Illinois: Guidance Issued on Tax Types Marketplace Facilitators Are Required to Collect

The Illinois Department of Revenue recently issued two Compliance Alerts addressing the obligations of remote retailers, marketplace sellers, and marketplace facilitators. Under Illinois law, effective January 1, 2021, remote retailers and marketplace facilitators are required to collect and remit state and local retailers’ occupation taxes (ROT) administered by the Illinois Department of Revenue.  Compliance Alert 2021-01 addresses other types of taxes/fees that might be owed on a facilitated transaction. In addition to state and local ROT, remote retailers and marketplace facilitators are required to collect and remit the Chicago Home Rule Municipal Soft Drink ROT (if the seller is in Chicago). However, marketplace facilitators are not required to collect and remit certain other taxes administered by Department of Revenue on facilitated sales, such as the Prepaid Wireless E911 Surcharge, Illinois Telecommunications Access Corporation Assessment, and the Tire User Fee.  These taxes/fees remain the obligation of the marketplace seller. The Department encourages marketplace sellers to make arrangements with their marketplace facilitators to collect these taxes/fees and transmit these taxes/fees to the marketplace sellers to further remit them to the Department. The Compliance Alert warns remote retailers, marketplace sellers, and marketplace facilitators that they may also be liable for taxes not administered by the Department, including taxes imposed and administered by a home rule municipality on food prepared for immediate consumption and on alcoholic beverages. Compliance Alert 2021-02 addresses the Metropolitan Pier and Exposition Authority (MPEA) Food and Beverage Retailer’s Occupation Tax.  Restaurants and other food and beverage establishments that are subject to the MPEA Food and Beverage Tax will continue to remit the MPEA tax to the Department for all their sales, including sales made over a marketplace that is a food delivery service. Although they are not required to remit the MPEA tax, marketplace facilitators are required to remit sales tax on sales made over the marketplace on behalf of restaurants and other food and beverage establishments within the MPEA boundaries.  Please contact John Griesedieck at 312-665-3024 with questions on the recently issued guidance.