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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Did an automated pharmacy machine that counted pills and filled, labeled, and capped bottles qualify for Illinois's manufacturing machinery exemption?
Generally no. The manufacturing exemption required machinery used primarily in a process that substantially and significantly changed existing material into property with a different form, use, or nam…
Could a replacement septic system at an Illinois manufacturing plant qualify for the enterprise-zone building-materials exemption?
Potentially yes, if the septic system was permanently affixed to real estate in an enterprise zone, but IDOR could not decide without more information. For purchases on or after July 1, 2013, the cont…
Were eyeglasses supplied through Medicare Advantage, Medicaid HMO, or other managed-care plans exempt from Illinois tax?
Not merely because the patient had Medicare or Medicaid coverage. Eyeglasses were medical appliances taxed at the 1% rate under the applicable retail or service method. Only payments made directly by …
Did limited Illinois trade-show attendance and customer referral credits give an out-of-state online retailer Illinois Use Tax collection nexus?
IDOR did not decide. It said nexus determinations were too fact-specific for a General Information Letter and were best made by auditors conducting the required factual investigation. The letter there…
Was propane delivered for rural home heating exempt from Illinois local retailers' occupation tax?
No. The Illinois Retailers' Occupation Tax Act did not exempt L.P. propane gas used to heat homes. Local retailers' occupation taxes administered by IDOR followed the State Act's exemptions, credits, …
Could a leased soybean seed treater, tanks, conveyors, and controls qualify for Illinois's farm-machinery exemption?
Potentially, but IDOR could not decide without more information. Machinery purchased for lease could qualify when the lessee used it primarily in production agriculture and the purchaser-lessor certif…
Could off-road logging and forestry equipment qualify for Illinois's farm-machinery exemption?
Yes, potentially. Off-road equipment used primarily—more than 50%—in forestry harvesting could qualify as farm machinery used in production agriculture or in a State or federal agricultural program. Q…
Were service, installation, and freight charges on two Illinois invoices taxable?
IDOR could not decide because the invoices had no highlighted lines and did not reveal what was provided. Generally, a construction contractor owed Use Tax on materials permanently incorporated into r…
Was industrial air-pollution-control equipment still generally exempt from Illinois sales tax after July 1, 2003?
No. Public Act 93-24 repealed the general pollution-control sales-tax exemption effective July 1, 2003. A narrower enterprise-zone exemption remained for tangible personal property used or consumed in…
Did an Illinois municipality owe Gas Revenue Tax when its own gas system supplied municipal buildings without billing them?
The tax measured on that distribution was zero. Gas Revenue Tax was the lower of 2.4 cents per therm or 5% of gross receipts for each customer and billing period. Because the municipality received no …
What corrections did Illinois give another state's survey about vehicle trade-ins, private sales, and long-term leases?
IDOR would not approve another agency's publication, though its chart generally appeared correct. Retail motor-vehicle sales could receive the Section 130.425 trade-in credit, but private-party vehicl…
Did an Illinois seller of gold coins and bars need tax registration, and which precious-metal sales were exempt?
A business making any taxable retail sales had to register with IDOR; one making only wholesale or exempt sales did not have to register to remit tax, though it could obtain a resale number. Sales of …
Could an Illinois nonprofit use an E-number or partial self-assessment for purchases also benefiting an individual or affiliated for-profit company?
Only direct purchases by the organization holding an active E-number were exempt, and only when made in furtherance of its organizational purpose. Individual members could not use the organization's n…
How did Illinois classify and tax towers, pylons, wall and interior signs, menu boards, neon tubing, and related installation fees?
IDOR did not classify the listed signs or decide the company's transactions. It declined the requested Private Letter Ruling and said a sign vendor could owe Retailers' Occupation Tax, Service Occupat…
Were prepaid software-license fees and related monthly license and support fees exempt from Illinois Retailers' Occupation Tax?
Yes. IDOR reviewed the company's license agreements and found that they met all five requirements for a nontaxable software license under 86 Ill. Adm. Code 130.1935(a)(1). Because the license fees wer…
Were chocolate-fruit and fruit-honey bars taxed as candy or low-rate food in Illinois?
IDOR did not expressly classify the two submitted bars. It explained that qualifying food for off-premises consumption was taxed at the 1% State rate, while candy was taxed at 6.25%, plus applicable l…
Could an Illinois utility charge Gas Revenue Tax for delivering out-of-state natural gas to a church exempt from Gas Use Tax?
Yes. The church's religious-organization exemption from Gas Use Tax on the gas purchase did not exempt the utility's Illinois delivery and related service charges from Gas Revenue Tax. The delivery ta…
When did Illinois tax refundable and nonrefundable advance payments for short-term automobile rentals?
A nonrefundable reservation fee was subject to the 5% Automobile Renting Tax when received because the customer was irrevocably liable for the right to possess the car, including when the customer lat…
Who owed Illinois tax when an out-of-state company leased semi-trailers for use in Illinois under true leases?
The lessor owed Illinois Use Tax on its cost price when true-leased trailers were brought into Illinois; rental receipts were not taxed and the lessee owed no tax. Tax properly due and paid to another…
Did a dissolving, steroid-releasing sinus implant qualify for Illinois' reduced tax rate for medicine or drugs?
Yes. Based on its instructions for use and sustained release of mometasone furoate through a bioabsorbable sinus implant, IDOR treated the product as a medicine or drug taxable at the 1% state rate pl…
How should the royalty income earned by nonresident members of a musical band (organized as a partnership) be sourced to Illinois for income tax purposes?
A nonresident partner in a partnership (like a band) must include in Illinois net income his or her distributive share of the partnership's business income that is apportioned to Illinois under IITA S…
When did progressive payments for a custom pressure vessel become taxable, and were crane and site-inspection reimbursements taxable?
Purchase-price payments became taxable gross receipts when the vessel was identified to the sales contract. Without a contrary agreement for future goods, identification generally occurred when the se…
Could IDOR decide how municipal gas taxes applied to third-party natural-gas suppliers?
No. IDOR administered the statewide Gas Revenue Tax and Gas Use Tax but had no authority or jurisdiction over municipal gas occupation taxes imposed and administered by municipalities under 65 ILCS 5/…
How could an Illinois drop-shipper document a sale for resale to an unregistered out-of-state purchaser?
The Illinois seller had to collect tax or document an exemption when delivering to the purchaser's Illinois customer. A valid resale certificate from the out-of-state purchaser could establish resale …
If a homeowner later receives a refund of property taxes (for example, from a certificate of error), does that refund reduce or require repayment of the Illinois property tax credit already claimed for the year the taxes were originally paid?
No amended return is required. The property tax credit for a prior year is based on the property taxes actually paid that year and is not redetermined when a refund is later received. Instead, the ref…
How did Illinois tax a security-system contract that included permanently installed components and movable clip-on cameras?
When the complete security system was sold and installed for one specified contract price, the installer could treat the work as a construction contract and pay Use Tax to suppliers on all related equ…
How did IDOR answer a 2016 survey about sales-tax nexus, software, digital goods, services, drop shipments, and refunds?
IDOR declined to give yes-or-no nexus answers because nexus was fact-specific, but supplied its 2016 general rules. It also said canned software was generally taxable, qualifying signed software licen…
Can an Illinois retailer deduct part of its gross receipts from sales of E15 fuel as gasohol or majority blended ethanol fuel?
No. IDOR said E15—85% gasoline and 15% ethanol—fit neither statutory fuel category, so every dollar of gross receipts from E15 sales was subject to Retailers' Occupation Tax without the requested dedu…
Is a hotel's service charge on a customer's high-speed internet access subject to Illinois sales or service tax?
Generally no, if the internet-access transaction transfers no tangible personal property to the customer. IDOR said a service-only transaction without such a transfer generally is not subject to Retai…
Did Illinois Hotel Operators' Occupation Tax apply when a condominium resident rented a second bedroom through an online platform?
Yes. IDOR treated the payments for stays under 30 days as taxable rent for living quarters. The lack of a bed did not matter, and platform registration and host screening did not make the room exclusi…
Who owed Illinois tax when a company leased computer and audiovisual equipment and then re-leased it to customers?
For a true lease, the original lessor was the end user and owed Use Tax on its cost; Illinois imposed no tax on rental receipts, so the lessee and sublessee incurred no tax liability. A conditional sa…
Were distributor renewal fees and bundled online dashboard and personal-website fees subject to Illinois sales or service taxes?
Membership fees were generally nontaxable intangibles when they transferred no tangible personal property. A fee that included property or property incident to a service could create tax, while online…
Was a restaurant tabletop device used mainly for ordering and paying a coin-operated amusement device or redemption machine?
No, based on IDOR's understanding. The device was used primarily to buy food, place orders, pay bills, and complete surveys—not primarily for amusement—and it did not meet the redemption-machine defin…
Did IDOR determine whether a steroid-releasing sinus implant qualified for Illinois' 1% rate as a drug or medical appliance?
No. IDOR lacked enough information about the implant's use and label claims to decide. It explained that qualifying drugs and medical appliances received the 1% state rate plus local tax, then directe…
What documentation applied when a registered truck-body manufacturer drop-shipped a vehicle to Illinois for an unregistered reseller?
IDOR identified the transaction as the standard drop-shipment pattern and directed the seller to the resale-certificate rules. It did not choose a form or deadline for the seller. It cautioned that Fo…
Did an adult tricycle and electric pedal-assist modification qualify for Illinois' 1% rate for disability modifications to motor vehicles?
No. IDOR said an electric adult tricycle was outside the Illinois Vehicle Code definition of a motor vehicle. Because the reduced rate covered modifications to a qualifying motor vehicle, neither the …
What proof does an Illinois employer need to keep to show that a hired veteran was 'unemployed' for purposes of the Credit for Hiring Qualified Unemployed Veterans?
The Illinois Income Tax Act does not specify any required documentation or proof to establish that a veteran was 'unemployed' under 35 ILCS 5/217.1(b). The Department noted that as evidence of receivi…
Could a municipality impose a hotel-like excise tax on nonresident patients of a nonprofit hospital?
IDOR did not decide. Local hotel taxes were generally outside its jurisdiction, so it directed the municipality to its State's Attorney and municipal preemption law. A hospital's sales-tax exemption n…
Could dealership service-loaner vehicles qualify for Illinois' interim-use exemption before retail resale?
Possibly. A dealer-owned vehicle bought for resale could qualify while used as a loaner only if it stayed in sales inventory, remained available for sale, and met the rule's accounting and depreciatio…
Who owed Illinois tax when a financing company paid a contractor to install energy-efficiency equipment and recovered costs through a capital lease?
The installer owed Use Tax on its cost because the LED or HVAC work was a construction contract improving real estate. The financing company could not give a resale certificate and was not technically…
Did a state university's Illinois Telecommunications Excise Tax exemption also exempt its service from the infrastructure maintenance fee?
No. Although qualifying state universities were outside taxable retail telecommunications under the excise-tax law, the Infrastructure Maintenance Fee Act had no state-university exemption. The retail…
Were cover-crop seeds exempt as a sale for resale when the cover crop was plowed into soil before a later cash crop?
Yes, if the cover crop was plowed into the soil, became part of the next crop, and that next crop was actually sold. The retailer then made a sale for resale and needed a valid Certificate of Resale. …
Were a fuel hauler's rebillings sales for resale when fuel was charged to one customer but delivered to another?
They appeared exempt as sales for resale on the limited facts, but only with proper documentation. The purchaser had to provide a signed Certificate of Resale using its own active registration or resa…
Did a contractor installing blinds, shutters, and flooring pay Use Tax on materials or collect sales tax from the customer?
The contractor paid Use Tax on its cost of materials permanently affixed to real estate and did not owe Retailers' Occupation Tax on construction-contract receipts. The customer owed no Use Tax, and a…
Were custom closet systems lightly secured to walls taxable retail property or real-estate improvements, and were installation charges taxable?
They were generally taxable retail products because anti-tip brackets and finishing nails allowed removal without meaningful damage, indicating the systems remained tangible personal property. Design …
Is a nonresident employee's compensation taxable by Illinois when she travels through a multi-state territory for an Illinois-based employer but her base of operations (her home) is in another state?
No. Because the employee's services are not localized in any single state and her base of operations is her home in another state, none of her compensation is allocated to Illinois -- even though she …
Does an out-of-state manufacturer create Illinois corporation income tax nexus just by having its leased rail cars pass through, wait in, or sit empty in Illinois while delivering goods?
The Department would not issue a formal ruling on whether nexus exists because the question is too fact-specific, but it explained that merely shipping or delivering goods into Illinois by leased rail…
Were participant fees for coached rowing lessons subject to Illinois sales, use, or service taxes?
Generally no, if the rowing program transferred no tangible personal property to participants. IDOR said the listed Illinois sales, use, and service taxes would not apply to the lesson fees on that co…
How did Illinois tax bundled computer hardware, canned software, maintenance, labor, updates, and delivery charges?
Canned software was generally taxable regardless of delivery method; qualifying licenses and custom software could be nontaxable. A maintenance bundle with unseparated canned-software upgrades was ful…
Were a materials seller's flat delivery charge, added fuel fee, and dumpster fee included in Illinois taxable gross receipts?
A separately identified delivery charge was excluded when customers could pick up the goods and the seller documented that option. The added fuel fee was taxable as a business cost even if separately …
Would IDOR verify a private publisher's Illinois motor-vehicle title, tax, lease, fee, and procedure guide?
No. IDOR would not approve a private legal publication and directed the publisher to statutes, rules, and official materials. To reduce errors, it supplied historical corrections on Form RUT-50, Chica…
Could a vehicle lessor obtain an Illinois tax refund when a long-term lessee moved out of state or ended the lease early?
No. Illinois taxed the original sale of the vehicle to the lessor, not the long-term lease, so the lessee's later move, retitling, or early termination did not change the tax. Monthly reimbursement by…
How did IDOR implement Public Act 98-628's alternate selling price for qualifying motor vehicles leased longer than one year?
For qualifying vehicles and defined leases over one year, tax remained imposed on the sale to the lessor but selling price became the lease-contract consideration plus later vehicle charges. Early ter…
Could a vehicle dealer exclude a federal gas-guzzler tax passed through in the vehicle price from the Illinois sales-tax base?
No. Because the federal excise tax was legally imposed on the automobile manufacturer rather than the consumer, IDOR treated the passed-through amount as a nondeductible business cost included in the …
Was an Illinois print broker's direct-mail job for an out-of-state customer exempt as interstate commerce?
IDOR would not decide from the limited facts. It said property actually delivered from Illinois to an out-of-state point and not returned could qualify with supporting records, but pieces delivered or…
Did a powdered product intended to be mixed with liquid qualify for Illinois' 1% state food tax rate?
It appeared to qualify on the limited facts. Beverage powders and dry mixes were not soft drinks, and the product was not for immediate consumption, so IDOR said it appeared taxable at the 1% state fo…
When were drugs, medicines, and beauty or hygiene products supplied by a nonprofit hospital or clinic exempt or taxable?
A charitable hospital or clinic with a valid exemption number did not owe Retailers' Occupation Tax on products supplied in furtherance of care while the person was a patient. Later sales of non-drug …
Did Illinois tax fees for electronic or hardcopy medical-record copies?
Electronic viewing, downloading, or transmission of medical records was not a transfer of tangible personal property. Hardcopy records did involve property transferred with a service and generally cre…
How did Illinois tax a custom-sign seller that separately billed freight and installation for signs attached to buildings or concrete-set poles?
IDOR did not give one result for every sale. It said sign vendors could owe Retailers' Occupation Tax, Service Occupation Tax, or Use Tax depending on the facts; a vendor acting as a construction cont…
Was a restaurant tabletop device used for ordering, paying, surveys, and optional games a taxable amusement device or redemption machine?
No, based on IDOR's understanding. The device was primarily used to buy food and services, place orders, and pay bills rather than for amusement, and it did not appear to meet the redemption-machine d…
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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.