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.
No Illinois rulings match these filters
Try a different search term or clear the filters.
Were separately stated shipping-and-handling charges taxable when party-plan merchandise went to a hostess for customer distribution?
Generally yes. ST 10-0115-GIL says shipping and handling was part of the retailer's taxable cost of doing business when merchandise was sent to a party hostess or distributor who then delivered it to …
Were sales-based 'hostess dollars' excluded from taxable receipts as an unreimbursed discount?
No. ST 10-0114-GIL says credits awarded to a party hostess based on sales generated at the party were included in taxable gross receipts when applied to merchandise. The taxable value equaled the doll…
How did Illinois treat access codes, points cards, stored-value cards, virtual goods, and downloadable video-game software?
The GIL did not conclusively classify every product. A card or coupon redeemable for tangible personal property was an intangible when sold; tax arose when a retailer later transferred the property. E…
Did an unreimbursed program-funding discount reduce Illinois taxable gross receipts on promotional products?
Yes. ST 10-0112-GIL says a discretionary discount funded entirely by the seller reduced taxable gross receipts to the consideration actually received. Full or partial reimbursement from a manufacturer…
Did reselling access to an online employability assessment create Illinois sales or service tax when no property was transferred?
Generally no under the facts stated. ST 10-0111-GIL says a transaction with no transfer of tangible personal property created neither Retailers' Occupation Tax, Use Tax, Service Occupation Tax, nor re…
Was a 42-month equipment 'lease intended as security' a conditional sale, sale-leaseback, or nontaxable financing?
Unresolved. ST 10-0110-GIL found the documents internally unclear: one provision appeared to transfer ownership to the lessor, while another said the arrangement created only a security interest. A gu…
Who owed Illinois Use Tax when custom countertops were sold and installed as part of one construction contract?
The construction contractor that purchased the countertops for permanent incorporation into the home was the end user and owed Use Tax on its cost. Under ST 10-0109-GIL, the customer did not owe Use T…
Could an out-of-state direct seller collect and remit Illinois tax for its independent distributors under one filing arrangement?
Potentially, but only through a Department-approved agency agreement. ST 10-0108-GIL says a manufacturer, importer, or wholesaler could use Form RR-80 to assume registration, return, and Retailers' Oc…
Were seed sales to farmers exempt as sales for resale, and did a seed seller have to register and file Illinois returns?
Seed sold to a farmer for raising crops that would be sold was a nontaxable sale for resale under ST 10-0107-GIL. Seed used to raise grass, crops, or other plants that the purchaser would use rather t…
Could a multistate service partnership avoid Illinois's throwout rule and source exam fees by where the examinations occurred?
No, not on the petition submitted. The partnership treated states without partnership filing requirements as states where it was not taxable, but Section 303(f)(2) also treated it as taxable wherever …
Could parents claim the Illinois education expense credit for dependent children who had no Social Security numbers because of a religious exemption?
Yes. After reviewing the federal return and the statement concerning the approved IRS Form 4029 religious exemption, IDOR corrected the Illinois return to allow a $313 education expense credit and sai…
Did a prescription polidocanol injection used to treat varicose veins qualify for Illinois's lower drug tax rate?
The GIL did not expressly issue a product-specific conclusion, but its general rule treated prescription drugs and medicines bearing medicinal claims as eligible for the lower State rate described in …
Could a telecommunications provider use Illinois's manufacturing machinery exemption for equipment used to build its network?
No. ST 10-0105-GIL says Illinois did not allow the manufacturing machinery and equipment exemption for telecommunications equipment, even though another state might. The purchaser therefore had to pay…
How did Illinois tax short-term motorized RV rentals, equipment rentals, and related fees?
Motorized RV rentals of one year or less fell under the Automobile Renting Occupation and Use Tax described in ST 10-0104-GIL, while a minimum term over 365 days was outside that Act. Other equipment …
Did Illinois decide whether a New York provider's web-based software and training were taxable or created Illinois collection duties?
Unresolved for the described web-based provider. The Department declined to determine nexus and said ASP, hosting, and web-software guidance belonged in rulemaking. Under the 2010 rules it described, …
How could an Illinois restaurant document tax-free purchases of products it planned to resell?
A restaurant buying products that it would resell should document the exemption by giving its supplier a certificate of resale. The 2010 GIL directed the owners to 86 Ill. Adm. Code 130.1405 and enclo…
Could a construction contractor claim an Illinois enterprise-zone exemption for tools, safety items, rentals, temporary facilities, and other project purchases?
Not categorically. Each enterprise-zone exemption covered different property and required its own certification and use tests. Building materials generally had to be physically incorporated into enter…
How did Illinois treat retail and private vehicle transfers, military purchases, trade-ins, and long-term motor-vehicle leases?
Under the 2010 rules surveyed, retail sales of automobiles, trucks, motor homes, mobile homes, trailers, boats, motorcycles, and off-road vehicles were taxable. Private transfers could face separate v…
What proof did Illinois require for a sale-for-resale exemption, and could a seller recover tax remitted before receiving that proof?
A seller could document resale with a proper certificate containing the parties, items, signature, date, and an active registration or resale number. Missing documentation created a rebuttable presump…
Were consumable items bought by a residential-service provider exempt merely because Medicaid recipients used them?
No blanket exemption applied merely because Medicaid recipients consumed the items. Direct Medicare or Medicaid payments could be exempt as governmental purchases when supported by an active E-number,…
Did Illinois tax dark chocolate at the lower food rate because of claimed health benefits?
No. Illinois's 2010 candy rule did not distinguish dark chocolate from other candy because of claimed health benefits. Candy—sweetener combined with chocolate, fruit, nuts, or flavorings in bars, drop…
Could a construction subcontractor use separate accounting because its only Illinois contract produced a loss?
No. The petition was not filed 120 days before the extended due date, and the company had used separate accounting on its original return instead of filing and paying under the statutory method. IDOR …
Could spouses filing a joint Illinois return claim the property-tax credit for two separately owned principal residences?
Yes. IDOR recognized that married couples could have two principal residences during a tax year and said they could claim the tax paid on both when computing the residential property-tax credit. They …
What restrictions applied when a licensed charitable-games supplier used, labeled, listed, or explained gaming equipment?
A licensed supplier could not distribute charitable-games equipment for a fun-only event unless the recipient held a charitable-games license. Equipment had to display the supplier's true corporate or…
Did Illinois tax a 401(k) withdrawal included in an individual's federal adjusted gross income?
No. Illinois began with federal adjusted gross income but Section 203(a)(2)(F) allowed an individual to subtract amounts included under IRC Section 402(a). Because a 401(k) withdrawal was included in …
Could a taxpayer receive Illinois withholding credit from a Form W-2 issued under a different name or Social Security number?
Yes, after adequate proof. IDOR said it would allow Illinois withholding reported on a Form W-2 whose name or taxpayer identification number did not match the return if the taxpayer proved that the IR…
Was a company's rotating block of hotel rooms exempt from Illinois hotel tax when reserved for at least 30 consecutive days?
Yes only for a specific number of rooms the company was unconditionally required to pay for throughout at least 30 consecutive days. Different employees could occupy those rooms during the period. If …
Could a home health agency partnership subtract income from patient services as personal service income?
Yes, for compensation from the described patient services. Illinois used the former federal definition of personal service income, which included wages, salaries, professional fees, and other compensa…
Could a taxpayer exclude future installment payments from 2009 estimated tax after electing to recognize the entire sale gain in 2009?
No. By electing out of the installment method, the taxpayer recognized the entire gain in the 2009 sale year, including the fair market value of the buyer's installment obligation. Illinois estimated …
Did Illinois treat prescribed insulin pumps, cartridges, and infusion sets as medical appliances eligible for the reduced sales-tax rate?
Unresolved. The Department did not classify the insulin pump, disposable cartridges, or infusion sets. It explained that a medical appliance had to be intended by its manufacturer to directly substitu…
Could medical equipment qualify for Illinois's exempt-hospital lease exemption when a financing bank owned and leased it to a company that subleased it to the hospital?
Potentially. The rule did not bar a lessor from leasing qualifying equipment to an intermediary that subleased it to an exempt hospital. But every relevant lease had to be executed or in effect when t…
When a restaurant gave customers complimentary meals and drinks, was Illinois Use Tax based on menu price or the restaurant's cost?
The restaurant owed Use Tax on its cost price, not the normal menu price. Taking food or drinks from inventory and giving them to a customer made the restaurant the end user. It could satisfy the tax …
Could an out-of-state vendor exclude an estimated freight charge from Illinois tax when the invoice listed freight separately but the vendor never reconciled it to actual shipping cost?
Not automatically. A separate freight line on an invoice did not prove a separate delivery agreement. Under the 2010 rule described, nontaxable delivery required a separate agreement from the property…
Would the Illinois Department of Revenue verify the tax, fee, and vehicle-procedure information in a private legal textbook?
No. The Department would not approve the accuracy of a private legal publication. It advised the publisher to consult Illinois statutes, administrative rules, and Department publications. It said the …
Did Illinois treat a noninvasive electrical bone-growth stimulator as a medical appliance eligible for the reduced sales-tax rate?
Apparently not. After refusing to issue a binding PLR, the Department said the described bone-growth stimulator appeared not to qualify for the reduced medical-appliance rate. The appliance itself had…
Did Illinois decide whether subscriptions to remotely hosted application-service-provider platforms were taxable software or nontaxable information services?
Unresolved. The Department refused to classify application-service-provider subscriptions through a letter ruling and said the subject belonged in formal rulemaking. Until that review was complete, ea…
Did Illinois decide whether an out-of-state mail-order medical-supply seller using a drop-ship distributor had nexus or qualified for reduced tax rates?
Unresolved. The Department did not determine the seller's nexus, drop-shipment obligations, or the classification of its medical supplies. It directed the seller to the general drop-shipment rule and …
Did Illinois decide whether an out-of-state eye-monitoring service with devices in patients' homes had nexus or owed tax on its monthly service fees?
Unresolved. The Department did not decide nexus, registration, or the taxability of the monthly eye-monitoring service. It outlined four Service Occupation Tax or Use Tax methods for property transfer…
Did Illinois decide whether nonprescription sales of the Plan B morning-after pill qualified for the reduced drug tax rate?
Unresolved. The Department did not expressly classify Plan B. It explained that a pill or other preparation for human use qualified as a drug when its label claimed medicinal qualities, including trea…
Could Illinois trade-in credit apply to property bought or titled outside Illinois, and could a buyer add a trade-in after the vehicle sale closed?
Like-kind property could qualify as a trade-in even if it was bought, titled, or taxed outside Illinois. But a completed sale could not later be amended to invent a trade-in that was not offered at th…
Which grain-bin materials and components qualified for Illinois's farm machinery and equipment exemption?
Grain bins themselves and building materials such as concrete, steel panels, and roof vents did not qualify. Dryers, blowers, augers, temperature monitors, grain spreaders, and level indicators could …
Did Illinois decide whether hosted call-automation software, phone-number charges, and a regulatory recovery fee were taxable telecommunications?
No specific result was issued. The Department said the request lacked the taxpayer identity, power of attorney, and enough detail about the carrier services and their use. It gave only general rules: …
How did Illinois distinguish taxable conditional-sale payments from rent under a true equipment lease?
A $1 or other nominal buyout generally makes the arrangement a conditional sale, so all lessor receipts are taxable. A fair-market-value option can preserve a true lease; the lessor then owes Use Tax …
When does a business renting an Illinois hotel room block for at least 30 days qualify as a permanent resident?
A business qualified for the permanent-resident exclusion when it was unconditionally obligated to pay for a specific number of rooms for at least 30 consecutive days, even if rooms were empty or used…
Did delivering appliances into an Illinois county make an out-of-state retailer owe that county's local school sales tax?
Not merely because of delivery. The GIL said local tax was sourced to where the sale occurred, unless an out-of-state sale involved inventory located in an Illinois taxing jurisdiction. When both the …
Did brewed coffee and frozen food heated by customers in a store microwave receive Illinois's lower food-tax rate?
Brewed coffee was taxed at the higher general-merchandise rate because retailer-prepared coffee is food for immediate consumption. A frozen item such as a burrito generally kept the lower food rate ev…
Did prepackaged ice cream sold from an Illinois ice cream truck qualify for the lower food-tax rate?
Generally no. The Department said an ice cream truck generally sells ice cream for immediate consumption, so the sales incurred the higher 2010 state rate of 6.25% plus applicable local taxes rather t…
Did Illinois decide whether a remotely accessed hosted email-marketing platform and its setup, messaging, and consulting fees were taxable?
No. The Department said hosted software and application-service-provider taxation belonged in formal rulemaking, not a case-by-case GIL. It supplied general rules: canned software was taxable even ele…
Could Illinois residents claim a Schedule CR credit for Wisconsin income tax paid on employee wages?
No. Illinois taxed its residents' wages, but the Illinois-Wisconsin reciprocal agreement exempted an Illinois resident's employee compensation from Wisconsin income tax. If Wisconsin tax was withheld …
Is Illinois sales tax computed before or after an instant appliance rebate that a manufacturer or utility reimburses to the retailer?
Before the reimbursed rebate. If a third party reimbursed the retailer for the instant discount, that reimbursement remained part of taxable gross receipts—so the example used the full $1,000 price, n…
Can Illinois body shops buy sandpaper, masking tape, paint guns, and other repair supplies tax-free for resale?
No, not when the shop uses or consumes the item instead of physically transferring it to the customer. Sandpaper, masking tape, thinners, brushes, paint guns, wrenches, and shop tools were taxable whe…
Should an Illinois telecommunications carrier charge Telecommunications Excise Tax to a consular official who holds a federal diplomatic tax exemption?
No, to the extent the consular official actually enjoyed the federal exemption. Illinois said section 4 barred the tax where federal law prevented state taxation, so carriers otherwise required to col…
When must an Illinois retailer report later customer payments, and when does temporary storage avoid Use Tax?
A retailer filing on the gross-receipts basis reported later payments in the period received; gross-sales filers paid upfront and had to notify the Department to change methods. Temporary-storage reli…
Can an Illinois retailer exclude used gaming hardware or software traded toward a new item?
Only if the traded item was of like kind and character to the item sold. The retailer could accept multiple trade-ins and needed sufficient records, but no special certification was required. The GIL …
Does donating medical instruments to an Illinois nonprofit hospital avoid Use Tax because a direct sale to the hospital might be exempt?
No. The donor was the end user and made a taxable use by giving the instruments away, regardless of the donee's entity type. Illinois said a donation differs from an exempt sale to an organization and…
When may an Illinois nonprofit with an E number hold a public fundraiser sale without Retailers' Occupation Tax?
Only within narrow exceptions for member sales, noncompetitive sales, or occasional dinners and similar activities. An Illinois E number was required, federal 501(c)(3) status alone was insufficient, …
How did Illinois treat call-tracking services that electronically delivered reports and used toll-free numbers?
If no tangible property was transferred, the service produced no Retailers' Occupation or Use Tax under the general rule, and electronic data was not tangible property. A provider using—but not resell…
Did Illinois decide whether an out-of-state seller of prostate immobilization devices had to register and collect tax, or whether the devices qualified for the medical-appliance rate?
No specific determination was made. Illinois declined to decide the seller's nexus and only outlined the 2010 nexus rules. It also explained that a medical appliance received the reduced rate only whe…
When did Illinois treat electronically delivered canned software, software licenses, and maintenance agreements as taxable?
Electronically delivered canned software was generally taxable, but a software license and its updates were not taxable if the license met every requirement in 86 Ill. Adm. Code 130.1935(a)(1), includ…
When should an Illinois appliance or home-theater installer collect sales tax from the customer, and when is it a construction contractor owing Use Tax on cost?
A retail sale of an appliance or other item remained taxable when installation was separately contracted; the separate installation charge was not subject to Retailers' Occupation Tax. A single contra…
Browse Illinois rulings by topic
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.