It can be helpful to think of sales tax and use tax as mirror images of each other. They’re closely related and they’re generally two ways of getting at the same thing. In both cases the state is collecting a tax on a purchase or a service. The main difference is whether that tax appears on the receipt (sales tax) or whether it’s the responsibility of the purchaser to report and pay the tax later (use tax).
In Illinois there are four main types of sales and use tax. They are the Retailers’ Occupation Tax (ROT), the Retailers’ Use Tax (RUT), the Service Occupation Tax (SOT) and the Service Use Tax (SUT). There are other sales and use taxes, but these four are the main ones.
It can be confusing to try to keep these four taxes straight. Try to think of them as pairs. There’s a sales tax and a use tax for retail purchases (ROT and RUT) and then there’s also a sales tax and a use tax for services (SOT and SUT).
So if you go to the drugstore on the corner and make a purchase, the sales tax on your receipt is ROT. If you bought something out of state and used it in Illinois you are required to declare that purchase and pay use tax (RUT) on it. SOT and SUT work in the same way, the only difference being that they are assessed on services instead of retail products.
For more information on the four kinds of sales and use tax in Illinois or for help with other tax related legal concerns, contact the Chicago tax lawyers at Horowitz & Weinstein.