Illinois General Assembly - Full Text of HB4894

LRB104 19858 HLH 33308 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB4894

Introduced , by Rep. Norma Hernandez

SYNOPSIS AS INTRODUCED:

New Act

Creates the Digital Advertising Tax Act. Imposes a tax on the portion of a person's annual gross revenue that is derived from digital advertising services in the State if the person's total revenue derived from digital advertising in the State exceeds $150,000,000. Provides that the tax is imposed at the rate of 10% of the annual gross revenues derived from digital advertising services in the State. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Digital Advertising Tax Act.

Section 2. Findings and intent. The General Assembly finds and declares the following:

(1) Many goods and services that have been traditionally subject to Illinois State and local use and occupation taxes have avoided taxation in the digital era. Many digital transactions are harder to bring into the sales tax base because, instead of paying a monetary fee, customers sometimes barter their personal information for access to digital platforms. This personal information is in turn sold for use in targeted advertisements on digital platforms.

(2) The value of the consumption provided by digital platforms is typically greater as the size of the network is greater. The General Assembly finds that the consumption value provided by networks of a small size is negligible, especially when compared to the compliance burden that would be imposed on smaller digital platforms.

Section 3. Definitions. As used in this Act:

"Annual gross revenue" means income or revenue from all sources, before any expenses or taxes, computed according to generally accepted accounting principles.

"Assessable base" means the annual gross revenue derived from digital advertising services in the State during the taxable year.

"Department" means the Department of Revenue.

"Digital advertising services" means advertising services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services that use personal information about the people to whom the ads are being served.

"Digital interface" means any software that a user is able to access, including a website, part of a website, or an application.

"Eligible taxpayer" means a person whose annual gross revenues from digital advertising in the State for the taxable year exceeds $150,000,000.

"Person" means any natural individual, firm, partnership, association, corporation, limited liability company, or trust; any receiver, executor, trustee, guardian, or other representative appointed by order of any court; or any other entity. Unless expressly provided otherwise, the term "person" does not include a governmental entity or a unit or instrumentality of a government entity.

"User" means an individual or any other person who accesses a digital interface with a device.

Section 4. Tax imposed.

(a) A tax is imposed on the portion of each eligible taxpayer's annual gross revenue that is derived from digital advertising services in the State.

(b) For the purposes of this Act, the portion of the annual gross revenue that is derived from digital advertising services in the State shall be determined using an apportionment factor. The apportionment factor is a fraction, the numerator of which is the annual gross revenues of a person derived from digital advertising in the State during the taxable year and the denominator of which is the annual gross revenues of a person derived from digital advertising in the entire United States during the taxable year.

(c) The Department shall adopt rules that determine the location from which revenues from digital advertising services are derived.

Section 5. Tax rate. The rate of the tax imposed under this Act is 10% of the eligible taxpayer's assessable base.

Section 6. Returns.

(a) Each eligible taxpayer shall complete and file a return with the Department on or before April 15 of the year after the taxable year in which the tax is incurred.

(b) A person that reasonably expects that the person's annual gross revenues derived from digital advertising services in the State will exceed $150,000,000 shall complete and file with the Department a declaration of estimated tax on or before April 15 of that year.

A person who is required to file a declaration of estimated tax under this subsection for a taxable year shall complete and file with the Department a quarterly estimated tax return on or before June 15, September 15, and December 15 of that year.

(c) A person who is required to file a return under this Section shall file with the return an attachment that provides to the Department any information that the Department requires to determine the person's annual gross revenues derived from digital advertising services in the State.

(d) A person required to file a return under this Section shall maintain records of digital advertising services provided in the State and the basis for the calculation of the digital advertising tax owed.

(e) The chief executive officer, proprietor, owner, or highest-ranking manager of an eligible taxpayer shall sign, under penalty of perjury, annual and quarterly returns to certify the accuracy of the information contained in the return. The forms for annual and quarterly returns prescribed by the Department shall include a warning that the person is signing the return under penalty of perjury.

Section 7. Tax payment.

(a) Except as provided in subsection (b) of this Section, each eligible taxpayer who is required to file a return under Section 6 of this Act shall pay the tax under this Act with the return that covers the period for which the tax is due.

(b) Any person who is required to file estimated digital advertising tax returns under paragraph (2) of subsection (b) of Section 6 of this Act shall pay:

(1) at least 25% of the estimated digital advertising tax shown on the declaration or amended declaration for the taxable year:

(A) with the declaration or amended declaration that covers the year; and

(B) with each quarterly return for that year; and

(2) any unpaid digital advertising tax for the year shown on the person's return that covers that year with the return.

Section 8. Collection. The Department shall collect the tax imposed by this Act. Money collected, after deducting amounts necessary for administration and enforcement by the Department, shall be paid into the General Revenue Fund.

Section 9. Penalties. When the amount due is under $300, any person subject to the provisions of this Act who fails to file a return, or who violates any other provision of Section 6 or Section 7 of this Act, or who fails to keep books and records as required by this Act, or who files a fraudulent return, or who willfully violates any rule or regulation of the Department for the administration and enforcement of the provisions of this Act, or any officer or agent of a corporation or manager, member, or agent of a limited liability company subject to this Act who signs a fraudulent return filed on behalf of such corporation or limited liability company, or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act is guilty of a Class 4 felony.

When the amount due is $300 or more, any person subject to the provisions of this Act who fails to file a return, or who violates any other provision of Section 6 or Section 7 of this Act, or who fails to keep books and records as required by this Act, or who files a fraudulent return, or who willfully violates any rule or regulation of the Department for the administration and enforcement of the provisions of this Act, or any officer or agent of a corporation or manager, member, or agent of a limited liability company subject to this Act who signs a fraudulent return filed on behalf of such corporation or limited liability company, or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act is guilty of a Class 3 felony. A prosecution for any act in violation of this Section may be commenced at any time within 3 years of the commission of that Act.

Section 99. Effective date. This Act takes effect upon becoming law.