Illinois Issues New Guidance on Marketplace Facilitators: What SaaS and Auction Platforms Need to Know
Illinois has released a new General Information Letter (GIL), ST 25‑0060‑GIL, offering important clarification on how the state interprets Marketplace Facilitator rules—especially as they apply to software companies, auction platforms, and SaaS providers.
If your business provides digital tools that allow users to list items, run auctions, or connect with payment processors, this guidance is worth your attention.
Below is a breakdown of what the Illinois Department of Revenue (IDOR) said, what it means, and how it may affect businesses operating in Illinois.
What Prompted the GIL?
A software company requested clarification on whether its platform—used by customers to run online auctions—qualified as a Marketplace Facilitator under Illinois law.
The company emphasized that it:
Provides software and hosting tools
Does not list items for sale
Does not set prices
Does not process payments
Does not act as an agent or intermediary
Does not have visibility into final sales or payment outcomes
Instead, customers control their own listings, auctions, payment processors, and fulfillment.
The company wanted to know whether offering technical integrations with third‑party payment processors could be considered “indirect payment processing”—a key factor in Illinois’ Marketplace Facilitator definition.
Illinois’ Marketplace Facilitator Rules: A Quick Refresher
Under Illinois law, a business is a Marketplace Facilitator if it:
Lists or advertises tangible personal property for sale on behalf of a third‑party seller, and
Directly or indirectly collects payment from the customer and transmits it to the seller.
Illinois takes a broad view of terms like:
“facilitates”
“indirectly”
“arrangement”
“provision”
This broad interpretation means many ecommerce and platform‑based businesses can fall under the rule—even if they don’t handle payments directly.
Key Takeaways From the GIL
1. Providing a Payment Connection = “Indirect Payment Processing”
IDOR states that offering functionality that connects a buyer to a payment mechanism can satisfy the “collecting payment” requirement—even if the platform never touches the funds.
This is a critical point.
If your platform:
Embeds payment links
Integrates with payment processors
Redirects users to a payment portal
…Illinois may consider that indirect participation in the payment process.
2. Listing Tools May Count as “Listing or Advertising”
Even if the platform does not create listings itself, providing the functionality for sellers to list items may satisfy the first prong of the Marketplace Facilitator definition.
3. Auction Platforms Are Not Automatically Exempt
Illinois recognizes a distinction between:
Licensed auctioneers (exempt), and
Internet auction listing services (not exempt)
If a platform allows users to post items for sale via online bidding, it may fall into the latter category.
4. Multi‑Seller Platforms Are Strongly Presumed to Be Marketplaces
IDOR notes that platforms hosting multiple unrelated sellers generally meet the definition of a marketplace unless they operate more like:
A standalone vendor website
A private, seller‑specific portal
A non‑searchable, invitation‑only environment
This is a narrow exception.
5. Marketplace Facilitators Must Maintain Seller Records
If classified as a marketplace facilitator, a business must maintain:
Transaction‑level records
Seller names, addresses, and FEINs
Books and records required under the Retailers’ Occupation Tax Act
This applies even if the facilitator does not control payments.
What This Means for SaaS Platforms and Auction Technology Providers
Illinois is signaling that functionality matters more than intent.
Even if your business:
Does not process payments
Does not control transactions
Does not act as an intermediary
…you may still be considered a marketplace facilitator if your platform:
Enables listings
Connects buyers and sellers
Provides payment integration options
This is especially relevant for:
Auction software companies
White‑label ecommerce platforms
Multi‑seller SaaS environments
Marketplaces with optional payment integrations
Platforms earning listing fees, referral fees, or final value fees
Practical Steps for Businesses to Consider
While the GIL is not binding, it reflects IDOR’s current interpretation. Businesses should consider:
1. Reviewing how their platform connects to payment processors
Even optional integrations may trigger facilitator status.
2. Evaluating whether their platform enables multi‑seller commerce
If multiple unrelated sellers can list items, the risk increases.
3. Assessing whether they meet Illinois’ economic thresholds
$100,000 in Illinois sales, or
200 transactions (through 2025)
4. Reviewing recordkeeping capabilities
If classified as a facilitator, you must maintain detailed seller and transaction records.
5. Consulting tax professionals
Marketplace facilitator rules vary widely by state, and Illinois’ interpretation is among the broadest.
Final Thoughts
Illinois’ latest GIL reinforces a trend: states are expanding the scope of marketplace facilitator laws to capture more digital platforms, even those that see themselves as software providers rather than ecommerce intermediaries.
If your business provides tools that allow users to list items, run auctions, or connect with payment processors, now is the time to evaluate your exposure.