Sales Tax Information for Illinois
The Illinois Department of Revenue enforces Illinois sales tax laws. Merchants and other businesses that sell goods collect Illinois sales tax on behalf of the state government and pay the taxes to the Department of Revenue on a quarter-monthly basis.
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Definition
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Illinois applies sales tax to sales of "tangible personal property for use and consumption." Illinois sales tax law does not consider "paper" assets like bonds, stocks and real estate holdings as tangible personal property. Sales tax actually encompasses several tax laws, including occupation taxes for sellers' receipts and use taxes imposed on consumers.
Rate
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The state of Illinois establishes its sales tax rate based on three categories of goods sold. First, certain drugs, food and medical appliances carry a sales tax rate of one percent. Second, larger items that require title or registration, like vehicles, carry a 6.25 percent sales tax. Third, the rate for general merchandise is also 6.25 percent. All rates are as of Spring 2010.
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Local Taxes
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In addition to state sales taxes, local city and county governments may impose additional sales taxes to goods sold in Illinois. Local city and county governments may impose additional sales taxes on a variety of goods and services, including cigarettes, alcohol and dry cleaning. The Illinois Department of Revenue does not collect these taxes, instead local city and county agencies collect them for use in the individual locality.
Exempt Transactions
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The Illinois government exempts a wide variety of transactions from the state sales tax. For example, all sales to federal, state and local governments are exempt. Similarly, sales to charitable, religious and educational non-profits are exempt. In addition, magazine and newspaper sales are exempt. Manufacturing equipment is exempt as is fuel on international flights.
Exempt Organizations
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The Illinois government also exempts certain qualified organizations from paying the state sales tax. Qualifying organizations, however, must apply to the Department of Revenue to receive an exemption. Typical qualifying organizations include governments, non-profits, senior citizen organizations, licensed child care centers, arts or cultural organizations and county fairs.
Warning
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Consult an attorney or tax professional to be sure of the obligations that you or your business is subject to with regard to Illinois sales taxes.
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References
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