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As a retailer, am I allowed a discount from the sales tax I report on my Form ST-556, Sales Tax Transaction Return, and Form ST-556-LSE, Transaction Return for Leases?
Yes. The Retailers’ Occupation Tax Act and the Use Tax Act allow a retailer to claim a discount, provided the retailer properly and timely files its Form ST-556, Sales Tax Transaction Return, or Form ST-556-LSE, Transaction Return for Leases, and pays the applicable tax by the due date. 35 ILCS 120/3; 35 ILCS 105/9; 86 Ill. Adm. Code 130.501-510; 86 Ill. Adm. Code 150.905. Under P.A. 102-1019, if you are required to file electronically and do not, the discount or retailers’ allowance for timely filed and paid returns will be disallowed.
For returns due on or after January 1, 2025, the discount is limited to $1,000 per month for all returns (i.e., both Forms ST-556 and ST-556-LSE) filed that month. The $1,000 monthly cap applies to vehicle sales with a delivery date on or after December 12, 2024, which corresponds to returns due on or after January 1, 2025. Retailers will no longer be able to reduce the tax remittance by the amount of the retailers’ allowance when filing Forms ST-556 and ST-556-LSE. To avoid potential billing issues or confusion, IDOR will calculate the discount on these returns through a monthly reconciliation process that will occur approximately 60 days after the end of a monthly liability period. The retailers’ allowance will be issued once the reconciliation process is completed each month.
If you are not mandated to file Forms ST-556 and ST-556-LSE electronically and file using paper returns, do not enter a figure on the retailers’ allowance line. You must remit all tax reported as due on your return to be issued the retailers’ allowance, as applicable, through IDOR’s monthly reconciliation process.
Note: Forms ST-556-X and ST-556-LSE-X filed on paper on or after January 1, 2023, to correct a return filed prior to January 1, 2023, will not cause a previously allowed discount or retailers’ allowance to be removed.