Could an Illinois tire retailer deduct a tire-disposal fee or the statutory tire user fee from taxable gross receipts?

Plain-English summary

IDOR issued this letter to correct an older response, ST 06-0036, that had answered a tire-disposal-fee question by discussing the Illinois tire user fee instead.

ST 13-0004-GIL said a retailer's tire-disposal fee was a cost of doing business and could not be deducted from gross receipts. It also said the statutory tire user fee had similar tax treatment.

The second statement did not remain IDOR's guidance. In ST 13-0019-GIL, issued April 26, 2013, the Department partially rescinded this letter. The later GIL preserved the result for the retailer's tire-disposal fee but clarified that 415 ILCS 5/55.9 specifically excluded the statutory tire user fee from gross receipts subject to Retailers' Occupation Tax, Use Tax, and locally imposed retailers' occupation taxes.

Common questions

Was the retailer's tire-disposal fee deductible? No. IDOR treated it as a cost of doing business included in gross receipts.

Was the statutory tire user fee also included? Not under the later correction. ST 13-0019-GIL partially rescinded this letter and said the statutory fee was excluded.

Did the later letter reverse everything in ST 13-0004? No. The partial rescission corrected only the tire-user-fee treatment; the tire-disposal-fee conclusion remained.

Citations and references

• 86 Ill. Adm. Code 130.410
• 415 ILCS 5/55.9, as identified in the later corrective ST 13-0019-GIL
• Related guidance: ST 06-0036 (the older response this letter clarified) and ST 13-0019-GIL (the later partial rescission), named in prose without a corpus link

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-13-0004.pdf

Original ruling text

ST 13-0004-GIL 01/25/2013 SALE OF SERVICE
This letter clarifies and replaces the Department’s previous response regarding the
inquiry about the “Tire Disposal Fees” provided in our General Information Letter dated
April 13, 2006, ST-06-0036. (This is a GIL.)
January 25, 2013
Dear:
This letter is written to clarify the Department’s General Information Letter, dated April 13, 2006,
(ST06-0036, copy enclosed) we sent you pursuant to your dated July 21, 2005, in which you
requested information.
It has come to our attention that you requested information regarding, among other issues, the
taxability of “Tire Disposal Fees”. Our response, however, addressed the “Illinois Tire User Fee”,
which has a similar tax treatment as the Tire Disposal Fee. As such, to clarify, in Illinois, tire disposal
fees, like tire user fees, are costs incurred by a retailer as a cost of doing business and may not be
deducted from its gross receipts. See, for example, 86 Ill. Adm. Code 130.410.
I hope this information is helpful and clarifies any confusion that may have arisen as a result of our
previous response.
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