Illinois DOR Proposes Use Tax Nexus Standards for Trade Show Retailers

By and on September 14, 2017

The Illinois Department of Revenue (Department) has issued a proposed new administrative rule addressing the nexus implications for out-of-state retailers attending trade shows in Illinois. The proposed rule, linked here, reaffirms the Department’s long-standing position that all sales made at an Illinois trade show are subject to Illinois Retailers Occupation Tax and any applicable local taxes. In a move welcomed by taxpayers, the proposed rule goes on to delineate a “safe harbor” of activities that will not create nexus for out-of-state retailers with respect to their other Illinois sales.

Under the safe harbor provision, an out-of-state retailer’s presence at an Illinois trade show will not create nexus for its other Illinois sales if each of the following conditions is met:

  1. The retailer attends no more than two trade shows per calendar year;
  2. The retailer is physically present at the two trade shows for an aggregate total of no more than eight days during any calendar year; and
  3. Combined gross receipts from sales made at the two trade shows during any single calendar year do not exceed $10,000.

The proposed rule clarifies what is meant by the eight day physical presence standard. A “day” includes any portion of a day in which a retailer is in Illinois and is engaged in “trade show activities.” Each day of trade show activities counts as one day, regardless of the number of “representatives” engaging in trade show activities on that day, but a “representative” is broadly defined to include “anyone acting under the seller’s authority,” including representatives acting on behalf of multiple retailers.

The proposed rule defines “trade show activity” as “activity, traditionally conducted at conventions, trade shows or similar meetings, whose purpose is, in whole or part, to create, maintain or enhance a business market in Illinois.” The phrase also includes “activities to attract persons in an industry generally, as well as members of the public, to the trade show for the purpose of displaying industry products or to stimulate interest in and demand for industry products or services, or to educate persons engaged in the industry in the development of new products and services.” Only the days the retailer is actually engaged in trade show activities count toward the eight day limit. Days setting up or tearing down displays or acting as a tourist before or after a trade show do not count toward the total.

Practice Notes

The first notice period for comments on the proposed rule is currently running and will expire on October 2, 2017. Retailers interested in commenting on the proposed rule should write to the Department at the following address: Jerilyn Troxel Gorden, Legal Services Officer, Illinois Department of Revenue, 101 W. Jefferson, Springfield, IL 62794. Alternatively, retailers can coordinate with an industry group, such as the Taxpayers’ Federation of Illinois, to submit their comments.

Issues that may need to be addressed before the rule is finalized include:

  1. The breadth of the definition of “trade show activity;”
  2. Adding language to clarify what constitutes a taxable sale made at an Illinois trade show and counted toward the $10,000 threshold;
  3. Establishing a temporary permit process by which a retailer can remit ROT and Local Tax on trade show sales, without creating a continuing Illinois tax collection obligation; and
  4. Clarifying whether the failure to qualify for the safe harbor provision in one year creates nexus for a retailer in subsequent years.
Mary Kay McCalla Martire
Mary Kay McCalla Martire focuses her practice on state and local tax disputes. She helps clients with audits, tax-related litigation, letter rulings and settlement conferences. Mary Kay has experience resolving disputes involving income, sales and use, utility and telecommunications taxes, as well as premium and retaliatory tax. Read Mary Kay McCalla Martire's full bio.


Nick Furtwengler
Nick Furtwengler focuses his practice on state and local tax matters. Read Nick Furtwengler's full bio.

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