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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Had Illinois decided whether each series within a series LLC would be treated as a separate sales-tax and lease-tax reporting entity?
No determination had been made. In this 2013 survey response, IDOR said Illinois had not decided whether to follow the proposed federal series-LLC rules for sales tax or whether each series would be a…
Did an Illinois-headquartered employer have to withhold Illinois tax when its nonresident truck drivers performed all services in another state?
No, if the drivers truly performed all services outside Illinois. Section 304(a)(2)(B) required some Illinois service before compensation could be treated as paid in Illinois. The employer's claim tha…
How should an Illinois propane delivery truck using a propane-diesel conversion system calculate tax on propane burned for highway travel?
Propane bought for off-highway use was not subject to Motor Fuel Tax, but any amount later burned to propel a vehicle on Illinois public highways became taxable. IDOR said the best calculation general…
Could an Illinois delivery leg carrying a mix of out-of-state-origin and Illinois-origin freight count toward the rolling-stock exemption?
Yes, in both scenarios presented. Whether 90% or only 10% of the commingled freight originated outside Illinois, the trips or miles could count toward qualifying rolling-stock use if the carrier docum…
Did an Illinois hotel owe Hotel Operators' Occupation Tax when a guest redeemed loyalty points for a complimentary room?
Generally no, when Hotel Operators' Occupation Tax was remitted on the original paid stays and the reimbursement fund was wholly owned by the hotel franchisor. The answer could change if a third party…
Did an Illinois end user's factory pickup make a drop shipment taxable when the manufacturer had adequate resale proof from the out-of-state distributor?
No. If the Illinois manufacturer obtained adequate resale documentation from the out-of-state distributor, IDOR would treat the manufacturer's sale as a sale for resale and would not require it to col…
Were colocation rack-space rent and a percentage pass-through of the provider's electricity bill taxable in Illinois?
The GIL did not expressly decide whether rack-space rent was a real-property charge or a tangible-property lease. It gave Illinois's general true-lease and conditional-sale rules. On electricity, it s…
Were sweetened protein drinks containing milk and protein bars containing flour taxed as food rather than soft drinks or candy in Illinois?
Yes under the definitions explained in the 2013 GIL. A sweetened beverage containing milk or milk products was excluded from “soft drinks” and treated as food. A bar containing flour was excluded from…
Were fees for cashing payroll, government, or tax-refund checks subject to Illinois sales or service tax?
No. The described customer received cash equal to the check's face value minus a fee, and no tangible personal property was transferred as part of the service. IDOR said Illinois sales and use taxes d…
Did an FDA-regulated cold-and-compression system qualify for Illinois's reduced medical-appliance tax rate?
No. IDOR said a qualifying medical appliance must directly substitute for a malfunctioning part of the human body. Although the cold-and-compression system was described as FDA-regulated and used for …
Did federal Medicare Part D premium-tax preemption exempt prescription-drug sales to private Part D plans from Illinois sales and service taxes?
No. IDOR said Medicare Part D plans operated as private insurers, not government purchasers, so drug sales to them did not qualify for Illinois's government exemption. The Department also said Service…
What did Illinois's 2013 annual survey say about nexus, BOGO and coupon discounts, and seminar or webinar charges?
For promotions, unreimbursed discounts reduced taxable gross receipts, manufacturer-reimbursed coupons did not, and a BOGO sale was taxed only on the amount actually received when no one reimbursed th…
How did Illinois tax data-center cabling installation, termination, testing, labeling, and inventory services?
IDOR did not classify the described cabling tasks or state which tax method applied. It explained that pure services without tangible-property transfer are outside retail tax, while property transferr…
Which restaurant-franchise charges for hosting, software, hardware, faxing, online ordering, and shipping were taxable in Illinois?
IDOR did not provide an item-by-item answer. Pure services without tangible-property transfers generally were outside retail tax, while transferred property followed Service Occupation or Use Tax rule…
Could a required intermediary be ignored so a one-time sale of business equipment qualified for Illinois's occasional-sale exemption?
IDOR did not decide. The buyer argued that the intermediary was only a conduit and should be ignored under J1 Aviation, leaving a nontaxable occasional sale between non-retailers. The Department said …
Did Illinois's residence presumption compare Illinois days with each other state separately or with all other-state days combined?
Each state was compared separately. A person who was an Illinois resident in the prior year and then spent 160 days in Illinois, 150 in Florida, and 55 in Wisconsin was presumed to remain an Illinois …
Can an Illinois software reseller treat canned-software sales as exempt when the publisher, rather than the reseller, signs the license with the customer?
Yes, potentially. The reseller did not have to be the licensor. If the signed license between the software publisher and the customer met all five requirements in 86 Ill. Adm. Code 130.1935(a)(1), the…
How did Illinois distinguish a taxable $1-purchase-option equipment lease from a true lease with a fair-market-value buyout?
A lease with a nominal or $1 purchase option generally was a conditional sale, making all contract receipts subject to Retailers' Occupation Tax. A lease retaining a fair-market-value buyout could rem…
Could a direct-sales company file and remit Illinois sales tax for its independent consultants, and where did 2013 home-party and website sales go on the return?
Yes, if IDOR accepted an RR-80 agency agreement under 86 Ill. Adm. Code 130.550. The company could then collect and remit tax on its consultants' ultimate retail sales, while consultants generally wou…
Could an Illinois retailer refund tax after receiving a late exemption certificate and simply adjust its next return, or send the customer to IDOR?
No. After refunding the tax to its customer, the retailer could not merely adjust the next return. It had to file a claim for credit under 86 Ill. Adm. Code 130.1501. Only the person that actually pai…
Did an Illinois sales-tax exemption number exempt a hotel operator from Hotel Operators' Occupation Tax on a room rented to a charity, school, or government entity?
No. The Hotel Operators' Occupation Tax was imposed on the hotel operator, not the room occupant, so an otherwise exempt charity, religious or educational group, or government entity's Illinois E-numb…
When were separately sold software and hardware maintenance agreements taxable in Illinois?
A maintenance agreement sold separately from the equipment or software generally was not a taxable sale, although the service provider owed Use Tax on parts transferred during service. An agreement in…
Did Illinois tax a $1-purchase-option equipment contract upfront or as installments, and how was a fair-market-value lease taxed?
A contract with a nominal or $1 purchase option generally was a conditional sale. The lessor-retailer owed Retailers' Occupation Tax on installment payments as it received them, and the customer owed …
Did an out-of-state winery with no Illinois location have to register and collect tax when shipping online wine orders directly to Illinois residents?
Yes. Under the law discussed in this 2013 letter, an out-of-state winery selling wine directly to Illinois residents had to obtain a Winery Shipper's License, also called a Direct Shipping Permit. If …
Were an intermodal trucker's separately stated storage, chassis, and fuel charges subject to Illinois sales or service tax?
Generally no, if the transactions involved no transfer of tangible personal property to the customer. IDOR said Retailers' Occupation, Use, Service Occupation, and Service Use Taxes generally did not …
Did a corporation lose its Illinois net-loss carryforwards merely because it stopped doing business in Illinois before later returning?
No. Ceasing Illinois business did not, by itself, destroy tax attributes acquired under Section 207. If a loss otherwise carried under the statutory periods and ordering rules to a year when the corpo…
Did checking an online box create the signed software-license agreement needed for Illinois's canned-software license exemption?
No. In this 2013 GIL, IDOR said checking a box to accept online license terms was not a written agreement signed by both licensor and customer. Canned software and updates generally were taxable unles…
How did Illinois tax dealership entrance towers or signs that were installed on concrete foundations?
If an entrance tower or sign was permanently affixed to real property, the installer was a construction contractor and the end user of the materials, owing Use Tax on cost rather than sales tax on the…
How did Illinois tax a facilities manager's fixed service fees, repair materials, construction work, and subcontracted services?
IDOR did not classify every fee. Permanently installed materials made the provider a construction contractor owing Use Tax on material cost, with no authority to bill the customer 'sales tax.' For oth…
Could a salvage business buy stamped cigarettes from a closing smoke shop and resell them to Illinois retailers without a distributor license?
It could buy the stamped cigarettes, but it could not resell them to retailers without an Illinois cigarette distributor's license. Retailers were required to obtain cigarettes for retail sale from li…
Did Illinois include tire disposal fees and statutory tire user fees in a retailer's taxable gross receipts?
The two fees were treated differently. A retailer's tire disposal fee was a cost of doing business and could not be deducted from taxable gross receipts. The statutory tire user fee was specifically e…
Would Illinois accept an MTC multistate resale certificate that omitted the description of items being purchased?
No, not as submitted. Illinois accepted the MTC Uniform Sales and Use Tax Certificate—Multijurisdictional as a resale certificate only when it contained all information required by 86 Ill. Adm. Code 1…
Did replacing a retiree's pension payments with an annuity make the payments taxable in Illinois?
Possibly. Section 203(a)(2)(F) covered amounts included federally under specified retirement provisions, including Section 403(a) annuities purchased by qualifying employee trusts. The plan's purchase…
What made tuition at an Illinois school eligible for the education expense credit?
The school had to be a public or nonpublic Illinois elementary or secondary school, comply with Title VI of the Civil Rights Act of 1964, and provide attendance sufficient to satisfy Illinois's mandat…
Was Illinois's January 2013 moist-snuff tax 30 cents per ounce even though 15% of the cigarette-package tax equaled 29.7 cents?
Yes. IDOR read 35 ILCS 143/10-10 as expressly setting the January 1, 2013 moist-snuff tax at $0.30 per ounce. It treated the separate 15%-of-cigarette-tax language as a cap on future moist-snuff rate …
Were prepaid wireless electronic PINs taxed as telephone service or as tangible personal property, and did the 9-1-1 surcharge also apply?
A qualifying prepaid telephone calling arrangement was treated as tangible personal property subject to Illinois Retailers' Occupation and Use Taxes plus applicable local occupation taxes. A prepaid s…
Did IDOR decide whether the software license attached to ST 13-0015-GIL qualified for Illinois's canned-software exemption?
No. IDOR declined to issue a PLR or decide whether the attached agreement met the exemption, saying 86 Ill. Adm. Code 130.1935 was clear enough for licensors and licensees to apply. It stated generall…
How did Illinois classify food, medicines, grooming products, diabetes supplies, propane exchanges, and coupon books for sales tax?
IDOR did not classify every listed product. It explained that qualifying food, drugs, medicines, and medical appliances received the lower 2013 state rate, while grooming and hygiene products used the…
Could an Illinois-based IFTA carrier destroy original fuel receipts after creating electronic images for tax records?
Yes, generally. Electronic imaging of original IFTA and motor-fuel records was acceptable if the records were complete, supported the quarterly return, and remained accessible. During an audit, the ca…
Was an exempt organization's Illinois E-number letter enough for its contractor to buy floor-covering materials tax-free?
No. A contractor incorporating materials into real estate owned by an exempt organization or government entity could buy them tax-free, but it had to give the supplier both the owner's active E-number…
Could an Illinois resident subtract pension income paid by a foreign employer's retirement plan?
No, based on the facts presented. Illinois begins with federal adjusted gross income and permits only expressly authorized modifications. The foreign employer's plan did not appear to fall within the …
Was a pension earned from a private foreign employer excludable from Illinois income?
No. The wife's pension from a private employer in another country was included in federal income, and the plan did not appear to fit any federal retirement provision listed in Section 203(a)(2)(F). Be…
Did a tiered partnership need alternative-apportionment permission to use the Illinois amounts reported on its partnership schedules?
Not if the LLC only meant to apply Section 305 to the Illinois amounts reported by its lower-tier partnerships on Schedules K-1-P; no Section 304(f) petition was needed for that statutory method. If i…
Did a tiered limited partnership need alternative-apportionment permission to use the Illinois amounts on its partnership schedules?
Not if the partnership only meant to apply Section 305 to the Illinois amounts reported by its lower-tier partnerships on Schedules K-1-P; that statutory method did not require a Section 304(f) petiti…
Were Illinois public school districts exempt from state Telecommunications Excise Tax because they were local-government entities?
No. The Telecommunications Excise Tax Act's exemptions were limited to the State and federal governments, state universities created by statute, and specified wholly owned corporate-subsidiary purchas…
Could a contractor use an exempt end user's E-number alone to buy construction materials tax-free in Illinois?
No. A contractor incorporating materials into real estate owned by an exempt organization or government entity could make a tax-free purchase only by giving the supplier the owner's active E-number an…
Did IDOR classify a carrier's prepaid home-phone plans as taxable prepaid calling arrangements instead of telecommunications services?
IDOR did not decide whether the carrier's plans met the definition. It explained that qualifying prepaid telephone calling arrangements were treated as tangible personal property subject to Retailers'…
How did Illinois tax computer servers leased for 24 months with a $1 purchase option and then rented to another customer?
The upstream 24-month contract's $1 purchase option generally made it a conditional sale. The lessor-retailer owed Retailers' Occupation Tax as installment payments were received, and a buyer purchasi…
What records did an Illinois retailer need to support the enterprise-zone building-materials exemption?
The retailer needed two records: a Certificate of Eligibility for Sales Tax Exemption from the enterprise-zone administrator and a purchaser certification identifying the project, zone, materials, pur…
Would IDOR give yes-or-no answers to a 2013 nexus survey, and what historical guidance did it provide instead?
No. IDOR said nexus was too fact-specific for the survey's yes-or-no format. It instead summarized the law it applied as of December 31, 2012: accepting Illinois orders or filling them from Illinois i…
Could an Illinois tire retailer deduct a tire-disposal fee or the statutory tire user fee from taxable gross receipts?
A retailer's tire-disposal fee was a cost of doing business and could not be deducted from taxable gross receipts. This letter originally said the statutory tire user fee received similar treatment, b…
Did Illinois sales tax apply to application-monitoring and consulting services delivered without tangible property?
Pure professional or consulting services without a transfer of tangible personal property did not create Service Occupation Tax or Use Tax liability. Electronically transferred information or data was…
Did diesel exhaust fluid qualify for Illinois's rolling-stock sales-tax exemption?
No, based on the facts provided. IDOR said diesel exhaust fluid was a consumable that did not become a physical component of qualifying rolling stock, so it did not qualify for the exemption. The exem…
How did Illinois tax a farmer's sales of live cattle to restaurants and households for processing into meat?
A sale to a restaurant that resold the resulting meat was generally a sale for resale, supported by a resale certificate. A sale to a household was a retail sale and did not become an exempt occasiona…
Could a cash-management company pay tax on customer safes and then bill one untaxed charge for the safe, armored transport, and cash services?
IDOR said the company appeared to be the end user of the safe and therefore owed Use Tax on it. But it would not confirm that the single customer charge was untaxed without reviewing the customer agre…
Which catheters and cardiovascular products qualified for Illinois's reduced medical-appliance tax rate?
The reduced rate applied only when the item was intended by its manufacturer to directly substitute for a malfunctioning body part. Catheters that introduced or removed fluids as a substitute for a bo…
When did an Illinois gift basket containing coffee, candy, and other food qualify for the lower food tax rate?
Under the assumptions in the letter, the whole gift basket qualified for the lower 1% state food rate plus local tax when more than 50% of its value came from qualifying food. If more than 50% of the …
Did transferring a recreational aircraft from four individuals to their newly formed, identically owned LLC trigger Illinois Aircraft Use Tax?
Yes. IDOR said transferring the aircraft from the four individual owners to their newly formed LLC was taxable under the Aircraft Use Tax Law because the aircraft moved from one legal entity to anothe…
Was a lump sum paid to a federal retiree in place of higher pension payments exempt from Illinois income tax?
No. Although the retiree's regular federal pension qualified for Illinois's retirement-income subtraction, the replacement lump sum had been subjected to FICA and Medicare taxes, indicating federal wa…
Did Illinois's $15 family-transfer vehicle tax rate apply to a transfer from a stepparent to a stepchild?
No. IDOR rescinded ST 12-0054-GIL and clarified that the $15 family-transfer rate was limited to a transferor's spouse, mother, father, brother, sister, or child; the statute did not extend that rate …
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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.