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.
If the beneficiaries of an Illinois family trust move out of state and trust administration relocates with them, does the trust stop owing Illinois income and replacement tax?
Not necessarily. Under IITA § 1501(a)(20), a trust is an Illinois resident if the grantor was domiciled in Illinois when the trust became irrevocable -- that test doesn't change just because beneficia…
What is Illinois General Information Letter IT 21-0008-GIL, and what does it say about corporate income tax nexus, apportionment, and combined reporting?
It isn't a ruling on anyone's tax situation -- it's the Illinois Department of Revenue's completed answers to a private publisher's annual multistate corporate income tax survey, covering nexus, appor…
Does an EV charging station operator that sells electricity have to register for and collect Illinois Electricity Excise Tax?
Yes. The Illinois Department of Revenue concluded that a person operating an EV charging station and selling electricity is a "delivering supplier" under 35 ILCS 640, so it must register with the Depa…
Does an Illinois business have to pay tax on the training manuals it hands out at a paid customer seminar, and how is that tax calculated?
Yes. Because labor is not taxable but the training manuals handed out at the seminar are tangible personal property, the company (acting as a "serviceman") owes Service Occupation Tax or Use Tax on th…
Does capital equipment being installed as part of a facility expansion in an Illinois enterprise zone qualify for the Enterprise Zone building materials sales tax exemption?
Mostly yes. The Department ruled that the listed capital equipment items -- including a wastewater system, steam boiler, air compressors, rail systems, a tunnel washer, dryer system, and ironer line -…
Does an out-of-state online retailer owe Illinois Retailers' Occupation Tax (ROT) or Use Tax on sales fulfilled from its subsidiary's Illinois stores or from unrelated third-party inventory in Illinois?
Use Tax, not ROT. The Department concluded that when an out-of-state internet retailer's Illinois sales are fulfilled from inventory owned and possessed by its subsidiary's stores or by unrelated thir…
If a company bundles hardware and a required software subscription into one price and doesn't separately state what part of the charge is for the tangible property, how is Illinois Service Occupation Tax calculated?
Illinois ruled that because the company's hardware (sensors, trackers, monitors, tokens) and its software/firmware are sold together for one bundled price with no separate charge for the tangible pers…
Does Illinois sales and use tax apply to explosives, blasting agents, and detonator equipment a company sells and uses to break up rock for its quarrying and mining customers?
No, not on these facts. The Department ruled that the blasting agents, high explosives, boosters, and detonator delivery systems the company supplies and uses to fragment rock are exempt manufacturing…
If an Indiana resident buys a car in Illinois and trades in another vehicle, does Illinois tax apply, and does the $10,000 trade-in credit cap still apply?
Yes to both. Illinois Retailers' Occupation Tax and Use Tax apply to a first division motor vehicle sold to an Indiana resident who takes delivery in Illinois but will register the vehicle in Indiana,…
When a dealer sells a motor vehicle with a trade-in, can the buyer and dealer lower the sale price and the trade-in value by equal amounts to get around the $10,000 cap on the tax-free trade-in credit?
The Department did not say the practice is flatly illegal, but it warned that selling price and trade-in value have to reflect real, objective values — if a dealer's reported numbers deviate from what…
Does having one full-time remote employee working from her home in Illinois create Illinois corporate income tax nexus for an out-of-state company with zero Illinois sales?
IDOR wouldn't say -- it does not issue rulings on whether nexus exists, since that determination is 'extremely fact-specific.' But it explained that under IITA Section 502(a), if the company has zero …
For Illinois income-tax apportionment purposes, is bitcoin treated as intangible personal property, and is it treated like a patent, copyright, or trademark?
Yes and no. The Illinois Department of Revenue treats bitcoin as 'intangible personal property' under the state's apportionment statute (35 ILCS 5/304), but bitcoin is NOT treated as a 'patent, copyri…
Can Illinois Historic Preservation Tax Credits be divided among partners or LLC members however they agree in a contract, instead of strictly by ownership percentage?
Yes. Under 35 ILCS 31/10(d), a partnership or LLC taxed as a partnership can pass the Illinois Historic Preservation Tax Credit through to its partners or members on a pro rata basis OR per an execute…
Is an out-of-state online retailer a 'marketplace facilitator' under Illinois law if it processes payment for third-party sellers' goods but never names those sellers on its website?
No. The Illinois Department of Revenue concluded that a retailer is not a marketplace facilitator if it never identifies the third-party sellers to purchasers on its website (the marketplace) — even t…
How does Illinois sales/use tax apply to a company that leases equipment (like traffic control trailers) to customers, when the equipment is bought and shipped from state to state?
Under Illinois's 2021-era rules, a lessor renting equipment under a true lease does not charge sales tax on the rental payments. Instead, the lessor itself owes Use Tax on its own cost price of the eq…
If a company buys equipment from an Illinois vendor and has a freight forwarder pick it up in Illinois and ship it to the company's own warehouse in a foreign country, is that sale exempt from Illinois Retailers' Occupation Tax as interstate/foreign commerce?
It depends on the facts, and the Department could not decide this specific case in a GIL. Illinois Retailers' Occupation Tax generally does not apply when a seller ships goods by carrier or mail, unde…
How should a wedding photographer/videographer in Illinois charge sales tax on custom photo albums and video packages sold to clients?
Photographers and videographers who sell physical products (like custom albums or USB drives) incident to their services are generally servicemen subject to Service Occupation Tax, not Retailers' Occu…
What does Illinois GIL ST 21-0042-GIL say about sales tax nexus, marketplace facilitators, and various exemptions?
This GIL is the Department's response to a national multistate tax survey and covers several unrelated topics: out-of-state sellers with any physical presence in Illinois (including a remote employee)…
Is a kombucha-based beverage with added fruit juice and no more than 5% juice content taxed as a 'soft drink' at Illinois's 6.25% sales tax rate?
Likely yes. Based on the ingredient information provided, the Illinois Department of Revenue concluded that the kombucha beverages described (containing kombucha culture, tea, and added fruit juice us…
If an out-of-state seller ships goods into Illinois but the Illinois customer arranges the freight and title passes outside Illinois, who owes Illinois tax and at what rate?
It depends on whether the remote seller meets Illinois's economic nexus thresholds ($100,000 in sales or 200+ transactions in the trailing four quarters). If it does, and it is listed as consignor/shi…
Does Illinois Retailers' Occupation (sales) Tax apply to farm machinery and equipment bought for use in production agriculture or federal/state agricultural programs?
No. Illinois Retailers' Occupation Tax does not apply to farm machinery and equipment that is used or leased for use primarily (over 50% of the time) in production agriculture or in state or federal a…
When a drop-shipped sale touches Illinois, whose sales count toward Illinois's $100,000/200-transaction economic nexus threshold for remote retailers?
It depends on who is selling at retail into Illinois. A sale for resale (the wholesale leg of a drop shipment) does not count toward either party's Illinois economic nexus threshold, but the retail sa…
When does a marketplace facilitator have to register and collect Illinois state and local sales tax on behalf of its marketplace sellers?
Once a marketplace facilitator's and its sellers' combined Illinois sales hit $100,000 or 200 separate transactions in a year, the facilitator (not the individual sellers) must register with the Illin…
Does Illinois Rental Purchase Agreement Occupation and Use Tax, Use Tax, or Retailers' Occupation Tax apply to an out-of-state company's subscription-based "try before you buy" merchandise service?
It depends on the arrangement. Illinois taxes subscription-style rent-to-try programs under the Rental Purchase Agreement Occupation and Use Tax (6.25% of subscription receipts) rather than sales tax,…
Is a sale exempt from Illinois sales tax as a sale in foreign commerce when the goods are delivered in Illinois to a freight forwarder for export, rather than directly to the purchaser?
Yes, if the freight forwarder — not the purchaser — takes physical possession in Illinois and ships the goods to a foreign country for good, the sale is exempt as a sale in foreign commerce under 86 I…
Is a supplier's sale of equipment to a contractor exempt from Illinois sales tax when the contractor resells it to a government agency under a construction contract, even without a CRT-61 at the time of shipment?
It depends, and the Department could not say for sure on the facts given. Sales of building materials to a construction contractor are exempt from Illinois Retailers' Occupation Tax and Use Tax only i…
Does an Illinois employer have to withhold Illinois income tax from an employee who is not an Illinois resident and performs no work in Illinois?
No. The Department concluded that if the employee was not an Illinois resident and none of the services were performed in Illinois, the compensation is not 'paid in Illinois' under 35 ILCS 5/304, so t…
Does an equipment-leasing company owe Illinois Retailers' Occupation Tax when it transfers its leased equipment to an affiliated company as part of a corporate reorganization?
No. Because the leasing company does not habitually sell equipment at retail (its occasional equipment sales were only about 1.5% of revenue) and is not otherwise holding itself out as a retailer, its…
Are the explosives, blasting agents, and detonator equipment a quarrying/mining company sells or uses exempt from Illinois sales and use tax as manufacturing machinery and equipment?
Yes, generally. Illinois' manufacturing machinery and equipment exemption specifically covers blasting agents, high explosives, detonators, lead-in line, and blasting machines used in the extractive p…
Can a taxpayer use alternative apportionment to include gain from selling media outlets (mostly attributable to goodwill) in its Illinois sales factor, when that gain would otherwise be excluded under the Occasional Sale Rule?
No. The Department denied the taxpayer's petition for alternative apportionment. It held that the standard Occasional Sale Rule (86 Ill. Adm. Code 100.3380(c)(2)) properly excludes the gross receipts …
Is a company's bundled sale of hardware (sensors, GPS trackers) plus a required software subscription subject to Illinois sales and use tax, and does the software license exclusion or the SaaS exemption apply?
Yes, taxable. The Illinois Department of Revenue could not issue a binding Private Letter Ruling because the request lacked billing detail, but its General Information Letter concludes the company is …
Does the $10,000 cap on the trade-in credit for First Division motor vehicles under Illinois' 2020 trade-in law apply to boats?
No. The $10,000 cap on the trade-in credit for First Division motor vehicles does not apply to boats, because boats are regulated as "vessels" under the Boat Registration and Safety Act, not as "motor…
How does Illinois decide which local Retailers' Occupation Tax applies when a business sells products shipped directly from an out-of-state manufacturer to customers?
It depends on where the retailer's own selling activities occur, not on where the item ships from or to. Illinois local sales tax is sourced to the jurisdiction where the retailer is 'engaged in the b…
If an Illinois resident moves abroad indefinitely for work but still receives K-1 income from his Illinois-based S corporation employer, is his foreign-earned income taxable by Illinois?
No, not if he actually changed his domicile. The Department said that if the taxpayer's 2007 move to another country was indefinite (not temporary or transitory) and he has no intention of returning t…
Is Voice Over Internet Protocol (VoIP) voice service subject to Illinois's Telecommunications Excise Tax and the Simplified Municipal Telecommunications Tax?
Yes. Illinois taxes VoIP voice service the same as any other telecommunications — both the statewide Telecommunications Excise Tax and, where a municipality has adopted it, the Simplified Municipal Te…
If a municipality hires a private company to collect parking fees and run the payment machines at its parking garages, does the municipality still qualify for the government exemption from Illinois Parking Excise Tax, or does hiring the company make it taxable?
The municipality still qualifies for the exemption. The Illinois Department of Revenue ruled that because the municipality (not its hired payment-processing company) owned the garages, set the parking…
If a company leases computers to a sublessor who in turn leases them to a government agency, and the computers pass in and out of Illinois warehouses for provisioning and reshipping, when is Illinois Use Tax owed?
The government lease exemption did not apply because COMPANY1 leased to a sublessor (COMPANY2), not directly to the government agency. Under the temporary storage exemption, devices that went from Ill…
Does Illinois charge the low 1% food tax rate on fresh culinary herb plants sold in grocery stores, or the regular 6.25% rate?
The low rate. Illinois ruled that fresh culinary herb plants (like basil or parsley sold in a pot of dirt or bare-root in a bag of water) sold in a grocery store's produce section for human consumptio…
Is kombucha taxed as a "soft drink" under Illinois sales tax law, or as ordinary (lower-taxed) food?
Based on the ingredients described, no — the Illinois Department of Revenue concluded that this particular kombucha product line (25 flavors made from kombucha culture, black tea, green tea, kiwi juic…
Does Illinois's Parking Excise Tax residential off-street parking exemption still apply if the parking facility is located near a building rather than inside it?
Yes. The Illinois Department of Revenue confirmed that the residential off-street parking exemption applies regardless of whether the parking spaces are inside the residential building or in a separat…
Does Illinois' farm machinery and equipment sales tax exemption cover corrugated plastic drainage pipe and other water management products used in production agriculture?
No. The Illinois Department of Revenue concluded that corrugated plastic pipe and other water management/drainage products, even when used primarily in production agriculture, are "drainage facilities…
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…
If an Illinois business buys goods from an out-of-state supplier and has them shipped to customers or locations both inside and outside Illinois, who owes Illinois sales or use tax?
It depends on where the property physically is when the sale happens. If the goods are delivered to a purchaser in Illinois, the sale is taxable there even if the buyer immediately takes the goods out…
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 a grocery store charge the high or low Illinois sales tax rate on individually sold rolls and cookies, and on prepackaged cold prepared food, when the store also has a separate dining area?
The low sales tax rate applies to individually sold rolls and cookies, and to prepackaged cold prepared food, as long as they aren't sold for consumption in the store's dining area. Because the store'…
Does Illinois' manufacturing machinery and equipment exemption let a manufacturer buy electricity and natural gas tax-free for use in production?
No. The Illinois Department of Revenue told a zinc-plating manufacturer that electricity and natural gas used in manufacturing are not covered by the manufacturing machinery and equipment exemption, b…
Does Illinois tax single-use catheters and rented catheter-driving equipment (laser/electrical signal generators) sold by a medical device company to hospitals at the 1% low medical-appliance rate, or the 6.25% general rate, and how are the equipment rentals and hospital sales taxed?
The catheters and rented signal/laser-generating equipment described do not qualify as low-rate (1%) medical appliances because they don't directly substitute for a malfunctioning body part, so they'r…
Does licensing software to customers through an end user license agreement (EULA) count as an exempt software license, or is it a taxable retail sale, under Illinois sales tax rules?
It can be exempt. Illinois treats a software license as a non-taxable exempt license — not a taxable retail sale of tangible personal property — if the EULA is signed (including by valid electronic si…
If a boat (or other item) is located in Illinois and handed over to an out-of-state buyer here, does the Illinois dealer have to collect and remit Illinois sales tax, even though the buyer immediately takes it out of state?
Yes, tax applies. When an Illinois boat dealer sells a boat that is in Illinois at closing and the out-of-state buyer takes physical possession of it here, the sale is taxable in Illinois, even if the…
Does an Illinois retailer have to charge sales tax when selling collectible paper currency, coins, or bullion?
No, generally not. The sale of legal tender, currency, medallions, or gold or silver coinage issued by Illinois, the U.S. government, or a foreign government, and bullion, is exempt from Illinois Reta…
Does an out-of-state furniture retailer with no Illinois office have to collect Illinois Retailers' Occupation Tax as a remote retailer, or just remit Use Tax?
It depends on sales volume. A remote retailer with no Illinois office or warehouse must collect and remit the full local Retailers' Occupation Tax (destination-based, so it can be 10.25% in Chicago) o…
When a company drop-ships goods into Illinois, are those sales exempt from Illinois sales tax if the goods are being resold or exported out of the country?
Yes, potentially. A drop shipment can be tax-exempt either as a sale for resale (if the purchaser gives a valid Certificate of Resale) or as an interstate/export sale (if the seller is contractually o…
Does a nonprofit's isolated-or-occasional-sale exemption still apply when it sells through a marketplace facilitator like an online platform?
No. Once a sale is made through a marketplace, Illinois no longer treats it as an isolated or occasional sale, so the exemption from Retailers' Occupation Tax does not apply to that sale, regardless o…
Are the chemicals a metal-plating and passivation business uses to clean, plate, coat, and treat customers' parts exempt from Illinois sales and use tax as manufacturing chemicals?
It depends on the chemical's role. Chemicals that directly and immediately change the customer's parts (cleaning, plating, chromate coating, sealing, passivation acids) can qualify for Illinois's manu…
Is a web-based (SaaS) fleet management service, and a free companion app that goes with it, subject to Illinois sales or use tax?
Generally no. Illinois does not tax subscription-based SaaS, so the fleet management service itself is not taxable. A companion app the provider gives customers for free is also not taxable if it's do…
What form or information does a manufacturer need to document a Certificate of Resale in Illinois, and can a Multijurisdictional exemption form be used instead of the state's own forms?
Yes, a Multistate Tax Commission Uniform Sales & Use Tax Exemption/Resale Certificate can serve as a valid Certificate of Resale as long as it contains everything 86 Ill. Adm. Code 130.1405 requires: …
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…
Under Illinois's Parking Excise Tax, who has to collect and remit the tax when a garage operator sells parking spaces to a web-based aggregator that resells them to the public?
The web-based aggregator, not the garage operator, is the one that owes the Parking Excise Tax on its resale price, because an aggregator that buys parking for resale and itself contracts with the par…
Does Illinois Retailers' Occupation Tax apply when a leased rail car or truck is destroyed and the lessee pays the stipulated loss value and takes title?
Generally no. When a true-lease lessor who is not otherwise in the business of selling like-kind property has leased equipment destroyed, the lessee's payment of the stipulated loss value and the less…
Can a cash-basis Illinois used motor vehicle dealer that prepays a customer's sales tax get a credit or refund when the customer defaults on the financing?
Yes, but only in a limited way. Illinois denied the dealer's request for a full refund of prepaid tax on defaulted accounts, but ruled that because the dealer can actually claim a federal bad-debt ded…
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.