On May 30, 2021, the Illinois Legislature passed S.B. 2066, which creates an exemption and retroactive credit for marketplace sellers for transactions in 2020 where tax was paid by the marketplace seller and the marketplace facilitator. Previously, Illinois’s marketplace law imposed a use tax (UT) obligation on a marketplace facilitator on all taxable sales of tangible personal property made by the marketplace facilitator or facilitated for the marketplace seller to customers in Illinois. However, marketplace transactions fulfilled with in-state inventory created a retailer’s occupation tax (ROT) liability for marketplace sellers. The imposition of the two taxes on the same transaction resulted in a problem because there was no mechanism to credit a marketplace facilitator’s remittance of UT against a marketplace seller’s ROT obligation on the same sale. The Department previously issued a compliance alert stating that it had no authority to provide a marketplace seller with a credit against ROT for the tax that was remitted by the marketplace facilitator. The bill adds a new subsection to the ROT exemption statute providing that “beginning January 1, 2020 and through December 31, 2020, sales of tangible personal property made by a marketplace seller over a marketplace for which tax is due under this Act but for which use tax has been collected and remitted to the Department by a marketplace facilitator under Section 2d of the Use Tax Act are exempt from tax under this Act.” Further, “marketplace sellers that have properly remitted tax under this Act on such sales may file a claim for credit as provided in Section 6 of this Act.” However the credit is not permitted if the marketplace facilitator has received or filed a claim for a credit or refund for such taxes.
