How to Charge Sales & Use Tax in Illinois
- 1). Identify who is exempt from sales tax in Illinois (the Illinois Department of Revenue provides lists). For example, non-profit organizations that are considered exclusively charitable, government bodies, rolling stock, newspapers and magazines are all exempt from Illinois sales-tax charges. Some big-ticket items that businesses purchase (including machinery and equipment) are tax-exempt in Illinois, as well. Many services such as printing, hair styling, legal services and financial services are also exempt in Illinois.
- 2). Know how much to charge. The basic sales tax in Illinois is 6.25 percent for general merchandise and items that require registration or titling, such as automobiles. The motor fuels pre-paid sales tax is $.05 per gallon with a $.01 discount for motor fuel containing gasohol (low-ethanol blends from E5 to E25).
- 3). Identify local fees and taxes. "Homerule" jurisdictions may charge taxes for park districts, county public safety, school-district capital improvements, park districts and mass-transit districts. If your business operates in one of these districts, you will have to collect taxes on items sold at those locations. The Illinois Department of Revenue provides a "tax-rate finder" to identify rates to be charged in locales around the state.
- 4). Use the proper forms provided by the state. If you collect more than $20,000 per month in sales taxes, you may have to file sales and use tax returns up to four times per month. Otherwise, depending on your liability, you pay monthly, quarterly or annually. When you register your business with the Department of Revenue, it will automatically mail you the forms you need to charge and remit sales and use taxes. Most businesses in Illinois are able to file their sales and use taxes via electronic-funds transfer.
- 5). Identify local sales taxes that you need to collect. The state doesn't collect sales taxes for some governing bodies such as the DuPage County Water Commission, which charges a 0.25 percent rate, and the Metro-East Park and Recreation District, which charges a 0.10 percent rate on general merchandise. Most of these jurisdictions are in the Chicagoland area or the Metro-east area of St. Louis, Missouri. The Illinois Department of Revenue lists these jurisdictions and rates.
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