Could an Illinois-only delivery leg count as interstate use for the rolling-stock exemption when goods first stopped at an Illinois warehouse?

Plain-English summary

An Illinois-only delivery leg could count as interstate use only when the shipment's initial documentation showed a final destination beyond the Illinois warehouse. Merely proving that goods originally came from outside Illinois was not enough under the Department's example if the first documents ended the shipment at the warehouse.

If initial documents showed the Illinois warehouse as the destination, a later trip from that warehouse to another Illinois location did not qualify as part of the interstate trip. If those documents instead showed the later Illinois location as the destination via the warehouse, the second leg could count.

The requester said final customers were unknown when goods left the out-of-state plant. The Department did not expressly approve the fleet's claimed exemption; it provided the documentation rule to apply.

What this means for you

Preserve shipment-level records showing the destination fixed at the start of the interstate movement. General proof that all inventory came from out of state does not replace documentation connecting a particular in-state leg to that interstate shipment.

Common questions

Q: Did an out-of-state origin automatically make every later Illinois delivery interstate?
A: No. The initial shipment documents had to show the later destination beyond the warehouse.

Q: Did the GIL rule that the requester's Illinois trucks qualified?
A: No. It gave examples and documentation requirements without an express fleet-specific conclusion.

Citations and references

• 35 ILCS 120/2-5(12) and (13)
• 86 Ill. Adm. Code 130.340(a) and (g)
• 35 ILCS 120/2-50 and 2-51(c), cited in the source

Subject

Rolling Stock Exemption

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2010.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2010/st-10-0019.pdf

Original ruling text

ST 10-0019-GIL 03/19/2010 ROLLING STOCK EXEMPTION
This letter concerns the rolling stock exemption. See 86 Ill. Adm. Code Section 130.340. (This
is a GIL.)

March 19, 2010

Dear Xxxxx:
This letter is in response to your letter dated December 9, 2009, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are
issued by the Department in response to specific taxpayer inquiries concerning the application of a
tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the
taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR
are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department policy
and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website
at www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to
your inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
Our client is an LLC (hereafter, ABC) that operates trucks throughout the Midwest.
These trucks are all used primarily to deliver the product of a related company ‘for hire’
(hereafter, Manufacturer). ABC has an Interstate Commerce Commission Certificate of
Authority from the Illinois Commerce Commission. The trucks all exceed 16,000
pounds. ABC has some trucks based outside Illinois that deliver the product from
Manufacturer’s plant outside Illinois to the various distribution centers throughout the
Midwest (including an Illinois distribution center). ABC also has different trucks based in
Illinois (titled and registered in IL) that deliver the product from the Illinois distribution
center to the various customers throughout Illinois.
Manufacturer has contracted with ABC to deliver its product. About 75% of ABC’
deliveries are for Manufacturer. The remaining 25% are for unrelated third parties
whose products may originate in Illinois. All of Manufacturer’s product is manufactured
outside of Illinois. At the time the product leaves Manufacturer’s plant, the ultimate
customer is unknown. It is not until the order is placed and fulfilled from the distribution
center in Illinois that the customer and final delivery destination is known. However, it is
known that all of the product delivered by ABC for Manufacturer to Illinois destinations
originated outside of Illinois.
Issues

Because all of the product being delivered to Illinois destinations for Manufacturer
originates outside of Illinois, it all undergoes an interstate journey. Does ABC’ use of
the Illinois based trucks qualify for the rolling stock exemption in Illinois?
Resolution
Since virtually every trip taken by ABC includes carrying Manufacturer’s products that
originate outside of Illinois, ABC is involved in the interstate transportation of the
product, and the rolling stock exemption applies. The delivery from outside of Illinois to
the distribution center in Illinois and the subsequent delivery from the distribution center
to the ultimate destination in Illinois should be treated as the entire delivery. Because of
this, the trucks are used in interstate commerce.
We are asking you to rule that the trips of ABC be considered interstate when
calculating the rolling stock exemption test. Every truck used by ABC is a part of that
interstate journey. Even though the Illinois-based trucks do not directly travel outside
Illinois more than 50% of their trips or miles, they are still part of the interstate delivery
and should qualify as used in interstate commerce (35 ILCS 120/2-50). The fact that
the exact final destination of each specific product is not known when it is in transit from
outside Illinois to an Illinois destination should not override the fact that it is known, with
no uncertainty, that the product shipments originate outside of Illinois and are
transported in interstate commerce.
Analysis
Illinois law provides an exemption for trucks that are determined to qualify as ‘rolling
stock’.i To qualify as rolling stock, all three of the following requirements must be met:
1.
2.
3.

The company operating the trucks must possess an Interstate Commerce
Commission Certificate of Authority form the Illinois Commerce Commission.
The carrier must be delivering the passengers or property ‘for hire’.
The carrier must transport the passengers or property in interstate commerce.

Effective July 1, 2004, motor vehicles that carry persons or property for hire, even just
between points in Illinois, will be considered used for hire in interstate commerce if the
motor vehicle transports persons whose journeys or property whose shipments originate
or terminate outside Illinoisii.
Beginning on July 1, 2004, the exemption for motor vehicles used as rolling stock
moving in interstate commerce cannot be claimed for motor vehicles whose gross
vehicle weight rating is 16,000 pounds or lessiii.
For purchases of motor vehicles made on and after July 1, 2004, a motor vehicle whose
gross vehicle weight rating exceeds 16,000 pounds will qualify for the rolling stock
exemption if, during a 12-month period, it carries persons or property for hire in
interstate commerce for greater than 50% of its total trips for that period or for greater
than 50% of its total miles for that period. The person claiming the rolling stock
exemption for a motor vehicle must make an election at the time of purchase to use
either the trips or mileage method to document that the motor vehicle will be used in a
manner that qualifies for the exemption.iv

Documentation of all trips taken by the motor vehicle in each 12-month period must be
maintained and be made available to the Department upon request. Any use of the
motor vehicle in a movement from one location to another, including but not limited to
mileage incurred by a motor vehicle returning from a delivery without a load or
passengers, is counted as a trip or mileage.v
In a general information lettervi the Department ruled that there was not enough
information provided to issue a private letter ruling, primarily because there was
insufficient information on the initial origination or final destination of passengers that
were either dropped off or picked up at the airport. The GIL went on to say that ‘a
carrier may use intrastate trips to qualify for the rolling stock exemption, so long as the
carrier can document that the journey of the passenger or shipment of the property
either originated or terminated outside the State of Illinois.’ While our client does not
have documentary evidence to support that a specific, individual product originated
outside of Illinois, it can support that all of its products originate outside of Illinois.
Accordingly, the need to support each individual product seems unnecessary given our
client’s facts.
In State of Illinois vs. ABC Leasing, Inc.vii, the taxpayer was a for hire carrier that
claimed it delivered materials in interstate commerce. The ultimate ruling was that the
trucks did not qualify for the rolling stock exemption because there was no documentary
evidence to prove that the product the taxpayer delivered in Illinois ultimately terminated
its journey outside of Illinois. Again, our client’s case differs from the facts in this case,
as our client knows that 100% of the product they deliver for Manufacturer originates
outside of Illinois.
Thank you for your time to consider our request. Please contact me if you have any
questions.

DEPARTMENT’S RESPONSE:
Notwithstanding the fact that the sale is at retail, the Retailers' Occupation Tax does not apply
to sales of tangible personal property to interstate carriers for hire for use as rolling stock moving in
interstate commerce, or lessors under leases of one year or longer executed or in effect at the time of
purchase to interstate carriers for hire for use as rolling stock moving in interstate commerce. (35
ILCS 120/2-5(12)) In addition, notwithstanding the fact that the sale is at retail, the Retailers'
Occupation Tax does not apply to sales of tangible personal property to owners, lessors, or shippers
of tangible personal property that is utilized by interstate carriers for hire for use as rolling stock
moving in interstate commerce as long as so used by the interstate carriers for hire. (35 ILCS 120/25(13)) See 86 Ill. Adm. Code 130.340(a).
Effective July 1, 2004, the trips or mileage of a motor vehicle for which persons or property are
carried for hire just between points in Illinois may be used to qualify for the rolling stock exemption, if
the journey of the passenger or shipment of the property either originates or terminates outside of
Illinois. A carrier may use intrastate trips to qualify for the above-mentioned rolling stock exemption,
so long as the carrier can document that the journey of the passenger or shipment of the property
either originated or terminated outside the State of Illinois. See 86 Ill. Adm. Code 130.340(g).
For example, if the initial documentation for a shipment of goods from out-of-state into Illinois
indicates that the destination is at the warehouse in City A, Illinois, then any subsequent shipment of
the goods from the warehouse in City A to another destination in Illinois will not qualify as part of an

interstate trip. However, if the initial documentation for a shipment of goods from out-of-state into
Illinois indicates that the destination is at City B, Illinois, via the warehouse in City A, then the
subsequent travel of the goods from the warehouse in City A to the destination in City B can count as
part of the interstate trip.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:msk
i

35 ILCS 120/2-50.
35 ILCS 120/2-51(c).
iii
Ill. Admin. Code tit. 86 § 130.340(i)(1)(B).
iv
Ill. Admin. Code tit. 86 § 130.340(i)(1)(C).
v
Ill. Admin. Code tit. 86 § 130.340(i)(1)(D).
vi
ST 04-0215-GIL, Nov. 29, 2004.
vii
Administrative Hearing Decision No. UT 08-7, May 12, 2008.
ii