Was industrial air-pollution-control equipment still generally exempt from Illinois sales tax after July 1, 2003?

Plain-English summary

An Illinois manufacturer had treated air-pollution-control equipment as exempt while taxing replacement and repair parts. It asked whether the equipment itself remained exempt.

IDOR said the general pollution-control sales-tax exemption was repealed effective July 1, 2003, by Public Act 93-24. The old exemption was described in Section 130.335.

A narrower enterprise-zone exemption survived. It applied to tangible personal property used or consumed in operating a pollution-control facility when the Department of Commerce and Economic Opportunity certified the business for the required investment and job-creation or retention criteria and certified the facility's enterprise-zone location. The property had to be used exclusively in the enterprise zone, and the pollution-control facility also had to be there.

What this means for you

Pollution-control function alone did not establish a general exemption after June 30, 2003. Sellers and purchasers had to verify the specific enterprise-zone certification and exclusive-use conditions.

Common questions

Was ordinary pollution-control equipment generally exempt in 2016? No.

Could certified enterprise-zone equipment qualify? Yes, under the conditions described in Section 1e.

Citations and references

• Public Act 93-24.
• 86 Ill. Adm. Code 130.335.
• 35 ILCS 120/1e.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0020-gil.pdf

Original ruling text

ST 16-0020-GIL 05/31/2016

POLLUTION CONTROL FACILITIES

The pollution control exemption expired July 1, 2003. See 86 Ill. Adm. Code 130.335. (This is
a GIL.)

May 31, 2016

Ref: Taxes on Air Pollution Control Equipment
Dear Xxxxx:
This letter is in response to your letter dated February 18, 2016, 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:
COMPANY is a manufacturer of industrial air pollution control equipment.
located in CITY, IL. Tax I.D. XX-XXXXXXX.

We are

Most of our equipment is sold through another manufacturer who then resells this
equipment to the end user. It has been our understanding that air pollution control
equipment is non taxable in Illinois, but replacement/repair parts are taxable. This
information was given to us from the taxpayer assistances department back in 2012 and
2013. They did site section 130.335 that also included air pollution parts. It was our
understanding that when section 130.335 ended, parts were no longer tax exempt but
equipment was still non taxable.
In recent years, we have sold some equipment as well as spare parts to the end user in
Illinois. We have charged sales tax on the parts that were sold, but not the air pollution
control equipment.
We know that spare/replacement parts are taxable. Please provide us with a ruling for
air pollution control equipment. Is this equipment taxable or non taxable?

DEPARTMENT’S RESPONSE:
Effective July 1, 2003, the Pollution Control Exemption for sales tax was repealed by Public
Act 93-24. This repealed exemption is described at 86 Ill. Adm. Code 130.335. However, the
expanded Pollution Control Exemption related to enterprise zones was not repealed. Section 1e of
the Retailers’ Occupation Tax Act provides that all tangible personal property to be used or consumed
in the operation of a pollution control facility that is certified, as required under Section 1f of the
Retailers’ Occupation Tax Act, by the Department of Commerce and Economic Opportunity both as
meeting certain investment and job creation or retention criteria and as being located within an
enterprise zone shall be exempt from Retailers’ Occupation Tax. See 35 ILCS 120/1e. The
administrative rules adopted by the Illinois Department of Revenue to implement this exemption
provide that if a business enterprise is so certified by the Department of Commerce and Economic
Opportunity, all tangible personal property used or consumed by it in the operation of pollution control
facilities within an enterprise zone are exempt from Retailers’ Occupation Tax. In order to qualify, the
items must be used exclusively in the enterprise zone and the pollution control facility must be in the
enterprise zone.
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:bkl