Did an Illinois governmental body have to renew its sales-tax exemption number, and how did a seller document exempt purchases?

Plain-English summary

Illinois automatically renewed governmental sales-and-use-tax exemptions, so the governmental unit did not have to file a renewal application. The Department said the renewal process generally began in the first week of January and noted that the requester appeared to have received its 2010 renewal on January 2.

An exempt purchase still required an active governmental exemption identification number, or E-number. Without one, the governmental body's purchases were taxable. The exemption covered sales to the entity holding the number, not purchases by individual employees.

A seller could document an exempt entity purchase by retaining the exemption letter or recording the E-number in its books and records. Separate rules applied to construction contractors acting for entities with E-numbers.

What this means for you

Verify that the E-number is active and that the governmental body—not an employee—is the purchaser. Keep the exemption letter or number with the transaction records.

Common questions

Q: Did the governmental entity have to apply for renewal?
A: No. The GIL said the Department renewed governmental exemptions automatically.

Q: Are employee purchases exempt under the agency's E-number?
A: No. Only sales to the governmental body holding the number were exempt.

Citations and references

• 86 Ill. Adm. Code 130.2080
• 86 Ill. Adm. Code 130.2075(d)
• 2 Ill. Adm. Code 1200.110 and 1200.120

Subject

Governmental Bodies

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-10-0044.pdf

Original ruling text

ST 10-0044-GIL 05/18/2010 GOVERNMENTAL BODIES
This letter references the Department’s rules regarding sales to governmental bodies. See 86
Ill. Adm. Code 130.2007. (This is a GIL.)

May 18, 2010

Dear Xxxxx:
This letter is in response to your letter dated January 12, 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:
This is a request for a General Information Letter pursuant to the Illinois Department of
Revenue (IDOR) Regulations Title 2 Part 1200 Section 1200.120. Due to the lack of
relevant information in both the IDOR Regulations and the Illinois Compiled Statutes
(ILCS), the ABC is seeking clarification from the Illinois Department of Revenue
regarding the expiration of sales and use tax exemptions for governmental entities.
The IDOR granted the ABC a governmental exemption from sales and use taxes on
purchases for ABC use. Enclosed is a copy of the current ABC’s sales tax exemption
letter obtained from the IDOR.
The ABC is requesting confirmation of the following questions related to the
governmental sales and use tax exemptions.
1.

Are governmental entities required to file an application for renewal of
exemption? Or are governmental entities exempt from this requirement due to
their governmental status?

2.

Does a governmental entity’s exempt ‘status’ expire? If so, when does it expire?

3.

Does a governmental entity’s exempt ‘number’ expire?
expire?

If so, when does it

4.

Does 35 ILCS 120/1g apply to governmental entities? Or does this specific ILCS
not apply to governmental organizations?

5.

Is the IDOR required to update a governmental entity’s exempt number every five
years?

6.

Does the exempt status and numbers for all governmental entities expire on
March 1st every five years (for example, the next date would be March 1, 2015)?
If not, how is this specific date attributed to the governmental entities?

7.

What, if any, are the applicable statutes for the answers to the questions noted
above?

Please contact me if you have any questions or require additional information to
complete this General Information Letter request.

DEPARTMENT’S RESPONSE:
Although we cannot give you specific answers in the form of a General Information Letter, we
hope you find the following helpful.
Sales to a governmental body are subject to tax unless the governmental body has an active
exemption identification "E-number.” See 86 Ill. Adm. Code 130.2080. If a governmental body does
not have an "E" number, then its purchases are subject to tax. Only sales to the governmental body
holding the "E" number are exempt, not sales to individual employees of the governmental body.
Sales to an exempt entity holding an E-number may be documented by retaining a copy of the
exemption letter or by recording the entity’s E-number in the seller’s books and records. For sales to
construction contractors acting on behalf of entities that have been issued E-numbers, please see 86
Ill. Adm. Code 130. 2075(d).
Please note, however, that governmental units do not have to apply for a renewal of its
governmental exemption from the payment of the Retailers’ Occupation Tax, the Service Occupation
Tax (both state and local), the Use Tax, and the Service Occupation Tax. The Department
automatically renews this exemption for governmental entities. Generally, this renewal process
begins the first week in January. Based on the attachment to your letter, it appears that the
Department sent out your renewal January 2, 2010.
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