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.
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Did a partnership that invested its Illinois Lottery winnings avoid replacement tax as either a lottery pool or an investment partnership?
No. Because the entity did more than collect and distribute lottery winnings—it invested them—it remained a partnership under the Illinois Income Tax Act. And because lottery winnings made up more tha…
Did listing a room through a screened, members-only home-sharing website avoid Illinois Hotel Operators' Occupation Tax?
Not automatically. IDOR would not decide the described home-sharing rentals without transaction-specific facts. Truly exclusive rooms rented only to private-club members and not to the public were out…
How did Illinois tax a medical-records service that delivered records electronically or as mailed paper copies?
Electronic viewing, downloading, or transmission of medical records was not a transfer of tangible personal property. Paper medical records delivered with the service could create Service Occupation T…
Were a nonresident actor's worldwide movie residuals taxable in Illinois when the movie work was performed entirely in Illinois?
Yes. The residuals were reported on Form W-2, so Illinois treated them as compensation for personal services. Because the acting services that generated the payments were performed entirely in Illinoi…
Were airline tickets bought online subject to Illinois Retailers' Occupation Tax or Use Tax?
No. IDOR said an airline ticket was not tangible personal property, so its sale was not subject to Illinois Retailers' Occupation Tax or Use Tax. The answer did not change based on whether the online …
Would IDOR certify a private vehicle-tax reference book, and what lease-tax corrections did it suggest?
IDOR would not approve the accuracy of a private legal publication and directed the publisher to statutes, rules, and Department publications. To reduce errors, it suggested two corrections: Automobil…
How did Illinois treat software, static-control items, and climate equipment used by an electronics manufacturer?
Software used to operate exempt manufacturing machinery was not subject to Retailers' Occupation Tax, but that software did not earn Manufacturer's Purchase Credit. General climate-control equipment q…
Did dissolving a corporation and distributing all its assets make its assessed Illinois income-tax debt uncollectible?
No. Dissolution under state law did not make the corporation's previously assessed Illinois income-tax liabilities uncollectible. Section 1405 allowed tax, penalties, and interest to be assessed and c…
Did Public Law 86-272 protect an out-of-state insurance underwriter whose employee solicited policies from an Illinois home office?
No. Public Law 86-272 protects qualifying in-state solicitation only for sales of tangible personal property. The company marketed, underwrote, priced, and administered insurance, which IDOR treated a…
Were a college's iPhone apps sold through Apple's App Store taxable canned software or sales for resale?
IDOR said the apps appeared to be taxable canned computer software, even though delivered electronically, and the college's transfers to Apple appeared to be sales for resale because Apple sold the ap…
Did ST 12-0054-GIL validly extend Illinois's $15 family-transfer vehicle tax rate to stepchildren?
No. This letter was rescinded by ST 12-0061-GIL. ST 12-0054 said the $15 family-transfer rate extended to stepchildren, but IDOR's replacement letter corrected that statement: the statutory list cover…
Did IDOR determine whether the two redacted 'whole food' products qualified for Illinois's lower food tax rate?
The published letter does not classify the two products because their names and labels are redacted. IDOR only supplied the governing definitions: qualifying food for off-premises consumption was taxe…
Could a nonresident avoid Illinois tax on a guaranteed payment from an Illinois partnership because the partner never entered the state?
No, based on the partnership schedules submitted. A guaranteed payment is generally treated as the partner's distributive share of ordinary partnership income, not employee wages. The partnership char…
How did a corporation's federal filing extension affect its Illinois income-tax return deadline?
The Illinois return was automatically extended to one month after the extended federal deadline, provided the statutory conditions were met. Thus, a December 15 federal extended deadline produced a Ja…
What Illinois exemptions applied to manufacturing utilities, packaging, research, local taxes, and residential utility accounts?
The manufacturing machinery exemption did not cover gas, electricity, or water. Separate gas and electricity tax laws provided narrower exemptions, including specified certified businesses, enterprise…
How could an out-of-state seller document an Illinois drop shipment as a sale for resale without Illinois nexus?
The Illinois supplier had to collect tax or document the distributor's resale purchase. The preferred proof was a resale certificate with an active Illinois registration or resale number; a no-nexus o…
Could an Illinois taxpayer subtract federally taxable Railroad Retirement Board sickness benefits, and where were they reported?
Yes. Federal law prohibited states from taxing sickness benefits paid under the Railroad Unemployment Insurance Act. Section 203(a)(2)(N) therefore allowed any such benefits included in federal adjust…
Could an Illinois online seller exclude income from products sold for medical needs from Illinois income tax?
No special income-tax exclusion applied. Income included in federal adjusted gross income carried into Illinois base income unless Section 203 provided a modification, and it contained no subtraction …
Did IDOR determine whether two meal-replacement products and mixed supplement bundles received the lower food tax rate?
The published response did not expressly classify either product or explain bundle treatment. IDOR said qualifying food for off-premises consumption received the lower 1% state rate plus local tax, ex…
What amount was subject to Illinois sales tax when a cellular phone was sold below cost with a service contract?
IDOR did not classify the retailer's exact bundle on the limited facts. It said a sold phone was tangible personal property and Retailers' Occupation Tax was measured by the gross receipts actually re…
Could a calendar-year corporation use Schedule SA to tax a Section 448 adjustment at the pre-2011 Illinois corporate rate?
No. Schedule SA and Section 202.5 applied only when a taxable year began before January 1 and ended after December 31, spanning the rate change. The corporation's taxable year was January 1 through De…
Was a 2011 refund of previously deducted College Illinois! contributions recaptured at the old contribution-year rate or the 2011 rate?
The 2011 rate applied. Section 203(a)(2)(D-22) required the contribution component of a nonqualified refund that had been deducted in earlier years to be added back in the year of distribution. The co…
Did the permanent-affixation test for a construction contractor's tank depend on the property being in an enterprise zone?
No. IDOR said the permanent-affixation analysis it had quoted from ST 08-0003-PLR remained applicable even though the facility was not in an enterprise zone. When a construction contractor permanently…
Were subscriber line charges and primary interexchange carrier charges subject to Illinois Telecommunications Excise Tax?
Yes. Subscriber line charges were included in taxable telecommunications gross charges because they recovered the local exchange company's cost of providing service. Primary interexchange carrier char…
Could a unitary group separately account for two business lines because the statutory sales factor produced much more Illinois income?
Not on the evidence submitted. A different or lower Illinois result from separate accounting did not establish that the statutory sales factor was grossly distorted. The group omitted details about in…
How much of a multistate employee's wages should an employer report as Illinois wages on Form W-2?
Report the amount treated as compensation paid in Illinois under Section 304(a)(2)(B), not an amount determined by whether another state also taxes or withholds from the wages. The GIL could not decid…
Did IDOR decide whether gelatin embolization pledgets qualified for Illinois's reduced medical-appliance tax rate?
No product-specific determination appears in the published response. IDOR said the reduced rate applied to an item intended by its manufacturer to directly substitute for a malfunctioning body part. A…
Were separately billed vending-program implementation, hosting, management, and processing fees part of an Illinois retailer's taxable gross receipts?
Yes, based on the information provided. IDOR said the implementation, web-hosting, management, and payment-processing fees appeared to cover the retailer's costs of selling products through customer-s…
Could an Illinois resident claim the other-state tax credit for Kentucky county income tax withheld from wages?
Yes. The Illinois-Kentucky reciprocity agreement barred Kentucky state income tax on an Illinois resident's wages but did not cover county or city income taxes. The Kentucky county withholding therefo…
Could church staff or members use the church's Illinois E number for meals or supplies they bought personally and were later reimbursed for?
No. An Illinois E number exempted qualifying purchases made by the church in furtherance of its organizational purposes, not purchases by individual staff or members. Staff and member restaurant meals…
Which Illinois taxes and 9-1-1 surcharge applied when a wireless retailer accepted payments for prepaid or subscription plans?
A true prepaid calling arrangement—service bought in advance and exhausted in known units or dollars—was tangible personal property subject to Retailers' Occupation Tax. A payment credited to an exist…
When could a charity provide a T-shirt with a donation without owing Illinois Retailers' Occupation Tax?
A charity's E number generally exempted its qualifying purchases, not its own retail sales. Its sales remained taxable unless a limited exception applied. T-shirts could qualify as exempt noncompetiti…
Were vehicle telematics plans limited to communication with a call center subject to Illinois Telecommunications Excise Tax?
No. Vehicle telematics that allowed voice and data communication only between the vehicle and a call center, without public-switched-network calling, were information services and not subject to Telec…
What Illinois wages belonged in Box 16 when an Illinois resident worked in another nonreciprocal state?
Wages for an Illinois resident working 100% in Minnesota were not Illinois wages in Box 16 because no services occurred in Illinois. The same applied if the employee worked 100% in Tennessee or anothe…
Did transferring a vehicle title between an individual and that individual's trust trigger Illinois Vehicle Use Tax?
Yes. A vehicle-title transfer from a trust to an individual, or from an individual to a trust, was subject to Illinois Vehicle Use Tax. The preferential $15 family-transfer rate did not apply because …
Were sales tax and a prepaid wireless 9-1-1 surcharge automatically improper on a monthly phone recharge?
Not automatically. A true prepaid calling arrangement was tangible personal property subject to Retailers' Occupation Tax, and prepaid wireless retail transactions also faced the 9-1-1 surcharge rules…
Was a rental company's one-off sale of a used man lift from rental inventory subject to Illinois sales or use tax?
No, under the stated non-motor-vehicle facts. A business that was strictly a lessor and sold only items no longer needed in its rental inventory made a nontaxable isolated or occasional sale. The less…
Did a small auto repair shop's de minimis serviceman status eliminate Form ST-1 filing for its retail tire sales?
No. Selling tires was a retail sale subject to Retailers' Occupation Tax, separate from repair services taxed under Service Occupation Tax when property was transferred. A retailer generally had to fi…
Could a taxpayer who moved out of Illinois claim the property-tax credit for the months the Illinois home was the principal residence?
Yes, proportionately. The taxpayer used the Illinois house as his principal residence from January 1 through October 1, 2009, continued to own it, and paid the 2009 property tax in 2010. Residence in …
Could an Illinois tobacco retailer receive more time after July 31, 2012, to sell its existing inventory of unstamped little cigars?
No. IDOR said it could not delay enforcement beyond July 31, 2012. Under the 2012 law, qualifying little cigars purchased on or after July 1 had to bear cigarette tax stamps, and unstamped inventory r…
Who owed Illinois tax on equipment provided under a lease with a $1 purchase option when the out-of-state lessor lacked Illinois nexus?
The $1 purchase option generally made the arrangement a conditional sale rather than a true lease. In the situation described, if the out-of-state lessor lacked Illinois nexus and was not registered, …
Were custom-printed magnetic hotel, casino, loyalty, and gift cards a taxable sale of property or a sale of service in Illinois?
IDOR described manufacturing and selling custom-printed magnetic cards as a sale of service, but the card and its custom printing were tangible personal property transferred with that service and were…
How did Illinois answer a 2012 survey about moving services, special-event exemptions, invoice tax display, repossessions, and responsible-person liability?
IDOR gave separate answers. Moving services without transferred property were outside Service Occupation and Use Tax, but packing materials sold to movers or storage companies were taxable retail sale…
Could a C corporation use a net-loss carryover against the pre-2011 portion of a straddle year after electing specific accounting?
No. Section 207(d) made the C corporation's Illinois net-loss carryover deduction zero for a taxable year ending after December 31, 2010 and before December 31, 2012. Section 202.5(c)(3) only directed…
Could an Illinois township buy diesel for off-road equipment free of sales tax and Motor Fuel Tax, and what documentation did it need?
The two taxes had different rules. A governmental body's retail purchase was sales-tax exempt only when supported by an active Illinois exemption identification (E) number. Local governments generally…
Could a corporation use separate accounting because its Illinois office showed a loss while formulary apportionment produced Illinois income?
Not on the submitted showing. Section 304(f) permits separate accounting or another method only when the statutory formula does not fairly represent Illinois activity. A profit-and-loss statement show…
Did purchased homeschool books, maps, DVDs, games, and equipment qualify for Illinois's education expense credit?
No, based on the receipts submitted. Purchased books, maps, DVDs, games, and similar items remained the family's property and did not appear substantially consumed during the school year. By contrast,…
Did a federal refund for qualified airline payments reopen the deadline for a related Illinois refund from a closed year?
Yes, to the extent the Illinois overpayment resulted from the same reduction in federal adjusted gross income. Once the airline employee received the federal refund under the 2012 FAA law, Section 506…
Could an electroplater buy packaging materials for resale when the materials stayed with customer-owned metal returned after processing?
It depended on the electroplater's serviceman method. If it used one of the first three Service Occupation Tax methods and unequivocally transferred all ownership rights in the packaging to the custom…
Could one licensed Illinois cigarette distributor buy or receive stamped cigarettes from another licensed Illinois distributor?
Yes. Informational Bulletin FY 2012-09 said stamped or unstamped cigarette packages could be sold or transferred between licensed cigarette distributors. Both the sale or transfer had to be accounted …
Were separately listed average shipping charges excluded from Illinois sales tax when the amount sometimes exceeded actual delivery cost?
Not merely because shipping appeared on a separate invoice line. The buyer and seller had to agree to delivery separately from the property price, shown best by a separate contract or by a genuine pic…
Could a retailer satisfy Illinois's unconditional-repayment requirement for an erroneous-sales-tax credit claim with a credit memorandum instead of first paying cash?
Yes, if the instrument was unconditional. A retailer seeking credit for tax it collected and remitted in error had to show that it had unconditionally repaid the purchaser so the retailer would not be…
Did a 250,000-gallon fire-protection tank bolted to a concrete foundation remain personal property, or was the subcontractor a construction contractor owing Use Tax on materials?
IDOR did not decide whether this tank was permanently incorporated into real estate. It said the classification was highly fact-intensive and directed the subcontractor to prior letters, including a P…
Was a village-owned Illinois hotel and convention facility exempt from Telecommunications Excise Tax and entitled to recover tax it had paid?
No. The Telecommunications Excise Tax Act did not exempt Illinois local governments. Its purchaser exemptions were limited to the State and federal governments, state universities created by statute, …
Did an out-of-state company owe Illinois tax on receipts from renting chassis through an Illinois container terminal?
It depended on the agreement. For a true lease—generally one with no buyout or only a fair-market-value option—Illinois imposed no tax on rental receipts and the lessee owed no tax; the lessor was the…
Could an Illinois resident subtract Italian social-security benefits and an Italian employer pension from Illinois income?
No. The private Italian employer pension did not fall within the federal retirement provisions listed in Section 203(a)(2)(F), and the separate Social Security subtraction in Section 203(a)(2)(L) cove…
Was a fee to attend a private social event subject to Illinois sales tax when the fee included restaurant or catered food and drinks?
Admission by itself was an intangible and was not subject to Illinois sales tax, but a ticket or event charge that entitled the attendee to food or drink was taxable. When members bought food or drink…
Did Illinois's prepaid wireless 9-1-1 surcharge apply to every prepaid calling card reported for sales tax, including an international access-code card?
The two charges used different definitions. A prepaid calling arrangement was tangible personal property subject to Retailers' Occupation Tax, but the 2012 prepaid wireless 9-1-1 surcharge applied onl…
Did selling an interest in a disregarded LLC trigger recapture when the LLC became a partnership but kept using the enterprise-zone property?
Yes. Before the sale, the disregarded LLC and its owner were one Illinois taxpayer. Selling 88% caused the LLC to become a new partnership, and Rev. Rul. 99-5 treated the owner as contributing the qua…
Could an insurer treat gain from selling premium renewal rights as nonbusiness income or exclude it from the premium-factor apportionment formula?
The gain was business income because the renewal rights served an operational function in the insurer's business. It therefore entered the insurer's statutory premium-based apportionment formula. IDOR…
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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.