What did rescinded Illinois GIL ST 14-0041 say about Illinois-only rolling-stock trips?

Plain-English summary

This letter is historical only. ST 14-0046-GIL expressly rescinded and replaced it.

An interstate motor carrier asked IDOR to rule that leased truck tractors met the rolling-stock exemption's trips test while carrying goods through an Illinois distribution center. IDOR declined to issue the requested Private Letter Ruling.

The rescinded GIL stated that an Illinois-only carrier-for-hire trip could count when the passenger journey or property shipment originated or terminated outside Illinois. The carrier had to document that out-of-state origin or destination.

For out-of-state products unloaded and reloaded at an Illinois distribution center, IDOR said trips of the described kind generally could qualify when the carrier documented the interstate origin or destination and the products had been shipped to the Illinois location by a carrier for hire.

The Department did not determine that the requester's tractors qualified. ST 14-0046-GIL later replaced this response.

What this means for you

Do not treat this rescinded GIL as the operative Department answer. Its replacement, ST 14-0046-GIL, is the later historical guidance on the same request.

Common questions

Is ST 14-0041 still operative? No.

Which letter replaced it? ST 14-0046-GIL.

Did IDOR approve the specific tractors? No.

Citations and references

• 35 ILCS 120/2-5(12) and (13).
• 86 Ill. Adm. Code 130.340(a) and (i).
• ST 14-0046-GIL (named replacement; no inferred link).

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2014.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2014/st-14-0041.pdf

Original ruling text

ST 14-0041-GIL 08/08/14 ROLLING STOCK EXEMPTION
This letter concerns the rolling stock exemption. See 86 Ill. Adm. Code Section 130.340. (This is a
GIL.)(This letter is rescinded by letter ruling ST 14-0046-GIL.)

August 8, 2014
Dear Xxxx:
This letter is in response to your letter dated March 7, 2014, 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.
Review of your request disclosed that all the information described in paragraphs 1 through 8
of Section 1200.110 appears to be contained in your request. This Private Letter Ruling will bind the
Department only with respect to COMPANY for the issue or issues presented in this ruling, and is
subject to the provisions of subsection (e) of Section 1200.110 governing expiration of Private Letter
Rulings. Issuance of this ruling is conditioned upon the understanding that neither COMPANY nor a
related taxpayer is currently under audit or involved in litigation concerning the issues that are the
subject of this ruling request. In your letter you have stated and made inquiry as follows:
Pursuant to 2 Ill. Adm. Code 1200.110, the purpose of this letter is to request a Private
Letter Ruling (“PLR”) from the Illinois Department of Revenue (the “Department”). Our
Firm represents COMPANY (“COMPANY”), a company located at ADDRESS, CITY,
Illinois XXXXX pursuant to the enclosed Power of Attorney. See, Exhibit A.
COMPANY instructed this Firm to request a PLR regarding the applicability of the rolling
stock use tax exemption to motor vehicles, e.g. truck tractors, COMPANY operates on a
for-hire basis to transport cargo moving in interstate commerce. To the best of the
knowledge of COMPANY and the Firm, the Department has not previously ruled on the
same or a similar issue for COMPANY or a predecessor, and neither COMPANY nor
any representatives have previously submitted the same or similar issue to the
Department but withdrew the request before a letter ruling was issued by the
Department. There is no audit or litigation pending with the Department regarding this
issue and COMPANY. COMPANY’S FEIN is XX-XXXXXXX and the use tax period in
issue is 20XX.
I.
INTRODUCTION
The relevant Illinois statutes (consistent with federal law on the issue) make clear a forhire single-state, Illinois movement of cargo with a point of origin or destination outside

Illinois by an authorized interstate motor carrier qualifies as interstate commerce under
the rolling stock exemption. Informal Department guidance on the issue indicates the
initial shipping documents for cargo with a point of origin outside Illinois must identify the
Illinois point of destination for the cargo. Applying these requirements to the facts and
law set forth below, the COMPANY vehicles in question are used more than 50% in
interstate commerce and qualify for the rolling stock exemption under the trips test,
notwithstanding more than 50% of the miles traveled by the vehicles are in Illinois.
II.
FACTS
COMPANY engages in business as an authorized interstate motor carrier. On May 19,
1999 the Federal Motor Carrier Safety Administration (“FMCSA”), successor to the
Federal Highway Administration, granted COMPANY interstate motor common carrier
authority and MC-XXXXXX has been continually active since MONTH1 XX, 20XX. See,
Exhibit B.
On MONTH2 XX, 20XX, COMPANY entered into a Vehicle Lease and Service
Agreement (the “Agreement”) with COMPANY1 d/b/a COMPANY1 (“COMPANY1”).
See, Exhibit C. Pursuant to the Agreement, COMPANY currently leases 22 model year
2013 BRANDX truck-tractors (the “Tractors”) and the Tractors operate in tandem with
semi-trailers. Per Provision 14 of the Agreement, at the end of the 65 month lease
period COMPANY must return all the Tractors to COMPANY1.
Per Schedule A of the Agreement (“Schedule A”), the Tractors are domiciled at
ADDRESS, CITY, Illinois XXXXX, an COMPANY2 (“COMPANY2”) DISTRIBUTION
CENTER (“DISTRIBUTION CENTER”) and COMPANY1 performs service and
maintenance of the Tractors in CITY, Illinois. See, Exhibit D. Schedule A further
provides the Tractors have a licensed weight of 80,000 pounds and COMPANY1
annually registers the Tractors with International Registration Plan (“IRP”) apportioned
license plates through the base state of Wisconsin. Registration fees for the Tractors
are paid to Illinois and the remaining 47 continental states plus the District of Columbia
thereby authorizing the Tractors to operate inside and outside Illinois.
On or around MONTH3 XX, 20XX, COMPANY1 filed an Illinois Vehicle Use Tax
Transaction Return Form RUT-25 for each Tractor. See, Exhibit E. On or around
MONTH3 XX, 20XX, the parent company of COMPANY1,COMPANY3 (“COMPANY3”),
remitted a check to the Department for $XXX,XXX to pay a total use tax of $X,XXX for
each Tractor.1 See, Exhibit F. Per Schedule A, COMPANY reimburses COMPANY1 for
the “Local Sales Tax”, i.e., the Illinois use tax paid for each Tractor. As indicated in a
MONTH1 XX, 20XX Tractor mileage invoice issued by COMPAN3 to COMPANY, the
“customer has previously paid IL use tax.” See, Exhibit G.
Per the In-Service Notification in the Agreement, COMPANY placed 19 of the Tractors
in service on MONTH3 XX, 20XX, one on MONTH3 XX, 20XX, and the remaining two
on MONTH4 XX, 20XX. See, Exhibit H. Since being placed in service, all the Tractors
have been dedicated by COMPANY to the for-hire transportation of grocery products for
1

The $X,XXX in Illinois use tax is slightly more than the $X,XXX.XX in “Local Sales Tax” stated in Schedule A of the Agreement.
The difference has been absorbed by COMPANY1.

COMPANY2. On a daily recurring basis, the Tractors transport grocery products for
delivery to COMPANY2 store locations in Illinois and several surrounding states.
Almost exclusive use of the Tractors has been dedicated to transporting COMPANY2
grocery products to and from the DISTRIBUTION CENTER.2 Nearly 100% of the
Tractor movements out of the DISTRIBUTION CENTER transport COMPANY2 store
ready packaged bread products that originate outside Illinois at COMPANY4 in CITY,
STATE.
The practice of individual COMPANY2 stores is to place bread orders roughly 5 days in
advance of shipment from COMPANY 4 in CITY, STATE. After each COMPANY2 store
places its bread order, COMPANY2 creates a Prorate Table. See, Exhibit I. The
Prorate Table identifies each COMPANY2 store placing a bread order and lists the type
and quantity of bread products ordered by each COMPANY2 store. COMPANY2, as
shipper of the bread products from COMPANY4, always predetermines in advance of
shipment the specific COMPANY2 store locations in Illinois receiving delivery of the
store ready bread products before the bread products are initially shipped from CITY,
STATE. The bread products and Illinois delivery location identified in the Prorate Table
are incorporated into the COMPANY2 prepared daily Tour Plan. See, Exhibit J.
COMPANY uses the Tour Plan information for its Tractor movements of the bread
products originating in STATE for delivery to the COMPANY2 store locations in Illinois
and several surrounding states.
At the DISTRIBUTION CENTER, inbound COMPANY2 bread products are unloaded
and reloaded aboard semi-trailers pulled by Tractors, Nearly 100% of the bread
products are immediately removed from inbound CITY, STATE semi-trailer and loaded
aboard semi-trailers at the DISTRIBUTION CENTER bound for the COMPANY2 store
locations.
Each semi-trailer pulled by the Tractors nearly always contains a
combination of bread products that originated at COMPANY4 in CITY, STATE and other
COMPANY2 grocery products (that may or may not have originated outside Illinois).
The Tractors depart the DISTRIBUTION CENTER pulling semi-trailers loaded with
COMPANY2 bread products (and other grocery products) for delivery to COMPANY2
stores in Illinois and several surrounding states, as designated in the COMPANY2 Tour
Plan. The Tractors generally return semi-trailers to the DISTRIBUTION CENTER
without any COMPANY2 grocery store products onboard or with a minimal amount of
close-out items, e.g. pallets, and with bread racking destined for delivery to COMPANY4
in CITY, STATE. In less than 20% of the return trips the semi-trailers are loaded with
COMPANY2 grocery store products picked-up from various vendors in Illinois that may
or may not be destined for termination outside Illinois.
According to the International Fuel Tax Agreement (“IFTA”) mileage reported for each of
the Tractors domiciled at the DISTRIBUTION CENTER from the in-service date of each
Tractor through December 31, 2013, more than 50% of the total miles for each of the
Tractors were incurred in Illinois. See Exhibit K. Accordingly, after being placed in
service each Tractor incurred more than 50% Illinois miles during the initial 12 month
period while transporting COMPANY2 bread products that originated in CITY, STATE
for delivery to COMPANY2 stores in Illinois and surrounding states. As explained
2

The Tractors are only sporadically used to pull semi-trailers loaded with grocery products from an COMPANY2 DISTRIBUTION
CENTER center in CITY2, Illinois or in CITY, STATE2 for delivery to COMPANY2 grocery stores in Illinois and surrounding
states.

below, each Tractor was used more than 50% on a total trips basis in interstate
commerce during the initial 12 month period and thus satisfies the rolling stock
exemption.
III.
LAW
Illinois use tax statutes provide a broad rolling stock exemption to prevent the taxation
of interstate commerce.3 35 ILCS 105/3-60 provides the relevant definition of interstate
commerce for the rolling stock use tax exemption as follows:
Except as provided in Section 3-61 of this Act [35 ILCS 105/3-61], the rolling
stock exemption applies to rolling stock used by an interstate carrier for hire,
even just between points in Illinois, if the rolling stock transports, for hire, persons
whose journeys or property whose shipments originate or terminate outside
Illinois.
(Emphasis added.)
35 ILCS 105/3-55(b) discusses the prohibition against imposing use tax on rolling stock
moving in interstate commerce in pertinent part as follows:
To prevent actual or likely multistate taxation, the tax imposed by this Act does
not apply to the use of tangible personal property in this State under the following
circumstances:
The use, in this State, of tangible personal property by an interstate carrier for
hire as rolling stock moving in interstate commerce or by lessors under a lease of
one year or longer executed or in effect at the time of purchase of tangible
personal property 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.
(Emphasis added.)
Illinois provides a use tax statute specific to motor vehicles such as the Tractors under
35 ILCS 105/3-61(c) that further refines the definition of use as rolling stock moving in
interstate commerce for purposes of 35 ILCS 105/3-55(b), as follows:
Beginning July 1, 2004, “use as rolling stock moving in interstate commerce” in
paragraphs (b) and (c) of Section 3-55 occurs for motor vehicles, as defined in
Section 1-146 of the Illinois Vehicle Code, when during a 12-month period the
rolling stock has carried persons or property for hire in interstate commerce for
greater than 50% of its total trips for that period or for greater than 50% of its total
miles for that period. The person claiming the exemption shall make an election
at the time of purchase to use either the trips or mileage method. Persons who
purchased motor vehicles prior to July 1, 2004 shall make an election to use
either the trip or mileage method and document that election in their books and
3

The retailers’ occupation tax statutes also afford an identical rolling stock exemption designed to prevent the taxation of interstate
commerce.

records. If no election is made under this subsection to use the trips or mileage
method, the person shall be deemed to have chosen the mileage method.
For purposes of determining qualifying trips or miles, motor vehicles that carry
persons or property for hire, even just between points in Illinois, will be
considered used for hire in interstate commerce of the motor vehicle transports
persons whose journeys or property whose shipments originate or terminate
outside Illinois.
The exemption for motor vehicles used as rolling stock moving in interstate
commerce may be claimed only for the following vehicles: (i) motor vehicles
whose gross vehicle weight rating exceeds 16,000 pounds; and (ii) limousines,
as defined in Section 1-139.1 of the Illinois Vehicle Code [625 ILCS 5/1-139.1].
This definition applies to all property purchased for the purpose of being attached
to those motor vehicles as a part thereof.
(Emphasis added.)
IV.
ANALYSIS
Under the Illinois use tax statutes cited above, COMPANY’S use of each Tractor more
than 50% in Illinois (based on Illinois miles reported for IFTA during a 12 month period)
qualifies as use as rolling stock moving in interstate commerce just between points in
Illinois under the total trips test.
All the COMPANY2 shipments from the
DISTRIBUTION CENTER involve Tractors transporting COMPANY2 store ready bread
products that originated outside Illinois and were predetermined by COMPANY2 in
advance of shipment for delivery to store locations in Illinois and surrounding states as
documented by the Prorate Table. Under these facts, we believe the Tractors qualify
for the rolling stock exemption.
In addition to qualifying as an interstate trip under the rolling stock statutes, federal law
fully supports the interstate nature of the single-state, Illinois moves of the Tractors.
Prior to 1996, the Interstate Commerce Commission (“ICC”) was frequently called upon
to decide whether its jurisdiction stretched to motor carrier services that were being
provided entirely in a single-state (i.e., in interstate commerce). Thus, a substantial
body of case law exists that sets forth general guidelines for determining whether a
single-state motor carrier service is interstate in nature. Whether transportation
between two points in a single-state is interstate depends on the “essential character” of
the shipment. Texas & N.O.R.R. v. Sabine Tram Co., 227 U.S. 111, 122 (1913). The
critical factor is the “fixed and persisting intent” of the shipper. See e.g., Baltimore &
O.S.W.R.R. Co. v Settle, 260 U.S. 166 (1922).
The longstanding rule stated by the ICC follows:
In view of the fact that “transportation in interstate or foreign commerce”
between points wholly within a State . . . is not limited to that performed
under joint rates or a common control, management or arrangement for a
through shipment, it obviously may also include transportation within a

State performed under a separate contract from that relating to
transportation to or from points without the State.
William E. Rush Common Carrier Application, 27 M.C.C. 661, 674 (I.C.C. 1939).
The Firm believes that the vast majority of decided ICC and federal cases have found
that the single-state (i.e., Illinois) trips in question qualify as transportation in interstate
commerce.
The foregoing rule continues to govern state sales and use tax exemptions premised on
a vehicle’s use in interstate commerce. Recently, the Michigan Court of Appeals relying
heavily on over 100 years of federal case law interpreting the use of transportation
equipment in interstate commerce found vehicles that never crossed state lines were
nonetheless engaged in interstate commerce and therefore entitled to Michigan’s rolling
stock sales tax exemption. Alvan Motor Freight, Inc. v Dept. of Treasury, 761 N.W.2d
269 (Mich. Ct. App. 2008). In that case, (a copy of which is enclosed, see Exhibit L),
the court emphasized that “courts have consistently found that even if a vessel or
vehicle never leaves a state, it is used in interstate commerce if it carries goods moving
in a continuous stream from an origin in one state to a destination in another.” Id. at

274. Unlike the vehicles at issue in Alvan Motor Freight, as evidenced by the IFTA
     mileage records all the COMPANY’S Tractors also cross Illinois state lines from time-totime, which is clearly a trip in interstate commerce.
     As evidenced by the Prorate Table, the indisputable intent of COMPANY2 at all times is
     for the bread products to be delivered from COMPANY4 in CITY, STATE for delivery to
     COMPANY2 stores in Illinois or surrounding states. It is the Firm’s position the Tractors
     are principally used in interstate commerce under the long-standing federal law
     “shipper’s fixed and persisting intent” test. As such, the Tractors transport bread
     products moving in interstate commerce, just between points in Illinois, which
     necessarily means the Tractors are used in interstate commerce under the federal
     standard.
     We are unaware of any contrary authorities or any Illinois case law interpreting the
     nature of the single-state, Illinois transportation in question under the current rolling
     stock exemption statutes. Nonetheless, guidance in a General Information Letter
     (“GIL”) issued by the Department addresses this issue. In ST 06-0122-GIL (a copy of
     which is enclosed, see Exhibit M), a sampling of the federal cases and ICC decisions
     were presented in a request for written guidance to confirm “certain single-state, Illinois
     movements of cargo constitute interstate commerce for purposes of the rolling stock
     sales (i.e., the retailers’ occupation tax) and use tax exemption.” While not directly
     relying on the federal standard of a shipper’s fixed and persisting intent to move the
     cargo in interstate commerce, consistent with this long-held federal standard, the
     Department confirmed the rolling stock exemption applied upon evidence that “the initial
     documentation for a shipment of goods from out-of-state into Illinois indicates that the
     destination is at City B, Illinois, via the warehouse in City A, then the subsequent travel
     of the goods from the warehouse in City A to the destination in City B can count as part
     of the interstate trip.” The Prorate Table is the initial documentation that the bread
     products shipped from CITY, STATE are moving as part of an interstate trip to
     predetermined COMPANY2 store locations in Illinois and surrounding states following a

brief stop at the DISTRIBUTION CENTER.
interstate trip.

The Illinois trips count as part of an

In the recently decided ST 13-0044 GIL ( a copy of which is enclosed, see Exhibit N),
the Department reaffirms the example in ST 06-0122-GIL and further confirms a mixed
load of interstate and intrastate cargo, such as the Tractors loaded with COMPANY2
bread products originating in CITY, STATE (and other grocery store items) moving just
between points in Illinois, qualifies as a trip in interstate commerce under the rolling
stock exemption statutes. As ST 13-0044 GIL correctly concludes, a shipment of cargo
with points of origin inside and outside Illinois is entirely interstate in nature for purposes
of the rolling stock exemption. To evidence the interstate nature of such a move from
the warehouse in City A to the destination in City B under the example in ST-06-0122
GIL, the Department states in ST 13-0044 GIL that the “carrier must maintain
documentation to indicate that the journey of the shipment of property either originated
or terminated outside the State of Illinois.”
Under the relevant Illinois rolling stock exemption statutes, federal case law standard
and ICC cases plus the informal guidance of the Department in its prior GIL’s
addressing requirements in the current rolling stock exemption statutes, the COMPANY
Tractors satisfy the rolling stock exemption with more than 50% of total trips in interstate
commerce as documented by the daily Prorate Table.
V.
RULING REQUEST
We seek the following ruling from the Department:
Please confirm the Tractors satisfy the “use as rolling stock moving in
interstate commerce” requirement under the rolling stock exemption at 35
ILCS 105/3-55(b) and 35 ILCS 105/3-61(c) and thus qualify for the rolling
stock exemption because each Tractor incurs more than 50% of its total
trips moving cargo with an origin or destination point outside Illinois.
We appreciate your consideration of this private letter ruling request. Please contact
me with any questions regarding this matter. I look forward to hearing from you.
DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization” provides that
“[w]hether to issue a private letter ruling in response to a letter ruling request is within the discretion of
the Department. The Department will respond to all requests for private letter rulings either by
issuance of a ruling or by a letter explaining that the request for ruling will not be honored.” 2 Ill. Adm.
Code 1200.110(a)(4). The Department recently met and determined that it would decline to issue a
Private Letter Ruling in response to your request. We hope however, the following General
Information Letter will be helpful in addressing your questions.
Notwithstanding the fact that the sale is at retail, 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. 35
ILCS 120/2-5(12). 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. 35 ILCS 120/25(13). See 86 Ill. Adm. Code 130.340(a).
Effective July 1, 2004, the trips or mileage of a motor vehicle for which persons or property are
carried for hire just between points in Illinois may be used to qualify for the rolling stock exemption, if
the journey of the passenger or shipment of the property either originates or terminates outside of
Illinois. A carrier may use intrastate trips to qualify for the above-mentioned rolling stock exemption,
so long as the carrier can document that the journey of the passenger or shipment of the property
either originated or terminated outside the State of Illinois. See 86 Ill. Adm. Code 130.340(i).
In your letter you state that bread products are shipped from an out-of-state location to an
COMPANY2 DISTRIBUTION CENTER located in CITY, Illinois. The inbound bread products are
unloaded and reloaded aboard semi-trailers pulled by Tractors leased by COMPANY bound for
COMPANY2 store locations in Illinois and several surrounding states. Generally, a carrier may use
intrastate trips of the nature described in your letter to qualify for the rolling stock exemption, so long
as the carrier can document that the products either originated or terminated outside the State of
Illinois, and the products were shipped to a location in Illinois by a carrier for hire.
I hope this information is helpful. If you have further questions concerning this Private Letter
Ruling, you may contact me at 782-2844. If you have further questions related to the Illinois sales tax
laws, 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
Chairman, Private Letter Ruling Committee
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