Are a cable company's lease receipts for set-top boxes and remote controls exempt from Illinois sales tax if the equipment is already taxed under Chicago's Amusement Tax?

Plain-English summary

The Illinois Department of Revenue ruled that a cable television company's receipts from leasing equipment (set-top boxes, remote controls, and similar tangible personal property) to its Chicago customers are exempt from Illinois state and local Retailers' Occupation Tax ("ROT"), because those lease receipts are already taxed under the City of Chicago's home-rule Amusement Tax.

This ruling grows out of Illinois' 2025 lease-tax overhaul: effective January 1, 2025, Article 75 of Public Act 103-592 expanded the ROT so that "sale" now includes a "lease," meaning lessors of tangible personal property generally must collect state and local sales tax on lease receipts the same way retailers do on sales. But the same legislation carved out an exemption for property whose lease receipts are already subject to a home-rule local government's own tax on lease receipts, as long as that local ordinance predates January 1, 2023. See 35 ILCS 120/2-5(49)(2).

The taxpayer here leases cable equipment to Chicago customers and, since a prior city audit, has paid Chicago's Amusement Tax (not the city's Personal Property Lease Transaction Tax) on those lease charges, because Chicago's Amusement Tax reaches "charges paid for the privilege to view" an amusement, including paid cable television programming. The Department agreed with the taxpayer that this arrangement satisfies the home-rule exemption: Chicago is a home-rule unit, its Amusement Tax ordinance predates January 1, 2023, and the tax is a tax on the equipment's lease receipts (via the "charges paid" to view the service). Because all three conditions were met, the lease receipts are exempt from state and Department-administered local ROT.

Because this is a Private Letter Ruling (PLR) rather than a General Information Letter, it is binding on the Department only as to the specific (redacted) taxpayer identified in the request, and only so long as the facts described remain accurate. Other taxpayers cannot rely on it directly, though it is useful as an illustration of how the Department applies the new home-rule lease exemption.

What this means for you

Cable, satellite, and similar equipment lessors in Chicago (and other home-rule cities)

If you lease tangible personal property to Chicago customers and already pay Chicago's Amusement Tax on those lease receipts (for example, equipment used to deliver "paid television" programming), this ruling supports treating those receipts as exempt from Illinois ROT under 35 ILCS 120/2-5(49)(2) -- provided the Amusement Tax ordinance provisions applicable to your leases predate January 1, 2023. The same logic could extend to other home-rule municipalities that impose their own tax on lease receipts under a pre-2023 ordinance, not just Chicago.

Businesses newly subject to the 2025 lease-tax overhaul

Since January 1, 2025, "sale" includes "lease" for ROT purposes, so lessors of tangible personal property in Illinois generally owe state and local ROT on lease receipts they didn't have to collect before. Before assuming a home-rule exemption applies to your leases, confirm (i) the local government is a home-rule unit, (ii) it taxes lease receipts (not just sales) under an ordinance adopted before January 1, 2023, and (iii) your specific charges fall within that local tax's base.

Accountants and tax professionals advising lessors

Note the "substance over form" point the Department accepted here: the exemption is not limited to taxes nominally labeled as lease or lease-transaction taxes (like Chicago's Personal Property Lease Transaction Tax). A tax that reaches lease receipts through a different label -- here, Chicago's Amusement Tax reaching "charges paid" to view a service delivered via leased equipment -- can also qualify, as long as it is imposed by a home-rule unit under a pre-2023 ordinance. This ruling binds the Department only for the specific redacted taxpayer, so similarly situated lessors should consider seeking their own PLR or GIL rather than relying on this one.

Common questions

Q: Does this ruling mean all equipment leases in Chicago are exempt from Illinois sales tax?
A: No. It applies specifically to lease receipts that are already subject to a Chicago home-rule tax on lease receipts (here, the Amusement Tax) under an ordinance adopted before January 1, 2023. Equipment leases not subject to such a tax remain subject to the state and local ROT under the 2025 lease-tax overhaul.

Q: Why does it matter whether Chicago's Amusement Tax or its Personal Property Lease Transaction Tax applies?
A: Under the facts described, Chicago's own practice (since a prior city audit) was to tax the equipment leases only under the Amusement Tax, and not also under the Personal Property Lease Transaction Tax, to avoid double taxation at the city level. Because the Amusement Tax reached the equipment's "lease receipts" and predates January 1, 2023, it was still sufficient to trigger the state-level exemption in 35 ILCS 120/2-5(49)(2), even though it isn't labeled a "lease" tax.

Q: Can other taxpayers rely on this ruling?
A: No. This is a Private Letter Ruling, binding on the Department only as to the specific (redacted) taxpayer who requested it, and only to the extent the facts it describes are correct and complete. Other taxpayers with similar facts should request their own ruling rather than rely on this one.

Q: When did the underlying lease-tax rules take effect?
A: The expansion of Illinois ROT to leases (making "sale" include "lease") took effect January 1, 2025, under Article 75 of Public Act 103-592. The home-rule exemption discussed in this ruling, 35 ILCS 120/2-5(49)(2), was added by that same legislation.

Q: What's the difference between this PLR and a GIL?
A: A PLR is issued in response to a specific taxpayer's facts and binds the Department only as to that taxpayer. A General Information Letter (GIL) simply points taxpayers to existing regulations or guidance and is not binding on the Department at all. See 2 Ill. Adm. Code 1200.110 (PLRs) and 1200.120 (GILs).

Citations and references

• 35 ILCS 120/2-5(49)(2) (home rule lease-receipts tax exemption from ROT, added by Article 75 of P.A. 103-592)
• 35 ILCS 120/1 (definition of "lease"; "sale" includes a lease on/after 1/1/2025)
• 35 ILCS 120/2 (ROT applies to lessors' gross receipts from leases on/after 1/1/2025)
• 35 ILCS 120/2-5 (extension of ROT/Use Tax exemptions to leases)
• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax imposed on retail sales)
• 86 Ill. Adm. Code 150.101 (Use Tax imposed on tangible personal property purchased at retail)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure and binding effect)
• Chicago, Ill. Mun. Code § 4-156-020.A (Chicago Amusement Tax on charges paid to view an amusement)
• Chicago, Ill. Mun. Code § 3-32-030.A (Chicago Personal Property Lease Transaction Tax)

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/st25-0003-plr.pdf

Original ruling text

ST 25-0003-PLR

5/28/2025

LEASING

Gross receipts from proceeds from the lease of tangible personal property that is
subject to a tax on lease receipts imposed by a home rule unit of local government
are exempt from State and Department-administered local retailers’ occupation
taxes if the ordinance imposing that tax was adopted prior to January 1, 2023. See
35 ILCS 120/2-5(49)(2) as added by Article 75 of Public Act 103-592. (This is a PLR).

May 28, 2025
NAME
COMPANY1
ADDRESS
Dear NAME:
This letter is in response to your letter dated March 10, 2025, 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.
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 COMPANY2, 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 COMPANY2, 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:
COMPANY1 submits this Request for a Private Letter Ruling pursuant to 2
Illinois Administrative Code 1200.110 from the Illinois Department of Revenue
on behalf of its client COMPANY2 and subsidiaries (collectively, the
“Company”). We respectfully request a Private Letter Ruling affirming that:

COMPANY2
Page 2
May 28, 2025
The Company’s receipts from the lease of equipment to
customers located in the City of Chicago are exempt from
taxation under Illinois’ Retailers’ Occupation Tax in accordance
with 35 ILCS 120/2-5(49)(2) because the lease receipts are
subject to the City of Chicago’s Amusement Tax.
To the best of both the Company and our knowledge, the Department has not
previously ruled on the same or a similar issue for the Company or a
predecessor, and neither the Company nor any representative previously
submitted the same or a similar issue to the Department. The Company does
not have an audit or litigation pending with the Department related to this
issue.
I.

Facts
A. Customer Agreements

The Company leases equipment to its Chicago customers, including set-top
boxes, remote controls, and other tangible personal property used to provide
cable television service. Per its customer agreements, the Company – (i)
retains title to the equipment during the lease period; (ii) limits the customers’
usage of the equipment in multiple ways (e.g., prohibitions on selling the
equipment, using the equipment with other service providers, or using the
equipment at locations other than their premises); and (iii) requires
customers to pay a substantial fee if they do not return the equipment at the
end of their service period. See attached Exhibit A, “SERVICE AGREEMENT” at
§ 7.
B. Company History
The City of Chicago imposes the Amusement Tax on the charges paid for the
privilege to view the Company’s cable television service. During a late-2000s
audit, the Chicago Department of Finance concluded that the Company’s
receipts from leases of such equipment to Chicago customers were subject
to the Amusement Tax. Although the Chicago Personal Property Lease
Transaction Tax would alternatively apply to such lease transactions, the
Department did not impose such tax on the Company’s equipment leases to
avoid double taxation. Since the close of that audit, the Company has
collected and remitted the Amusement Tax on charges for equipment leased
to its Chicago customers used to view cable television service.

COMPANY2
Page 3
May 28, 2025
II.

Issue

Whether the Company’s receipts from the lease of equipment that are subject
to Chicago’s Amusement Tax qualify for the home rule exemption for lease
receipts under 35 ILCS 120/2-5(49)(2).
III.

Ruling Requested

The Company respectfully requests a Private Letter Ruling affirming that:
The Company’s receipts from the lease of equipment to
customers located in the City of Chicago are exempt from
taxation under Illinois’ Retailers’ Occupation Tax in accordance
with 35 ILCS 120/2-5(49)(2) because the lease receipts are
subject to the City of Chicago’s Amusement Tax.
IV.

Law and Discussion

Effective January 1, 2025, the Illinois General Assembly expanded the Illinois
Retailers’ Occupation Tax (“ROT”) to apply to leases of tangible personal
property. 35 ILCS 120/1. A “lease” is defined by statute as:
“[A] transfer of the possession or control of, the right to possess
or control, or a license to use, but not title to, tangible personal
property for a fixed or indeterminate term for consideration,
regardless of the name by which the transaction is called.”
Id. To mitigate the double taxation of tangible personal property leases,
Illinois exempts from the ROT “property that is subject to a tax on lease
receipts imposed by a home rule unit of local government if the ordinance
imposing that tax was adopted prior to January 1, 2023.” 35 ILCS 120/25(49)(2) (emphasis added). In recent guidance (FY2025-15, Illinois Sales and
Use Tax Applies to Leased or Rented Tangible Personal Property), the
Department confirmed that Chicago’s Personal Property Lease Transaction
Tax is one example of such a tax.
The Company’s equipment leases that are subject to the Amusement Tax also
meet the test for the above ROT exemption because: (i) Chicago is a home rule
unit of local government; (ii) Chicago’s Amusement Tax Ordinance was
adopted prior to January 1, 2023; and (iii) the Amusement Tax is imposed on
the receipts from the lease of equipment, as part of the “charges paid” for the
underlying amusement.

COMPANY2
Page 4
May 28, 2025
At the outset, Chicago is a home rule unit of local government. See Ill. Const.
of 1970, Art. VII, § 6(a) (“[A]ny municipality which has a population of more
than 25,000 [is a] home rule unit[].”). Additionally, Chicago adopted the
Amusement Tax Ordinance prior to January 1, 2023. See Metro-GoldwynMayer, Inc. v. ABC-Great States, Inc., 291 N.E.2d 200, 201 (1972) (“In 1947,
the City of Chicago enacted an amusement tax of 3% on the operators of
theatres based upon the gross receipts from admissions in excess of ninety
cents per single admission”). Chicago expanded the Amusement Tax to “paid
television” – including cable television service – effective January 1, 1996. See
Commc’ns & Cable of Chicago, Inc. v. City of Chicago, 282 Ill.App.3d 1038,
1041 (1996).
More substantively, the Amusement Tax is imposed on “lease receipts” from
the lease or rental of the Company’s equipment used to provide cable
television service. In particular, the Chicago Amusement Tax is imposed on
“patrons of every amusement within the City” on “the charges paid for the
privilege to view…such amusement.” Chicago, Ill. Mun. Code § 4-156-020.A.
The Company’s cable television service qualifies as a taxable “amusement”
which includes “paid television” programming. See Chicago, Ill. Mun. Code §
4-156-010 (defining “amusement” and “paid television”).
The Amusement Tax base – “charges paid” – includes not just the
consideration paid to view the cable television service, but also:
“[A]ny and all charges that the patron pays incidental to
obtaining the privilege to…to view…an amusement, including
but not limited to any and all related markups, service fees,
convenience fees, facilitation fees, cancellation fees and other
such charges, regardless of terminology.”
Moreover, the Chicago Department of Finance has interpreted the City’s
Amusement Tax to apply to the Company’s equipment leases. Chicago issued
an August 1999 Information Bulletin which states that “charges for the use of
telecommunications converters and remote control devices (whether or not
separately stated) in connection with the provision of paid television
programming” are subject to the Amusement Tax. Chicago subsequently
issued an informational bulletin in 2008 that reiterated that cable companies’
digital equipment leases – but not sales – are subject to the Amusement Tax.
Further, if the Company’s equipment leases were not subject to the Chicago
Amusement Tax, they would instead be subject to the Personal Property

COMPANY2
Page 5
May 28, 2025
Lease Transaction Tax. See Chicago, Ill. Mun. Code § 3-32-030.A. The only
reason why the equipment is not subject to the tax is to avoid double taxation
from the Amusement Tax.
Here, the Company’s lease receipts from equipment used to provide cable
service qualifies for the ROT exemption under 35 ILCS 120/2-5(49)(2). Indeed,
that provision does not limit the exemption to a tax nominally imposed on
tangible personal property leases (e.g., the Chicago Personal Property Lease
Transaction Tax), but rather provides that the exemption applies to any
property subject to a tax on lease receipts imposed by a home rule unit of local
government if the ordinance imposing that tax was adopted prior to January 1,
2023. 35 ILCS 120-2-5(49)(2). Accordingly, the exemption language in 35 ILCS
120/2-5(49)(2) takes a substance-over-form approach. In so doing, the
relevant inquiry is only whether “lease receipts” are subject to a home rule tax
imposed before January 1, 2023.
In addition to meeting the statutory language, excluding equipment subject to
the Amusement Tax also satisfies the policy basis for the ROT exclusion of
avoiding burdensome double taxation. Further, were the equipment not
subject to the Amusement Tax, Chicago would, alternatively, impose the
Personal Property Lease Transaction Tax on such leases.
We have not identified authorities which are contrary to the Company’s view.
Accordingly, because the Company’s receipts from leases of customer
equipment used to view cable television service are subject to Chicago’s
Amusement Tax, they should be exempt from the ROT pursuant to 35 ILCS
120/2-5(49)(2).
V.

Conclusion

We respectfully request confirmation that the Company’s lease receipts
subject to Chicago’s Amusement Tax are exempt from the ROT.
Thank you in advance for consideration of this request. Please feel free to
contact me at 202.383.0864 if you have any questions or require additional
information.
DEPARTMENT’S RESPONSE:
The Illinois 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

COMPANY2
Page 6
May 28, 2025
consumption. See 86 Ill. Adm. Code 130.101. In Illinois, 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.
Effective January 1, 2025, in accordance with the provisions of Article 75 of Public Act
103-592, persons engaged in the business of leasing tangible personal property at retail
(“lessors”) in Illinois are subject to State and local retailers’ occupation tax on the gross
receipts from leases of tangible personal property made in the course of business. See 35
ILCS 120/2. A “lease” is defined as a transfer of the possession or control of, the right to
possess or control, or a license to use, but not title to, tangible personal property for a fixed
or indeterminate term for consideration, regardless of the name by which the transaction is
called, but does not include a lease entered into merely as a security agreement that does
not involve a transfer of possession or control from the lessor to the lessee. On and after
January 1, 2025, for purposes of State and local retailers’ occupation taxes, the term “sale”
includes a lease. See 35 ILCS 120/1. This includes the extension of all exemptions from
retailers’ occupation tax and use tax to leases. See 35 ILCS 120/2-5. The tax applies to lease
receipts received on or after January 1, 2025 for leases in effect, entered into, or renewed on
or after that date. The lessor must remit for each tax return period the tax applicable to lease
receipts received during that tax return period. See 35 ILCS 120/2.
Gross receipts from the lease of property that is subject to a tax on lease receipts
imposed by a home rule unit of local government are exempt from the State and
Department-administered local retailers’ occupation taxes if the ordinance imposing the
home rule tax was adopted prior to January 1, 2023. See 35 ILCS 120/2-5(49)(2) as added by
Article 75 of Public Act 103-592, which provides that:
Sec. 2-5. Exemptions. Gross receipts from proceeds from the sale, which, on
and after January 1, 2025, includes the lease, of the following tangible personal
property are exempt from the tax imposed by this Act:
...
...
(49) Gross receipts from the lease of the following tangible personal property:
...
...
(2) property that is subject to a tax on lease receipts imposed by a home rule
unit of local government if the ordinance imposing that tax was adopted prior to
January 1, 2023.
The Department has previously stated that gross receipts from the lease of property
that is subject to Chicago’s Personal Property Lease Transaction Tax (Chicago, Ill. Mun.
Code §3-32-030) are exempt from the State and Department-administered local retailers’

COMPANY2
Page 7
May 28, 2025
occupation taxes. The Department agrees that the tax paid by COMPANY2 under Chicago’s
Amusement Tax for the equipment (including set-top boxes, remote controls, and other
tangible personal property) leased to customers to provide cable television services is “a tax
on lease receipts imposed by a home rule unit of local government” under an ordinance that
was adopted prior to January 1, 2023.
Chicago’s Amusement Tax was adopted prior to January 1, 2023. To the extent it
applies to the lease of tangible personal property, it is a tax on lease receipts. See Chicago,
Ill. Mun. Code §4-156-020. The City of Chicago Department of Revenue confirmed that the
Amusement Tax applies to lease receipts in the August 1999 Information Bulletin titled
“Providers of Paid Television Programming” it issued which states that “. . . the Chicago
amusement tax (Municipal Code, Chapter 4-156 et seq.) rather than the Chicago personal
property lease transaction tax (Municipal Code, Chapter 3-32 et seq.), should be imposed
upon charges for the use of telecommunications converters and remote control devices
(whether or not separately stated) in connection with the provision of paid television
programming.” COMPANY2 states that it pays the Chicago Amusement Tax on the
equipment it leases to its customers as part of the provision of cable television services.
Therefore, the gross receipts COMPANY2 receives from the lease of property that is subject
Chicago’s Amusement Tax as part of its provision of cable television services are exempt
from the State and Department-administered local retailers’ occupation taxes.
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 have further questions concerning this
Private Letter Ruling, you may contact me at (217) 782-7055. If you have further questions
related to the Illinois sales tax laws, please visit our website at https://tax.illinois.gov/or
contact the Department’s Taxpayer Information Division at (800) 732-8866.
Very truly yours,

Samuel J. Moore
Chairman, Private Letter Ruling Committee
SJM:sce