Did Illinois County School Facility Occupation Tax apply to wholesale oil sales made for resale?

Plain-English summary

Properly documented wholesale oil sales for resale were not subject to County School Facility Retailers' or Service Occupation Tax. The county tax incorporated the exemptions from the state occupation taxes, so a sale exempt at the state level as a resale remained exempt from this county tax.

The GIL said the purchaser generally needed an active Illinois registration or resale number and had to give that number to the supplier with a resale certification. Without an active number and certification, the sale was presumed not to be for resale, although other evidence could rebut the presumption.

The County School Facility law's reference to coal or another mineral mined in Illinois was a situs rule—how to locate a sale when it was taxable. It did not make wholesale resale transactions taxable. The Department also stated that the county rate could not exceed 1% in 2010 and that revenues were restricted to school-facility purposes.

What this means for you

Oil's classification as a mineral was not the decisive issue for a wholesale resale. The supplier needed records proving that the purchaser acquired the oil for resale.

Common questions

Q: Did the mined-mineral provision tax wholesale oil?
A: No. The Department said that provision addressed the situs of taxable retail sales and did not apply to items sold for resale.

Q: Does the county resale exemption require documentation?
A: Yes. The GIL described an active registration or resale number and a certification to the supplier.

Citations and references

• 55 ILCS 5/5-1006.7
• 86 Ill. Adm. Code 130.210(c)
• 2 Ill. Adm. Code 1200.110 and 1200.120

Subject

Local 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-10-0057.pdf

Original ruling text

ST 10-0057-GIL 07/29/2010 LOCAL TAX
An item that is exempt from the State Retailers’ Occupation Tax or Service Occupation Tax as
a sale for resale, is also exempt from the tax imposed under the County School Facility
Occupation Tax Law as a sale for resale. See 86 Ill. Adm. Code 130.210(c). (This is a GIL.)

July 29, 2010

Dear Xxxxx:
This letter is in response to your letters dated April 29, 2010 and May 28, 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 of April 29, 2010 you have stated and made inquiry as follows:
The BOARD is discussing the imposition of a one-percent sales tax under the authority
of the enclosed statute, 55 ILCS 5/5-1006.7, for school facility occupation taxes.
The oil producers in that county are concerned about subsection (e) which may impose
a tax upon them when the oil is delivered for sale within the State of Illinois. We need a
legal opinion as to whether this tax will apply to oil producers in COUNTY. Your
assistance will be greatly appreciated.
In your letter of May 28, 2010 you have stated as follows:
The BOARD has imposed of [sic] a one-percent sales tax under the authority of the
enclosed statute, 55 ILCS 5/5-1006.7, for school facility occupation taxes. It is my
position that oil producers would not be subject to this tax pursuant to the statute.
Following is my reasoning:
The statute lists ‘coal or other mineral mined in Illinois’ as subject to the
tax, but oil is not considered to be a mineral. The sale of oil at the
wholesale level, such as between oil producer and a gas station or
refinery would not be subject to this sales tax in that it applies only to
transactions that were already being taxed at the 6.25% level, which, as it

relates to oil, would only apply [sic] gas that is sold to consumers at a gas
station.
Please advise me as to whether my legal analysis is correct. The BOARD is waiting for
an official legal opinion that oil producers are exempt from this tax. As an attorney from
the Illinois Dept. of Revenue, you can provide the official legal opinion that they require.
Your assistance will be greatly appreciated.

DEPARTMENT’S RESPONSE:
The County School Facility Occupation Tax Law (55 ILCS 5/5-1006.7) authorizes counties to
impose within the county, after referendum approval, (i) a retailers’ occupation tax upon all persons
engaged in the business of selling tangible personal property, other than personal property titled or
registered with an agency of this State’s government, at retail in the county on the gross receipts from
the sales made in the course of business and (ii) a service occupation tax upon all persons engaged
in the county in the business of making sales of service, on the selling price of tangible personal
property transferred as an incident to making those sales of service. These taxes are commonly
referred to as sales taxes. The tax revenues are to be used exclusively for school facility purposes.
The rate of the tax may not exceed 1%.
Validly documented sales for resale are not subject to the County School Facility Occupation
Taxes. Wholesale sales of any tangible personal property, including oil, would be exempt as sales for
resale as long as properly documented. In practice, any item that is not subject to the State’s 6.25%
Retailers’ Occupation Tax or Service Occupation Tax because it is exempt as a sale for resale or on
the basis of some other exemption, is also not subject to the County School Facility Retailers’
Occupation or Service Occupation Tax. This is because the exemptions found in the Retailers’
Occupation Tax are incorporated by reference into the County School Facility Occupation Tax Law.
(See 55 ILCS 5/1-1006.7(a))
Please keep in mind that sales for resale cannot be made tax-free unless the purchaser
(except in the case of an out-of-State purchaser who will always resell and deliver the property to his
customers outside Illinois) has an active registration number or active resale number from the
Department and gives such number to suppliers in connection with certifying to any supplier that any
sale to such purchaser is nontaxable because of being a sale for resale. 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 (See 89 Ill. Adm.
Code 130.210(c)).
The language in subsection (e) of the County School Facility Occupation Tax Law dealing with
sales of coal or another mineral mined in Illinois does not address whether these items are subject to
tax, but rather, how to situs the sale of these items in situations when they are subject to tax under
this Law. Note that this subsection addresses “retail” sales of these items. As a result, this language
does not apply to items that are sold for resale.
Any item, including oil, that is exempt from the State Retailers’ Occupation Tax or Service
Occupation Tax as a sale for resale, is also exempt from the tax imposed under the County School
Facility Occupation Tax Law as a sale for 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.

Sincerely,

Samuel J. Moore
Associate Counsel