Can a business buy tangible personal property tax-free from a seller by claiming it is for resale, and what must a valid Certificate of Resale contain?

Plain-English summary

A seller of enclosed trailers asked the Illinois Department of Revenue whether it had to collect sales tax when a manufacturing-company customer claimed its purchase was exempt as a sale for resale, since the trailers were not "finished" until the buyer completed a build-out on them. The Department answered with the general framework rather than a yes/no on this taxpayer's specific facts, which is typical for a GIL.

Under Illinois law, a sale of tangible personal property can be made tax-free as a sale for resale if the purchaser has an active registration or resale number from the Department and furnishes that number to the seller while certifying that the purchase is nontaxable because it is for resale (35 ILCS 120/2a). This also covers property that, without first being used for its purchased purpose, becomes an ingredient or component of other tangible personal property that is later sold at retail — that purchase is treated as being for resale, not as a taxable retail sale (86 Ill. Adm. Code 130.210).

To actually buy tax-free on this basis, the purchaser must give the seller a properly completed Certificate of Resale. To be valid, the certificate must contain all of the items of information listed in 86 Ill. Adm. Code 130.1405(b); a correctly filled-out Form CRT-61 satisfies this requirement. Sellers who normally sell to end users may accept a compliant Certificate of Resale, but they still have an obligation to exercise good faith — the Department has upheld disallowing certificates that carry inaccurate information, such as an inactive or discontinued registration number, citing Rock Island Tobacco v. Department of Revenue, 87 Ill. App. 3d 476, 478 (1980).

What this means for you

Sellers accepting resale certificates

Before treating a sale as tax-exempt, confirm the buyer's Certificate of Resale (or Form CRT-61) is complete under 86 Ill. Adm. Code 130.1405(b) and that the registration or resale number on it is active. Accepting a certificate in good faith generally protects you, but knowingly accepting one with a bad or discontinued number does not — the Department and courts have disallowed that.

Buyers claiming a resale exemption

Whether your purchased item is "finished" on your end is not the test. What matters is whether you have an active registration/resale number, whether you furnish a complete Certificate of Resale to the seller, and whether the property you buy — even as a component that later becomes part of something else you sell at retail — is genuinely purchased for resale rather than for your own use.

Common questions

Q: Does a purchased item need to be resold "as-is," with no further work done to it, to qualify as a sale for resale?
A: No. Property that becomes an ingredient or constituent part of other tangible personal property later sold at retail still qualifies as purchased for resale, as long as it isn't first put to the use for which it was purchased (86 Ill. Adm. Code 130.210).

Q: What does a Certificate of Resale need to include?
A: It must contain the items of information listed in 86 Ill. Adm. Code 130.1405(b). A properly completed Form CRT-61 satisfies these requirements.

Q: Can a seller refuse a Certificate of Resale?
A: Yes. While sellers may accept a compliant certificate, they must act in good faith, and the Department may properly disallow certificates containing inaccurate information, including inactive or discontinued registration numbers (citing Rock Island Tobacco v. Department of Revenue, 87 Ill. App. 3d 476, 478 (1980)).

Q: Does this letter resolve whether this particular buyer owed tax?
A: Not definitively. This is a General Information Letter, which points the requester to the relevant statutes and rules rather than ruling on the specific facts; it is not binding on the Department. A taxpayer wanting a binding answer on its own facts would need to request a Private Letter Ruling under 86 Ill. Adm. Code 1200.110.

Citations and references

Statutes and rules:

• 35 ILCS 120/2a (sale-for-resale exemption; registration/resale number requirement)
• 86 Ill. Adm. Code 130.210 (property becoming part of tangible personal property later sold at retail)
• 86 Ill. Adm. Code 130.1405(b) (required contents of a Certificate of Resale)
• 86 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure)
• 86 Ill. Adm. Code 1200.120 (General Information Letters)

Case law:

• Rock Island Tobacco v. Department of Revenue, 87 Ill. App. 3d 476, 478 (1980) (proper to disallow Certificates of Resale with inaccurate/inactive registration numbers)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2025.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2025/st25-0001-gil.pdf

Original ruling text

ST 25-0001-GIL

01/08/2025

SALE FOR RESALE

A Certificate of Resale must contain the items of information set out in 86 Ill. Adm.
Code 130.1405. (This is a GIL).
January 8, 2025
NAME1
COMPANY1
ADDRESS
Dear NAME1:
This letter is in response to your letter dated December 19, 2024, 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 https://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 am writing to get confirmation on if I need to collect sales tax or not.
My business name is COMPANY2 DBA COMPANY1 and I sell enclosed trailers.
These trailers are built in CITY, STATE, I have them transported to COMPANY1
and I sell the trailer to the consumer or business. These trailers come with a
Manufacturer’s Certificate of Origin.
I have a manufacturing company that has bought 2 trailers from us, and
they are saying that they should be tax exempt as the product they are buying
is not finished on their end and they do a build out on the trailer. The company
has a CRT-61 and a sales and use taxes and fee number (NUMBER) both forms
are included. Since the trailer is not a finished product on their side, they think
they should not have to pay tax.
I need clarification if they must pay tax or not. Please send a response
back to me that explains what I need to do and why. This will help in any further

COMPANY1
Page 2
January 8, 2025
discussions, so I know what needs to be done. I have talked to NAME2 in the
tax department at the state and she said that you would have to be the one to
make the decision.
DEPARTMENT’S RESPONSE:
Under Illinois law, a sale of tangible personal property shall be made tax-free on the
ground of being a sale for resale if the purchaser has an active registration number or resale
number from the Department and furnishes that number to the seller in connection with
certifying to the seller that the sale to such purchaser is nontaxable because of being a sale
for resale. Please refer to 35 ILCS 120/2a.
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, provided that the property purchased is deemed to be purchased for the purpose
of resale. See 86 Ill. Adm. Code 130.210.
To purchase items of tangible personal property tax free for the purpose of resale,
purchasers must submit properly completed Certificates of Resale to sellers. In order for a
Certificate of Resale to be valid in Illinois, it must contain the items of information set out in
86 Ill. Adm. Code 130.1405(b). A properly completed Form CRT-61 may be used to satisfy
these requirements.
Although a retail company that normally sells to end users may accept a Certificate
of Resale that complies with Section 130.1405, sellers do have an obligation to exercise
good faith when accepting Certificates of Resale from purchasers. It has been held to be
proper for the Department to not allow Certificates of Resale that contain inaccurate
information in the form of inactive or discontinued registration numbers. See Rock Island
Tobacco v Department of Revenue, 87 Ill. App. 3d 476, 478 (1980).
I hope this information is helpful. If you require additional information, please visit
our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer Information
Division at 800-732-8866.
Very truly yours,

COMPANY1
Page 3
January 8, 2025
Samuel J. Moore
Associate Counsel
SJM:sce