IL ST 11-0081-GIL Illinois Retailers' Occupation (Sales & Use) Tax 2011-09-19

Is a subscription to an educational website with videos, study guides, practice questions, and no software download taxable in Illinois?

Short answer: The GIL did not expressly classify the educational subscription. It stated that electronically transferred or downloaded information and data were not tangible personal property, while canned software was taxable regardless of delivery method, including electronic transmission. Custom software prepared to the customer's special order might not be taxable, and canned-software updates were taxable. The requester described website access to videos, study guides, practice questions, and curriculum with no software downloaded, so the key unresolved classification was information access versus taxable canned software.

Apply this to your situation

This page answers the general question as of 2011. Ezel answers yours, under current Illinois tax law, with citations.

Disclaimer: This is an official Illinois Department of Revenue General Information Letter (GIL), issued under 2 Ill. Adm. Code 1200.120. A GIL merely directs a taxpayer to the relevant Department regulations or other sources of information; it is NOT a statement of Department policy and is NOT binding on the Department. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Illinois tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

The requester sold subscriptions to an educational website containing videos, study guides, practice questions, and supplemental curriculum. Customers viewed the materials online and downloaded no software.

Illinois did not expressly rule that the subscription was taxable or exempt. It supplied the classification rules for electronic information and software.

Electronic information was not tangible property

Information or data transferred or downloaded electronically was not considered tangible personal property under 86 Ill. Adm. Code 130.2105(a)(3).

Canned software remained taxable

Canned software was taxable tangible personal property regardless of delivery method, including electronic delivery. Canned-software updates were fully taxable.

Custom software prepared to a customer's special order might not be a taxable retail sale, including qualifying custom updates.

The GIL did not say whether the educational platform gave access only to information or included taxable canned software.

What this means for you

Online education providers

No-download delivery supports the information-services side of the framework but does not by itself produce a binding exemption. Classify what the customer receives and whether software functionality is transferred.

Subscribers

This letter is not a determination of tax on any specific platform. It is general guidance and leaves the product classification unresolved.

Common questions

Q: Is electronically delivered information tangible personal property?
A: No under the rule stated.

Q: Is canned software taxable when delivered online?
A: Yes.

Q: Did Illinois specifically exempt this educational subscription?
A: No. It gave general rules without applying them to a final classification.

Citations and references

35 ILCS 120/2 and 35 ILCS 105/3 — Retailers' Occupation Tax and Use Tax.
86 Ill. Adm. Code 130.2105(a)(3) — electronic information or data.
86 Ill. Adm. Code 130.1935 — canned and custom software.

Source

Original ruling text

ST 11-0081-GIL 09/19/2011 MISCELLANEOUS
Information or data that is electronically downloaded is not considered the transfer of tangible
personal property in this State. See 86 Ill. Adm. Code 120.2105. (This is a GIL.)

September 19, 2011

Dear Xxxxx:
This letter is in response to your letter dated August 26, 2011, 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:
We are requesting a Written Ruling on the taxability of a new item our company is
currently developing. It is a subscription to an educational website which provides
teaching and learning resources in math. Information that can be viewed include:
videos, study guides, practice questions, and supplemental curriculum.
The
subscription allows access to the website to view all of these educational tools. No
software is downloaded to the purchaser’s computer. Comparable products include
WEBSITES.
Please send the Written Ruling via email or our mailing address.

DEPARTMENT’S RESPONSE:
The Illinois Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in
the business of selling tangible personal property to purchasers for use or consumption. 35 ILCS
120/2; 86 Ill. Adm. Code 130.101. In Illinois, Use Tax is imposed on the privilege of using, in this
State, any kind of tangible personal property that is purchased anywhere at retail from a retailer. 35
ILCS 105/3; 86 Ill. Adm. Code 150.101. These taxes comprise what is commonly known as "sales"
tax in Illinois. If the purchases occur in Illinois, the purchasers must pay the Use Tax to the retailer at
the time of purchase. The retailers are then allowed to retain the amount of Use Tax paid to
reimburse themselves for their Retailers' Occupation Tax liability incurred on those sales. If the

purchases occur outside Illinois, purchasers must self assess their Use Tax liability and remit it
directly to the Department.
Information or data that is electronically transferred or downloaded is not considered the
transfer of tangible personal property in this State. See 86 Ill. Adm. Code 130.2105(a)(3). However,
canned computer software is considered taxable tangible personal property regardless of the form in
which it is transferred or transmitted, including tape, disc, card, electronic means or other media. See
86 Ill. Adm. Code 130. 1935. If the computer software consists of custom computer programs, then
the sales of such software may not be taxable retail sales. See Section 130.1935(c). Custom
computer programs or software must be prepared to the special order of the customer. Charges for
updates of canned software are fully taxable pursuant to Section 130.1935. If the updates qualify as
custom software under Section 130.1935(c), they may not be taxable.
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,

Richard S. Wolters
Associate Counsel
RSW:msk

Get today's answer for your situation

You just read a 2011 ruling on this question. Ezel checks current Illinois tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.