Illinois Adopts Regulation on Trade Show Nexus

September 26, 2018

The Illinois Department of Revenue adopted a new regulation addressing a safe harbor rule with respect to nexus arising from trade show attendance.

Trade shows can be an indispensable means for businesses to promote their products and services. However, depending on the states in which trade shows are held, businesses may end up creating nexus in those states just by attending a trade show for a certain number of days in the year.[1] Some states provide specific guidance on trade show nexus that is more lenient than for other nexus-creating activities because trade shows provide economic benefit to the host state.  Therefore, the state doesn’t want to discourage trade shows from being hosted in the state by imposing strict nexus rules on the companies that attend.  Illinois recently adopted a new regulation regarding trade show nexus, effective July 27, 2018.[2] Illinois’ new regulation states that if an out-of-state retailer (hereinafter referred to as “retailer”) or its representative engages in Illinois trade show activities, the retailer has sales/use tax nexus and must register with Illinois and collect and remit use tax on all sales to Illinois purchasers. “Trade show activities” means activity traditionally conducted at conventions, trade shows or similar meetings, whose purpose is, in whole or in part, to create, maintain or enhance a business market in Illinois, including activities to attract people to an industry, displaying products or otherwise stimulate interest in and demand for industry products or services, or to educate people on developments of new products or services in the industry.  Such activities typically do not include merely attending a trade show as a visitor. A “representative” does not need to be an employee or agent, and may include an independent contractor or anyone acting under the authority of the retailer. Not all trade show activities conducted in Illinois will result in nexus, however, as there are three safe harbor conditions which, if met, preclude the retailer from creating nexus in Illinois.

The first condition requires that the retailer attends no more than two Illinois trade shows during the calendar year. The second condition is that the retailer must not be physically present at those two Illinois trade shows for more than eight days in the aggregate during the calendar year.  For purposes of counting those eight days, the following rules apply:

  • Days in which the retailer is in Illinois but is not engaged in any activity related to the trade shows will not count toward the eight-day limit. For example, if the retailer stays in Illinois for two days after the trade show as a tourist, those two days do not count towards the eight-day limit.
  • The number of representatives within Illinois at the same trade show does not change the number of days the out-of-state retailer is considered to be in the state (i.e., three representatives attending the same Illinois trade show for five days is the same as one representative attending the Illinois trade show for five days).
  • Any amount of time physically spent at the trade show counts as one day toward the eight-day limit.
  • Days spent setting up and tearing down trade show displays do not count toward the eight-day limit.

The third condition is that the combined gross receipts from taxable sales made at Illinois trade shows during a calendar year do not exceed $10,000. However, sales tax must be collected and remitted by any retailer that makes taxable sales at trade shows even if the retailer meets the nexus safe harbor requirements.  In those cases, the retailer may satisfy its sales tax filing and payment obligations by completing the Special Event Tax Collection Report and Payment Coupon Form, which is typically distributed by event coordinators (or taxpayers may get this form directly from the Illinois Department of Revenue).

Retailers that do not meet the safe harbor requirements should register and file returns on a regular basis. Even after the Supreme Court decision in Wayfair, companies can still create nexus by being physically present in the state, even if that presence is temporary, such as engaging in trade show activities.  This regulation demonstrates the need for businesses to understand the state and local tax implications of conducting any kind of activity in a state, because failure to address any tax obligations from such activities can quickly lead to tax exposure. Aprio’s SALT team has experience advising companies on the nuances of nexus, and we can assist them to ensure that they are in compliance with their SALT obligations.   We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.

Contact Jeff Glickman, partner-in-charge of Aprio’s SALT practice, at for more information.

This article was featured in the September 2018 SALT Newsletter. [1] Assuming the taxpayer doesn’t already have sales tax economic nexus, pre-Wayfair sales tax nexus principles should apply. [2] Ill. Reg. § 150.802. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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