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Sales tax nexus is a legal phrase that describes the relationship between a state and a company that results in a duty to collect taxes. The fundamental criteria that determines whether a business is obligated to collect and remit sales taxes in the state of Illinois is the same as it is in the majority of other states: the existence of physical nexus. Tax nexus can also be produced by other causes, such as economic nexus and click-through nexus.
– Having a physical presence in the state, such as a shop, warehouse, or office
– Employing people or hiring independent contractors in the state
– Delivering products or providing services on a regular basis in the state
– Attending trade exhibits or events in the state
– Having tangible personal property in the state that you own or rent
A company may need to apply for an Illinois Sales Tax Permit, collect and submit sales taxes on its taxable sales made in the state, and more if it engages in any of these activities.
Illinois does not impose a sales tax on purchases made from out-of-state vendors, but it does impose a use tax on items if the purchaser uses them in Illinois. The sales tax rate varies based on where the buyer is located, and the use tax rate is the same.
The combined state, county, and city taxes in Chicago, Illinois, amount to a 10.25% sales tax rate. It should be noted that there are several exceptions to this rate, such as sales of food and beverages, which are subject to a 1% tax instead.
In Illinois, the location of the buyer affects the sales tax rate. The state’s sales tax is 6.25%, but because of additional local taxes, the overall rate might reach 11%. For instance, the sales tax rate in Cook County is 10.25% while it is 7.75% in DuPage County.
In conclusion, you might be obligated to collect and pay sales taxes on your taxable sales made in the state if your company has a physical presence there or engages in any of the activities that give it sales tax nexus. You might also be charged use tax if you buy something from an out-of-state vendor and use it in Illinois. To ensure compliance with Illinois sales and use tax rules, it is advisable to speak with a tax expert.