Does an Illinois retailer have to charge sales tax when selling collectible paper currency, coins, or bullion?

Plain-English summary

The Illinois Department of Revenue confirmed that selling collectible paper currency does not trigger Retailers' Occupation Tax (Illinois' version of sales tax), so long as the currency was actually issued as legal tender by a qualifying government.

A business asked about selling old bills to customers in Illinois — examples given were an 1882 "Date Back" $10 note from Princeton, Illinois, and a 1934 $10,000 Federal Reserve Note. Even though these notes are unlikely to ever be spent as money, they were originally issued as legal tender by the State of Illinois or the U.S. government.

Illinois law exempts gross receipts from selling legal tender, currency, medallions, or gold or silver coinage issued by Illinois, the U.S. government, or any foreign government, plus bullion, from Retailers' Occupation Tax. The Department confirmed this exemption applies even if the item has appreciated in value and become rare, and is unlikely to be used in ordinary commerce today.

The Department also flagged two limits on the exemption worth knowing:

• Coins or medallions minted by an issuer not listed in the statute — for example, a commemorative medallion from a private company or from a state other than Illinois — are taxable.
• If an exempt coin or currency item is incorporated into jewelry, the exemption is lost, and the entire sale of that jewelry becomes taxable.

What this means for you

Coin, currency, and bullion dealers

If you sell legal-tender currency, official coinage, or bullion issued by Illinois, the U.S. government, or a foreign government, those sales are exempt from Retailers' Occupation Tax under 86 Ill. Adm. Code 130.1910(c) — regardless of whether the item now trades as a rare collectible rather than as spendable money. Keep records tracing each item to a qualifying government issuer, since that is what makes the exemption apply.

Jewelers and dealers who repurpose coins

Watch the jewelry rule closely: incorporating an otherwise-exempt coin or medallion into a piece of jewelry causes the entire sale of that jewelry to become taxable, not just the setting or labor. If you sell coin jewelry, charge tax on the full sales price.

Business owners and accountants

Confirm the issuer before assuming an exemption applies. Only currency, medallions, or coinage issued by Illinois, the U.S. government, or a foreign government (plus bullion) qualifies. Commemorative pieces minted by private businesses or by other states' governments don't fit the statutory list and are taxable retail sales.

Common questions

Q: Is selling old or rare currency exempt from Illinois sales tax?
A: Yes, if it was issued as legal tender by the State of Illinois, the U.S. government, or a foreign government. The exemption applies even though the notes are now valuable collectibles unlikely to be spent as money.

Q: What about gold or silver coins?
A: Gold or silver coinage issued by Illinois, the U.S. government, or a foreign government is exempt, as is bullion. Coins from an issuer not covered by the statute are taxable.

Q: Are all commemorative medallions and coins tax-exempt?
A: No. Only those issued by the specific governments listed in the statute (Illinois, the U.S. government, or a foreign government) are exempt. Commemorative medallions minted by private businesses or other states are subject to tax.

Q: If I set a coin into a ring or necklace, is that sale still exempt?
A: No. Once an exempt coin or currency item is incorporated into jewelry, the exemption is lost and the entire gross receipts from the sale of that jewelry are taxable.

Q: Is this letter binding on the Department?
A: No. This is a General Information Letter (GIL), which only directs the taxpayer to relevant statutes, rules, and information. It is not a statement of Department policy and does not bind the Department the way a Private Letter Ruling would.

Citations and references

Statutes and rules:

• 35 ILCS 120/2 (Retailers' Occupation Tax imposed on retail sales)
• 35 ILCS 120/2-5(18) (exemption for legal tender, currency, medallions, coinage, and bullion)
• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax generally)
• 86 Ill. Adm. Code 130.1910 (currency, coinage, and bullion exemption; jewelry and non-qualifying issuer limits)
• 86 Ill. Adm. Code 150.101 (Use Tax generally)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedure)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2021.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2021/st21-0006-gil.pdf

Original ruling text

ST-21-0006 01/28/2021 SALE AT RETAIL
The sale of legal tender, currency, medallions, or gold or silver coinage issued by the State of
Illinois, the government of the United States of America, or the government of any foreign
country, and bullion are exempt from Retailers’ Occupation Tax. See 86 Ill. Adm. Code
130.1910. (This is a GIL.)
January 28, 2021
Dear Xxxx:
This letter is in response to your letter dated April 10, 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 working with a client that will be selling paper currency to customers in
Illinois. The currency was generally issued by a nation or state’s government, has a
monetary face value and is or was considered legal tender by the state or country issue.
Examples of the types of currency that our client will be selling include the 1882 Date
Back $10 Princeton, Illinois, or the 1934 Federal Reserve Note $10,000.
It is our understanding that although Illinois imposes a retailer’s occupation tax
on retail sales of tangible personal property, the gross receipts from the sale of legal
tender, currency, medallions, or gold or silver coinage issued by the State of Illinois, the
government of the united States of America, or the government of any foreign country,
and bullion are exempted from the tax (ILCS §120/2; ILCS § 120/2-5(18); and Ill. Admin.
Code 130.1910(c)). Accordingly, as the paper currency was issued by the State or
Illinois or the government of the United States of America, and it is considered
currency/legal tender, even though it’s unlikely they would ever be used for such
purposes, the sale of these bills or notes would be exempt from sales tax.
We would appreciate your confirmation of our understanding that the sale of legal
tender and currency, whether formerly or currently in circulation, qualifies for the
exemption as noted in ILCS § 120/2-5(18); and Ill. Admin. Code 130.1910(c).
If you have any questions or need any additional information please feel free to
reach out to us.
DEPARTMENT’S RESPONSE:

ST-21-0006
Page 2
January 28, 2021
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. Cod 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. Purchases of
tangible personal property are subject to Illinois sales tax unless a purchase qualifies for an
exemption under Illinois law.
Notwithstanding the fact that the sales may be at retail, gross receipts from the sales of legal
tender, currency, medallions, or gold or silver coinage issued by the State of Illinois, the government
of the United States of America, or the government of any foreign country, and bullion are exempt
from Retailers’ Occupation Tax.
See 120 ILCS 2-5(18); 86 Ill. Adm. Code 130.1910(c);
Section130.120(aa). This exemption applies even if these items have appreciated in value and have
become rare and are unlikely to be used in today’s commerce.
Note, however, when a government or entity that is not listed in the statute issues a coin or
similar item, it is subject to tax pursuant to Section 130.1910(a). For example, commemorative
medallions minted by private businesses or other states would be subject to tax. Further, any coins
or other items covered by the exemption that are incorporated into jewelry lose their exempt status,
and the entire gross receipts from the sale of such jewelry is taxable.
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,
Alexis K. Overstreet
Associate Counsel
AKO:rkn