Do certain organizations qualify for a retailers' occupation and use tax exemption on their purchases made at retail?

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Yes. To qualify for an exemption from retailers’ occupation and use tax on retail purchases, your organization must satisfy one of the following criteria:

• the organization must be organized and operated exclusively for charitable, religious, educational, or governmental purposes;
  
• the organization must be a not-for-profit entity organized for arts and cultural purposes; or
  
• the organization must be a not-for-profit entity organized primarily for the recreation of persons 55 years of age or older.
  

Tax exemptions may be available for schools, governmental bodies, churches, and exclusively charitable organizations. Exempt status may also be granted to licensed not-for-profit day care centers, qualifying senior citizens organizations and institutions, and 501(c)(3) music or dramatic arts organizations, such as theatrical groups, symphony orchestras, or other performing arts groups. See 86 Ill. Adm. Code 130.2007 and 130.2081.

There is no fee to apply for a sales tax exemption number (e-number).

Note: Not-for-profit hospitals and not-for-profit nursing homes that qualify as exclusively charitable institutions also are exempt from retailers’ occupation and use taxes on purchases and are not required to collect sales tax when selling food or medicine to their patients. Hospital dining facilities that are not open to the general public are also exempt. However, a hospital or hospital auxiliary incurs sales tax liability when selling products such as candy, chewing gum, tobacco products, and razor blades since these items are not necessary for basic hospital services and place the hospital in competition with community businesses. 86 Ill. Adm. Code 130.2005.

To apply for an Illinois sales tax exemption number, your organization should submit Form STAX-1, Application for Sales Tax Exemption, or Apply for or Renew a Sales Tax Exemption online using MyTax Illinois. If eligible, the Illinois Department of Revenue (IDOR) will issue your organization a sales tax exemption number (e-number). The sales tax exemption application may take up to 90 days to process and if we issue you a number, it will not be retroactive to your application date. Your organization must provide a retailer with the e-number IDOR issues you before making purchases tax-free.

For more information about sales tax exemptions, see our Information Page for Exempt Organizations (PIO-37).

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