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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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…
If a rent-to-own agreement has a rental term of consecutive 90-day periods but requires payments every other week, is it subject to Illinois's Rental Purchase Agreement Occupation and Use Tax?
Generally no. The Department's opinion is that a rental agreement with a rental term made up of consecutive 90-day periods, but with payments due every other week, does not meet the statutory definiti…
Does a hotel owe Hotel Operators' Occupation Tax on a guest's stay of more than 30 consecutive days when a different company took over paying the bill partway through, with no break in the stay?
No. Under this PLR, once a guest occupies the same hotel room for at least 30 consecutive days without interruption, the guest is a 'permanent resident' and the hotel's receipts for that period are ex…
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…
Does Illinois have a 'trailing nexus' rule that requires a remote seller to keep collecting sales/use tax for a period after its Illinois nexus ends?
As of this 2018 letter, Illinois had no rule addressing 'trailing nexus' (continuing to owe sales/use tax for a period after nexus ends); the Department said any nexus determination would depend on th…
Does the Metropolitan Pier and Exposition Authority (MPEA) food and beverage tax apply to food, alcohol, and soft drinks sold on tour boats that depart from and return to docks on the Chicago River?
Yes. The Illinois Department of Revenue concluded that the Metropolitan Pier and Exposition Authority (MPEA) Retailers' Occupation Tax on food, alcoholic beverages, and soft drinks applies to sales ma…
What does Illinois General Information Letter ST 18-0015-GIL conclude about Nexus?
The Department explained the general nexus rules but did not confirm the taxpayer's specific conclusion: whether this out-of-state distributor must collect Illinois Use Tax depends on nexus, and separ…
What does Illinois General Information Letter ST 18-0014-GIL conclude about Prepaid Sales Tax?
The Department did not resolve the taxpayer's specific refund request, but explained that a reseller registered solely under Section 2c whose sales are all nontaxable owes no prepaid sales tax on moto…
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…
What does Illinois General Information Letter ST 18-0009-GIL conclude about Manufacturing Machinery & Equipment?
There is no Illinois sales-tax exemption for electricity used in manufacturing (electricity is taxed separately under the Electricity Excise Tax Law), but machinery and equipment used more than 50% of…
What does Illinois General Information Letter ST 18-0008-GIL conclude about Motor Vehicles?
The Department declined to formally approve an outside survey chart on motor vehicle taxation, but confirmed the chart's general accuracy and explained Illinois' rules: trade-in credits reduce the tax…
What does Illinois General Information Letter ST 18-0007-GIL conclude about Sale For Resale?
The Department declined to endorse or complete a private trade-group survey on drop shipments, but pointed to its own rules: an Illinois seller documents a drop-shipment sale for resale with a valid C…
Does an out-of-state contractor owe Illinois sales or use tax on installing, maintaining, and supplying car wash equipment in Illinois?
A construction contractor who permanently affixes tangible personal property (like installed equipment, electrical, or plumbing materials) to real property is the end user of that property and owes Il…
What does Illinois General Information Letter ST 18-0005-GIL conclude about Nexus?
The Department declined to complete the requester's nexus survey because nexus determinations are too fact-specific for a General Information Letter, but it gave general background on Illinois Retaile…
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…
Does Illinois sales tax apply to a mobile app subscription and bundled distributor services sold by a multi-level-marketing company?
It depends on what is actually transferred: if the mobile app, dashboard, and personal-website bundle involve no transfer of tangible personal property (e.g., cloud-based access with nothing downloade…
Are custom dental devices like anti-snoring mouthpieces and dental bars taxed at Illinois' reduced 1% medical appliance rate, and can dentists buy them for resale?
The Department said the custom dental devices described (a prescription anti-snoring/sleep apnea mouthpiece and a metal dental bar) would generally qualify as medical appliances taxed at Illinois' red…
If my laser tag business charges one price for a birthday party package that includes laser tag, pizza, soft drinks, and a party host, do I owe sales tax on the whole thing?
It depends on how you bill it. If you charge a single bundled price covering the laser tag, food, drinks, and party host, Illinois Retailers' Occupation Tax applies to the entire charge; if you separa…
If my business charges one price for admission plus food and drinks (like a birthday party package), does Illinois sales tax apply to the whole charge or just the food?
It depends on how you bill it: if you charge one single, undivided price covering admission, food, and drinks, Illinois Retailers' Occupation Tax applies to the entire charge, but if the food and soft…
Does the manufacturing machinery and equipment sales/use tax exemption cover equipment, like cleanrooms, that starts out in research and development before being used in production?
It depends, and the Department declined to give a firm yes or no here. Machinery and equipment (including the taxpayer's cleanrooms) can qualify for Illinois's manufacturing machinery and equipment ex…
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 …
Does Illinois sales/use tax apply to computer software, including software as a service (SaaS)?
It depends on how the software is delivered: Illinois generally taxes sales of "canned" (prewritten) computer software as tangible personal property, but custom software and software-as-a-service arra…
Does an out-of-state online seller of snack bars owe Illinois sales or use tax, and at what rate, if its products are stocked in an Illinois warehouse?
It depends: the Department declined to give a binding nexus determination and instead explained the general rules. An out-of-state seller has no Illinois collection duty unless it has physical presenc…
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…
Does having remote employees or independent contractors in Illinois create income tax or sales tax nexus?
The Department would not say. It explained that whether a taxpayer has nexus with Illinois is too fact-specific for a ruling, and instead pointed to its nexus regulation (Section 100.9720) and general…
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…
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 is Illinois sales tax due on computer software licenses and software maintenance agreements?
Canned (prewritten) computer software is taxable tangible personal property in Illinois, whatever the medium; genuinely custom software may not be. A software license is not a taxable retail sale if t…
Do two whole-food snack bars qualify for Illinois's 1% state food rate or the 6.25% general-merchandise rate?
The letter did not classify the two bars because it lacked facts about how the seller conducted sales. It gave the general rule: qualifying food for off-premises consumption was taxed at the 1% state …
When are Illinois trailer sales or leases taxable, and when can the rolling stock exemption apply?
A trailer sale or conditional lease-sale generally triggers Retailers' Occupation Tax. Under a true lease, the lessor is the user and owes Use Tax on its cost, while rental receipts are not taxed. The…
Are fruit trees, nut trees, shrubs, vines, and other nursery stock exempt as Illinois farm machinery or equipment?
No. IDOR said nursery stock and seedlings are not farm machinery or equipment under 86 Ill. Adm. Code 130.305, even when bought for agricultural production. A separate sale for resale can be nontaxabl…
Does cooking wine sold as a food ingredient qualify for Illinois's 1% state food rate?
The GIL did not specifically classify the cooking wine. It explained that food sold for off-premises consumption generally received the 1% state rate plus local taxes, but alcoholic beverages, candy, …
Are Illinois membership fees taxable when members also receive guides, magazines, and marketing materials?
A pure membership fee is generally an intangible and is not subject to Retailers' Occupation Tax or Use Tax when no tangible personal property is transferred. But this association also described guide…
How do Illinois sales and service taxes apply to foodservice arrangements with exempt hospitals and nursing homes?
IDOR declined to decide the eight hypothetical arrangements without contracts and clearer facts. It explained that resale transactions require a valid certificate; qualifying charitable hospitals and …
Can an Illinois intermediary use a general contractor's resale number or a minority-participation program to buy HVAC equipment tax-free?
No Illinois sales-tax exemption existed merely because a transaction involved a minority-participation program. If the intermediary bought equipment for resale, it had to give the seller a valid Certi…
When do Illinois construction contractors owe use tax, and what documentation supports exempt-entity or enterprise-zone purchases?
Construction contractors were end users and owed Use Tax on the cost of property permanently incorporated into Illinois real estate. Audiovisual and telecommunications systems sold and installed for o…
What general Illinois exemptions and credits applied to manufacturers and exempt organizations in 2014?
IDOR could not answer the broad questions specifically. It explained that machinery used more than 50% of the time in qualifying manufacturing or assembly could be exempt; exempt machinery purchases a…
Did Illinois's 1% rate apply to a motorcycle hand-brake system designed for disabled riders?
Generally yes. Illinois imposed a 1% rate on motor-vehicle modifications that enable a disabled person to drive or assist in transporting disabled persons. IDOR said systems allowing a disabled rider …
When are separately stated furniture delivery or merchandise shipping charges excluded from Illinois sales tax?
A delivery charge was outside the taxable selling price only when the buyer and seller separately agreed to it and the amount reflected actual transportation cost. Merely listing 'shipping' or 'additi…
What nexus rules did Illinois describe for remote retailers in 2014, and are those physical-presence rules still current?
IDOR declined to decide the affiliated companies' nexus because it required an auditor's fact-intensive investigation. The 2014 GIL described then-controlling Quill physical-presence rules, including …
When were licensed software, updates, support, training, and maintenance taxable in Illinois?
IDOR declined to decide the reseller's specific transactions. Generally, canned software was taxable regardless of delivery unless every signed-license criterion in Rule 130.1935(a)(1) was met; then t…
Was a claimed Illinois software-license exemption valid based only on the limited documents submitted?
Unresolved. Canned software was generally taxable regardless of delivery method, but a license could be nontaxable only if every requirement in 86 Ill. Adm. Code 130.1935(a)(1) was met, including a si…
Did Illinois decide whether a satellite-TV installation company owed sales or use tax on equipment reimbursed by the service provider?
No. ST 11-0012-GIL says the Department could not determine the exact arrangement between the installation company and satellite service provider, so it gave no specific sales-tax, use-tax, or registra…
Did Illinois sales tax apply when an online game seller delivered only downloadable or emailed PDF files?
No Retailers' Occupation Tax or Use Tax applied if the transaction transferred only electronically delivered information or data, with no canned software and no tangible personal property. But canned …
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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.