Was a village-owned Illinois hotel and convention facility exempt from Telecommunications Excise Tax and entitled to recover tax it had paid?

Plain-English summary

A hotel and convention facility owned by an Illinois village believed its governmental status made it tax-exempt. Its telecommunications vendor offered a credit for three years, and the facility asked how to recover tax paid earlier.

IDOR said the premise was wrong for Telecommunications Excise Tax. The Act's purchaser exemptions were limited to the State and federal governments, state universities created by statute, and qualifying purchases by wholly owned corporate subsidiaries from a parent or another wholly owned subsidiary.

Illinois units of local government were not exempt. The broader exemptions available under the Retailers' Occupation Tax Act and related sales-tax statutes were not incorporated into the Telecommunications Excise Tax Act. The village-owned facility's telecommunications purchases were therefore fully taxable.

Because IDOR found no exemption, the response did not provide a route to recover the older payments as erroneously collected exempt tax.

Common questions

Did village ownership create a telecommunications tax exemption? No.

Did an Illinois sales-tax E number control? No. Sales-tax exemptions were not incorporated into the Telecommunications Excise Tax Act.

Who could buy telecommunications tax-free under the cited 2012 rule? The State and federal governments, state universities created by statute, and qualifying wholly owned corporate affiliates.

Citations and references

• 35 ILCS 630/2, 630/3, and 630/4
• 35 ILCS 120 (sales-tax exemptions not incorporated)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2012.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2012/st-12-0026.pdf

Original ruling text

ST 12-0026-GIL 06/15/2012 TELECOMMUNICATIONS EXCISE TAX
This letter concerns the very limited exemptions from Telecommunications Excise Tax.
See 35 ILCS 630/2. (This is a GIL.)
June 15, 2012
Dear:
This letter is in response to your letter dated May 22, 2012, 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:
My name is Mr. Z and I am from the HOTEL & CONVENTION in CITY IL. We are
owned by the VILLAGE therefore are tax exempt. We have had an account with
COMPANY since opening of 200X and we have been paying sales tax. Recently, we
got in touch with COMPANY and they are able and willing to credit us for up to 3 years.
Is there anyway [sic] we can be reimbursed for the exempt taxes prior to the 3 years?
Please let me know if/what I need to do in order to be reimbursed prior to 3 years.

DEPARTMENT’S RESPONSE:
The Telecommunications Excise Tax Act imposes a tax on the act or privilege of originating or
receiving intrastate or interstate telecommunications by persons in Illinois at the rate of 7% of the
gross charges for such telecommunications purchased at retail from retailers by such persons. 35
ILCS 630/3 and 4. The only purchasers who can purchase telecommunications tax-free are the State
and Federal governments, State Universities created by statute, and wholly owned corporate
subsidiaries purchasing from the parent or other wholly owned subsidiary. 35 ILCS 630/2.
The exemptions provided in the Retailers’ Occupation Tax Act (35 ILCS 120/), and related Tax Acts
(generally referred to as “sales tax”) are not incorporated by reference into the Telecommunications
Excise Tax Act. Therefore, the exemptions contained in the Retailers’ Occupation Tax Act are not
available under the Telecommunications Excise Tax. The Act does not authorize an exemption for a
purchase of telecommunications by units of local governments in Illinois. Such purchases are fully
subject to 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.

ST 12-0026-GIL
June 15, 2012
Page 2

Very truly yours,

Richard S. Wolters
Associate Counsel
RSW:msk