Live Adult Entertainment Facility Surcharge

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A live adult entertainment facility operator must register with the Illinois Department of Revenue to collect the Live Adult Entertainment Facility Surcharge if all of the following apply:

• the facility is operated as a business that is open to the public.
• the business serves alcohol or permits the consumption of alcohol on its premises.
• the business offers or provides, during at least 30 consecutive or nonconsecutive days in a calendar year, activities by employees, agents, or contractors of the business that involve nude or partially denuded individuals that when considered as a whole, appeal primarily to an interest in nudity or sex.

If you have questions about registering for the Live Adult Entertainment Facility Surcharge, contact our Central Registration Division at 217 785-3707.

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There are two methods allowed for calculating the Live Adult Entertainment Facility Surcharge:

• One method calculates the surcharge based on the number of patrons admitted to the facility.
• The other method calculates the surcharge based on the facility’s gross receipts subject to tax under Section 2 of the Retailers’ Occupation Tax.

An operator must elect, at the time a return is due, one of the methods to calculate the surcharge, regardless of the method used the previous year. Once an operator files Form LA-1 for a given year, the operator cannot change the calculation method for that reporting period by filing an amended return.

Note: An operator has the discretion to determine how it will cover the expense of the Live Adult Entertainment Facility Surcharge. An operator is not required to impose a fee on a customer of the facility. Collecting the surcharge at a fixed amount from each person admitted does not require the operator to use the admissions method to calculate the surcharge due on Form LA-1.

For more information, see 35 ILCS 175/10 and 86 Ill. Adm. Code Section 900.120.

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Calculating the Live Adult Entertainment Facility Surcharge using the method based on admissions requires the operator to pay $3 per person admitted to the facility. This $3 does not have to be imposed on the customer, but it must be remitted by the operator. An operator electing to calculate the surcharge based on admissions must maintain an accurate record of the daily admissions in its books and records. 35 ILCS 175/10(a).

Example:

To meet this obligation, an employee located at the entrance of the live adult entertainment facility could sell tickets to customers entering the facility and collect them from the customers after they enter the facility. The operator then could maintain a daily record of ticket sales in its books and records.

An operator is only required to count a patron once in a 24-hour period, regardless of the number of times that patron enters the facility. The 24-hour period starts each day at 8:00 a.m. An operator must use some method of verifying that a patron previously has been admitted, such as a hand stamp or admission card.

Note: This method must be used if an operator has not filed the applicable returns under the Retailers’ Occupation Tax Act for a full calendar year prior to any January 20.

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The method based on gross receipts requires the operator to pay a set dollar amount based on the annual gross receipts subject to tax under Section 2 of the Retailers’ Occupation Tax Act. 35 ILCS 175/10(a)(2). Use the following table to determine the amount of surcharge that would be due based on your gross receipts.

If the facility’s annual gross receipts from the previous calendar year are:

• less than $500,000, the surcharge owed is $5,000;
• $500,000 or more, but less than $2,000,000, the surcharge owed is $15,000;
• $2,000,000 or more, the surcharge owed is $25,000.

To calculate gross receipts, use the total taxable receipts from the prior year's Form ST-1, Sales and Use Tax and E911 Surcharge Return. For single-site surcharge filers, the taxable receipts can be figured by adding Lines 4a, 5a, and 8a from each Form ST-1. Multi-site surcharge filers can calculate their taxable receipts using Lines 4a, 5a, and 8a from each Form ST-2.

Note: This method cannot be used if an operator has not filed the applicable returns under the Retailers’ Occupation Tax Act for a full calendar year prior to any January 20.