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2017 Sales Tax Letter Rulings

General Information Letters

Ruling Date Subject Synopsis
ST 17-0001-GIL 1/10/2017 Penalties This letter discusses application of the $100 Uniform Penalty and Interest Act penalty for failure to file zero liability transaction reporting returns (e.g. ST-556 and ST-556-LSE). See 35 ILCS 735/3-3(a-15) and 35 ILCS 120/3. (This is a GIL.)
ST 17-0002-GIL 1/19/2017 Miscellaneous This letter responds to a survey. (This is a GIL.)
ST 17-0003-GIL 02/03/2017 Service Occupation Tax Under the Service Occupation Tax, servicemen are taxed on tangible personal property transferred incident to a sale of service. See 86 Ill. Adm. Code Part 140. (This is a GIL.)
ST 17-0004-GIL 02/06/2017 Exempt Organizations A person whose activities are organized and conducted primarily as a not-for-profit service enterprise, and who engages in selling tangible personal property at retail (whether to the public or merely to members and their guests) is engaged in the business of selling tangible personal property at retail with respect to such transactions, excepting only a person organized and operated exclusively for charitable, religious or educational purposes either (1), to the extent of sales by such person to its members, students, patients or inmates of tangible personal property to be used primarily for the purposes of such person, or (2), to the extent of sales by such person of tangible personal property which is not sold or offered for sale by persons organized for profit. 35 ILCS 120/1.
ST 17-0005-GIL 02/09/2017 Motor Vehicles P.A. 98-628 amended the Retailers’ Occupation Tax Act and the Use Tax Act to provide that with respect to certain motor vehicles that are sold to a leasing company for the purpose of leasing the vehicle for a defined period that is longer than one year, “selling price” means “the consideration received by the lessor pursuant to the lease contract.” To the extent the lease contract includes reimbursement for charges that are added to prices on account of the Retailers’ Occupation Tax Act or the Use Tax Act, these amounts are part of the selling price subject to tax. See 35 ILCS 120/1. (This is a GIL.)
ST 17-0006-GIL 03/02/2017 Computer Software A provider of software as a service is acting as a serviceman. If the provider does not transfer any tangible personal property to the customer, then the transaction generally would not be subject to Retailers’ Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax. If the provider transfers to the customer an API, applet, desktop agent, or a remote access agent to enable the customer to access the provider’s network and services, it appears the subscriber is receiving computer software that is subject to tax. See 86 Ill. Adm. Code Parts 130 and 140. (This is a GIL.)
ST 17-0007-GIL 03/02/2017 Nexus This letter responds to a questionnaire regarding nexus. See Quill Corp. v. North Dakota, 112 S. Ct. 1904 (1992). (This is a GIL.)
ST 17-0008-GIL 03/07/2017 Food, Drugs, & Medical Appliances Items such as vitamins or dietary supplements are considered foods and may qualify for the low State rate of tax. See 86 Ill. Adm. Code 130.310. (This is a GIL.)
ST 17-0009-GIL 03/15/2017 Use Tax The Use Tax does not apply to the use in this State of tangible personal property which has been acquired outside this State by a nonresident individual who then brings the property into this State for use here, and who has used the property outside this State for more than 90 days. See 86 Ill. Adm. Code 150.315. (This is a GIL.)
ST 17-0010-GIL 03/21/2017 Nexus A retailer maintaining a place of business in Illinois must collect tax from users in accordance with the Retailers’ Occupation Tax Act and the Use Tax Act by adding the tax to the selling price of tangible personal property, when sold for use. See 86 Ill. Adm. 150.401. (This is a GIL.)
ST 17-0011-GIL 04/10/2017 Tax Rate On January 1, 2017 certain feminine hygiene products became exempt from the Retailers’ Occupation Tax. These items include menstrual pads, tampons, and menstrual cups. See 35 ILCS 120/2-5(42). (This is a GIL.)
ST 17-0012-GIL 04/07/2017 Local Taxes If a sale is made in a jurisdiction that imposes a local retailers’ occupation tax, that local jurisdiction’s tax will be incurred on that sale. See 86 Ill. Adm. Code 270.115. (This is a GIL.)
ST 17-0013-GIL 05/30/2017 Municipalities The corporate authorities of any municipality may tax persons engaged in the business of distributing, supplying, furnishing, or selling gas for use or consumption within the corporate limits of a municipality of 500,000 or fewer population, and not for resale, at a rate not to exceed 5% of the gross receipts therefrom. 65 ILCS 5/8-11-2.
ST 17-0014-GIL 05/31/2017 Nexus This letter discusses the rules regarding nexus and the taxability of food. See Quill Corp. v. North Dakota, 112 S. Ct. 1904 (1992). See 86 Ill. Adm. Code 130.310. (This is a GIL.)
ST 17-0015-GIL 05/31/2017 Nexus This letter discusses the rules regarding nexus. See Hartney Fuel Oil Co. v. Hamer, 2013 IL 115130, 376 Ill. Dec. 294 (2013). See 86 Ill. Adm. Code 270.115. (This is a GIL.)
ST 17-0016-GIL 06/02/2017 Manufacturing Machinery and Equipment Gases generally are not exempt under the manufacturing machinery and equipment exemption. See 86 Ill. Adm. Code 130.330(c). (This is a GIL.)
ST 17-0017-GIL 06/02/2017 Construction Contractors When a construction contractor permanently affixes tangible personal property to real property, the contractor is deemed the end user of that tangible personal property. As the end user, the contractor incurs Use Tax on the cost price of that tangible personal property. See 86 Ill. Adm. Code 130.2075. (This is a GIL.)
ST 17-0018-GIL 06/02/2017 Nexus A retailer maintaining a place of business in Illinois must collect tax from users in accordance with the Retailers’ Occupation Tax Act and the Use Tax Act by adding the tax to the selling price of tangible personal property, when sold for use. See 86 Ill. Adm. 150.401. (This is a GIL.)
ST 17-0019-GIL 06/08/2017 Gross Receipts When the incidence of a tax is imposed upon consumers, it does not become part of the selling price of an item subject to Retailers’ Occupation Tax. (See Section 130.435) (This is a GIL.)
ST 17-0020-GIL 06/09/2017 Motor Vehicles Lessors of tangible personal property, including motor vehicles, under true leases in Illinois are deemed end users of the property to be leased. As end users of tangible personal property located in Illinois, lessors owe Use Tax on their cost price of such property. See 86 Ill. Adm. Code 130.220 and 86 Ill. Adm. Code 130.2013. (This is a GIL.)
ST 17-0021-GIL 06/15/2017 Farm Machinery & Equipment The sale of certain types of tangible personal property used in production agriculture is not subject to Illinois Retailers’ Occupation Tax and Use Tax. See 35 ILCS 120/2-5(2) and 86 Ill. Adm. Code 130.305. (This is a GIL.)
ST 17-0022-GIL 06/15/2017 Food, Drugs & Medical Appliances This letter discusses the rules regarding the taxability of drugs and medical appliances. See 86 Ill. Adm. Code 130.311. (This is a GIL.)
ST 17-0023-GIL 06/23/2017 Nexus This letter discusses the rules regarding nexus and the taxability of food. See Quill Corp. v. North Dakota, 112 S. Ct. 1904 (1992). See 86 Ill. Adm. Code 130.310. (This is a GIL.)
ST 17-0024-GIL 06/28/2017 Computer Software A provider of software as a service is acting as a serviceman. If the provider does not the transfer any tangible personal property to the customer, then the transaction generally would not be subject to Retailers’ Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax. See 86 Ill. Adm. Code Parts 130 and 140. (This is a GIL.)
ST 17-0025-GIL 06/28/2017 Telecommunications Excise Tax Equipment rental charges are excludable from the telecommunication excise tax if they are disaggregated and separately stated from other charges in the books and records of the retailer. See 86 Ill. Adm. Code 495.100(b). (This is a GIL.)
ST 17-0026-GIL 06/28/2017 Delivery Charges This letter discusses transportation and delivery charges. See 86 Ill. Adm. Code 130.415. (This is a GIL.)
ST 17-0027-GIL 07/17/2017 Computer Software This letter discusses the requirements for a license of computer software. See 86 Ill. Adm. Code 130.1935. (This is a GIL.)
ST 17-0028-GIL 08/14/2017 Miscellaneous Generally, the sale of an admission ticket is the sale of an intangible. Intangible personal property is not subject to sales tax. See 86 Ill. Adm. Code 130.120. (This is a GIL.)
ST 17-0029-GIL 07/31/2017 Miscellaneous This letter responds to an annual survey. (This is a GIL.)
ST 17-0030-GIL 09/19/2017 Sale of Service If no tangible personal property is transferred to the customer, then no Illinois Retailers’ Occupation Tax or Service Occupation Tax would apply. See 86 Ill. Adm. Code Parts 140.301. (This is a GIL.)
ST 17-0031-GIL 09/19/2017 Manufacturing Machinery and Equipment Under the Retailers’ Occupation Tax Act, the manufacturing machinery and equipment exemption is available for machinery and equipment used primarily (over 50% of the time) in the manufacturing or assembling of tangible personal property for wholesale or retail sale or lease. Machinery and equipment used to manufacture compressed natural gas can qualify for the exemption. See 86 Ill. Adm. Code 130.330. (This is a GIL.)
ST 17-0032-GIL 10/02/2017 Gross Receipts When a single charge is made for the admission to an attraction, food and soft drinks, the entire charge is subject to Retailers’ Occupation Tax. In contrast, if the food and soft drinks are separately stated from the admission to an attraction (e.g., bowling, roller skating, laser tag), tax applies only to the food and soft drinks. See 86 Ill. Adm. Code 130.2145(c)(2)(B). (This is a GIL.)
ST 17-0033-GIL 10/02/2017 Gross Receipts When a single charge is made for the entertainment, food, soft drinks, and a party host, the entire charge is subject to Retailers’ Occupation Tax. In contrast, if the food and soft drinks are separately stated from the entertainment (e.g., laser tag and party host), tax applies only to the food and soft drinks. See 86 Ill. Adm. Code 130.2145(c)(2)(B). (This is a GIL.)
ST 17-0034-GIL 10/03/2017 Medical Appliances A medical appliance is an item that directly substitutes for a malfunctioning part of the human body. Products that qualify as medical appliances are taxed at a lower State rate of 1% plus any applicable local taxes. See 86 Ill. Adm. Code 130.311. (This is a GIL).
ST 17-0035-GIL 11/08/2017 Miscellaneous The Emergency Telephone Assistance Act is administered by the Illinois Department of State Police. See 50 ILCS 750/. (This is a GIL.)
ST 17-0036-GIL 11/21/2017 Miscellaneous Manufacturers, importers or wholesalers can enter into an "agency agreement" with the Department, whereby they register, file returns and remit Retailers' Occupation Tax on behalf of their local distributors. See 86 Ill. Adm. Code 130.550. (This is a GIL.)
ST 17-0037-GIL 12/06/2017 Occasional Sale When persons sell tangible personal property which they are not otherwise engaged in the business of selling, such transactions may be occasional sales not subject to Retailers Occupation Tax. See 86 Ill. Adm. Code 130.110. (This is a GIL.)
ST 17-0038-GIL 12/28/2017 Computer Software This letter discusses the taxability of computer software. See 86 Ill. Adm. Code 130.1935. (This is a GIL.)

Private Letter Rulings

Ruling Date Subject Synopsis
ST 17-0001-PLR 02/09/2017 Repairs This letter discusses the taxation of express warranties and extended warranties. See 86 Ill. Adm. Code 140.141 and 86 Ill. Adm. Code 140.301(b)(3). (This is a PLR.)
ST 17-0002-PLR 02/09/2017 Manufacturing Machinery & Equipment A de minimis serviceman incurring a Use Tax liability may claim exemptions predicated upon either the exempt status of his customer or upon exemptions claimed by his customer based on nontaxable uses of the tangible personal property transferred by the serviceman. These exemptions include sales to customers who are able to properly document the manufacturing machinery and equipment exemption. 86 Ill. Adm. Code 140.108(a)(2).
ST 17-0003-PLR 03/02/2017 Medical Appliances A medical appliance is an item that directly substitutes for a malfunctioning part of the human body. Products that qualify as medical appliances are taxed at a lower State rate of 1% plus any applicable local taxes. See 86 Ill. Adm. Code 130.311. (This is a PLR).
ST 17-0004-PLR 05/25/2017 Retailers’ Occupation Tax This letter discusses the applicability of the exemptions from tax in the Retailers’ Occupation Tax Act and Use Tax Act for gross receipts received from proceeds from the sale of a motor vehicle that is used for automobile renting, as defined in the Automobile Renting Occupation and Use Tax Act. 35 ILCS 120/2-5(5); 35 ILCS 105/3-5(10). (This is a PLR.)
ST 17-0005-PLR 06/14/2017 Local Taxes The occupation of selling is comprised of the composite of many activities extending from the preparation for, and the obtaining of, orders for goods to the final consummation of the sale by the passing of title and payment of the purchase price. Thus, establishing where "the taxable business of selling is being carried on" requires a fact-specific inquiry into the composite of activities that comprise the retailer’s business. 86 Ill. Adm. Code 220.115, 270.115, and 693.115. (This is a PLR.)
ST 17-0006-PLR 08/14/2017 Computer Software A provider of software as a service is acting as a serviceman. If the provider does not transfer any tangible personal property to the customer, then the transaction generally would not be subject to Retailers’ Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax. If the provider transfers to the customer an API, applet, desktop agent, or a remote access agent to enable the customer to access the provider’s network and services, it appears the subscriber is receiving computer software that is subject to tax. See 86 Ill. Adm. Code Parts 130 and 140. (This is a PLR.)
ST 17-0007-PLR 08/16/2017 Manufacturing Machinery & Equipment Under the Retailers’ Occupation Tax Act, the manufacturing machinery and equipment exemption is available for machinery and equipment used primarily (over 50% of the time) in the manufacturing or assembling of tangible personal property for wholesale or retail sale or lease. See 86 Ill. Adm. Code 130.330. (This is a PLR.)
ST 17-0008-PLR 09/14/2017 Gross Receipts Membership fees are not gross receipts from the sale of tangible personal property. Membership fees are gross receipts received in exchange for an intangible. See 86 Ill. Adm. Code 130.401(d) and 86 Ill. Adm. Code 140.101. (This is a PLR.)
ST 17-0009-PLR 09/14/2017 Enterprise Zones Under the Enterprise Zone building materials exemption, a deduction from Illinois Retailers’ Occupation Tax liability exists for gross receipts from retail sales of materials that will be incorporated, by remodeling, rehabilitation, or new construction, into real estate located in an enterprise zone established by a county or municipality under the Illinois Enterprise Zone Act. (See 35 ILCS 120/5k and 86 Ill. Adm. Code 130.1951(e).) (This is a PLR.)
ST 17-0010-PLR 09/22/2017 Tobacco Products Tax Act The tax is on any person engaged in business as a distributor of tobacco products. See 35 ILCS 145/10-10). This PLR has been supplemented and modified by ST 17-0012-PLR. (This is a PLR.)
ST 17-0011-PLR 12/27/2017 Delivery Charges This letter discusses transportation and delivery charges. 86 Ill. Adm. Code 130.415. (This is a PLR.)
ST 17-0012-PLR 12/27/2017 Tobacco Products Tax Act The tax is imposed on any person engaged in business as a distributor of tobacco products. See 35 ILCS 145/10-10). (This is a PLR.) This PLR supplements and modifies ST 17-0010-PLR, dated September 22, 2017.