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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Could a senior claim the Illinois property-tax credit in a year when the state paid the bill under the tax-deferral program?
No. Section 208 allowed the credit only for real property taxes paid by the taxpayer during the taxable year. Under the Senior Citizens Real Estate Tax Deferral Program, the Illinois Department of Rev…
May an Illinois licensed cigarette distributor also sell stamped cigarettes directly to retail customers?
Yes for a distributor within the first statutory definition of 'distributor' that held a license under Section 4 of the Cigarette Tax Act. A retail location could not have unstamped cigarette packages…
Is a replacement fee charged when a customer loses a rented book subject to Illinois sales tax under a true lease?
Generally no. When a book rental is a true lease, Illinois imposes no Retailers' Occupation Tax on rental receipts or related lease charges such as late fees or replacement fees. The lessor is treated…
Does an Illinois public school district owe Retailers' Occupation Tax when it sells books and supplies to students?
Yes. Illinois said a school district incurred Retailers' Occupation Tax when selling books and supplies to students because those sales competed with private retailers and were not direct performance …
How did Illinois analyze sales tax, service tax, nexus, and voluntary disclosure for an out-of-state repair dispatcher using Illinois contractors?
Illinois did not expressly decide the repair dispatcher's nexus or final tax liability. It explained that construction contractors were end users owing Use Tax on materials permanently incorporated in…
Is an unavoidable percentage fee added to a taxable Illinois retail transaction itself included in taxable gross receipts?
Generally yes. Illinois Retailers' Occupation Tax applied to all consideration received for a retail sale, and the seller could not deduct materials, labor, freight, overhead, processing, or other bus…
Were out-of-state insurance companies exempt from Illinois corporate income and replacement tax?
No. Illinois corporate income and personal property replacement taxes applied to insurance companies whether domiciled in Illinois or another state. Business income was apportioned using Illinois dire…
Could a C corporation use an Illinois net-loss carryover on its final return during the historical 2011–2014 suspension?
No. Historical Section 207(d) prohibited a C-corporation carryover deduction for any taxable year ending after December 31, 2010 and before December 31, 2014. The statute did not provide an exception …
Why did Illinois sales tax appear on mail-order prescription drugs, and how did a pharmacist calculate and collect that tax?
Qualifying drugs, medicines, and medical appliances were taxed at a reduced 1% Illinois state rate plus applicable local taxes; items not qualifying for the reduced rate used the 6.25% general-merchan…
Who owes Illinois tax on building and remodeling materials that a construction contractor permanently incorporates into real property?
The construction contractor owed Use Tax on the cost of materials permanently affixed to or incorporated into Illinois real property. If the supplier did not collect the tax, the contractor had to sel…
May an Illinois manufacturer buy pallets, containers, wrapping, and packing materials tax-free for resale when ownership passes to customers with the shipped product?
Yes for pallets and qualifying containers, wrapping, and packing materials when ownership transferred to the customer together with the shipped product. Illinois treated the container seller's transac…
Is a subscription to an educational website with videos, study guides, practice questions, and no software download taxable in Illinois?
The GIL did not expressly classify the educational subscription. It stated that electronically transferred or downloaded information and data were not tangible personal property, while canned software…
Can a nonprofit single-member LLC use its educational nonprofit parent's Illinois E number without applying separately?
Generally no. An organization's purchases were taxable unless that organization had an active Illinois E number, even when it was related to an organization holding one. The discretionary statute allo…
Are engineering and design charges for custom bridges taxable in Illinois, and what if engineering is sold without tangible property?
It depends on the bridge transaction. If the bridge was a retail sale, separately stated engineering and design were costs of doing business included in taxable gross receipts. If the bridge met all s…
Can a trailer used only to transport and store combine headers qualify for Illinois's farm-machinery and equipment exemption?
Yes, they may qualify. Illinois said combine-header transport trailers were not general transportation vehicles when used solely to carry headers for installation on a combine or store them when remov…
What corrections did Illinois suggest for a private publication about moving property into Illinois and taxing rented vehicles?
Illinois did not approve or endorse the private publication. It suggested limited corrections: the moving-to-Illinois exemption language should refer to individuals because businesses were not exempt,…
How did Illinois tax retail and private-party vehicle transfers, military purchases, trade-ins, and motor-vehicle leases in 2011?
This 2011 GIL was a broad survey, not a ruling on one transaction. It said retail sales of the listed vehicles were subject to Retailers' Occupation and Use Tax, while private-party transfers could tr…
Are aircraft repair and maintenance services or the parts transferred with them exempt from Illinois tax?
Unresolved for the requester. Illinois could not determine the treatment because the letter did not identify the exact service or maintenance work or the aircraft parts involved. A service with no tra…
When are medical-supply payments involving Medicare, Medicaid, or Illinois HFS exempt from Illinois sales tax?
A payment was exempt only when Medicare, Medicaid, or the Illinois Department of Healthcare and Family Services paid the provider directly and the government exemption was properly documented with an …
May an Illinois licensed cigarette distributor sell cigarettes and other tobacco products directly to retail customers?
Yes for a cigarette distributor within the first statutory definition of 'distributor' that held a Section 4 license. A retail-sales location could not hold unstamped cigarette packages, and the distr…
How do Illinois Service Occupation Tax rules apply to custom-printed loyalty cards stored in Illinois and later drop-shipped nationwide?
Unresolved for the exact loyalty-card transaction. Illinois did not directly answer whether tax attached when ownership changed in Illinois, whether later drop-ship and freight fees were taxable, whet…
May an Illinois retailer exclude separately billed air freight paid to acquire goods for sale from taxable gross receipts?
No. A seller's incoming freight or transportation cost for acquiring property for sale was a cost of doing business included in taxable gross receipts. The seller could not deduct it merely because th…
Is a maintenance agreement covering hardware, technical support, warranty repairs, and canned-software updates taxable in Illinois?
Unresolved for the requester's embedded-software and hardware agreement because Illinois declined to issue the requested PLR and did not apply the rules to a final result. Generally, maintenance inclu…
Which building systems and production items for a meat-processing facility qualified for Illinois manufacturing relief under the 2011 rules?
Illinois did not approve every facility component requested. The manufacturing-machinery exemption applied to machinery and equipment used primarily—more than 50%—in manufacturing or assembling proper…
How did Illinois distinguish taxable canned software from custom software, qualifying licenses, and related support or training services?
Illinois gave general rules rather than a separate conclusion for every service described. Canned software was taxable tangible personal property regardless of electronic delivery. Custom software pre…
Did an out-of-state medical-device seller with an Illinois sales employee have Illinois sales-tax nexus or need to keep filing returns?
Unresolved. Illinois declined to determine the seller's nexus or remove it from filing because nexus facts were best gathered by an auditor. Under the historical 2011 framework, an agent or representa…
Was Illinois income tax properly withheld from inmate payroll, and did the inmate have to prepare Form W-2?
It depended on federal law. Illinois withholding was required only for Illinois compensation that was subject to federal income-tax withholding; federal FICA treatment alone was not enough. The GIL di…
Are soaps, acids, sanitizers, teat dips, and similar chemicals used by Illinois dairy farmers exempt farm chemicals?
It depends on the chemical's use. Raising dairy cows to produce milk for sale as food qualified as production agriculture. A chemical product used in that production or in the care of animals whose pr…
Does Illinois provide a sales-tax exemption for disabled veterans or for purchases by a county veterans association?
Illinois did not have a sales-tax exemption for disabled veterans. The Department could not decide whether the county veterans association qualified because the request did not explain its creation, o…
Which heart-assist devices, accessories, parts, and maintenance agreements qualified for Illinois's reduced medical-appliance rate?
Unresolved for the nine product and service categories because Illinois said it lacked necessary item-specific information and declined the PLR. A medical appliance had to be intended by its manufactu…
What resale-certificate documentation must an Illinois-registered seller keep for a drop shipment to an Illinois customer?
The Illinois-registered drop-ship seller had to charge tax or document the exemption for its Illinois delivery. To establish that its sale was for resale, it had to obtain and keep a valid Certificate…
Must an Illinois business making only wholesale sales register and file sales-tax returns, and how can it document purchases for resale?
A person making exclusively wholesale sales was not required to register, file Retailers' Occupation Tax returns, or remit that tax. The business could nevertheless obtain an Illinois resale number so…
Are weed-control chemicals used on prairie-grass fields enrolled in wildlife conservation programs exempt Illinois farm chemicals?
The Department did not grant the farmer a specific exemption. It explained that farm chemicals used in production agriculture can be exempt when the resulting crops or animal products are to be sold. …
Could an Illinois construction contractor claim the expanded enterprise-zone exemptions for manufacturing or pollution-control property?
No. Illinois revoked ST 10-0101-GIL and clarified that the expanded enterprise-zone exemptions for property used in manufacturing or assembling and for property used in pollution-control facilities we…
How did installment payments from a July 2010 business sale split across Illinois's 2011 rate change, and could the corporation use its 2010 loss?
Under a specific-accounting election, installment gain belonged to the pre-2011 portion only to the extent federal accounting recognized gain from payments received before January 1, 2011. Gain tied t…
Is electronic access to Illinois county title records, delivered entirely online to an out-of-state customer, subject to Illinois sales tax?
The GIL did not issue a definitive transaction ruling, but said electronically transferred or downloaded information and data were not tangible personal property. Based on the limited facts, if the co…
Could active-duty service members claim the Illinois property-tax credit when their Illinois home was the principal residence but legal domicile changed later?
Yes. Although the couple did not change legal residence to Illinois until retiring from active duty in 2010, they had owned and physically used the Illinois home as their principal residence since 200…
Is a hotel's mandatory service charge on a banquet or meal included in taxable Illinois gross receipts?
Usually yes, unless the separately stated mandatory charge was actually turned over as tips or a substitute for tips to employees who directly prepared, served, hosted, or cleaned up that food or beve…
What did Illinois report in its 2011 multistate survey about transfer tax, discounts, gratuities, R&D, maintenance, and remote sellers?
This was a historical 2011 survey, not approval of the private publication. Illinois said real-estate transfer tax used net consideration after allowed deductions; unreimbursed discounts reduced taxab…
Could a manufacturer exempt packaging, compressor parts, gloves, oils, and pollution-control equipment under Illinois's 2011 rules?
Packaging could be purchased for resale when transferred to customers with the products and documented by a Certificate of Resale; retained, reused, or discarded containers did not qualify. Machinery …
Are motorcycle rentals covered by Illinois's Automobile Renting Tax, and is a lease to another short-term rental dealer exempt?
Motorcycles and motor-driven cycles were treated as automobiles under the Act, so a person renting them in Illinois for one year or less was subject to the Automobile Renting Occupation and Use Tax. T…
Can a foreign visitor obtain an Illinois sales-tax refund for merchandise bought and received in Illinois before taking it abroad?
No. Foreign or domestic traveler status did not exempt merchandise delivered and used in Illinois, and mere possession in Illinois counted as use. A sale remained taxable when the buyer received the p…
Why did historical Illinois Schedule CR put the full federal alimony deduction in the non-Illinois column when limiting the other-state tax credit?
Because Illinois had to apply the same alimony-deduction allocation principle to nonresidents and to the hypothetical other-state income used in the resident credit limit. Under Lunding, Illinois allo…
Did ceasing operations create an exception allowing a C corporation to use a net-loss carryover during Illinois's historical suspension?
No. Historical Section 207(d) barred a C-corporation carryover deduction for taxable years ending after December 31, 2010 and before December 31, 2014. The statute contained no exception for a final t…
Did a donee include the donor's holding period when calculating Illinois's subtraction for pre-August 1969 appreciation?
Yes, provided federal law included the donor's holding period in the donee's holding period. Illinois Section 203(f) used a holding-period fraction when the property's August 1, 1969 value was not rea…
Are an auctioneer's mandatory buyer administrative fees included in taxable Illinois gross receipts, and who owes the tax?
Yes when the underlying auction sale was taxable. A mandatory buyer administrative fee was part of the total selling price and could not be deducted as a service or business cost. If the auctioneer ac…
Was cloud-streamed dental patient-education video subject to Illinois sales and use tax when customers received no property or software?
Generally no, if the customer only received online access and no software or other tangible personal property. ST 11-0052-GIL says a company providing access to a database of information without trans…
Could an Illinois taxpayer claim a claim-of-right subtraction when repaying Social Security benefits that had already been subtracted when received?
No. Illinois had already allowed the federally taxable Social Security benefits to be subtracted in the years received under Section 203(a)(2)(L). Although the 2010 repayment supported a federal Secti…
Could a hotel use a private attestation form and an organization's Illinois E number to exempt employee purchases and room rentals?
No blanket approval. ST 11-0051-GIL declined to approve a private attestation form. For sales and use tax, federal section 501(c)(3) status alone was not enough: an organization needed an Illinois E n…
Were replacement filters used in a heatset printing press exempt under Illinois's graphic-arts machinery exemption?
Unresolved. ST 11-0050-GIL explains that qualifying graphic-arts machinery, equipment, and repair or replacement parts could be exempt, while materials used or consumed in the process were not. But th…
Could press-packing paper qualify for Illinois's graphic-arts machinery and equipment exemption?
Potentially. ST 11-0049-GIL says the described press-packing material appeared to qualify for the graphic-arts machinery and equipment exemption, but a one-time expendable supply would not qualify und…
Did Illinois's graphic-arts machinery exemption cover donor sheets, receptors, and specially coated proofing paper?
Generally no. ST 11-0048-GIL says materials used or consumed in the graphic-arts process are outside the machinery-and-equipment exemption. Although qualifying machinery used in prepress work could be…
Did Illinois confirm a print broker's de minimis serviceman status, 50%-of-bill method, and interstate-commerce exemption for direct mail?
No. ST 11-0047-GIL declined to issue a Private Letter Ruling and did not confirm the print broker's de minimis-serviceman classification, use of 50% of the service bill as the tax base, or interstate-…
Did an unlimited monthly cellular subscription fee fall under Illinois sales tax or telecommunications excise tax?
Unresolved on the limited facts. ST 11-0046-GIL says a statutory prepaid telephone calling arrangement was tangible personal property subject to Retailers' Occupation Tax rather than Telecommunication…
How did Illinois treat downloaded ringtones, media, music, videos, and software for sales tax and telecommunications excise tax?
For sales tax, electronically downloaded information or data was not tangible personal property, but canned software remained taxable even when transmitted electronically; custom software might not be…
Could an investment fund apportion gain from selling master limited partnership interests using the underlying partnerships' Illinois factors?
No, not on the evidence submitted. The fund asked to apportion gain from selling master limited partnership interests, including IRC Section 751 ordinary-income recapture, with the underlying partners…
How did Illinois tax a vehicle lessor leasing vehicles to the U.S. government, and what exempt-entity rule could apply?
For a true lease, the lessor generally was the end user and owed Illinois Use Tax on its cost price; Illinois imposed no sales tax on the rental receipts, so the lessee incurred no sales-tax liability…
Would an Illinois school district owe sales tax if it supplied diesel fuel to a private pupil-transportation contractor and recovered the cost?
Potentially. ST 11-0043-GIL says governmental bodies generally incur Retailers' Occupation Tax when they sell tangible personal property to the public for use or consumption, with an exception for an …
How did Illinois tax canned software, custom software, exempt software licenses, and maintenance agreements under ST 11-0042-GIL?
Canned software was taxable regardless of delivery method, while custom software prepared to special order might not be taxable. A canned-software license avoided Retailers' Occupation Tax only if it …
Were separately sold support, maintenance, and update agreements taxable when the underlying software license met Illinois's five-part license exemption?
No, under the stated assumption. ST 11-0041-GIL says that when a software license met all five criteria in 86 Ill. Adm. Code 130.1935(a)(1), charges for support, maintenance, or updates of that licens…
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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.