If you’re selling digital services and products to customers in Illinois, then you might be liable for Illinois’ sales tax -- also referred to as “retailers’ occupation tax”. This guide covers two very important parts of the system:
- Registering for the tax, and then
- Filing tax returns on time.
We’ve scoured the Illinois Revenue website to provide you with all the necessary information about sales tax for businesses in one place.
How to register for sales tax in Illinois
Remote sellers register for sales tax in Illinois according to where you are based.
US businesses can register via MyTax Illinois, an online tax portal. This portal is also where you’ll file and pay your tax returns. More on that later!
International businesses must register by filling out a form and emailing it to the Illinois tax office. You’ll find more information below.
The first step is to register for a sales tax permit.
- Go to the MyTax Illinois website, which will immediately take you to the first step of the REG-1 New Business registration form.
- Provide standard personal information, as well as more business details. When it’s time to provide your business’ legal address, you must verify it by clicking the button below.
- You’re required to select your primary business activity and primary business type (e.g. Advertising & Business Services, Computer/Programming/Software, etc.). If that’s not enough to capture everything your business does, you’re also given the option to select a secondary activity and type.
- Then follows a series of questions about your industry and the products you sell. These are simple Yes or No questions, and you can click on whichever answer fits your business.
Note: Whenever you see a hyperlinked question with blue text, simply click on it to read helpful clarification! See below.
- Then you’ll see a screen that asks all remote retailers to immediately click “Next”. This section is for brick-and-mortar businesses only. If you don’t have a permanent location in Illinois, then carry on!
- Now at the Changing Locations screen, you should check off all the municipalities and counties in Illinois where you currently tax at a destination rate. You can scroll down, click through the list, or use the search filter feature.
Finally, enter information about the responsible parties, i.e. the people responsible for the business’ tax obligations. That could be one or more people, and you’re free to enter someone else in the form.
Your application takes about 1-2 days to process. You’ll be notified via email.
Once reviewed and approved, you should receive a sales tax permit. When you do, you’ll also be assigned a filing frequency: monthly, quarterly, or yearly.
In summary, the registration process is pretty simple! You must fill out Form REG-1, Illinois Business Registration Application and email it to REV.TA-Sales@illinois.gov.
However, the form requires a lot of information, so it’s worth looking through and gathering all the necessary documents and data ahead of time. Here’s a sneak peek:
Things to note about this form:
- Question 1 asks about a Federal Employer Identification Number (FEIN or EIN). If you aren’t familiar with this, take a moment to read about what an EIN number is and how to get one.
- Although the form is designed for US addresses, simply write in your full location and country in the fields provided for “State,” etc.
- You must print it out and sign it physically, then rescan to email. Electronic signatures are not accepted.
Processing could take anywhere from 6 to 8 weeks. Once approved, you’ll be assigned a filing frequency: monthly, quarterly, or yearly.
Now that you’re registered for sales tax, you can activate your MyTax Illinois account.
How to file sales tax returns in Illinois
Sales and taxes should be reported and filed using US dollars. If you’ve made any transactions in Illinois in a different currency, be sure to convert those to USD using official currency exchange rates.
When to file and pay
You must file a sales tax return either monthly, quarterly, or yearly. The deadlines are as follows:
For monthly filers, reports are due on the 20th of the month following the reporting month. For example, the April sales tax report is due May 20.
For quarterly filers, reports are due on the 20th of the month following the reporting period.
- April 20, for first quarter ending March 31
- July 20, for second quarter ending June 30
- October 20, for third quarter ending September 30
- January 20, for fourth quarter ending December 31
For yearly filers, reports for the previous year are due on January 20.
Note: Didn’t make any sales in Illinois during your reporting period? You should still report that. This is typically called a “zero return” and it follows the exact same process as a normal return. (Just a little less data entry 😉)
How to file
Before you get started, you should collect all the information about your taxable sales in Illinois during the previous quarter. The tax website suggests having these pieces ready:
- total sales and income
- total purchases and expenses
You can file online in MyTax Illinois. You can log in here.
Once you’ve completed your return, you’ll receive specific instructions on how to pay.
How to pay
Tax payments must be made using US dollars.
You can pay directly in MyTax Illinois at the end of the tax declaration process, when you file your return. This will be an electronic bank transfer or credit card payment.
What to do in between registering and filing?
Well, you must comply with all the rules for Illinois sales tax! That means charging 6.25% sales tax and watching out for local level taxes, among other things.
For further reading that will help you stay compliant and successful as a remote seller, check out our Business Guide to Sales Tax in Illinois.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.