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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Are late fees for overdue lease or rental payments subject to Illinois sales tax?
Yes. A late charge or penalty added because a customer paid past the due date becomes part of the seller's or lessor's taxable gross receipts in Illinois -- and since Illinois began taxing most tangib…
Should Illinois's cannabis purchaser excise tax and local cannabis taxes be added on top of the retail price, and do they get taxed again themselves?
Yes, cannabis purchaser excise tax and local (municipal/county) cannabis taxes are separately stated additional charges on top of the retail price -- and none of those tax add-ons become part of the s…
Can a marketplace facilitator subtract its own currency-exchange, payment-processing, and platform fees from taxable gross receipts, since those fees are charged to marketplace sellers rather than buyers?
No. A marketplace facilitator that has met the $100,000 remittance threshold is treated as the retailer for every sale made over its marketplace, and its taxable gross receipts include all considerati…
Does a cafeteria operator owe Illinois Retailers' Occupation Tax on the extra subsidy an employer pays it to cover cafeteria losses?
No. Because the employer's year-end subsidy payment is calculated only after the accounting period ends and is not tied to any individual food sale, the Department ruled it is not part of the operator…
When are shipping, storage, and other fulfillment-contract line items subject to Illinois sales tax on a sale of tangible personal property?
It depends on whether an "inseparable link" exists between the sale of the goods and the service charge. If the charge (including delivery) isn't separately identified, or is separately identified but…
If a seller passes on the cost of a federal tariff to a buyer in Illinois, is that tariff amount subject to sales or use tax?
Yes, if the seller is the importer of record (consignee) who paid the tariff and passes that cost on to the customer, the tariff becomes part of the selling price and must be included in gross receipt…
When a parking garage uses a third-party booking intermediary that adds a service fee on top of the parking charge, whose gross receipts figure goes on Line 1 of the Parking Excise Tax return — the amount the customer pays, or the smaller amount the intermediary forwards to the garage operator?
It depends on whether the intermediary's fee is separately stated. If the booking intermediary's service fee is not separately stated, the operator must report and pay tax on the full amount the custo…
If a company pays a federal tariff on imported materials and passes that cost on to a customer, does Illinois sales or use tax apply to the tariff amount?
It depends on who is legally responsible for the tariff. If the seller is the importer of record and passes the tariff cost on to the customer as part of the price, the tariff is part of the gross rec…
Can a car buyer get a sales-tax trade-in credit when a manufacturer's Lemon Law settlement money is applied toward a replacement vehicle?
No. Illinois law does not allow a sales-tax trade-in credit for the portion of a new vehicle's price that is covered by a manufacturer's New Vehicle Buyer Protection Act ("Lemon Law") settlement. In t…
Can a payment processor's fees, or the retailer's own credit card fees, be excluded from gross receipts subject to Illinois Retailers' Occupation Tax?
No. Illinois treats processing charges, credit card fees, and other costs of doing business as part of a retailer's taxable gross receipts, even if they are separately stated on the customer's bill. U…
Does Illinois sales tax apply to a mandatory service charge or tip added to a restaurant bill?
Mandatory gratuity or service charges that are separately stated on the bill and actually paid over to the service employees as tips (or a substitute for tips) are not subject to Illinois sales tax. B…
When a jewelry retailer lets a customer trade in old jewelry toward a new purchase, can the retailer exclude the value of that trade-in from the "gross receipts" it owes Illinois sales tax on?
Yes, but only if the traded-in item is of "like kind and character" as the item being sold -- for example, a customer trading in a ring toward a bracelet purchase. When that test is met, the value of …
How does a retailer calculate Retailers' Occupation Tax when a customer pays with a discount coupon, a manufacturer's coupon, a radio-station or third-party gift certificate, or a buy-one-get-one-free deal?
Tax is based on gross receipts actually received by the retailer, including any reimbursement it gets for a discount -- an unreimbursed discount (a coupon or card the retailer isn't paid back for) red…
Does an online reseller have to charge and collect Illinois sales tax on a "buyer's premium" it adds on top of the sale price of each item?
Yes. A buyer's premium is part of the seller's taxable gross receipts / selling price under the Retailers' Occupation Tax, because no deduction from gross receipts is allowed for the seller's costs of…
Does a car-sharing company's base rental charge, membership fees, and various add-on fees get taxed under the Automobile Renting Tax, the sales/use tax, or neither?
The base rental charge for renting a car for a year or less is subject to the Automobile Renting Occupation and Use Tax (ART), not sales tax. Plain membership fees (with no included drive time) are ge…
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…
Does a company that arranges events for clients have to charge sales tax on its service fees, and how does gross receipts tax apply to caterers?
Caterers owe Illinois Retailers' Occupation Tax on their entire gross receipts from selling food, with no deduction for overhead costs like linens, dishes, flowers, or delivery. A pure event-planning …
My MLM company charges new distributors a $20 enrollment fee and charges active distributors the same $20 fee annually to renew their status and keep their wholesale discount, support services, and web access -- no physical item is sent in exchange. Is that fee subject to Illinois Retailers' Occupation Tax?
No -- when a membership or enrollment fee doesn't come with any tangible personal property in exchange, it's treated as an intangible and isn't part of the gross receipts subject to Illinois Retailers…
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…
If my laser tag business charges one price for a birthday party package that includes laser tag, pizza, soft drinks, and a party host, do I owe sales tax on the whole thing?
It depends on how you bill it. If you charge a single bundled price covering the laser tag, food, drinks, and party host, Illinois Retailers' Occupation Tax applies to the entire charge; if you separa…
If my business charges one price for admission plus food and drinks (like a birthday party package), does Illinois sales tax apply to the whole charge or just the food?
It depends on how you bill it: if you charge one single, undivided price covering admission, food, and drinks, Illinois Retailers' Occupation Tax applies to the entire charge, but if the food and soft…
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 the Cook County Sweetened Beverage Tax become part of the selling price used to calculate Illinois Retailers' Occupation Tax liability?
No. Because the Cook County Sweetened Beverage Tax is imposed on the consumer (like the Cook County Liquor Gallonage Tax), it is not part of the selling price of the beverage and must be excluded when…
Was a prepaid grocery-delivery membership covering three months of shipping and handling subject to Illinois sales or use tax?
No. The membership prepaid shipping and handling for future grocery orders but did not itself transfer tangible personal property. IDOR treated it as an intangible, so the membership receipt was not s…
Should Illinois sales tax be calculated before or after applying a store reward certificate?
It depended on reimbursement. If the retailer received full or partial reimbursement for the reward coupon, taxable gross receipts included both the customer's payment and the reimbursement. If the re…
Did an Illinois municipality owe Gas Revenue Tax when its own gas system supplied municipal buildings without billing them?
The tax measured on that distribution was zero. Gas Revenue Tax was the lower of 2.4 cents per therm or 5% of gross receipts for each customer and billing period. Because the municipality received no …
When did Illinois tax refundable and nonrefundable advance payments for short-term automobile rentals?
A nonrefundable reservation fee was subject to the 5% Automobile Renting Tax when received because the customer was irrevocably liable for the right to possess the car, including when the customer lat…
When did progressive payments for a custom pressure vessel become taxable, and were crane and site-inspection reimbursements taxable?
Purchase-price payments became taxable gross receipts when the vessel was identified to the sales contract. Without a contrary agreement for future goods, identification generally occurred when the se…
Can an Illinois retailer deduct part of its gross receipts from sales of E15 fuel as gasohol or majority blended ethanol fuel?
No. IDOR said E15—85% gasoline and 15% ethanol—fit neither statutory fuel category, so every dollar of gross receipts from E15 sales was subject to Retailers' Occupation Tax without the requested dedu…
Were a materials seller's flat delivery charge, added fuel fee, and dumpster fee included in Illinois taxable gross receipts?
A separately identified delivery charge was excluded when customers could pick up the goods and the seller documented that option. The added fuel fee was taxable as a business cost even if separately …
Could a vehicle dealer exclude a federal gas-guzzler tax passed through in the vehicle price from the Illinois sales-tax base?
No. Because the federal excise tax was legally imposed on the automobile manufacturer rather than the consumer, IDOR treated the passed-through amount as a nondeductible business cost included in the …
Must an Illinois caterer tax separately billed equipment, labor, setup, and delivery, and how are cleaning supplies treated?
Yes. A caterer's taxable gross receipts included food-related charges for linens, tables, chairs, dishes, flowers, labor, setup, and delivery even when separately billed. Truly separate non-food enter…
Does separately listing an Illinois shipping or delivery charge automatically make it nontaxable?
No. The charge was excluded only when the buyer and seller separately agreed to delivery apart from the property sale; a separate invoice line alone was insufficient. A pickup option or separate deliv…
When were Illinois banquet-room, food, service, and decoration charges taxable?
The result depended on the transaction's true object. A room rental with only incidental snacks or nonalcoholic drinks could be nontaxable, but when food, alcohol, or beverages were the true object, r…
Was Illinois tax computed before or after a manufacturer coupon reimbursed to the retailer?
Before the reimbursed discount. A manufacturer, distributor, or other coupon for which the retailer received full or partial reimbursement remained part of gross receipts and selling price. The retail…
Was a membership fee taxable when it was calculated from the savings on each retail purchase?
Yes, based on the facts described. Membership fees generally were nontaxable intangibles when they transferred only membership rights. Here, the fee was charged with each purchase, tied to that item's…
Was a manufacturer's separately stated consolidated freight charge for moving goods between its own plants taxable?
Yes. Moving products from one company facility to another to consolidate a customer's order was incoming freight and a retailer cost of doing business. The charge remained part of taxable gross receip…
Could an Illinois business add a credit-card surcharge, and was the fee part of taxable gross receipts?
As of this 2014 letter, Illinois did not prohibit the surcharge described. For a taxable retail transaction, the card fee was a cost of doing business included in taxable gross receipts even if separa…
Are separately listed delivery and installation charges subject to Illinois sales tax?
Not automatically exempt. Under Illinois' Retailers' Occupation Tax, delivery and installation charges are generally part of taxable gross receipts even when listed separately on the invoice. They are…
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…
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…
What amount was subject to Illinois sales tax when a cellular phone was sold below cost with a service contract?
IDOR did not classify the retailer's exact bundle on the limited facts. It said a sold phone was tangible personal property and Retailers' Occupation Tax was measured by the gross receipts actually re…
Were separately billed vending-program implementation, hosting, management, and processing fees part of an Illinois retailer's taxable gross receipts?
Yes, based on the information provided. IDOR said the implementation, web-hosting, management, and payment-processing fees appeared to cover the retailer's costs of selling products through customer-s…
Were a retailer's nonrefundable layaway service fee and fee charged only when the customer canceled subject to Illinois sales tax?
The nonrefundable layaway service fee was taxable. IDOR treated it like a handling charge and a cost of doing business passed to the customer, so it remained in taxable gross receipts. A cancellation …
What Illinois sales-tax amount applies when grocery customers redeem trading stamps for free or nominal-price cookware?
The retailer transferring the cookware owed Retailers' Occupation Tax and collected Use Tax based on the cookware's retail value, even when the customer received it for stamps or a nominal cash amount…
Is an unavoidable percentage fee added to a taxable Illinois retail transaction itself included in taxable gross receipts?
Generally yes. Illinois Retailers' Occupation Tax applied to all consideration received for a retail sale, and the seller could not deduct materials, labor, freight, overhead, processing, or other bus…
Are engineering and design charges for custom bridges taxable in Illinois, and what if engineering is sold without tangible property?
It depends on the bridge transaction. If the bridge was a retail sale, separately stated engineering and design were costs of doing business included in taxable gross receipts. If the bridge met all s…
May an Illinois retailer exclude separately billed air freight paid to acquire goods for sale from taxable gross receipts?
No. A seller's incoming freight or transportation cost for acquiring property for sale was a cost of doing business included in taxable gross receipts. The seller could not deduct it merely because th…
Is a hotel's mandatory service charge on a banquet or meal included in taxable Illinois gross receipts?
Usually yes, unless the separately stated mandatory charge was actually turned over as tips or a substitute for tips to employees who directly prepared, served, hosted, or cleaned up that food or beve…
Are motorcycle rentals covered by Illinois's Automobile Renting Tax, and is a lease to another short-term rental dealer exempt?
Motorcycles and motor-driven cycles were treated as automobiles under the Act, so a person renting them in Illinois for one year or less was subject to the Automobile Renting Occupation and Use Tax. T…
Are an auctioneer's mandatory buyer administrative fees included in taxable Illinois gross receipts, and who owes the tax?
Yes when the underlying auction sale was taxable. A mandatory buyer administrative fee was part of the total selling price and could not be deducted as a service or business cost. If the auctioneer ac…
When did Illinois sales tax apply to layaway and partial payments, and was a nonrefundable layaway fee taxable?
When the buyer had made a binding commitment, the property was identified, and a payment was made, that payment entered the seller's taxable gross receipts when received. A nonrefundable layaway fee w…
Did unreimbursed loyalty-point and coupon discounts reduce Illinois taxable receipts for retail goods and wireless telecommunications?
Generally yes. ST 11-0019-GIL says an unreimbursed retailer discount reduced taxable gross receipts to the amount actually received. If a manufacturer, distributor, or other source reimbursed the disc…
Did an Illinois restaurant charge tax on the menu price before an unreimbursed discount or voucher?
No for an unreimbursed discount. ST 11-0003-GIL says only the discounted amount actually received by the restaurant was taxable when no supplier or other party reimbursed the discount. If the seller r…
Which separately stated charges could be excluded from Illinois automobile-rental gross receipts?
The GIL did not classify every listed rental-car fee without reviewing the contracts. Under the 2011 rules, all consideration for an automobile rental of one year or less entered gross receipts unless…
How did Illinois tax hostess reward credits, free products, half-price items, and shipping in party-plan sales?
A hostess reward credit based on party sales entered taxable gross receipts when applied to merchandise, at the dollar amount credited. If the company instead gave merchandise away, the company owed U…
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…
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…
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 …
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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.