Use Tax for Individual Taxpayers

Do you owe Illinois Use Tax?

Did you buy goods outside Illinois to use or consume in Illinois?
Would they have been taxable in Illinois?
If you bought goods within the United States, did you pay less sales tax than you would have paid in Illinois?

If you answered “yes” to these questions, you may owe Illinois Use tax.

What is use tax?

Use tax is a form of sales tax designed to distribute the tax burden fairly among consumers and assure fair competition between in-state and out-of-state businesses. In general, states that impose sales taxes also have complementary use taxes on the privilege of using goods within their borders. This tax applies to individuals, businesses, and organizations.

Illinois law requires you to pay tax at Illinois rates on purchases you make for use or consumption in Illinois

when you buy goods from businesses located outside Illinois and bring them into Illinois, or
when you have the goods delivered to you from businesses located outside Illinois.

Does the duty tax I paid to the U.S. Customs Service replace use tax?

No. Use tax is due whether or not an item has to be declared or is subject to a duty tax.

Why should I voluntarily pay use tax?

Using goods purchased tax free or at lower rates outside Illinois is unfair to retailers, consumers, and taxpayers in the following ways:

Illinois retailers, who must charge sales tax, must compete with out-of-state retailers, who may charge no sales tax or charge tax at rates less than Illinois rates.
Illinois must make up lost revenues or curtail state services provided to consumers and taxpayers.

Illinois is aggressively focusing upon collecting this tax.

Illinois shares sales information with other states and bills Illinois residents for unpaid tax, penalty, and interest.
Illinois gathers information on overseas purchases from the U.S. Customs Service.

By voluntarily paying, on time, all of the Illinois Use Tax you owe, you will avoid being billed for unpaid tax and additional penalty and interest charges.

The Illinois Department of Revenue can assess use tax owed by taxpayers who do not pay voluntarily. For taxpayers who do not have records to document their use tax liability, the department will estimate liability. Taxpayers have the right to refute the department’s estimates.

What are the Illinois Use Tax rates?

Illinois Use Tax rates are 6.25 percent of the purchase price of general merchandise and 1.00 percent of the purchase price of qualifying food, drugs, and medical appliances.

The 1.00 percent rate applies to

food that has not been prepared for immediate consumption (such as most food sold in grocery stores, excluding hot foods, alcoholic beverages, and soft drinks),
prescription medicines and nonprescription items claimed to have medicinal value (such as aspirin), and
prescription and nonprescription medical appliances that replace a malfunctioning part of the human body (such as wheel chairs and hearing aids).

Who must pay use tax?

You owe Illinois Use Tax if you purchase an item for use or consumption in Illinois and

you purchase the item from an out-of-state retailer who charges no Illinois Sales Tax or charges sales tax at a rate lower than the Illinois rate, and
the item you purchase would normally be subject to sales tax if you buy it from a retailer in Illinois.

Examples include

catalog purchases from an out-of-state retailer who does not charge Illinois Sales Tax;
purchases through out-of-state home shopping television and computer network (internet) services that do not charge Illinois Sales Tax; and
items purchased while you were
- - in another state from a retailer who charged sales tax at a lower rate than the Illinois rate or
- in a foreign country.

In addition, if you purchase an item for use or consumption in Illinois from an Illinois retailer and you do not pay tax to the retailer, you owe use tax to the department.

How do I pay Illinois Use Tax?

Generally, individuals, organizations, and unregistered businesses must pay use tax directly to the Illinois department of Revenue using Form ST-44, Illinois Use Tax Return.

You are allowed credit for sales taxes properly paid to another state; however, if you pay tax to another state at less than the Illinois rates, you must pay Illinois the difference.

You are not allowed credit for any taxes paid to foreign governments; these purchases are subject to the full Illinois tax rates.

If your annual use tax liability is $600 or less, you may pay use tax annually on or before April 15 of the year following the year in which you make your purchases.

If your annual use tax liability is greater than $600, you must pay the tax by the last day of the month following the month in which the purchase was made.If you are a registered Illinois retailer or serviceperson, and currently file Form ST-1, you must report use tax on that form.

If you are a registered Illinois retailer or serviceperson, and currently file Form ST-1, you must report use tax on that form.

Businesses that purchase items tax free for use or consumption in Illinois should use the return whose liability period corresponds to the purchase date of the items for which use tax is due.

Businesses that purchase items tax free for resale and later remove these items from inventory for use or consumption in Illinois should use the return whose liability period corresponds to the date the item was removed from inventory.

To pay use tax on motor vehicles, watercraft, aircraft, trailers, or mobile homes you purchased from dealers outside Illinois, you must file Form RUT-25, Vehicle Use Tax Transaction Return, within 30 days of the date the item was brought into Illinois. Do not use Form ST-44 for these purchases.

To pay use tax on motor vehicles you purchased or acquired as a gift from an individual or other party who is not in the business of selling motor vehicles at retail, you must file Form RUT-50, Private Party Vehicle Tax Transaction Return, within 30 days of acquiring the vehicle or within 30 days of bringing it into IL, the later to occur. Do not use Form ST-44 for these purchases.

Note: Purchases of items including trailers and mobile homes from an individual or other party who is not in the business of selling those items at retail are not subject to use tax.

To pay use tax on aircraft or watercraft you purchased or acquired as a gift or acquired in trade from an individual or other party who is not in the business of selling aircraft or watercraft at retail, you must file Form RUT-75, Aircraft/Watercraft Use Tax Transaction Return, within 30 days from the date of acquisition or the date the aircraft or watercraft is brought into Illinois, whichever is later. Do not use Form ST-44 or Form RUT-25 for these purchases.

Note: An “other party,” as used above, includes companies that obtain their aircraft or watercraft from a related or unrelated party who is not in the business of selling these items at retail.

Questions?

Call us at: 1 800 732-8866 or 1 217 782-3336
Call TDD: 1 800 544-5304