Update 6.6.2018: Illinois has adopted economic nexus with the enactment of House Bill 3342. Beginning October 1, 2018, out-of-state retailers that have at least $100,000 in gross receipts from sales of goods or services in Illinois, or 200 separate sales of the same, are required to collect and remit Illinois tax.



Illinois has a very narrow tax base. The Retailers’ Occupation Tax applies to persons engaged in the business of selling tangible personal property. Persons engaged in the sale of services are only subject to the Service Occupation Tax if the sale of a service depends on the sale of tangible personal property.

Efforts are underway to tax more services in Illinois. Senate Bill 09 (Budget Economic Stabilization Fund Act), which was narrowly approved by the Senate, seeks to tax laundry, structural pest control, private detective, and tattoo and body piercing services, among others. It also would establish a new 5 percent tax on satellite television, and an additional 1 percent entertainment tax on streaming services such as Netflix. Taxing streaming services is contentious: Chicago imposed a “Netflix tax” on streaming services in 2015, and it promptly triggered a lawsuit that is ongoing.

However, SB 09 seeks to exempt “tangible personal property purchased for transfer incidental to performance of a taxable service.”

House Speaker Michael Madigan has said the Senate proposal “will be thoughtfully considered … as part of our efforts to pass a full-year balanced budget that will end the budget impasse,” but many in Springfield are pessimistic. Governor Bruce Rauner is intent on freezing property tax rates, and Madigan has not shared the House budget plan. Illinois has been at a standoff over the budget, and if an agreement isn’t reached by July 1, Fitch Ratings has warned that the state will face “another credit downgrade” (Chicago Tribune).