Collect and Report Sales and Use Tax
Policy Statement
Units are responsible for collecting and reporting applicable sales and use taxes on taxable sales, which are typically sales of tangible property. Taxable sales are primarily recorded in self-supporting funds. However, taxable sales may also be recorded in gift funds (as a part of fundraising activities) or in service plan funds (if the goods sold are for use outside of the medical facility).
Reason for the Policy
In order to ensure compliance with the various sales and use tax regulations enacted by the State of Illinois and various other states, it is necessary to outline the collection and reporting process for sales and use taxes.
Sales and use taxes are a complex area. Consult 18.6 Sales and Use Tax/Goods and Services Tax for information on taxable sales and how to determine the amount of tax to collect.
Applicability of the Policy
This policy applies to any unit which sells tangible property to customers not exempt from sales and use tax.
Procedure
To ensure proper collection and reporting of sales and use taxes:
- 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 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 address outside of Illinois, consult "Sales to Clients in Other States" in 18.6 Sales and Use Tax/Goods and Services 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 18.6 Sales and Use Tax/Goods and Services Tax to find the applicable tax rate. If the state where the sale was processed is not on this table, contact Tax Compliance and Analysis for further guidance.
- Calculate the required tax to assess on the sale, using one of the following methods:
- Method 1: 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).
- Method 2: Include the tax in the sales price charged 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 $10.00 ($9.17 in sales plus $0.83 in tax).
Contact University Accounting and Financial Reporting (UAFR) for guidance if neither method was followed.
- In order to help ensure proper recording of both the sales revenue and the tax collected, follow the applicable method below:
Self-Supporting or Service Plan Fund:
For taxable sales associated with a self-supporting or service plan fund, record the sales revenue and the tax collected to the appropriate account code in the applicable fund of the selling unit. The recommended practice is to use the appropriate revenue account code to record the sales revenue and to use account code 61200 "Sales Tax Payable" to record the tax liability.
Gift Fund:
For taxable sales taking place within a gift fund (such as the sale of tangible personal property [donated or purchased] sold as part of a fundraiser), complete the applicable University of Illinois Foundation (UIF) Gift Transmittal Form and enter the exact amount of calculated sales tax in the “Comments” field of the form. Note: Sales of tangible personal property (donated or purchased) at a live, silent, or online auction are typically exempt from sales tax. See Section 18.6 of the Business and Financial Policies and Procedures for further details.
The UIF will then sweep the sales revenue to account code 303242 “UIF Fundraising/Non-Gift Revenue” of the related gift fund. They will also sweep the sales tax to account code 303247 “Non-Gift Sales Tax Revenue” of the related gift fund.
- Download a new copy of the University of Illinois Sales Tax Reporting Form each month, as changes to the form occur frequently.
- Submit the completed form for the previous month's sales to UAFRTAX@uillinois.edu by the 10th of the current month. For example, the deadline to report September taxable sales is October 10th. Late, incorrect, or incomplete submissions may result in penalties and interest charges.
- 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 from the unit's fund to the agency fund from which the tax was paid.
18.6 Sales and Use Tax/Goods and Services Tax
10.3.1 Deposit Cash and Checks with University Bursar
10.1.1 Obtain Approval as a Cash Handling Unit
IDOR Tax Rate Finder
Great Lakes States Tax Enforcement Pact
IDOR Overview of Sales and Use Tax
Last Updated: July 31, 2020