Is a company's purchase of another company's business assets, arranged through a private broker rather than through the broker's internet auction, subject to Illinois Retailers' Occupation (sales) Tax, or does it qualify for the occasional sale exemption?

Plain-English summary

The Illinois Department of Revenue ruled that a construction company's purchase of another company's business assets was exempt from Retailers' Occupation Tax (sales tax) as an occasional sale, even though the deal involved a broker who also ran an online auction platform.

A broker (an auctioneer and internet auction listing service) privately notified the taxpayer of a chance to buy either the seller's ongoing business or its equipment. The taxpayer and seller negotiated the deal directly and privately; only after negotiations were well underway did the broker briefly list the assets on its auction website, and the purchased items were pulled from that listing once the private deal closed. The broker then invoiced the taxpayer for the equipment, charged Retailers' Occupation Tax, and remitted it to the state. The taxpayer paid the tax and then sought a ruling on whether it was actually owed.

The Department agreed it was not. Since January 1, 2021, internet auction listing services can be treated as "marketplace facilitators," meaning sales made through their auction platforms are taxable and can't qualify as occasional sales. But here, the entire transaction -- negotiation, deal terms, and closing -- happened through the broker's private sale services, independent of its internet auction listing service, even though the broker (rather than the seller directly) ultimately invoiced and collected payment. Because the seller was not in the business of selling this kind of equipment and the transaction was isolated and non-recurring, it qualified for the occasional sale exemption under 86 Ill. Adm. Code 130.110.

What this means for you

Business owners buying or selling company assets

If you buy or sell business assets (equipment, inventory, or other property) in a one-off deal, that sale can be exempt from Illinois sales tax as an "occasional sale," even if a broker is involved, as long as the seller isn't in the business of regularly selling that kind of property and the deal isn't actually conducted through the broker's public auction or marketplace channel.

Auctioneers, brokers, and marketplace facilitators

The channel matters more than the broker's identity. The same broker can act as a taxable "marketplace facilitator" for sales made through its internet auction listing service, and as a non-taxable conduit for a privately negotiated sale of business assets. Briefly listing assets on the auction site during negotiations, or having the broker invoice and collect the tax, doesn't by itself convert a private sale into a taxable marketplace transaction.

Accountants and tax professionals

This ruling walks through the post-2021 marketplace facilitator rules for auctioneers (P.A. 101-0031/101-0604, clarified by P.A. 102-0634/SB 2066) alongside the pre-existing occasional sale exemption in 86 Ill. Adm. Code 130.110. Note the refund mechanics: because the broker (not the taxpayer) remitted the tax directly to the Department, only the broker -- not the taxpayer/purchaser -- has standing to file a claim for credit under 86 Ill. Adm. Code 130.1501; any refund to the taxpayer is a private matter between the taxpayer and the broker.

Common questions

Q: Does using a broker to sell business assets automatically make the sale taxable?
A: No. What matters is whether the sale actually went through the broker's taxable marketplace/auction channel or was a privately negotiated sale that the broker merely facilitated administratively (e.g., by invoicing). Here, the negotiations and deal terms were entirely private, so the sale qualified as an occasional sale.

Q: The broker briefly listed the assets on its auction website -- why didn't that make the sale taxable?
A: Because the listing did not lead to the sale. The parties had already negotiated privately, and the purchased assets were removed from the auction listing once the private deal closed. The Department found the auction listing incidental, not the actual sales channel.

Q: Who can claim a refund if sales tax was paid but the transaction turns out to be exempt?
A: Under 86 Ill. Adm. Code 130.1501, since the broker remitted the tax directly to the Department, only the broker has standing to file a claim for credit. Whether the broker then refunds the purchaser is a private matter between them; the Department cannot compel that refund.

Q: Can any other taxpayer rely on this ruling?
A: No. This is a Private Letter Ruling binding on the Department only as to the specific taxpayer and the facts as presented. It illustrates the Department's reasoning but does not create precedent for other taxpayers' transactions.

Q: What law changed the tax treatment of auctioneers around this time?
A: Effective January 1, 2021 (P.A. 101-0031 and 101-0604), internet auction listing services meeting certain gross-receipts or transaction-count thresholds became "marketplace facilitators" subject to Retailers' Occupation Tax on sales made through their platforms. P.A. 102-0634 (SB 2066), effective August 27, 2021, clarified that persons licensed under the Auction License Act are not "marketplace facilitators" unless they specifically operate as an internet auction listing service.

Citations and references

Statutes:

• 35 ILCS 120/1 et seq.; 35 ILCS 120/2 (Retailers' Occupation Tax Act and its imposition)
• 35 ILCS 120/2-12(7) (marketplace facilitator sourcing)
• 35 ILCS 105/3 (Use Tax imposition)
• 225 ILCS 407/5-10 (Auction License Act -- definitions of "auction" and "internet auction listing service")

Regulations:

• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax)
• 86 Ill. Adm. Code 130.110 (occasional sale exemption)
• 86 Ill. Adm. Code 130.1501 (refund claims)
• 86 Ill. Adm. Code 130.1915(b) (pre-2021 auctioneer rule for disclosed principals)
• 86 Ill. Adm. Code 131.135(a) (marketplace facilitator threshold)
• 86 Ill. Adm. Code 131.145(k) (no occasional sale on a marketplace)
• 86 Ill. Adm. Code 131.155; 86 Ill. Adm. Code 270.115 (sourcing)
• 86 Ill. Adm. Code 150.101 (Use Tax)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure); 2 Ill. Adm. Code 1200.120 (General Information Letters)

Public Acts:

• P.A. 101-0031 and P.A. 101-0604 (2021 marketplace facilitator rules for auctioneers, per Information Bulletin FY2021-05)
• P.A. 102-0634 / SB 2066 (excludes Auction License Act licensees from "marketplace facilitator" except internet auction listing services)

Case law:

• Heller v. Fergus Ford, Inc., 59 Ill. 2d 576, 579 (1975) (tax exemptions strictly construed in favor of taxation)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2023.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2023/ST-23-0001-PLR.pdf

Original ruling text

ST-23-0001-PLR 02/07/2023 OCCASIONAL SALE
A transaction for sale of business assets made entirely through a private broker
qualified for the occasional sale exemption. See 86 Ill. Adm. Code 130.110.
(This is a PLR.)
February 7, 2023

NAME/COMPANY1/ADDRESS
Dear Mr. XXX,
This letter is in response to your letter dated September 17, 2021, in which you
requested 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.
Review of your request disclosed that all the information described in paragraphs
1 through 8 of Section 1200.110 appears to be contained in your request. This Private
Letter Ruling will bind the Department only with respect to, COMPANY2,
(“COMPANY2”) for the issue or issues presented in this ruling and is subject to the
provisions of subsection (e) of Section 1200.110 governing expiration of Private Letter
Rulings. Issuance of this ruling is conditioned upon the understanding that neither
COMPANY2 nor a related taxpayer is currently under audit or involved in litigation
concerning the issues that are the subject of this ruling request. In your letter you have
stated and made inquiry as follows:

We are requesting a Private Letter Ruling on behalf of our client,
COMPANY2, pursuant to 86 Ill. Admin Code 1200.110. Pursuant to the
regulation, we attest on behalf of our client the following:

1. The taxpayer is not under audit for any tax, nor is the taxpayer
   the subject of any pending litigation related to the request.
2. The requested ruling relates to Service Occupation Tax for
   periods open under the statute of limitation and going forward.
3. To the best of our knowledge, the Taxpayer and Representative

COMPANY2/ NAME
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February 7, 2023
are not aware of any contradictory authorities nor are we aware
of any rulings covering the specific facts and questions
addressed below.

4. Neither the taxpayer nor its Representative have previously
   requested a ruling from the Department of Revenue on this
   issue.
5. The Taxpayer is not aware of any relevant authorities not
   disclosed which contradict the ruling request.
   Statement of Facts
   COMPANY2 ("The Taxpayer") is a construction company located in
   CITY1, Illinois.
   In DATE1, Taxpayer was privately notified by COMPANY3 ("Broker") of an
   opportunity to negotiate for either the purchase of COMPANY4 ("Seller")
   as a going concern or to purchase the equipment of that company in a
   private sale. Broker is based in CITY2 and is primarily engaged in the
   business of auctioning farm, construction and other commercial
   equipment. For online auctions, equipment is listed in a uniform
   presentation format set by the Broker. (See ADDRESS2).
   As the opportunity was not yet publicly known, the negotiations were
   conducted directly between Taxpayer and the Seller. Negotiations took
   place directly between the Taxpayer and the Seller in the fall of YEAR1.
   The Seller had initially been interested in continuing with the business
   through a transitional agreement, but in early YEAR2, the Seller decided
   just to sell the assets. Preliminary lists of assets and pricing were
   exchanged that ultimately culminated in the purchase of assets. An offer
   for equipment was presented by Taxpayer to the Seller at this time.
   In DATE2, Broker listed all of the assets of the Seller on its website as
   available. Shortly thereafter, Taxpayer completed its direct negotiations
   with the Seller to purchase selected equipment from the Seller. At this
   time, the purchased assets were removed from the listing on the Broker's
   website. Note that the assets purchased by the Taxpayer were not
   purchased through the internet auction but were invoiced by the Broker
   based on instructions by the Seller and Taxpayer.
   Broker invoiced Taxpayer for the equipment including ROT. To our
   knowledge, the Broker did not take title to the property. Taxpayer, through
   its representative, inquired as to applicability of the law changes described
   in Information Bulletin FY2021-05 applied to this transaction and spoke to
   Debra Boggess, who advised that we submit a private letter ruling request.
   Taxpayer paid the ROT and now seeks to clarify whether it is entitled to a

COMPANY2/ NAME
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February 7, 2023
refund. We discussed the matter with Debra Boggess from your office and
she recommended that we request a ruling.
Ruling Requested
The Taxpayer requests a ruling that its purchase of equipment from
Broker Auctions is not subject to Illinois Retailers Occupation Tax as the
purchase was made from a disclosed principal not engaged in the
business of selling the type of equipment purchased and the auction
company was not required to collect ROT as an auctioneer.
Discussion and Relevant Authorities
Prior to January 1, 2021, Illinois regulations provided that when a retailer
sells tangible personal property such as machinery and other capital
assets, which he has used in his business and no longer needs, and
which he does not otherwise engage in selling, he does not incur Retailers
Occupation Tax liability when selling such tangible personal property even
if sales are at retail and even if he may be required to make a
considerable number of such sales in order to dispose of such tangible
personal property, because such sales are isolated and occasional and do
not constitute the business of selling tangible personal property at retail.
86 Admin. Code 130.110(b).
In the rules relating to auctions in effect prior to January 1, 2021, when
auctioneers making sales on behalf of disclosed principals provided the
principal is engaged in the business of making sales of such tangible
personal property at retail. 86 Ill. Admin. Code 130.1915(b).
"Auction" means the sale or lease of property, real or personal, by means
of exchanges between an auctioneer and prospective purchasers or
lessees, which consists of a series of invitations for offers made by the
auctioneer and offers by prospective purchasers or lessees for the
purpose of obtaining an acceptable offer for the sale or lease of the
property, including the sale or lease of property via mail,
telecommunications, or the Internet. 225 ILCS 407/5-10.
Effective January 1, 2021, P.A. 101-0031 and 101-0604 became effective
and changed the rules for auctioneers as announced in Information
Bulletin 2021-05:
If an auctioneer makes a sale on behalf of an identified marketplace
Seller (e.g., a marketplace Seller that is disclosed), the auctioneer
will incur Retailers' Occupation Tax at the rate in effect at the
location where the tangible personal property is shipped or

COMPANY2/ NAME
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February 7, 2023
delivered or at which possession is taken by the purchaser
(destination rate).
Subsequently, in an apparent acknowledgement that this law change
needed further clarification, the Illinois Generally Assembly passed SB
2066 and the Governor signed the bill into law on August 27, 2021 as PA
102-0634. This bill provides that the term "marketplace facilitator" does not
include any person licensed under the Auction License Act, other than a
person who is an Internet auction listing service.
Internet auction listing service is defined under 225 ILCS 407/5-10 as:
"Internet auction listing service" means a website on the Internet, or other
interactive computer service, that is designed to allow or advertise as a
means of allowing users to offer personal property or services for sale or
lease to a prospective buyer or lessee through an online bid submission
process using that website or interactive computer service and that does
not examine, set the price, prepare the description of the personal
property or service to be offered, or in any way utilize the services of a
natural person as an auctioneer.
Here, we have a sale brokered by a third party where the buyer and Seller
extensively negotiated directly with each other and which culminated in
the sale.
We submit that the law change announced in Information Bulletin 2021-5
was not applicable to this sale for the following reasons:
•
•

•

•

•

At the time the negotiations began, the marketplace facilitator
law relating to auctioneers was not in effect
The transaction should not be considered an auction because,
once the parties were introduced by the Broker, negotiations
were conducted directly between the Taxpayer and the Seller.
The transaction should not be considered an auction because
the assets were purchased through a brokered sale rather than
through the Broker's auction channel.
The General Assembly, through the passage of SB 2066/ PA
102-0634, recognized that the application of marketplace
facilitator rules to auction situations in PA 101-0031 and 1010604, as described in Information Bulletin FY2021-05, was
overly broad.
To the extent that the Department finds that the date of the
invoice rather than the date of the commencement of
negotiations applies in determining the rules for characterizing
the transaction, the Broker should not be considered an
"internet auction listing service" under 225 ILCS 407/5-10.

COMPANY2/ NAME
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February 7, 2023
•
•

Under the revised law, marketplace facilitator rules only apply to
internet auction listing services.
Therefore, the transaction should not be subject to the
marketplace facilitator rules whether the Department looks at
the date of commencement of negotiations or the date of the
invoice, and the transaction should qualify for occasional sale
treatment as the Seller was not engaged in the business of
selling construction equipment, and the Taxpayer should be
entitled to a refund of sales tax paid to and remitted by the
Broker.

We respectfully submit that the Illinois Department of Revenue issue the
requested ruling with the taxpayer information redacted. We further
request that if the Department concludes contrary to the request that the
Taxpayer be allowed to withdraw the ruling request. We are happy to
provide any additional information or answer any questions the
Department has.
Please contact me at (###)###-#### if there are any questions. A Power
of Attorney has been submitted to the POA unit.
After the submission of this ruling request, at the Department’s request,
additional information was submitted. The information included copies of the following
documents: a nondisclosure agreement, numerous emails and written correspondence,
an appraisal of business assets, schedules of business assets, and various proposals
relating to the purchase of the business or its assets.
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 35 ILCS 120/2; 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 35 ILCS 105/3; 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.
For consistency, we will refer to the various parties as named in the PLR request,
i.e. COMPANY2 ("Taxpayer"), COMPANY3 ("Broker"), and COMPANY4 ("Seller").
The Broker was retained by the Seller to assist with the sale of its business either
as an ongoing business or, failing that, the sale of its business assets. The Broker
offers several different business services to its clients depending on their needs. Of the

COMPANY2/ NAME
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February 7, 2023
services offered, the two business services which are relevant in this matter are auction
services and private sale services. As discussed below, the tax consequences are
different depending on the nature of the services performed.
Auctioneers as marketplace facilitators
Beginning January 1, 2021, an internet auction listing service which meets a tax
remittance threshold set out in 86 Ill. Adm. Code 131.135(a), is considered a
marketplace facilitator subject to State and local retailers’ occupation taxes on all sales
made on its marketplace. See 35 ILCS 120/1. On and after August 27, 2021, a
marketplace facilitator does not include any person licensed under the Auction License
Act, 225 ILCS 407. However, this exemption does not apply to any person who is an
Internet auction listing service, as defined by the Auction License Act. 35 ILCS 120/1.
An internet auction listing service is defined under 225 ILCS 407/5-10 as: “[a]
website on the Internet, or other interactive computer service, that is designed to allow
or advertise as a means of allowing users to offer personal property or services for sale
or lease to a prospective buyer or lessee through an online bid submission process
using that website or interactive computer service and that does not examine, set the
price, prepare the description of the personal property or service to be offered, or in any
way utilize the services of a natural person as an auctioneer.”
An internet auction listing service is subject to the marketplace facilitator sourcing
rules for sales tax, if either of the following thresholds was met during the preceding four
quarterly periods ending on the last day of March, June, September, and December:
1)

the internet auction listing service had cumulative gross receipts from
sales of tangible personal property to purchasers in Illinois of $100,000 or
more; or

2)

the internet auction listing service entered into 200 or more separate
transactions for the sale of tangible personal property to purchasers in
Illinois. 35 ILCS 120/2(b).

Under the sourcing rules, an internet auction listing service is deemed to be
engaged in the business of selling on behalf of its disclosed marketplace sellers at the
Illinois location to which the tangible personal property is shipped or delivered or at
which possession is taken by the purchaser. See 35 ILCS 120/2-12(7). However, if an
internet auction listing service makes a sale on behalf of a marketplace seller not
disclosed on the marketplace, then, the internet auction listing service is considered the
seller and is required to file its own return, separate from the return it files for sales it
makes on behalf of marketplace sellers. The internet auction listing service would incur
State and local retailers’ occupation tax at either the rate in effect at the Illinois location
where the selling occurs or if the sale is fulfilled from inventory located outside Illinois
and selling activities otherwise occur at a location outside of Illinois, the rate in effect at

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February 7, 2023
the location to which the tangible personal property is shipped or delivered or at which
possession is taken by the purchaser. See 86 Ill. Adm. Code 131.155 and 86 Ill. Adm.
Code 270.115.
In this case, the Broker’s auction services meet the definition of an internet
auction listing service as defined under 225 ILCS 407/5-10. As such, the Broker would
be considered a marketplace facilitator for all sales made through its internet auction
listing service. Additionally, because a marketplace is a location held out to the public
as being habitually engaged in the selling of tangible personal property, no sales made
on a marketplace are considered occasional sales. See 86 Ill. Adm. Code 131.145(k).
Accordingly, if the sale of the Seller’s business assets was made through the
Broker’s auction services, the transaction would be taxable as a retail sale under the
provisions of the Retailers' Occupation Tax, 35 ILCS 120/1, et seq.
Occasional sales
Isolated or occasional sales of tangible personal property at retail by persons
who do not hold themselves out as being engaged (or who do not habitually engage) in
selling such tangible personal property at retail do not constitute engaging in the
business of selling such tangible personal property at retail. See 86 Ill. Adm. Code
130.110. For example, if a business sells tangible personal property, such as
machinery or other capital assets, which has been used in the business and is no longer
needed, and which such business does not otherwise engage in selling, it does not
incur Retailers' Occupation Tax liability when selling such tangible personal property.
This exemption applies even if the sales are at retail and even if the business may be
required to make a considerable number of such sales in order to dispose of such
tangible personal property. This is because such sales are isolated or occasional and
do not constitute a business of selling tangible personal property at retail. See 86 Ill.
Adm. Code 130.110(b).
The occasional sale exemption would apply in this case if the sale of the Seller’s
business assets was conducted through the Broker’s private sales services. See 86 Ill.
Adm. Code 130.110.
A fundamental principal of tax law is that tax exemption provisions are strictly
construed in favor of taxation and the party claiming the exemption has the burden of
clearly proving that it is entitled to the exemption; with all doubts resolved in favor of
taxation. Heller v. Fergus Ford, Inc., 59 Ill. 2d 576, 579 (1975).
It is the Department’s opinion, after reviewing the information in the private letter
ruling request as well as the additional materials submitted, that the sale of the Seller’s
business assets to the Taxpayer was exempt from sales tax as an occasional sale.
From the facts presented, the entire transaction was conducted independent of the
Broker’s internet auction listing service. The Broker approached the Taxpayer to

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February 7, 2023
ascertain its potential interest in purchasing the Seller’s on-going business. Only after
the Taxpayer expressed an interest in doing so, was a nondisclosure agreement
executed identifying the Seller. Thereafter, a series of negotiations took place regarding
the sale of the business. The confidential nature of the negotiations precluded the use
of the internet auction listing service as it involved such matters as employment
contracts, equipment, and asset purchases, as well as the assuming of building rental
and existing contracts. The final negotiated agreement for the purchase of certain
business assets rather than the Seller’s on-going business, was accomplished, as was
the entire negotiation process, separate and independent from the Broker’s internet
auction listing service. Consequently, the fact that some of the purchased assets were
eventually listed on the Broker’s internet auction listing service during the negotiations,
and payment for the Seller’s business assets was made to the Broker, does not change
this result. The Broker’s involvement in this matter was pursuant to its private sales
services, rather than as an auctioneer, and as such, the Taxpayer’s purchase of the
Seller’s business assets was exempt from sales tax as an occasional sale.
Please note that since the Broker paid the sales tax, directly to the Department,
the Broker is the only party with standing to file a claim regarding an overpayment of the
tax. See 86 Ill. Adm. Code 130.1501. A retailer's determination as to whether it will
make a refund of the amount of the tax to a customer and file a claim for credit with the
Department is a matter between the retailer and its customer. The Department has no
authority to compel a retailer to refund taxes to a customer and file a claim for credit.
The factual representations upon which this ruling is based are subject to review
by the Department during the course of any audit, investigation, or hearing and this
ruling shall bind the Department only if the factual representations recited in this ruling
are correct and complete. This Private Letter Ruling is revoked and will cease to bind
the Department 10 years after the date of this letter under the provisions of 2 Ill. Adm.
Code 1200.110(e) or earlier if there is a pertinent change in statutory law, case law,
rules or in the factual representations recited in this ruling.
I hope this information is helpful. If you have further questions related to the
Illinois sales tax laws, please visit our website at www.tax.illinois.gov or contact the
Department’s Taxpayer Information Division at (217) 782-3336.

Very truly yours,

Samuel J. Moore
Private Letter Ruling Committee Chairman
SJM:TG:rkn