TITLE: Illinois and Kentucky End 200-Transaction Sales Tax Nexus Tests: What International Sellers Need to Know
Illinois and Kentucky have removed their 200-transaction sales tax nexus tests. For international sellers, that may remove a registration trigger, but it does not remove the need to monitor sales, review existing permits, and keep accurate location records.
Illinois also introduced a significant audit risk: a 15% assessment on certain sales when records do not establish where the sales took place. Here’s what you need to know and what to do next.
Illinois: Check your sales against the $100,000 threshold
Effective January 1, 2026, Illinois removed the 200-transaction threshold for remote retailers and marketplace facilitators making destination-based sales. The remaining economic nexus threshold is $100,000 or more in cumulative gross receipts from sales of tangible personal property to Illinois purchasers during the relevant 12-month lookback period.
The lookback period ends on March 31, June 30, September 30, and December 31. For quarters beginning after March 31, 2026, you should retest your sales each quarter. If you meet the threshold, you may need to begin collecting and remitting destination-based Retailers’ Occupation Tax (ROT).
This change may help low-dollar, high-volume sellers. For example, 200 orders of $15 stickers total just $3,000. Transaction volume alone no longer triggers Illinois’ economic nexus requirement. But sales value still matters, and other grounds for tax obligations, such as physical presence, may still apply.
The Illinois Department of Revenue (IDOR) says sellers who registered only because of the former transaction test, and did not meet the $100,000 threshold, should have reviewed sales for the 12 months ending December 31, 2025. IDOR automatically changed the registration status of eligible sellers to “voluntary use tax” and notified them. Check your account and past filings rather than assuming your registration has closed.
If you collected destination-based ROT after January 1, 2026, while below the threshold, Illinois says the amount must either be refunded to customers or remitted to IDOR and reported on Form ST-1 as Use Tax. Any amount above the 6.25% state use tax rate is reported as excess tax. Review your returns and records before making adjustments.
Illinois’ 15% assessment makes location records essential
The new 15% undetermined-location rate is not a general Illinois sales tax rate. It applies when a taxpayer fails to provide the information, schedules, or supporting documents needed to determine where destination-based sales occurred. IDOR can assess the gross receipts from those sales at 15%.
The rule can apply during an audit to any period under audit, including periods before January 2026. Standard penalties may also apply where separately warranted.
Keep records that support both the sale and its tax location, including:
- The customer’s name and billing address.
- The customer’s name and exact ship-to address, including street, city, county, state, and ZIP code.
- Documentation showing where the goods were shipped from.
This matters whether orders come through Shopify, Amazon, Etsy, or your own website. Don’t rely on order totals alone. Maintain downloadable transaction and shipping records so you can support the locations reported on Forms ST-1 and ST-2 if IDOR asks.
Marketplace facilitators that no longer meet Illinois’ threshold generally no longer need to file and remit ROT for marketplace sellers. However, facilitators with a physical presence in Illinois still have filing responsibilities for their own sales.
Kentucky: The 200-order trigger ended August 1
Kentucky’s HB 757 removed the 200-transaction economic nexus test for remote retailers and marketplace providers, effective August 1, 2026. The remaining sales threshold is $100,000 or more in gross receipts into Kentucky in the previous or current calendar year.
If you registered only because your Kentucky order count reached 200, you may no longer be required to hold a permit on that basis alone. However, Kentucky’s Department of Revenue advises sellers to check with the Department before closing an account. Past filing periods and other registration obligations still matter.
Don’t treat this as a nationwide change
Illinois and Kentucky have changed their rules, but transaction tests remain relevant in other states. The thresholds differ. For example, Connecticut applies a $100,000 threshold and 200 retail sales, while Georgia and New Jersey have thresholds that can be met through sales value or transaction volume. New York uses a higher sales threshold alongside a transaction test.
As an international seller, keep tracking both sales value and order counts by state. A change in one state does not remove your obligations elsewhere. Also review marketplace reports alongside your own sales data: platform collection does not automatically settle every registration, filing, or recordkeeping responsibility.
Build a repeatable US compliance process
Use this checklist to keep your US sales tax compliance organized:
- Separate sales by state and channel. Include your website, marketplaces, and other sales channels so you can assess the complete picture.
- Review each state’s current threshold. Track gross receipts and order counts where either can affect nexus.
- Check registrations and prior returns. Confirm whether your Illinois or Kentucky status changed, and resolve any periods that still require attention.
- Keep location evidence. Preserve billing, ship-to, and ship-from details to support your sales tax reporting.
- Retest on schedule. Record when each state’s threshold is reviewed and whether collection or filing requirements have changed.
Sterlinx Global operates as a Global Tax Compliance Suite for ecommerce brands, digital businesses, growing SMEs, and UK sellers with US LLCs. You provide your financial and transaction data; we handle ongoing compliance delivery, including bookkeeping, tax calculations, sales tax filings, and year-end accounts. Our ecommerce accounting services support businesses that need structured records across sales channels, while our Shopify accounting support helps bring store data into a consistent reporting process.
Frequently asked questions
Does Illinois still require registration after 200 orders?
Not on the basis of transaction count alone. Since January 1, 2026, the remaining Illinois economic nexus threshold is $100,000 or more in cumulative gross receipts from sales of tangible personal property to Illinois purchasers during the applicable 12-month lookback period. Other nexus grounds may still apply.
Is the 15% Illinois rate the sales tax rate for online orders?
No. The 15% rate is an assessment on gross receipts from destination-based sales when the taxpayer fails to provide sufficient information to determine the sales locations. It is not a standard rate to apply to all Illinois orders.
Can I close my Kentucky sales tax permit if I had fewer than $100,000 in sales?
Not automatically. Kentucky says sellers registered solely due to transaction volume may no longer need a permit on that basis, but you should check with the Department before closing your account. Prior-period obligations or another basis for registration may remain.
What should international sellers do first?
Review sales by state, confirm current registrations and filing duties, and make sure your records identify where each order was billed, shipped to, and shipped from. That gives you a reliable basis for deciding whether to register, adjust, or close an account, and for supporting what you report if a state asks.