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Shopping Online? Pay Up: Out-of-State Retailers Charging Sales Tax


Online shoppers in Illinois are now required to pay the state’s sales tax when making purchases from certain out-of-state retailers.

Per the Supreme Court’s South Dakota v. Wayfair ruling in June, retailers that don’t operate in Illinois and generate more than $100,000 in annual sales from Illinois customers (or conduct at least 200 separate transactions per year) must charge those customers the state’s 6.25 percent sales tax rate.

The same standard is applied to out-of-state retailers doing business in the 44 other U.S. states that collect sales tax.

This isn’t a new tax, stresses Carol Portman, director of the Taxpayers’ Federation of Illinois, a Springfield-based tax and fiscal policy advocacy organization. Illinois residents have long been required to self-report out-of-state purchases on their tax forms.

“The tax was due, has always been due and if you haven’t been paying, that means you’ve been cheating on your taxes,” Portman said. “The state now has the ability to make the sellers collect it instead of chasing down after you and me and all our neighbors to make us calculate and self-remit.”

Only about 4.5 percent of taxpayers currently self-assess and remit these taxes, according to Portman.

Portman said small businesses are concerned about the burden of extra bookkeeping.

“That has always been the concern and frustration with states’ efforts to level the playing field,” Portman said. “If you’re a smallish company selling throughout the country, trying to figure out every single state’s tax rules, when the rates change, the definitions and all that other stuff gets really complicated really fast.”

Illinois lawmakers anticipated the new tax standard and baked in into the state’s fiscal year 2019 budget with an effective date of Oct. 1.

Portman joins us in discussion to further discuss the new tax standard.

Follow Evan Garcia on Twitter: @EvanRGarcia


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