Could a logistics company buy automobiles from Illinois dealers tax-free for resale and later export, and what proof should it provide?

Plain-English summary

A U.S. logistics company proposed buying one to three new or used automobiles per week from Illinois dealers, reselling them through another intermediary, and exporting them to a foreign buyer. It asked whether export made the dealer sale exempt, whether it needed reseller authority, and whether other Illinois requirements applied.

IDOR said the facts were insufficient to determine the tax consequences of each step and did not grant a blanket export exemption. It observed that the logistics company appeared to be purchasing the automobiles for resale and urged it to obtain a resale number.

For protection, each Illinois dealer should obtain a signed certificate of resale describing the vehicles and identifying the seller and purchaser, with the purchaser's Illinois registration number, resale number, or qualifying out-of-state statement. Without a number and certification, Illinois presumes the sale is not for resale, although other evidence can rebut that presumption.

The later sales between the logistics company, intermediary, and foreign buyer could also create Illinois tax issues or themselves be sales for resale; the GIL left those questions unresolved.

Common questions

Did eventual export automatically exempt the Illinois dealer purchase? IDOR did not say so; it lacked enough facts to classify the transactions.

What documentation did IDOR recommend? An Illinois resale number and a complete signed certificate of resale.

Citations and references

• 86 Ill. Adm. Code 130.1405
• 35 ILCS 120/2c

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-13-0060.pdf

Original ruling text

ST-13-0060 – GIL 10/22/13 CERTIFICATES OF RESALE
This letter discusses requirements for certificates of resale. See 86 Ill. Adm. Code 130.1405.
(This is a GIL.)
October 22, 2013

Dear Xxxxx:
This letter is in response to your letter that we received on February 21, 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:
My name is TAXPAYER and I work for COMPANY3, a logistics company
based in CITY, STATE.
We have a potential business opportunity to export automobiles to COUNTRY;
for which we require guidance to ensure we comply with the applicable
regulations, please see the following conditions and scenario below:
CONDITIONS
•
•
•
•
•
•
•
•

Commodity: New and Used Automobiles
Quantity: 1 to 3 automobiles per Week
Supplier: Various Automobile Dealers in Illinois
Export Port: CITY
Destination: COUNTRY
Actual Buyer: COMPANY1
Ordering Party: COMPANY2
US Buying Party: COMPANY3

SCENARIO
1.

COMPANY1 requests COMPANY2 to locate and purchase
automobiles with specific criteria in the US.

2.
3.

4.

5.
6.

7.

COMPANY2 requests COMPANY3 to locate and purchase
automobile.
COMPANY3 locates and purchases the automobile and informs
the dealer that the automobile will be exported to COUNTRY and
requests a sales tax exemption.
COMPANY3 exports the automobile to COUNTRY and provides
exporting documents to the dealer as sales tax exemption for
auditing purposes.
COMPANY3 sells the automobile to COMPANY2 at cost and
charges an additional 3% finder’s fee.
COMPANY2 sells the automobile to COMPANY1 at cost and
charges an additional 6% finder’s fee (COMPANY3 3% +
COMPANY2 3%).
•
Price of automobile is not ‘marked up the 6% finder’s fee is
on separate charge line.
Upon arrival to COUNTRY port, COMPANY2 arranges delivery
to COMPANY1.

With consideration of the above scenario, please kindly advise:
A.
B.
C.

Is our understanding correct that Sales Tax is exempt if
automobiles are exported?
Is a Reseller’s License, Seller’s Permit or other authority required
for COMPANY3 to engage in this Business?
Are there any other issues or requirements that we should be
concerned?

If you require more detail, please let us know.
Thank you in advance for your assistance.

DEPARTMENT’S RESPONSE:
In your letter, you raise several potential issues. We do not have enough information
about the transactions involved in the automobile purchases your corporation makes to determine
your tax consequences. Without more information, we cannot provide guidance to you regarding
the taxability of each of these transactions. However, from the information that you have
supplied, it appears that COMPANY3 may be purchasing for resale when the corporation
purchases automobiles from automobile dealers located in Illinois. We urge you to obtain a
reseller’s number to use in such transactions. See 86 Ill. Adm. Code 130.1405. When sales for
resale are made, sellers should, for their protection, take a Certificate of Resale from the
purchaser. Mere statements by sellers that property was sold for resale will not be accepted by
the Department without corroborative evidence. Certificates of Resale may be made a part of
purchase orders signed by the purchaser.

A Certificate of Resale is a statement signed by the purchaser that the property purchased
by him is purchased for purposes of resale. Provided that this statement is correct, the
Department will accept Certificates of Resale as prima facie proof that sales covered thereby
were made for resale. Failure to present an active registration number or resale number and a
certification to the seller that a sale is for resale creates a presumption that a sale is not for resale.
This presumption may be rebutted by other evidence that all of the seller’s sales are sales for
resale, or that a particular sale is a sale for resale (Section 2c of the Act). In addition to the
statement, a Certificate of Resale must contain:
1)

the seller’s name and address;

2)

the purchaser’s name and address;

3)

a description of the items being purchased for resale;

4)

purchaser’s signature, or the signature of an authorized employee or agent of the
purchaser, and date of signing;

5)

Registration Number, Resale Number, or Certificate of Resale to Out-of-State
purchaser:
a) purchaser’s registration number with the Illinois Department of Revenue; or
b) purchaser’s resale number issued by the Department of Revenue; or
c) a statement that the purchaser is an out-of-State purchaser who will sell only
to purchasers located outside the State of Illinois.

Your letter describes two other potential transactions. If the sales from COMPANY to
COMPANY and from COMPANY to COMPANY occur in STATE, these transactions could
trigger Illinois tax liability. They may also be sales for resale. However, we cannot say whether
you have tax liability based on the limited information provided.
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,

Cara Bishop
Associate Counsel
CB:msk