Was propane delivered for rural home heating exempt from Illinois local retailers' occupation tax?

Plain-English summary

A rural homeowner asked why one propane-delivery company charged a combined State and local tax rate while two others charged only the State rate, and whether home heating created a local exemption.

IDOR said local retailers' occupation taxes that it administered followed the State Retailers' Occupation Tax rules for exemptions, credits, and administrative procedures. Because the State Act did not exempt L.P. propane gas used to heat homes, those local taxes did not provide an exemption either.

What this means for you

Residential use alone did not exempt propane from the State rule or from local occupation taxes administered under the same exemption framework. The letter did not determine which rate applied to a particular delivery address.

Common questions

Was rural home-heating propane locally exempt? No.

Did IDOR verify the exact rate charged by each company? No.

Citations and references

• 86 Ill. Adm. Code 693.120.

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-16-0027-gil.pdf

Original ruling text

ST 16-0027-GIL 06/02/2016 MISCELLANEOUS
Occupation taxes imposed by units of local government that are administered by the Illinois
Department of Revenue generally are subject to the same exemptions contained in the State
Retailers’ Occupation Tax Act. See 86 Ill. Adm. Code 693.120. (This is a GIL.)

June 2, 2016

Dear XXXXX:
This letter is in response to your letter dated April 8, 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:

I am asking for legal advice on the sales tax rate that is charged by rural L.P. Propane
gas delivery companies.
We have three companied [sic] serving our area; two charge .0625% sales tax and one
is charging .0725% sales tax: a combined total of state sales tax plus local sales tax.
Does not heating ones [sic] home with rural L.P. Propane gas exempt a person from
local tax?
I am asking for a verification of the above law to be sent to me.

DEPARTMENT’S RESPONSE:

Local retailers’ occupation taxes imposed by local governments and that are administered by
the Department follow the same rules for exemptions, credits, and other administrative procedures as
the State Retailers' Occupation Tax. See 86 Ill. Adm. Code 693.120. Consequently, if an item is not
exempt under the Retailers' Occupation Tax Act, it is also not exempt from a local retailers’
occupation tax.
The Retailers’ Occupation Tax Act does not provide an exemption for sales of L.P. Propane
gas used to heat homes. Thus, taxes imposed by units of local government that are administered by
the Department would, similarly, not provide an exemption.
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