Under Illinois's 2025 leasing tax, does a park district owe sales tax on golf cart packages, room-rental add-ons, GPS geocache rentals, mini golf, facility rentals, and locker rentals?

Plain-English summary

Illinois's new leasing tax, effective January 1, 2025, made "sale" include a "lease" of tangible personal property, so lessors now owe retailers' occupation tax on their lease receipts (35 ILCS 120/1; 35 ILCS 120/2). This park district asked the Department how that new tax applies to a set of common recreational rentals: golf cart packages, room-rental equipment add-ons, GPS units rented for a self-guided geocache course, mini golf clubs and balls, facility rentals (weddings, rooms, pavilions, fields, gyms, batting cages), and locker rentals.

The Department's answer turns on the "true object" test. If the true object of a transaction is the rental of space or the providing of an amusement (a mini golf course, batting cage, or golf course, for example), and no separate charge is made for the incidental tangible personal property provided (like the clubs and balls), the operator is treated as the user of that property and owes only use tax on its own cost — the patron owes nothing extra. But if a separate charge is made for that incidental property, the operator owes retailers' occupation tax on the rental/lease price of the property itself (86 Ill. Adm. Code 130.2145(e)).

The opposite can also happen: under the "inseparable link" doctrine, if the true object of the transaction is actually the lease of tangible personal property, then related space-rental or service charges become part of the taxable gross receipts — even if billed separately — whenever the lessee has no option to get the property without those charges (86 Ill. Adm. Code 130.415(b)(1)(B)). The letter's own kayak-tour example shows the line: if a business only rents kayaks bundled with a guided tour, the tour charge is inseparably linked to the kayak rental and the whole thing is taxable; but if the business also offers stand-alone kayak rentals and separately states the tour charge, the tour fee escapes tax.

Applying these rules, the letter treats golf carts bundled into golf outing packages, room-rental equipment add-ons (TVs, sound systems, projectors, etc.), and the GPS units for the geocache course as the kind of tangible personal property whose taxability depends on whether a separate charge is made and whether an inseparable link exists to a service. Mini golf (clubs and balls provided as part of the round) is analyzed the same way as batting cages and bowling alleys — incidental property to an amusement. Finally, the letter draws a hard line for real property: the new leasing tax does not extend to real property at all, so room rentals, locker rentals, and storage facility rentals are not taxed under this regime regardless of the true-object or inseparable-link analysis, and fixtures permanently attached to realty are excluded from "tangible personal property" entirely.

What this means for you

Park districts and recreational facility operators

Look at each rental line item and ask two questions: (1) is the true object of the transaction the space/amusement, or the equipment? and (2) is a separate charge made for the equipment, and can the patron get it without paying for the linked service? Bundled packages where equipment can't be obtained separately (like the geocache GPS units, if no stand-alone GPS rental is offered) tend toward the inseparable-link result — full taxability. Equipment folded into a room or facility rental with no separate line-item charge is instead use-tax exposure for the district, not sales tax for the patron. Room, locker, and storage facility rentals stay outside the leasing tax altogether because they are real property, not tangible personal property.

Accountants and tax professionals advising park districts or similar operators

Walk clients through 86 Ill. Adm. Code 130.2145(e) for the "true object" side and 86 Ill. Adm. Code 130.415(b)(1)(B) for the "inseparable link" side — these two provisions, read together with the kayak-tour example, resolve most bundled-rental fact patterns. Also confirm invoicing practices: whether equipment/add-on charges are separately stated, and whether a no-charge or stand-alone rental option exists, often determines the outcome as much as the nature of the property itself.

Vendors purchasing property intended for lease

If the district purchases carts, GPS units, or other equipment intended for both leasing and its own use, it should keep separate inventories for tax-free resale purchases (per 35 ILCS 120/2c and 86 Ill. Adm. Code 130.1405) versus tax-paid purchases for property used incidentally in an amusement or entertainment environment where no separate charge is made (86 Ill. Adm. Code 130.1401).

Common questions

Q: Are golf carts included in golf outing packages taxable?
A: The letter analyzes cart rentals bundled into a package under the same true-object/inseparable-link framework as its other examples: if the carts are separately charged and there's no way to buy the golf outing without also paying for the cart, the inseparable-link doctrine can make the full package receipts taxable; if the cart is truly incidental to the amusement (the round of golf) with no separate charge, the district instead owes only use tax on its own cost of the cart.

Q: Do room-rental equipment add-ons (TVs, sound systems, projectors, tables, etc.) get taxed along with the room?
A: The room rental itself is not taxed (rentals of real property, like rooms, fall outside the new leasing tax). Whether the add-on equipment is taxed depends on the same true-object and separate-charge analysis: if there's no separate charge for the equipment, the district is the user and owes use tax on its own cost; if there is a separate charge, the district owes retailers' occupation tax on the rental/lease price of that equipment.

Q: Are the GPS units rented for the self-guided geocache course taxable?
A: The letter treats this as a "rented as part of an experience" fact pattern to be analyzed like the guided-kayak-tour example: if the GPS unit can't be rented independently of the geocache course, the charge for the course is inseparably linked to the GPS rental and the whole transaction is taxable; if a stand-alone GPS rental option exists and is separately invoiced, the course charge is a nontaxable service.

Q: Is mini golf (with clubs and balls provided) subject to sales tax?
A: Mini golf is grouped with batting cages, bowling alleys, skating rinks, and golf courses as rentals of tangible personal property incident to providing an amusement. If the true object is the round of mini golf and no separate charge is made for the clubs and balls, no tax is incurred on the round charge (the district instead owes use tax on its own cost of the equipment); a separate charge for the clubs/balls would make that charge taxable.

Q: Are facility rentals (weddings, pavilions, fields, gyms, batting cages) and locker rentals taxable under the new leasing law?
A: Locker rentals are real property (or otherwise outside tangible personal property) and are expressly stated not to be taxed under Article 75 of Public Act 103-592. Facility/space rentals such as weddings, rooms, and pavilions are analyzed under the same true-object test as the other examples — the space rental itself is not taxed unless the true object is really the tangible personal property (e.g., batting cage or field equipment) and no separate charge/inseparable-link exception applies.

Citations and references

• 35 ILCS 120/2 (retailers' occupation tax on lease receipts)
• 35 ILCS 120/1 (definition of "sale" includes a lease, effective Jan. 1, 2025)
• 35 ILCS 120/2c (sale-for-resale exemption for lessors)
• 86 Ill. Adm. Code 130.2145(e) (true object test for room rentals and incidental property/food)
• 86 Ill. Adm. Code 130.415(b)(1)(B) (inseparable link between lease and related service charges)
• 86 Ill. Adm. Code 130.1401 (use/consumption vs. resale determination)
• 86 Ill. Adm. Code 130.1405 (Certificate of Resale requirements)

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/st25-0011-gil.pdf

Original ruling text

ST 25-0011-GIL

03/12/2025

LEASING

If the true object of the transaction is the rental of space or providing an
amusement, no tax is incurred on the charges for the space or the amusement. If
no separate charge is made under the agreement for the incidental amount of
tangible personal property provided, the renter is considered the user of the
tangible personal property and incurs use tax on its cost price of the tangible
personal property transferred incidentally to the purchase of space or an
amusement and used in the course of using that space or partaking in that
amusement. If a separate charge is made for any tangible personal property
transferred by rental or lease incidentally to the rental of space or providing an
amusement, the renter incurs retailers’ occupation tax on the rental or lease price
of the tangible personal property. See generally 86 Ill. Adm. Code 130.2145(e).
(This is a GIL.)
March 12, 2025
NAME, TITLE
COMPANY
ADDRESS
EMAIL
Dear NAME:
This letter is in response to your email dated February 6, 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.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your email you have stated and made inquiry, in relevant part, as
follows:
I’d like to get clarification on some items we have that may qualify as rented
property for the new sales tax requirement. We are a park district and have
some unique rentals. We have already determined that we will be charging
sales tax on our golf rentals.

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1. What is the requirement for the rented property if the rental is part of a
   package?
   - Golf outing packages where the group pays a set amount and it
   includes rounds of golf and golf carts. Do we charge sales tax for
   the carts that are included in the package?
   - For room rentals, we have add-ons for equipment; including tvs,
   extension cords, easels, audio visual carts, coat racks, sound
   systems, pianos, LCD projectors, podiums, and tables. Does the
   tax apply to the room rental? Does the tax apply to the addons/equipment that go along with the room rental?
2. We have items that are rented as part of an experience.
   - GPS units are rented from our Marsh for self-guided geocache course
   programs. Do we need to determine if the patron is paying for the GPS
   unit rental or the course program, which includes the unit?
   - We have a mini golf course, clubs and balls are provided, patrons are
   paying for rounds of mini golf. Does sales tax apply?
3. Are facility rentals subject to sales tax? We rent spaces for weddings,
   rooms throughout the district and park pavilions. We also rent fields, gym
   space, battings cages, etc. for athletics.
4. Are locker rentals in the fitness center and aquatics centers taxable?
   I have read the informational bulletin, are there any other resources that
   explains the leased or rented tangible personal property in more detail? If you
   have anything related to packages or experiences, please let me know. We
   want to ensure we are complying with the sales tax requirement as soon as
   possible.
   Thank you for your assistance.
   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
   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

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March 12, 2025
(“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. 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.
True Object
When tangible personal property is transferred as part of the rental of space or as
part of providing an amusement, tax is due. The tax owed and the method to calculate the
tax depend on two factors:
and

(i)

whether the tangible personal property is the true object of the transaction;

(ii)

how the tangible personal property is invoiced in the transaction.

The following paragraphs address these issues.
Regarding the rental of banquet and conference rooms, the Department has
previously determined that if the true object of the transaction is the rental of the room and
if food or beverages are provided incidentally to the rental of the room, no tax is incurred on
the charges for the rental of the room. If no separate charge is made under the contract for
the incidental amount of food or beverages provided, the rentor is considered the user of the
food or beverages and incurs use tax on its cost price of the food or beverages transferred
incidentally to the rental of the room. If a separate charge is made for any food and
beverages transferred incidentally to the rental of the room, the rentor incurs retailers’
occupation tax on the selling price of the food or beverages. See 86 Ill. Adm. Code
130.2145(e). However, if the true object of the transaction is the sale of food or beverages,
any room rental charges are part of the seller’s costs of doing business and are includable
in the seller’s taxable gross receipts even if the charges for the room rental are separately
stated on the agreement or bill between the seller and its customers. In the context of a
room rental, the Department deems the providing of any food other than snacks to be the
true object of the transaction and not the rental of the room. If alcoholic beverages are either
provided or sold by the rentor to the persons attending the event for which the room is

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rented, the true object of the transaction will always be deemed the sale of food or
beverages and not the rental of the room. The rental of the room in these circumstances is
considered an inseparable link in the sale of the food and beverages to the customer and is
not merely incidental to the seller’s business of selling food or beverages. Therefore,
charges for room rental are includable in the seller’s taxable gross receipts. See 86 Ill. Adm.
Code 130.2145(e).
This same test applies to rentals of tangible personal property incident to a rental of
space or providing an amusement, e.g. batting cages, mini golf courses, bowling alleys,
skating rinks, and golf courses. If the true object of the transaction is the rental of space or
providing an amusement, no tax is incurred on the charges for the space or the amusement.
If no separate charge is made under the agreement for the incidental amount of tangible
personal property provided, the rentor is considered the user of the tangible personal
property and incurs use tax on its cost price of the tangible personal property transferred
incidentally to the purchaser of space or an amusement and used in the course of using that
space or partaking in that amusement. If a separate charge is made for any tangible
personal property transferred by rental or lease incidentally to the rental of space or
providing an amusement, the rentor incurs retailers’ occupation tax on the rental or lease
price of the tangible personal property.
Inseparable Link
However, if the true object of the transaction is the lease or rental of tangible
personal property, any space rental or amusement charges, if inseparably linked to the
lease or rental of the tangible personal property, are part of the lessor’s costs of doing
business and are includable in the lessor’s taxable gross receipts. This is true even if the
charges for the space rental or amusement are separately stated on the agreement or bill
between the lessor and its customers.
When an “inseparable link” exists between the lease of tangible personal property
and related service charges, including delivery charges, the related service charges are part
of the gross receipts subject to the Retailers’ Occupation Tax. See 86 Ill. Adm. Code
130.415(b)(1)(B)(i). An inseparable link exists when (a) the service charges are not
separately identified to the lessee on the contract or invoice or (b) the service charges are
separately identified to the lessee on the contract or invoice, but the lessor does not offer
the lessee the option to lease the property without the payment of service charges added to
the lease or rental price of an item (e.g., the lessor does not offer the lessee the option to
lease the tangible personal property separately from the related service, or the lessor does
not offer, or the lessee does not qualify for, a free service option). 86 Ill. Adm. Code
130.415(b)(1)(B)(ii). In contrast, if the lessee can rent or lease the tangible personal property
without payment of service charges to the lessor, then an inseparable link does not exist,

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and the service charges should not be included in the lease or rental price of the tangible
personal property. 86 Ill. Adm. Code 130.415(b)(1)(B)(ii)-(iii).
The following example illustrates whether a service charge constitutes an
inseparable link to rental or lease charges. A business offers guided kayak tours that include
the rental of a kayak for the one-hour tour duration. Renters are encouraged to participate
in the tour but are allowed to venture off on their own. The business requires tour
participants to use the provided rented kayaks. The business does not offer rentals of
kayaks independent of purchasing the tour. The kayak rental is the true object of the
transaction since the tour could not be done without the kayak, but the kayak rental would
still have value without the tour. The charge for the tour is inseparably linked to the rental
charges for the kayak, regardless of if they are separately stated, as you cannot rent the
kayak without the tour charge. As such, the entirety of the proceeds of the transaction is
includable in the business’s gross receipts and subject to tax. However, if the business were
to offer independent kayak rentals in addition to kayak tours, the charge for the tour would
not be inseparably linked to the rental charges for the kayak. In this instance, if the business
separately states the charge for kayak rental from the charge for the tour on the business’s
invoice, the charges for the tour would not be includable in the business’s gross receipts for
retailers’ occupation tax purposes and would be a nontaxable service charge.
Sales for Resale
A person who sells tangible personal property to a purchaser who may use or
consume such property within the meaning of the Retailers’ Occupation Tax Act, but who
also may resell such property, must determine, at the time when he sells the property to
such purchaser, whether the purchaser is buying the property “for use or consumption”
within the meaning of the Act or whether the purchaser is buying the property “for resale”.
86 Ill. Adm. Code 130.1401. Beginning January 1, 2025, a sale to a lessor of tangible personal
property who is subject to the tax on leases implemented by Article 75 of Public Act 103592, for the purpose of leasing that 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. See
35 ILCS 120/2c. See 86 Ill. Adm. Code 130.1405 for Certificate of Resale requirements.
Purchases for use or consumption may not be made tax-free for resale. If a retailer,
including lessors beginning January 1, 2025, purchases an item that the retailer intends to
use or consume as well as lease, that item may not be purchased tax-free for resale. If a
lessor wants to avail themselves of the opportunity to make purchases tax-free for resale,
such lessor could keep separate inventories based on items purchased tax-free for lease,
the receipts for the lease of which will be subject to retailers’ occupation tax, and items
purchased tax-paid for use by the lessor. Tax-paid items include tangible personal property
used by transferring it incident to the provision of an entertainment or amusement

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environment in which the object of the transaction is the entertainment or amusement
environment and no separate charge is made for the tangible personal property.
Real Property
The tax on leases and rentals of tangible personal property does not extend to real
property. For instance, room rentals, locker rentals, and storage facility rentals would not
be taxed under Article 75 of Public Act 103-592. To the extent that property is installed as
fixtures permanently attached to the realty on which they are located, such property is not
considered tangible personal property and would not be subject to the new tax on leases
and rentals of tangible personal property.
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,
Alexis Overstreet
Deputy General Counsel
AKO:sce