ILCS 145/2(10).
The Department administers three local Chicago hotel taxes: the Metropolitan Pier
and Exposition Authority Hotel Tax 70 ILCS 210/13(c), the Illinois Sports Facilities Authority’s
Hotel Tax 70 ILCS 3205/19, and the Chicago Municipal Hotel Tax 65 ILCS 5/8-3-13. Unlike
the Chicago hotel taxes administered by the Department, all other local hotel taxes are
administered by the local governments which imposed the tax, and do not necessarily follow
the State Hotel Operators’ Occupation Tax Act.

B. SALES AND USE TAX BASE

[b] ADMISSION SERVICES
▪ Does your state impose sales tax on “admission services”?
 Yes  No
▪ If YES, which of the following admission services are taxable (check all that apply)?
 Amusement parks and carnivals  Concerts  Theater  Movies  Trade shows
 Museums, zoos, and aquariums  Professional or college sporting events

DEPARTMENT’S RESPONSE
Illinois does not impose a sales tax on admission services.
DIGITAL ADVERTISING
▪ Does your state tax digital advertising under an excise tax separate from sales/use tax?
 No

 Yes

COMPANY/NAME
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October 10, 2024
▪ If YES, what is the sales volume threshold that triggers a filing obligation?
▪ If YES, how is the purchase of digital advertising sourced?
 User’s IP address  Buyer’s billing address  Apportionment formula  Other
(explain)

DEPARTMENT’S RESPONSE
Illinois does not impose a State tax on digital advertising.
PERSONAL CARE (without a prescription). Which of the following purchases are taxable (check
all that apply)?
 Alcohol wipes and swabs  Burn ointments  Eyedrops
 Ipecac
 Allergy relief products  Calamine lotion  Feminine hygiene products Lice treatments
 Asthma preparations
 Denture adhesive products
 First aid kits
 Nasal drops or sprays
 Band-aids and bandages  Diapers
 Incontinence underpads  Teething lotions
 Blood pressure monitors

DEPARTMENT’S RESPONSE
Products that qualify as drugs, medicines and medical appliances are taxed at a
State rate of 1% plus any applicable local taxes. Products that do not qualify for the 1% rate
of tax are taxed at the general merchandise rate of 6.25% plus applicable local taxes. [35
ILCS 120/2-10]. Qualifying products include prescription drugs or medicines and
nonprescription drugs or medicines. A medicine or drug is any pill, powder, potion, salve, or
other preparation for human use that purports on the label to have medicinal qualities. A
written claim on the label that a product is intended to cure or treat disease, illness, injury,
or pain, or to mitigate the symptoms of such disease, illness, injury, or pain constitutes a
medicinal claim. See 86 Ill. Adm. 130.311 for information and examples on the type of
products that qualify, and those that do not qualify for the 1% tax rate. The term
“nonprescription medicines and drugs” does not include grooming and hygiene products. If
an item is a nonprescription grooming and hygiene product, it will be taxed at the State
6.25% general merchandise rate regardless of any medicinal claims made on the product’s
label. Beginning January 1, 2017, through December 31, 2026, Retailers’ Occupation Tax
does not apply to sales of menstrual pads, tampons, and menstrual cups. 86 Ill. Adm. Code
130.120(vv).

COMPANY/NAME
Page 7
October 10, 2024
[73] MISCELLANEOUS SERVICES. Which of the following services are taxable (check all that
apply)?
 Printing
 Massage
 Tanning
 Tattooing
 Florist
 Taxidermy
 Catering
 Domestic residential cleaning
 Clothing alteration and/or repair  Interior decorating and design
 Commercial cleaning and janitorial
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. The Retailers’ Occupation Tax does not apply
to sales of service. Under the Service Occupation Tax Act, businesses providing services
(i.e., servicemen) are taxed on tangible personal property transferred incident to sales of
service. See 86 Ill. Adm. Code 140.101. If no tangible personal property is transferred
incident to sales of service, no tax is due. Note that Subpart S of 86 Ill. Adm. Code 130
addresses the taxation of specific types of businesses including printers, florists, and
caterers.
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,

Thomas Grudichak
Associate Counsel
TG/slc