Is a telephone cooperative's dark fiber lease subject to Illinois's Telecommunications Excise Tax or sales tax, and is its wholesale local loop service exempt?

Plain-English summary

A rural telephone cooperative and its wholly owned subsidiary lease out "dark fiber" -- fiber optic cable strands that carry no light and no signal -- to a customer under long-term agreements, with the customer responsible for its own equipment to actually "light" the fiber and transmit data. The same two companies also sell wholesale local loop (DSL) access -- both broadband-only and combined broadband-with-phone service -- to the same customer at their standard tariff rates, priced separately from the dark fiber. They asked the Department to confirm the tax treatment of both revenue streams.

The Department's answer, largely tracking the companies' own detailed submitted analysis (though issued as a GIL rather than the binding PLR requested, since it found existing guidance dispositive), reached three separate conclusions:

1. Dark fiber isn't a taxable telecommunications service. Illinois's Telecommunications Excise Tax reaches transmissions of "messages or information" by wire, fiber-optics, and similar means. Because dark fiber carries no light and transmits nothing -- it's genuinely unlit, inert cable -- it doesn't meet the definition of "telecommunications" at all, consistent with the Department's own longstanding published guidance on the subject.
2. Buried dark fiber is real property, not taxable tangible personal property. Illinois applies an "intention test" (is the item annexed to the realty, applied to the realty's use, and intended as a permanent addition?) to decide whether installed property counts as real estate. Underground dark fiber, buried and connected via junction boxes, checks all three boxes -- so its lease isn't subject to Retailers' Occupation Tax at all. (A contractor who physically installs such cable still owes Use Tax on the cable's own cost, since installing tangible personal property into real estate doesn't erase that upstream tax.)
3. Wholesale local loop service between affiliates is exempt as a wholesale transaction. Selling local loop/DSL service to an affiliated company (which then resells it to end users) at the companies' own tariff rate doesn't change its character as a wholesale sale -- and wholesale transactions generally aren't subject to either the Telecommunications Excise Tax or Retailers' Occupation Tax, since those taxes are aimed at retail sales, not resale-for-resale arrangements.

The Department also used this letter to correct a misreading of one of its own OLDER letters (ST-01-0234-GIL, from 2001): the taxpayer had quoted two full sentences from that older letter as if they were Department guidance, but the Department clarified that only the LAST of those sentences was actually its guidance -- the earlier sentences the taxpayer quoted were part of the TAXPAYER'S OWN conclusion in that older ruling request, not something the Department itself had said.

What this means for you

Telecom companies leasing dark fiber

Unlit fiber optic strands that carry no signal generally fall outside the Telecommunications Excise Tax entirely -- but track whether the cable is buried (real property, no Retailers' Occupation Tax on the lease, though the installer separately owes Use Tax on the cable's cost) versus aerial, since the real-property classification specifically turns on permanent physical annexation to the ground or a structure.

Telecom cooperatives and their subsidiaries with intercompany wholesale arrangements

Selling service to an affiliate at a standard tariff rate, for that affiliate to resell to end users, can qualify as an exempt wholesale transaction under both the Telecommunications Excise Tax and Retailers' Occupation Tax -- document the resale relationship clearly, since the exemption depends on the transaction genuinely being wholesale-for-resale, not retail pricing dressed up as intercompany.

Anyone citing an older Illinois GIL as precedent

Read the older letter's ACTUAL Department guidance carefully, separate from any taxpayer argument the Department may be quoting back -- this letter shows the Department itself sometimes has to clarify which sentences in an older GIL were its own conclusion versus the requesting taxpayer's argument.

Common questions

Q: Is leasing dark fiber (unlit cable) subject to Illinois's Telecommunications Excise Tax?
A: No. Dark fiber carries no light and transmits no information, so it doesn't meet the definition of "telecommunications" the tax applies to.

Q: Is a lease of buried dark fiber cable subject to Illinois sales tax?
A: No. Buried fiber optic cable is treated as real property (not tangible personal property) under Illinois's intention test, so its lease falls outside the Retailers' Occupation Tax -- though a contractor installing it still owes Use Tax on the cable's own cost.

Q: Is a wholesale sale of local loop/DSL service between affiliated telecom companies taxed?
A: No, if it's genuinely a wholesale sale for resale to end users -- that's exempt from both the Telecommunications Excise Tax and Retailers' Occupation Tax, even when priced using the companies' standard tariff rate.

Q: What if the fiber were lit (actually transmitting data) instead of dark?
A: The Department noted that if lit fiber capacity is sold to an end user, Telecommunications Excise Tax would apply -- the tax-exempt treatment here is specific to genuinely unlit, dark fiber.

Citations and references

Statutes:

• 35 ILCS 630/2, 630/2(a), 630/2(c), 630/3(c), 630/4(c), 630/5, 630/8 (Telecommunications Excise Tax Act)
• 35 ILCS 636/5-7, 636/5-10, 636/5-15 (Simplified Municipal Telecommunications Tax Act)
• 35 ILCS 120/1, 120/2 (Retailers' Occupation Tax Act -- "sale at retail"; lease as sale)

Regulations:

• 86 Ill. Adm. Code 130.101, 130.120(b), 130.1940(c), 130.2010(a) (Retailers' Occupation Tax; real property exclusion; construction contractor Use Tax)
• 86 Ill. Adm. Code 495.100 (Telecommunications Excise Tax -- "gross charges" definition)

Source

• Landing page: Illinois 2025 Sales Tax Letter Rulings
• Original PDF: ST25-0052-GIL.pdf

Original ruling text

ST 25-0052-GIL

10/17/2025

TELECOMMUNICATIONS EXCISE TAX

The Telecommunications Excise Tax is imposed upon the act or privilege of
originating or receiving intrastate or interstate telecommunications in Illinois at the
rate of 8.65%, effective July 1, 2025, of the gross charges for such
telecommunications purchased at retail from retailers. 35 ILCS 630/3(c) and 4(c),
as amended by Public Act 104-0006. (This is a GIL).
October 17, 2025
NAME
COMPANY1
ADDRESS
Dear NAME:
This letter is in response to your letter dated July 24, 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.
Whether to issue a private letter ruling in response to a letter ruling request is within
the discretion of the Department. 2 Ill. Adm. Code 1200.110(a)(4). If there is case law or
there are regulations dispositive of the subject of the request, the Department will decline
to issue a private letter ruling on the subject. 2 Ill. Adm. Code 1200.110(a)(3)(D). The
Department recently met and determined that it would decline to issue a Private Letter
Ruling in response to your request. We hope, however, the following General Information
Letter will be helpful in addressing your questions. In your letter you have stated and made
inquiry as follows:
FACTS
COMPANY2 was established on DATE, to provide telephone service to
LOCATION Illinois. Today, the cooperative serves approximately NUMBER1
members across NUMBER2 exchanges in NUMBER3 communities, offering a
wide range of telecommunication and Internet access services. COMPANY2

COMPANY2
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October 17, 2025
has a wholly owned subsidiary, COMPANY3, which is accounted for on a
consolidated basis. From time to time, COMPANY2 enters into agreements to
provide access to infrastructure to COMPANY3, as well as to third-party
customers. In addition, COMPANY3 enters into substantially similar
agreements with third-party customers directly. COMPANY2/COMPANY3 are
seeking this ruling in relation to two revenue streams: (1) dark fiber; and (2)
local loop. COMPANY3 and COMPANY2 file as a unitary group for Illinois
income tax purposes, and the taxability of dark fiber is an issue in common for
the two entities; as such, the entities are not prohibited from receiving a joint
ruling under Illinois Administrative Code 1200.110(3)(A)(ii).
Dark Fiber:
COMPANY2/COMPANY3 enters into agreements for the lease of dark fiber
optic cable facilities. 1 Exhibits to the agreement define the specific dark fiber
facilities being provided, i.e., dark fiber running between defined points. 2 The
agreement also provides route maps and engineering specifications
documenting that the leased dark fiber is encased in conduit and buried
underground, accessible only through established junction boxes. 3 The
leased dark fiber is solely for the use of the lessee identified in the agreement. 4
The agreement does not require COMPANY2/COMPANY3 to provide any
transmission service, i.e., light the fiber. 5 The lessee is responsible for any
interconnections necessary to facilitate the transmission. 6 The lease
agreement is for a minimum term of twelve months, and automatically
thereafter reverts to a month-to-month lease. 7 The agreement in Exhibit A is a
renewal of a materially identical lease agreement for dark fiber that was first
executed in 2013. 8 Exhibit A is being included as a representative example of
COMPANY2/COMPANY3’s dark fiber agreements with customers. Although
Exhibit A is specific to one customer, COMPANY2/COMPANY3 uses an
identical contract template for all of its dark fiber agreements. 9 The periods
are issue for this contract are January 1, 2025 – present, as well as future
renewal periods for this contract.
Local Loop:
Exhibit A – COMPANY2 & COMPANY2 Lease
Id.
3
Id, Exhibit B COMPANY2 Fiber Build Process
4
Id. at I.
5
Id.
6
Id. at 2.
7
Id. at 3.4
8
Id.at I.
9
Exhibit C – Statement from Management
1
2

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October 17, 2025
Separate and apart from its dark fiber revenue stream,
COMPANY2/COMPANY3 and the same lessee have engaged in an agreement
for the purchase of digital subscriber line (“DSL”) access services of two
different types:
1) Local loop access standalone: A broadband-only line at a fixed $$$
per line,
2) Local loop access with telephone: A wireline Internet and voice
phone line for $$$ per month. 10
The two types of local loop services are sold under separate pricing models as
outlined above. The respective prices are representative of
COMPANY2/COMPANY3’s tariff rate for these services. Further, the two types
of local services are separately stated on invoices. The periods at issue for this
contract are January 1, 2025 – present, as well as future renewal periods for
this contract.
ISSUES
1) Is COMPANY2/COMPANY3’s provision of dark fiber subject to the
Illinois Telecommunications Excise tax?
2) Is COMPANY2/COMPANY3’s provision of dark fiber equipment
subject to the Illinois Retailer’s Occupation tax?
3) Is COMPANY2/COMPANY3’s provision of local loop service exempt
from both Illinois Telecommunications Tax and Illinois Retailer’s
Occupation tax by virtue of being a wholesale transaction?
CONCLUSIONS
1) COMPANY2/COMPANY3’s provision of dark fiber is not subject to
the Illinois Telecommunications Tax.
2) COMPANY2/COMPANY3’s provision of dark fiber equipment is not
subject to the Illinois Retailers’ Occupation tax because it is real
property, not tangible personal property.
3) COMPANY2/COMPANY3’s provision of local loop service is exempt
from both Illinois Telecommunications Tax and Illinois Retailer’s
Occupation Tax because it is a wholesale transaction.
DISCUSSION & ANALYSIS

10

Exhibit D Wholesale Agreement

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October 17, 2025

1. COMPANY2/COMPANY3’s provision of dark fiber is not subject to
   the Illinois Telecommunications Excise tax.
   Illinois imposes the Telecommunications Excise Tax (“TET”) on the gross
   charges for originating or receiving telecommunications in Illinois. 11 The tax is
   measured by the gross charge for telecommunications purchased at retail. 12
   Telecommunications is broadly defined to include, without limitation,
   messages or information transmitted through use of local, toll and wide area
   telephone service; private line services; channel services; telegraph services;
   teletypewriter;
   computer
   exchange
   services;
   cellular
   mobile
   telecommunications service; specialized mobile radio; stationary two-way
   radio; paging service; or any other form of mobile and portable one-way or
   two-way communications; or any other transmission of messages or
   information by electronic or similar means, between or among points by wire,
   cable, fiber -optics, laser, microwave, radio, satellite or similar facilities. 13
   Dark fiber is commonly defined in the telecommunications industry as
   “[o]ptical fiber through which no light is transmitted and which, therefore, no
   signal is being carried. Generally speaking, a dark fiber is one of many fibers
   contained within a cable.” 14 Dark fiber has no electronics on it, no light is sent
   down the fiber, and no information is transmitted. 15 Per Illinois guidance, dark
   fiber strands provided to customers between two locations also do not meet
   the definition of “telecommunications” and are not subject to TET. 16
   Here, COMPANY2/COMPANY3 leases dark fiber to its customer. The fiber is
   not lit, i.e., COMPANY2/COMPANY3 is not providing any transmission, and the
   lessee is responsible for interconnection that would allow the lessee to
   transmit information via the fiber. Given no transmission is being provided,
   this revenue stream is not captured within the definition of a
   telecommunications service subject to the TET. Further, longstanding
   administrative guidance published by the Illinois Department of Revenue
   explicitly states that dark fiber is not a telecommunications service subject to
   the TET.
2. COMPANY2/COMPANY3’s provision of dark fiber is not subject to
   the Illinois Retailers’ Occupation tax because it is real property, not
   tangible personal property.
   35 ILCS § 630/4.
   Id.
   13
   35 ILCS § 630/2(c).
   14
   Newton’s Telecom Dictionary, 23rd Edition (2007).
   15
   Id.
   16
   Illinois Dept. of Rev. General Information Letter ST 24-0004-GIL, 02/01/2024.
   11
   12

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October 17, 2025
The Retailers’ Occupation Tax Act (“ROT”), commonly referred to as sales tax,
imposes a tax upon persons engaged in the business of selling at retail
tangible personal property. 17 A transaction that involves a lease with a dollar
or other nominal option to purchase is considered to be a conditional sale
from the outset, and all of the receipts from the transaction are subject to the
sales tax. 18 Illinois retailers’ occupation (sales) tax does not apply to receipts
from sales of real property. 19
Longstanding administrative guidance published by the Illinois Department of
Revenue states that dark fiber may be viewed as either real or tangible
personal property depending on whether the fiber is aerial or buried,
respectively. 20 As stated in the guidance:
A review of IAC 130.220 appears to support that the IRU
agreement for ‘dark fiber’ could be classified as a rental of
tangible personal property for the aerial cable and related
equipment. Due to part of the fiber optic cable being buried it
appears this may be deemed an affixation to realty…” 21 When
fiber optic cable is permanently attached to real property,
whether installed underground or above ground to telephone
poles, it becomes real property for sales tax purposes. 22
We note that the second sentence quoted above seems to contradict the first,
in that it expands the position that dark fiber is real property to both buried and
aerial cable, whereas the earlier sentence implies that only buried cable
would be viewed as real property. The Department of Revenue’s interpretation
of buried dark fiber as real property is consistent with precedential Illinois
case law. Illinois has also applied the intention test and annexation analysis
in determining whether property is evaluated as real property or tangible
personal property. 23 Under the intention test, three criteria are applied to
evaluated whether property is personal or real. 24 First, the property must be
annexed to the realty or to something appurtenant thereto; second, the
property must be applied to the use or purpose to which that part of the realty,
with which it is connected, is appropriated; and finally, the party making the
35 ILCS 120/2
Ill. Admin. Code 130.2010(a).
19
Ill. Admin. Code 130.120(b).
20
Illinois Dept. of Rev. General Information Letter ST 01-0234-GIL, 11/13/2001.
21
Id.
22
Id.
23
WILLIAM G. BEELER, Petitioner-Appellee, v. JAMES BOYLAN, McLean County Treasurer, RespondentAppellant., 106 Ill App 3d 667 62 Ill Dec 385 435 NE2d 1357, 05/19/1982.
24
Id.
17
18

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October 17, 2025
annexation must intend to make a permanent accession to the freehold. 25 The
annexation analysis determines that annexation may be either actual or
constructive. 26
Here, COMPANY2/COMPANY3’s provision of dark fiber likely meets the above
test in being evaluated as real property. The dark fiber is annexed to the realty,
as it is buried and installed underground, and underground dark fiber has been
recognized as being permanently attached to real property. 27 The dark fiber is
applied to the use or purpose of the property it is buried in, as
COMPANY2/COMPANY3 has entered into agreements with property owners
to excavate trenches and then bury the dark fiber for purposes of connecting
geographically distant sites. Finally, COMPANY2/COMPANY3 intended to
make a permanent accession to the property in installing the dark fiber due to
the nature of the installation and continuing demand for dark fiber services.
Based on the intention test, COMPANY2/COMPANY3’s provision of dark fiber
equipment should be considered as a fixture to real property that is not
subject to Illinois’ ROT. Further, treating COMPANY2/COMPANY3’s lease of
buried dark fiber as real property exempt from ROT is consistent with the
DOR’s previous guidance on the subject.

3. COMPANY2/COMPANY3’s provision of local loop service is exempt
   from both Illinois Telecommunications Tax and Illinois Retailer’s
   occupation tax because it is a wholesale transaction.
   Illinois imposes the TET on the gross charges for originating or receiving
   telecommunications in Illinois. 28 The tax is measured by the gross charge for
   telecommunications purchased at retail. 29 Similarly, the ROT is imposed on
   the sale of tangible personal property at retail. 30 Sale at retail means any
   transfer of ownership for purposes of use or consumption, and not for the
   purpose of resale in any form. 31
   Here, as outlined in the agreement, COMPANY2/COMPANY3 is selling the
   local loop services to the COMPANY3 at wholesale so that COMPANY3 can
   resell the service to end users. Utilizing the tariff rate for pricing the
   intercompany, wholesale transaction does not change the character of the
   Id.; Sword v. Low (1887), 122 Ill. 487, 496, 13 N.E. 826, 828; 1 G. Thompson, Modern Law of Real Property sec.
   56, at 187 (1980); 5 American Law of Property sec. 19.3, at 16 (1952)
   26
   Id.; State ex rel. Gisholt Machine Co. v. Norsman (1918), 168 Wis. 442, 169 N.W. 429.
   27
   Illinois Dept. of Rev. General Information Letter St 01-0234-GIL, 11/13/2001.
   28
   35 ILCS § 630/4.
   29
   Id.
   30
   35 ILCS 120/2.
   31
   35 ILCS 120/1.
   25

COMPANY2
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October 17, 2025
transaction as a wholesale transaction, which wholesale transactions are not
subject to either TET or ROT.
The Company, and we, the tax representatives, declare that we have
examined this request, including the accompanying documents, and to the
best of our knowledge and belief, the facts presented in support of the
requested ruling are true, correct, and complete. To the best of Company’s
knowledge, and our knowledge as representatives, the Company has not
previously sought nor received a ruling from the Illinois Department of
Revenue on these issues.
In the even that this letter does not, in your view, provide sufficient information
to support our conclusions, we would request a meeting to more fully state
our position pursuant to Illinois Administrative Code tit. 2, § 1200.110(a)(4). If
the Department disagrees with any part or all of the conclusions reached in
this letter, we respectfully request the Department contact us prior to the
issuance of a letter in response to this request.
DEPARTMENT’S RESPONSE:
I. Retailers’ Occupation Tax Act
The Illinois Retailers’ Occupation Tax Act (“ROTA”) imposes a tax upon persons
engaged in this State in the business of selling tangible personal property to purchasers for
use or consumption. 35 ILCS 120/2; 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. 35 ILCS 105/3; 86 Ill. Adm. Code 150.101.
These taxes comprise what is commonly known as “sales” tax in Illinois. If the purchases
occur in Illinois, the purchasers must pay the Use Tax to the retailer at the time of purchase.
35 ILCS 105/3-45; 86 Ill. Adm. Code 150.401. The retailers are then allowed to retain the
amount of Use Tax paid to reimburse themselves for their Retailers’ Occupation Tax liability
incurred on those sales. 86 Ill. Adm. Code 150.130(b). If the purchases occur outside
Illinois, purchasers must self-assess their Use Tax liability and remit it directly to the
Department. See 35 ILCS 105/3-45; 86 Ill. Adm. Code 150.701(a).
“Sale at retail” means any transfer of the ownership of or title to tangible personal
property to a purchaser, for the purpose of use or consumption, and not for the purpose of
resale in any form as tangible personal property to the extent not first subjected to a use for
which it was purchased, for a valuable consideration. 35 ILCS 120/1 (emphasis added). On
and after January 1, 2025, the term “sale”, when used in the Retailers’ Occupation Tax Act,
includes a lease. “Lease” means 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

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or indeterminate term for consideration, regardless of the name by which the transaction is
called. “Lease” 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. 35 ILCS
120/1.
II. Telecommunications Excise Tax Act
The Illinois Telecommunications Excise Tax Act imposes a tax on the act or privilege
of originating or receiving intrastate or interstate telecommunications by persons in Illinois
at the rate of 8.65%, effective July 1, 2025, of the gross charges for such telecommunications
purchased at retail by such persons. 35 ILCS 630/3(c) and 4(c), as amended by Public Act
104-0006. The Simplified Municipal Telecommunications Tax Act allows municipalities to
impose a tax on the act or privilege of originating in such municipality or receiving in such
municipality intrastate or interstate telecommunications by persons in Illinois at a rate not
to exceed 6% for municipalities with a population of less than 500,000, and at a rate not to
exceed 7% for municipalities with a population of 500,000 or more, of the gross charges for
such telecommunications purchased at retail by such persons. 35 ILCS 636/5-10, 5-15. The
incidence of the tax is on the person who originates or terminates intrastate or interstate
telecommunications, and the tax is collected and remitted to the Department by the retailer
of the telecommunications. 35 ILCS 630/5.
Except as provided in Section 8 of the Telecommunications Excise Tax Act, the act or
privilege of originating or receiving telecommunications in this State shall not be made taxfree on the ground of being a sale for resale unless the person has an active resale number
from the Department and furnishes that number to the retailer in connection with certifying
to the retailer that any sale to such person is nontaxable because of being a sale for resale.
35 ILCS 630/8.
“Telecommunications,” in addition to the meaning ordinarily and popularly ascribed
to it, includes, without limitation, messages or information transmitted through use of local,
toll and wide area telephone service; private line services; channel services; telegraph
services; teletypewriter; computer exchange services; cellular mobile telecommunications
service; specialized mobile radio; stationary two way radio; paging service; or any other form
of mobile and portable one-way or two-way communications; or any other transmission of
messages or information by electronic or similar means, between or among points by wire,
cable, fiber-optics, laser, microwave, radio, satellite or similar facilities.
“Telecommunications” does not include “value added services in which computer
processing applications are used to act on the form, content, code and protocol of the
information for purposes other than transmission.”
35 ILCS 630/2(c).
If
telecommunications retailers provide these services, the charges for each service must be
disaggregated and separately stated from telecommunications charges in the books and

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records of the retailers. If these charges are not thus disaggregated, the entire charge is
taxable as a sale of telecommunications. 35 ILCS 630/2(a)(10).
“Gross charges” means the amount paid for the act or privilege of originating or
receiving telecommunications in this State and for all services and equipment provided in
connection therewith by a retailer, valued in money whether paid in money or otherwise,
including cash, credits, services and property of every kind or nature, and shall be
determined without any deduction on account of the cost of such telecommunications, the
cost of materials used, labor or service costs or any other expense whatsoever. 35 ILCS
630/2(a); 86 Ill. Adm Code 495.100(a). “Gross charges” do not include “charges for the
storage of data or information for subsequent retrieval or the processing of data or
information intended to change its form or content.” 35 ILCS 630/2(a)(3); 86 Ill. Adm. Code
495.100(c).
Dark fiber is “[o]ptical fiber through which no light is transmitted and which,
therefore, no signal is being carried. Generally, a dark fiber is one of many fibers contained
within a cable.” Newton’s Telecom Dictionary, 23rd Edition (2007). Dark fiber has no
electronics on it, no light is sent down the fiber, and no information is transmitted. ST-240004-GIL (February 1, 2024).
“Telecommunications,” means “messages or information transmitted . . . between
or among points by wire, cable, fiber-optics, laser, microwave, radio, satellite or similar
facilities.” 35 ILCS 630/2(c). Dark fiber strands provided on a long-term lease basis
pursuant to an Irrevocable Right to Use, or IRU, do not meet the definition of
“telecommunications” and are not subject to telecommunications excise tax. Dark fiber
strands (not indefeasible) provided to customers between two locations also do not meet
the definition of “telecommunications” and are not subject to telecommunications excise
tax. ST-24-0004-GIL (February 1, 2024).
When fiber optic cable is permanently attached to real property, whether installed
underground or above ground to telephone poles, it becomes real property. ST-01-0234-GIL
(November 13, 2001). Real property is not subject to the Retailers’ Occupation Tax Act. 35
ILCS 12/1. Thus, leases of dark fiber optic cable, whether installed underground or above
ground to telephone poles, are not subject to retailers’ occupation tax. However, a
construction contractor incurs use tax on his cost price for such cable as tangible personal
property that is incorporated into real estate. 86 Ill. Adm. Code 130.1940(c).
When the company purchases optical equipment to light the fiber optic cable in order
to sell capacity to other carriers for resale, it owes use tax on the cost price of the equipment.
When the company sells capacity to other carriers for resale, it is selling
telecommunications for resale and would have to document that the sales are for resale. If

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the lighted fiber optic cable capacity were provided to an end user, telecommunications
excise tax would be incurred. ST-24-0004-GIL (February 1, 2024).
Lastly, to dispel any confusion as to what constitutes the Department’s guidance in
ST-01-0234-GIL, the Department would like to clarify that only the last sentence, from the
below quoted language appearing on page 4 of the taxpayer’s letter, constitutes the
Department’s guidance. The preceding two sentences are quoted from the taxpayer’s
conclusion and are not the Department’s guidance.
As stated in the guidance:
A review of IAC 130.220 appears to support that the IRU
agreement for ‘dark fiber’ could be classified as a rental of
tangible personal property for the aerial cable and related
equipment. Due to part of the fiber optic cable being buried it
appears this may be deemed an affixation to realty…” When
fiber optic cable is permanently attached to real property,
whether installed underground or above ground to telephone
poles, it becomes real property for sales tax purposes.
I hope this information is helpful. If you have further questions concerning this
General Information Letter, 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,

KAK:sce

Katarzyna Kowalska
Associate Counsel