Did Illinois sales tax apply when an online game seller delivered only downloadable or emailed PDF files?

Plain-English summary

Electronically delivered information or data was not treated as tangible personal property under the rule stated in this 2010 GIL. The requester emailed and offered downloads of game files in PDF format and mailed nothing physical. If the transaction transferred no canned software and no tangible personal property, the Department said no Retailers' Occupation Tax or Use Tax was incurred.

The GIL drew an important line for software: canned or prewritten computer software was tangible personal property regardless of whether it arrived by tape, disc, card, electronic transmission, or another medium.

What this means for you

Classify what the customer receives, not merely how it is delivered. A downloaded document containing information was treated differently from prewritten software in this letter. If the file performs software functions rather than simply conveying content, the result may change.

Common questions

Q: Did emailing or downloading the PDF game files create Illinois sales tax under this GIL?
A: No, if the seller transferred only information or data and neither canned software nor tangible personal property.

Q: Was all electronically delivered content exempt?
A: No. The Department specifically said canned or prewritten software remained tangible personal property even when transferred electronically.

Citations and references

• 86 Ill. Adm. Code 130.2105(a)(3)
• 86 Ill. Adm. Code 130.1935

Subject

Miscellaneous

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2010.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2010/st-10-0005.pdf

Original ruling text

ST 10-0005-GIL 02/24/2010 MISCELLANEOUS
Information or data that is electronically downloaded is not considered the transfer of tangible
personal property in this State. See 86 Ill. Adm. Code 130.2105. (This is a GIL.)

February 24, 2010

Dear Xxxxx:
This letter is in response to your letter dated November 5, 2009, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are
issued by the Department in response to specific taxpayer inquiries concerning the application of a
tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the
taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR
are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department policy
and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website
at www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to
your inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
I write games and I sell them on the internet to clients in Illinois, the US and worldwide.
The files for the games are automatically emailed to the clients in Adobe Acrobat format
(pdfs) and they can also download them from the website. Nothing is physically mailed
to the clients. They print the game themselves using there [sic] own paper. So as they
are not tangible personal property, should I be paying sales tax on these products (ie
charging an extra 10.25% for the clients who live in Illinois)?
Thank you for your assistance in clarifying this matter.
DEPARTMENT’S RESPONSE:
Information or data that is electronically downloaded is not considered the transfer of tangible
personal property in this State. See 86 Ill. Adm. Code 130. 2105(a)(3). Please note that canned
(prewritten) computer software is considered tangible personal property regardless of the form in
which it is transferred or transmitted, including tape, disc, card, electronic means or other media. See
86 Ill. Adm. Code 130. 1935.
Accordingly, if one is not transferring any canned (prewritten) computer software and no
tangible personal property of any kind is being transferred, then no Retailers’ Occupation Tax or Use
Tax would be incurred on the transaction.

I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:msk