What does Illinois General Information Letter ST 20-0021-GIL conclude about Enterprise Zones?

Plain-English summary

This Illinois Department of Revenue General Information Letter answers a question from a contract manufacturer that runs a wastewater treatment (pollution control) operation at its plant and wanted a sales tax exemption on the tangible personal property it buys to run that pollution control facility. The company explained that its facility uses biological and chemical treatment to reduce pollutants before releasing water back into the municipal sewer system, that it sits inside an enterprise zone, and that it creates at least 200 full-time Illinois jobs.

The Department's answer draws a sharp line: the old, general "Pollution Control Exemption" for sales tax was repealed effective July 1, 2003 (Public Act 93-24), and that repealed exemption is described at 86 Ill. Adm. Code 130.335. It no longer exists. However, a narrower, still-active exemption survives specifically for pollution control facilities located within an enterprise zone. Under 35 ILCS 120/1e, tangible personal property used or consumed in operating such a facility is exempt from Retailers' Occupation Tax if the facility is certified under 35 ILCS 120/1f -- both as meeting investment and job creation/retention criteria and as being located within an enterprise zone. Because Use Tax exemption follows Retailers' Occupation Tax exemption under 35 ILCS 105/3-65, exempt purchases are also free of Use Tax.

Critically, the Department noted it was "unclear" from the taxpayer's letter whether the company had actually been certified by the Department of Commerce and Economic Opportunity (DCEO) -- the agency that issues the Exemption Certificate required to claim this benefit. The Illinois Department of Revenue does not issue that certificate itself; DCEO does. So merely being located in an enterprise zone, operating a qualifying pollution control facility, and meeting job-creation thresholds is not enough on its own -- the business must first obtain DCEO certification before it can claim the sales/use tax exemption.

Because this is a GIL rather than a Private Letter Ruling, the Department did not rule on whether this specific taxpayer qualifies. It simply explained the legal framework and pointed to the missing piece (DCEO certification) that the taxpayer would need before the exemption could apply.

What this means for you

Manufacturers and other businesses in enterprise zones

If your facility performs pollution control functions (like wastewater treatment) and sits within a designated Illinois enterprise zone, you may be able to buy exempt-from-tax the tangible personal property used or consumed in operating that facility. But the exemption is conditioned on certification, not just location and function. You must apply for and receive certification from the Department of Commerce and Economic Opportunity confirming both (1) that your facility meets DCEO's investment/job-creation-or-retention criteria and (2) that it is located within an enterprise zone. Only after DCEO issues an Exemption Certificate can you present it to vendors to buy the qualifying property tax-free.

Accountants and tax professionals advising these businesses

Don't confuse this narrow, still-live "enterprise zone pollution control" exemption (35 ILCS 120/1e and 1f) with the old general Pollution Control Exemption, which was repealed in 2003 and no longer applies anywhere in Illinois, enterprise zone or not. When a client claims eligibility, confirm DCEO certification exists (and that the Exemption Certificate has actually been issued) before relying on the exemption -- the Illinois Department of Revenue will not certify facilities itself, and a GIL like this one will not resolve certification questions for you.

Common questions

Q: Is there still a general sales tax exemption for pollution control equipment in Illinois?
A: No. The general Pollution Control Exemption (formerly described at 86 Ill. Adm. Code 130.335) was repealed effective July 1, 2003 by Public Act 93-24. It no longer exists.

Q: What exemption, if any, survived the 2003 repeal?
A: An exemption limited to pollution control facilities located within an enterprise zone. Under 35 ILCS 120/1e, tangible personal property used or consumed in operating such a facility is exempt from Retailers' Occupation Tax if the facility is certified under 35 ILCS 120/1f.

Q: Who certifies that a facility qualifies for the enterprise zone pollution control exemption?
A: The Department of Commerce and Economic Opportunity (DCEO), not the Illinois Department of Revenue. DCEO certifies that the business enterprise meets investment and job creation/retention criteria and that the facility is located within an enterprise zone, and DCEO issues the Exemption Certificate.

Q: Does an exemption from Retailers' Occupation Tax also cover Use Tax?
A: Yes. Under 35 ILCS 105/3-65, tangible personal property that is exempt from Retailers' Occupation Tax is also exempt from Use Tax.

Q: Did the Department confirm this particular taxpayer qualified for the exemption?
A: No. The Department said it was unclear from the taxpayer's letter whether the company had been certified by DCEO, and this GIL does not resolve that fact question -- it only explains the applicable rules and points the taxpayer to DCEO.

Citations and references

• 35 ILCS 120/1e (enterprise zone pollution control facility exemption from Retailers' Occupation Tax)
• 35 ILCS 120/1f (certification requirements for the enterprise zone exemption)
• 35 ILCS 105/3-65 (Use Tax exemption for property exempt from Retailers' Occupation Tax)
• 35 ILCS 120/1a (definition referenced for "Pollution Control Facility")
• 86 Ill. Adm. Code 130.335 (repealed general Pollution Control Exemption)
• 86 Ill. Adm. Code 130.1948 (tangible personal property used or consumed in pollution control facilities located within enterprise zones)
• 2 Ill. Adm. Code 1200.110 (procedures for Private Letter Rulings)
• 2 Ill. Adm. Code 1200.120 (General Information Letters)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2020.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2020/st20-0021-gil.pdf

Original ruling text

ST 20-0021-GIL 10/02/2020

ENTERPRISE ZONES

Sales of tangible personal property to be used or consumed in the operation of pollution
control facilities located in an enterprise zone and certified by the Department of Commerce
and Economic Opportunity are exempt from the tax imposed by the Retailers’ Occupation Tax
Act. See 35 ILCS 120/1e. and 1f. (This is a GIL.)

October 2, 2020

Dear Xxxx:
This letter is in response to your letter dated April 1, 2019, 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.
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:
We are requesting that the Department of Revenue issue COMPANY (CITY Plant) a
Sales Tax Exemption in connection with the purchase of tangible personal property that
will be used in a pollution control facility. We believe that COMPANY (CITY Plant)
qualifies as a recognized “Pollution Control Facility” as defined under the Department of
Revenue Act, 35 ILCS 120/1a (from Ch. 120, par. 440a, Section 1a).
COMPANY located at ADDRESS, CITY, IL, is a leading contract manufacturer in the
consumer [sic] packaged goods industry.
The company strives to meet the
environmental and conservatory obligations set forth by the state at all times. We
employ both biological and chemical means to dispose of pollutant byproducts in our
manufacturing process before safely releasing treated water back into the sewage
systems. Using bacteria, we are able to reduce overall Chemical Oxygen Demand
(COD) and Total Suspended Solids (TSS) in wastewater to levels deemed appropriate
by the CITY Sanitary District. Attached with this letter is our company’s Wastewater
Treatment Agreement with the CITY Sanitary District, our wastewater permit, and indepth diagram of our wastewater plant and explanation of the treatment process, for the
State’s consideration.

ST 20-0021-GIL
Page 2
Our CITY facility meets the requirements in Section 1f of the Retailers’ Occupation Tax
Act. It is located within an Enterprise Zone as defined under Title 86 Part 130.1948
Tangible Personal Property Use or Consumed in the Operation of Pollution Control
Facilities Located Within Enterprise Zones and creates a minimum of 200 full-time jobs
in Illinois.
Please contact NAME at NUMBER if you require additional information.
DEPARTMENT’S RESPONSE:
Effective July 1, 2003, the Pollution Control Exemption for sales tax was repealed by Public
Act 93-24. This repealed exemption is described at 86 Ill. Adm. Code 130.335. However, the
expanded Pollution Control Exemption related to enterprise zones was not repealed.
Section 1e of the Retailers’ Occupation Tax Act provides that all tangible personal property to
be used or consumed in the operation of a pollution control facility that is certified, as required under
Section 1f of the Retailers’ Occupation Tax Act by the Department of Commerce and Economic
Opportunity both as meeting certain investment and job creation or retention criteria and as being
located within an enterprise zone, shall be exempt from Retailers’ Occupation Tax. See 35 ILCS
120/1e. Section 1f of the Retailer’s Occupation Tax Act provides, in relevant part, that the exemption
stated in Section 1e shall only apply to business enterprises which (among other things) “are certified
by the Department of Commerce and Economic Opportunity.” See 35 ILCS 120/1f. The
administrative rules adopted by the Illinois Department of Revenue to implement this exemption
provide that if a business enterprise is so certified by the Department of Commerce and Economic
Opportunity, all tangible personal property used or consumed by it in the operation of pollution control
facilities within an enterprise zone are exempt from Retailers’ Occupation Tax. An item that is exempt
from Retailers’ Occupation Tax is also exempt from Use Tax. See 35 ILCS 105/3-65.
It is unclear from your letter whether COMPANY has been certified by the Department of
Commerce and Economic Opportunity under Section 1e of the Retailers’ Occupation Tax Act.
Business enterprises must be certified by the Department of Commerce and Economic Opportunity
before they are eligible to receive an Exemption Certificate, which is issued by the Department of
Commerce and Economic Opportunity, not the Illinois Department of Revenue.
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,

Debra M. Boggess
Associate Counsel

ST 20-0021-GIL
Page 3

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