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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Is a program enrollment fee for an overnight immersive role-play experience subject to Illinois's Hotel Operators' Occupation Tax?
Yes. A facility that assigns participants overnight sleeping accommodations as part of a structured program -- even a private immersive role-play experience with no public lodging or reservations -- i…
Does an out-of-state dry-cleaning/repair company that only picks up and delivers items in Illinois -- with no office or warehouse there -- have to register and collect Illinois tax?
It depends on your numbers, not just your physical footprint: an out-of-state serviceperson with no Illinois office or warehouse can still have to register and collect Illinois tax once it hits $100,0…
Does an infusion-therapy provider owe Illinois sales tax on the prescription drugs it administers to patients, and at what rate?
An infusion-therapy provider is a "serviceperson" subject to Illinois's Service Occupation Tax on the prescription drugs it transfers to patients as part of treatment -- not exempt -- but qualifying p…
If a waste disposal company requires customers to use its own dumpsters as part of the service, is providing the dumpster a taxable lease or part of a nontaxable service?
It's part of the service, not a taxable retail lease. Since the dumpster has little to no value to the customer without the waste-removal service and can't be rented separately, its "true object" is t…
Do I have to charge Illinois sales tax when I sell Deal-of-the-Day vouchers for golf tee times or pro-shop merchandise?
No -- selling a Deal-of-the-Day voucher itself is never subject to Illinois sales tax, because the voucher is intangible property. Whether tax applies when the voucher is REDEEMED depends on what it's…
If I charge a fee to autograph a poster a customer already owns, is that fee subject to Illinois sales tax?
Signing a poster the CUSTOMER already owns and brings to you is a pure service with no transfer of tangible personal property, so it's not subject to Illinois sales tax by itself. But if you sell the …
Who owes Illinois tax on the parts used in a free "goodwill" vehicle repair that a manufacturer directs its dealer to perform?
It depends on who initiates the free repair. If a dealer does a goodwill repair entirely on its own, the dealer owes Use Tax on its own cost for the parts. But if a manufacturer directs the repair and…
Are a MedSpa's hormone therapy, Botox, and wellness services subject to Illinois sales tax, and how do bundled memberships get taxed?
The Department declined to answer each of the MedSpa's 12 specific service-by-service questions individually, and instead reiterated the general framework: a pure service with no tangible personal pro…
Does a waste-hauling broker owe Illinois sales/use tax on charges for roll-off dumpster and portable-toilet services when it subcontracts the actual dumpsters and toilets to third-party haulers?
Yes, but as Service Occupation Tax, not Retailers' Occupation Tax on a rental: the Department ruled that delivering a dumpster or portable toilet to a customer's site is a taxable 'lease' of tangible …
Is a bundled IVF specimen-storage offering -- combining a leased robotic system, a nominally-sold storage tank, and subscription database software -- taxable in Illinois?
The Department didn't issue a specific yes/no on this taxpayer's bundled tank/robot/software offering. Instead, it explained the general framework: a software-as-a-service provider is a 'serviceperson…
Does an AI chatbot company owe Illinois sales, use, or service occupation tax on its subscription plans and a free, open-source API software development kit?
Cloud-based AI chatbot access that's never downloaded -- used only through a website or app -- is a service, not subject to Retailers' Occupation Tax or Use Tax. But if the company gives subscribers a…
Does an AI chatbot company owe Illinois sales, use, or service occupation tax on its subscription plans and a free, open-source API software development kit?
This letter was later SUPERSEDED by ST 25-0057-GIL, which reissued essentially the same analysis for the same taxpayer with only a minor wording correction (no substantive change): cloud-based AI chat…
Is a home-security company's equipment-installation fee subject to Illinois sales tax, and does the 2025 lease-tax law change the answer?
Yes for the installation fee, but only under the Service Occupation Tax, not the Retailers' Occupation Tax. The Illinois Department of Revenue ruled that a security-monitoring company's leased alarm e…
Are food, medicines, drugs, and medical appliances exempt from Illinois sales tax, or are they taxed at a special rate?
Qualifying food, prescription and non-prescription medicines, drugs, and medical appliances for human use are NOT exempt from Illinois sales tax -- they are taxed at a reduced state rate of 1% (plus a…
Does Illinois sales/use tax apply to a SaaS company's paid subscription fees and its free downloadable mobile app?
No sales tax applies to the SaaS subscription fees themselves, because Illinois does not tax software accessed only remotely through the cloud and never downloaded. The free mobile app is a separate q…
Should a direct mail printing company charge Retailers' Occupation Tax or Service Occupation/Use Tax on printing, addressing, and mailing jobs, depending on who controls the mailing and where the items are delivered?
It depends on who controls the mailing and where items go. If the printer prints, addresses, and mails items at the customer's direction (the customer keeps control), the full job is subject to Servic…
Does an Illinois auto body shop owe sales/use tax on shop supplies like sandpaper and masking tape, or can it charge customers tax-free for them as a resale?
Auto repairmen and body shops owe Illinois Use Tax on consumable supplies (sandpaper, masking tape, paint thinner, etc.) that are used up in the shop and never physically leave with the customer's car…
When are shipping, storage, and other fulfillment-contract line items subject to Illinois sales tax on a sale of tangible personal property?
It depends on whether an "inseparable link" exists between the sale of the goods and the service charge. If the charge (including delivery) isn't separately identified, or is separately identified but…
Are a travel-marketing company's magazines, direct-mail flyers, and membership fees subject to Illinois sales and use tax?
The Department declined to rule on the specific facts and instead gave general guidance: periodicals published at least twice a year in newsprint-and-ink form (like the company's bimonthly travel maga…
Does Illinois sales tax apply to a membership fee that gives customers access to exclusive dining events and third-party restaurant perks, but no tangible goods?
No. Illinois treats membership fees as intangibles, so they are not subject to Retailers' Occupation Tax or Use Tax when the membership itself transfers no tangible personal property. But if a members…
Does an out-of-state company that sells cloud-based software and app subscriptions to an Illinois client owe Illinois Service Use Tax or sales tax on those subscription charges?
It depends on what is actually transferred. Illinois does not tax software-as-a-service subscriptions where nothing is downloaded and access is purely cloud-based -- but an out-of-state "serviceman" t…
Does an Illinois wedding and event décor business have to charge sales tax on décor packages that combine the temporary use of owned décor items with design and setup services?
It depends on the 'true object' of the transaction. If the décor items would have no value to the client without the design/installation service, the business is a serviceman and owes Service Occupati…
Under Illinois's 2025 lease-tax overhaul, does a party-entertainment company that rents out equipment along with an on-site supervisor owe retailers' occupation tax on the whole package, and how is that tax sourced?
Generally yes. Effective January 1, 2025, Illinois taxes leases of tangible personal property as retail sales (Article 75 of Public Act 103-592), and the Department explained that renting out equipmen…
Is a roll-off dumpster trash-removal service subject to Illinois sales tax as a lease of the dumpster, or is it a nontaxable waste-disposal service?
It's taxable, but as a service transaction, not a flat exemption. The Department ruled that a roll-off dumpster provided as part of a trash-removal service is a lease of tangible personal property inc…
Does a dumpster rental business have to charge Illinois sales tax on the rental, delivery, and waste-removal charges, or is it a nontaxable sale of service?
It depends on how the dumpster's cost compares to the total bill. Renting out a dumpster is a lease of tangible personal property, and effective January 1, 2025, leases transferred as an incident of a…
Does Illinois charge sales tax on software accessed only through the cloud, like a SaaS subscription or an app membership?
No. Illinois does not tax computer software delivered through a cloud-based system where the software is never downloaded to the customer's device and is only accessed remotely, including software-as-…
Is a subscription to a health/fitness coaching app (with SaaS-style content, trackers, and a downloadable app) subject to Illinois sales tax?
No, not on the facts this taxpayer described. The Department ruled that the subscription fees for the taxpayer's Member Services (personalized health content, coaching, and in-app trackers) and Person…
Does Illinois sales tax, service occupation tax, or telecommunications excise tax apply to cloud-based practice-management software sold to healthcare providers?
The Department did not issue a yes/no ruling on this taxpayer's specific facts (that requires a binding Private Letter Ruling), but it confirmed the general framework: canned computer software is taxa…
Is equipment used to manufacture prototype products under a federal contract exempt from Illinois sales and use tax?
It depends on what happens to the finished product. Machinery and equipment used primarily to manufacture tangible personal property that will be sold or leased at wholesale or retail is exempt from I…
Does Illinois sales tax or marketplace facilitator law apply to a call-answering/call-center service that takes food orders but never collects payment?
No. The Illinois Department of Revenue concluded that Retailers' Occupation Tax and Use Tax do not apply to sales of service, and that a call-answering service for restaurants does not meet the defini…
Does Illinois sales tax apply to a self-publishing platform's charge for online book-drafting access and to the printed book it produces?
The Department did not decide the taxpayer's specific facts in a binding way (that's what a GIL is), but it laid out the general framework: true SaaS access that is never downloaded is not subject to …
Does Illinois sales, use, or service occupation tax apply to a company's domain name registration, web hosting, and creation of emails and SSL certificates?
No. The Illinois Department of Revenue explained that a company's domain name registration, web hosting, and creation of emails and SSL certificates qualify as custom, intangible computer property (no…
Does Illinois sales tax apply to a photographer's digital photo files and an optional custom-made photo album sold along with them?
Electronically delivering digital photo files by themselves is generally not subject to Illinois Retailers' Occupation or Use Tax, because transferring data electronically isn't a transfer of tangible…
Does an out-of-state mail order pharmacy that fulfills prescription orders through a third-party partner's Illinois warehouse have to register and collect Illinois Service Use Tax or Service Occupation Tax?
Yes, potentially -- an out-of-state serviceman (including a mail order pharmacy) that meets the Service Use Tax Act's definition of "serviceman maintaining a place of business in this State" (35 ILCS …
Is a foreign-based company's subscription charge for a cloud-delivered health-coaching app (with a web portal, downloadable App, meal plans, workout videos, and personal coaching) subject to Illinois Retailers' Occupation, Use, or Service Occupation Tax?
The Department did not give a yes-or-no answer. It explained that electronically transferred information/data is not taxable tangible personal property, but canned (prewritten) computer software is ta…
Does an IT company that resells Microsoft Office 365 and other SaaS (software-as-a-service) products to its customers have to charge Illinois sales tax on those sales?
It depends on facts the Department said this particular letter didn't supply: canned (prewritten) software is generally taxable in Illinois regardless of delivery method, but a license meeting all fiv…
If a company manufactures signs, hires a third party to install them, and bills its dealers for the supply, freight, and installation, does it owe Illinois Retailers' Occupation (sales) Tax, Use Tax, or Service Occupation Tax on the sign -- and does the answer change once the sign is bolted to a concrete foundation?
It depends on whether the sign has "commercial value" to buyers generally and whether it becomes permanently affixed to real estate. A sign with commercial value (e.g., one reading generic words like …
Does a company that runs a service-matching marketplace app owe Retailers' Occupation Tax, Use Tax, or Service Occupation Tax on the small kits of branded items (placards, stickers, etc.) it gives to the service providers who sign up on its platform?
Only Use Tax, and only on the Department's cost price of those items. The Department ruled the marketplace-facilitation fees are for a non-taxable service, and because the company gives away only a sm…
Is a yearly subscription fee for using computer software (not owning it) subject to Illinois sales tax?
It depends on how the software is delivered and licensed: cloud-based software that is never downloaded to the customer's computer is not taxable, and a properly-documented software license meeting fi…
For an out-of-state retailer that sells to tax preparers (including through a marketplace facilitator), when did Illinois's economic nexus/remote-seller rules take effect, and are products like presentation folders, envelopes, tax forms, and checks taxable?
The Department confirms that Illinois's Wayfair-style economic nexus standard took effect October 1, 2018 (a retailer must register and collect Illinois Use Tax once it has $100,000+ in Illinois sales…
Is a nonprofit's sale of digital exams, assessments, and study materials to schools, professional associations, and individual students/examinees subject to Illinois sales tax?
No. The Department found these digital assessments, licensing exams, and study materials are non-taxable personal/professional services (not tangible personal property or taxable digital goods), so sa…
Does a company that sells software as a service (SaaS), digital goods, and in-game purchases have to collect Illinois Retailers' Occupation Tax, Use Tax, or Service Occupation Tax?
Generally no. A provider of software as a service (SaaS) is acting as a "serviceman," and if it does not transfer any tangible personal property to the customer, the transaction generally is not subje…
Is a bundled all-inclusive sporting-event ticket (admission plus food and drink for one price) subject to Illinois Retailers' Occupation Tax, or only to local amusement tax?
It depends on proportion, not a fixed rule: if the food and drink bundled into a single ticket price are just incidental to the sporting event (the service), the transaction is treated as a sale of se…
When a serviceman buys a specimen-collection kit from an out-of-state, unregistered supplier and uses it (rather than transferring it to the customer) to provide a non-taxable service in Illinois, does the serviceman owe Illinois Use Tax on the kit?
Yes. When a serviceman purchases tangible personal property at retail from an unregistered, out-of-state supplier and uses or consumes that property in Illinois rather than transferring it to service …
Does a personal chef who prepares and delivers custom meals for private clients qualify for a special 'de minimis serviceman' exemption from Illinois Retailers' Occupation (sales) Tax, since the chef already pays sales tax on the raw ingredients?
No special exemption applies. The Department explained that custom-made items substantially similar to stock or standard items (like tailor-made clothing) remain subject to Retailers' Occupation Tax, …
How is Illinois Service Occupation Tax calculated when a business (serviceman) transfers tangible personal property—like advertising materials—as part of providing a service, including when a secondary serviceman/subcontractor is involved and when materials are shipped outside Illinois?
Illinois taxes servicemen (businesses that sell services) on the tangible personal property they transfer as part of that service, not under regular sales tax but under the separate Service Occupation…
Must an auto glass repair and replacement company include its over-the-counter retail and wholesale glass sales when calculating its 35% 'de minimis' cost ratio, and how must it collect tax on its repair and replacement services?
Retail and wholesale sales of glass are excluded from the cost-ratio calculation used to determine 'de minimis' serviceman status; only the cost of materials transferred as part of a repair or replace…
Does an outdoor walking tour company owe Illinois sales/use tax when its tour price includes stops for food and drinks at third-party restaurants and bars?
It depends on whether tangible personal property (food or drinks) is transferred as part of the sale. A walking tour by itself, with no food or drink included, is a nontaxable service. But if the tour…
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…
Does an out-of-state company that has an Illinois employee and buys personalized debit/prepaid cards from printers owe Illinois Retailers' Occupation, Use, or Service Occupation Tax on those cards, depending on where the printer ships them and whether they are resold, given away, or destroyed unfinished?
It depends on where the printer ships the finished cards. Because the company has an Illinois employee, it is an out-of-state "serviceman maintaining a place of business" in Illinois, and the Departme…
Does an outsourced veterinary pharmacy business owe Service Occupation Tax or Retailers' Occupation Tax on the products it supplies through participating veterinary hospitals to pet owners, and who is responsible for remitting that tax?
The Department could not give a definitive answer because the facts were unclear, but it explained the framework: if the pharmacy company sells to veterinary hospitals at wholesale and the hospitals r…
Does a company that dehydrates, powders, and encapsulates a customer's own product into vitamin capsules owe Service Occupation Tax, and if so, how is the tax base calculated?
Yes. The Department concluded the company is acting as a "serviceman" under the Service Occupation Tax Act and owes tax on the tangible personal property (the capsules and packaging) transferred incid…
Does an out-of-state digital advertising company owe Illinois Use Tax or Service Occupation Tax on payments it receives from Illinois-based customers for serving mobile ads that lead to app installs?
It depends on whether tangible personal property (including taxable computer software) actually changes hands. The Department explained that Illinois does not treat viewing, downloading, or streaming …
Does a SaaS company owe Illinois sales, use, or service occupation tax on a free connector applet and on subscription fees for its cloud-based service?
No. The Department ruled the company owes no Illinois Use Tax on the free applet it lets customers download from out-of-state servers, and no Retailers' Occupation Tax, Use Tax, or Service Occupation …
Does an Illinois business have to pay tax on the training manuals it hands out at a paid customer seminar, and how is that tax calculated?
Yes. Because labor is not taxable but the training manuals handed out at the seminar are tangible personal property, the company (acting as a "serviceman") owes Service Occupation Tax or Use Tax on th…
If a company bundles hardware and a required software subscription into one price and doesn't separately state what part of the charge is for the tangible property, how is Illinois Service Occupation Tax calculated?
Illinois ruled that because the company's hardware (sensors, trackers, monitors, tokens) and its software/firmware are sold together for one bundled price with no separate charge for the tangible pers…
Does Illinois sales and use tax apply to explosives, blasting agents, and detonator equipment a company sells and uses to break up rock for its quarrying and mining customers?
No, not on these facts. The Department ruled that the blasting agents, high explosives, boosters, and detonator delivery systems the company supplies and uses to fragment rock are exempt manufacturing…
How should a wedding photographer/videographer in Illinois charge sales tax on custom photo albums and video packages sold to clients?
Photographers and videographers who sell physical products (like custom albums or USB drives) incident to their services are generally servicemen subject to Service Occupation Tax, not Retailers' Occu…
Are the explosives, blasting agents, and detonator equipment a quarrying/mining company sells or uses exempt from Illinois sales and use tax as manufacturing machinery and equipment?
Yes, generally. Illinois' manufacturing machinery and equipment exemption specifically covers blasting agents, high explosives, detonators, lead-in line, and blasting machines used in the extractive p…
Is a company's bundled sale of hardware (sensors, GPS trackers) plus a required software subscription subject to Illinois sales and use tax, and does the software license exclusion or the SaaS exemption apply?
Yes, taxable. The Illinois Department of Revenue could not issue a binding Private Letter Ruling because the request lacked billing detail, but its General Information Letter concludes the company is …
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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.