Were Illinois sales of tobacco products to out-of-state wholesalers or retailers exempt from Tobacco Products Tax?

Plain-English summary

An Illinois other-tobacco-products distributor asked whether it had to charge tax when an out-of-state buyer presented a tobacco license and resale documentation.

The 2015 letter described a 36% tax on the wholesale price of tobacco products sold or disposed of to Illinois retailers or consumers, with different stated rules for moist snuff and little cigars. Interstate-commerce and United States government sales were outside the tax to the extent described.

For products other than little cigars, a wholesaler's purchase was exempt when the wholesaler would not sell the product at retail. Purchases by wholesalers or retailers for delivery outside Illinois were also exempt.

The seller had to document an exempt sale with a purchaser certification containing seller and purchaser names and addresses, purchase date, purchaser signature, tobacco-products license number if applicable, and a statement that the purchase was for non-consumer resale or delivery outside Illinois.

IDOR did not address exempt sales of little cigars and instructed the taxpayer to submit another request for that issue.

What this means for you

An out-of-state license alone was not the complete record. The seller needed the specific signed certification and had to confirm that the transaction fit the nonretail-wholesale or outside-Illinois-delivery exemption.

Common questions

Were tobacco products for delivery outside Illinois exempt? Yes, other than little cigars under the guidance given.

Was documentation required? Yes.

Did the GIL resolve little-cigar sales? No.

Citations and references

• 35 ILCS 143/10-10 and 143/10-15.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2015.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2015/st-15-0005-gil.pdf

Original ruling text

ST 15-0005-GIL 01/09/2015 TOBACCO PRODUCTS TAX: This letter discusses sales
of tobacco products other than little cigars for delivery outside of Illinois. 35 ILCS 143.
(This is a GIL.)

January 9, 2015

Dear XXXX:
This letter is in response to your letter dated September 9, 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.
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 have OTP license for State of IL ####. According to State of IL law if some one from
out of state comes to my location and bring they tobacco license and buy any tobacco
products, I have to charge them 36% State of IL OTP tax no matter either he or she is a
retailer or wholesaler, but the law I read online which I attached with this letter.
According to that I don’t have to charge them any tax long as they bring a resale license
and signature a invoice. When I talked to IL Department of Revenue. They said write a
letter to legal Department and they will issue you a letter, so kindly please help me to
resolve this situation.
DEPARTMENT’S RESPONSE:
A tax is imposed on any person engaged in business as a distributor of tobacco
products, at the rate of 36% of the wholesale price of tobacco products sold or
otherwise disposed of to retailers or consumers located in this State; except that,
beginning on January 1, 2013, the tax on moist snuff shall be imposed at a rate of $0.30
per ounce, and a proportionate tax at the like rate on all fractional parts of an ounce,

sold or otherwise disposed of to retailers or consumers located in this State. Beginning
July 1, 2013, the tax on little cigars shall be imposed at the same rate, and the proceeds
shall be distributed in the same manner, as the tax imposed on cigarettes under the
Cigarette Tax Act. The tax for little cigars is currently $1.98 for a package containing 20
little cigars. The tax is not imposed upon any activity in that business in interstate
commerce or otherwise, to the extent to which that activity may not, under the
Constitution and Statutes of the United States, be made the subject of taxation by this
State. The tax is also not imposed on sales made to the United States or any entity
thereof. 35 ILCS 143/10-10.
Purchases of tobacco products other than little cigars by wholesalers who will not
sell the product at retail are exempt from the tax imposed by this Act. Purchases of
tobacco products other than little cigars by wholesalers and retailers for delivery of the
product outside Illinois are exempt from the tax imposed by this Act. A person making
an exempt sale of tobacco products other than little cigars to a wholesaler or a retailer
must document the exemption by obtaining a certification from the purchaser containing
the seller's name and address, the purchaser's name and address, the date of
purchase, the purchaser's signature, the purchaser's tobacco products tax license
number, if applicable, and a statement that the purchaser is purchasing for resale other
than for sale to consumers or is purchasing for delivery outside of Illinois. 35 ILCS
143/10-15.
If you have any questions regarding tax-exempt sales of little cigars, you will
need to send us another request for information.
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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