Does an EV charging station operator that sells electricity have to register for and collect Illinois Electricity Excise Tax?

Plain-English summary

The Illinois Department of Revenue was asked whether a privately owned electric-vehicle charging station that sells electricity by time or by kilowatt-hour (kWh) owes either of two state taxes: the Electricity Excise Tax or the Electricity Distribution Tax (part of the Public Utilities Revenue Act).

The Department's answer: EV charging stations are not subject to sales/use tax on the electricity they sell (electricity delivered by wire is excluded from the Retailers' Occupation Tax Act and Use Tax Act). But a person operating an EV charging station is a "delivering supplier" under the Electricity Excise Tax Law, because that law defines "delivering supplier" broadly as anyone in the business of delivering electricity to persons for use or consumption (not for resale). As a delivering supplier, the operator must register with the Department and must collect and remit the Electricity Excise Tax, measured by the kilowatt-hours used or consumed by its customers.

The Department also addressed the second tax the taxpayer asked about — the Electricity Distribution Tax under 35 ILCS 620. That tax only applies to a "taxpayer" defined as an electric cooperative, electric utility, or alternative retail electric supplier. The Public Utilities Act specifically says an entity that only furnishes EV charging service is not deemed to sell electricity and is not deemed a public utility or alternative retail electric supplier for that purpose — so ordinary EV charging stations fall outside the Electricity Distribution Tax, unless the operator is otherwise regulated as a public utility or alternative retail electric supplier under the Public Utilities Act.

What this means for you

EV charging station operators

If you operate (or plan to operate) a business selling electricity through EV charging equipment, this letter says you should register with the Illinois Department of Revenue as a delivering supplier and collect/remit Electricity Excise Tax based on the kWh your customers use — regardless of whether you bill by time or by kWh. You do not need to separately worry about Retailers' Occupation Tax/Use Tax (sales tax) on that electricity, and you are generally exempted from being classified a "public utility" or "alternative retail electric supplier" for Public Utilities Act purposes solely because you run a charging station, which also keeps you out of the Electricity Distribution Tax in the ordinary case.

Business owners and tax analysts tracking multi-state taxes

This GIL is useful precisely because it disentangles three different Illinois tax regimes that could apply to electricity sales: sales/use tax (does not apply — electricity delivered by wire is excluded), the Electricity Excise Tax (does apply, via the "delivering supplier" definition), and the Electricity Distribution Tax (generally does not apply to EV charging stations, because the Public Utilities Act carves them out of "public utility" and "alternative retail electric supplier" status). Confirm which of your electricity-adjacent revenue streams count as "delivering" electricity for use/consumption versus a service that doesn't trigger delivering-supplier status.

Accountants and tax professionals

Note the key statutory hooks: the "delivering supplier" and "use" definitions in 35 ILCS 640/2-3 are broad and drive the excise-tax result regardless of how the Public Utilities Act treats EV charging companies. The Public Utilities Act exclusion (220 ILCS 5/3-105(c), 220 ILCS 5/16-102) applies only to Public Utilities Act status and to the Electricity Distribution Tax's "taxpayer" definition — it does not carry over to exempt anyone from the separate Electricity Excise Tax Law, since that exemption language isn't written into 35 ILCS 640.

Common questions

Q: Does an EV charging station have to charge sales tax on the electricity it sells?
A: No. Electricity delivered to customers by wire is excluded from tax under the Retailers' Occupation Tax Act and Use Tax Act (35 ILCS 120/2; 35 ILCS 105/3).

Q: Does an EV charging station have to register with the Illinois Department of Revenue?
A: Yes, if it sells electricity. The Department's position is that operating an EV charging station selling electricity makes the operator a "delivering supplier" under 35 ILCS 640/2-7.5, which requires registration.

Q: How is the Electricity Excise Tax calculated for an EV charging station?
A: Based on the kilowatt-hours used or consumed by the station's customers, per the Department's response in this letter.

Q: Does the Electricity Distribution Tax under 35 ILCS 620 also apply to EV charging stations?
A: Generally no. That tax applies only to entities meeting the definition of "taxpayer" (electric cooperative, electric utility, or alternative retail electric supplier) under the Public Utilities Act, and the Public Utilities Act specifically excludes an entity that only furnishes EV charging service from being deemed a public utility or alternative retail electric supplier — unless that entity is otherwise regulated as one under the Act.

Q: Is this letter binding on the Department?
A: No. This is a General Information Letter (GIL), which directs taxpayers to relevant regulations and information but is not a statement of Department policy and is not binding on the Department, unlike a Private Letter Ruling (PLR).

Citations and references

Statutes and rules:

• 35 ILCS 640/2-4 (Electricity Excise Tax imposed on use/consumption of purchased electricity)
• 35 ILCS 640/2-9 (tax collected and remitted by the delivering supplier)
• 35 ILCS 640/2-7.5 (delivering supplier registration requirement)
• 35 ILCS 640/2-3 (definitions of "delivering supplier" and "use")
• 35 ILCS 620/1, 620/2a.1 (Public Utilities Revenue Act invested capital and electricity distribution tax)
• 220 ILCS 5/3-105, 220 ILCS 5/16-102 (Public Utilities Act; EV charging excluded from "public utility"/"alternative retail electric supplier")
• 220 ILCS 30/3.4 (definition of "Electric Cooperative")
• 35 ILCS 120/2; 35 ILCS 105/3 (Retailers' Occupation Tax Act / Use Tax Act exclusions for wire-delivered electricity)
• 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/st21-0040-gil.pdf

Original ruling text

ST-21-0040 09/17/2021 ELECTRICITY EXCISE TAX
A person that operates a EV charging station selling electricity is a delivering
supplier, must register with the Department, and collect and remit the Electricity
Excise Tax based on kilowatt-hours used or consumed by customers. 35 ILCS

640. (This is a GIL.)
     September 17, 2021
     Dear NAME:
     This letter is in response to your inquiry dated September 1, 2021, 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:
     My name is NAME and I am a tax analyst with BUSINESS. We track
     sales/use taxes and a variety of other taxes for a variety of clients. I am
     wondering about the taxability of electric vehicle charging service sold by
     a non-public utility.
     I understand that such sales are not subject to sales and use tax, but
     wanted to confirm whether they are subject to either of the below taxes:
     •
     •

Electricity Excise Tax - Per 35 ILCS 640/2-4, any person selling electricity
for end use and not for resale is subject to the tax.
Electricity Distribution Tax - Per 35 ILCS 620, a "taxpayer" is liable for the
electricity distribution tax, but is defined as " for purposes of the tax on the
distribution of electricity” an “electric cooperative, an electric utility, or an
alternative retail electric supplier (other than a person that is an alternative
retail electric supplier solely pursuant to subsection (e) of Section 16-115
of the Public Utilities Act)." The Public Utilities Act specifically excludes
owners of EV charging stations from its definition of a public utility or
alternative retail electric supplier under 220 ILCS 5/3-105 and 220 ILCS
5/16-102. However, 35 ILCS 620 also defines "Taxpayer" as "a person
engaged in the business of distributing, supplying, furnishing or selling

NAME
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September 17, 2021
electricity for use or consumption and not for resale” for purposes of the
Public Utilities Revenue Tax.
I'm wanting to understand whether a private owner of an EV charging
station who sells electricity by both time and by KwH are subject to either
or both the electricity excise tax levied under 35 ILCS 640/2-4 and the
electricity distribution tax levied under 35 ILCS 620/2a.1, or just the excise
tax listed in 35 ILCS 640/2-4.
Can you advise?
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. Sales of (1) electricity
delivered to customers by wire; (2) natural or artificial gas that is delivered to customers
through pipes, pipelines, or mains; and (3) water that is delivered to customers through
pipes, pipelines, or mains are not subject to tax under these Acts. 35 ILCS 120/2; 35
ILCS 105/3.
The Electricity Excise Tax imposes a tax on the privilege of using in Illinois
electricity purchased for use or consumption and not for resale. 35 ILCS 640/2-4. The
tax is imposed on the user or consumer of electricity and is collected and remitted to the
Department by the delivering supplier. 35 ILCS 640/2-9. The delivering supplier must
register with the Department. 35 ILCS 640/2-7.5.
“Delivering supplier” is defined broadly and “means any person engaged in the
business of delivering electricity to persons for use or consumption and not for resale, . .
. “ “Use” is also broadly defined and “means the exercise by any person of any right or
power over electricity incident to the ownership of that electricity, . . . “ 35 ILCS 640/2-3.
It is the Department’s position that a person that operates a EV charging station selling
electricity is a delivering supplier, must register with the Department, and collect and
remit the Electricity Excise Tax based on kilowatt-hours used or consumed by
customers.
As discussed below, the Public Utilities Act states that an entity that furnishes the
service of charging electric vehicles does not and shall not be deemed to sell electricity
and is not and shall not be deemed a public utility or alternative retail electric supplier
notwithstanding the basis on which the service is provided or billed. However, this
language is not included in the Electricity Excise Tax Act and therefore does not exempt

NAME
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September 17, 2021
a person selling electricity through a EV charging station from collecting and remitting
the tax.
Section 2a.1 of the Public Utilities Revenue Act imposes a tax on invested capital
and the distribution of electricity.
"Taxpayer" for purposes of the tax on the distribution of electricity imposed
by this Act means an electric cooperative, an electric utility, or an
alternative retail electric supplier (other than a person that is an alternative
retail electric supplier solely pursuant to subsection (e) of Section 16-115
of the Public Utilities Act), as those terms are defined in the Public Utilities
Act, engaged in the business of distributing electricity in this State for use
or consumption and not for resale. (35 ILCS 620/1; emphasis added.)
The Public Utilities Act provides that an entity that furnishes the service of
charging electric vehicles does not and shall not be deemed to sell electricity and is not
and shall not be deemed a public utility or alternative retail electric supplier
notwithstanding the basis on which the service is provided or billed (220 ILCS 5/3105(c) and 220 ILCS 16-102), however, if the person is otherwise deemed a public
utility or alternative retail electric supplier under the Act, or is otherwise subject to
regulation under the Act, then that entity is not exempt from and remains subject to the
otherwise applicable provisions of the Public Utilities Act.
Sec. 3.4. "Electric Cooperative" means (a) any not-for-profit corporation or
other person that owns, controls, operates or manages, directly or
indirectly, within this State, any plant, equipment or property for the
production, transmission, sale, delivery or furnishing of electricity and (b)
that either is or has been financed in whole or in part under the federal
"Rural Electrification Act of 1936" and the Acts amendatory thereof and
supplementary thereto, or is directly or indirectly caused to be formed by
any one or more such not-for-profit corporations or other persons that is or
has been so financed. 220 ILCS 30/3.4.
“Electric utility” is not explicitly defined in Section 3-105 but is generally
considered to be incorporated within the definition of “public utility.” See Electric
Service Customer Choice and Rate Relief Law of 1997, 220 ILCS 5/16-102. ("Electric
utility" means a public utility, as defined in Section 3-105 of this Act, that has a
franchise, license, permit or right to furnish or sell electricity to retail customers within a
service area.)
To incur invested capital tax, a person must meet the definition of “taxpayer” (be
an electric cooperative, an electric utility, or an alternative retail electric supplier as
defined by the Public Utilities Act). The Public Utilities Act excludes electric utilities and
alternative retail electric suppliers, unless the person is otherwise deemed a public utility

NAME
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September 17, 2021
alternative retail electric supplier under the Act or is otherwise subject to regulation
under this Act.
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
RSW:rkn