a) Activities of Marketplace Facilitators
1)
Beginning January 1, 2021, a
marketplace facilitator means a person who, pursuant to an agreement with an
unrelated third-party marketplace seller, directly or indirectly through one or
more affiliates facilitates a retail sale by an unrelated third-party
marketplace seller by:
A)
Listing or advertising for sale by the marketplace seller in a
marketplace, tangible personal property that is subject to tax under ROTA;
and
B)
Either
directly or indirectly, through agreements or arrangements with third parties,
collecting payment from the customer and transmitting that payment to the
marketplace seller regardless of whether the marketplace facilitator receives
compensation or other consideration in exchange for its services.
Provision on a marketplace of functionality for connection to a payment
mechanism meets the requirements of this subsection
(a)(1)(B).
2)
A
person who provides advertising services, including listing products for sale,
is not considered a marketplace facilitator, so long as the advertising service
platform or forum does not engage, directly or indirectly through one or more
affiliated persons, in the activities described in subsection
(a)(1)(B). [35 ILCS 120/1 ]
b) A marketplace
facilitator must indicate to purchasers on its marketplace that the tangible
personal property is being sold on behalf of an identified marketplace seller.
If the marketplace seller is not identified to the purchaser on the
marketplace, then for tax remittance purposes, the marketplace facilitator is
considered the seller of the tangible personal property. A marketplace
facilitator considered the seller of an item (either because the marketplace
seller is not identified or because the marketplace facilitator is making a
sale of its own) must register, file returns, and pay tax on its own sales
separately from the return filed on behalf of marketplace sellers. Internet
auction listing services that operate as marketplace facilitators must follow
the provisions for disclosed or undisclosed principals at 86 Ill. Adm. Code
130.1915 in determining whether
or not their marketplace sellers are identified. If none of the tangible
personal property sold over a marketplace is identified to purchasers on the
marketplace as tangible personal property sold on behalf of an identified
marketplace seller, the requirements of subsection (a)(1)(A) are not met. (See
EXAMPLE 4 at the end of this Section.)
c) Beginning February 1, 2022, sales of
tangible personal property that is required to be titled or registered with an
agency of the State of Illinois, including motor vehicles, watercraft,
aircraft, and trailers, that are made over a marketplace to purchasers in
Illinois are subject to the provisions of this Part. For sales made by a
marketplace facilitator on behalf of marketplace sellers, taxes under this Part
apply at the location to which the titled or registered item is shipped or
delivered, or the location in Illinois where the purchaser takes possession of
the titled or registered item. For a transaction in which an Illinois purchaser
travels to an out-of-state location to take possession of an item that is
required to be titled or registered with an agency of the State of Illinois,
the provisions of this Part do not apply. In this case, only Use Tax is
incurred. For sales made by marketplace facilitators themselves, see subsection
(g).
d) On and after January 1,
2021, a marketplace facilitator that meets either of the thresholds in Section
131.135(a) is
considered a retailer engaged in the occupation of selling at retail in
Illinois and is liable for all applicable State and local retailers' occupation
taxes administered by the Department on all sales to Illinois purchasers made
over the marketplace, including its own sales and sales made over the
marketplace on behalf of marketplace sellers.
e) Affiliates of a Marketplace Facilitator
Are Not "Marketplace Sellers". As a result, a marketplace facilitator is not
considered to be the retailer and is not liable for tax on sales made to
Illinois purchasers by affiliates selling over its marketplace. An affiliate
must consider several factors in determining its tax liability. First, it must
determine if it is a "remote retailer" under Section
131.110. (See also Illustration
A.) If it is a remote retailer, it must calculate whether its sales meet either
of the tax remittance thresholds in Section
131.115(a). If
it is not a remote retailer, it must examine its selling activities to
determine if it has any other type of tax liability. (See Section
131.155.) An affiliate of a
marketplace facilitator that is a remote retailer and is liable for ROTA must
register with the Department to file returns and make payment of the tax
separately from any returns remitted to the Department by a marketplace
facilitator. However, if a marketplace facilitator has obtained certification
as a CSP or a CAS, it may assist affiliates in filing their returns and
performing other tax functions as provided in Section
131.160 or
131.165.
f) Except as provided in subsection
131.107(c)(1)(C),
marketplace facilitators that meet either of the thresholds in Section
131.135(a) are
deemed to be engaged in the business of selling on behalf of their marketplace
sellers at the Illinois location to which the tangible personal property is
shipped or delivered or at which possession is taken by the purchaser. State
and local retailers' occupation taxes are incurred at the rate in effect at
this location for all sales made on behalf of marketplace sellers over the
marketplace. (See Section
131.155 and
35 ILCS
120/2-12(7).)
g) Marketplace facilitators that meet either
of the thresholds in Section
131.135(a) and
that make their own sales over their marketplace (or are considered to be the
seller because the marketplace seller is not identified as explained in
subsection (b)) are subject to State and local retailers' occupation tax. The
marketplace facilitator incurs State and local retailers' occupation tax at the
rate in effect at either the location of the inventory or the location in
Illinois at which the selling activities otherwise occur. The location at which
the State and local retailers' occupation tax is incurred must be determined by
applying the provisions of 86 Ill. Adm. Code
270.115(c) and
(d). For sales that are not fulfilled from
inventory in Illinois and for which selling is not engaged in at any location
in Illinois (see 86 Ill. Adm. Code
270.115), the marketplace
facilitator is deemed to be engaged in the business of selling at the Illinois
location to which the tangible personal property is shipped or delivered or at
which possession is taken by the purchaser. State and local retailers'
occupation tax is incurred at the rate in effect at this location for all such
sales. (See Section
131.155.)
Note: For all the following examples, unless otherwise
specified, marketplace sellers are identified to purchasers on the
marketplace.
EXAMPLE 1: Carabibi, a social media network, provides a forum
in which persons using the network can buy and sell used tangible personal
property. Carabibi functions solely as an advertising platform bringing buyers
and sellers together. Once the buyer and seller have contacted each other over
the network, they must negotiate the sale and make payment arrangements
themselves. While the forum provided by Carabibi constitutes a marketplace as
defined in Section 131.101, Carabibi is not
considered a marketplace facilitator because it does not engage in the
activities described in subsection (a)(1)(B).
EXAMPLE 2: Paymate is a payment processing business appointed
by merchants to handle payment transactions from various channels, such as
credit cards and debit cards. Its sole activity with respect to marketplace
sales is to handle financial transactions between two parties on the
marketplace. Paymate is not a marketplace facilitator because it does not
engage in the activities described in subsection (a)(1)(A).
EXAMPLE 3: CouponCrowd operates an online platform that sells
coupons that can be redeemed by purchasers at various retail stores that have
contracted with CouponCrowd to promote their businesses. CouponCrowd lists the
coupons for sale, sells the coupons to purchasers, and processes payment for
the purchase of the coupons. CouponCrowd is not a marketplace facilitator. The
sale of a coupon is the sale of an intangible, not the sale of tangible
personal property. Marketplace facilitators must engage in facilitating sales
of tangible personal property.
EXAMPLE 4: Visualeyes This operates a specialized online
marketplace that sells various brands of contact lenses to purchasers.
Visualeyes This makes purchases for resale from various suppliers of the
contact lenses offered for sale on its marketplace. Its marketplace does not
indicate to purchasers using the marketplace that the sales are made on behalf
of any identified marketplace sellers. In this example, Visualeyes This is not
a marketplace facilitator. It is simply an online retailer making its own sales
of contact lenses. Its tax liability will depend on its activities. (See
Illustration A.)
EXAMPLE 5: Mandameal.com is an online and mobile food-ordering
and delivery service that enters into over 200 transactions with Illinois
purchasers. It contracts with a variety of restaurants by advertising meals
available for purchase from restaurants; it also offers delivery service for
the food orders. Customers place food orders using the Mandameal application or
through its online website. Mandameal.com accepts payments from customers,
completes the orders with the restaurants, and transmits payment on a regular
basis to the restaurants. Mandameal.com engages in activities that make it a
marketplace facilitator. Mandameal.com is required to register with the
Department and remit retailers' occupation tax, including applicable local
retailers' occupation taxes administered by the Department, on sales made on
its marketplace on behalf of restaurants. State and local retailers' occupation
taxes are incurred at the rate in effect at the delivery location of the
purchaser. For example, if the food order is delivered to a customer address,
Mandameal.com incurs State and local retailers' occupation taxes in effect at
the location where the order is delivered. If the order is picked up at the
restaurant, however, Mandameal.com incurs State and local retailers' occupation
taxes in effect at the restaurant location. For information on the imposition
and applicability of the MPEA ROT and the Chicago Soft Drink Tax, see Section
131.107(c) of
this Part.
EXAMPLE 6: CanineCorner.com is a marketplace that sells dog
gear. Its gross receipts from sales to Illinois purchasers are over $100,000.
Ponchos for Pooches.com decides to sell its rain gear over this marketplace.
Some of the inventory Ponchos for Pooches.com sells over the marketplace is
fulfilled from its manufacturing plant in Portland, Oregon, while other sales
are fulfilled from its warehouse in Kankakee, Illinois. CanineCorner.com incurs
Retailers' Occupation Tax, including all applicable local retailers' occupation
taxes, for all sales of rain gear made over the marketplace on behalf of
Ponchos for Pooches.com. Tax on all sales, both those fulfilled from Portland,
Oregon and from the Kankakee, Illinois warehouse, is incurred at the rate in
effect at the Illinois location to which the tangible personal property is
shipped or delivered or at which possession is taken by the purchaser.
EXAMPLE 7: Seconds for Less is an upscale resale shop in
Evanston, Illinois. It buys and sells gently used clothing for children and
adults. After inspecting the clothing offered by an individual for sale, it
pays the individual, either in cash or with store credit, for the clothing it
wishes to purchase. The clothing is then cleaned, pressed, and displayed for
sale. In this example, Seconds for Less is not operating a marketplace and is
not a marketplace facilitator because it owns the clothing it offers for
sale.
