Can a conservation nonprofit sell excess animals from its preserve tax-free as an 'occasional sale,' even if it has to do this every year?

Plain-English summary

A 501(c)(3) conservation nonprofit owns and manages a large prairie preserve in Illinois, where it keeps a herd of large grazing animals as an essential tool for restoring the grassland ecosystem -- their grazing keeps grasses from crowding out wildflowers. The herd was originally introduced from other preserves the organization runs in other states.

Because the preserve has a "carrying capacity" -- a limit on how many animals the land can sustain -- the organization periodically sells off excess animals. It gives first preference to other conservation organizations, then sells at auction, mostly to breeders or meat producers, using the proceeds to fund the preserve's upkeep. In one November sale, animals went to four buyers: a nonprofit research consortium running its own prairie-restoration site, two private breeders, and one meat-production company.

The organization asked the Illinois Department of Revenue (IDOR) to rule that ALL such sales, no matter who buys the animals, are exempt from Retailers' Occupation Tax (ROT) as "isolated or occasional sales." As a fallback, it also argued that sales to the meat producer were exempt as sales-for-resale, sales to breeders were exempt under the breeding-livestock exemption, and sales to the nonprofit research consortium were exempt under the nonprofit-institution-supplier exemption.

IDOR agreed only partially. It ruled that this particular November batch of sales, to these four specific buyers, did qualify as an isolated/occasional sale and was exempt from ROT. But it explicitly refused to extend that conclusion to future sales. Because of the size and reproductive rate of the herd, and the organization's need to "regularly and continually dispose of" animals to prevent overgrazing, IDOR said it "cannot conclude that future sales would be isolated and occasional sales" or that the organization "is not engaged in this State in the business of selling tangible personal property at retail." In other words, a predictable, recurring pattern of sales risks crossing the line from "occasional" into an ongoing retail business -- which would make future sales taxable even though this one wasn't.

IDOR did confirm that the taxpayer's three fallback legal theories are legitimate bases that could independently support an exemption in the future: sales for resale (if properly documented), sales of breeding livestock under 86 Ill. Adm. Code 130.2100(d), and sales to qualifying nonprofit institutions under 130.2005(d). However, IDOR did not verify that these applied to the specific November sales -- it only said such sales "should be properly documented to obtain the benefit of the exemptions."

The ruling is officially filed under the subject "Agents" because IDOR's response also addressed a separate, general rule about auctioneers (86 Ill. Adm. Code 130.1915): an auctioneer selling on behalf of an undisclosed principal is itself liable for ROT on the sale, but if the principal is disclosed, tax liability depends on whether that principal is a retailer or otherwise qualifies as an isolated/occasional seller of that type of property.

What this means for you

Conservation nonprofits and land trusts managing livestock or wildlife herds

If you manage a preserve or sanctuary and periodically need to sell excess animals (or other property) to keep your operation sustainable, a single sale or batch of sales may qualify as an exempt "isolated or occasional sale" under 86 Ill. Adm. Code 130.110 and 130.120(f) -- but do not assume that exemption carries forward automatically. IDOR looks at whether the sales are a recurring, predictable part of how you operate. If you know you'll need to sell animals again next year, and the year after, because of population growth or carrying-capacity limits, IDOR may treat that as evidence you're "engaged in the business of selling" the property, which is taxable. Line up backup exemptions (resale, breeding livestock, sales to nonprofit institutions) and document each sale carefully so you have a fallback if the occasional-sale argument eventually fails.

Auctioneers and agents selling on behalf of others

If you sell property at auction on behalf of someone else, your own tax exposure under the Retailers' Occupation Tax turns on whether you disclose your principal. If the principal (the true owner) is undisclosed, you as the auctioneer are treated as the seller and are liable for ROT on the gross receipts. If the principal is disclosed, liability shifts to whether that principal is a retailer of that type of property, or otherwise qualifies for an exemption (such as isolated/occasional sale). Disclosing your principal's identity can therefore be an important step in avoiding tax liability falling on you as the agent.

Common questions

Q: Does this ruling mean the organization's animal sales will always be tax-exempt?
A: No. IDOR only ruled that the specific November batch of sales, to those four buyers, qualified as an exempt isolated/occasional sale. It expressly declined to say the same about future sales, because the organization expects to need to sell animals again regularly to manage its herd size -- a pattern that could make it "engaged in the business of selling" taxable property.

Q: Why did a recurring need to sell animals hurt the "occasional sale" argument?
A: The occasional-sale exemption is meant for sporadic disposals of property, not a regular, foreseeable revenue stream. Because the herd reproduces and the preserve's carrying capacity requires regular culling by sale, IDOR viewed future sales as too predictable and recurring to guarantee they'd qualify as merely "isolated or occasional."

Q: If the occasional-sale exemption doesn't apply to future sales, is the organization out of options?
A: Not necessarily. IDOR confirmed three other exemptions remain available as independent legal bases, if the facts support them and are properly documented: sales for resale (for sales to buyers like meat producers who resell the processed product), the breeding-livestock exemption (for sales to breeders), and the nonprofit-institution-supplier exemption (for sales to qualifying nonprofit buyers).

Q: Why is this PLR filed under "Agents" if it's mostly about animal sales?
A: IDOR's response separately addressed the auctioneer/agency rule under 86 Ill. Adm. Code 130.1915, covering how tax liability is allocated between an auctioneer and an undisclosed or disclosed principal. That general agency rule, not the animal-sale facts, is why the Department classified the letter under the "Agents" subject heading.

Q: Can other taxpayers rely on this ruling?
A: No. This is a Private Letter Ruling, binding on IDOR only as to the specific taxpayer who requested it, and only to the extent the facts it described were correct and complete. It expires 10 years after issuance under 2 Ill. Adm. Code 1200.110(e). Other taxpayers with similar facts would need to request their own PLR.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2019.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2019/st19-0003-plr.pdf

Original ruling text

ST 19-0003-PLR 07/08/2019 AGENTS
An auctioneer acting on behalf of an unknown or undisclosed principal is responsible for
Retailers’ Occupation Tax on the gross receipts from the sale. However, if the auctioneer is
acting on behalf of a known or disclosed principal, the sale of tangible personal property is
taxable to the principal and not the auctioneer if the principal is a retailer of the tangible
personal property being sold at the auction. See 86 Ill. Adm. Code 130.1915. (This is a PLR).
July 8, 2019

Re: Request for Letter Ruling Concerning COMPANY’s Exemption from Illinois Retailers’
Occupation Tax
Dear: Xxxx:
This letter is in response to your letter dated December 31, 2018, in which you requested
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:
We represent COMPANY, a nonprofit corporation of and tax-exempt charitable
organization (federal employer identification number ##) under Section 501(c)(3) of the
U. S. Internal Revenue Code (the Illinois chapter referred to hereinafter as
“COMPANY”). COMPANY’s principal offices are located at ADDRESS.
COMPANY desires to obtain a private letter ruling from the Illinois Department of
Revenue (the “IDOR”) specifying whether and how COMPANY may claim an exemption
from the Illinois Retailers’ Occupation Tax (the “ROT”) with respect to COMPANY’s sale
of ANIMAL, as described in detail below. This letter constitutes COMPANY’s request for
this private letter ruling and is organized according to the requirements of 2 III Adm.

ST 19-0003-PLR
Page 2
Code 1200.110, which sets outs the procedures for requesting such private letter
rulings.

1. Statement of the facts and other information pertinent to the request.
   PRESERVE.
   COMPANY’s mission, in Illinois and everywhere else it operates, is to conserve the
   lands and waters on which all life depends. As part of this mission, COMPANY owns
   and operates the PRESERVE, located at ADDRESS, Illinois, a ## acre preserve
   (“PRESERVE”). In YEAR, recognizing that PRESERVE offered the best opportunity to
   restore a large and diverse grassland, COMPANY purchased the core of the preserve,
   and has made additional purchases since that time resulting in the nearly ## acres it
   owns today.
   COMPANY chose PRESERVE because it possessed numerous grassland remnants,
   which are intact prairie communities that have never been plowed. Grasslands are
   essential to combating the Earth’s rising temperatures. Grasslands are a natural
   “carbon sink,” and increase the ability of the earth’s atmosphere to keep global
   temperature in balance. Conserving and protecting grasslands is increasingly important
   as the need for farmland, which displaces natural grasslands, continues to grow.
   COMPANY does not merely purchase and hold places like PRESERVE, but actively
   restores and manages them. In addition to COMPANY staff who research and work fulltime at PRESERVE, volunteers have donated more than 200,000 hours of labor to the
   restoration and management of PRESERVE. COMPANY personnel believe that
   maintaining PRESERVE as a sustainable, ecologically healthy grassland requires three
   essential components: climate, controlled burns and grazing.
   Grasslands are more than just fields of grass; in fact, in grasslands, the forbs (or
   wildflowers) make up the majority of plant species diversity rather than actual grasses.
   However, grasses grow much more quickly than forbs. Without grazing of the grasses,
   grasses would eventual [sic] overtake the forbs, resulting in a less biologically diverse
   ecosystem. For thousands of years, ANIMALS have been a natural component of the
   prairie, as their grazing and wallowing (which is their rolling on the dry ground)
   enhances wildlife habitat for both plants and animals. In particular, when ANIMALS
   graze, they only eat the grasses and avoid the forbs, giving the wildflowers an
   advantage by reducing the grass dominance. Over time, ANIMALS grazing also
   manipulates the physical structure of the prairies. Some areas are short, where the
   ANIMALS have recently grazed, but areas where the ANIMALS have not recently
   grazed are taller and thicker. The mosaic of varying heterogeneous structures across
   the landscape is critical to ensuring a healthy prairie ecosystem. The ANIMAL herd that
   lives at PRESERVE is therefore a key component to COMPANY’s conservation efforts
   at PRESERVE.
   PRESERVE ANIMAL herd.

ST 19-0003-PLR
Page 3
In October 20XX, ## ANIMALS were introduced to PRESERVE. The herd came from
three preserves owned by COMPANY in other states. Importantly, the ANIMALS at
PRESERVE are descended from a herd that was protected, at the direction of President
Theodore Roosevelt, on the site of NATIONAL PARK in STATE, which means that
these ANIMALS show no traces of cattle genes, which most other ANIMALS possess.
Since that time, the herd has grown to over ## head. The ANIMALS breed, birth, feed,
and care for themselves without human intervention. PRESERVE’s ANIMAL herd roams
across ## of PRESERVE’s ## acres. COMPANY is committed to keeping ANIMALS as
wild as possible, within the constraints of available space and human safety, and with
minimal veterinary care just once a year at the fall roundup.
However, since PRESERVE is not a limitless area, COMPANY scientists and staff
understand that the ANIMAL herd at PRESERVE must be capped at some point. In
order to sustain the grasslands and ensure that the grassland is not over-grazed, a
constant grazing-variable is deduced resulting in what is referred to as a “carrying
capacity” limit on the number of head of ANIMALS at PRESERVE. The carrying
capacity is the threshold number of ANIMALS the grassland can sustain without altering
or destroying its present, thriving state. Any number beyond the carrying capacity
results in destruction of the grasslands and is counterproductive to COMPANY’s
conservation efforts.
Sale of ANIMALS
In 20XX, COMPANY determined that the number of ANIMALS in the PRESERVE herd
would soon exceed PRESERVE’s carrying capacity. COMPANY engaged COMPANY 1
to assist COMPANY in selling some of its ANIMALS to ensure that PRESERVE’s herd
would not grow so large as to threaten the viability of the preserve. COMPANY’s policy
in Illinois for selling the ANIMALS is to give first preference to other conservation
organizations who will use the ANIMALS for similar conservation purposes. 1 If the
demand for ANIMALS from other similarly motivated organizations is insufficient,
COMPANY will then sell ANIMALS at auction, primarily to ANIMAL breeders or meat
producers, which comprise the main market for ANIMALS apart from other conservation
organizations. ANIMALS are sold at market price and COMPANY uses the proceeds
from the sale to fund the upkeep and operation of PRESERVE.
In November 20XX, ## of PRESERVE’s ANIMALS were sold to four (4) buyers. Two (2)
of the ANIMALS were sold to the COMPANY 2, a nonprofit consortium of over ##
research universities that manages a ##-acre site located in CITY, Illinois that houses
the U.S. government’s COMPANY 2 research center. The COMPANY 2 site, like
PRESERVE, maintains a herd of ANIMALS on nearly ## acres of reconstructed
tallgrass prairie in order to create and maintain a healthy, sustainable grassland. The
remaining ANIMALS were sold to two (2) private individuals to be used for breeding and
one (1) ANIMAL meat production company. COMPANY fully expects that it will need to
sell ANIMALS in future years, as its herd will continue to grow and push up against the
carrying capacity of PRESERVE.
The COMPANY has chapters in practically every state, and some of these chapters also engage in ANIMAL sales, but only the sales
of ANIMALS by the Illinois chapter are discussed in this request, and the activities of other chapters are not relevant to this request.

1

ST 19-0003-PLR
Page 4

Contracts, licenses, agreements, instruments or other documents relevant
to the request

2.

We have attached the invoices and sale contracts for the ANIMALS sold by COMPANY
in November 20XX.
•
•
•
•

COMPANY 2, ## ANIMALS, dated 1 November 20XX at $$$;
NAME (a breeder), ## ANIMALS, dated 26 November 20XX at $$$;
NAME 1 (a breeder), ## ANIMALS, dated 26 November 20XX at $$$; and
NAME 2 of COMPANY 3 (a meat producer), ## ANIMALS, dated 26 November
20XX at $$$

We have also attached an executed power of attorney on Illinois Form 2848

3. Tax period at issue; disclosure of pending audit or litigation.
   As noted above, COMPANY sold the ANIMALS at issue in November 20XX;
   accordingly, the tax periods at issue are those beginning November 20XX and
   continuing into the future. There is currently no IDOR audit or litigation pending against
   COMPANY for this issue or any other issue.
4. Statement with respect to previous rulings.
   To the best of our knowledge, and to the best of COMPANY’s knowledge, the IDOR has
   not previously ruled on the same or a similar issue for COMPANY or any predecessor,
   and neither COMPANY nor its representatives have previously submitted the same or a
   similar issue to the IDOR but withdrew it before a letter ruling was issued.
5. Statement of authorities in support of an exemption from the Retailer’s [sic]
   Occupation Tax
   We believe that the COMPANY’s sale of some of the ANIMALS from PRESERVE is
   exempt from ROT based on the following authorities.
   All of COMPANY’s ANIMAL sales are exempt because the sales qualify as isolated or
   occasional sales.
   The ROT is imposed on persons engaged in Illinois in the business of selling tangible
   personal property to purchasers for use or consumption. See 86 Ill. Adm. Code
   130.101. The ROT is not imposed on receipts from sales that are isolated or occasional.
   See 86 Ill. Adm. Code. 130.120(f). Occasional and isolated sales are described in 86 Ill
   Adm. Code. 130.110(a), which provides that since the ROT does not apply to “persons
   who are not engaged in the business of selling tangible personal property, persons who
   make isolated or occasional sales thereof do not incur tax liability.” For example, as
   provided in 86 Ill. Adm. Code 130.110(b), “if a retailer sells tangible personal

ST 19-0003-PLR
Page 5
property…which he has used in his business and no longer needs, and which he does
not otherwise engage in selling, he does not incur the” ROT.
As noted above, COMPANY is not engaged in business at all, but rather is dedicated to
a mission of conserving the lands and waters on which all life depends. PRESERVE is
managed by COMPANY as part of that mission, specifically as a means for preserving a
large and diverse grassland that offers scientific exploration, an ever-evolving
ecosystem, and a place for conservation of wildlife and prairie. A critical component of
sustaining PRESERVE as a grassland is the herd of ANIMALS maintained at
PRESERVE. Unfortunately, and perhaps ironically as a victim of its own success, the
ANIMAL herd has grown (and will continue grow) beyond the carrying capacity of
PRESERVE. At this point, the excess ANIMALS are no longer needed by COMPANY
as part of its conservation mission, and in fact, retaining these excess ANIMALS would
threaten the sustainability of PRESERVE and COMPANY’s mission. Accordingly, the
ANIMAL sale in November 20XX, and those expected in the future, are a necessary
byproduct of COMPANY’s conservation efforts.
In summary, the ANIMAL sales that COMPANY conducted and will conduct in the future
are not part of a business of selling property, or even part of COMPANY’s
organizational day-to-day operation, but rather are sales of ANIMALS that are no longer
needed and that, if kept, would in fact undermine COMPANY’s conservation efforts at
PRESERVE. If, for example, the ANIMAL herd at PRESERVE did not in any particular
year grow beyond the preserve’s “carrying capacity,” COMPANY would not expect to
sell any of its ANIMALS. In other words, the excess ANIMALS, like the business owner
noted above in 86 Ill. Adm. Code 130.110(b) who sold no-longer needed tangible
personal property, are no longer needed and in fact pose a high risk to the ecological
sustainment of the PRESERVE grassland, therefore making is [sic] essential that they
be sold off. We believe that such ANIMAL sales, regardless of the identity of the
purchaser, should qualify as isolated or occasional sales that are exempt from the ROT.
COMPANY sales to meat processors are exempt as sales to purchasers for resale.
As discussed above, we believe there is a strong argument that all of COMPANY’s
ANIMAL sales are exempt from the ROT as isolated or occasional sales, regardless of
the identity of the purchaser, and we would request that relief be granted to COMPANY
on that basis. However, if the IDOR determines that this relief is not appropriate, we
would respectfully request that it rule, in the case of sales made to meat processors,
that COMPANY’s sales are exempt from the ROT as sales to purchasers for resale.
The ROT is not imposed on receipts of tangible personal property for purposes of resale
in any form as tangible personal property, provided that, in the case of Illinois-based
purchasers, the purchasers certify that their purchase is for resale. See 86 Ill. Adm.
Code. 130.120(c). Even without this certification, sellers can rebut the presumption that
a sale is not for resale with evidence that a particular sale is in fact for resale. See 86 Ill.
Adm. Code. 130.210(c). Sales of tangible personal property, which property, to the
extent not first subjected to a use for which it was purchased, as an ingredient or
constituent, goes into and forms a part of tangible personal property subsequently the
subject of a “sale at retail,” are not sales at retail as defined for purposes of the ROT,

ST 19-0003-PLR
Page 6
provided that the property purchased is deemed to be purchased for the purpose of
resale, despite first being used, to the extent to which it is resold as an ingredient of an
intentionally produced product or byproduct of manufacturing. See 86 Ill. Adm. Code
130.201(a)(1).
In the case of ANIMAL sales to meat producers, although the ROT and the Ill. Adm.
Code are not entirely clear on the point, such sales should be viewed as being for
resale. This view is supported by a letter ruling granted to another taxpayer, ST 13-0001
GIL (1/9/2013), in which the IDOR ruled that a farmer selling a live cow to restaurant,
where the farmer delivers the cow to an independent, certified processor who butchers
the cow into meat that the buyer wishes, was not subject to ROT in respect of such
sale. We would argue that COMPANY’s sale of a ANIMALS from PRESERVE to a meat
processor should be treated similarly, that is, as a sale for resale, and therefore exempt
from the ROT on this basis as well.
COMPANY sales to ANIMAL breeders are exempt under 86 Ill. Adm. Code 130-2100(d)
As discussed above, we believe there is a strong argument that all of COMPANY’s
ANIMAL sales are exempt from the ROT as isolated or occasional sales, regardless of
the identity of the purchaser, and we would request that relief be granted to COMPANY
on that basis. However, if the IDOR determines that this relief is not appropriate, we
would respectfully request that it rule, in the case of sales made to ANIMAL breeders,
that COMPANY’s sales are exempt from ROT under 86 Ill. Adm. Code 130-2100(d).
Under that regulation, “[f]armers or producers of breeding livestock are not liable for
Retailers’ Occupation Tax with respect to gross receipts realized from the sale of bulls,
stallions or other servicing animals for breeding purposes.” COMPANY is undoubtedly a
producer (albeit unwittingly) of ANIMAL suitable for breeding, as evidenced by their sale
of ANIMAL in November 20XX to two different breeders. We believe that COMPANY
sales of ANIMAL to breeders, therefore, should be exempt from the ROT on this basis
as well.
COMPANY sales to other conservation organizations are exempt under 86 Ill. Code
130-2005 [sic].
As discussed above, we believe there is a strong argument that all of COMPANY’s
ANIMALS sales are exempt from the ROT as isolated or occasional sales, regardless of
the identity of the purchaser, and we would request that relief be granted to COMPANY
on that basis. However, if the IDOR determines that this relief is not appropriate, we
would respectfully request that it rule, in the case of sales made to other charitable or
conservation organizations (such as COMPANY 2), that COMPANY’s sales are exempt
from the ROT under 86 Ill. Adm. Code 130-2005 [sic].
It is clear that nonprofit entities, such as COMPANY, are in fact subject to the ROT
when selling tangible personal property just as a for-profit entity would be. See 86 Ill.
Adm. Code 130-2005(a). Were this not the case, this letter ruling request would be
unnecessary. However, there are limited exceptions to this rule, including sales made to
nonprofit institutions.

ST 19-0003-PLR
Page 7

86 Ill. Adm. Code 130-2005(d)(1) [sic] provides that “[s]uppliers of nonprofit institutions,
associations and organizations do not incur Retailers’ Occupation Tax liability when
they sell tangible personal property to any such purchaser for resale in any form as
tangible personal property.” 86 Ill. Adm. Code 130-2005(d)(2) [sic] provides further that
“[s]uppliers of such purchasers incur Retailers’ Occupation Tax liability when they sell
tangible personal property to any such purchaser at retail (i.e., for use or consumption
by the purchaser or to be given away by the purchaser and not for resale in any form as
tangible personal property), provided that the tax does not apply to receipts received by
the seller from sales of any kind made to any purchaser of this character who is able to
qualify as a corporation society, association, foundation or institution organized and
operated exclusively for charitable, religious or educational purposes, or any not-forprofit corporation, society, association, foundation, institution or organization which has
no compensated officers or employees and which is organized and operated primarily
for the recreation of persons 55 years of age or older.” Thus, sales to a nonprofit
organization may be exempt from the ROT, provided that the organization is non-profit
and operated exclusively for, among other things, charitable or educational purposes.
See. 86 Ill. Adm. Code 130-2005(h) [sic].
86 Ill. Adm. Code 130-2005(h) [sic] provides examples of examples of entities eligible
for this exemption, and they include those operated and organized for education
purposes, as well as those operated exclusively for the purpose of conducting scientific
research of a character that would be beneficial to the public (held to be a charitable
purpose). COMPANY 2, the final buyer of ANIMALS in November 20XX, is a nonprofit
consortium of over 80 research universities with a mission akin to that of COMPANY.
Accordingly, if the IDOR otherwise does not agree that COMPANY’s ANIMAL sales
should qualify as isolated or occasional sales as argued above, we believe that sales of
ANIMALS to COMPANY 2, and other similarly-organized and operated purchasers (to
whom COMPANY intends to give preference in future ANIMALS sales) should be
exempt under 86 Ill. Adm. Code 130-2005(d) [sic] as sales made to nonprofit institutions
organized for charitable, educational, or scientific research purposes.
6.

Statement of authorities contrary to the taxpayer’s views.

We have not been able to locate, and believe that there are not, any authorities contrary
to COMPANY’s view as to its eligibility for an exemption from the ROT.
7.

Request for deletion of information from the public version of the private
letter ruling.

We would request that the publicly disseminated version of any private letter ruling
issued to COMPANY pursuant to this request specifically not contain or otherwise
conceal the identities and descriptions of the purchasers of the ANIMALS sold in
November 20XX, as well as the purchase price paid for the ANIMALS.
8.

Signature of the taxpayer or the taxpayer’s representative.

ST 19-0003-PLR
Page 8
DEPARTMENT’S RESPONSE:
The Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in the
business of selling tangible personal property at retail to purchasers for use or consumption. See 86
Ill. Adm. Code 130.101. 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. The retailers are
then allowed to retain the amount of Use Tax paid to reimburse themselves for Retailers' Occupation
Tax which they are required to and do pay to the Department with respect to the same sale. If the
retailer does not collect the Use Tax from the purchaser for remittance to the Department, the
purchaser is responsible for remitting the Use Tax directly to the Department. See 86 Ill. Adm. Code
150.130.
A person, however, does not incur Retailers' Occupation Tax liability on the gross receipts from
an isolated or occasional sale. See 86 Ill. Adm. Code 130.110 regarding "Occasional Sales."
Consequently, the purchaser of that tangible personal property does not incur a corresponding Use
Tax liability on that purchase. See 86 Ill. Adm. Code 150.101(d). As a general proposition, the
occasional sale exemption is only available when a person (as defined in Section 1 of the Retailers’
Occupation Tax Act, 35 ILCS 120/1, purchases an item and then, after using the item, disposes of it
by selling it. See 86 Ill. Adm. Code 130.110. However, the sale will not qualify as an isolated or
occasional sale if the person holds himself out as being engaged in the retail sale of that item or
similar type of tangible personal property.
The Department believes the sales of the ANIMALS to the COMPANY 2, NAME, NAME 1, and
COMPANY 3 in November 20XX qualify as isolated and occasional sales and are exempt from sales
tax. Because of the size of the herd, the reproductive rate of the herd, and the need for COMPANY
to regularly and continually dispose of ANIMALS to sustain the grasslands and prevent over-grazing,
the Department cannot conclude that future sales would be isolated and occasional sales or that
COMPANY is not engaged in this State in the business of selling tangible personal property at retail
to purchasers for use or consumption.
As noted in your letter, some the sales may be exempt from tax based on other provisions in
the Retailers’ Occupation Tax Act and the Department regulations. See 86 Ill. Adm. Code 130.201
and 130.210 (sales for resale); 130.2100(d) (sellers of breeding livestock); and 130.2005(d) (suppliers
of nonprofit institutions, associations and organizations). These sales should be properly
documented to obtain the benefit of the exemptions.
Organizations that are recognized as non-profit under Internal Revenue Code Section
501(c)(3), are not necessarily exempt organizations pursuant to Illinois tax law. Such organizations
must obtain an exemption identification number (an “E number”) to qualify. See 86 Ill. Adm. Code
130.2007. Organizations that make application to the Department of Revenue and are determined to
be exclusively religious, educational, or charitable, receive an E number.
The E number evidences that the Department recognizes the organizations as exempt from
Use Tax when purchasing tangible personal property in furtherance of their organizational purposes.
With respect to auctions, an auctioneer and purchaser’s liability depends upon disclosure of
the identity of the principal or owner of the property being auctioned. See the Department’s regulation

ST 19-0003-PLR
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at 86 Ill. Adm. Code 130.1915. If the principal is disclosed, the tax liability attributable to him depends
upon whether he is a retailer or whether he would qualify as an isolated or occasional seller of the
type of property that is being sold. If the principal is not disclosed, the auctioneer is considered the
seller and is subject to Retailers’ Occupation Tax; the purchaser incurs a corresponding Use Tax
liability, subject to any exemptions that may apply to the sales.
The factual representations upon which this ruling is based are subject to review by the
Department during the course of any audit, investigation, or hearing and this ruling shall bind the
Department only if the factual representations recited in this ruling are correct and complete. This
Private Letter Ruling is revoked and will cease to bind the Department 10 years after the date of this
letter under the provisions of 2 Ill. Adm. Code 1200.110(e) or earlier if there is a pertinent change in
statutory law, case law, rules or in the factual representations recited in this ruling.
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
Chairman`, Private Letter Ruling Committee
RSW:rkn