The Sales Tax Issue

The issue of sales tax has become a hot topic among many “brick and mortar” retailers, as many of us who try to offer competitive pricing are often asked to waive local or state sales tax. I would like to point out a few points that I hope customers will consider before making that “sales tax free” internet purchase.
First, whether you buy from a local store or an online dealer, you are legally obligated to pay “Sales and Use Tax” on your purchase.
Do you know about Use Tax? Use Tax is a sales tax that you, as the purchaser, owe on items that you buy for use in Illinois. If the seller does not collect sales tax, you must pay the Illinois Department of Revenue. The most common purchases on which the seller does not collect Illinois Use Tax are those made via the internet, from a mail order catalog, or made when traveling outside Illinois. You must keep your receipts when you make these type of purchases. In Illinois the amounts should be reported on the Use Tax line on Form IL-1040.
Generally, if sales tax would apply when you buy a particular item in Illinois, use tax applies when you make a similar purchase from a business outside the state.
Second, as a member of the community, your sales tax dollars are one of the most important sources of funding for city services. Consider some of the services your local community offers that are supported in part by sales tax. Firefighters, Police Officers, City Parks and more.
Finally, consider the following:

  • 6 cents of every dollar spent with a BIG BOX RETAILER is retained/re-circulated in a community.
  • Source: Rocky Mountain Institute
  • 20 cents of every dollar spent with a CHAIN STORE is retained/re-circulated in a community.
  • Source: Small Business Administration
  • 60 cents of every dollar spent with a SOLE PROPRIETOR/INDEPENDENT RETAILER is retained/re-circulated in a community.
  • Source: Small Business Administration
  • A dollar spent at a locally-owned store is usually spent 6 to 15 times before it leaves the community. From $1, you create $5 to $14 in value within the community
  • Source: Northwest Earth Institute’s Choices for Sustainable Living

 

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