In this Open Comment Period: Section 22 - Collect and Report Sales and Use Tax
Welcome!
In this Open Comment Period we present updated policy and procedural information for collecting and reporting sales and use tax, in Section 22: Self-Supporting/Revenue Generating Activities. These updates reflect customer input and provide changes to help address common questions and clarify existing requirements.
In addition, the updated policy will now reflect uniform reporting requirements among the three campuses.
Collect and Report Sales and Use Tax
Before You Begin
Units are responsible for collecting applicable sales and use taxes on taxable sales. Taxable sales are primarily recorded in self-supporting funds. However, even when sales are not from self-supporting activities, taxes must still be collected and reported. For example, units may host a fundraiser which records taxable sales within their gift fund. Tax needs to be collected and reported on these items as well.
Sales and use taxes are a complex area. Consult Section 18.6, Sales and Use Tax for information on taxable sales and how to determine the amount of tax to collect.
Begin
To collect and report sales and use tax:
- Determine the appropriate tax rate by identifying the location of the sales activity.
- If the sale was processed in Illinois and sold to a customer in person, then use the tax rate of the seller's location. Consult the Illinois Department of Revenue (IDOR) Tax Rate Finder, to find the applicable tax rate.
- If the sale was processed in Illinois and shipped to an Illinois address, then use the tax rate of the seller's location. Consult theIllinois Department of Revenue (IDOR) Tax Rate Finder, to find the applicable tax rate.
- If the sale was processed in Illinois and shipped to an address outside of Illinois, consult "Sales to Clients in Other States" inSection 18.6, Sales and Use Tax, to find the applicable tax rate.
- If the sale was processed outside of Illinois (for example, selling goods at a conference held in Texas), consult "Sales to Clients in Other States" in Section 18.6, Sales and Use Tax, to find the applicable tax rate. If the state where the sale was processed is not on this table, contact University Tax for further guidance.
- Calculate the required tax to assess on the sale, using one of the following methods:
- Collect the sales price plus the calculated tax amount from the customer.
Example:
If the sales price is $10 and the applicable tax rate is 9%, you will collect a total of $10.90 from the customer ($10 in sales plus $0.90 in tax).
- Charge a flat rate to the customer. To use this method, you must disclose that the tax is included in the sales price.
Example:
If the sales price is $10, the applicable tax rate is 9%, and you have properly disclosed that the sales price includes tax (such as a sign at the checkout counter), then you will collect a total of $10 ($9.17 in sales plus $0.83 in tax).
Contact University Accounting and Financial Reporting (UAFR) for guidance if neither of the methods was followed.
- Separate the sales revenue and tax and record each to the appropriate account code in the applicable fund of the selling unit. Use the applicable revenue account code to record the sales revenue, and use account code 61200, "Sales Tax Payable" to record the tax liability.
Contact UAFR for guidance if this method was not used, or if your sales were related to fundraising activities within a gift fund.
- Submit the University of Illinois Sales Tax Template for the previous month's sales to UAFRTAX@uillinois.edu by the 10th of the current month, even if no sales were transacted during that month. Late, incorrect, or incomplete submissions may result in penalties and interest charges.
Example:
The deadline to report September taxable sales activity is October 10th.
Download a new copy of the form each month, as changes to the form occur frequently.
- UAFR reports combined sales from all units on the applicable sales and use tax returns and remits the collected taxes to the appropriate governmental bodies.
- UAFR posts journal vouchers to move the sales and use tax liability from the unit's self-supporting fund to the agency fund from which the tax was paid.
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