Did checking an online box satisfy Illinois's purchaser-signature requirement for an electronic resale certificate?

Plain-English summary

A purchaser's simple online click did not satisfy the Illinois resale-certificate signature requirement. The Department said a digital signature might be acceptable.

An electronic certificate still needed the seller and purchaser names and addresses, item description, purchaser or authorized-agent signature and date, and a registration number, resale number, or qualifying out-of-state certification.

Without an active number and compliant certification, the sale was presumed retail. Other evidence could rebut that presumption, but a certificate lacking a signature faced greater audit scrutiny.

What this means for you

Use a verifiable signature process rather than a bare eligibility checkbox. Validate the registration number and retain the full certificate record as it existed when signed.

Common questions

Q: Was a checked box enough?
A: No. The GIL said it did not meet the signature requirement.

Q: Could a digital signature work?
A: Possibly, if the electronic certificate also contained all required information.

Citations and references

• 5 ILCS 175/5-120
• 86 Ill. Adm. Code 130.1405 and 130.1405(b)(4)
• Rock Island Tobacco & Specialty Co. v. Illinois Department of Revenue, 87 Ill. App. 3d 476, 409 N.E.2d 136 (1980)

Subject

Sale For Resale

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-10-0009.pdf

Original ruling text

ST 10-0009-GIL 02/25/2010 SALE FOR RESALE
This letter discusses the requirements for Certificates of Resale. See 5 ILCS 175/5-120 and
86 Ill. Adm. Code 130.1405. (This is a GIL.)

February 25, 2010

Dear Xxxxx:
This letter is in response to your letter dated January 6, 2010, 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:
COMPANY is in the process of integrating a new software that enables our stores to
utilize a streamlined approach to obtaining Resale and Tax Exemption Certificates.
Before we complete the process, we want to make sure that we stay within the
guidelines and the laws of your state.
Please respond to the following questions via email at your earliest convenience:

1. Is electronic acknowledgement of intent to resell product, or eligibility of sales
   tax exemption acceptable?
   Our customers would not physically complete a handwritten certificate of sales tax
   exemption, but complete an application on-line and check a box acknowledging their
   eligibility for resale or sales tax exemption and provide us with their tax identification
   number, name, address, etc.
2. If electronic acknowledgement of intent to resell product, or eligibility of sales
   tax exemption is NOT acceptable, is electronic signature capture acceptable in
   completion of an on-line form?
   Our customers would complete a form by typing the information into a state mandated
   form, then use a commonly used electronic signature capture (similar to those used in

most department stores) to acknowledge their eligibility for resale or sales tax
exemption.
Both versions of this form would be electronically stored and would greatly reduce our
paper use, as well as the chance of fraud.
If you have any questions, please feel free to contact me. Your assistance is greatly
appreciated.

DEPARTMENT’S RESPONSE:
We are unable to provide you with the specific response you request in the context of a
General Information Letter. Provided below is information that we hope you find helpful regarding
your resale/ exemption certificate.
For general information regarding resale certificates, the Department’s regulation for resale
certificates, “Seller's Responsibility to Obtain Certificates of Resale and Requirements for Certificates
of Resale,” is found at 86 Ill. Adm. Code 130.1405. If an electronic resale certificate is kept, it should
contain all of the information required under 86 Ill. Adm. Code 130.1405.
A Certificate of Resale is a statement signed by the purchaser that the property purchased by
him is purchased for purposes of resale. Provided that this statement is correct, the Department will
accept Certificates of Resale as prima facie proof that sales covered thereby were made for resale.
In addition to the statement, a Certificate of Resale must contain:
1)
2)
3)
4)
5)

The seller's name and address;
the purchaser's name and address;
a description of the items being purchased for resale;
purchaser's signature, or the signature of an authorized employee or agent of the
purchaser, and date of signing;
Registration Number, Resale Number, or Certification of Resale to out-of-State
Purchaser.

The obligations of a seller with respect to accepting a Certificate of Resale were addressed in
Rock Island Tobacco and Specialty Company v. Illinois Department of Revenue, 87 Ill.App.3d 476,
409 N.E.2d 136, 42 Ill. Dec. 641 (3rd Dist. 1980). The Rock Island court held that when a retailer
obtains a proper Certificate of Resale that contains a registration or resale number that is valid on the
date it is given, the retailer’s liability is at an end. If the purchaser uses that item himself or herself
(i.e., it was not purchased for resale), the Department will proceed against the purchaser, not the
retailer, provided the above stated conditions are met. The purchaser’s registration or reseller number
can be verified at the Department’s website by clicking on the “Tax registration inquiry” box.
Failure to present an active registration number or resale number and a certification to the
seller that a sale is for resale creates a presumption that a sale is not for resale. This presumption
may be rebutted by other evidence that all of the seller’s sales are sales for resale, or that a particular
sale is a sale for resale. For example, other evidence that might be used to document a sale for
resale, when a registration number or resale number and certification to the seller are not provided,
could include an invoice from the purchaser to his customer showing that the item was actually
resold, along with a statement from the purchaser explaining why it had not obtained a resale number
and certifying that the purchase was a purchase for resale in Illinois. The risk run by companies in
accepting such a certification and the risk run by purchasers in providing such a certification is that an
Illinois auditor is more likely to go behind a certificate of resale that does not contain a signature and

require that more information be provided as evidence that the particular sale was, in fact, a sale for
resale.
An electronic resale certificate should contain all of the information required by 86 Ill. Adm.
Code 130.1405. We do not believe a process that simply requires a click of a button is sufficient to
meet the signature requirement contained in Section 130.1405(b)(4). If a signature is not obtained in
accordance with the Department’s rules, a sale is presumed to be a sale at retail. However, a digital
signature may be acceptable. As explained above, the law allows the Department to look at other
evidence in determining the sufficiency of a certificate of resale.
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,

Richard S. Wolters
Associate Counsel
RSW:msk