Did diesel exhaust fluid qualify for Illinois's rolling-stock sales-tax exemption?

Plain-English summary

A seller asked whether diesel exhaust fluid (DEF), injected into a diesel truck's exhaust system to reduce emissions, qualified for Illinois's rolling-stock sales-tax exemption.

IDOR said the classification depended on how the item was used, not simply on the kind of item. Equipment or parts could qualify when they became a component of qualifying rolling stock or, although not incorporated, were dedicated to particular rolling stock and participated directly in transportation.

Examples of qualifying physical components included oil, grease, parts, belts, lights, transmission fluid, paint, antifreeze, filters, hoses, and seats. Fuel, flares, cleaners, paint supplies, tools, window-washing fluid, solvents, and other consumables generally did not qualify.

Based on the request and IDOR's research, DEF did not become a physical component of the truck and was a consumable. IDOR therefore said it did not qualify for the rolling-stock exemption.

Common questions

Did DEF qualify for the exemption? No, based on the information provided.

Did every item used by an interstate carrier qualify? No. The item had to become a component part or be dedicated equipment that directly participated in transportation.

Did fuel qualify? No. The letter listed fuel and other consumables among nonqualifying items.

Citations and references

• 86 Ill. Adm. Code 130.340(b), (j)(2)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2013.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2013/st-13-0002.pdf

Original ruling text

ST 13-0002-GIL 01/18/2013 ROLLING STOCK EXEMPTION
This letter discusses diesel exhaust fluid (DEF) and the rolling stock exemption. See 86
Ill. Adm. Code Section 130.340. (This is a GIL.)
January 18, 2013
Dear:
This letter is in response to your letter dated September 20, 2012, 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:
As per our previous discussion, may this letter serve as a request for the determination
of sales tax applicability for diesel exhaust fluid (DEF). DEF is a relatively new product
that has come to use in the last three years by diesel truck operators. DEF is injected
into the exhaust to ultimately reduce emissions.
There have been many questions arising as to whether DEF qualifies for the Rolling
Stock Sales Tax Exemption.
We would appreciate a determination from the
Department.
If you should need additional information, feel free to contact me.
DEPARTMENT’S RESPONSE:
The Illinois Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in the
business of selling tangible personal property to purchasers for use or consumption. See 86 Ill. Adm.
Code 130.101. In Illinois, Use Tax is imposed 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. These taxes comprise what is commonly known as "sales" tax in Illinois.
Under the rolling stock exemption, the Retailers' Occupation Tax does not apply to sales of tangible
personal property to interstate carriers for hire for use as rolling stock moving in interstate commerce
or lessors under leases of one year or longer executed or in effect at the time of purchase to
interstate carriers for hire for use as rolling stock moving in interstate commerce. In addition,
notwithstanding the fact that the sale is at retail, the Retailers' Occupation Tax does not apply to sales
of tangible personal property to owners, lessors, or shippers of tangible personal property that is
utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce as long as
so used by the interstate carriers for hire. See 86 Ill. Adm. Code 130.340. For parts and equipment

ST 13-0002-GIL
January 18, 2013
Page 2
purchased for qualifying trucks and trailers, please see subsections (b) and subpart (2) of subsection
(j) of Section 130.340.
It is not the type of item that determines whether or not it qualifies as rolling stock, rather how the item
is used by a qualifying interstate carrier. Not all items of tangible personal property used by an
interstate carrier for hire qualify for the rolling stock exemption. The exemption is applicable to
equipment or parts only if they become a component part of qualifying rolling stock and to equipment
which, though not physically incorporated, is dedicated to a particular qualifying item or items of
rolling stock and participates directly in the transportation process.
The exemption does not apply to fuel nor to jacks or flares or other items that are used by interstate
carriers for hire in servicing the transportation vehicles, but that do not become a part of the vehicles,
and that do not participate directly in some way in the transportation process. 86 Ill. Adm. Code
130.340(b)
Thus, oil, grease, parts, belts, lights, transmission fluids, paint, anti-freeze, filters, hoses, and seats
generally qualify for the exemption since these products become a physical component part of the
qualifying rolling stock. Fuel, flares, cleaners, paint supplies, and tools do not generally qualify for the
exemption because they do not become a part of such vehicles and do not participate directly in
some way in the transportation process.” See Section 130.340(b). Consumables such as fuel and
window washing fluid or solvents are also taxable.
Based on the information provided in your letter and additional research conducted by the
Department, it appears that DEF does not become a physical component part of the qualifying rolling
stock, is a consumable and does not qualify for the rolling stock exemption.
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