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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After a car is bought back by the manufacturer under Illinois's lemon law, how does the consumer get the Illinois sales tax on it refunded?
The consumer generally can't get it directly -- only the dealer/retailer that actually remitted the sales tax to the Illinois Department of Revenue can file a claim for credit, and only after first re…
Can the Illinois Department of Revenue excuse a retailer from sales tax it should have collected because its systems weren't ready, or only waive the penalties?
The Department cannot abate (excuse) sales tax that was required to be collected and remitted, including for a retailer whose systems weren't ready by its economic-nexus start date -- but it can grant…
Are charges for web-based Cloud Collaboration Service, an add-on Audio Conference Bridging Service, and a bundle of the two subject to the Illinois Telecommunications Excise Tax?
It depends on the product. The Cloud Collaboration (software) service is generally not taxable because it's accessed remotely from the cloud rather than downloaded. The Audio Conference Bridging add-o…
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…
If I sell modular homes bought from out-of-state factories and have contractors permanently install them, do I owe Illinois sales/use tax, and do I need to file monthly sales tax returns?
It depends on whether you're contractually obligated to permanently affix the home to real estate. If you are, you're acting as a construction contractor and you owe Use Tax on your cost price of the …
Does equipment installed during a building expansion — like a hand-washing/sanitizing station, cabinetry and workstations, and internal wall systems — qualify for the Illinois Enterprise Zone building materials sales-tax exemption?
It depends on whether the items are permanently affixed to the real estate, but based on the limited facts described, the Department said it appears the specific items described (a hygiene/sanitizing …
What does Illinois Private Letter Ruling IT 18-0011-PLR conclude about Sales Factor -Intangible Property?
Yes -- the Illinois Department of Revenue ruled that a taxpayer originating senior secured loans to customers in the ordinary course of business is treated as a 'dealer' for purposes of the Illinois s…
For Illinois sales-factor sourcing, is a taxpayer that originates loans to customers still a 'dealer' in intangible property even though it qualifies for the federal negligible-sales exemption from mark-to-market accounting?
Yes -- the Illinois Department of Revenue ruled that a taxpayer who regularly originates loans to customers in the ordinary course of business is a 'dealer' in intangible personal property under 35 IL…
What does Illinois Private Letter Ruling IT 18-0009-PLR conclude about Sales Factor -Intangible Property?
Yes -- the Illinois Department of Revenue ruled that a taxpayer who regularly originates loans to customers in the ordinary course of business is treated as a 'dealer in securities' for purposes of th…
Under Illinois Income Tax Act Section 304(a)(3)(C-5)(iii)(a), is a company that originates loans to customers a 'dealer' for sales-factor sourcing purposes even though it qualifies for the federal 'negligible sales' exemption from mark-to-market accounting?
Yes -- the Illinois Department of Revenue ruled that a taxpayer regularly originating loans to customers is a 'dealer in securities' for Illinois sales-factor sourcing purposes under 35 ILCS 5/304(a)(…
For Illinois sales-factor sourcing purposes, is a taxpayer that regularly originates loans to customers still a 'dealer in securities' even though it qualifies for the federal negligible-sales exemption from mark-to-market accounting?
Yes -- the Illinois Department of Revenue ruled that a taxpayer originating loans to customers in the ordinary course of business is a 'dealer in securities' for purposes of the Illinois sales-factor …
Under Illinois Private Letter Ruling IT 18-0006-PLR, is a loan-originating taxpayer still a 'dealer' for Illinois sales-factor sourcing purposes even though it qualifies for the federal 'negligible sales' exemption from mark-to-market accounting?
Yes -- Illinois PLR IT 18-0006-PLR holds that a taxpayer who regularly originates loans to customers in the ordinary course of business is still considered a 'dealer' under 35 ILCS 5/304(a)(3)(C-5)(ii…
What does Illinois Private Letter Ruling IT 18-0005-PLR conclude about Sales Factor -Intangible Property?
Yes -- the Illinois Department of Revenue ruled that the taxpayer, which regularly originates loans to customers in the ordinary course of business, is a 'dealer' for purposes of the Illinois sales-fa…
What does Illinois Private Letter Ruling IT 18-0004-PLR conclude about Sales Factor -Intangible Property?
Yes -- the Illinois Department of Revenue ruled that a taxpayer who regularly originates loans to customers in the ordinary course of business is treated as a 'dealer' for purposes of the Illinois sal…
What does Illinois Private Letter Ruling IT 18-0003-PLR conclude about Sales Factor -Intangible Property?
Yes -- even though the taxpayer qualified for the federal 'negligible sales' exemption from mark-to-market dealer accounting under Treas. Reg. 1.475(c)-1(c), the Illinois Department of Revenue ruled i…
Is Illinois Telecommunications Excise Tax imposed on fire alarm monitoring services?
It depends on how the fire alarm company bills for the phone/transmission line. Fire alarm services provided by telecommunications retailers, or by other retailers that resell telephone services, ARE …
Do vitamins and dietary supplements qualify for Illinois's low 1% sales tax rate, or do they get taxed at the general 6.25% rate?
It depends on the label. Vitamins and dietary supplements are generally treated as 'food' and taxed at the low 1% state rate (plus local taxes) under 86 Ill. Adm. Code 130.310 -- unless they purport o…
Is aircraft repair and maintenance work performed by a Class IV FAR Part 145 facility still exempt from Illinois sales tax under 35 ILCS 105/3-5(35), regardless of the aircraft's weight class?
No longer exempt for anyone. The Department did not reach the taxpayer's specific question about aircraft weight class, because the exemption itself sunset on December 31, 2014 by operation of law und…
Does a company that only 'cross-docks' already-Illinois-stamped cigarette packages (loading them onto pallets or trucks with other grocery items for delivery to retailers, without stamping, selling, warehousing, or repacking them) need a license under the Illinois Cigarette Tax Act?
Based on the limited facts described, likely no. The Department said that if a person does not meet the definitions of 'distributor,' 'secondary distributor,' 'transporter,' or 'retailer' under the Ci…
Can an Illinois wholesaler sell unstamped cigarettes and tobacco products to a Missouri-licensed distributor without paying Illinois cigarette tax?
The Department did not give a yes-or-no answer. It responded with a General Information Letter (GIL) instead of the Private Letter Ruling the taxpayer had been told to request, and simply pointed the …
How does Illinois sales/use tax apply to a software license/maintenance agreement, including annual licensing fees and charges for updates or maintenance?
It depends on whether the software is 'canned' or 'custom' and how the agreement is structured. Canned (pre-written) computer software is generally taxable as a retail sale, but a software license esc…
Does Illinois approve or confirm the accuracy of another state's chart summarizing motor-vehicle sales/use tax rates and rules across states?
Not exactly. The Department said it cannot formally approve publications other than its own, but noted the submitted chart 'generally appears to be correct,' and it then supplied additional guidance o…
What does Illinois General Information Letter IT 18-0003-GIL conclude about Alternative Apportionment?
The Department denied the taxpayer's petition for alternative apportionment because the taxpayer's letter gave no information about the market for its goods or services showing that standard single-sa…
Does Illinois tax a manufacturer's flavored malt beverage (FMB) products as beer, and at what excise tax rate?
Yes. In PLR ST 18-0012-PLR, the Illinois Department of Revenue ruled that the taxpayer's flavored malt beverage products are "beer" under the Liquor Control Act of 1934 and are taxed at the beer excis…
What does Illinois Private Letter Ruling ST 18-0011-PLR conclude about Agents?
In this PLR, the Department ruled that a company running school book fairs -- not the school or PTO -- is the disclosed principal responsible for Retailers' Occupation Tax, because the company sets pr…
What does Illinois Private Letter Ruling ST 18-0010-PLR conclude about Computer Software?
Yes -- a signed Order Form that incorporates a separate Terms & Conditions Agreement by reference can satisfy the written-signature requirement of 86 Ill. Adm. Code 130.1935(a)(1)(A), as long as the O…
Must an Illinois trucking company withhold Illinois income tax from a nonresident interstate driver who is dispatched from Illinois but drives loads outside the state?
It depends on control, not just dispatch: if the driver's service is directed or controlled from Illinois (e.g., dispatching), Illinois withholding is required, but if it is directed or controlled fro…
Does Illinois Retailers' Occupation (sales) Tax apply to the sale of cryptocurrency 'utility tokens' that represent ownership of mining hardware?
No. The Illinois Department of Revenue ruled that the utility tokens described (smart contracts representing fractional ownership of crypto-mining hardware) are intangible personal property, and sales…
If my business sells, installs, and repairs garage doors in Illinois, do I owe sales tax, use tax, or both on the materials and labor involved?
It depends on whether you're acting as a construction contractor or a retailer. The Department didn't rule on the taxpayer's five specific numbered scenarios one-by-one; instead it explained the gener…
Can a manufacturer's 'agency agreement' with the Illinois Department of Revenue cover a local distributor's sales of product samples, and what sales-tax rate applies to those samples?
If the manufacturer (here, a nutrition-products company) has an 'agency agreement' with the Department under 86 Ill. Adm. Code 130.550, it must collect and remit Retailers' Occupation Tax on the distr…
Can a nonprofit school with an Illinois sales-tax E-number sell household goods to its members for fundraising without collecting and remitting Retailers' Occupation Tax?
Not clearly, on the facts described. The Department explained that E-number holders may sell to members tax-free only when the sales are 'primarily for the purposes of the selling organization,' but i…
Does a 5-month operating lease of household goods, where the customer can later continue leasing, return the goods, or buy them at fair market value, qualify as a taxable 'rental purchase agreement' under Illinois's Rental Purchase Agreement Occupation and Use Tax, and is that tax ever subject to local rates?
No, not on the facts described — because the initial lease term was 5 months (more than 4 months), the Department said the agreement does NOT qualify as a 'rental purchase agreement' under 35 ILCS 180…
If a rent-to-own agreement has a rental term of consecutive 90-day periods but requires payments every other week, is it subject to Illinois's Rental Purchase Agreement Occupation and Use Tax?
Generally no. The Department's opinion is that a rental agreement with a rental term made up of consecutive 90-day periods, but with payments due every other week, does not meet the statutory definiti…
Instead of filling out an annual multistate tax survey, what sales-tax positions did the Illinois Department of Revenue volunteer on trade show nexus, click-through nexus, economic nexus after Wayfair, short-term rentals, the manufacturing exemption, medical items, and cannabis?
The Department declined to fill out the requested survey questionnaire itself, but instead summarized existing Illinois law on eight topics the questionnaire raised: trade show presence can create nex…
What does Illinois General Information Letter IT 18-0001-GIL conclude about Residency?
The Department declined to determine this individual's residency status, but explained that an Illinois domiciliary who is posted overseas on a temporary or short-term work assignment generally remain…
Does a hotel owe Hotel Operators' Occupation Tax on a guest's stay of more than 30 consecutive days when a different company took over paying the bill partway through, with no break in the stay?
No. Under this PLR, once a guest occupies the same hotel room for at least 30 consecutive days without interruption, the guest is a 'permanent resident' and the hotel's receipts for that period are ex…
What does Illinois Private Letter Ruling ST 18-0008-PLR conclude about Gross Receipts?
Vendor incentive payments a retailer receives are NOT included in taxable gross receipts under the Retailers' Occupation Tax as long as the payment is not conditioned on an individual retail sale (e.g…
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 Private Letter Ruling ST 18-0007-PLR conclude about Liquor Tax?
The Department ruled that the taxpayer's flavored malt beverage (14% alcohol by volume) must be taxed as wine at $1.39 per gallon under the Liquor Control Act, not as beer at $0.231 per gallon, based …
What does Illinois Private Letter Ruling ST 18-0006-PLR conclude about Manufacturing Machinery & Equipment?
Illinois ruled that a recycling company's sorting, separating, and baling equipment used to process scrap into marketable recycled commodities qualifies for the Retailers' Occupation Tax/Use Tax manuf…
What does Illinois Private Letter Ruling ST 18-0005-PLR conclude about Local Taxes?
Yes: the Illinois Department of Revenue ruled that the taxpayer's commercial fuel-marketing unit was engaged in the business of selling in the city where its sales office was located, because three of…
Does Illinois have a 'trailing nexus' rule that requires a remote seller to keep collecting sales/use tax for a period after its Illinois nexus ends?
As of this 2018 letter, Illinois had no rule addressing 'trailing nexus' (continuing to owe sales/use tax for a period after nexus ends); the Department said any nexus determination would depend on th…
Does the Metropolitan Pier and Exposition Authority (MPEA) food and beverage tax apply to food, alcohol, and soft drinks sold on tour boats that depart from and return to docks on the Chicago River?
Yes. The Illinois Department of Revenue concluded that the Metropolitan Pier and Exposition Authority (MPEA) Retailers' Occupation Tax on food, alcoholic beverages, and soft drinks applies to sales ma…
Does the sale of jointly-owned real estate by a sale-leaseback company count in its Illinois sales-factor apportionment, and if so, how?
Yes -- the Illinois Department of Revenue ruled that the taxpayer's distributive share of gross proceeds from its joint venture's sale of investment real property must be included in its Illinois sale…
What does Illinois General Information Letter ST 18-0015-GIL conclude about Nexus?
The Department explained the general nexus rules but did not confirm the taxpayer's specific conclusion: whether this out-of-state distributor must collect Illinois Use Tax depends on nexus, and separ…
What does Illinois General Information Letter ST 18-0014-GIL conclude about Prepaid Sales Tax?
The Department did not resolve the taxpayer's specific refund request, but explained that a reseller registered solely under Section 2c whose sales are all nontaxable owes no prepaid sales tax on moto…
What does Illinois General Information Letter ST 18-0013-GIL conclude about Prepaid Sales Tax?
Yes: the Illinois Department of Revenue told this fuel importer that, because it was already filing Illinois sales tax returns, it was responsible for collecting and remitting prepaid sales tax on the…
What does Illinois General Information Letter ST 18-0012-GIL conclude about Rental Purchase Agreement Tax?
The Department did not give a definitive yes-or-no answer; it stated only its general opinion that items taxed at the 1% state sales tax rate (such as the durable medical equipment described by the re…
What does Illinois General Information Letter ST 18-0011-GIL conclude about Coal Mining Equipment?
The Department found that gypsum a utility sold to a company (for use as a pond-lining coating) is a consumable supply, not exempt coal mining equipment, so it appears not to qualify for the Retailers…
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…
What does Illinois General Information Letter ST 18-0009-GIL conclude about Manufacturing Machinery & Equipment?
There is no Illinois sales-tax exemption for electricity used in manufacturing (electricity is taxed separately under the Electricity Excise Tax Law), but machinery and equipment used more than 50% of…
What does Illinois General Information Letter ST 18-0008-GIL conclude about Motor Vehicles?
The Department declined to formally approve an outside survey chart on motor vehicle taxation, but confirmed the chart's general accuracy and explained Illinois' rules: trade-in credits reduce the tax…
What does Illinois General Information Letter ST 18-0007-GIL conclude about Sale For Resale?
The Department declined to endorse or complete a private trade-group survey on drop shipments, but pointed to its own rules: an Illinois seller documents a drop-shipment sale for resale with a valid C…
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…
What does Illinois General Information Letter ST 18-0005-GIL conclude about Nexus?
The Department declined to complete the requester's nexus survey because nexus determinations are too fact-specific for a General Information Letter, but it gave general background on Illinois Retaile…
What does Illinois General Information Letter ST 18-0004-GIL conclude about Motor Vehicles?
The Department declined to verify the accuracy of a private legal publisher's compiled data (that's not what a GIL does), but as a courtesy it flagged that a listed 'local taxes' rate of 7.50% was out…
Can an investor amend a return to claim the River Edge Historic Preservation Tax Credit late, carry it forward, and transfer it to a new investor?
Partly yes, partly no. The Investor may file an amended 2016 return to claim the River Edge Historic Preservation Tax Credit and pass it through to its members, who can use it in 2016 or carry it forw…
Is sales tax owed on perpetual software license fees and annual maintenance fees for canned (non-custom) software like SAP?
It depends on the license terms. Illinois taxes sales of "canned" (non-custom) software like SAP, including maintenance fees for updates, unless the license agreement meets all five criteria in 86 Ill…
Can an ROTC instructor paid by a school district subtract that pay as military pay on Illinois Schedule M?
The Department did not give a yes-or-no answer. It explained that Illinois law lets active-duty and National Guard members subtract military pay on Schedule M, but said civilian pay generally does not…
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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.