Trade show activities can create sales tax nexus with Illinois. Sales made at a trade show by an out-of-state retailer are subject to both state and local tax.
The Department of Revenue has issued a regulation discussing sales tax registration and collection requirements for remote sellers who make sales at Illinois trade shows. The regulation is effective July 27, 2018.
Trade Shows As a Place of Business
Generally, a seller that maintains a place of business in Illinois must register to collect Illinois sales tax. Under the new regulation, remote sellers or their representatives that engage in trade show activities are maintaining a place of business in Illinois.
Further, sales made at a trade show by remote sellers or their representatives are subject to state and local tax. The regulation provides a safe harbor for creating nexus. However, that safe harbor does not relieve an out-of-state retailer from the duty to collect sales tax on sales made at trade shows.
Safe Harbor for Certain Retailers
Under the safe harbor, remote sellers at Illinois trade shows do not have nexus if they meet three conditions:
- The retailer attends no more than two trade shows a year.
- The retailer spends no more than 8 days total at those two trade shows.
- The receipts from the two trade shows do not exceed $10,000.
Trade Shows Representative
A seller’s representative can create sales tax nexus for the seller. A person acting under the seller’s authority is a representative of the seller, including employees, agents, and independent contractors. The person will be a representative even if the person:
- has their own retail business; or
- also represents other retailers.
Trade Shows Activities
A trade show activity is an activity designed to create, maintain or enhance a business market in Illinois.
The activity can be conducted at:
- trade shows; or
- similar meetings.
86 Ill. Adm. Code 150.802, Illinois Department of Revenue, effective July 27, 2018