10.3 Illinois Sales Tax, Settlement Statements & Net Proceeds

Illinois Sales Tax, Settlement Statements & Net Proceeds

The last skill in the 10-item math bucket is turning a hammer into two documents: a buyer-side tax figure when the lot is taxable personal property, and a seller settlement that subtracts only what the contract and the deal file allow. Candidates lose these items by treating 6.25 percent as a Cook County ticket, by taxing real estate as if it were jewelry, by subtracting buyer premium from the seller, or by folding unauthorized "misc" into net.

Illinois 6.25 percent — state rate, not the whole ticket

Illinois Retailers' Occupation Tax and complementary Use Tax on general merchandise are commonly described as a combined state rate of 6.25 percent (5 percent ROT plus 1.25 percent state Use Tax components). Local occupation taxes add. Never treat 6.25 percent as the final register rate in Cook County or another home-rule town. If the PSI item does not give a combined local rate, compute state 6.25 percent on the taxable hammer and stop. If the item gives 8.50 percent or another combined figure, use the figure it gives.

Do not invent that buyer premium is always inside the ROT base. IDOR rules and the contract control whether premium is receipts from the sale of tangible personal property. When the question is silent, compute tax on hammer and say so. Adding tax to a $9,350 invoice because you assumed the $850 premium is taxable is extra law the item did not give you.

Worked tax — jewelry hammer $2,400

Taxable personal property sold to a user. State rate 6.25 percent. No local rate given. No instruction to tax the premium.

• Tax = $2,400 × 0.0625. First, $2,400 × 0.06 = $144. Then $2,400 × 0.0025 = $6. Tax = $150.
• Buyer pays hammer plus tax before any premium = $2,400 + $150 = $2,550.

If the same lot also carries a 10 percent buyer premium, the premium is $240. The buyer invoice is then $2,400 + $240 + $150 = $2,790 only if tax remains on hammer. Do not recompute 6.25 percent of $2,640 unless the item tells you premium is in the base.

130.1915 — who remits

86 Ill. Adm. Code 130.1915 is the auction tax-remittance rule PSI can wrap around a 6.25 percent calculation.

• If the auctioneer acts for an unknown or undisclosed principal, or is entrusted with possession of the tangible personal property for sale, the auctioneer is deemed the owner and remits tax on receipts from sales to users or consumers.
• If the principal is disclosed, the disclosed principal generally incurs origin-rate Retailers' Occupation Tax. The auctioneer is not automatically the retailer on that disclosed-principal sale.
• Auctioneers are not currently marketplace facilitators after Public Act 102-0634 (August 27, 2021). That facilitator label does not automatically pull an ordinary live or online auctioneer into marketplace collection. Internet listing services may still have a different facilitator posture; do not collapse a passive listing platform into 130.1915's undisclosed-principal deemed-owner rule.

For the arithmetic item, compute 6.25 percent (or the given combined rate) on the taxable hammer. For the law wrapper, ask whether the principal was disclosed. Undisclosed plus possession is the deemed-owner remittance path.

Realty is different. The real estate itself is often not ROT. A $250,000 land hammer is a settlement problem, not a 6.25 percent problem, unless the item separately taxes taxable personal property sold with the farm. Do not take 6.25 percent of $250,000 and call it closing tax.

Seller net — hammer minus commission minus authorized expenses

Seller net = Hammer − Seller commission − Authorized expenses.

Authorized expenses are the ones the 15-10 contract and the deal file support: advertising the seller agreed to, hauling, yardage, catalog, clerking. Unauthorized "we always charge a tent fee" does not come off. Buyer premium stays out of this formula unless 15-10(1)(D) credits the seller with the premium or a stated share.

Work every settlement below. These reuse Section 10.1 commissions on purpose.

Real estate — $250,000 hammer

6 percent commission on $250,000 = $250,000 × 0.06 = $15,000. Authorized advertising $2,500. Deductions = $15,000 + $2,500 = $17,500. Net = $250,000 − $17,500 = $232,500. Realty itself is not run through 6.25 percent ROT on this fact pattern.

Farm equipment — $85,000 hammer

10 percent commission = $85,000 × 0.10 = $8,500. Authorized expenses $3,200. Deductions = $8,500 + $3,200 = $11,700. Net = $85,000 − $11,700 = $73,300.

This is the same $85,000 hammer as the mixed-compensation example, but the clause here is 10 percent plus expenses, not 6 percent plus an $800 catalog fee. Read the clause on the page you are on.

Estate personal property — $62,000 hammer

12 percent commission = $62,000 × 0.12 = $7,440. Authorized advertising $1,800. Deductions = $7,440 + $1,800 = $9,240. Net = $62,000 − $9,240 = $52,760.

A near-miss is $62,000 − $7,440 = $54,560, which is net before advertising. Another near-miss is treating $9,240 as the net instead of the deduction.

Livestock — $28,000 hammer

7 percent commission = $28,000 × 0.07 = $1,960. Hauling $800 and yardage $400 are authorized. Deductions = $1,960 + $800 + $400 = $3,160. Net = $28,000 − $3,160 = $24,840.

Dropping yardage yields $28,000 − $1,960 − $800 = $25,240. Dropping both expenses yields $26,040. Those are the distractors.

Settlement statements and the 1440.270 deal file

The settlement statement is the paper that proves the arithmetic. It must itemize:

1. Gross (hammer, lot by lot or in total as the sale was clerked).
2. Commission (the 15-10 fee: percentage, flat, mixed, graduated, or per-head).
3. Authorized expenses (each named, with the supporting invoice in the deal file).
4. Net proceeds due the seller.
5. Buyer premium, on its own line, showing who received it as 15-10(1)(D) required.
6. Tax collected, if the auctioneer remitted under 130.1915 or as the item instructs, not buried inside commission.

68 Ill. Adm. Code 1440.270 is the special-account and records rule (Chapter 8). The deal file includes clerk sheets and settlement sheets. A net wired to the seller with no itemized sheet is not a complete 1440.270 file. Clerk sheets show what the ring recorded as hammer. Settlement sheets show how that hammer became net. Keep them together with the 15-10 contract, the advertising, and the expense receipts.

Walk this list before you pick a net:

1. Write hammer. Do not start from the buyer invoice.
2. Compute commission from the actual clause (percentage of hammer, flat, mixed, graduated, or per-head).
3. Add only authorized expenses.
4. Subtract those two pieces from hammer. That is net.
5. Leave buyer premium out of net unless the contract awards it to the seller.
6. On taxable personal property, compute 6.25 percent of taxable hammer unless a combined local rate is given; apply 130.1915 to decide who remits; do not tax the realty itself on a land-only hammer.
7. Put gross, commission, expenses, net, premium, and tax on the settlement sheet that lives in the 1440.270 deal file.

That is the whole math bucket: identify the base, multiply the rate the contract actually wrote, add only what the file authorizes, and disclose who received the premium. Ten scored items. They are 20 percent of the exam. Work them on scratch paper the same way this chapter worked them.