State Senator Cristina Castro

SPRINGFIELD – In order to clarify how taxes are collected from online sellers based in Illinois, State Senator Cristina Castro (D- Elgin) introduced a measure that corrects the double-taxation of Illinois sellers who sell their products through larger marketplace facilitators.

“This legislation provides a simple fix to something that has cost businesses in the state unnecessary taxes,” Castro said. “Big websites that act as a marketplace for smaller sellers provide an important service, but the way the Illinois Use Tax was interpreted by Department of Revenue in 2020 hurt some of these Illinois sellers.”

Legislation that went into effect in January of 2020 required marketplace facilitators, like Amazon and Etsy, to collect and turn over a sales tax of 6.25%, known as the Illinois Use Tax, to the Department of Revenue. However, the Department of Revenue also required that Illinois-based retailers selling through these marketplaces turn over their local sales tax to the state, which includes the same 6.25%.

Senate Bill 2066 retroactively clarifies the law to allow these Illinois businesses to file for a refund to recover the sales tax they should never have had to pay because it was already collected and turned over to the state by the marketplace facilitators.

Additionally, SB 2066 ensured auctioneers licensed by the state are not treated as marketplace facilitators, meaning auction sales, like those on websites like eBay, will continue to be taxed as they were up to Dec. 31, 2020.

The measure passed the Senate on Wednesday and now goes to the House for further consideration.