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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What does Illinois General Information Letter ST 20-0021-GIL conclude about Enterprise Zones?
Sales of tangible personal property used or consumed in operating a pollution control facility are exempt from Illinois Retailers' Occupation Tax (and therefore Use Tax) only if the facility is locate…
Does an Illinois retailer still owe Retailers' Occupation Tax on petroleum product sales to a purchaser that is exempt from use tax under federal law?
Yes, the exemption still applies. Illinois confirmed that receipts from selling petroleum products (motor fuels) to a purchaser that is exempt from use tax by operation of federal law -- here, a compa…
Is the entire selling price of a wheelchair-adaptive van taxed at the general 6.25% rate, or can the modification be taxed separately at the 1% low rate?
It depends on who did the modifying. If a dealer buys a van, converts it for a disabled person, and sells the finished van, the entire selling price is taxed at the general 6.25% (plus local tax) rate…
When an Illinois retailer sells food and beverages, does it collect both Use Tax and Retailers' Occupation Tax from the customer, and can it reduce what it remits to the State?
Yes. Illinois retailers collect a single combined tax (6.25% state, plus any local Retailers' Occupation Tax) from patrons at the time of sale, and when remitting to the State they reduce the Use Tax …
Does Illinois tax the transportation and delivery charges that trucking companies charge when they sell and deliver rock, sand, or gravel from a quarry to a customer?
Yes, in most cases. Illinois treats trucking companies that sell and deliver rock, sand, or gravel from a quarry as retailers subject to Retailers' Occupation Tax, and under the 'inseparable link' rul…
What does Illinois General Information Letter ST 20-0004-GIL conclude about Exempt Organizations?
An educational institution that trains optometrists does not owe Retailers' Occupation Tax or Service Occupation Tax on prescription eyeglasses and contact lenses it transfers to patients as part of i…
Does a company that arranges events for clients have to charge sales tax on its service fees, and how does gross receipts tax apply to caterers?
Caterers owe Illinois Retailers' Occupation Tax on their entire gross receipts from selling food, with no deduction for overhead costs like linens, dishes, flowers, or delivery. A pure event-planning …
My MLM company charges new distributors a $20 enrollment fee and charges active distributors the same $20 fee annually to renew their status and keep their wholesale discount, support services, and web access -- no physical item is sent in exchange. Is that fee subject to Illinois Retailers' Occupation Tax?
No -- when a membership or enrollment fee doesn't come with any tangible personal property in exchange, it's treated as an intangible and isn't part of the gross receipts subject to Illinois Retailers…
What does Illinois Private Letter Ruling ST 18-0013-PLR conclude about Automobile Renting Tax?
The Department ruled that a company leasing used vehicles through a mobile app on a 45-day, monthly-renewing term is a 'rentor' subject to Illinois Automobile Renting Occupation and Use Tax (5% of gro…
After a car is bought back by the manufacturer under Illinois's lemon law, how does the consumer get the Illinois sales tax on it refunded?
The consumer generally can't get it directly -- only the dealer/retailer that actually remitted the sales tax to the Illinois Department of Revenue can file a claim for credit, and only after first re…
When a business sells the same product both at retail and bundled into a service (like a science kit included in a camp sign-up fee), how does it figure Illinois sales tax on the bundled item?
It depends on which of four Service Occupation Tax methods applies -- separately stated selling price, 50% of the entire bill, cost price (if a registered de minimis serviceman), or Use Tax on cost pr…
If I sell modular homes bought from out-of-state factories and have contractors permanently install them, do I owe Illinois sales/use tax, and do I need to file monthly sales tax returns?
It depends on whether you're contractually obligated to permanently affix the home to real estate. If you are, you're acting as a construction contractor and you owe Use Tax on your cost price of the …
Do vitamins and dietary supplements qualify for Illinois's low 1% sales tax rate, or do they get taxed at the general 6.25% rate?
It depends on the label. Vitamins and dietary supplements are generally treated as 'food' and taxed at the low 1% state rate (plus local taxes) under 86 Ill. Adm. Code 130.310 -- unless they purport o…
Is aircraft repair and maintenance work performed by a Class IV FAR Part 145 facility still exempt from Illinois sales tax under 35 ILCS 105/3-5(35), regardless of the aircraft's weight class?
No longer exempt for anyone. The Department did not reach the taxpayer's specific question about aircraft weight class, because the exemption itself sunset on December 31, 2014 by operation of law und…
What does Illinois Private Letter Ruling ST 18-0011-PLR conclude about Agents?
In this PLR, the Department ruled that a company running school book fairs -- not the school or PTO -- is the disclosed principal responsible for Retailers' Occupation Tax, because the company sets pr…
Does Illinois Retailers' Occupation (sales) Tax apply to the sale of cryptocurrency 'utility tokens' that represent ownership of mining hardware?
No. The Illinois Department of Revenue ruled that the utility tokens described (smart contracts representing fractional ownership of crypto-mining hardware) are intangible personal property, and sales…
If my business sells, installs, and repairs garage doors in Illinois, do I owe sales tax, use tax, or both on the materials and labor involved?
It depends on whether you're acting as a construction contractor or a retailer. The Department didn't rule on the taxpayer's five specific numbered scenarios one-by-one; instead it explained the gener…
Can a manufacturer's 'agency agreement' with the Illinois Department of Revenue cover a local distributor's sales of product samples, and what sales-tax rate applies to those samples?
If the manufacturer (here, a nutrition-products company) has an 'agency agreement' with the Department under 86 Ill. Adm. Code 130.550, it must collect and remit Retailers' Occupation Tax on the distr…
Can a nonprofit school with an Illinois sales-tax E-number sell household goods to its members for fundraising without collecting and remitting Retailers' Occupation Tax?
Not clearly, on the facts described. The Department explained that E-number holders may sell to members tax-free only when the sales are 'primarily for the purposes of the selling organization,' but i…
Does a 5-month operating lease of household goods, where the customer can later continue leasing, return the goods, or buy them at fair market value, qualify as a taxable 'rental purchase agreement' under Illinois's Rental Purchase Agreement Occupation and Use Tax, and is that tax ever subject to local rates?
No, not on the facts described — because the initial lease term was 5 months (more than 4 months), the Department said the agreement does NOT qualify as a 'rental purchase agreement' under 35 ILCS 180…
What does Illinois Private Letter Ruling ST 18-0008-PLR conclude about Gross Receipts?
Vendor incentive payments a retailer receives are NOT included in taxable gross receipts under the Retailers' Occupation Tax as long as the payment is not conditioned on an individual retail sale (e.g…
What does Illinois General Information Letter ST 18-0018-GIL conclude about Service Occupation Tax?
The Department declined to issue the requested Private Letter Ruling because the facts provided were too limited, and instead issued this General Information Letter explaining, in general terms, how R…
What does Illinois Private Letter Ruling ST 18-0005-PLR conclude about Local Taxes?
Yes: the Illinois Department of Revenue ruled that the taxpayer's commercial fuel-marketing unit was engaged in the business of selling in the city where its sales office was located, because three of…
What does Illinois General Information Letter ST 18-0013-GIL conclude about Prepaid Sales Tax?
Yes: the Illinois Department of Revenue told this fuel importer that, because it was already filing Illinois sales tax returns, it was responsible for collecting and remitting prepaid sales tax on the…
What does Illinois General Information Letter ST 18-0012-GIL conclude about Rental Purchase Agreement Tax?
The Department did not give a definitive yes-or-no answer; it stated only its general opinion that items taxed at the 1% state sales tax rate (such as the durable medical equipment described by the re…
What does Illinois General Information Letter ST 18-0011-GIL conclude about Coal Mining Equipment?
The Department found that gypsum a utility sold to a company (for use as a pond-lining coating) is a consumable supply, not exempt coal mining equipment, so it appears not to qualify for the Retailers…
Is sales tax owed on perpetual software license fees and annual maintenance fees for canned (non-custom) software like SAP?
It depends on the license terms. Illinois taxes sales of "canned" (non-custom) software like SAP, including maintenance fees for updates, unless the license agreement meets all five criteria in 86 Ill…
Does a sandwich-shop chain owe Retailers' Occupation Tax on a separately stated delivery charge when customers can also pick up the same food in-store at the same price?
No. The Illinois Department of Revenue ruled that because the taxpayer's customers can always pick up their sandwiches, chips, and drinks in-store at the same price with no delivery charge, there is n…
Does a casual seller — an individual selling personal property, a company selling small items at auction, or an auction seller — owe Illinois sales or use tax on the transaction?
It depends on whether the seller is regularly in the business of selling that type of property. Illinois does not impose Retailers' Occupation Tax (and the buyer owes no matching Use Tax) on an isolat…
Do I owe Illinois sales tax when I buy an optional extended warranty or maintenance agreement separately from the product it covers?
No. When an optional extended warranty or maintenance agreement is sold separately from the tangible personal property it covers, the sale of that agreement itself is not a taxable transaction under I…
Do the materials a company buys to build a natural gas-fired power generation facility qualify for Illinois's Enterprise Zone building materials sales tax exemption?
Yes. The Illinois Department of Revenue ruled that the company's materials -- from turbines and boilers to buildings, piping, and structural steel -- qualify as "building materials to be incorporated …
Are fees for a paid membership add-on (offering delivery perks and item discounts) subject to Illinois Retailers' Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax?
No. The Department ruled that because the membership itself does not transfer any tangible personal property to the customer, the fees for the paid add-on membership -- and for its free one-month tria…
Does butane-blending equipment that a pipeline/tank-storage company installs just before its truck loading rack qualify for Illinois's manufacturing machinery and equipment sales tax exemption?
It depends on where each piece of equipment sits relative to the production cycle. The Illinois Department of Revenue ruled that equipment used to sample, test, measure, and inject butane into the gas…
Does a nonprofit have to charge Illinois sales tax on admission tickets, food, merchandise, and hospitality sales at a fundraising event?
It depends on what is being sold: admission tickets alone are an exempt intangible, but food and beverages sold separately, clothing/programs/souvenirs, and catering to corporate hospitality tents are…
Does Illinois sales tax apply to software delivered by URL that customers can download and duplicate without limit?
Likely no exemption: the Department explained that a software license escapes Illinois Retailers' Occupation Tax only if it meets five specific criteria in 86 Ill. Adm. Code 130.1935(a)(1), and told t…
If my company still offers a pickup option (even a shrinking one), are our delivery charges tax-exempt, and would eliminating pickup entirely make delivery charges taxable?
As long as customers genuinely have the option to pick up the item without paying a delivery charge, the delivery charge is not part of the taxable selling price. If pickup is eliminated and delivery …
Are breast pumps, nursing bras, and other breastfeeding supplies taxed at Illinois's reduced 1% rate for medical appliances?
Mostly no. The Department said the listed breastfeeding items (breast pumps and parts, shields, shells, nursing bras, lactation supplements/cookies) don't appear to directly substitute for a malfuncti…
Is machinery and equipment used primarily to harvest hay for sale exempt from Illinois Retailers' Occupation Tax and Use Tax as farm machinery and equipment?
Yes. Under 86 Ill. Adm. Code 130.305, machinery and equipment (new or used) that is used or leased primarily in production agriculture is exempt from Illinois Retailers' Occupation Tax and Use Tax, an…
Where did Illinois source local retailers' occupation tax for an industrial supplier's branch, remote-order, online, and affiliate sales?
Over-the-counter branch sales were sourced to the ordering branch. Specified phone, fax, email, eProcurement, special-branch, and affiliate sales were sourced to the Illinois headquarters after primar…
If I lease a motor vehicle under a true lease and then buy it before the lease ends, do I get credit against the purchase tax for the sales/use tax already paid on my lease payments?
No. Under a true lease, the lessor (not the lessee) owes Use Tax on its cost price of the vehicle, and lease receipts themselves are not taxed. When a lessee later buys the leased vehicle before the l…
Does the Cook County Sweetened Beverage Tax become part of the selling price used to calculate Illinois Retailers' Occupation Tax liability?
No. Because the Cook County Sweetened Beverage Tax is imposed on the consumer (like the Cook County Liquor Gallonage Tax), it is not part of the selling price of the beverage and must be excluded when…
Does a company create Illinois sales-tax nexus by having a resident employee, using independent-contractor transcriptionists who work from home, and occasionally sending employees onsite to customer locations?
The Department declined to make a specific nexus determination in this GIL, saying nexus is too fact-specific for a General Information Letter and is better handled by an auditor. Instead, it explaine…
When a construction contractor buys materials and permanently installs them into real property, who owes Illinois Use Tax, and can a subcontractor's out-of-state tax payment avoid double taxation down the sales chain?
The construction contractor (or subcontractor doing the installing) that permanently affixes tangible personal property to real estate is the 'end user' of that property and owes Illinois Use Tax on i…
When does an out-of-state seller that stores inventory in an Illinois marketplace warehouse have to register and collect Illinois sales or use tax?
It depends on nexus: if the out-of-state seller's inventory is held in Illinois at the time of sale (or is produced there), the seller is treated as an Illinois retailer that must register and collect…
Does an out-of-state company that sells downloaded software over the internet, with no Illinois office or employees, have to collect Illinois sales/use tax on those sales?
It depends on whether the seller has nexus with Illinois. Under the Quill two-prong test, a retailer must have physical presence in Illinois (such as an office, agent, representative, or repetitive de…
Could a short-term car-rental company sell its fleet to a related title-holding entity and lease it back without Retailers' Occupation Tax or Use Tax?
Yes under the rental-use exemptions, though not as an occasional sale. The rental company and title-holding entity had agreed before transfer that the vehicles would continue in short-term rentals sub…
Are Poise pads for bladder leakage covered by Illinois's sales-tax exemption for feminine hygiene products?
No. Illinois's Retailers' Occupation Tax exemption effective January 1, 2017 covers only menstrual pads, tampons, and menstrual cups. Poise pads are designed for bladder leakage, not menstruation, so …
When a sale happens in a home-rule area with state, county, and city sales taxes, do you add all the individual tax rates together to get the total rate charged on the sale?
Yes. The Illinois Department of Revenue confirmed that in a home-rule jurisdiction like Jacksonville (Morgan County), you simply add each applicable tax rate together — state (6.25%), county (1.00%), …
Did a custom oral device that advances the jaw to keep a sleep-apnea patient's airway open qualify as an Illinois medical appliance?
Yes. Based on the described operation, IDOR ruled that the physician-prescribed, dentist-custom-fitted device directly substituted for or corrected a malfunctioning body function by moving the jaw for…
When a motor vehicle is sold to a leasing company for a long-term lease (over one year), who owes Retailers' Occupation Tax or Use Tax, and does that include any tax amount the lessor passes through to the lessee?
The dealer that sells the vehicle to the leasing company owes Retailers' Occupation Tax, and the leasing company (as purchaser/user) owes Use Tax; the lessee owes neither tax directly. For leases long…
Were meals sold directly to county-jail inmates by a charitable educational organization exempt from Illinois sales tax?
No. IDOR said the sale would be exempt if the prison itself sold meals to its inmates, but the requesting charitable or educational organization -- not the prison -- planned to be the seller. Its dire…
Were separately stated freight charges on wine shipped directly to Illinois consumers excluded from sales tax when free winery pickup was available?
Potentially, but IDOR would not give a fact-specific statement. Delivery is taxable when inseparably linked to the sale, such as when the customer has no way to buy without paying delivery. If free pi…
Did the destination of goods shipped from an Illinois hub determine whether freight charges were taxable?
No. Freight taxability depended on whether delivery was inseparably linked to the sale, not destination. Charges were taxable when unstated or unavoidable; separately stated optional delivery could be…
When a retailer sells and installs an appliance, is installation taxable and does the retailer become a construction contractor?
The appliance sale was taxable. Installation was included in taxable selling price only when bundled into that price; a separately agreed or separately listed installation charge was a nontaxable serv…
Was propane delivered for rural home heating exempt from Illinois local retailers' occupation tax?
No. The Illinois Retailers' Occupation Tax Act did not exempt L.P. propane gas used to heat homes. Local retailers' occupation taxes administered by IDOR followed the State Act's exemptions, credits, …
Could canned software be licensed tax-free in Illinois, and how was custom software treated?
Yes, as a general rule. A canned-software license and its later updates were not taxable when the license met all five conditions in Section 130.1935(a)(1). Separately, qualifying custom software prep…
Are separately listed delivery and installation charges subject to Illinois sales tax?
Not automatically exempt. Under Illinois' Retailers' Occupation Tax, delivery and installation charges are generally part of taxable gross receipts even when listed separately on the invoice. They are…
When are custom-designed precast concrete components treated as a service rather than a taxable retail sale in Illinois?
A custom component can be treated as special-order property produced in a service occupation only if the purchaser primarily hires the seller for engineering or scientific skill, the item has use or v…
Did prepaid home-phone packages qualify as prepaid telephone calling arrangements taxed as tangible personal property rather than telecommunications?
Generally yes. A package paid in advance that enables calls through an access or authorization code and stops service when the purchased amount is consumed generally qualifies as a prepaid telephone c…
Did Illinois include tire disposal fees and statutory tire user fees in a retailer's taxable gross receipts?
The two fees were treated differently. A retailer's tire disposal fee was a cost of doing business and could not be deducted from taxable gross receipts. The statutory tire user fee was specifically e…
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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.