Illinois State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Illinois, with full citations and the original source on every page.
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Does a private equity fund member or its management company have Illinois income tax nexus, and how is income from selling LLC units or receiving management fees apportioned to Illinois?
The Department will not issue a nexus ruling because nexus determinations are too fact-specific, but it points to Illinois' general apportionment rules: gains from selling intangible property (like LL…
Did a one-time or minimal Illinois sale by an out-of-state seller automatically limit it to collecting only the 6.25% Illinois Use Tax?
IDOR would not decide. Nexus was too fact-specific for a nonbinding GIL, and the seller supplied too little detail. The 2016 letter distinguished an Illinois retailer owing Retailers' Occupation Tax, …
How did Illinois classify a tissue bank's cost-plus charges for providing donated non-transplantable human remains for research and training?
IDOR said the tissue bank appeared to sell services, not make retail sales, so it did not incur Retailers' Occupation Tax. Tangible remains transferred with the service could create Service Occupation…
Did self-service copiers leased to retail print shops qualify for Illinois manufacturing or resale exemptions?
Generally no manufacturing exemption: a copier must be used primarily in a process commonly regarded as manufacturing, and ordinary self-service copying did not establish that. The lessee also could n…
How did Illinois sales tax apply to a bowling and arcade venue's games, rentals, memberships, food, merchandise, and party packages?
Merchandise, meals, beer, and wine were taxable retail sales; bowling and other amusement play were not sales-taxed when no property transferred. Locker and shoe rental receipts were not taxed, though…
Were separately stated freight charges on wine shipped directly to Illinois consumers excluded from sales tax when free winery pickup was available?
Potentially, but IDOR would not give a fact-specific statement. Delivery is taxable when inseparably linked to the sale, such as when the customer has no way to buy without paying delivery. If free pi…
Is civilian pay from a State of Illinois job that requires Illinois National Guard membership exempt from Illinois income tax?
No. The Illinois Department of Revenue concluded that civilian wages paid by the State of Illinois are not tax-exempt, even if the job requires the employee to maintain Illinois National Guard members…
If a nonresident partner's only Illinois income is pass-through income from a partnership that already withholds and remits tax on its behalf, does the partner still have to file its own annual Illinois corporate return?
No, generally not. The Illinois Department of Revenue explained that a nonresident partner whose Illinois income tax liability is fully paid through pass-through withholding under IITA Section 709.5 i…
Did diesel used by lock-and-dam construction vessels or a boat repairer's tow vessels qualify for Illinois bordering-river fuel exemptions?
Not for the construction contractor transporting its own materials; that was not transportation for hire. A repair company's tow fuel could qualify only when transportation to and from the repair site…
Did a supermarket's rotisserie oven, cleaner, grease bags, and related equipment qualify for Illinois's manufacturing machinery exemption?
No. The supermarket used the equipment to slow-cook chickens for retail sale in its deli. Illinois's rule states that food and beverage preparation by restaurants, food-service establishments, and oth…
Does Illinois tax a nonresident's capital gain from the sale of stock in an Illinois company received as farm patronage dividends?
No. Gain from the sale or exchange of stock is nonbusiness income made up of intangible personal property, and under IITA Section 303(b)(3) it is allocable to Illinois only if the taxpayer's commercia…
When a multi-state wind-power company sells its interest in a partnership that owns a wind farm, is the gain sourced to Illinois based on where the buyer is located or based on where the company's own work took place?
Illinois ruled the gain is sourced to the buyer's (customer's) location, not the seller's activity location, because the taxpayer qualified as a "dealer" in the partnership interest under Illinois' mo…
Did the destination of goods shipped from an Illinois hub determine whether freight charges were taxable?
No. Freight taxability depended on whether delivery was inseparably linked to the sale, not destination. Charges were taxable when unstated or unavoidable; separately stated optional delivery could be…
When a retailer sells and installs an appliance, is installation taxable and does the retailer become a construction contractor?
The appliance sale was taxable. Installation was included in taxable selling price only when bundled into that price; a separately agreed or separately listed installation charge was a nontaxable serv…
What corrections did Illinois give another state's survey about private vehicle sales, rentor sales, and long-term motor-vehicle leases?
IDOR said the survey was generally correct but needed clearer labels separating retail from occasional sales. Private-party vehicle transfers faced Private Party Vehicle Use Tax, while rentors selling…
Did an aircraft used primarily for crop scouting and field maintenance qualify for Illinois's farm machinery exemption?
No on the stated primary uses. An aircraft can qualify if used primarily in production agriculture, but Illinois's definition included activities such as tilling, planting, irrigation, chemical applic…
Does a lessee owe Illinois tax when buying a car at the end of a true lease after reimbursing the lessor's original Use Tax?
Yes. The original payment was likely a private contractual reimbursement of the lessor's up-front Use Tax, not the lessee's own tax liability. The later buyout was a separate retail sale, so the purch…
Did a nonprofit campground owe Illinois Hotel Operators' Occupation Tax on cabins rented for camps and public events?
Generally yes. The campground offered lodging for weddings, retreats, orientations, youth camps, and individual cabin stays, so it rented to the public as well as program participants. When sleeping a…
Did a nonprofit Christian camp or retreat center avoid Illinois hotel tax by renting only to church groups and youth camps?
Generally no for the described operation. A facility renting only to its own members may not be open to the public, but one renting to members and any public group is treated as public and all rental …
How did Illinois tax optional medical-equipment service agreements, later repairs and parts, restocking fees, and shipping?
An optional agreement invoiced separately from equipment was not taxable when sold; the provider instead owed tax under the serviceman rules on parts later transferred, while labor-only service involv…
Could a company obtain an Illinois cigarette stamping distributor license to sell stamped cigarettes directly to retailers?
It depended on whether the company was a manufacturer. A manufacturer licensed under the second or third statutory category could not sell stamped original packages directly to retailers or secondary …
Where did a technology distributor source Illinois local sales tax after moving its headquarters but retaining its credit and distribution center?
All Illinois sales remained sourced to the city containing the company's credit department, invoicing and payment functions, IT systems, and primary Illinois distribution center. That included invento…
How did Illinois tax equipment leases with a nominal buyout compared with true leases, installation, and other stated charges?
A lease with a dollar or other nominal purchase option was a conditional sale from the outset, so all lessor receipts were subject to Retailers' Occupation Tax. A true lease used no buyout or a fair-m…
Were separately stated shipping and handling charges on an online computer purchase automatically exempt from Illinois sales tax?
No. Separate statement alone did not break the link between sale and delivery. Freight was taxable when the customer had no pickup or qualifying free-delivery option. If a genuine free delivery or pic…
Did limited religious-group rentals or nonprofit status exempt a Christian camp from Illinois Hotel Operators' Occupation Tax?
Generally no for the described camp. A lodging facility renting exclusively to its own members may not be open to the public, but one renting to members and public groups is treated as public and all …
How did Illinois tax related-company equipment leases, a dental lab's custom dentures, and a dental practice's supplies?
Custom dentures were sales of service; the dentist and lab had to apply the serviceman and multi-service rules. Dentures generally qualified as medical appliances at the 1% State rate, while impressio…
Who owed Illinois tax when a glass contractor permanently installed materials, used subcontractors, and also sold some items over the counter?
The construction contractor was the end user and owed Use Tax on the cost of materials permanently incorporated into Illinois real estate, regardless of lump-sum billing. Customers owed no Use Tax, th…
Did Section 130.330(c)(3) generally exempt gases consumed in manufacturing, as Illinois GIL ST 99-0296 had stated?
No. IDOR corrected its September 29, 1999 General Information Letter ST 99-0296, which had incorrectly said the rules specifically exempt gases consumed in manufacturing. The correction states that ga…
Did Section 130.330(c)(3) generally exempt gases consumed in manufacturing, as Illinois GIL ST 11-0021 had stated?
No. IDOR corrected its April 1, 2011 General Information Letter ST 11-0021, which had incorrectly said the rules specifically exempt gases consumed in manufacturing. The correction states that gases a…
Did Section 130.330(c)(3) generally exempt gases consumed in manufacturing, as Illinois GIL ST 09-0112 had stated?
No. IDOR corrected its August 31, 2009 General Information Letter ST 09-0112, which had incorrectly said the rules specifically exempt gases consumed in manufacturing. The correction states that gases…
Did Illinois Use Tax apply when a new resident brought in an aircraft titled to an LLC after paying tax in another state?
Yes, and Form RUT-25 was required when the aircraft was titled or registered in Illinois. The exemption for a nonresident individual who used property outside Illinois for at least three months did no…
Did Section 130.330(c)(3) generally exempt gases consumed in manufacturing, as Illinois GIL ST 09-0101 had stated?
No. IDOR corrected its July 31, 2009 General Information Letter ST 09-0101, which had incorrectly said the rules specifically exempt gases consumed in manufacturing. The correction states that gases a…
Would the Illinois Department of Revenue verify the tax, fee, and procedure information in a private vehicle title-and-registration textbook?
No. IDOR would not approve the accuracy of a private legal publication. It advised the publisher to consult Illinois statutes, administrative rules, and Department publications, said the previously pu…
Does a paid income tax return preparer need a separate Illinois-issued PTIN, and which Illinois tax returns require a PTIN?
No — the PTIN required on Illinois returns is the same Preparer Tax Identification Number already issued by the IRS; Illinois does not issue its own PTIN. Once Department rules take effect for tax yea…
Where did an Illinois distributor source local tax on warehouse walk-ins and sales processed through a separate headquarters office?
Walk-in sales were sourced to the warehouse city because binding the sale, payment and invoicing, and inventory were there. All other Illinois sales were sourced to the Illinois headquarters city afte…
Were separately stated fees for loading aviation fuel into an aircraft subject to Illinois Retailers' Occupation Tax?
It depended on who controlled the loading arrangement. If the aircraft operator contracted with the fuel seller to buy and load fuel and the seller selected the loader, the into-plane fee was taxable …
Was a prepaid grocery-delivery membership covering three months of shipping and handling subject to Illinois sales or use tax?
No. The membership prepaid shipping and handling for future grocery orders but did not itself transfer tangible personal property. IDOR treated it as an intangible, so the membership receipt was not s…
Did Illinois's historical full exemption for biodiesel blends above 10% include 10.1% through 10.9%, and how were those sales and overpayments reported?
Yes. Through December 31, 2018, blends containing more than 10% but no more than 99% biodiesel were fully exempt, including 10.1% through 10.9%. Until Form ST-1 changed, those decimal blends could be …
Did an equipment lease become a conditional sale when customers could not return the equipment and had to make a 10% balloon purchase or trade up?
Yes. The addendum eliminated the return option and required the customer either to buy the equipment for 10% of original cost or roll remaining payments into a new equipment lease. IDOR found that the…
Could an Illinois landscape contractor buy temporary project materials tax-free when working for a government or other exempt entity?
Generally no. A landscape contractor could buy property tax-free for permanent incorporation into exempt-entity real estate by giving the supplier the required certification. But silt fencing, ditch c…
When did Illinois tax a telecommunications late fee, and could the Department decide whether the fee on this customer's bill was taxable?
A late fee separately stated from telecommunications charges was not subject to Telecommunications Excise Tax, while a fee not separately stated was taxable. For sales tax, a true finance charge was e…
Do deferred retirement payments made to retired partners of a professional-services LLC out of current partnership earnings qualify for Illinois's retirement-income subtraction modification?
Yes. The Illinois Department of Revenue concluded that payments to retired LLC members that meet the requirements of IRC Section 1402(a)(10) - excluded from net earnings from self-employment - qualify…
When were a retailer's separately identified shipping charges excluded from Illinois sales tax?
Shipping was nontaxable when it was separately identified and the buyer could obtain the goods without paying a delivery charge, such as through qualifying free delivery or pickup, while the product p…
Did a downloaded API make cloud-based biomedical analytics taxable in Illinois even when the API was incidental to the service?
Yes, under IDOR's service-transaction analysis. Remote-only cloud software was not taxable under the Department's 2016 guidance, but the company confirmed that its API was downloaded to the customer's…
What Illinois tax-appeal, manufacturing-exemption, filing, and video-gaming guidance did IDOR give in response to a 2016 annual survey?
IDOR could not complete the survey format but explained that the Independent Tax Tribunal heard listed Department disputes generally exceeding $15,000 and its final decisions went to the Illinois Appe…
Could drainage culverts, pavement concrete and steel, and buried utility lines qualify for Illinois's enterprise-zone building-materials exemption?
Potentially yes, if the materials were permanently incorporated into real estate located in an enterprise zone. IDOR could not decide without more facts. For purchases on or after July 1, 2013, the co…
Were subscription SEO and marketing tools exempt from Illinois tax when subscribers might receive a downloadable toolbar or API?
Cloud software never downloaded and only accessed remotely was not taxable under IDOR's 2016 guidance. But the provider was a serviceman, and its terms and emails indicated subscribers received a down…
Were cloud-based web collaboration services exempt from Illinois tax when customers might download access software?
Cloud-only software that was never downloaded and merely accessed remotely was not taxable under IDOR's 2016 guidance. But a SaaS provider was a serviceman, and any API, applet, desktop agent, produce…
Was a cloud-based physician-records service nontaxable when its agreements appeared to provide an API or desktop client?
Cloud-only software that was never downloaded and only accessed remotely was not taxable under IDOR's 2016 guidance. But the provider was a serviceman, and its agreements appeared to transfer an API o…
Which equipment used to turn utility natural gas into vehicle-ready compressed natural gas qualified for Illinois's manufacturing exemption?
Filters, dryers, compressors, holding tanks, high-pressure piping, and programmable logic controllers qualified when used primarily to manufacture compressed natural gas. Manufacturing began with the …
Which patient and non-patient sales by a nonprofit hospital affiliate with an E-number were exempt from Illinois Retailers' Occupation Tax?
The qualifying hospital affiliate did not owe Retailers' Occupation Tax on food, medicine, or grooming and hygiene products furnished to patients as part of hospital or clinic care, or on drugs sold t…
Were urgent-response medical monitoring, wireless data, and ordinary cell-phone services subject to Illinois Telecommunications Excise Tax?
IDOR would not confirm the company's specific treatment in a nonbinding GIL. It said ordinary mobile phone service incurred Telecommunications Excise Tax, while wireless data plans generally fell unde…
Which nursing-home meal supplies qualified for Medicare or Medicaid flow-through exemption treatment under Illinois service-tax rules?
Only qualifying property transferred to patients and paid for by Medicare or Medicaid received proportional exemption treatment under the serviceman's chosen tax method and proper E-number documentati…
Where did a fuel distributor source Illinois local tax on delivered fuel oil, warehouse lubricant sales, and card-lock gasoline sales?
Delivered fuel-oil sales were sourced to the city containing the sales and administrative office, even when fuel came from third-party racks or storage elsewhere. Lubricant sales from inventory at a s…
Were an online grocer's home-delivery and local-pickup charges included in taxable Illinois gross receipts?
The $2.99 pickup charge was taxable because it reimbursed the grocer's cost of moving goods between its facilities. The separately stated $5.99 home-delivery charge was excluded because customers had …
Should Illinois sales tax be calculated before or after applying a store reward certificate?
It depended on reimbursement. If the retailer received full or partial reimbursement for the reward coupon, taxable gross receipts included both the customer's payment and the reimbursement. If the re…
Was an annual software service plan taxable in Illinois, and how were maintenance, bug fixes, and software updates treated?
IDOR could not determine the invoice's product or service and said the questioned $107.99 did not appear to be the tax charge. A maintenance agreement included in software's selling price was taxable;…
Did permanently bolted steel freezer racking qualify for Illinois' enterprise-zone building-materials exemption?
Yes. Based on the taxpayer's representation that the steel cold-storage racking would be permanently bolted into a concrete curb and incorporated into real estate in an enterprise zone, IDOR treated i…
Does compensation paid to an Illinois National Guard member who is also a dual-status federal military technician qualify for Illinois' military pay subtraction modification?
Yes. The Illinois Department of Revenue concluded that compensation paid to National Guard members employed as dual-status military technicians under 32 U.S.C. §709(a) qualifies for the subtraction mo…
Can a partnership subtract, from its Illinois Replacement Tax base, the lifetime payments it makes to a retired partner for engineering services that partner performed before retiring?
Yes. The Illinois Department of Revenue ruled that a partnership's payments to a retired partner under a retirement plan qualify as personal service income under IITA Section 203(d)(2)(H), so the part…
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These are official tax letter rulings and advisory opinions issued by Illinois's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.