Illinois State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Illinois, with full citations and the original source on every page.
No Illinois rulings match these filters
Try a different search term or clear the filters.
Did Illinois' River Edge Redevelopment Zone building-materials exemption cover mixed-use projects with multifamily rental housing?
Only the commercial portion. The exemption covered materials incorporated into an industrial or commercial project, not a residential project. For a mixed-use development, retailers could claim the ex…
Was an annual software license and support fee subject to Illinois sales tax, and could the customer obtain a refund?
The license was nontaxable only if its signed written terms met all five conditions in 86 Ill. Adm. Code 130.1935(a)(1). Otherwise the canned-software license was taxable, and bundled support was taxa…
Can a taxpayer use separate accounting instead of Illinois's statutory apportionment formula just because separate accounting produces a lower or different tax liability?
No. Just like the near-identical companion ruling IT 15-0012-GIL, the Department denied this petition: a taxpayer cannot get permission to use separate accounting merely because it produces a differen…
Can a taxpayer use separate accounting instead of Illinois's statutory apportionment formula just because separate accounting produces a lower or different tax liability?
No. Just like the near-identical companion ruling IT 15-0012-GIL, the Department denied this petition: a taxpayer cannot get permission to use separate accounting merely because it produces a differen…
Can a taxpayer use separate accounting instead of Illinois's statutory apportionment formula just because separate accounting produces a lower or different tax liability?
No. The Department denied the petition: a taxpayer cannot get permission to use separate accounting merely because it produces a different (or more favorable) result than the statutory apportionment f…
Were services previously found outside Illinois telecommunications excise tax subject to Retailers' Occupation, Use, or Service Occupation Tax?
Not if the services transferred no tangible personal property. IDOR declined a supplemental PLR but explained that pure services were outside Retailers' Occupation and Use Tax, and Service Occupation …
Could an automobile dealership buy gasoline for resale when it filled new vehicles before delivery to customers?
Only to the extent it could prove the gasoline was actually resold. For a bulk tank, the dealer had to allocate resale versus dealership use, issue a resale certificate only for the resale percentage,…
Does a tax-exempt 501(c)(3) non-profit have to pay Illinois income tax or report to the Illinois Department of Revenue when it receives personal donations from Illinois residents?
No. An organization that is exempt from federal income tax and has no unrelated business taxable income is not subject to Illinois income tax, and the Department of Revenue has no role in registering …
How did Illinois tax steel cable reels and customer reel deposits when the manufacturer retained or transferred ownership?
Ownership controlled. If the manufacturer transferred reel title with the cable, it could buy the reel for resale and the deposit followed the cable sale's tax treatment. If it retained title and reus…
Can a corporation subtract a refund of out-of-state taxes from its federal taxable income when computing Illinois base income?
No. Illinois law does not provide any subtraction modification for a refund of state or local taxes included in a corporation's federal taxable income, even if the refund relates to years before the c…
How did Illinois tax a motor vehicle bought by a lessor for a lease longer than one year, and who could claim a refund?
Illinois taxed the vehicle sale to the lessor at the dealer-location rate, not the long-term lease. The lessee's repayment of that cost arose from the lease contract. For qualifying post-2014 leases, …
Did Illinois Watercraft Use Tax apply to a private-party boat purchase, and could IDOR remove a late-payment penalty?
Yes, Watercraft Use Tax applied even though an ordinary occasional sale might avoid sales and use tax; that law had no occasional-sale exemption. Only the Board of Appeals could waive penalty or inter…
Did an Illinois nonprofit exemption number exempt a church from utility excise taxes, local utility taxes, fees, and bill adjustments?
No. An Illinois E number documented exemption from Use Tax on qualifying purchases made for the church's organizational purpose. It did not exempt Electricity Excise Tax, Gas Revenue Tax, or other uti…
Were hosted customer-management, inventory, antivirus, firewall, and reporting solutions subject to Illinois sales or service tax?
They appeared to be service transactions and generally avoided Illinois retail, use, and service taxes when no tangible property or canned software was transferred. Hardcopy reports could create servi…
Why did Jacksonville, Illinois restaurants charge different sales-tax rates, and what was the 2015 rate on general merchandise?
Rates varied by item, jurisdiction, and effective date. IDOR said Jacksonville's general-merchandise rate was 7% before July 1, 2015 and 8% afterward, when a 1% County School Facility Tax was added to…
Must an Illinois caterer tax separately billed equipment, labor, setup, and delivery, and how are cleaning supplies treated?
Yes. A caterer's taxable gross receipts included food-related charges for linens, tables, chairs, dishes, flowers, labor, setup, and delivery even when separately billed. Truly separate non-food enter…
What did Illinois report in its 2015 survey response about advertising, nexus, tax rates, and local sales taxes?
IDOR declined the survey format but supplied a historical overview under 2015 law. Advertising without transferred property generally escaped retail, use, and service taxes; Illinois presence could cr…
Could an Illinois resident subtract a qualified profit-sharing-plan distribution from Illinois income when converting it to a Roth IRA?
Yes, if the plan was a qualified profit-sharing plan under IRC Section 401(a). The Department said its distributions would be included in federal adjusted gross income under IRC Section 402(a) or (c) …
What corrections did Illinois provide for a 2015 survey on vehicle trade-ins, private sales, and long-term leases?
IDOR would not approve another agency's publication but said its Illinois chart generally appeared correct. It clarified that retail trade-ins could reduce taxable price, while qualifying long-term-le…
How did Illinois service taxes apply when a business printed and distributed advertising door hangers?
IDOR could not give a transaction-specific answer without the contracts and registration facts. It treated the arrangement as a service transaction that could require Service Use Tax collection or Use…
Under Illinois law described in 2015, how were motor-vehicle sales and leases longer than one year taxed?
A vehicle sale used the tax rate imposed where the retailer made the sale. For a lease longer than one year, Illinois did not tax the lease receipts under Department-administered taxes; the lessor was…
How did Illinois source wages when an Illinois resident with an Illinois base of operations worked 75% in Illinois and 25% in Ohio?
If the employee's base of operations was in Illinois, the Department said 100% of the wages were sourced to Illinois even though the employee worked 25% of the time in Ohio and Ohio taxed that portion…
Did a lender's Article 9 repossession of business collateral trigger Illinois bulk-sales reporting and withholding?
No. The Department said a lender's repossession of collateral after borrower default under a UCC Article 9 security agreement was not a sale or transfer within the Illinois bulk-sales provisions, so t…
How did Illinois tax a cloud-based hotel texting service and separately charged printer usage?
A service transferring no tangible property generally avoided retail, use, and service taxes, and online text or data was intangible. IDOR did not expressly classify the texting service for telecommun…
Could a beer producer's canning system, can feed table, and conveyor qualify for Illinois's manufacturing machinery exemption?
Potentially, but IDOR would not confirm the specific equipment on the limited facts. Machinery used primarily to place beer into the container or package in which it is normally sold qualified when it…
Could a corporation claim an Illinois subtraction for basis differences caused by federal bankruptcy discharge-of-debt attribute reductions?
No. Illinois allowed no subtraction modification for the claimed federal-versus-state attribute-reduction difference and required the same asset basis for federal and Illinois income tax. Illinois net…
What did a 2015 Illinois receipt label for 'non-Prescrip' likely mean, and which tax rate applied?
IDOR could not determine the correct tax without the receipt. Under the 2015 rates it described, qualifying prescription and nonprescription medicines, medical appliances, disability vehicle modificat…
Does separately listing an Illinois shipping or delivery charge automatically make it nontaxable?
No. The charge was excluded only when the buyer and seller separately agreed to delivery apart from the property sale; a separate invoice line alone was insufficient. A pickup option or separate deliv…
Could an Illinois retailer advertise sales as tax-free, omit tax from receipts, and pay the sales tax itself?
No. The retailer had to collect Use Tax from customers by adding it to the selling price. Advertising that sales were tax-free or that the retailer would absorb the tax violated the Use Tax Act and wa…
Were graduation caps and gowns sold or rented directly to students tax-exempt because their schools were exempt organizations?
No exemption applied to sales made directly to students merely because they attended exempt schools; the exempt organization itself had to buy directly using a valid E-number. True cap-and-gown leases…
How did Illinois distinguish a taxable conditional sale from a true lease of equipment?
A nominal purchase option or guaranteed sale generally made the arrangement a conditional sale, so all lessor receipts were taxable. A true lease generally had no buyout, or only a fair-market-value o…
How did Illinois sales-tax credit rules apply when a defective boat was replaced through a lawsuit settlement?
The result depended on structure. If the dealer refunded the first boat's price and tax and the customer bought a second boat, whoever paid the first tax to IDOR could seek credit or refund. If the fi…
Could a seller use one Illinois ST-587 or resale certificate for repeated manufacturing-equipment purchases?
Yes, in limited circumstances. A sufficiently specific ST-587 could cover multiple purchases fulfilling one contractor-manufacturer contract or repeated repair-part purchases for identified equipment.…
What did Illinois's 2015 rules require of an online textbook retailer with employees in Illinois?
Its Illinois salesperson and account manager appeared to require registration and Use Tax collection, though IDOR lacked facts to decide Retailers' Occupation and local tax. Under the 2015 Internet-sa…
Did Illinois Telecommunications Excise Tax apply to bandwidth an Internet provider bought to supply Internet access?
To the extent the provider bought and supplied the bandwidth so customers could connect to the Internet or access online content and services, the 2015 letter treated it as Internet access covered by …
Did an out-of-state CPAP seller using an Illinois drop shipper have to collect Illinois tax from Illinois customers?
IDOR did not decide because the seller provided too little information. It identified the standard drop-shipment rules and resale-certificate requirements, describing a typical transaction as an out-o…
How did Illinois tax materials bought by construction contractors for permanent incorporation into real estate?
Contractors were the end users and owed Use Tax on material cost, generally paying suppliers and not issuing resale certificates. Customers owed no Use Tax, and any pass-through could be labeled reimb…
Could a leased soybean seed-treatment system qualify for Illinois's farm machinery exemption?
Potentially, but IDOR lacked enough facts to rule on this system. Machinery bought for lease qualified when the lessee used it primarily in production agriculture and the purchaser-lessor certified th…
Were USAC Federal Lifeline Program disbursements to a telecom provider subject to Illinois Telecommunications Excise Tax?
IDOR did not decide. It lacked the billing invoices and enough information about how USAC administered the Lifeline disbursements. The letter noted that State and Federal governments were exempt, but …
When were Illinois banquet-room, food, service, and decoration charges taxable?
The result depended on the transaction's true object. A room rental with only incidental snacks or nonalcoholic drinks could be nontaxable, but when food, alcohol, or beverages were the true object, r…
Did out-of-state liquor sellers have to collect Illinois tax on alcohol and shipping, and how could they recover tax paid in error?
IDOR did not make a seller-specific nexus determination. Under its 2015 framework, a seller without Illinois nexus did not collect, but customers self-assessed Use Tax; a direct-shipping winery licens…
Was a nonresident former employee's lawsuit settlement Illinois-source compensation when the employment claims arose while based in Illinois?
Yes. The Department treated the settlement as wages because the claims arose from the former employer-employee relationship and entirely from acts during a period when the employee was based in Illino…
Was Illinois tax computed before or after a manufacturer coupon reimbursed to the retailer?
Before the reimbursed discount. A manufacturer, distributor, or other coupon for which the retailer received full or partial reimbursement remained part of gross receipts and selling price. The retail…
How did Illinois tax videoconference room, bridging, and ISDN charges?
IDOR did not specifically classify the described bridging or ISDN services. A room or service transferring no tangible property avoided retail, use, and service taxes. Actual telecommunications charge…
Could an Illinois resident claim a credit for other-state tax on wages that the employer's W-2 sourced entirely to Illinois?
No, on the records presented. The W-2 sourced 100% of the compensation to Illinois, and the taxpayer showed no other income that Illinois rules would source outside the state. The credit limit was the…
Were paid or free-trial online memberships with shipping, streaming, e-books, music, storage, and discounts taxable in Illinois?
IDOR did not specifically classify the described membership. It said membership fees generally were nontaxable intangibles when no tangible property was transferred. If membership itself entitled the …
Did nonprescription durable medical equipment receive Illinois's reduced medical-appliance tax rate?
Only if the item directly substituted for a malfunctioning body part. Prescription or medical use alone was insufficient. Qualifying appliances used the 1% State rate plus local tax described in 2015;…
Could a government contractor retroactively amend an older contract so its property purchases became purchases for resale to the city?
No retroactive effect appeared available. A contractor normally bought items for its own use unless the government contract explicitly required a sale and transfer of property to the government. An au…
How did Illinois tax equipment fabricated out of state and permanently installed by out-of-state contractors at an Illinois jobsite?
IDOR could not decide without the contracts. A contractor permanently affixing equipment to Illinois real estate was the end user and owed Use Tax on cost. Under the 2015 letter, the State rate was 6.…
When were a charitable nonprofit hospital's sales of medicines, skin-care, and grooming products to patients exempt?
An E-number charitable hospital did not owe Retailers' Occupation Tax on drugs or grooming products sold to a current patient in furtherance of hospital or clinic care. After the patient left, later s…
Were restaurant meal-delivery fees taxable when separately stated but customers were not told they could choose carryout?
Yes. A separate invoice line was insufficient. Because the restaurant did not notify customers that they could buy the meal for the stated price and choose carryout instead of delivery for an added ch…
Did exchange memberships, SIPC-protected broker cash, and broker receivables count toward Illinois's 90% investment-partnership asset test?
Exchange seats or memberships did not qualify: they were neither listed investment securities nor office space or equipment, even if necessary to trading. The GIL treated SIPC-protected currency accou…
Could an Illinois copy shop charge tax on paper copies even though copying was a service?
Yes, potentially. Illinois treated copying as a service, but paper transferred to the customer could create Service Occupation and corresponding Service Use Tax. Depending on the shop's method and de …
How did Illinois tax paper and electronic medical records, coding, training, abstraction, SaaS storage, and shipping?
The activities appeared to be services. Electronic records and services transferring no tangible property generally avoided retail, use, and service taxes; hardcopy records could create service-tax li…
What did Illinois report in a 2015 survey about nexus, software, digital goods, services, and drop shipments?
IDOR declined yes-or-no nexus answers and gave historical 2015 guidance. Physical presence through agents or representatives could create collection duties; affiliate and tracked-referral rules used $…
Did a charitable lessee's Illinois E-number exempt a lessor from Use Tax or cancel a contractual tax reimbursement?
Generally no. In a true lease, the lessor remained the end user and owed Use Tax on cost despite the lessee's E-number, subject to narrow hospital-equipment exceptions. Illinois did not tax rental rec…
Were an online retailer's mandatory shipping-and-handling fees taxable, and could it allocate fees between taxable and exempt items?
Yes. Customers had to choose shipping and could not pick up at the fulfillment centers, so shipping and handling were inseparably linked to taxable merchandise and entered taxable gross receipts. For …
Was Use Tax due on leased computer servers placed in an Illinois data center for cloud-hosting customers outside Illinois?
The servers were taxable tangible personal property. IDOR could not classify the lease without its contracts. If it was a true lease, the lessor owed Use Tax on server cost and rental receipts were un…
How did Illinois tax HVAC retrofit hardware bundled with cloud monitoring and a SaaS subscription?
IDOR did not decide the four proposed scenarios. Hardware delivered in Illinois was taxable unless resale or another exemption was documented. Online data access appeared to be a service, and electron…
Could an Illinois non-home-rule village's voter-approved municipal sales tax apply to boats and automobiles?
No. The taxable base was set by statute, and the Non-Home Rule Municipal Retailers' Occupation Tax excluded property titled and registered by an Illinois agency, including boats and automobiles. The s…
Browse Illinois rulings by topic
These are official tax letter rulings and advisory opinions issued by Illinois's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.