Tax Law - Illinois ROTA/Use Taxes

In Nava v. Sears, Roebuck & Co. (1st Dist., 2013), the plaintiff complained that he had been charged sales tax on the full purchase price of a digital cable converter box, despite the fact that he (among other consumers) had received a voucher for a portion of the retail purchase price.  The $40.00 voucher was from the federal government, to be redeemed by the retailer.  The Illinois Department fo Revenue advised that sales tax was not required to be collected on the portion of the purchase paid for by the vouchers, which was exempt from the tax, but the Circuit Court disagreed and granted summary judgment in favor of Sears.  On appeal, the Court reviewed the different types of sales taxes assessed on retailers and purchasers in Illinois: the Retailers' Occupation Tax (ROTA) and the Use Tax.  It noted that, although ROTA obligates payment of a tax on tangible personal property sold in Illinois by a retailer, and the Use Tax Act mandates payment of a tax on the privilege of using such property in Illinois by the consumer, only one tax from that transaction is remitted to the Department, and the single payment by the retailer satisfies both taxes.  A retailer's tax liability under both Acts is a percentage of gross receipts (selling price), and the tax rate under both statutes is currently set at 6.25%.  However, the Acts set forth numerous exceptions to the gross receipts rule, one of which includes government purchasers.  Since a portion of the box was, in effect, paid for by the federal government, which is exempt from Illinois sales taxes, Sears was not obligated to collect them on that portion of the converter's purchase price.