In response to numerous inquiries, the Chicago Departments of Finance and Law issued an Information Bulletin on their application of nexus to Chicago taxes in light of Wayfair v. South Dakota, 585 U.S. __, 138 S. Ct. 2080 (2018). Illinois has adopted an economic nexus standard by which out-of-state retailers making sales of tangible personal property to Illinois must collect state use tax if, in a 12-month period: (1) the cumulative gross receipts from such sales are $100,000 or more; or (2) the retailer enters into 200 or more separate such transactions. As the nexus requirement applies to state use tax, but not local home rule taxes, Chicago concludes that it “does not limit the analysis of what constitutes nexus for the purpose of determining whether the City can require an out-of-state entity to collect a City tax.”

While Chicago will consider these thresholds for whether an entity has nexus with Chicago, the City will “not necessarily” treat this factor as “determinative.” Chicago will also consider other factors, including:

  1. Agreements that the entity has with other businesses in Chicago;
  2. Activities that the entity’s employees or other agents perform on the entity’s behalf in Chicago;
  3. Any physical presence that the entity has in Chicago;
  4. Advertising directed at Chicago customers; and
  5. Any other facts that support or oppose the conclusion that the entity has purposefully availed itself of the privilege of carrying on business in Chicago.

Chicago will also allow for a safe harbor by which out-of-state entities that receive under $100,000 in revenue from Chicago customers during their most recent four calendar quarters and meet certain other requirements are not expected to collect tax from their Chicago customers during the current calendar quarter.  However, the safe harbor is very limited.  It applies to only:

  1. The Amusement Tax on electronically delivered amusements (e., video and audio streaming and online games); and
  2. The Personal Property Lease Transaction Tax on nonpossessory computer leases (i.e., cloud computing).