The Illinois 2020 tax expansion may require your business to collect sales tax from your customers for any purchases made through your company’s website or the internet. As reported by the Madison record, businesses using online marketplace services such as Amazon, eBay and Etsy to sell their products or services may need to collect 6.25% sales tax from their customers.
Companies are required to collect sales taxes for purchases of goods that are shipped to customers in the Land of Lincoln and in other states. Regardless of where your retail or warehouse is physically located, if a package of goods is delivered to Illinois or another state, sales tax must be collected. Traditionally, sales tax was only collected by those businesses that had a physical location inside of the same state where their packages were delivered. For example, if a customer living in California made a purchase from a company’s website that was physically operating in Illinois, collecting sales tax was not necessary. On the other hand, when the customer also lived in Illinois, the company was required to collect sales tax on the goods that were sold.
In 2018, the Supreme Court of the United States’ decision in South Dakota v. Wayfair Inc. changed the ability for states to collect sales tax through internet sales. States and local municipalities may now require businesses to collect sales tax from their out-of-state customers. While this may increase accounting and record-keeping responsibilities, many companies depend on the internet and popular online marketplaces for generating a bulk of their sales.
This information is provided for educational purposes only, and should not be interpreted as legal advice.