Can an Illinois retailer legally advertise that customers 'pay no sales tax' on their purchase?

Plain-English summary

Illinois's Use Tax Act does not just impose a tax -- it also bans a specific kind of advertising. Section 7 of the Act (35 ILCS 105/7) makes it a Class A misdemeanor for a retailer to advertise, or tell customers directly or indirectly, that the retailer will "absorb" the sales/use tax or that the tax will not be added to the selling price. The Department's own regulation, 86 Ill. Adm. Code 150.515, restates this same prohibition.

This particular letter isn't a response to a taxpayer's question -- it's the Department acting on a complaint or a copy of an ad it received in the mail. A retailer had advertised "Pay No Sales Tax on Entire Purchase exclusions apply," with the asterisk pointing to an "enter to win" promotion rather than explaining what was actually excluded from the tax-free claim. The Department's Associate Counsel wrote directly to the retailer: this advertising violates the Use Tax Act, the retailer must immediately stop* advertising that no sales tax will apply, and any repeat of this kind of ad "will be viewed as a continuing violation, which could result in criminal prosecution."

What this means for you

Retailers and marketers

Do not advertise "no sales tax," "we pay the tax," or similar language implying the customer won't be charged tax on a purchase -- even with a fine-print disclaimer -- unless the transaction is genuinely, fully tax-exempt. Illinois treats this as more than a marketing puffery problem: intentionally or not, it's a specific criminal violation (a Class A misdemeanor) under the Use Tax Act, and the tax still must be separately stated and collected from the customer.

Accountants and tax professionals advising retail clients

If a client's promotional materials use "tax included," "we cover the tax," or "no tax today" language, flag it regardless of how the promotion is actually structured on the back end -- the statute targets the advertising representation itself (35 ILCS 105/7), not just whether tax was ultimately collected correctly.

Common questions

Q: Can a retailer legally offer a "we pay your sales tax" promotion?
A: Not by advertising it that way. Illinois law prohibits a retailer from advertising or stating to customers that it will absorb the tax or that tax won't be added to the price. The tax must still be added to and collected as part of the selling price.

Q: What's the penalty for violating this rule?
A: Illinois law (35 ILCS 105/7) makes a violation a Class A misdemeanor, and the Department's letter warns that repeated violations could lead to criminal prosecution.

Q: Is this letter a General Information Letter like other Illinois GILs?
A: The Department's own PDF labels it "(This is a GIL)," but it isn't a response to anyone's request for information -- it's an unprompted compliance warning triggered by an ad the Department received. It doesn't bind the Department as to any retailer other than the one addressed, and it isn't a substitute for reading the statute and regulation yourself.

Q: Does adding a disclaimer or fine print (like "*exclusions apply") fix the problem?
A: Not based on this letter -- the Department objected to the ad even though it carried an asterisked disclaimer, because the disclaimer didn't actually explain what was excluded from the "no tax" claim.

Citations and references

• 86 Ill. Adm. Code 150.515 (prohibition on advertising that the retailer will absorb use tax)
• 35 ILCS 105/3-45 (Use Tax Act -- retailer must collect tax by adding it to the selling price)
• 35 ILCS 105/7 (Use Tax Act Section 7 -- unlawful to advertise tax absorption; Class A misdemeanor)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2025.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2025/st25-0035-gil.pdf

Original ruling text

ST 25-0035-GIL 07/01/2025 USE TAX
Retailers are prohibited from advertising or holding out that they will absorb the
purchaser's use tax obligation. See 86 Ill. Adm. Code 150.515. (This is a GIL.)
July 1, 2025
COMPANY
ADDRESS
Dear Madam or Sir:
It has come to our attention that an advertisement of COMPANY, sent by mail, and
received by our office, (copy enclosed) makes a statement that customers making purchases
"Pay No Sales Tax on Entire Purchase exclusions apply". The "" does not further explain what
"exclusions apply" but relates to the "enter to win" promotion.
Please consider this letter as fair notice that this conduct violates the provisions of the
Use Tax Act. See 35 ILCS 105/3-45. This Section of the Use Tax Act requires Illinois retailers
to collect the Use Tax from purchasers by adding the tax to the selling price of the tangible
personal property when sold for use. Section 7 of the Act states:
It is unlawful for any retailer to advertise or hold out or state to the public or to
any purchaser, consumer or user, directly or indirectly, that the tax or any part
thereof imposed by Section 3 hereof will be assumed or absorbed by the retailer
or that it will not be added to the selling price of the property sold, or if added
that it or any part thereof will be refunded other than when the retailer refunds
the selling price and tax because of the merchandise's being returned to the
retailer or other than when the retailer credits or refunds the tax to the
purchaser to support a claim filed with the Department under the Retailers'
Occupation Tax Act or under this Act. Any person violating any of the provisions
of this Section within this State shall be guilty of a Class A misdemeanor. 35
ILCS 105/7.
As indicated above, it is a Class A misdemeanor for a retailer to advertise that it will pay
the sales tax on a purchase or that the tax will not be added to the selling price. The
Department's regulations found at 86 Ill. Adm. Code 150.515 reflect this statutory prohibition.
While we do not want to interfere with your advertising techniques, under the circumstances,
we are compelled to do so. You should immediately cease advertising that no sales tax will
be incurred. Any future advertisements of this kind will be viewed as a continuing violation,
which could result in criminal prosecution.

COMPANY
Page 2
July 1, 2025
If you require additional information, please visit our website at
https://tax.illinois.gov/ or contact the Department’s Taxpayer Information Division at 800732-8866.
Very truly yours,
Kimberly Rossini
Associate Counsel
KAR:slc