Were a fuel hauler's rebillings sales for resale when fuel was charged to one customer but delivered to another?

Plain-English summary

A fuel freight hauler described loads charged to one customer but physically delivered to another. When the original seller could not correct the invoice, the wrongly billed customer invoiced the hauler for the fuel and taxes, and the hauler then invoiced the actual recipient.

IDOR said the exact transactions were unclear from the limited facts, but they appeared to be exempt sales for resale. The exemption required documentation; a seller could not rely on a bare statement that property was resold.

A Certificate of Resale had to be signed by the purchaser, use that purchaser's own active registration or resale number, identify the seller and purchaser, describe the items, and include the signing date. Without an active number and certification, the sale was presumed not to be for resale, though other evidence could rebut the presumption.

What this means for you

Correcting the economic burden after a misdelivery does not itself document a resale. Each seller in the rebilling chain should identify its purchaser and obtain a certificate bearing that purchaser's valid number.

Common questions

Did IDOR say the rebillings were taxable? They appeared exempt as sales for resale, subject to documentation.

Whose registration number belonged on the certificate? The purchaser's.

Could other evidence replace a certificate? It could rebut the taxable presumption, but the GIL treated a valid certificate as the standard proof.

Citations and references

• 86 Ill. Adm. Code 130.1405.
• Section 2c of the Illinois Retailers' Occupation Tax Act.

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-15-0070-gil.pdf

Original ruling text

ST 15-0070-GIL 11/30/2015 SALE FOR RESALE
This letter addresses sales for resale. See 86 Ill. Adm. Code 130.1405. (This is a GIL.)

November 30, 2015

Dear Xxxxx:
This letter is in response to your letter dated September 24, 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:
ABC is a freight hauler in the Fuel industry and deliver loads for a large number of
different customers. On occasion, there are loads that are pulled on a given customer,
but the fuel is actually delivered to another customer, possible competitor of who the
load was pulled on. In this case, the wrong customer gets charged for all the fuel and
related taxes. When this happens we attempt to have the seller of the fuel correct the
billing, to bill the correct customer for the product; however, there are times when this is
not possible. In return, the customer charged for the fuel and taxes invoices ABC for
the product and all taxes. ABC, therefore, invoices the receiving customer for the
product and the related taxes.
We have been in contact with the Illinois Tax Department regarding this topic and have
resolved our responsibilities for the Illinois Excise taxes and Motor Fuel taxes. When it
came to the question of the State Use Tax, they were unable to answer our questions
and recommended we contact the Legal Services Department. After several attempts,
we were told we had to contact the Legal Services Department by letter and then
someone could contact us.
Would someone please call me at ABC, to assist us on questions we have regarding
Illinois State Use Tax.
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. See 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. See 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.
The exact nature of the transactions you describe is not clear from the limited information in
your letter. Based on the representations made in your letter, it appears that the transactions
involved are exempt from sales tax as sales for resale. Sales for resale must be properly
documented or sellers must charge tax. 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.
Please note that the certificate must be signed by the individual making the purchase. The
registration number on the certificate must also be that of the purchaser. 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.

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:ebj