The PJ Tatler

Illinois residents expected to report, pay taxes on internet purchases now

This seems like the worst of tax ideas: Expecting residents to track and pay tax on all online purchases, or face the wrath of the state.

This year, for the first time, taxpayers are being asked how much they owe in so-called “use taxes” on the Illinois 1040 tax form. The law already required taxpayers to pay the “use” tax, but it wasn’t listed on the basic form.

A use tax is a form of sales tax that applies to purchases made outside Illinois, but used in the state. The tax, which is 6.25 percent of the purchase price, applies to online purchases made from businesses that don’t have brick and mortar locations in the state and that don’t charge Illinois sales taxes, according to the Illinois Department of Revenue. That includes companies like Amazon.com, but not Barnes & Noble or Macy’s, who charge sales taxes online. The “use” tax also applies to catalog and home shopping network purchases from out-of-state companies that don’t charge sales taxes.