EXAMPLE: If Remote Retailer A's only activities are sales of exempt manufacturing machinery and equipment to Illinois manufacturers, the provisions of this Part do not apply and it is not required to register with the Department and file returns. If Remote Retailer A makes any taxable sales, however, the provisions of this Part apply and it must determine whether it meets either of the tax remittance thresholds in Section 131.115. The rules provided in Section 131.120 must be applied when making this determination. For example, for purposes of determining if it has met either of the tax remittance thresholds, it must include its exempt sales as provided in Section 131.120(b)(5).
EXAMPLE 1: On December 31, 2020, ABC Wines, an Illinois Liquor Control Commission Winery Shipper's License holder located in New York that has no physical presence in Illinois, determines that it has made sales to Illinois purchasers for the preceding 12 months that exceed $100,000. Beginning January 1, 2021, ABC Wines must collect and remit State and local retailers' occupation tax in effect at the Illinois address to which its products are shipped or delivered or at which possession is taken by the purchaser ("destination sourcing") for sales to Illinois purchasers for one year.
EXAMPLE 2: Ponchos for Pooches.com is a retailer of rain gear for dogs. Its sales are made exclusively from its manufacturing facility in Portland, Oregon. It has no physical presence in Illinois. Its annual gross receipts from sales to Illinois purchasers exceed $100,000. Ponchos for Pooches.com is a remote retailer and is required to register with the Department and remit State and local retailers' occupation taxes in effect at the address to which its products are shipped or delivered or at which possession is taken by the purchaser ("destination sourcing").
EXAMPLE 3: Rain gear sold to Illinois purchasers by Ponchos for Pooches.com has skyrocketed. As a result, the company has begun sending sales representatives to Illinois to market its products through local pet stores. As a result of these activities, Ponchos for Pooches.com is no longer considered a remote retailer because it has a physical presence in Illinois due to the presence of its sales reps. At this point, its tax liability changes. It no longer incurs State and local retailers' occupation taxes on its sales. It instead incurs an obligation to collect and remit only the Use Tax (6.25 %) on its sales.
EXAMPLE 4: Ponchos for Pooches.com has become so popular with Illinois purchasers that the company decides to open up a manufacturing facility in Illinois. Sales to Illinois purchasers are sometimes fulfilled from this facility. For all sales to Illinois purchasers that are fulfilled from its Illinois manufacturing facility, Ponchos for Pooches.com incurs State and local retailers' occupation taxes in effect at the location of the manufacturing facility ("origin sourcing"). In addition, Ponchos for Pooches.com incurs only a Use Tax collection obligation (6.25%) on sales made from its Oregon manufacturing facility. As illustrated in Example 3, Ponchos for Pooches.com is not considered a remote retailer because it has a physical presence in Illinois (its manufacturing facility).
EXAMPLE 5: Ponchos for Pooches.com decides to sell its products over a marketplace. The marketplace meets the tax remittance requirements of Section 131.135(a) and so is required to remit State and local retailers' occupation taxes to the Department on all sales made over its marketplace to Illinois purchasers by its marketplace sellers. Ponchos for Pooches.com is not responsible for reporting and remitting tax on sales made over the marketplace. As provided in Example 4, Ponchos for Pooches.com maintains a physical presence in Illinois due to its manufacturing facility. Ponchos for Pooches.com incurs State and local retailers' occupation taxes for all sales it makes to Illinois purchasers outside the marketplace that are fulfilled from its Illinois manufacturing facility ("origin sourcing"). In addition, Ponchos for Pooches.com incurs only a Use Tax collection obligation (6.25%) on sales it makes outside the marketplace to Illinois purchasers that are fulfilled from its Oregon manufacturing facility.
Ill. Admin. Code tit. 86, § 131.110