Who owed Illinois tax when a janitorial company used cleaning supplies while providing services?

Plain-English summary

A janitorial company using cleaning supplies in its work owed Illinois Use Tax on the supplies' cost price. Because the provider consumed those supplies in Illinois, it could not purchase them for resale. The service customer incurred no tax liability for the provider's use of the supplies.

The Department also said a service that transfers no tangible personal property is outside Retailers' Occupation Tax and Use Tax. If property is transferred as part of the service, Service Occupation Tax or Use Tax rules for servicemen can apply depending on the facts.

What this means for you

Separate supplies your business consumes while performing a service from property actually transferred to the customer. Consumed soap, cleaning chemicals, and similar supplies generally create a use-tax cost for the service provider under this GIL, not a resale purchase or a customer tax on the supplies.

Common questions

Q: Were janitorial services themselves taxable when no property was transferred?
A: No, under the general rule stated in the GIL.

Q: Could the provider buy its consumed cleaning supplies for resale?
A: No. The provider used the supplies while performing the service and owed Use Tax on their cost price.

Citations and references

• 86 Ill. Adm. Code 130.101
• 86 Ill. Adm. Code 140.101 through 140.109
• 86 Ill. Adm. Code 150.101

Subject

Use Tax

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-10-0007.pdf

Original ruling text

ST 10-0007-GIL 02/25/2010 USE TAX
Persons who provide cleaning or janitorial services and use cleaning supplies as part of those
services incur Use Tax liability on the cost price of those cleaning supplies. See, generally, 86
Ill. Adm. Code 150.101 (This is a GIL.)

February 25, 2010

Dear Xxxxx:
This letter is in response to your letter dated August 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:
Hello. We are a Janitorial and Security Services company headquartered in New York.
We are planning to begin conducting business in Illinois.
We would like to update our files with the appropriate tax information. Are Janitorial
services and supplies, such as soap or toilet paper, taxable in Illinois under your State
Sales Tax law?
If so, what are your state and city sales tax rates to be charged for janitorial services
and rebillable supplies? Or are these services and supplies billed as non-taxable?
Could you please advise us on this specific Sales Tax issue whether or not the client
pays sales tax in this case and at what tax rate or if this specific charge is non-taxable
under State tax law? Please advise how we can find out how to find out if services are
taxable in different cities/counties.
Your prompt attention to these matters is greatly appreciated. Thank you for your help.
DEPARTMENT’S RESPONSE:

The sale of services in which no tangible personal property is transferred incident to those
services is not subject to Retailers' Occupation Tax or Use Tax (sales tax) in Illinois. The Retailers'
Occupation Tax Act and Use Tax Act apply only to retail sales of tangible personal property. See 86
Ill. Adm. Code 130.101. However, if tangible personal property is transferred incident to sales of
service, this will result in either Service Occupation Tax liability or Use Tax liability for the servicemen
depending upon his activities. For your general information see 86 Ill. Adm. Code 140.101 through
140.109 regarding sales of service and Service Occupation Tax. If no tangible personal property is
transferred incident to a sale of service, then no Service Occupation Tax would apply.
In Illinois, Use Tax is imposed, however, on the privilege of using, in this State, any kind of
tangible personal property that is purchased anywhere at retail from a retailer. See 86 Ill. Adm. Code
150.101. If the purchases occur in Illinois, the purchasers must pay the Use Tax to the retailer at the
time of purchase. If the purchases occur outside Illinois, and the vendor does not collect the Illinois
tax, purchasers must self assess their Use Tax liability and remit it directly the Department.
It is the Department’s understanding that normally no tangible personal property is transferred
to customers of cleaning or janitorial services. However, persons who provide cleaning or janitorial
services and use cleaning supplies as part of those services incur Use Tax liability on the cost price
of those cleaning supplies because they are using those cleaning supplies in this State. The
recipients of those services incur no tax liability in regards to the use of the supplies by the cleaning
or janitorial service providers. Because the supplies are used by the providers of cleaning or janitorial
services, they cannot be purchased for resale.
For your general information regarding local taxes, please see the Department’s website for
the tax rate finder for local taxes.
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