Illinois Taxes Online Table of Contents

  1. Overview of Illinois Retailers' Occupation Tax
    1. Illinois 'Sales Tax' Structure
    2. Retailers' Occupation Tax - Generally
    3. Illinois Retailers Defined
    4. Gross Receipts Defined
    5. Statutory Exemptions to Retailers' Occupation Tax
  2. Overview of the Illinois Use Tax
    1. Relationship between Use Tax and Retailers' Occupation Tax
    2. Use Defined
    3. Use Tax Requirements on Gifts
    4. Use Tax Exemptions - Generally
    5. Interim (Demonstration) Use Exemption
      1. Interim Use of Leased Property
    6. Use Tax Exemptions to Avoid Multi-State Taxation
      1. Tax Paid to Another State
    7. Temporary Storage Exemption
    8. Retailers Responsibility to Collect Use Tax
    9. Payment of Use Tax Directly to the Department of Revenue
    10. Payment of Use Tax on Items Titled or Registered in Illinois
  3. Overview of Local Option Sales Taxes
    1. Local Option Sales Taxes - Generally
    2. Local Option Retailers' Occupation Tax
    3. Local Option Service Occupation Tax
    4. Local Option Use Tax
    5. Metropolitan Pier and Exposition Authority (MPEA) Tax
    6. Chicago Soft Drink Tax
    7. County Motor Fuel Tax
    8. Local Option Hotel Taxes
  4. Defining Taxable Receipts
    1. Taxable Receipts - Generally
    2. Occasional Sales
      1. Sales by Auctioneers and Agents
    3. Sales of Real Estate
    4. Traded-In Property
    5. Costs of Doing Business
    6. Cash Discounts
    7. Credit or Debit Card Transactions
    8. Returned Merchandise
    9. Refund of Tax Erroneously Collected
    10. NSF Checks
    11. Non-Collectable Accounts (Bad Debts)
    12. Federal Taxes
    13. State and Local Taxes
    14. Delivery Charges
    15. Handling Charges
    16. Restocking Charges
    17. Finance and Interest Charges
    18. Installation Charges
    19. Alteration Charges
    20. Mandatory Charges
    21. Cover Charges
    22. Minimum Charges
    23. Membership Fees
    24. Mandatory Gratuities
    25. Warranties
    26. Maintenance Agreements
    27. Trading Stamps
    28. Coupons
    29. Gift Certificates
    30. Manufacturer Rebates
    31. Vending Machine Sales
    32. Coins, Currency and Bullion
  5. Sales for Resale
    1. Sales for Resale - Generally
      1. Items Resold As Is
      2. Items Physically Incorporated Into Other Items
      3. Items Transferred Along With Items Being Sold
      4. Containers, Packaging Materials & Labels
      5. Ingredient of a Product or Byproduct of Manufacturing
    2. Sales for Resale by Service Businesses
    3. Documenting Sales for Resale
      1. Resale Certificates
      2. Good Faith Acceptance
      3. Verifying IBT Numbers
      4. Acquiring Certification After the Fact
      5. Other Evidence
    4. Drop Shipments
  6. Exempt Organizations and Governments
    1. Sales to Exempt Organizations
    2. Tax Exempt Numbers
      1. Retailer Responsibilities
    3. Requirements for Exempt Organization Status
      1. Examples of Exempt Organizations
      2. Examples of Non-Exempt Organizations
    4. Sales to Governments
      1. Foreign Diplomat Exemptions
      2. Sales to Federal Credit Unions and Other Federal Banking Institutions
      3. Sales to Government Contractors
    5. Pass - Through Exemptions to Contractors
    6. Disaster Relief Donations
    7. Property Leased to Governments and Hospitals
    8. Sales by Exempt Organizations
      1. Sales to Members
      2. Noncompetitive Sales
      3. Occasional Dinners and Similar Activities
    9. Teacher- Sponsored Student Organizations
    10. School Fundraising Exemption
    11. Sales by State and Local Governments
    12. Sales by the United States and Foreign Governments
  7. Interstate Sales
    1. Interstate Sales - Generally
    2. Exceptions to the General Rules Involving Interstate Sales
      1. Sales of Vehicles to Non-residents
      2. Sales to Common Carriers
    3. Interstate Sales of Service
    4. Proof of Out-of-State Delivery
    5. Interstate Sales and Relationship to Use Tax
  8. Foods, Drugs, and Medical Appliances
    1. History of Food and Drug Exemption
    2. Taxability of Food Sales - Generally
      1. Food for Immediate Consumption
      2. Food Sellers Incurring Dual Tax Rates
      3. Food Sold through Vending Machines
      4. Food Sold by Catering Businesses
      5. Food Sold or Provided by Hotels in Conjunction with Renting Rooms
    3. Medicines and Drugs
    4. Medical Appliances
  9. Machinery and Equipment
    1. History of Machinery and Equipment Exemptions
    2. Manufacturing Machinery and Equipment Exemption
      1. Manufacturing or Assembling Defined
      2. Production Process Defined
      3. Machinery and Equipment Defined
      4. Certification Required for Manufacturing Machinery and Equipment Exemption
      5. Lessors of Manufacturing Machinery and Equipment
    3. Manufacturer's Purchase Credit (MPC)
    4. Graphic Arts Machinery and Equipment Exemption
      1. Graphic Arts Process Defined
      2. Graphic Arts Machinery and Equipment Defined
      3. Certification Required for Graphic Arts Machinery and Equipment Exemption
      4. Lessors of Graphic Arts Machinery and Equipment
    5. Coal Exploration and Mining Machinery and Equipment Exemption
    6. Oil Field Exploration, Drilling and Production Machinery and Equipment Exemption
    7. Aggregate Production Machinery and Equipment Exemption
  10. Agricultural Products and Farm Machinery
    1. Production Agriculture Defined
    2. Farm Machinery and Equipment
      1. Farm Vehicles
      2. Farm Structures and Buildings
      3. Precision Farming Equipment
      4. Farm Machinery and Equipment Exemption Certification Requirements
      5. Lessors of Farm Machinery
    3. Seeds
    4. Fertilizers and Farm Chemicals
    5. Animal Feeds and Medicines
    6. Sales of Breeding Livestock
    7. Sales by Agricultural Producers
    8. Race Horses
    9. Game Birds
  11. Rolling Stock and Vehicles Subject to Commercial Distribution Fee
    1. Rolling Stock Exemption - Generally
    2. Rolling Stock Equipment Defined
      1. For Hire Requirement
      2. Interstate Activity Defined
      3. Interstate versus Intrastate Usage
    3. Rolling Stock and Leased Vehicles and Equipment
    4. Fuel Purchased by Interstate Carriers
    5. Commercial Distribution Fee (CDF) Exemption
      1. Relationship between Rolling Stock and CDF Exemptions
    6. Documenting the Rolling Stock and CDF Exemptions
  12. Computer Software
    1. Computer Software - Generally
      1. Canned Software
      2. Customized Software
    2. Software Licenses
    3. Software Used to Operate Machinery and Equipment
  13. Pollution Control Facilities
    1. Pollution Control Exemption - Generally
    2. Pollution Control Facility Defined
      1. Pollution Control System
      2. Primary Test for Claiming Pollution Control
    3. Documenting the Pollution Control Exemption
    4. Pollution Control Equipment Used in Manufacturing
    5. Low Sulfur Dioxide Emission Coal-Fueled Devices
      1. Coal Gasification Facility
  14. Newspapers, Magazines and Books
    1. Printed Publications - Generally
    2. Newspaper or Magazine Defined
      1. Newsprint Supplies
    3. Non-Printed Media
  15. Motor Vehicles, Watercraft and Aircraft
    1. Motor Vehicles - Generally
      1. Transaction Basis Returns
    2. Interim Use Exemption for Demonstrator Motor Vehicles
      1. Interim Use Exemption for Aircraft and Watercraft
    3. Vehicle Trade-In Credit
      1. Advance Trade-In Allowances for Motor Vehicle Leasing Businesses
      2. Vehicles Returned Pursuant to the New Vehicle Buyers Protection Act
    4. Sales of Motor Vehicles Exempt from Tax
      1. Sales of Vehicles to Out-of-State Purchasers
      2. Sales of Automobiles for Rental or Leasing
      3. Sales of Motor Vehicles Subject to Replacement Vehicle Tax
      4. Sales of Vehicles Used as Rolling Stock
      5. Sales of Vehicles Subject to Commercial Distribution Fee
    5. Manufacturer Rebates on Motor Vehicles
    6. Extended Warranty Contracts
    7. Documentation Fees Charged by Automobile Dealers
    8. Sales of Used Motor Vehicles by Leasing or Rental Business
    9. Purchases of Vehicles from Out-of-State Dealers
    10. Vehicle Use Tax
    11. Automobile Renting Tax (ART)
      1. Renting Transactions Exempt from ART
      2. Non-Taxable Charges for ART
    12. Tire User Fee
    13. Sales of Aircraft
      1. Aircraft Use Tax
    14. Sales of Watercraft
      1. Watercraft Use Tax
  16. Motor Fuels
    1. Taxation of Motor Fuel - Generally
    2. Illinois Motor Fuel Tax
      1. Motor Fuel Tax Licensing Requirements
      2. Exemptions from Motor Fuel Tax
      3. Dyed Diesel Fuel
      4. Motor Fuel Tax Claims
    3. Motor Fuel Use Tax
      1. Motor Fuel Use Tax Registration
    4. Underground Storage Tank Tax and Environmental Impact Fee
    5. Retailers' Occupation Tax on Sales of Motor Fuels
      1. Prepaid Sales Tax on Motor Fuel
      2. Gasohol, Majority Blended Ethanol and Biodiesel Fuels
      3. Aviation (Jet) Fuel
      4. Fuel Used in Vessels on Rivers Bordering Illinois
      5. Deducting Other Fuel Taxes When Calculating Retailers' Occupation Tax
    6. Cook County Motor Fuel Sales Tax
    7. County Motor Fuel Sales Tax
  17. Alcoholic Beverages and Tobacco Products
    1. Taxation of Alcohol and Tobacco - Generally
    2. Illinois Alcoholic Liquor Tax
      1. Liquor Tax Exemptions
      2. Non Beverage Use of Alcoholic Liquor
      3. Liquor Common Carriers
      4. Liquor Warehouses
    3. Cook County Liquor Tax
    4. Illinois Cigarette Tax
      1. Cigarette Tax Stamps and Reporting Requirements
      2. Cigarette Tax Exemptions
      3. Cigarette Manufacturers Additional Reporting Requirements
      4. Cigarette Transporters
    5. Cigarette Use Tax
    6. Cook County and City of Chicago Cigarette Taxes
    7. Illinois Tobacco Products Tax
      1. Tobacco Products Tax Exemptions
    8. Retailers' Occupation Tax on Sales of Alcoholic Beverages and Tobacco Products
      1. Additional Sales Tax Reporting by Liquor Retailers
      2. Additional Sales Tax Reporting on Sales by Liquor Distributors
  18. Leasing
    1. Illinois Tax Law Regarding Leasing - Generally
    2. True Lease versus Installment Sale
    3. Tax Charged on Lease Payments
    4. Leasing to Tax Exempt Organizations
    5. Exemptions for Leased Equipment
    6. Businesses that Rent and Sell
      1. Primarily a Lessor
      2. Primarily a Retailer
    7. Sales of Items Previously Leased
      1. Credit Allowed for Tax Paid on Original Purchase
      2. Sales of Property Encumbered by a Lease
    8. Automobile Renting Tax
      1. Renting Transactions Exempt from ART
      2. Non-Taxable Rental Charges
    9. Hotel Operators' Occupation Tax
      1. Exemptions from Hotel Operators' Tax
      2. Renting Rooms to Tax Exempt Organizations
      3. Local Option Hotel Taxes
  19. Construction Contracts
    1. Construction Contractors - Generally
      1. Construction Contract or Retail Sale
      2. Collection of Tax by Contractors
    2. Dual Purpose Retailer-Contractor
    3. Construction Contracts Involving Tax-Exempt Entities
    4. Enterprise Zones
      1. High Impact Businesses
  20. Out-of-State Retailers
    1. Out-of-State Retailers - Generally
      1. Out-of-State Retailers - Liability for Retailers' Occupation Tax
      2. Out-of-State Retailers - Use Tax Collection Responsibility
    2. Nexus Case Law
      1. Nexus Relating to Mail Order and Internet Retailers
      2. Expanded Nexus Situations
  21. Public Utilities
    1. Taxation of Services Provided by Public Utilities - Generally
    2. Gas Revenue Tax Act
      1. Exemptions from Gas Revenue Tax
    3. Gas Use Tax
      1. Gas Use Tax Collected by Delivering Suppliers
      2. Self Assessing Purchaser of Natural Gas
      3. Gas Use Tax Exemptions
    4. Electricity Excise Tax
      1. Delivering Suppliers of Electricity
      2. Self Assessing Purchasers of Electricity
      3. Exemptions from Electricity Excise Tax
    5. Energy Assistance Charge and Renewable Energy Charge
    6. Telecommunications Excise Tax
      1. 1-800 and 1-900 Telephone Services
      2. Services Not Subject to Telecommunications Excise Tax
      3. Exemptions from Telecommunications Excise Tax
      4. Interstate and Mobile Telecommunications
      5. Internet Service Providers
      6. Cable and Satellite Television Services
      7. Prepaid Telephone Calling Arrangements
      8. Pay Phones
    7. Telecommunications Infrastructure Maintenance Fee
  22. Service Businesses
    1. Taxation of Service Businesses - Generally
      1. De Minimus or De Maximus Service Provider
    2. De Minimus Service Businesses
      1. De Minimus Service Providers That Are Also Retailers
    3. De Maximus Service Businesses
    4. Service Occupation or Retail Selling
    5. Service Occupation Tax Exemptions
      1. Food, Drugs and Medical Appliances Transferred Incident to Service Transactions
    6. Warranty Repairs and Maintenance Agreements
    7. Multi-Service Situations
    8. Dry Cleaning Solvent Tax
  23. Miscellaneous Sales and Excise Tax Provisions
    1. Registration Requirements
      1. Registration Fees
      2. Bonding
      3. Discontinuing Business Operations
      4. Revoked, Cancelled or Suspended Certificates or Licenses
    2. Filing Requirements
      1. Electronic Filing Options
      2. Accelerated Payment Requirements
      3. Electronic Tax Payments
    3. Books and Records Requirements
    4. Bills and Notices
      1. Statute of Limitations
      2. Payment Plans
      3. Collection Actions
      4. Board of Appeals
    5. Claims and Refunds
    6. Audits and Criminal Investigations
      1. Informal Conference Board
    7. Administrative Hearings
    8. Circuit Court Complaint
    9. Taxpayer Assistance
      1. Legal Letter Rulings
  24. Penalties and Interest
    1. Uniform Penalty and Interest Act
    2. Civil Penalties - Generally
      1. Late Filing (or Non-Filing) Penalty
      2. Late Payment Penalty
      3. Underreporting Penalty
      4. Failure to File Correct Information Return Penalty
      5. Negligence Penalty
      6. Fraud Penalty
      7. Personal Liability Penalty
      8. Bad Check Penalty
      9. Cost of Collection Fee
    3. Penalty Abatement for Reasonable Cause
    4. Interest Rates
      1. Calculating Interest
    5. Over-Collection of Tax
    6. Criminal Penalties
    7. Motor Fuel Tax Penalties
    8. Cigarette Tax Penalties
    9. Liquor Tax Penalties