Most of us understand sales tax fairly well. Buy something in Illinois and Illinois sales tax will show up on your receipt, as well as other municipality taxes. Use tax is not generally as well understood, probably because, although we’ve all technically owed it for years, until its recent budget problems, the state of Illinois wasn’t too aggressive in going after undeclared use taxes.
In Illinois there are four main sales and use taxes. There are the taxes on retail goods, the Retailers Occupation Tax (ROT) and the Retailers’ Use Tax (RUT), and then there are the taxes on services, the Service Occupation Tax (SOT) and the Service Use Tax (SUT).
ROT and SOT are purchases and services within the state. RUT and SUT are for goods or services for which you paid less than Illinois’s sales tax (currently 6.25%) and which you use in the state. For use tax, you owe the difference of whatever sales tax you did pay on the item and Illinois’s rate, so if you paid greater than or equal to the Illinois rate you don’t owe use tax.
For more information on sales tax, use tax, or other tax law concerns, contact Horowitz & Weinstein.