Did delivering appliances into an Illinois county make an out-of-state retailer owe that county's local school sales tax?

Plain-English summary

Delivery into an Illinois county did not, by itself, determine the local sales tax. The Department said local tax generally followed the jurisdiction where the sale occurred, not the delivery location. If the sale occurred in an Illinois jurisdiction imposing a local tax, that jurisdiction's tax applied even when the item shipped from somewhere else.

For a sale occurring outside Illinois, inventory location became important. If the property was in inventory within an Illinois jurisdiction that imposed a local tax when the sale occurred, that location determined the applicable local tax. But when both the sale and the property were outside Illinois at the time of sale, the GIL said the transaction was subject only to Illinois Use Tax at the 2010 state rate of 6.25%.

Although the cited regulation addressed municipal home-rule taxes, the Department said the same principles applied to all local taxes it administered, including the County School Facility Tax at issue.

What this means for you

Do not source an Illinois local tax solely from the delivery address. Document where the sale occurs and where the goods are located at that time, then apply current Illinois sourcing law rather than assuming the 2010 rate or framework is unchanged.

Common questions

Q: Was the delivery truck treated as a temporary sales location in the county?
A: The Department's written response did not adopt that theory. It said the local rate was fixed by the place of sale, not the delivery location.

Q: Did this GIL conclusively exempt the named retailer from the county tax?
A: No. It was a nonbinding GIL giving general sourcing principles, not a taxpayer-specific Private Letter Ruling.

Citations and references

• 35 ILCS 120/2 (Retailers' Occupation Tax)
• 35 ILCS 105/3 (Use Tax)
• 86 Ill. Adm. Code 270.115(b) and (b)(3) (local-tax sourcing principles)
• 2 Ill. Adm. Code 1200.120 (GILs)

Subject

Local Taxes

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-10-0080.pdf

Original ruling text

ST 10-0080-GIL 09/02/2010 LOCAL TAXES
If a sale is made in a jurisdiction that imposes a local tax, that tax will be incurred. In situations
in which both the sale and the location of the property being sold at the time of the sale are
outside of the State of Illinois, such sales would only be subject to the Illinois Use Tax at the
rate of 6.25%. See 86 Ill. Adm. Code 270.115. (This is a GIL.)

September 2, 2010

Dear Xxxxx:
This letter is in response to your letter dated July 21, 2010, 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:
This is a formal request for determination as to whether COMPANY is required to collect
and submit to the Illinois Department of Revenue the COUNTY, Illinois 1% sales tax for
schools effective July 1 2010.
COMPANY sells major appliances and is located on the border of Indiana and Illinois.
Our store regularly sells and delivers to customers who reside in Illinois, and the
customers are charged the Illinois sales tax rate of 6.25%. In March, 2010, I read a
newspaper article in the PUBLICATION which stated COUNTY, Illinois enacted a 1%
sales tax increase for their schools effective July 1, 2010.
To get further information on this tax and how it would affect COMPANY, I called the
Illinois Department of Revenue at 217-785-3707 on March 22, 2010 and spoke to a
woman named Cheryl regarding this issue. She did not show any information
specifically about the COUNTY tax increase on her records but said it was such a long
and extensive process, that it would probably be in July when the records were
updated.
Cheryl then told me that since our truck delivers to COUNTY, the truck is considered a
temporary sales location in COUNTY and the 1% additional tax would need to be

collected. I asked if this would be paid through WebFile and if a different worksheet
was used for it. She said I would need to call back in July to tell the Illinois Department
of Revenue that COMPANY needed to change the way it was set up in WebFile so this
tax could be paid. She also suggested I call the local city or county clerk to get the
correct effective date as the timelines printed in newspapers are not always accurate.
That same day, March 22, 2010, I called the COUNTY Clerk. She said she had been
told that we would have to charge the 7.25% sales tax (6.25% Illinois plus 1%
COUNTY) although there were some exceptions such as farm equipment, groceries,
and medical. She had just mailed in the paperwork to the Illinois Department of
Revenue. I am enclosing a copy of the tax information faxed to me on 4-20-10.
On July 20, 2010, I called the Illinois Department of Revenue to get the WebFile change
requested. I spoke to a man named INDIVIDUAL. He told me that local taxes do not
apply since our store is not physically based in COUNTY and that we have no salesmen
or warehouses in that county. He told me I was told wrong by both Cheryl with the
Illinois Department of Revenue and the COUNTY Clerk. He had me go to the Illinois
Department of Revenue website to see the documentation. Under Regulations, Title
86: Revenue, Part 130, Retailers' Occupation Tax, Section 130.610 Sales of Property
Originating in Other States. He said that parts d)1)B and C applied to our store and that
no Retailers' Occupation Tax liability was incurred. A copy of this document is
enclosed.
I asked INDIVIDUAL to send me a letter stating our store was not obligated to collect
and remit this 1% tax to the Illinois Department of Revenue. He told me he was unable
to do this and that I needed to request such a letter through the Legal Counsel
department.
I would appreciate receiving a determination letter from your department as quickly as
possible so we have legal proof as to what taxes we are supposed to be collecting and
remitting to the Illinois Department of Revenue. I have invested a lot of time, energy,
and money into setting up our computer system to determine which customers need to
be charged this additional 1% tax. Our store will continue to collect the tax until we
receive your official letter of determination. If we do not have to collect this tax, we will
refund our customers the 1% tax money already collected.
Thank you very much for your prompt attention in resolving this issue. Please contact
me if you need additional information.

DEPARTMENT’S RESPONSE:
Illinois taxes the retail sale and use of tangible personal property under two separate but
related statutes. The Retailers' Occupation Tax Act imposes a tax upon persons engaged in the
business of selling at retail tangible personal property. 35 ILCS 120/2. The Use Tax Act imposes a tax
upon the privilege of using in this State tangible personal property purchased at retail from a retailer.
35 ILCS 105/3. These taxes comprise what is commonly known as "sales" tax in Illinois.
In general, the imposition of the various local sales taxes in Illinois takes effect when “selling”
occurs in a jurisdiction imposing a tax. See for example 86 Ill. Adm. Code 270.115(b). The local tax
rate, if any, is fixed by the location where the sale takes place, not the delivery location. The fact that
the item being sold is shipped from an out-of-State location or from another Illinois location is

immaterial for purposes of the imposition of local taxes if the sale occurs in an Illinois jurisdiction
imposing a local tax. For these transactions, the local tax imposed in the jurisdiction where the sale
occurs will be incurred.
If a sale occurs outside the State, but the property being sold is located in an inventory of the
retailer which is located in an Illinois jurisdiction that has imposed a local tax (see, for example,
Section 270.115(b)(3)), then the location of the property at the time of sale will determine where the
seller is engaged in business for the purpose of determining the imposition of applicable local sales
taxes. In situations in which both the sale and the location of the property being sold at the time of the
sale are outside of the State of Illinois, such sales would only be subject to the Illinois Use Tax at the
rate of 6.25%.
Although the regulation cited above (86 Ill. Adm. Code 270.115) deals with the municipal home
rule taxes, the principles outlined in this regulation apply to all local taxes administered by the
Department, including the County School Facility Tax.
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.
Sincerely,

Samuel J. Moore
Associate Counsel
SJM:msk