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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How did IDOR answer a 2014 survey on sales-tax nexus, digital products, drop shipments, services, and SSUTA?
IDOR refused activity-by-activity nexus answers because nexus was fact-specific. Under its historical framework, Illinois presence included agents and repetitive delivery or installation. Canned softw…
Could a corporate cafeteria with limited seating charge Illinois's reduced food rate on grocery items sold for takeout?
Potentially, but IDOR made no fact-specific determination. Any on-premises seating created a presumption that all food sales used the high rate. Qualifying grocery items could use the reduced rate onl…
Are separately listed delivery and installation charges subject to Illinois sales tax?
Not automatically exempt. Under Illinois' Retailers' Occupation Tax, delivery and installation charges are generally part of taxable gross receipts even when listed separately on the invoice. They are…
When is Illinois sales tax due on computer software licenses and software maintenance agreements?
Canned (prewritten) computer software is taxable tangible personal property in Illinois, whatever the medium; genuinely custom software may not be. A software license is not a taxable retail sale if t…
Do two whole-food snack bars qualify for Illinois's 1% state food rate or the 6.25% general-merchandise rate?
The letter did not classify the two bars because it lacked facts about how the seller conducted sales. It gave the general rule: qualifying food for off-premises consumption was taxed at the 1% state …
When are Illinois trailer sales or leases taxable, and when can the rolling stock exemption apply?
A trailer sale or conditional lease-sale generally triggers Retailers' Occupation Tax. Under a true lease, the lessor is the user and owes Use Tax on its cost, while rental receipts are not taxed. The…
Are fruit trees, nut trees, shrubs, vines, and other nursery stock exempt as Illinois farm machinery or equipment?
No. IDOR said nursery stock and seedlings are not farm machinery or equipment under 86 Ill. Adm. Code 130.305, even when bought for agricultural production. A separate sale for resale can be nontaxabl…
Does cooking wine sold as a food ingredient qualify for Illinois's 1% state food rate?
The GIL did not specifically classify the cooking wine. It explained that food sold for off-premises consumption generally received the 1% state rate plus local taxes, but alcoholic beverages, candy, …
Are Illinois membership fees taxable when members also receive guides, magazines, and marketing materials?
A pure membership fee is generally an intangible and is not subject to Retailers' Occupation Tax or Use Tax when no tangible personal property is transferred. But this association also described guide…
Which electricity-bill charges enter an Illinois self-assessing purchaser's Electricity Excise Tax base?
The 5.1% Electricity Excise Tax applied to the broad aggregate purchase price paid for nonresidential electricity, including supply, distribution, transmission, delivery, and directly related services…
Did buying Illinois-hosted data services, while owning software but no server hardware, create Illinois income-tax nexus for an out-of-state corporation?
The GIL did not decide. The corporation bought hosting from a commercial provider, owned no server hardware, and owned or licensed software used on the hosted systems. IDOR said nexus was extremely fa…
Were software and credit-data receipts sourced to Illinois because the servers and programmers were there, or to the states where lender customers received the product or service?
The GIL could not give one sourcing answer without knowing what each company transferred. A copyright transfer followed the copyright-utilization rule; another software license followed the intangible…
How do Illinois sales and service taxes apply to foodservice arrangements with exempt hospitals and nursing homes?
IDOR declined to decide the eight hypothetical arrangements without contracts and clearer facts. It explained that resale transactions require a valid certificate; qualifying charitable hospitals and …
When are custom-designed precast concrete components treated as a service rather than a taxable retail sale in Illinois?
A custom component can be treated as special-order property produced in a service occupation only if the purchaser primarily hires the seller for engineering or scientific skill, the item has use or v…
Can an Illinois intermediary use a general contractor's resale number or a minority-participation program to buy HVAC equipment tax-free?
No Illinois sales-tax exemption existed merely because a transaction involved a minority-participation program. If the intermediary bought equipment for resale, it had to give the seller a valid Certi…
When do Illinois construction contractors owe use tax, and what documentation supports exempt-entity or enterprise-zone purchases?
Construction contractors were end users and owed Use Tax on the cost of property permanently incorporated into Illinois real estate. Audiovisual and telecommunications systems sold and installed for o…
What general Illinois exemptions and credits applied to manufacturers and exempt organizations in 2014?
IDOR could not answer the broad questions specifically. It explained that machinery used more than 50% of the time in qualifying manufacturing or assembly could be exempt; exempt machinery purchases a…
Did Illinois's 1% rate apply to a motorcycle hand-brake system designed for disabled riders?
Generally yes. Illinois imposed a 1% rate on motor-vehicle modifications that enable a disabled person to drive or assist in transporting disabled persons. IDOR said systems allowing a disabled rider …
When are separately stated furniture delivery or merchandise shipping charges excluded from Illinois sales tax?
A delivery charge was outside the taxable selling price only when the buyer and seller separately agreed to it and the amount reflected actual transportation cost. Merely listing 'shipping' or 'additi…
Who owes Illinois use tax when a subcontractor buys and installs drainage tile as part of a pipeline project?
The party contractually required to buy drainage tile for permanent incorporation into real estate was the construction contractor and owed Use Tax on its cost. If the subcontractor bought and install…
Could an Illinois resident claim an other-state credit after that state recharacterized wages from an S corporation as the shareholder's distributive income?
Not for the wage portion. The shareholder lived and worked in Illinois, his employment base of operations appeared to be Illinois, and the S corporation reported all of his W-2 compensation as Illinoi…
Did an Illinois motor carrier have to withhold Illinois tax from nonresident truck drivers who lived and principally worked in another state but sometimes drove in Illinois?
The submitted facts were not enough for a single answer. No Illinois withholding applied if the driver regularly performed assigned motor-carrier duties in two or more states and federal law reserved …
What nexus rules did Illinois describe for remote retailers in 2014, and are those physical-presence rules still current?
IDOR declined to decide the affiliated companies' nexus because it required an auditor's fact-intensive investigation. The 2014 GIL described then-controlling Quill physical-presence rules, including …
Could Illinois residents claim a Schedule CR credit when a reciprocal state withheld tax from deferred compensation that state was not entitled to tax?
No, if the reciprocal-state tax was withheld or paid in error. The reciprocal agreement barred that state from taxing the Illinois residents' employee compensation, so the residents had to claim a ref…
May an Illinois construction contractor buy materials tax-free for incorporation into property owned by an exempt organization or government entity?
Yes, if the contractor buys tangible personal property for physical incorporation into real estate owned by an exempt organization or government entity that has a valid Illinois E number. The contract…
Could a company stop filing monthly Illinois ST-1 returns because its shipments were international and its returns showed no sales-tax liability?
IDOR did not approve stopping the returns because the company's transaction details were insufficient. A registered retailer generally must file Form ST-1 monthly even without a minimum sales threshol…
Are Illinois hotel receipts from qualifying Taiwan representatives exempt from Hotel Operators' Occupation Tax?
Yes. Hotel receipts from Taipei Economic and Cultural Representative Office representatives were exempt when the guest possessed an American Institute in Taiwan card stating that the holder was exempt…
When were licensed software, updates, support, training, and maintenance taxable in Illinois?
IDOR declined to decide the reseller's specific transactions. Generally, canned software was taxable regardless of delivery unless every signed-license criterion in Rule 130.1935(a)(1) was met; then t…
Was a claimed Illinois software-license exemption valid based only on the limited documents submitted?
Unresolved. Canned software was generally taxable regardless of delivery method, but a license could be nontaxable only if every requirement in 86 Ill. Adm. Code 130.1935(a)(1) was met, including a si…
Did a cloud collaboration provider owe Illinois Telecommunications Excise Tax when customers used their own internet and telecom connections?
Generally no, if customers accessed the cloud applications through internet or telecommunications connections they bought from third parties. In that situation the cloud provider was not itself provid…
Are one-time customer account setup fees subject to Illinois Telecommunications Excise Tax?
Generally yes. IDOR said one-time account setup fees were necessary for and directly related to providing telecommunications, so they were included in gross charges subject to the 7% Illinois Telecomm…
Is a purchase exempt from Illinois tax merely because the buyer takes the goods to Canada, and can the buyer claim a refund directly?
Not merely because the goods were destined for Canada. A buyer that takes possession in Illinois generally owes tax even if it immediately carries the goods out of state. A seller-delivered shipment m…
Did third-party shopping-cart servers located in Illinois create sales-tax nexus for an otherwise out-of-state online business?
IDOR did not decide the server question. It said fact-specific nexus determinations generally require an audit and supplied only 2013 guidelines based on Quill's physical-presence rule. That rule is n…
Did Illinois confirm that every aircraft spare sold from a manufacturer's Illinois warehouse qualified for the Class IV aircraft exemption?
No fact-specific answer was given. IDOR declined to issue the requested private letter ruling. It explained only that qualifying aircraft materials, parts, equipment, components, and furnishings are e…
May an Illinois water utility buy treatment chemicals tax-free when the chemicals remain in pipe-delivered water sold to customers?
Yes, for chemicals transferred as component parts of pipe-delivered water. Public Act 98-583 excludes that water from Illinois sales and use taxes, so the utility may buy component chemicals tax-free …
Under the 2013 Illinois rules, could a resident include nonprofessional gambling winnings in Schedule CR's out-of-state-income column?
No under the law described in the 2013 GIL. Illinois limited the resident credit using income that would be sourced outside Illinois if every state used Illinois rules. Nonprofessional gambling winnin…
How did Illinois source receipts from online counseling, eBooks, and audio or DVD courses sold by an out-of-state internet business?
The receipt type controlled. Online counseling followed the service rule based on where the service was received. eBook receipts followed the intangible-property rule based on the taxpayer's income-pr…
Could a manufacturer replace an unusually high nine-day Illinois sales factor with its lower prior-year factor because the short period was unrepresentative?
No on the evidence submitted. The statutory factor measured Illinois's share of the market for the particular nine-day taxable year, and an unusually high concentration of Illinois sales in that perio…
Does Illinois sales or service tax apply to a paid program when no tangible personal property is transferred to the customer?
Generally no. Retailers' Occupation and Use Taxes do not apply to sales of service, and Service Occupation and Service Use Taxes apply only when tangible personal property is transferred incident to t…
May an equipment lessor use a motor carrier's authority number on Illinois Form RUT-7 when the lessee operates under that carrier's authority?
Yes, when the lessee has an agreement with the interstate carrier under 49 C.F.R. Part 376 and operates under that carrier's Certificate of Authority. The purchaser-lessor may identify that carrier an…
For goods sent to an Illinois consolidator or warehouse before a final store, is tax based on the interim ship-to location or the ultimate destination?
IDOR did not determine which location controlled because the facts were insufficient. It said a registered seller must collect Illinois Use Tax on an Illinois delivery unless it documents an exemption…
In an Illinois drop shipment, may the supplier omit tax when the out-of-state reseller lacks an Illinois number but the end customer promises to self-assess?
The supplier must collect Illinois tax unless it documents that its sale to the out-of-state purchaser is for resale. The preferred proof is a signed certificate carrying an Illinois registration or r…
Which Illinois food-tax rate applied to ice-cream cakes, bulk novelty packages, individual bars, and drive-through prepared food?
Prepared food, drive-through food, and individual ice-cream bars were subject to the high rate described in the 2013 GIL. Ice-cream cakes and qualifying bulk packages could receive the low 1% state ra…
Could a logistics company buy automobiles from Illinois dealers tax-free for resale and later export, and what proof should it provide?
IDOR did not determine the tax result for the proposed automobile-export chain because the transaction facts were insufficient. It said the logistics company appeared to be buying the vehicles for res…
Did Illinois's three-year deficiency period run from an early-filed partnership return's original due date when the partnership never requested an extension?
No. A return filed early was deemed filed on the last prescribed filing day, and that day included Illinois's automatic six-month partnership extension even when the taxpayer filed no extension applic…
Did an Illinois Public Water Supply Construction Permit satisfy the permit requirement for the nonprofit community-water construction exemption?
Yes. IDOR said a Public Water Supply Construction Permit issued by the Illinois EPA under Title IV counts as a valid water-supply permit for the community-water exemption. A qualifying not-for-profit …
How did Illinois generally tax records-management charges for storage, shredding, equipment, software, maintenance, delivery, and cancellation?
IDOR declined to complete the requested item-by-item matrix, but gave category rules. Pure storage, shredding, data, and other services generally were not sales-taxable when no tangible property was t…
Would the Illinois Department of Revenue verify and approve the tax and procedure content of a private vehicle title-and-registration textbook?
No. IDOR said it would not approve the accuracy of a private legal publication. It advised the publisher to rely on Illinois statutes, administrative rules, and Department publications. The Department…
Was contaminated or mixed liquid recovered from vehicle fuel tanks outside Illinois motor-fuel tax, and could a broker sell it for resale?
IDOR did not determine whether the recovered tank liquid was legally “motor fuel” because it lacked enough information about the product. Regardless of motor-fuel classification, the broker's Illinois…
How does Illinois tax a manufacturer's sales of window and door frames, including sales to construction contractors?
A manufacturer that sells window or door frames without installing them sells tangible personal property and owes Retailers' Occupation Tax unless an exemption, such as resale, applies. When a constru…
Did a federal technical termination and deemed asset transfer trigger Illinois reversals of prior bonus-depreciation modifications?
Yes under the technical-termination rules applied in the 2013 GIL. When more than 50% of partnership capital and profits changed hands within 12 months, federal law deemed the old partnership to trans…
Could a retailer inside an Illinois business district pay the additional local retailers' occupation tax itself instead of charging customers?
Yes. A retailer in an Illinois business district must pay the additional Retailers' Occupation Tax to IDOR, but the statute does not require the retailer to reimburse itself by separately charging cus…
Were hosted canned-software license fees and mandatory maintenance fees taxable when Illinois customers accessed the system online?
IDOR did not give a fact-specific yes-or-no answer. It said canned software is generally taxable even when transferred electronically, but a license is not a taxable retail sale if it satisfies all fi…
Was a cloud restaurant back-office system sold to franchisees taxable in Illinois when no hardware was provided?
IDOR did not determine whether the restaurant system was a nontaxable service or a software license. A service with no tangible-property transfer generally was outside Illinois sales and service taxes…
Did prepaid home-phone packages qualify as prepaid telephone calling arrangements taxed as tangible personal property rather than telecommunications?
Generally yes. A package paid in advance that enables calls through an access or authorization code and stops service when the purchased amount is consumed generally qualifies as a prepaid telephone c…
Could a corporation omit full officer Social Security numbers from Illinois sales-tax registration forms and provide only the last four digits or its FEIN?
No. Section 2a required a corporate registration applicant to provide each officer's name, title, and Social Security number, and IDOR said it had no administrative authority to waive that statutory r…
Could an LLC use its sole owner's Illinois registration number on the LLC's certificate of resale?
IDOR did not answer whether the sole owner's registration number was valid for the LLC's purchase. It explained that the seller should obtain a signed certificate of resale containing the purchaser's …
Was a web-only information service with no software download taxable as software as a service in Illinois?
IDOR did not decide whether the described web-only service was taxable. In 2013, it said application-service-provider, software-hosting, and web-software transactions varied too much for individual le…
Were charges for web-based meetings, webinars, and training subject to Illinois Telecommunications Excise Tax when users supplied their own connectivity?
Generally no. Customers used their own internet, telephone, or conferencing services, and toll-free voice service was separate rather than included in the web-service charge. IDOR said the described o…
Were alcohol sales by an Illinois park district at its annual community festival exempt from Retailers' Occupation Tax?
No. The limited retail-sale exceptions for qualifying charitable, religious, and educational organizations did not apply to the park district because it was a governmental body. IDOR said a government…
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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.