Understanding O’Fallon, Illinois City Sales Tax: How DoorDash, Grubhub, and Uber Eats Are Treated Differently
O'FALLON, IL (StLouisRestaurantReview) When it comes to running a restaurant or food service business in O’Fallon, Illinois, staying up-to-date with tax requirements can be confusing. One area that often raises questions is how online ordering platforms such as DoorDash, Grubhub, and Uber Eats should be reported on state and city sales tax forms. While the state of Illinois has one set of rules, the City of O’Fallon imposes an additional 1% local sales tax, and the treatment of third-party delivery sales is not always uniform.
This article explains the key differences, clarifies common misunderstandings, and outlines what business owners need to know when filing both state and local sales tax reports.
Illinois State Sales Tax and Third-Party Delivery Apps
In Illinois, restaurants and other food establishments are required to collect and remit sales tax on the sale of prepared food and beverages. However, when it comes to third-party ordering platforms like DoorDash, Grubhub, and Uber Eats, state rules are straightforward. These transactions do not need to be included on the restaurant’s Illinois state sales tax return.
Why? Because the third-party platforms themselves are responsible for collecting and remitting the state sales tax directly. In other words, when a customer orders through DoorDash, Grubhub, or Uber Eats, those companies act as the “marketplace facilitators.” They collect the sales tax at the point of sale and then remit it to the Illinois Department of Revenue.
For restaurants, this simplifies reporting at the state level. You can exclude all sales from these platforms when filling out your Illinois state sales tax form.
The City of O’Fallon’s Additional 1% Local Sales Tax
On top of the state sales tax, the City of O’Fallon charges an additional 1% local sales tax. This applies to sales made within the city limits and is collected to fund municipal operations and community development.
For most in-person restaurant sales, this is simple: the restaurant collects the extra 1% tax from the customer and remits it to the city. However, online orders placed through delivery platforms are more complicated. The city requires restaurants to separate third-party delivery sales and determine which platforms must be included in the local tax filing.
How DoorDash, Grubhub, and Uber Eats Differ Under O’Fallon’s Rules
This is where business owners often stumble. Even though all three companies are treated the same at the state level, O’Fallon distinguishes between them when it comes to the local 1% sales tax.
DoorDash – Restaurants in O’Fallon can exclude DoorDash sales from their city sales tax filing. The platform handles those transactions separately.
Grubhub – Just like DoorDash, Grubhub sales can be excluded from the O’Fallon city sales tax form. Restaurants do not need to calculate or report these transactions for the additional 1% city tax.
Uber Eats – Unlike DoorDash and Grubhub, Uber Eats sales must be included on the O’Fallon city sales tax form. Restaurants are required to calculate and remit the additional 1% tax on Uber Eats orders to the city.
This difference creates an unusual situation: even though all three platforms are excluded at the state level, only Uber Eats must be included when reporting city sales tax in O’Fallon.
Why the Difference Exists
The reason O’Fallon requires Uber Eats sales but not DoorDash or Grubhub is tied to how each company has structured its agreements and tax collection responsibilities. Some platforms act as full marketplace facilitators for both state and local taxes, while others only remit at the state level.
DoorDash and Grubhub have arrangements in place that ensure local sales tax is handled without requiring restaurants to report it directly. Uber Eats, however, leaves the responsibility for the city’s additional 1% sales tax with the restaurant.
Practical Impact on Restaurant Owners
For restaurant owners in O’Fallon, this creates an extra layer of bookkeeping and reporting responsibility. You must carefully track sales from Uber Eats and make sure they are included in your monthly or quarterly city sales tax filing. At the same time, you need to exclude DoorDash and Grubhub transactions to avoid double taxation.
This means:
Accurate Record-Keeping – You’ll need to maintain detailed records of your Uber Eats sales each month. Most platforms provide transaction summaries, but you should also double-check against your own POS system.
Separation of Platforms – Treat DoorDash and Grubhub separately from Uber Eats in your sales reports. This avoids reporting errors.
Avoiding Penalties – If you fail to include Uber Eats sales in your O’Fallon city sales tax filing, you could face penalties, interest, or audits.
Example Calculation
Let’s say a restaurant in O’Fallon has the following third-party sales in a given month:
DoorDash: $8,000
Grubhub: $5,000
Uber Eats: $6,000
For the Illinois state sales tax form, all three platforms are excluded. The restaurant reports only its in-house and direct online sales.
For the O’Fallon city sales tax form, the restaurant excludes DoorDash and Grubhub but must include Uber Eats. That means the city’s 1% sales tax is calculated only on the $6,000 in Uber Eats sales, resulting in an additional $60 in tax owed to the city.
Best Practices for Managing City Sales Tax in O’Fallon
To stay compliant and avoid headaches, restaurants should adopt best practices:
Set Up Separate Sales Categories – In your accounting system, create categories for DoorDash, Grubhub, Uber Eats, and in-house sales. This makes reporting much easier.
Review Reports Monthly – Don’t wait until the end of the quarter. Review your sales tax responsibilities monthly to ensure corrections can be made promptly.
Consult with Your Accountant – Since tax rules can change, and interpretations may vary, consult with a tax professional who understands both Illinois state law and O’Fallon city regulations.
Stay Updated – The way cities handle third-party delivery sales continues to evolve. O’Fallon’s current rules may change in the future, so staying informed is essential.
Why This Matters for the Future of Restaurants
As online ordering and delivery continue to grow, tax policies like these will increasingly impact restaurants’ bottom lines. The difference between including or excluding a platform can mean hundreds or even thousands of dollars per year.
By understanding the unique treatment of DoorDash, Grubhub, and Uber Eats under O’Fallon’s city sales tax rules, restaurant owners can stay compliant while protecting their profits.
Conclusion
Navigating sales tax in O’Fallon, Illinois, requires more than just following state rules. While DoorDash, Grubhub, and Uber Eats are all excluded from Illinois state sales tax filings, the city’s additional 1% local tax creates a key distinction. DoorDash and Grubhub sales can be excluded from the city return, but Uber Eats sales must be reported and taxed.
For restaurant owners, the takeaway is straightforward: track Uber Eats separately, maintain organized records, and consult with professionals to minimize mistakes. Staying on top of these details ensures compliance, prevents penalties, and helps your business focus on what it does best—serving customers.
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