Did an Illinois nonprofit exemption number exempt a church from utility excise taxes, local utility taxes, fees, and bill adjustments?

Plain-English summary

A nonprofit church asked whether municipal taxes, sales taxes, state gas-revenue taxes, environmental cost-recovery adjustments, energy-efficiency charges, franchise costs, and similar utility-bill items were excise taxes it still had to pay.

IDOR explained that federal Section 501(c)(3) status alone did not establish Illinois exemption. An exclusively religious, educational, or charitable organization had to apply for an Illinois exemption identification number, or E number.

The E number documented exemption from Use Tax on tangible personal property purchased in furtherance of the organization's purpose. It did not exempt the church from Electricity Excise Tax, Gas Revenue Tax, or the other utility taxes, fees, and costs listed in its bills. IDOR also did not administer local utility taxes and directed the church to the municipality for any local exemption.

What this means for you

Treat an E number as documentation for a defined Illinois sales-and-use-tax exemption, not as a blanket exemption from every charge appearing on a utility bill.

Common questions

Was federal nonprofit status enough? No.

Did the E number cover utility excise taxes? No.

Who could answer local utility-tax questions? The local municipality.

Citations and references

• 86 Ill. Adm. Code 130.2007.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2015.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2015/st-15-0054-gil.pdf

Original ruling text

ST-15-0054 GIL – August 27, 2015 - EXEMPT ORGANIZATIONS
Organizations that make application to the Department and are determined to be exclusively
religious, educational, or charitable, receive an exemption identification "E number.” This
number evidences that this State recognizes that the organization qualifies as exempt from
incurring Use Tax when purchasing tangible personal property in furtherance of its
organizational purpose. See 86 Ill. Adm. Code 130.2007. (This is a GIL.)

August 27, 2015

Dear Mr. XXXX:
This letter is in response to your letter dated August 3, 2015, 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:
Thank you for responding to our June 30, 2015 written request for additional
information concerning our tax exemption status. CHURCH, a not-for-profit religious
organization would like further written clarification regarding excise taxation.
Specifically CHURCH would like to know are municipal taxes, sale taxes, state
gas revenue taxes, environmental cost recovery adj., energy efficiency programs,
franchise cost, considered excise taxation and should be paid or are the above listed
items considered tax exempt and therefore not payable. We have included examples
for your review. Thank you in advance for responding!
DEPARTMENT’S RESPONSE:
Organizations that are recognized as non-profit under Internal Revenue Code Section
501(c)(3), are not necessarily exempt organizations pursuant to Illinois tax law. Such organizations
must obtain an exemption identification number (an “E number”) to qualify. See 86 Ill. Adm. Code
130.2007. Organizations that make application to the Department of Revenue and are determined to
be exclusively religious, educational, or charitable, receive an E number.

The E number evidences that the Department recognizes the organizations as exempt from
incurring Use Tax (often referred to as “sales tax”) when purchasing tangible personal property in
furtherance of their organizational purposes. The E number, however, does not exempt organizations
from the excise taxes you have identified in the documents attached to your letter (i.e., the Electricity
Excise Tax, the Gas Revenue Tax and other charges, fees, and costs that may be added to utility
bills). As a result, even though an organization has an E number, it is still liable for those taxes, fees
and costs. The E number is issued by the Department as a mechanism to document sales tax
exemptions on taxes administered by the Department. We do not collect or administer local utility
taxes. You may want to contact the municipality to see what exemptions may be available.
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
DMB:mdb