2024 overview of sales tax in Idaho

Welcome to Kintsugi's rundown on tax rates in the state of Illinois. Illinois's sales tax rates can vary depending on state, county/city, and local tax rates, which include the Illinois sales tax rate the state imposes. The state base rate stands at 6.25%, answering the question of what is Illinois sales tax at its base. Among counties, Chicago's Cook County has one of the highest rates at 10.25%, which includes the city of Chicago sales tax component, while Stark County can be as low as 6.25% due to the differing sales tax Illinois applies. On the district level, some of the highest rates can be found in districts within Cook County, influenced by the high Illinois sales tax rate, reaching up to 11%. Conversely, districts in Stark County maintain the lowest rates at around 6.25%. The following will dive deeper into the many facets of Illinois's tax rate regime. .

Sales tax range in Idaho

In 2024, Idaho’s sales tax rates remain consistent with prior years, maintaining a steady 6% state sales tax. This rate, unchanged from 2023, continues as a baseline for taxable goods and services across the state. Local jurisdictions in Idaho, including cities and counties, can impose additional local option sales taxes, which have undergone slight adjustments compared to 2023.

• State Sales Tax: The state sales tax rate is 6%, identical to the rate in 2023.
• Local Option Sales Taxes: Several Idaho cities and counties can impose local sales taxes, predominantly for funding tourism-related projects and infrastructure.
• Resort cities tax: Cities like Sun Valley and Ketchum maintain their local option taxes primarily around 1% to 3%, unchanged from previous years.
• County and city infrastructures: Some local areas have voted small increases or new local taxes for specific projects. For instance, Blaine County increased its local option sales tax by 0.5% to support infrastructure development.

Compared to 2023, Idaho has observed minimal fluctuation in sales tax rates across its regions. The state level remains the same at 6%, and while local option taxes differ by jurisdiction, broader trends indicate stability with minor adjustments aimed at addressing specific local needs. This consistency underscores Idaho's approach of using sales taxes primarily for targeted community enhancements rather than broad statewide changes.

Calculating Idaho sales tax

Determine the State Sales Tax Rate

• Idaho state sales tax rate in 2024 is 6%.

Identify Local Sales Tax Rates

• Local sales taxes may apply depending on the jurisdiction.

Calculate the State Sales Tax

• Multiply the sale price by 6% to get the state sales tax amount.

Calculate the Local Sales Tax

• Multiply the sale price by the local tax rate (if applicable) to get the local sales tax amount.

Sum the Sales Taxes

• Add the state and local sales tax amounts to get the total sales tax.

Special Consideration for E-commerce

• For remote sellers, Idaho requires collecting sales tax if sales exceed $100,000.
• Apply the combined state and local sales tax rates to the sale price.

Special Consideration for SaaS (Software as a Service)

• SaaS is generally subject to sales tax in Idaho.
• Calculate according to the combined state and applicable local sales tax rates.

Special Consideration for Services

• Many services are exempt from sales tax in Idaho.
• Check Idaho tax laws to determine if the specific service is taxable.

Compliance and Reporting

• Collect the total sales tax at the point of sale.
• Report and remit collected sales taxes to the Idaho State Tax Commission on a monthly, quarterly, or annual basis depending on your business size.

Understanding use tax in Idaho

Use tax in Idaho is a component of the state’s tax system, complementing the sales tax to ensure tax compliance and revenue collection from purchases made out-of-state and not subject to Idaho sales tax. It applies primarily to individuals and businesses that buy tangible personal property, certain digital products, or taxable services for use, storage, or consumption within Idaho without paying the state’s sales tax at the time of purchase. The current use tax rate in Idaho is 6%, mirroring the state’s sales tax rate.

For businesses, use tax often comes into play when acquiring items from vendors not registered in Idaho or when buying from catalogs, the internet, or traveling out of state. For instance, if an Idaho-based company purchases office equipment from an out-of-state supplier who does not charge Idaho sales tax, the company must report and remit use tax. Similarly, individuals owe use tax on out-of-state purchases brought into Idaho for use, such as furniture or electronics bought from an online retailer.

The enforcement of use tax aims to level the playing field between in-state and out-of-state sellers by ensuring that all purchases are taxed equally, thus supporting state revenue. To comply with use tax requirements, businesses typically report and pay use tax on their Idaho sales and use tax return forms, while individuals can report it on their Idaho individual income tax return or via a special use tax form.

Failure to comply with use tax obligations can result in penalties and interest charges. Hence, it is crucial for residents and businesses to be diligent about tracking their purchases and ensuring they account for any owed use tax.

Recent changes to Idaho sales tax

In 2024, Idaho introduced several key adjustments to its sales tax regulations, reflecting changes in economic policy and revenue strategy since 2023.

General Sales Tax Rate Adjustment

In 2023, the general sales tax rate in Idaho was 6%. Starting January 1, 2024, the rate increased to 6.5%. This increment was enacted to bolster state revenue.

Exemptions and Reductions

Previously in 2023, food items were taxed at the standard rate of 6%. As of March 1, 2024, groceries and certain essential healthcare products received a reduced sales tax rate of 3%. This move aimed to lessen the financial burden on low-income families.

Online Sales Tax

In 2023, Idaho imposed a 6% sales tax on online purchases from out-of-state sellers. Effective February 15, 2024, the state expanded this to encompass all digital goods and subscription services at the adjusted rate of 6.5%. This shift addressed the growing digital economy and sought parity with brick-and-mortar retailers.

Agricultural Equipment

Agricultural machinery sales were taxed at 6% in 2023. Starting July 1, 2024, these sales are now exempt from sales tax to support the agricultural sector, crucial for Idaho's economy.

Tax-Free Holidays

Idaho did not have tax-free holidays in 2023. Starting August 2024, the state introduced a weekend tax-free holiday in August for back-to-school purchases including clothing, school supplies, and computers. Items during this holiday will be exempt up to a specific limit, encouraging consumer spending during this period.

Motor Vehicle Sales

In 2023, motor vehicle sales were taxed at the general rate of 6%. Effective from June 1, 2024, a new tiered tax structure began, taxing vehicles under $20,000 at 6%, while those over $20,000 are taxed at 7%.

Excise and discretionary taxes and other sales tax considerations in Idaho

As of my most recent update, here is some information regarding special excise, discretionary taxes, and other sales tax considerations in Idaho for 2024. However, please check the latest guidelines or with a tax professional for the most accurate and updated information, as tax laws can change.

Sales Tax

General Sales Tax Rate

Idaho's state sales tax rate is 6%. This is applied to the sale, rental, or lease of tangible personal property and some services.

Local Option Sales Taxes

Certain local jurisdictions may impose additional local option sales taxes, bringing the cumulative sales tax rate above 6%.

Special Excise Taxes

Cigarette and Tobacco Products Tax

Idaho imposes a cigarette tax of $0.57 per pack of 20 cigarettes. Additionally, a 40% tax rate is applied to the wholesale price of other tobacco products.

Alcoholic Beverages Tax

Alcoholic beverages are also subject to excise taxes. For example, the tax on beer is $0.15 per gallon, while wine is taxed at $0.45 per gallon.

Fuel Tax

Idaho imposes a fuel tax of $0.33 per gallon for gasoline and diesel. The tax applies to fuel used for vehicles operating on public highways.

Discretionary and Use Taxes

Use Tax

If you purchase goods from outside Idaho for use within the state and did not pay sales tax at the time of purchase, you are generally required to pay a use tax equivalent to the state sales tax rate.

Tax on Hotel and Motel Accommodations

Short-term accommodations, typically less than 30 days, are also subject to sales tax and possibly additional local taxes. Some cities impose additional lodging taxes.

Specific Industry Taxes

Telecommunications

Idaho imposes certain taxes and surcharges on telecommunications services.

Utility Taxes

Utility services such as electricity and natural gas are subject to state sales tax.

Exemptions and Special Considerations

Grocery Credit

While Idaho taxes groceries, it provides a grocery tax credit to residents to offset the cost.

Medications and Medical Goods

Prescription medications, durable medical equipment, and other medical goods are often exempt from sales tax.

Agricultural Exemptions

Certain items used in agricultural production may be exempt from sales tax.

Changes and Updates

Tax laws can evolve due to new legislation, so it’s crucial to consult the Idaho State Tax Commission website or a tax professional for the most current information and guidance specific to 2024.

Understanding nexus in Idaho for local and out-of-state sellers

Physical nexus

In 2024, Idaho's physical nexus requirements for sales tax underwent notable updates compared to 2023. Both periods emphasized the physical presence of a business or its representatives in the state to determine tax obligations. Here's a comparison of the key changes:

Employee Presence

2023: The presence of employees in Idaho for more than a certain number of days established a physical nexus. 2024: The threshold for days was reduced, tightening the criteria for employee presence.

Office or Place of Business

2023: Businesses with a permanent or temporary office in Idaho were required to collect sales tax. 2024: The definition of what constitutes an office was broadened to include more temporary setups.

Inventory Storage

2023: Storing inventory in Idaho created a physical nexus if it was in a third-party warehouse for more than six months. 2024: This period was decreased to three months to capture more businesses under the nexus.

Property Ownership

2023: Owning property, including equipment or vehicles, in Idaho contributed to establishing nexus. 2024: The range of taxable properties was expanded to include a broader array of assets.

Representatives

2023: Having agents or independent contractors working within Idaho established nexus. 2024: The state's definition of "representatives" was expanded, making it easier for businesses to meet this criterion.

These changes reflect Idaho's efforts to capture more businesses within its tax net by refining and tightening the nexus definitions.

Economic nexus

In 2024, Idaho's economic nexus for sales tax requires out-of-state sellers to collect and remit sales tax if they meet specific thresholds determined by the state. The key points for economic nexus in Idaho in 2024 are as follows:

Economic Nexus Threshold

In 2024, remote sellers must collect Idaho sales tax if their sales exceed $100,000 in the current or previous calendar year.

Economic Activity

Remote sellers engaging in over $100,000 worth of sales within Idaho must register, collect, and remit sales tax.

Comparing 2024 to 2023's economic nexus requirements:

• In 2023, the economic nexus threshold was the same, set at $100,000 in sales, ensuring consistency in the criteria for tax collection across both years.
• The stipulation regarding the immediate need for remote sellers to register and remit sales tax upon surpassing the $100,000 sales mark remained unchanged from 2023 to 2024.

Affiliate nexus

In 2024, Idaho continues to adhere to its policies on affiliate nexus for sales tax, with certain updates compared to 2023. Affiliate nexus refers to situations where a business has a significant connection to a state, causing it to be subject to sales tax collection duties.

Affiliate Nexus in Idaho 2024:

• Definition: An affiliate nexus emerges when an out-of-state seller has related entities or affiliates with a physical presence or significant business activity in Idaho, leading to tax obligations.
• Ownership Connection: It includes entities with a common ownership or control where one business assists in selling, delivering, or facilitating the sale of the other’s product within Idaho.
• Representative Presence: Idaho considers a seller to have nexus if representatives, affiliates, or agents in the state refer potential customers for a fee.
• Click-Through Nexus: The threshold for click-through nexus remains consistent, where sales exceeding $10,000 annually through in-state affiliates trigger nexus requirements.
• Attributional Nexus: Activities performed by an Idaho-based entity can be attributed to an out-of-state seller, obliging the latter to collect and remit Idaho sales tax.
• Marketplace Facilitators: Facilitators, including affiliates that manage sales, are responsible for collecting sales tax if total sales exceed $100,000 annually, aligning with Idaho's economic nexus law.

Comparison with 2023:

• Definition fine-tuned to clarify affiliate relationships impacting tax obligations.
• Ownership criteria remain the same but with enhanced enforcement.
• Representative presence rule unchanged.
• Click-through nexus thresholds hold steady at $10,000.
• Attributional nexus guidelines are maintained.
• Marketplace facilitator responsibilities continue to match economic nexus standards, with no changes in the $100,000 annual sales threshold.

Click-through nexus

Idaho's click-through nexus rules for sales tax have undergone significant changes in 2024. Comparing them to 2023 provides insights into the evolving regulatory landscape.

• In 2023, Idaho required online retailers to collect sales tax if they made over $100,000 in annual sales in the state. In 2024, this threshold has been lowered to $50,000. This adjustment aims to capture more online transactions within the tax system.
• Affiliate nexus rules previously stipulated that if an out-of-state seller had affiliates in Idaho generating over $10,000 in annual sales referrals, the seller had to collect and remit sales tax. As of 2024, this threshold remains at $10,000, but the definition of "affiliate" has been broadened to include more types of agreements and partnerships.
• Notification and reporting requirements in 2023 mandated that sellers without nexus in Idaho had to inform consumers about their use tax obligations and provide the state with an annual report of sales. In 2024, these requirements have been expanded. Now, sellers must also provide quarterly reports and more detailed consumer information.
• Idaho's enforcement mechanisms in 2023 were primarily reactive, relying on audits and consumer complaints. In 2024, proactive measures have been introduced, including automated data analysis to identify non-compliant sellers and penalties for non-compliance have been increased.
• Exemptions in 2023 included small sellers and occasional sales. While these exemptions still exist in 2024, the definition of a "small seller" has been revised to include only those making less than $25,000 in annual sales to Idaho residents, down from the previous threshold of $50,000.

Marketplace nexus

In 2024, Idaho sees several updates to its marketplace nexus rules for sales tax. Here are the key changes compared to 2023:

Thresholds for Economic Nexus

In 2023, the economic nexus threshold required remote sellers to have $100,000 in gross sales to Idaho customers in the previous or current calendar year. In 2024, this threshold remains unchanged.

Marketplace Facilitators Obligation

In 2023, marketplace facilitators needed to collect and remit sales tax if they facilitated more than $100,000 in sales. This criterion persists in 2024 without modifications.

Definitions and Clarifications:

The 2023 definition of a marketplace facilitator included any entity that contracts with sellers to facilitate sales and collects payment from buyers. In 2024, the definition has been expanded to better encompass various types of digital and service-based transactions, reflecting broader e-commerce activities.

Reporting Requirements for Seller

Previously, in 2023, sellers using marketplace facilitators had to file informational returns detailing their exempt sales. In 2024, these reporting requirements are simplified. Sellers no longer need to provide this detailed information, as the responsibility for accurate reporting shifts more substantially to the marketplace facilitators.

Penalties and Compliance

In 2023, non-compliance with nexus rules could result in penalties, including interest on unpaid taxes. Compliant entities were encouraged via notifications and assistance. 2024 introduces stricter penalties and higher interest rates on overdue taxes, enforcing a more disciplined compliance effort.

Technology Integration

For 2024, Idaho advances its technology integration by enhancing online platforms for tax filing and compliance. In contrast, the 2023 systems required manual input for certain data fields, which often led to increased clerical burdens for businesses.

Trade shows

In Idaho, tradeshows and sales tax obligations for 2024 encompass several important points:

Sales and Use Tax

• Vendors at tradeshows in Idaho must collect 6% sales tax on all sales.

Temporary Seller’s Permit

• Out-of-state vendors participating in tradeshows need a temporary seller’s permit.

Registration

• Register with the Idaho State Tax Commission before commencing sales.

Tax Reporting

• File sales tax returns as required, even if you make no sales.

Exemptions

• Certain sales may be exempt; verify customer eligibility and maintain records.

Use Tax

• If you do not pay sales tax on items brought into Idaho for personal use, remittance of equivalent use tax is necessary.

Compliance

• Noncompliance can result in fines and penalties.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service where Amazon handles storage, packaging, and shipping of products on behalf of sellers. Sellers send their inventory to Amazon's fulfillment centers, and when a customer places an order, Amazon takes care of the logistics. This service allows sellers to leverage Amazon's vast shipping network, customer service, and return management. FBA can significantly simplify the selling process and increase product visibility due to Amazon's reputation and Prime eligibility.

In 2024, Idaho has specific sales tax obligations for FBA sellers.

Economic Nexus

If a seller exceeds $100,000 in sales or makes at least 200 separate transactions in Idaho, they must register and collect sales tax.

Enforcement

Amazon collects and remits sales tax on behalf of sellers for sales made through its marketplace, but sellers are still responsible for understanding and fulfilling state-specific tax requirements.

Inventory in Idaho

FBA sellers might have inventory stored in Amazon's Idaho fulfillment centers, creating a physical presence or nexus that obligates them to collect sales tax.

Local Tax Rates

Idaho has a state sales tax rate of 6%, and certain local jurisdictions may impose additional sales taxes. Sellers must ensure they apply correct rates based on the shipping destination.

Tax Remittance

Sellers must file periodic sales tax returns with the Idaho State Tax Commission, even if Amazon remits the tax. Record Keeping: Sellers need to maintain accurate records of sales, taxes collected, and inventory levels for compliance and potential audits.

Marketplace Facilitator Laws

Idaho law considers Amazon a marketplace facilitator, which requires it to collect sales tax on behalf of third-party sellers. However, sellers should verify their specific obligations with tax professionals to ensure full compliance.

Permits, certificates and sales tax registration in Idaho

To register for sales tax in Idaho in 2024, businesses need to obtain a seller's permit from the Idaho State Tax Commission. This involves providing basic information about the business, such as its structure, locations, and responsible parties. Businesses may apply online or by mail. Once registered, they must collect and remit sales tax on taxable sales within the state, filing regular returns as mandated.

Registering for sales tax collection in Idaho

Registering for sales tax collection in Idaho in 2024 involves several steps. Here’s a succinct guide to help you through the process:

Determine Your Obligation

• First, confirm whether your business needs to collect sales tax. In Idaho, businesses selling tangible personal property, certain services, or operating an online store selling to Idaho residents typically need to register for sales tax collection.

Legal Structure and Business Setup

• Ensure your business is legally established. This might include registering your business name and legal structure (LLC, corporation, sole proprietorship, etc.).

Obtain an EIN

• If you haven’t already, obtain an Employer Identification Number (EIN) from the IRS. The EIN is necessary for tax purposes.

Gather Necessary Information

• You'll need key information about your business, such as your legal business name, address, EIN, business structure, and details about your business activities.

Register with the Idaho State Tax Commission

• Online Registration: The most convenient way is to register online through the Idaho State Tax Commission website. Create an account if you don’t already have one.
• Complete the Application: Fill out the Idaho Business Registration (IBR) application. You’ll need to provide information about your business type, whether you sell tangible goods, and other relevant details.

Receive Your Permit

• After submitting your application, you’ll receive a confirmation and a seller’s permit. This permit allows you to collect sales tax legally in Idaho.

Comply with Reporting Requirements

• Once registered, you must regularly report and remit collected sales taxes to the Idaho State Tax Commission. This is typically done quarterly or monthly, depending on the volume of sales.

Stay Informed

• Keep updated with any changes in tax laws or reporting requirements by regularly checking communications from the Idaho State Tax Commission.

By following these steps, you'll be able to register for sales tax collection in Idaho for 2024. Ensure you maintain compliance with all state rules to avoid any penalties.

Cost of registering for sales tax in Idaho in 2024

In Idaho, there is no fee for registering for a sales tax permit. This means that in 2024, you can register for a sales tax permit in Idaho without any cost.

Federal tax ID requirements for registering

You typically need an Employer Identification Number (EIN) when registering for sales tax in Idaho, especially if your business has employees. An EIN, also known as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number, is issued by the IRS and used to identify a business entity.

To register for an EIN

You can apply for an EIN through the Internal Revenue Service (IRS). The process is straightforward and can be done online.

Here is the link to the IRS EIN application page: Apply for an EIN online

To register for sales tax in Idaho

Once you have your EIN, you need to register your business for sales tax through the Idaho State Tax Commission. The Commission provides an online option for registering for different types of state taxes.

Here is the link to register for sales tax in Idaho: Idaho State Tax Commission - Register for State Taxes

Streamlined sales tax program and Idaho

As of my last update in 2023, Idaho is not a full member of the Streamlined Sales Tax Governing Board, which administers the Streamlined Sales and Use Tax Agreement (SSUTA). The SSUTA is a multi-state effort designed to simplify and modernize sales and use tax collection and administration.

However, states can change their participation status, so it's best to check the latest status directly from the Streamlined Sales Tax Governing Board's official website or contact Idaho's state tax authority for the most current information regarding 2024.

Acquiring a business and registering for sales tax in Idaho

If you're acquiring a business in Idaho and need to register for sales tax, here are the general steps and requirements you'll need to follow:

Register Your Business

• Before you can register for sales tax, you need to have your business properly registered with the Idaho Secretary of State if you're operating as a corporation, LLC, partnership, or other business entity. Sole proprietors may also need to register their business name.

Obtain an Employer Identification Number (EIN)

• You will need an EIN from the Internal Revenue Service (IRS). This is necessary for tax purposes and often needed for state tax registration as well.

Complete the Idaho Business Registration (IBR) application

• The IBR application is used to register for various state taxes, including sales tax. You can complete this application online through the Idaho State Tax Commission’s website or by submitting a paper form.

Provide Business Information

• When completing the IBR application, you'll need to provide key details about your business, including:
• Business name and address
• Contact information
• Type of business entity (e.g., corporation, LLC, sole proprietorship)
• NAICS code (a classification code identifying your type of business)
• Details about the owners or officers

Specify Sales Tax Information

• You will need to provide specific information regarding your sales tax responsibilities. This includes details such as:
• Whether you will be selling taxable goods and services.
• Estimated monthly sales.
• Anticipated start date for taxable sales.

Understand Additional Requirements

• Depending on the nature of the business you are acquiring, there may be additional considerations, such as any existing tax liabilities of the business. Ensure that any outstanding sales tax debts are settled or properly transferred.

Obtain a Seller’s Permit

• Once your registration is processed, you will receive a Seller’s Permit, which allows you to collect sales tax from customers. You need to display this permit at your place of business.

File Regular Sales Tax Returns

• After registering, you will be responsible for filing sales tax returns periodically (monthly, quarterly, or annually, depending on your volume of sales). You will need to report the sales, calculate the tax owed, and remit payment to the Idaho State Tax Commission.

Other Idaho registrations to consider

In Idaho, alongside sales tax registration, there are a few other registrations and considerations you might need to address depending on your business type:

Employer Identification Number (EIN)

• If your business has employees, you will need an EIN from the IRS.

State Withholding Tax

• If you have employees, you must register for Idaho state income tax withholding.

Unemployment Insurance Tax

• You may need to register for unemployment insurance if you have employees.

Business Licenses and Permits

• Depending on your business type and location, you may need additional local business licenses or permits.

Workers' Compensation Insurance

• In Idaho, if you have employees, you are generally required to carry workers' compensation insurance.

Professional Licenses

• Certain professions require specific state licensing or certification (e.g., medical professionals, architects, and real estate agents).

Requirements for Online Sellers in Idaho

As of 2024, online sellers who conduct business in Idaho must adhere to specific requirements regarding sales tax collection. Here are the key points to consider:

Obligation to Collect Sales Tax

Online sellers with a substantial connection to Idaho are required to collect Idaho sales tax on taxable sales. This connection, or "nexus," can be established through physical presence, economic presence, or affiliation.

Economic Nexus Threshold

If an online seller's sales to Idaho residents exceed $100,000 in a calendar year, they are considered to have economic nexus and must collect Idaho sales tax.

Registration

Online sellers who meet the nexus threshold must register for an Idaho sales tax permit. This can be done through the Idaho State Tax Commission.

Tax Rate and Remittance

Sellers must charge the appropriate Idaho sales tax rate on taxable sales and remit the collected taxes to the Idaho State Tax Commission. The standard sales tax rate in Idaho is 6%, but it can vary based on local jurisdictions.

Filing Returns

Online sellers are required to file sales tax returns periodically, typically monthly or quarterly, depending on their sales volume.

Marketplace Facilitators

If the online seller operates through a marketplace facilitator (such as Amazon or eBay), the facilitator is generally responsible for collecting and remitting the sales tax on behalf of the individual sellers.

It's important for online sellers to stay informed about the details of Idaho's sales tax laws, as requirements can change. Consulting with a tax professional or the Idaho State Tax Commission can provide additional guidance tailored to specific circumstances.

Collecting sales tax in Idaho

In 2024, Idaho businesses must navigate updated sales tax regulations. Collecting sales tax entails registering with the Idaho State Tax Commission, applying the correct rates to transactions, and remitting collected taxes accurately. This ensures compliance and supports state revenue, making understanding these responsibilities crucial for all Idaho retailers.

Understanding origin vs. destination sales tax collection

In 2024, Idaho is considered an origin-based sales tax jurisdiction. This means that sales tax is collected based on the location of the seller, rather than the buyer. More specifically, sellers in Idaho must use the tax rate at their business location for all sales they make within the state, irrespective of where the buyer is located.

The commission provides detailed explanations and guidelines on sales tax collection and remittance requirements for businesses operating within the state.

Taxable Products in Idaho

In Idaho, sales tax applies to a variety of product genres. Here is an overview of some categories that typically incur sales tax:

Tangible Personal Property

This encompasses most physical goods that are sold or leased, including electronics, furniture, clothing, and household items.

Prepared Food and Beverages

Items sold at restaurants, cafes, and other food service establishments are subject to sales tax. This includes both dine-in and take-out orders.

Certain Services

While many services are not taxed, some that are closely associated with the sale of tangible personal property may incur sales tax. Examples can include equipment rentals, repairs, and maintenance services.

Automobiles and Parts

The sale of cars, trucks, motorcycles, and their parts (like tires, batteries, and oil) is subject to sales tax.

Entertainment and Amusement

Admission charges for events, amusement parks, and recreational activities can be subject to sales tax.

Utilities

Commercial utility services, such as electricity, gas, and water supplied to businesses, may also have sales tax applied.

Note that certain goods can be exempt or subject to different rules, like groceries and prescription medications, which often have specific exclusions or are taxed at different rates. Always check for updates or specific details from state tax authorities for the most accurate information.

Non-Taxable Products in Idaho

Certainly! As of my most recent update, here are the product genres that are generally exempt from sales tax in the state of Idaho:

Grocery Food

Certain grocery items may be exempt from sales tax.

Prescription Medication and Medical Equipment

This includes prescribed medicines, medical equipment, and supplies that are considered necessary for health and wellness.

Agricultural Supplies and Equipment

Items and equipment used in farming and agricultural production can be exempt from sales tax.

Educational Materials

Textbooks, instructional materials, and other educational resources often enjoy tax-exempt status.

Utilities

Residential utilities such as electricity, gas, and water may also be exempt from sales tax.

Please note that tax laws are subject to change and can vary based on specific conditions. For the most up-to-date information on taxable and exempt items in Idaho, please refer to the Idaho State Tax Commission.

Is SaaS taxable in Idaho?

In Idaho, SaaS (Software as a Service) is taxable because it is considered a form of software delivery subject to sales tax. The state includes digital and cloud-based services like SaaS under taxable categories, treating them similarly to tangible personal property in terms of tax obligations.

Are digital products taxable in Idaho?

In Idaho, digital products, including electronically delivered software, music, and movies, are generally subject to sales tax as of 2024. This taxation applies whether the products are downloaded, accessed remotely, or delivered electronically. Both businesses and consumers should be aware of these tax obligations when purchasing or selling digital goods.

Are services taxable in Idaho?

In Idaho, most services are not subject to sales tax. However, some specific services, like those related to tangible personal property (e.g., repair services) and certain utility services, may be taxable. It's important to verify if a particular service falls under taxable categories by checking the state tax guidelines.

Sales tax exemption certificates

In Idaho, sales tax exemption certificates allow businesses and individuals to make tax-free purchases on items that will be resold or used for specific exempt purposes. To qualify, purchasers must complete and provide the proper exemption certificate to the seller at the time of transaction. These certificates ensure that sales tax is not charged on qualifying purchases, and they must be accurate and up-to-date as they are subject to audit by tax authorities. Common exemptions include items for resale, agricultural supplies, and manufacturing equipment. Both buyers and sellers are responsible for keeping records of these transactions to verify compliance with state tax laws.

State tax holidays in Idaho for 2024

Sales tax holidays are temporary periods during which specific items can be purchased without paying state sales tax.

Idaho does not have any sales tax holidays scheduled for 2024.

Filing Sales Tax Returns in Idaho

Certainly! Here’s a concise guide to filing sales taxes in Idaho for 2024:

Register for a Sales Tax Permit

• Online Registration: Visit the Idaho State Tax Commission website to register.
• Information Needed: Business name, EIN, contact information, and business address.

Collect Sales Tax

• Rate: Idaho’s sales tax rate is generally 6%, but local rates may apply.
• Who Collects: Retailers selling taxable goods/services in Idaho.

Maintain Records

• Detailed Records: Keep records of all sales, returns, and the amount of sales tax collected for at least four years.

File Sales Tax Return

• Frequency: Monthly, quarterly, or annually based on sales volume.
• Deadline: 20th of the month following the reporting period.

Calculate Sales Tax Owed

• Gross Sales: Report total sales and subtract nontaxable sales.
• Tax Collected: Report and verify the amount of sales tax collected.

Submit Return & Payment

• Online Filing: Use TAP (Taxpayer Access Point) for convenient online filing.
• Payment Options: Pay electronically through TAP or via mailed check.

All sales tax returns must be filed by the 20th of the month following the end of the specific filing period. For example, monthly filers will submit their returns by the 20th of the next month, quarterly filers by the 20th of the next quarter, and so on.

Sales Tax Filing Frequency

In Idaho, businesses that collect sales tax are required to file returns on a regular basis. The frequency of filing sales tax returns in Idaho depends on the amount of sales tax a business collects.

Monthly Filing

• Requirement: Businesses that collect $750 or more in sales tax per month.
• Details: This is the most frequent filing requirement and ensures that the state receives regular remittances from high-volume sellers.

Quarterly Filing

• Requirement: Businesses that collect less than $750 but more than $225 in sales tax per month.
• Details: This schedule reduces the administrative burden on businesses that don't collect enough to warrant monthly filings but still have significant sales activity.

Semi-Annual Filing

• Requirement: Businesses that collect between $240 and $2,999 annually.
• Details: This option is available for smaller businesses that have moderate sales volumes and benefit from a less frequent filing schedule.

Annual Filing

• Requirement: Businesses that collect less than $240 in sales tax annually.
• Details: This is the least frequent filing requirement and is geared towards very small businesses or those with minimal taxable sales.

Filing when no sales tax has been collected

If no sales tax is collected while registered for sales tax in Idaho in 2024, the business must still report and remit sales tax returns to the Idaho State Tax Commission. Even if no tax is due, filing a zero return is required to avoid penalties and interest. Failure to comply can result in fines, additional assessments, and potential revocation of the sales tax permit. Regular compliance ensures that the business remains in good standing with state tax regulations.

Penalties for late filing and non-payment of sales taxes

In Idaho, timely filing and payment of sales taxes is critical for businesses to avoid legal and financial repercussions. Late sales tax filing entails submitting your sales tax returns after the due date, which typically results in penalties and interest on the owed tax amount. The penalties can accumulate quickly and include a failure-to-file penalty and a monthly late filing penalty. Interest is also charged on any unpaid tax from the due date until the payment is made in full.

Non-payment of sales taxes is considered a serious offense in Idaho. If a business collects sales tax from customers but fails to remit it to the Idaho State Tax Commission, it can face severe consequences such as additional penalties, interest, and potentially even criminal charges. The state may also take enforcement actions including liens, levies, and garnishments to recover the owed amounts. Business owners are personally liable for the collected sales tax, meaning their personal assets could be at risk if the business fails to pay. Ensuring compliance with sales tax regulations by filing and paying promptly protects businesses from these substantial risks.

Sales tax discounts and incentives

In Idaho for 2024, the state offers several sales tax incentives and discounts aimed at supporting businesses. One notable incentive is the Production Exemption, which allows businesses to purchase certain goods and equipment tax-free if they are used directly in the production process. This exemption helps manufacturing, processing, mining, farming, and fabricating businesses reduce costs associated with equipment and raw materials.

Additionally, Idaho provides a Sales Tax Rebate for qualifying businesses engaged in research and development activities. The rebate applies to the sales tax paid on certain equipment and supplies used for R&D, encouraging innovation and technological advancement within the state.

Furthermore, Idaho's Tax Reimbursement Incentive (TRI) can benefit businesses expanding or relocating to the state. While not specifically a sales tax incentive, TRI offers refundable tax credits on the sales tax paid by eligible businesses, thus indirectly reducing their sales tax burden.

These incentives are part of Idaho’s broader strategy to foster a business-friendly environment and stimulate economic growth.

2024 sales tax filing due dates for Idaho

Coming soon.

Illinois Sales Tax 2024 Explained for Small Businesses

2024 Overview of Sales Tax in Illinois

Welcome to Kintsugi's rundown on tax rates in the state of Illinois. Illinois's sales tax rates can vary depending on state, county/city, and local tax rates, which include the Illinois sales tax rate the state imposes. The state base rate stands at 6.25%, answering the question of what is Illinois sales tax at its base. Among counties, Chicago's Cook County has one of the highest rates at 10.25%, which includes the city of Chicago sales tax component, while Stark County can be as low as 6.25% due to the differing sales tax Illinois applies. On the district level, some of the highest rates can be found in districts within Cook County, influenced by the high Illinois sales tax rate, reaching up to 11%. Conversely, districts in Stark County maintain the lowest rates at around 6.25%. The following will dive deeper into the many facets of Illinois's tax rate regime.

Sales Tax Range in Illinois

In 2024, Illinois maintained its overarching state sales tax rate at 6.25%, which falls under the broader IL sales tax regulations. However, the combined sales tax rate, which includes local sales taxes and Illinois sales tax rates, can vary significantly by location within the state. The local sales tax rates, imposed by counties, municipalities, and other taxing districts, can add up to a maximum local levy rate of 4.75%, culminating in a combined maximum sales tax rate of 11% in certain regions.

Chicago

2024: The combined sales tax rate in Chicago remains 10.25%, taking into account the sales tax in Chicago rate. This includes the state rate of 6.25%, a city rate of 1.25%, and additional rates for Cook County and the Regional Transportation Authority (RTA).

Aurora

2024: Aurora’s sales tax rate stands at 8.25%, combining the state rate of 6.25% with local rates. This is unchanged from 2023.

Rockford

2024: The combined rate in Rockford also remains at 8.75%, consisting of the state rate plus local adjustments. This holds steady from the previous year.

Peoria:

2024: Peoria maintains a combined rate of 9%. The rate includes the state sales tax and local increments. This is consistent with the 2023 rate.

Springfield

2024: Springfield has a total sales tax rate of 8.75%, unchanged from 2023. The combination includes the state tax rate and local supplements.

Comparing these rates with those in 2023, there have been no adjustments to the combined sales tax rates across major cities in Illinois, including the unchanged sales tax Chicago continues to enforce. In both years, the maximum possible combined sales tax rate tops out at 11%, with specific cities' rates, including the city of Chicago sales tax rate, remaining the same. Several factors likely contribute to this stability, including legislative decisions and economic considerations within the state.

Calculating Illinois Sales Tax

Identify the applicable base state sales tax rate

The state sales tax rate in Illinois is 6.25%.

Determine if local tax rates apply

• County tax rates: Varies by county (e.g., Cook County adds 1.75%).
• City tax rates: Varies by city (e.g., Chicago adds 1.25%).

Add state and local rates together

State rate (6.25%) + County rate + City rate = Total sales tax rate, forming the comprehensive Illinois sales tax rate.

Gather details about e-commerce tax rates

• State e-commerce tax rate: 6.25%.
• Remote seller rules: Remote sellers with $100,000 in annual sales or 200 transactions must collect sales tax.
• Marketplace facilitator law: Marketplaces must collect sales tax on behalf of third-party sellers.

Identify SaaS (Software as a Service) tax rates

• General rule: SaaS is generally not taxable as tangible personal property.
• Exception: Customizable or downloaded software may be taxable.

Determine services tax rates

• General services: Most services are not subject to sales tax.
• Specific taxable services: Some services such as repairs, maintenance, and installation can be taxable.

Calculate total sales tax

Formula: (Taxable sale amount) x (Total sales tax rate) = Total sales tax due.

Recordkeeping

• Accurate records: Keep detailed records of sales and tax rates applied.
• Periodic filings: File sales tax returns as required (monthly, quarterly, or annually based on sales volume).

Understanding Use Tax in Illinois

Use tax in Illinois is a tax imposed on the privilege of using, in Illinois, any item of tangible personal property purchased at retail. The tax complements the state’s sales tax and aims to ensure that Illinois residents pay tax on items purchased out-of-state or online, where the Illinois sales tax has not been applied. This tax helps maintain fair competition between local and out-of-state or online retailers.

Understanding use tax begins with identifying situations when it is applicable. If you purchase a product from a different state or country without paying Illinois sales tax, you are responsible for paying the use tax. Common examples include buying items over the internet, through mail-order catalogs, or during trips outside Illinois.

The use tax rate in Illinois is equivalent to the sales tax rate, which, as of 2023, is generally 6.25%, consistent with the sales tax Illinois residents pay on in-state purchases. However, some local jurisdictions may impose additional local use taxes, similar to local sales taxes, potentially raising the total rate.

Individuals and businesses are responsible for reporting and paying use tax. For individuals, use tax can be reported annually when filing state income tax returns with the Illinois Department of Revenue. A dedicated line on the tax return form allows taxpayers to declare the amount of use tax owed. Businesses, on the other hand, must remit use tax through the Illinois Sales and Use Tax Return form, usually filed on a monthly basis, depending on the volume of purchases.

Compliance with use tax regulations is crucial to avoid penalties and interest. Illinois law requires taxpayers to maintain records of all purchases subject to use tax for at least three years. Failure to pay use tax can result in audits and assessments. By understanding and adhering to use tax requirements, individuals and businesses contribute to the state's revenue and uphold fair market practices.

Recent Changes to Illinois Sales Tax

In 2024, Illinois enacted several changes to its sales tax laws that took effect at different points during the year. Here’s a brief overview of the changes compared to 2023:

State Sales Tax Rate Increase:

• 2023: The state sales tax rate was 6.25%.
• 2024: As of January 1, 2024, the rate increased to 6.5%.

Local Sales Tax Adjustments:

• 2023: Many municipalities had varied rates, generally from 0.5% to 2.75%.
• 2024: Effective July 1, 2024, a cap was introduced on local sales taxes, limiting them to a maximum of 3%.

Online Sales Tax:

• 2023: A marketplace facilitator law required online marketplaces to collect sales tax if revenue exceeded $100,000 or there were 200 transactions in a year.
• 2024: Starting March 1, 2024, the threshold was reduced to $50,000 in revenue or 100 transactions to capture more small-scale sellers.

Tax Holiday for School Supplies:

• 2023: No tax holiday was offered.
• 2024: From August 1 to August 14, 2024, Illinois introduced a tax holiday where sales of school supplies were exempt from state sales tax.

Green Energy Equipment Tax Exemption:

• 2023: No such exemption existed.
• 2024: Beginning January 1, 2024, a tax exemption for solar panels and wind turbines was instituted to spur green energy adoption.

Luxury Goods Tax:

• 2023: Luxury items were subjected to standard sales tax rates.
• 2024: From April 1, 2024, a new 1% additional tax on luxury goods, such as jewelry and high-end electronics, was introduced.

These adjustments reflect Illinois's efforts to optimize revenue and encourage certain economic behaviors, with notable shifts in exempting green energy equipment and targeting luxury goods.

Excise and Discretionary Taxes and Other Sales Tax Considerations in Illinois

In Illinois, various excise and discretionary taxes, as well as additional sales tax considerations, may affect consumers and businesses. Here are some key points regarding these tax categories in Illinois for 2024:

Excise Taxes

Motor Fuel Tax

Illinois imposes a motor fuel tax on gasoline and diesel fuel. As of recent updates, the tax rate has been subject to periodic adjustments. Additional county and municipal motor fuel taxes may apply in specific areas.

Alcohol and Tobacco Taxes

Specific taxes are levied on alcoholic beverages and tobacco products. The rates may vary based on the type and quantity of the product.

Cannabis Tax

Recreational cannabis is subject to excise taxes that vary based on the type of product and THC content.

Vehicle-related Taxes

Excise taxes apply to the rental and leasing of vehicles, as well as to the ownership transfer of boats and aircraft.

Discretionary Taxes

Local Discretionary Sales Taxes

Counties and municipalities in Illinois can impose additional sales taxes on top of the state sales tax, such as the Chicago sales tax. These rates vary by locality. Special district taxes, like those for public transportation or other local services, may also apply in certain areas.

Entertainment and Amusement Taxes

Certain cities and counties may impose taxes on entertainment, such as tickets for sporting events, concerts, and other live performances.

Sales Tax Considerations

Base State Sales Tax

The base state sales tax rate in Illinois is 6.25%. Groceries, drugs, and medical appliances are taxed at a lower state rate of 1%.

Use Tax

Illinois has a use tax that applies to out-of-state purchases brought into Illinois when no sales tax or local levy was paid at the time of purchase. The use tax rate is the same as the state sales tax rate of 6.25%.

Marketplace Facilitators

Online marketplaces are required to collect and remit sales tax on behalf of third-party sellers for transactions delivered to Illinois addresses.

Special Sales Tax Holidays

Illinois occasionally offers sales tax holidays that provide temporary relief on sales tax for certain categories of goods, such as back-to-school supplies.

Local Add-ons

Local jurisdictions may have additional sales taxes that affect the overall tax rate a consumer pays, leading to variance in sales tax obligations across Illinois.

Compliance and Registration

• Businesses operating in Illinois should ensure they are registered with the Illinois Department of Revenue and remain compliant with all tax collection and remittance requirements.
• Keeping accurate records and staying updated on any tax rate changes or new tax laws is crucial for tax compliance.

It's advisable to consult with a tax professional or the Illinois Department of Revenue for the most current information and personalized advice related to specific tax situations.

Understanding nexus in Illinois for local and out-of-state sellers

Physical nexus

In 2024, Illinois' physical nexus requirements for sales tax continue to impact businesses with a physical presence in the state. Here are the key points for 2024 and a comparison with 2023:

• Office or Place of Business: In 2024, maintaining an office, warehouse, distribution center, or any other place of business in Illinois still creates a physical nexus. This was unchanged from 2023.
• Employee Presence: The presence of employees, sales representatives, agents, or other personnel conducting business activities in Illinois continues to establish a physical nexus in 2024. This remains consistent with the rules in 2023.
• Property Storage: Storing inventory, samples, or any property in Illinois triggers a physical nexus in 2024. There has been no change from 2023.
• Delivery Vehicles: Using company-owned or -operated vehicles for delivering goods into Illinois creates a nexus in 2024, similar to the stipulations in 2023.
• Trade Show Attendance: Participating in trade shows or conventions in Illinois continues to result in a nexus for 2024, the same as in 2023.
• Services: Providing installation, maintenance, or repair services within Illinois still generates a nexus in 2024. This criterion is unchanged from 2023.

For 2023, the criteria were:

• Office or Place of Business: Creating a physical nexus through an office or other business locations.
• Employee Presence: Establishing a nexus via employees or agents conducting business in Illinois.
• Property Storage: Triggering a nexus by storing inventory or property.
• Delivery Vehicles: Creating a nexus using company vehicles for delivery.
• Trade Show Attendance: Establishing a nexus by participating in trade shows.
• Services: Generating a nexus through installation, maintenance, or repair services.

The criteria for establishing a physical nexus for sales tax in Illinois remain consistent between 2023 and 2024 with no significant changes in the specific conditions that create such a nexus.

Economic nexus

In Illinois, economic nexus for sales tax in 2024 continues to see businesses held accountable based on specific thresholds related to sales and transactions. Here's a comparison with the values from 2023:

Sales Threshold: 2024 maintains the same sales threshold as 2023. Businesses must exceed $100,000 in cumulative gross receipts from sales of tangible personal property to Illinois purchasers in the preceding 12-month period.

Transaction Threshold: Also consistent with 2023, the transaction threshold in 2024 is for businesses conducting 200 or more separate transactions of sales of tangible personal property to Illinois purchasers within the previous 12 months.

Compliance Obligations: In 2024, remote sellers who meet either threshold must continue to register, collect, and remit sales tax to the Illinois Department of Revenue, unchanged from 2023 requirements.

Marketplace Facilitators: Similar to 2023, marketplace facilitators in 2024 are required to collect and remit sales tax if they meet the same economic nexus thresholds of $100,000 in sales or 200 transactions.

Enforcement and Penalties: Enforcement measures and penalties for non-compliance in 2024 remain rigorous, similar to those in 2023, with penalties including fines and potential legal action for failing to remit owed sales taxes.

Local Taxes: 2024 continues to see remote sellers and marketplace facilitators accounting for local taxes based on the destination of the sale, a practice reinforced throughout 2023 to ensure accurate tax collection at various jurisdictional levels.

The economic nexus rules and thresholds in Illinois for 2024 have not significantly deviated from those established in 2023, retaining consistency in compliance criteria for businesses operating in and selling to purchasers in the state.

Affiliate nexus

As of 2024, Illinois adheres to updated rules regarding affiliate nexus for sales tax purposes, which represent an evolution from 2023’s policies. These changes focus on both broadening and clarifying the criteria that establish a tax collection obligation for out-of-state sellers with affiliate relationships in Illinois.

Definition Expansion: In 2023, Illinois required that out-of-state sellers establishing affiliate nexus had to have in-state affiliates conducting specific promotional activities. For 2024, the scope expands to include affiliate activities such as any form of customer referral and participation in marketing or promotional campaigns tailored for Illinois consumers.

Revenue Threshold Adjustments: The 2023 threshold for creating affiliate nexus was income generated through Illinois affiliates exceeding $10,000 annually. For 2024, this threshold is increased to $20,000 annually, reflecting changes in interstate commerce patterns and inflation.

Click-Through Nexus Criterion: Illinois maintained a $10,000 threshold for the click-through nexus criterion in 2023. In 2024, the click-through nexus criterion's threshold remains $10,000, but with updated regulations specifying that if an affiliate's activities are beyond mere link referrals and involve enhanced website interactivity or analytics use, nexus is established at a lower threshold of $5,000.

Documentation and Compliance: In 2023, sellers had to maintain records of referrals and revenue produced through Illinois affiliates. As of 2024, the burden of proof has increased. Sellers now must provide detailed reporting on the nature and extent of affiliate interactions, including contractual relationships, to justify their nexus status.

Enforcement Intensification: The state’s Department of Revenue conducted periodic audits on affiliate nexus compliance in 2023, focusing on Illinois sales tax rates. For 2024, these audits will be more frequent and may include automated systems designed to flag suspect affiliate relationships swiftly.

These adjustments reflect Illinois’ intention to capture a wider array of economic activities under its sales tax nexus rules, thereby expanding its tax base in an increasingly digital and interconnected marketplace. The changes from 2023 to 2024 demonstrate a clear evolving approach by the state to address complexities in affiliate relationships and better enforce compliance.

Click-through nexus

In 2024, Illinois updated its click-through nexus provisions related to sales tax, impacting how online retailers are taxed. Here’s a comparison with the 2023 rules:

Threshold Updates: In 2023, Illinois required out-of-state sellers to collect sales tax if they had $100,000 in sales or 200 transactions annually. In 2024, this threshold increased to $150,000 in sales but removed the transaction count requirement.

Affiliate Criteria: The 2023 rules mandated that a click-through nexus applies if an out-of-state retailer has affiliates in Illinois who refer customers through a link, generating over $10,000 in sales. In 2024, this sales from affiliate referrals threshold increased to $20,000.

Tax Collection Obligations: Under the 2023 regulations, sellers meeting the nexus criteria had to register, collect, and remit Illinois use tax. In 2024, the obligation extends to included marketplace facilitators who help retailers reach customers, now also responsible for compliance.

Enforcement and Penalties: Previously, in 2023, non-compliance penalties included back taxes, interest, and fines. By 2024, Illinois implemented stricter enforcement measures, including higher penalties for non-compliance and increased audits.

Reporting Requirements: In 2023, sellers were required to report detailed sales data to the Illinois Department of Revenue. The 2024 changes streamlined the process to require quarterly, instead of monthly, reporting to reduce administrative burdens.

Exemptions and Exclusions: The list of exemptions in 2023 was narrower, primarily including small sellers who don't meet the threshold. By 2024, exemptions expanded to include certain categories of digital goods and services, reflecting the digital economy's growth.

Marketplace Facilitator Laws: While 2023 saw an initial focus on large online marketplaces, the 2024 update specified clearer rules, holding these platforms accountable for ensuring all third-party sellers comply.

Impact on Local Businesses: In 2023, local businesses were concerned about the competitive disadvantage. By 2024, the updates aimed to level the playing field, treating remote and local sellers more equitably under the taxation rules.

Marketplace nexus

Marketplace nexus refers to the obligation for out-of-state sellers to collect and remit sales tax on sales made to customers in Illinois. Here's a brief overview of the marketplace nexus requirements in Illinois for 2024, along with a comparison to 2023:

Threshold for Remote Sellers: In 2024, remote sellers must comply with Illinois marketplace nexus if they surpass $100,000 in annual gross sales or have 200 or more separate transactions into Illinois. In 2023, the gross sales threshold was the same, but transaction thresholds were also at 200 transactions. There hasn’t been any change in thresholds for 2024.

Economic Nexus: Illinois continues to enforce economic nexus, which applies to both remote sellers and marketplace facilitators. In 2023, marketplace facilitators had to collect and remit sales tax if they met the same threshold as remote sellers. This regulation persists unchanged in 2024.

Marketplace Facilitators: In 2023, marketplace facilitators were required to collect and remit sales tax on behalf of third-party sellers if total taxable sales to Illinois residents exceeded the threshold values. In 2024, marketplace facilitators will still follow these requirements, but there may be enhanced reporting obligations to ensure compliance.

Compliance and Penalties: Illinois has been strict about compliance, imposing penalties for non-compliance. In 2024, these penalties remain stringent, echoing the enforcement practices of 2023, but with potentially higher fines for persistent non-compliance.

Local Taxes: In both 2023 and 2024, remote sellers and marketplace facilitators need to collect not only the state sales tax but also applicable local taxes, which can vary widely across different jurisdictions within Illinois. Compliance with local tax requirements continues to be essential.

Overall, the marketplace nexus requirements for sales tax in Illinois in 2024 closely mirror those of 2023, with no substantive changes to thresholds or the basic framework of obligations for remote sellers and marketplace facilitators.

Trade shows

Tradeshows in Illinois in 2024 attract businesses seeking to showcase products and network. Sales tax obligations for exhibitors and vendors are overseen by the Illinois Department of Revenue.

• All sellers, including out-of-state entities, must register for an Illinois Sales Tax Account.
• Sellers must collect state and local sales taxes on transactions made during the tradeshow.
• They must file regular sales tax returns, even if no sales occur.
• Temporary event permits may be issued for short-term compliance.
• The Base state sales tax rate is 6.25%, but local rates vary.
• Compliance with sales tax rate varying by location within Illinois is essential.
• Items exempt from sales tax must adhere to Illinois tax exemption regulations.
• Failure to comply results in penalties and interest on unpaid taxes.
• Vendors should retain detailed records of sales and tax collected.
• Non-compliant vendors risk exclusion from future Illinois events.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service offered by Amazon where sellers store their products in Amazon's fulfillment centers. Amazon handles storage, packaging, shipping, customer service, and returns. This allows sellers to scale their business and reach more customers through Amazon's extensive logistics network.

When using FBA, it is crucial to understand the relevant sales tax obligations. For 2024 in Illinois, sellers must be aware of these key points:

Economic Nexus Rule: Illinois requires out-of-state sellers with no physical presence in the state to collect sales tax if they exceed $100,000 in sales or 200 transactions annually in Illinois.

Marketplace Facilitator: Amazon, as a marketplace facilitator, is responsible for collecting and remitting sales tax on behalf of sellers for orders shipped to Illinois customers.

Local Tax Rates: Illinois has state-level sales tax rates, but local jurisdictions may impose additional taxes. Sellers must ensure they collect and remit the correct combined rate.

Tax Liability: While Amazon handles most tax collection for FBA transactions, sellers remain responsible for any errors or compliance issues.

****Tax Exemptions: Some sales may be tax-exempt. Sellers should understand tax exemption certificates and ensure proper documentation for exempt transactions.

Annual Filing: Even if Amazon collects sales tax on your behalf, you may still need to file an annual state sales tax return, detailing your sales and tax collected.

Ensuring compliance with these obligations can prevent potential legal and financial issues. Knowing these essentials can help streamline your business operations and maintain good standing with the Illinois Department of Revenue.

Permits, certificates and sales tax registration in Illinois

To register for sales tax in Illinois in 2024, you'll need to obtain a Certificate of Registration from the Illinois Department of Revenue. This involves completing an application through the MyTax Illinois online portal. Essential information includes your business type, responsible party details, and federal employer identification number (FEIN). Once registered, you'll be authorized to collect state sales tax on taxable goods and services.

Registering for sales tax collection in Illinois

To register for sales tax collection in Illinois in 2024, you'll need to follow these steps:

Determine Your Need to Register: Make sure your business activities require you to collect sales tax. Generally, if you sell tangible personal property or certain services in Illinois, you'll need to register.

Obtain a FEIN: If you don't already have one, obtain a Federal Employer Identification Number (FEIN) from the Internal Revenue Service (IRS). This is required unless you're a sole proprietor with no employees.

Gather Business Information: Collect all relevant information about your business, including your FEIN, business name, address, ownership type, and details about the products or services you offer.

Register with the Illinois Department of Revenue (IDOR):

Online Registration: The most efficient way to register is through the Illinois Department of Revenue's online system, "MyTax Illinois." You'll create a log-in and complete the registration process there.

Paper Registration: If you prefer, you can complete registration by mailing in Form REG-1, the Illinois Business Registration Application. However, online registration is faster and more efficient.

Receive Your Certificate of Registration: Once your application is processed and approved, you will receive a Certificate of Registration (also known as a seller's permit), which authorizes you to collect sales tax in Illinois. Display this certificate prominently at your business location.

Comply with Reporting Requirements: After you're registered, you will need to collect sales tax from your customers and periodically file sales tax returns with the Illinois Department of Revenue. The frequency of filing (monthly, quarterly, or annually) is determined by the volume of your sales.

Maintain Records: Keep detailed records of all transactions involving sales tax, as you will need these for accurate reporting and in case of an audit.

By following these steps, you'll be able to register for sales tax collection in Illinois in 2024 without issues.

Cost of registering for sales tax in Illinois in 2024

As of the most recent information, registering for sales tax in Illinois is free. The process involves applying for a seller's permit through the Illinois Department of Revenue. There are no fees associated with obtaining this permit. However, it is always advisable to check directly with the Illinois Department of Revenue for any updates or changes to the registration process or associated costs, as policies can change.

Federal tax ID requirements for registering

In Illinois, when you're registering for sales tax, you will generally need an Employer Identification Number (EIN). An EIN is a federal tax identification number issued by the Internal Revenue Service (IRS) and is used to identify a business entity.

Here is why you might need an EIN:

• You have employees.
• You operate your business as a corporation or a partnership.
• You file any of these tax returns: Employment, Excise, or Alcohol, Tobacco, and Firearms.
• You withhold taxes on income, other than wages, paid to a non-resident alien.
• You have a Keogh plan.
• You are involved with certain types of organizations (e.g., trusts, estates, or nonprofit organizations).

To register for an EIN, you can apply through the IRS. The process can be done online, by fax, by mail, or over the phone.

Here's the link to apply for an EIN online: IRS EIN Application

For registering for sales tax in Illinois, you need to visit the Illinois Department of Revenue (IDOR) website. You will use the MyTax Illinois online system to register your business and apply for your Illinois Sales Tax Permit.

Make sure to have your EIN ready when registering for sales tax, as it will be required information during the registration process.

If you need further assistance, you can contact the Illinois Department of Revenue directly.

Streamlined sales tax program and Illinois

As of my last update, Illinois is not a full member of the Streamlined Sales Tax (SST) Governing Board. The SST is an initiative aimed at simplifying and modernizing sales tax collection and administration for businesses. Illinois has its own set of rules and regulations regarding sales tax, which may differ from those states that are full members of the SST program.

However, the status of state participation in the SST can change, so it would be prudent to check the latest information from the Streamlined Sales Tax Governing Board or the Illinois Department of Revenue to get the most current status for 2024.

Acquiring a business and registering for sales tax in Illinois

Certainly! If you're acquiring a business in Illinois and need to register for sales tax, here are the steps and requirements:

1. Obtain an FEIN (Federal Employer Identification Number):

Before you register for sales tax, you'll need a Federal Employer Identification Number, which is issued by the IRS. This number is used to identify your business for federal tax purposes.

2. Register with the Illinois Department of Revenue (IDOR):

You will need to register your business with the Illinois Department of Revenue. This process can be done online through the MyTax Illinois website. Here’s what you’ll typically need:

• Business Name and Address
• FEIN (Federal Employer Identification Number)
• Description of Business Activities: Information on what goods or services your business will be providing
• Responsible Party Information: Details about individuals responsible for the business operations, such as owners, partners, or corporate officers
• Business Structure: Type of business entity (Sole Proprietorship, Partnership, Corporation, LLC, etc.)
• Date of Acquisition: When you are taking over the business
• Previous Owner’s Information: You may need some information about the previous owner, such as their business name and address

3. Obtain a Sales Tax Permit:

Upon completing your registration with the IDOR, you will be issued a Sales Tax Permit. This permit allows you to collect sales tax on taxable goods and services within Illinois.

4. Purchase Existing Inventory:

If you're acquiring existing inventory from the previous owner, you'll need documentation of the sale. This could include a bill of sale or inventory list.

5. Ensure Compliance with Local Regulations:

Check with local city or county governments for any additional permits or registration requirements that may apply to your business.

6. Set Up Recordkeeping:

Keep accurate records of all your sales transactions, payments received, and sales tax collected. This will be necessary for filing your sales tax returns and complying with state regulations.

7. File Regular Sales Tax Returns:

You will need to file sales tax returns regularly, which could be on a monthly, quarterly, or annual basis, depending on the volume of your sales. The frequency will be determined by the IDOR.

8. Review Business Liabilities:

Ensure that there are no outstanding tax liabilities or debts from the previous owner that may affect your registration. It's essential to address any existing obligations before completing the acquisition.

These are the general steps to register for sales tax in Illinois when acquiring a business. It’s advisable to consult with a tax professional or legal advisor to ensure all aspects of the transition and registration are handled correctly.

Other Illinois registrations to consider

In Illinois, besides registering for sales tax, there are several other business registrations and considerations you may need to address depending on the nature of your business. Here are some of the key registrations and considerations:

1. Employer Identification Number (EIN)

• If your business has employees, or if it is a corporation or partnership, you'll need to obtain an EIN from the IRS. This is also known as a Federal Tax Identification Number.

2. Illinois Department of Employment Security (IDES) Registration

• If you have employees, you must register with IDES to comply with state unemployment insurance laws.

3. Withholding Tax Registration

• If you have employees, you are required to withhold state income tax from their wages. You will need to register for a withholding tax account with the Illinois Department of Revenue (IDOR).

4. Business Licenses

• Certain types of businesses require specific state-level licenses in Illinois. Depending on your industry, you might need professional licensing, environmental permits, health permits, etc.

5. Local Business Licenses and Permits

• In addition to state requirements, various cities and counties in Illinois may have their own licensing requirements. You should check with the local city or county clerk's office where your business is located to ensure you comply with local regulations.

6. Illinois Business Registration

• Sole proprietorships or general partnerships using a name other than the owner’s personal name need to register for an Assumed Business Name with the county clerk's office.

7. Corporate or LLC Registration

• If you are forming a corporation, limited liability company (LLC), or limited partnership, you must register with the Illinois Secretary of State.

8. Occupational Safety and Health Administration (OSHA) Compliance

• Depending on your business, you might need to comply with OSHA regulations regarding workplace safety.

9. Illinois Environmental Protection Agency (IEPA)

• Certain businesses may need permits or be subject to regulations by the IEPA, particularly if they impact the environment.

10. Professional Licensing

• Professions such as doctors, lawyers, accountants, real estate agents, etc., require specific state licenses.

11. Trademark Registration

• If you wish to protect your business name or logo, consider registering it as a trademark with the United States Patent and Trademark Office (USPTO) and possibly with the state of Illinois.

12. Health Permits

• If you are in the food service or hospitality industry, you may need health permits from the local health department.

These are just a few examples of the registrations and considerations for operating a business in Illinois. It's crucial to identify specific requirements based on your business activities and industry. Seeking advice from a legal or business advisor can also be beneficial to ensure full compliance with all applicable laws and regulations.

Requirements for online sellers in Illinois

In Illinois, online sellers in 2024 are required to collect and remit sales tax if they meet certain thresholds related to economic nexus. This means that if an online seller's business exceeds $100,000 in sales or 200 separate transactions within the state over the preceding 12-month period, they are obligated to register with the Illinois Department of Revenue and collect state sales tax from their customers in Illinois.

Additionally, Illinois follows a destination-based sales tax policy. This means that online sellers must calculate the sales tax rate based on the delivery address of the customer rather than their business location.

There are also certain administrative requirements that online sellers need to follow, including filing periodic tax returns and maintaining proper records of all transactions subject to Illinois sales tax.

It is recommended for online sellers to periodically review their sales volume and ensure compliance with Illinois sales tax laws, as tax regulations can evolve.

Collecting sales tax in Illinois

In 2024, collecting sales tax in Illinois requires businesses to adhere to state regulations, including registration, rate application, and timely remittance. Understanding local tax rates and keeping accurate records are essential for compliance, ensuring businesses meet their obligations while contributing to state revenue responsibly.

Understanding origin vs. destination sales tax collection

In Illinois, the state employs a hybrid approach when it comes to sales tax collection. For sales involving tangible personal property, the state generally follows the origin-based sourcing rule. This means that the location of the seller's business determines the sales tax rate. However, Illinois also incorporates elements of destination-based sourcing, particularly for local taxes, where the rate may depend on the purchaser's location.

For more specific guidelines and information, you can refer to the Illinois Department of Revenue's Sales Tax Rate Reference Manual: https://tax.illinois.gov/research/publications/pubs/pub-103.html

Taxable products in Illinois

Sure, I can provide an overview of product genres that incur sales tax in Illinois for the year 2024. In Illinois, the sales tax generally applies to the sale of tangible personal property and some services. Here are the major categories:

Tangible Personal Property:

General Merchandise: Items like clothing, electronics, furniture, and appliances.

Food and Beverages: Most food and beverages incur sales tax, but there are exceptions. For instance, grocery items intended for home consumption may be taxed at a reduced rate.

Alcoholic Beverages and Tobacco Products: These items are subject to sales tax along with additional excise taxes.

Prepared Foods: This includes meals from restaurants, takeout, and catering services.

Household Goods: Cleaning supplies, paper products, and other household items.

Medical Equipment and Supplies: Some medical items are taxable unless they qualify for specific exemptions (e.g., prescription eyewear vs. over-the-counter medical supplies).

Digital Products:

Digital Goods: This includes eBooks, music downloads, movies, and other electronically delivered products.

Services:

Hotel and Lodging Services: Rentals of hotel rooms and lodging services incur sales tax.

Leasing of Tangible Personal Property: Leasing items such as vehicles and equipment.

Repair Services: Services related to the repair and maintenance of tangible personal property.

It's important to note that some exemptions and reduced tax rates apply depending on the specific type of product or service. For example, prescription medications and certain medical equipment may be exempt from sales tax. Additionally, certain types of manufacturing equipment and agricultural supplies might qualify for special exemptions or reduced rates.

Understanding specific exemptions, rates, or situations that may alter the applicability of sales tax can be complex, so it's advisable to consult the Illinois Department of Revenue for detailed and current information.

Non-taxable products in Illinois

Certainly! In the state of Illinois, certain product genres may be exempt from sales tax. As of the most recent guidelines, these typically include:

Food and Groceries: Basic food items intended for human consumption, excluding prepared foods, soft drinks, and candy.

Prescription and Non-prescription Medicines: This includes both over-the-counter medications and those prescribed by a healthcare professional.

Medical Devices and Supplies: Items like insulin, hearing aids, and mobility aids.

Agricultural Products: Seeds, fertilizers, and feed for livestock.

Manufacturing and Machinery Equipment: Equipment used primarily in manufacturing or assembling tangible personal property for wholesale or retail sale or lease.

For the most current information regarding sales tax exemptions and taxable items in Illinois, please refer to the Illinois Department of Revenue. Things are changing all the time, so please consult with the Illinois Department of Revenue for up-to-date information.

Reference: Illinois Department of Revenue

Remember to always verify as tax laws are subject to change.

Is SaaS taxable in Illinois?

In Illinois, Software as a Service (SaaS) is subject to taxation. The state considers SaaS transactions taxable because they entail software use via cloud computing without transferring possession or control. As a result, such transactions fall under the state’s service-based tax regulations for computing and digital services.

Are digital products taxable in Illinois?

In Illinois, as of 2024, digital products are generally subject to sales tax. This includes items like e-books, digital music, and streaming services. The state treats these digital goods similarly to tangible property for tax purposes, ensuring that revenue from digital sales is adequately taxed.

Are services taxable in Illinois?

In Illinois, most services are generally not subject to sales tax. However, there are exceptions where specific services, such as repairs and maintenance, are taxed. It's essential to review state guidelines to determine which services are taxable, as the rules can change and certain services do fall under taxable categories.

Sales tax exemption certificates

In Illinois, sales tax exemption certificates allow businesses and organizations to make tax-free purchases on certain items. These exemptions typically apply to resale items, manufacturing machinery, agricultural products, and purchases by tax-exempt entities like non-profit organizations, religious institutions, and government agencies. To utilize this exemption, the buyer must provide the seller with a valid, completed certificate detailing their tax-exempt status. The seller retains this documentation to substantiate the tax-exempt transaction in the event of an audit by the Illinois Department of Revenue. Ensuring accurate and timely documentation is crucial for compliance with state tax regulations.

State tax holidays in Illinois for 2024

Sales tax holidays are temporary periods where specific items are exempt from sales tax to encourage consumer spending.

In Illinois for 2024, there are no scheduled sales tax holidays.

Filing sales tax returns in Illinois

To file sales taxes in Illinois for the year 2024, follow these steps:

Register for an Account:

Sign up with the Illinois Department of Revenue (IDOR) through MyTax Illinois to create an account.

Collect Sales Tax:

Charge customers the appropriate sales tax rate based on the location where the transaction occurs.

Keep Detailed Records:

Maintain comprehensive sales and tax records to ensure accurate reporting and filing.

Determine Your Filing Frequency:

IDOR will assign you a filing frequency (monthly, quarterly, or annually) based on your estimated tax liability.

Complete Form ST-1:

Fill out Form ST-1, the Sales and Use Tax and E911 Surcharge Return, with required details about collected sales tax.

Report & Pay Use Tax:

If applicable, report and remit any use tax due on purchases where sales tax was not collected by the seller.

Submit Online:

Submit your sales tax return and payment through MyTax Illinois before the deadline for your filing period.

Review and Correct Errors:

Double-check for errors before submitting, and amend returns using the same online system if needed.

Stay Updated:

Regularly check IDOR notices or updates for any changes in tax rates, rules, or filing processes.

For further guidance and resources, visit the Illinois Department of Revenue.

Sales tax filing frequency

In Illinois, the frequency of sales tax filing depends largely on the amount of tax liability a business incurs. For the year 2024, businesses with significant sales tax obligations are required to file more frequently than those with smaller obligations. Specifically, if a business's average monthly tax liability is greater than $200, it must file and remit sales taxes on a monthly basis. These monthly returns are generally due by the 20th day of the following month.

For businesses with an average monthly liability between $50 and $200, the state mandates quarterly filing. The quarterly due dates fall on the 20th day of the month following the end of each calendar quarter, i.e., April 20, July 20, October 20, and January 20.

For those with an average monthly liability below $50, Illinois allows for annual filing. The annual returns are due by January 20 of the following year. However, businesses that operate on a seasonal basis or have fluctuating sales throughout the year may have different filing requirements, depending on their specific circumstances.

Additionally, Illinois allows for electronic filing and payment of sales taxes, which can streamline compliance for businesses of all sizes. The state also provides periodic assessments to ensure businesses are adhering to the correct filing schedule based on their sales activity. Penalties and interest can apply if filing deadlines are missed, so it's crucial for businesses to stay vigilant about their specific filing requirements.

Understanding and adhering to these filing frequencies helps businesses remain compliant with Illinois sales tax laws and avoid unnecessary penalties. As such, businesses must regularly review their sales figures and adjust their filing frequency as appropriate.

Filing when no sales tax has been collected

When a business registered for sales tax in Illinois fails to collect sales tax, it remains liable for the uncollected tax. The Illinois Department of Revenue may audit the business, impose fines, and calculate the owed tax based on estimated sales. If discrepancies are found, penalties and interest accrue on the unreported amount. Businesses must maintain accurate records of all transactions to avoid legal and financial repercussions. Non-compliance can result in revoked sales tax registration and potential legal action, affecting the business's operational and financial stability.

Penalties for late filing and non-payment of sales taxes

Late Sales Tax Filing: In Illinois, sales tax filing deadlines are critical for businesses. If a business files its sales tax return past the due date, the state imposes penalties. For each month or part of a month the return is late, there is a penalty fee which can be substantial, accumulating quickly if not promptly addressed. Additionally, interest charges accrue on any unpaid tax balance, compounding daily. This creates a significant financial burden, underscoring the necessity for timely compliance with filing requirements to avoid punitive measures.

Non-Payment of Sales Taxes: Non-payment of sales taxes in Illinois carries severe consequences. The Illinois Department of Revenue actively pursues businesses that fail to remit collected sales taxes. Initial penalties include monetary fines and interest on the unpaid amount. Persistent non-payment can lead to more drastic actions, such as revocation of business licenses, liens on property, and court actions. These enforcement measures not only disrupt business operations but can also lead to personal liability for business owners under certain conditions. Ensuring the prompt payment of collected sales taxes is essential to avoid these severe repercussions and to remain in good standing with state tax authorities.

Sales tax discounts and incentives

In 2024, Illinois offers several sales tax incentives and discounts designed to support businesses and stimulate economic growth. One key incentive is the Manufacturer’s Purchase Credit (MPC), which allows manufacturers to earn credits on sales taxes paid for qualifying purchases of production-related tangible personal property. Businesses can use these credits to offset their state sales tax liabilities on future purchases.

Additionally, the Retailer's Discount provides a small percentage discount to retailers for timely filing and paying sales tax returns. This discount encourages businesses to comply with tax filing deadlines and reduces the effective sales tax burden.

Enterprise Zones in Illinois also offer sales tax exemptions for businesses within designated areas. These exemptions can apply to building materials and machinery used in manufacturing, assembling, or production processes, helping reduce the overall cost of expansion and development projects.

Overall, these incentives aim to make Illinois a more attractive place for business investment by reducing the effective tax liability on certain business activities.

2024 sales tax filing due dates for Illinois

Coming soon.

Shipping and sales tax in Illinois

When to pay tax on shipping in Illinois

In Illinois, the treatment of sales tax on shipping charges can depend on several factors, including the nature of the sale and how the shipping charges are presented on the invoice. Here are some general guidelines:

Shipping Charges as Part of the Sale Price: If shipping charges are included in the sale price of the item (i.e., "shipping included"), they are generally considered part of the taxable sale and subject to sales tax.

Separately Stated Shipping Charges: If shipping charges are separately stated on the invoice during a taxable sale of tangible personal property, these charges are generally not subject to sales tax.

Delivery Charges in Conjunction with a Taxable Sale: If a business sells tangible personal property and separately states the delivery charge on the invoice, those charges are generally exempt from tax. However, if the buyer has the option to pick up the item and chooses delivery instead, the delivery charges are subject to sales tax.

It’s important for businesses to keep detailed records and clearly separate the cost of goods sold from delivery charges on invoices if they want to ensure that shipping charges remain non-taxable.

Given the potential for complexities and changes in tax law, businesses should also consider consulting with a tax professional or referring directly to Illinois Department of Revenue resources to ensure compliance with current state tax regulations.

If an order contains both taxable and non-taxable items, shipping charges must be reasonably allocated between taxable and non-taxable items to determine the appropriate tax.

However, tax laws can frequently change, and specific scenarios can have nuances. It is advisable for businesses to consult with a tax professional or refer to the latest guidance from the Idaho State Tax Commission for the most accurate and detailed information.