Does Illinois sales or service tax apply to a paid program when no tangible personal property is transferred to the customer?

Plain-English summary

A provider asked whether to charge tax on a program priced at $199 and referred IDOR to an enclosed brochure. The brochure and substantive program description do not appear in the published letter, so the exact offering cannot be classified from the public text.

IDOR supplied a conditional rule. Retailers' Occupation Tax and Use Tax do not apply to sales of service. Service Occupation Tax and Service Use Tax reach tangible personal property transferred incident to a service. If the program transfers no tangible personal property to the customer, it generally is outside all four taxes.

Common questions

Did IDOR conclusively exempt the named program? No. Its answer was conditional, and the published source lacks the brochure needed to verify the program's contents.

What fact controls under this GIL? Whether the provider transfers tangible personal property to the customer as part of the service.

Citations and references

• 86 Ill. Adm. Code 140.101
• 86 Ill. Adm. Code 160.101

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-13-0065.pdf

Original ruling text

ST-13-0065 – GIL 10/22/13 SERVICE OCCUPATION TAX
If no tangible personal property is transferred to the customer, then no Illinois Retailers’
Occupation Tax or Service Occupation Tax would apply. See 86 Ill. Adm. Code Parts 130 and

140. (This is a GIL.)

October 22, 2013

Dear Xxxxx:
This letter is in response to your letter received on March 26, 2013, 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:
I am requiring [sic] about whether we should charge our clients tax on the
following items, please see enclosed brochure (our set selling price will be $199).
Thank you for your assistance awaiting you [sic] reply in writing

DEPARTMENT’S RESPONSE:
Retailers' Occupation and Use Taxes do not apply to sales of service. The Service
Occupation Tax Act and Service Use Tax are imposed on the transfer of tangible personal
property incident to sales of service. 86 Ill. Adm. Code 140.101 and 160.101. However, if no
tangible personal property is transferred incident to a sale of service, the Service Occupation Tax
and Service Use Tax do not apply.
If the program you are inquiring about does not involve the transfer of any tangible
personal property to the customer, then it generally would not be subject to Retailers’
Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax.

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

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