Do You Have Nexus in Illinois?
The two main ways to establish sales tax nexus are physical nexus and economic nexus. Physical nexus is established when a business has a type of physical presence in a state, such as a store or warehouse. Economic nexus, on the other hand, is established based on a business’s sales activity in a state, regardless of whether they have a physical presence or not. This means that even if a business doesn’t have a physical presence in a state, they may still be required to collect and remit sales tax if they meet the economic nexus threshold in that state.
Physical sales tax nexus in Illinois refers to the requirement for businesses to collect and remit sales tax in the state if they have a physical presence in Illinois. This physical presence could be established through various factors, such as having a brick-and-mortar store, a warehouse, an employee, or an office in Illinois. Additionally, businesses that have sales representatives or agents operating in the state may also be considered to have physical nexus in Illinois. Once a business has established physical nexus in the state, they are required to register for a sales tax permit and collect, remit, and file the appropriate amount of sales tax on all taxable transactions that occur within Illinois. It is important for businesses to understand the specific requirements for physical nexus in Illinois to ensure compliance with state sales tax laws. If you would like to speak to someone about your specific sales tax nexus footprint, schedule a call with a HOST representative today.
Illinois has an economic nexus law that went into effect on October 1, 2018. Under this law, out-of-state businesses are required to collect and remit Illinois sales tax if they meet certain thresholds. Specifically, businesses must collect and remit Illinois sales tax if they have made sales of tangible personal property or services exceeding $100,000 in Illinois during the previous 12-month period, or if they have completed 200 or more separate transactions in the state during the previous 12-month period. This means that even if a business does not have a physical presence in Illinois, they may still be required to collect and remit sales tax if they meet the economic nexus threshold.
How Do You Register for a Sales Tax Permit in Illinois?
In order to obtain a sales tax permit in IL, follow the steps below.
1. Navigate to the Illinois Departmnet of Revenue website.
2. Scroll down to the “Register” section
3. Click “Register a New Business (Form REG-1)” and proceed through the questionnaire
After your sales tax application has been processed by the state, you will be issued a sales tax permit. You can then start collecting and remitting sales tax to the state by submitting your sales tax returns.
TIP: If you are registering for a sales tax permit in IL as a remote seller, you will want to select “Yes” to the question below.
What Information Do You Need to Register?
Some of the information that you will need readily available register for a sales tax permit in IL are below:
- Business name and address
- Business entity type (e.g. sole proprietorship, partnership, LLC, corporation)
- Federal employer identification number (FEIN) or social security number (SSN)
- Business activity information, including a brief description of your products or services
- Estimated monthly/annual sales volume
- Banking information for electronic funds transfer (EFT) of sales tax payments (optional)
- Sales tax jurisdiction information for each location where you will be collecting and remitting sales tax
- Contact information for the business owner or authorized representative
- The effective date of when your business established nexus in the state
While filling out the application, make sure to periodically save it as a draft to avoid losing your progress. Once the application is complete and submitted, it is crucial to save a copy for your records.
How Long Does it Take for the State to Process Your Sales Tax Permit?
The length of time it may take the state to process a sales tax permit application in Illinois can vary depending on several factors such as the quantity of applications being processed by the state at that time and the completeness of the application submitted. Any missing or incorrect information can cause delays and lengthen the time it takes to process your application.
Most often, after submitting an IL registration you will receive an email from the state with next steps so be sure that you provide your best email address to the state when completing the questionnaire.
Although it is typical for the state to take around one to two weeks to process sales tax registration applications, it can sometimes take longer. If you have been waiting for over three weeks and have not received any updates, it might be advisable to contact the state to inquire about the status of your application.
Need Assistance Registering for a Sales Tax Permit?
If you encounter any difficulties while submitting your application, you can reach out to the state via email or by calling 800-732-8866 or emailing REV.TA-Sales@illinois.gov. Alternatively, for a hassle-free option, HOST provides a sales tax registration service that includes online account setup and complete registration assistance. Completing a simple form is all it takes, and we’ll take care of the rest for you.
Ready To Start the Sales Tax Registration Process?