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 Illinois sales tax apply to a records-management company's document storage, shredding, scanning, software, and related service fees?
Generally, no. The Department confirmed that if a transaction does not involve transferring tangible personal property to the customer, no Retailers' Occupation Tax, Use Tax, Service Occupation Tax, o…
Does a company that resells hosted phone system licenses have to collect and remit Illinois telecommunications tax or sales tax on those licenses?
It depends on what's actually being resold: hosted telecommunications service is generally subject to the 7% Telecommunications Excise Tax unless the reseller holds an active Illinois resale number, w…
Does Illinois Service Occupation Tax or Use Tax apply when a company sells two-component spray-on bedliner products to franchisees/dealers who apply them to customers' trucks?
The franchisees and dealers who buy the bedliner components and spray them onto customers' trucks are acting as 'servicemen' under the Service Occupation Tax Act, so they can buy the components from t…
How does Illinois source local Service Occupation Tax and Retailers' Occupation Tax when a company uses production managers and a network of outside suppliers to fulfill custom orders?
Local Service Occupation Tax and Retailers' Occupation Tax are sourced to the location where the company's own selling activities occur (here, its production managers), not to the location of an outsi…
What does Illinois General Information Letter ST 20-0032-GIL conclude about Computer Software?
Generally, no. A software-as-a-service provider is treated as a 'serviceman,' and if it does not transfer any tangible personal property (including computer software) to the customer, the charges are …
Does a not-for-profit college that trains optometrists owe Illinois sales or service occupation tax on the prescription eyewear it provides to patients as part of student training?
No. The Illinois Department of Revenue ruled that the college does not owe Retailers' Occupation Tax or Service Occupation Tax on prescription eyeglasses and contact lenses transferred to patients as …
What does Illinois General Information Letter ST 20-0030-GIL conclude about Computer Software?
It depends on what is actually transferred to the customer. Illinois taxes sales of tangible personal property, and 'canned' (pre-written) computer software counts as tangible personal property, so se…
Is computer software subject to Illinois sales and use tax, and how does that apply to software licenses, leases, and services like death-record and address searches?
Generally yes: 'canned' (prewritten) computer software is taxable tangible personal property in Illinois, while custom-written software generally is not. A software license escapes tax only if it meet…
How does Illinois sales, use, and service occupation tax apply to open-source software licenses and to paid software subscriptions?
Free open-source software licenses are not subject to Illinois Retailers' Occupation Tax because there's no charge for the software; the company owes no Use Tax either, since it also acquired the soft…
Does Illinois tax the transportation and delivery charges that trucking companies charge when they sell and deliver rock, sand, or gravel from a quarry to a customer?
Yes, in most cases. Illinois treats trucking companies that sell and deliver rock, sand, or gravel from a quarry as retailers subject to Retailers' Occupation Tax, and under the 'inseparable link' rul…
What does Illinois General Information Letter ST 20-0004-GIL conclude about Exempt Organizations?
An educational institution that trains optometrists does not owe Retailers' Occupation Tax or Service Occupation Tax on prescription eyeglasses and contact lenses it transfers to patients as part of i…
What does Illinois General Information Letter ST 20-0002-GIL conclude about Computer Software?
A cloud-based online file storage service that does not transfer any tangible personal property (including computer software) to its customers is generally not subject to Illinois Retailers' Occupatio…
What does Illinois General Information Letter ST 19-0035-GIL conclude about Computer Software?
A software-as-a-service provider is treated as a 'serviceman,' not a retailer. If the provider never transfers any tangible personal property (including software) to the customer, the transaction gene…
We manufacture custom signs and sell them into Illinois, where we're registered; an independent contractor installs them (attached to a building or a pole set in concrete) and an independent carrier delivers them, with installation and freight separately billed above our cost -- do we charge sales tax or owe use tax, does tax apply to the freight and installation charges, and what happens if we use subcontractors to install?
It depends on whether the sign has 'commercial value' to anyone besides the buyer: a generic sign (for example, one that just reads "real estate" or "insurance" without the customer's name or brand) t…
Our company sells an enhanced communications-platform product to Illinois customers, and separately some businesses offer software as a service or resell conferencing/telecom services -- when is computer software a taxable retail sale versus a non-taxable license, when does SaaS/cloud delivery escape sales tax, and when does audio-conferencing trigger the Telecommunications Excise Tax?
The Department did NOT classify the taxpayer's own PRODUCT -- it first declined to issue the binding Private Letter Ruling the taxpayer requested, citing "the lack of information regarding the product…
The company I pay for email marketing services says it must charge me Illinois sales tax, but they don't sell or license me any software -- is that right?
The Department did not resolve this taxpayer's specific dispute with his email-service provider -- it only restated the general rules for how Illinois taxes software and software-adjacent services, si…
When a business sells the same product both at retail and bundled into a service (like a science kit included in a camp sign-up fee), how does it figure Illinois sales tax on the bundled item?
It depends on which of four Service Occupation Tax methods applies -- separately stated selling price, 50% of the entire bill, cost price (if a registered de minimis serviceman), or Use Tax on cost pr…
When a company sells custom signs into Illinois and has them installed by an independent contractor, does it charge sales tax, or does the customer owe use tax -- and what about the freight and installation charges?
It depends on the sign. A sign with 'commercial value' to more than just that buyer (e.g., a generic 'insurance' or 'hamburgers' sign) is taxable retail sale under Retailers' Occupation Tax, including…
What does Illinois General Information Letter ST 18-0018-GIL conclude about Service Occupation Tax?
The Department declined to issue the requested Private Letter Ruling because the facts provided were too limited, and instead issued this General Information Letter explaining, in general terms, how R…
What does Illinois General Information Letter ST 18-0010-GIL conclude about Service Occupation Tax?
The Department did not give a yes/no answer on collecting sales tax on 'sublet' auto repair parts and labor; instead this GIL explains the general Service Occupation Tax framework for multi-service (s…
Does an out-of-state contractor owe Illinois sales or use tax on installing, maintaining, and supplying car wash equipment in Illinois?
A construction contractor who permanently affixes tangible personal property (like installed equipment, electrical, or plumbing materials) to real property is the end user of that property and owes Il…
Does Illinois sales tax apply to a mobile app subscription and bundled distributor services sold by a multi-level-marketing company?
It depends on what is actually transferred: if the mobile app, dashboard, and personal-website bundle involve no transfer of tangible personal property (e.g., cloud-based access with nothing downloade…
Are custom dental devices like anti-snoring mouthpieces and dental bars taxed at Illinois' reduced 1% medical appliance rate, and can dentists buy them for resale?
The Department said the custom dental devices described (a prescription anti-snoring/sleep apnea mouthpiece and a metal dental bar) would generally qualify as medical appliances taxed at Illinois' red…
Do I owe Illinois sales tax when I buy an optional extended warranty or maintenance agreement separately from the product it covers?
No. When an optional extended warranty or maintenance agreement is sold separately from the tangible personal property it covers, the sale of that agreement itself is not a taxable transaction under I…
Are fees for a paid membership add-on (offering delivery perks and item discounts) subject to Illinois Retailers' Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax?
No. The Department ruled that because the membership itself does not transfer any tangible personal property to the customer, the fees for the paid add-on membership -- and for its free one-month tria…
Does Illinois Retailers' Occupation Tax or Use Tax apply to a company's various cloud-based (SaaS) software products -- tax-preparation, bookkeeping, self-employed finance, professional tax-prep, and payroll offerings -- including their related free mobile apps, desktop conversion tools, and occasional downloadable components?
The core SaaS access to each of the five product lines is not taxable because it is delivered purely through the cloud with no software downloaded to the user's device. However, whenever the company D…
Does a company create Illinois sales-tax nexus by having a resident employee, using independent-contractor transcriptionists who work from home, and occasionally sending employees onsite to customer locations?
The Department declined to make a specific nexus determination in this GIL, saying nexus is too fact-specific for a General Information Letter and is better handled by an auditor. Instead, it explaine…
Does an out-of-state seller of a hardware device and a cloud-based software subscription have to collect Illinois sales tax, and does the Illinois customer owe use tax if it doesn't?
It depends on whether the out-of-state business has nexus with Illinois. If it is an 'Illinois Retailer' or a 'retailer maintaining a place of business in Illinois' (which can include an in-state agen…
Does providing cloud-based software (like software as a service, an API, or a remote access agent) trigger Illinois Retailers' Occupation, Use, or Service Occupation Tax, and can an Illinois-based automated call-center service create sales tax nexus for its out-of-state clients?
A provider of software as a service acts as a serviceman: if nothing tangible is transferred to the customer, the service generally is not subject to Retailers' Occupation, Use, Service Occupation, or…
Was a separately purchased consumer-electronics extended warranty taxable when customers also had to buy it to use a device-upgrade program?
No. IDOR treated the separately priced extended warranty as an optional maintenance agreement, so its sale was not subject to Retailers' Occupation Tax even when purchase was required for upgrade-prog…
How does Illinois tax a turnkey door-hanger marketing service that designs, prints, verifies, and distributes printed pieces?
IDOR did not give a transaction-specific yes-or-no answer; this nonbinding GIL supplied the serviceman framework. Tangible door hangers transferred with a service are taxed under one of four methods: …
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…
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…
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 …
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…
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…
Were services previously found outside Illinois telecommunications excise tax subject to Retailers' Occupation, Use, or Service Occupation Tax?
Not if the services transferred no tangible personal property. IDOR declined a supplemental PLR but explained that pure services were outside Retailers' Occupation and Use Tax, and Service Occupation …
How did Illinois service taxes apply when a business printed and distributed advertising door hangers?
IDOR could not give a transaction-specific answer without the contracts and registration facts. It treated the arrangement as a service transaction that could require Service Use Tax collection or Use…
Were paid or free-trial online memberships with shipping, streaming, e-books, music, storage, and discounts taxable in Illinois?
IDOR did not specifically classify the described membership. It said membership fees generally were nontaxable intangibles when no tangible property was transferred. If membership itself entitled the …
Could an Illinois copy shop charge tax on paper copies even though copying was a service?
Yes, potentially. Illinois treated copying as a service, but paper transferred to the customer could create Service Occupation and corresponding Service Use Tax. Depending on the shop's method and de …
How did Illinois tax medical-record services delivered on paper, CD, or electronically to in-state and out-of-state recipients?
IDOR could not assign liability without invoices or determine whether the arrangement was multi-service. Electronic transmission was not tangible property. Paper or CD delivery could create service-ta…
How did Illinois tax a direct-mail postcard campaign bought from an out-of-state advertising agency and rebilled to dealers?
IDOR could not decide without invoices, contracts, and the parties' registration status. The campaign could be a service with postcards transferred incident to it and a multi-service arrangement betwe…
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…
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…
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…
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…
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 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…
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…
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…
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…
How did Illinois tax a medical-records service that delivered records electronically or as mailed paper copies?
Electronic viewing, downloading, or transmission of medical records was not a transfer of tangible personal property. Paper medical records delivered with the service could create Service Occupation T…
Did a small auto repair shop's de minimis serviceman status eliminate Form ST-1 filing for its retail tire sales?
No. Selling tires was a retail sale subject to Retailers' Occupation Tax, separate from repair services taxed under Service Occupation Tax when property was transferred. A retailer generally had to fi…
Were custom-printed magnetic hotel, casino, loyalty, and gift cards a taxable sale of property or a sale of service in Illinois?
IDOR described manufacturing and selling custom-printed magnetic cards as a sale of service, but the card and its custom printing were tangible personal property transferred with that service and were…
Could an electroplater buy packaging materials for resale when the materials stayed with customer-owned metal returned after processing?
It depended on the electroplater's serviceman method. If it used one of the first three Service Occupation Tax methods and unequivocally transferred all ownership rights in the packaging to the custom…
Were prescription drugs paid through Medicare Part D exempt from Illinois tax, and how did a pharmacy calculate and collect Service Occupation Tax?
Medicare Part D drug sales were not government-exempt because private prescription drug providers, not the government, purchased the drugs. The pharmacy had to use one of four serviceman methods. IDOR…
How was the de minimis serviceman cost ratio computed, and when could a service provider treat transfers to a nonprofit customer as tax-exempt?
The cost ratio used only the annual cost of tangible personal property actually transferred to service customers—not equipment, maintenance, repairs, or supplies that were merely business costs. A 501…
Was a printing broker exempt from tax because it sold custom-designed printed items as a service and subcontracted the physical printing?
No blanket exemption applied. Custom or special-order printed items were generally sales of service subject to Service Occupation Tax on the tangible property transferred. The printing broker had to u…
How does Illinois tax custom printed matter transferred by graphic-arts servicemen, including registered and unregistered de minimis servicemen?
Illinois declined to issue the requested Private Letter Ruling but explained the general rules. Special-order or custom print items generally fall under Service Occupation Tax, while stock or standard…
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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.