Were an intermodal trucker's separately stated storage, chassis, and fuel charges subject to Illinois sales or service tax?

Plain-English summary

An intermodal trucking company separately billed customers for rail-yard storage, use of a chassis that remained under the trucker's control, and fuel consumed while moving containers.

IDOR gave a conditional answer rather than deciding each charge. Retailers' Occupation and Use Taxes did not apply to sales of service, while Service Occupation and Service Use Taxes applied only when tangible personal property was transferred incident to the service.

If the described transactions transferred no tangible personal property to the customer, none of those four taxes generally applied. The letter did not independently determine whether each storage, chassis, or fuel charge met that condition.

Common questions

Did IDOR expressly approve all three charges as nontaxable? No. Its answer depended on no property being transferred.

Did separately listing a charge make it taxable? The response focused on property transfer, not invoice presentation.

Citations and references

• 86 Ill. Adm. Code 140.101
• 86 Ill. Adm. Code 160.101

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2013.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2013/st-13-0024.pdf

Original ruling text

ST 13-0024-GIL 05/28/2013 SERVICE OCCUPATION TAX
If no tangible personal property is transferred to the customer, then no Illinois Retailers’
Occupation Tax or Service Occupation Tax would apply. See 86 Ill. Adm. Code Parts
130 and 140. (This is a GIL.)
May 28, 2013
Dear:
This letter is in response to your letter dated January 3, 2013, 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 respectfully request a written opinion regarding whether or not a Taxpayer is
required to collect sales and use tax for charges it itemizes on its invoices. We believe
these items are incidental components used in the process of providing its primary
business service to customers in the State of Illinois, rather than sales to its customers.
Taxpayer is a transportation company offering intermodal trucking services to its
customers. Based on Illinois Regulation 140-101, we believe that Taxpayer’s sales are
non-taxable and that the items listed below are not separate sales, but are instead but
necessary parts of the intermodal trucking services offered, and therefore not subject to
sales and use tax. We respectfully request an opinion as to the validity of our
interpretation and have the following questions:

1. Please confirm that Taxpayers services are non-taxable.
2. During periods where the customer requires a delay or wait time in the
   transportation process and the product is sitting at a rail yard, Taxpayer is
   charged a storage fee by the rail yard. Taxpayer in turn charges the
   customer for this storage fee so that it can be reimbursed for the expense.
   Taxpayer is not a storage company nor is it in the business of selling or
   providing storage. This is only provided in conjunction with the transportation
   services and only when Taxpayer is charged for storage and we therefore
   believe this is non-taxable. Is Taxpayer considered responsible for collecting
   sales tax for storage of intermodal cargo containers until such time as the end
   customer can take delivery?
3. When a chassis is required (framework required to hold the intermodal
   container holding cargo) Taxpayer makes a separate charge for the chassis.
   The chassis is not transferred to the customer and the customer has no care,

ST 13-0024-GIL
May 28, 2013
Page 2
custody, or control over the chassis. It is used by Taxpayer to provide the
transportation service. We do no believe this is a taxable charge to
Taxpayers customer because the chassis is used by Taxpayer and the
customer never takes any possession or control of the chassis. Is Taxpayer
considered responsible for collecting sales tax on the charge for the chassis?

4. Taxpayer charges for the fuel expenses as a separate line item. This is not
   fuel that is sold to the customer but is fuel that is used and consumed by
   Taxpayer while providing the transportation service and we therefore believe
   this charge to Taxpayer’s customer is non-taxable. Is Taxpayer considered
   responsible for collecting sales tax on these charges for fuel used in moving
   intermodal containers?
   Please let us know if we can provide more information to assist in determination of this
   matter. If we are incorrect, please provide an explanation as to why these services
   incidental to the intermodal transportation of cargo would not qualify as non-taxable.
   You can contact me at XXXX if you have any questions.
   DEPARTMENT’S RESPONSE:
   Retailers' Occupation and Use Taxes do not apply to sales of service. The Service Occupation Tax
   Act and Service Use Tax are imposed on the transfer of tangible personal property incident to sales
   of service. 86 Ill. Adm. Code 140.101 and 160.101. However, if no tangible personal property is
   transferred incident to a sale of service, the Service Occupation Tax and Service Use Tax do not
   apply.
   If the transactions you are inquiring about do not involve the transfer of any tangible personal property
   to the customer, then they generally would not be subject to Retailers’ Occupation Tax, Use Tax,
   Service Occupation Tax, or Service Use 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.
   Very truly yours,

Debra M. Boggess
Associate Counsel