Illinois Sales Tax Reform Explained

The Illinois Department of Revenue has released the following details pertaining to changes in the sales tax laws that took effect on January 1, 1990, and make it easier for most registered sales taxpayers to collect and pay their taxes.

New sales tax forms have been issued. With the new forms, taxpayers will not have to separately figure their local, transit, county supplementary and water commission taxes. Instead, there is one rate for general merchandise (6.25%) and one rate for food, drugs and medical appliances (1%). The discount rate is figured with one calculation on all taxes rather than with numerous calculations on only certain taxes.

The new sales tax forms require taxpayers to round to whole dollar amounts. For each figure, amounts less than 50 cents are dropped, and amounts of 50 cents or more are increased to the next higher dollar.

As of January 1, 1990, out-of-state retailers and suppliers who sell to Illinois customers do not have the advantage that they previously had over Illinois businesses because some local taxes that previously were not collected on out-of-state purchases are now included in the new state rate of tax. Thus, the state rate is the same as the out-of-state rate.

Taxpayers who have more than one place of business have a new method of reporting sales taxes. Rather than combining their receipts under one area of local government, they must report on a store-by-store basis for each site. A new form (ST-2) is designed for multi-site businesses so that they can compute their tax for each site.

Also, as of January 1, 1990, certain servicepersons will change the way they figure and pay their tax because the basis of the tax changed to the price paid for the merchandise purchased. The amount of tax to be paid and the method by which it is paid depends upon whether the cost of the merchandise transferred to service customers is less, or more, than 35% of the total receipts from the sales of service. (Informational Bulletin FY 90-6, Illinois Department of Revenue, October 1989.) •

Page 12 / Illinois Municipal Review / January 1990