Confirming Business Locations

A law was established in an effort to encourage local and state cooperation to confirm business locations for sales tax purposes. Its ultimate goal was to eliminate the need for tax allocation adjustment. This law added responsibilities for IDOR, municipal and county governments, and businesses that collect sales tax. Proper allocation of sales tax money can be accomplished only if all three parties do their part.

Each month IDOR sends to the municipal or county clerk an IDOR-50-L-1M, Taxpayer Notification - Tax Location Verification, listing each new or reinstated business that registered with IDOR and any business that discontinued a location in the prior month. The clerks must verify the correct taxing jurisdiction for the business location electronically through MyLocalTax or by returning the form to IDOR at the address listed in the document.

There is a six-month time limit on adjustments of erroneous disbursements. If you do not notify us promptly of any discrepancies on your various taxpayer address lists, you could lose revenues through erroneous disbursements.

For example, if you receive your annual taxpayer location address list and, when verifying it, discover a business that started operating in your jurisdiction is not listed, you should immediately notify us in writing. For a period of six months prior to the receipt of your notification, any sales tax money generated by that business that was disbursed will be adjusted. This could result in thousands of dollars in disbursements that will be taken from one taxing jurisdiction and disbursed to another. Any disbursements that occurred outside of that six-month time period will not be adjusted, which may result in lost revenues for your local government.

Retailers are required to advise us of location addresses where they conduct retail sales in the state. This information is a required part of the registration application we provide. In addition, retailers are required to inform us anytime an address is changed or an existing location is closed.

We must maintain site location information for retail sales and submit comprehensive notifications to you:

• Annual Taxpayer Location Address List. A paper copy of this form is sent once a year to municipal and county clerks. It lists the businesses that have a registered site within their taxing jurisdiction.
  
• Taxpayer Notification - Tax Location Verification
  • IDOR-50-L-1M - This notification is sent monthly to municipal and county clerks when a new business has registered, an existing business has been reinstated, a business has changed its registration, or a business has been discontinued in their taxing jurisdiction.

You must thoroughly review all of the notifications that you receive and either verify to us that the information is accurate or notify us that there is a discrepancy to ensure proper allocation of sales tax money. Governments that have activated a MyLocalTax account will automatically receive correspondence electronically through MyLocalTax. 

Please note: It is vital that your local government respond to Form IDOR 50-L-1M, Taxpayer Notification – Tax Location Verification, and notify IDOR if the address listed is in your taxing jurisdiction or another jurisdiction. This will ensure proper allocation of the Illinois sales tax collected from retail sales made at the address. When the taxing jurisdiction discrepancy is brought to IDOR’s attention, we will adjust the previous six months of erroneous disbursements that you received for the taxpayer. This potentially may result in thousands of dollars in disbursements that will be taken from your local government and allocated to the correct taxing jurisdiction.

Yes. The list includes only those businesses that have registered with IDOR to sell tangible personal property at retail and are registered to report retail sales within your taxing jurisdiction. There are many types of businesses that provide a service but do not sell tangible personal property at retail.

A service business is required to charge sales tax on the merchandise it transfers (sells) to its customers as part of the service it provides when the annual aggregate costs of the merchandise reaches a specified percentage of the total charge for both merchandise transferred and service provided. For most service businesses, the annual aggregate cost must be 35 percent or more of annual gross receipts. In the case of pharmacists and persons engaged in graphic arts production, the required percentage increases to 75 percent. Some businesses that do not meet these percentage requirements elect to register and charge sales tax anyway.

Service businesses that do not meet these registration requirements and that are not also in business as retailers pay tax to their suppliers on the items they purchase and ultimately transfer to their customers incident to the services they provide.

Although there can be exceptions, the following is a list of service businesses that typically do not sell tangible personal property at retail and will not be found on your list. This list is not exhaustive, and other businesses may be excluded by the same criteria.

• Real estate companies
• Construction contractors
• Wholesalers and manufacturers
• Barber shops, hair salons, and nail salons that do not sell merchandise
• Financial institutions
• Repair shops
  

LOCAL TAX ALLOCATION DIVISION (3-500)
ILLINOIS DEPARTMENT OF REVENUE
101 WEST JEFFERSON STREET
SPRINGFIELD IL 62702

Phone: 217 785-6518
Fax: 217 785-6527
Email: rev.localtax@illinois.gov