Overview

Illinois has unique marketplace facilitator tax rules that directly affect how Amazon handles sales tax on third-party seller orders shipped to the state. Unlike most states where Amazon simply collects and remits sales tax on behalf of sellers, Illinois distinguishes between Retailers' Occupation Tax (ROT) and state use tax — and Amazon only handles one of them. Sellers shipping to Illinois buyers need to understand this distinction to stay compliant and avoid unexpected tax obligations.

Key Points / What Sellers Need to Know

• Amazon collects state use tax, not ROT — As of January 1, 2021, Amazon calculates, collects, and remits state use tax on all third-party seller orders shipped to Illinois buyers, but it does not handle Retailers' Occupation Tax.
• Sellers may still owe ROT — If ROT is the appropriate tax for an order, sellers may have a continuing obligation to remit it, even though they cannot collect the full ROT rate through Amazon's platform.
• Tax settings were removed — Starting January 1, 2020, sellers' previous tax calculation options and selections for Illinois orders were disabled. Amazon took over use tax collection as the marketplace facilitator.
• Professional tax advice is essential — Because Illinois tax law creates a split responsibility between Amazon and the seller, consulting a tax advisor is strongly recommended to determine your specific obligations.

How Illinois Differs From Other States

Illinois marketplace facilitator legislation is unique among U.S. states because it creates a two-tax system for marketplace sales. Most states have a single sales tax that marketplace facilitators like Amazon collect on behalf of sellers. Illinois, however, has both the Retailers' Occupation Tax (ROT), which is imposed on the seller, and the state use tax, which is imposed on the buyer. Due to state legislation and regulation, Amazon collects and remits only the use tax component as the marketplace facilitator. This means sellers may still have ROT obligations on their Illinois orders that Amazon does not cover. The difference between the ROT rate and the use tax rate can vary, potentially leaving sellers responsible for the gap.