Springfield, IL— State Senator Toi Hutchinson (D-Chicago Heights) passed legislation out of the Senate today that will clarify which municipality receives the local portion of sales tax on a purchase order. Illinois uses origination sourcing when determining which unit of local government receives the sales tax on a purchase order that is placed in another municipality. Origination sourcing means sales tax is paid on an order based on where that order is received instead of where an order is delivered.

"This legislation will codify into law a state practice for over fifty years of using the location where an order was accepted as the determining factor for which municipality receives the sales tax on that order," Hutchinson said. "This policy was called the bright-line taxing rule. In recent years, the Department of Revenue has shifted course, applying a subjective tax that combines many different factors when determining which municipalities tax rate applies. This type of system is not good for business. It is confusing and cumbersome, and is not the type of stability businesses need."