Illinois State Tax Rulings

My out-of-state company has no offices or employees in Illinois, but we own inventory that sits in an Illinois contract packager's warehouse before being shipped to customers nationwide -- does that create Illinois income tax nexus?

The Department won't give a binding yes/no on nexus outside of an audit -- it's too fact-specific for a letter ruling. But it did flag that owning a stock of merchandise sitting in an Illinois warehou…

Is a payment-localization company that briefly holds 'flash title' to goods -- or never holds title at all -- a marketplace facilitator responsible for Illinois sales tax on its merchant clients' sales?

A person must carry out BOTH activities in the marketplace facilitator definition -- listing or advertising the seller's goods for sale, AND collecting/transmitting payment -- to qualify as a marketpl…

What did Illinois tell a commercial tax-guide publisher, in response to its annual multistate survey, about how the state's sales and use tax applies to marketplace-facilitator fees, digital products, information services, and similar hot topics?

My out-of-state company licenses highly customized software and provides equipment to an Illinois customer, but we keep ownership of both and have no employees or offices in Illinois -- is this revenue Illinois-source income for corporate tax purposes?

The Department wouldn't give a final yes or no -- nexus and income-sourcing questions like this are considered too fact-specific for a letter ruling and are resolved only in an audit. It did lay out t…

My out-of-state SaaS company is going to start having customers headquartered in Illinois -- does that create nexus requiring us to file an Illinois corporate income tax return, and if so, what sales threshold triggers it?

The Department would not say definitively whether selling SaaS to Illinois customers creates Illinois corporate income tax nexus -- nexus determinations are considered too fact-specific for a letter r…

What does Illinois General Information Letter IT 23-0004-GIL conclude about Nexus?

The Department explicitly declined to answer. IDOR does not issue letter rulings resolving specific nexus questions because nexus determinations are inherently fact specific, so it never decided wheth…

Does an out-of-state vehicle seller create Illinois nexus just because it hires a third-party company to calibrate equipment at customers' locations in Illinois after delivery?

The Department wouldn't say definitively -- nexus is too fact-specific for a GIL -- but it explained that an out-of-state retailer with an ongoing physical presence in Illinois (including through an a…

What did Illinois tell a nationwide state-tax survey about its corporate income tax rules on bonus depreciation and net-operating-loss carryforwards?

This is not a ruling on one taxpayer's facts. It's the Illinois Department of Revenue's answers to an outside publisher's annual, roughly 90-question survey of every state's corporate income tax rules…

Does Illinois's $100,000 economic-nexus threshold for sales tax also apply to corporate income tax, and does leasing a warehouse forfeit PL 86-272 protection?

IDOR would not determine whether any of the three specific companies had Illinois nexus, calling that question 'extremely fact specific.' But it confirmed two general rules: Illinois's $100,000/200-tr…

What are Illinois's official answers to a comprehensive national multistate survey covering sales tax nexus, economic nexus thresholds, remote-seller/service-provider activities, refund claims, voluntary disclosure agreements, and local sales taxes?

Illinois bases sales/use tax nexus on BOTH physical and economic presence, with the economic threshold set at $100,000 or more in cumulative Illinois gross receipts OR 200 or more separate Illinois tr…

Does an Illinois online classified-ads website have to collect Retailers' Occupation (sales) Tax on sales of digital 'credit packs' that customers use to publish, highlight, or promote listings?

No. The Department ruled that because purchasers of the digital credit packs receive no tangible personal property -- no inventory is shipped and nothing physical changes hands -- the sales are not su…

What is Illinois General Information Letter IT 22-0003-GIL, and what does it say about corporate income tax nexus?

It isn't a ruling on anyone's tax situation -- it's the Illinois Department of Revenue's completed answers to a private publisher's annual '2022 Survey of State Tax Departments,' covering how Illinois…

What is Illinois General Information Letter IT 21-0008-GIL, and what does it say about corporate income tax nexus, apportionment, and combined reporting?

It isn't a ruling on anyone's tax situation -- it's the Illinois Department of Revenue's completed answers to a private publisher's annual multistate corporate income tax survey, covering nexus, appor…

Does having one full-time remote employee working from her home in Illinois create Illinois corporate income tax nexus for an out-of-state company with zero Illinois sales?

IDOR wouldn't say -- it does not issue rulings on whether nexus exists, since that determination is 'extremely fact-specific.' But it explained that under IITA Section 502(a), if the company has zero …

What does Illinois General Information Letter ST 20-0031-GIL conclude about Nexus?

It depends on which sales count. Illinois's GIL explains that under 'Wayfair nexus,' a remote retailer must collect Illinois Use Tax once its cumulative gross receipts from Illinois sales hit $100,000…

What does Illinois General Information Letter ST 20-0029-GIL conclude about Nexus?

It depends on the retailer's contacts with Illinois. A retailer with physical presence in Illinois (even 'more than the slightest') must collect Use Tax, and since October 1, 2018, an out-of-state ret…

What does Illinois General Information Letter ST 20-0022-GIL conclude about Construction Contractors?

Construction contractors in Illinois are treated as end users, not retailers: they owe Use Tax on their cost price of materials permanently incorporated into real property (like an installed gas stati…

What does Illinois General Information Letter ST 20-0023-GIL conclude about Nexus?

It depends on whether the out-of-state company has a physical presence in Illinois, meets the Wayfair economic-nexus thresholds ($100,000 in sales or 200+ transactions to Illinois customers), or (star…

What does Illinois General Information Letter ST 20-0014-GIL conclude about Construction Contractors?

When a construction contractor permanently affixes tangible personal property to real property, Illinois treats the contractor as the 'end user' of that property, meaning the contractor owes Use Tax (…

What does Illinois General Information Letter ST 20-0018-GIL conclude about Miscellaneous?

This isn't taxpayer guidance in the usual sense -- it's the Illinois Department of Revenue's reply to a publisher's annual 50-state tax survey. The Department declined to fill out the questionnaire it…

What does Illinois General Information Letter ST 19-0005-GIL conclude about Nexus?

The Department declined to fill out a multistate nexus survey, saying nexus is too fact-specific for a General Information Letter -- but it laid out the general framework: remote sellers with no physi…

Does Illinois charge sales tax on digital art files that customers download electronically?

No. Illinois Retailers' Occupation Tax and Use Tax (the state's 'sales tax') apply only to sales of tangible personal property, so a home-based designer's digital art files sold and downloaded electro…

If our out-of-state company has no offices in Illinois but has one remote employee working from home in Chicago in customer service, do we have to register and collect Illinois sales tax?

Yes. Illinois told this company that having even one employee working in Chicago -- even in customer service with no sales duties -- gives it physical presence in Illinois, which satisfies the Commerc…

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…

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…

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…

What does Illinois say about sales/use tax nexus, motor vehicle leasing and short-term rentals, the interim-use/demonstrator exemption, and sales to exempt organizations?

This GIL doesn't answer a single yes/no question; it's the Department's response to a multi-state tax survey, declining to fill out the questionnaire but summarizing Illinois law on several sales-tax …

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…

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…

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…

Does an out-of-state seller of a hardware device and a cloud-based software subscription have to collect Illinois sales tax, and does the Illinois customer owe use tax if it doesn't?

It depends on whether the out-of-state business has nexus with Illinois. If it is an 'Illinois Retailer' or a 'retailer maintaining a place of business in Illinois' (which can include an in-state agen…

When does an out-of-state seller have enough connection ('nexus') with Illinois to owe Retailers' Occupation Tax or to have to collect Use Tax from Illinois customers, and how does Illinois treat related issues like software, cloud computing, drop shipments, and short-term rental platforms?

Illinois could not give a simple yes/no answer to a multistate nexus survey because nexus determinations are too fact-specific for a General Information Letter. Instead, the Department outlined its ge…

Does a private equity fund member or its management company have Illinois income tax nexus, and how is income from selling LLC units or receiving management fees apportioned to Illinois?

The Department will not issue a nexus ruling because nexus determinations are too fact-specific, but it points to Illinois' general apportionment rules: gains from selling intangible property (like LL…

Did a one-time or minimal Illinois sale by an out-of-state seller automatically limit it to collecting only the 6.25% Illinois Use Tax?

IDOR would not decide. Nexus was too fact-specific for a nonbinding GIL, and the seller supplied too little detail. The 2016 letter distinguished an Illinois retailer owing Retailers' Occupation Tax, …

Did limited Illinois trade-show attendance and customer referral credits give an out-of-state online retailer Illinois Use Tax collection nexus?

IDOR did not decide. It said nexus determinations were too fact-specific for a General Information Letter and were best made by auditors conducting the required factual investigation. The letter there…

How did IDOR answer a 2016 survey about sales-tax nexus, software, digital goods, services, drop shipments, and refunds?

IDOR declined to give yes-or-no nexus answers because nexus was fact-specific, but supplied its 2016 general rules. It also said canned software was generally taxable, qualifying signed software licen…

Does an out-of-state manufacturer create Illinois corporation income tax nexus just by having its leased rail cars pass through, wait in, or sit empty in Illinois while delivering goods?

The Department would not issue a formal ruling on whether nexus exists because the question is too fact-specific, but it explained that merely shipping or delivering goods into Illinois by leased rail…

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…

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 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…

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 $…

How did Illinois answer a 2014 sales-tax survey on nexus safe harbors, special charges, local taxes, and virtual currency?

Illinois reported no nexus safe-harbor zones. Retained restocking fees were not taxable gross receipts, but the customer received all sales tax back. Handling was taxable; a genuine separately contrac…

Did buying Illinois-hosted data services, while owning software but no server hardware, create Illinois income-tax nexus for an out-of-state corporation?

The GIL did not decide. The corporation bought hosting from a commercial provider, owned no server hardware, and owned or licensed software used on the hosted systems. IDOR said nexus was extremely fa…

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 …

Did third-party shopping-cart servers located in Illinois create sales-tax nexus for an otherwise out-of-state online business?

IDOR did not decide the server question. It said fact-specific nexus determinations generally require an audit and supplied only 2013 guidelines based on Quill's physical-presence rule. That rule is n…

How did Illinois source receipts from online counseling, eBooks, and audio or DVD courses sold by an out-of-state internet business?

The receipt type controlled. Online counseling followed the service rule based on where the service was received. eBook receipts followed the intangible-property rule based on the taxpayer's income-pr…

What did Illinois's 2013 annual survey say about nexus, BOGO and coupon discounts, and seminar or webinar charges?

For promotions, unreimbursed discounts reduced taxable gross receipts, manufacturer-reimbursed coupons did not, and a BOGO sale was taxed only on the amount actually received when no one reimbursed th…

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…

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, …

Did independent sales managers, local installers, and direct shipments from Illinois require a Missouri LED-sign seller to collect Illinois tax?

IDOR declined to decide the seller's nexus, saying those facts were better developed in an audit. Under the historical framework it described, physical presence included an agent or representative and…

Did regularly arranging Illinois repair services through local independent contractors create Illinois income-tax nexus for an out-of-state LLC?

IDOR did not make a definitive nexus determination because the issue was highly fact-dependent and normally resolved in an audit. It warned, however, that regularly arranging and controlling Illinois …

Did regularly dispatching local contractors for Illinois retail repairs likely create income-tax nexus, and could voluntary disclosure limit prior years?

IDOR did not issue a final nexus determination because all facts would need audit review. It nevertheless said that a business built around regularly dispatching Illinois contractors for repair servic…

How did Illinois describe sales, nexus, local sourcing, and lease tax rules in response to a Series LLC classification survey?

IDOR did not answer the Series LLC survey yes or no or say that each series was a separate Illinois sales-tax entity. It said Illinois sales and use tax generally looked at transactions between legal …

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…

What documentation supported an Illinois resale exemption for in-state, out-of-state, and auction buyers under ST 11-0040-GIL?

A properly completed Certificate of Resale, signed by the purchaser and containing the seller and buyer details, item description, signature date, and the required registration, resale, or out-of-stat…

Who owed Illinois tax when an out-of-state facilities manager hired Illinois construction contractors and service providers for retail stores?

Construction contractors were end users of materials permanently incorporated into Illinois real estate and owed Use Tax on their cost. When subcontractors acted as construction contractors, the gener…