Title:86 Part:150

AUTHORITY: Implementing the Use Tax Act [35 ILCS 105] and authorized by Sections 2505-90 and 2505-795 of the Department of Revenue Law [20 ILCS 2505].

SOURCE: Adopted August 1, 1955; amended at 4 Ill. Reg. 24, p. 553, effective June 1, 1980; amended at 5 Ill. Reg. 5351, effective April 30, 1981; amended at 5 Ill. Reg. 11072, effective October 6, 1981; codified at 6 Ill. Reg. 9326; amended at 8 Ill. Reg. 3704, effective March 12, 1984; amended at 8 Ill. Reg. 7278, effective May 11, 1984; amended at 8 Ill. Reg. 8623, effective June 5, 1984; amended at 11 Ill. Reg. 6275, effective March 20, 1987; amended at 14 Ill. Reg. 6835, effective April 19, 1990; amended at 15 Ill. Reg. 5861, effective April 5, 1991; emergency amendment at 16 Ill. Reg. 14889, effective September 9, 1992, for a maximum of 150 days; amended at 17 Ill. Reg. 1947, effective February 2, 1993; amended at 18 Ill. Reg. 1584, effective January 13, 1994; amended at 20 Ill. Reg. 7019, effective May 7, 1996; amended at 20 Ill. Reg. 16224, effective December 16, 1996; amended at 22 Ill. Reg. 21670, effective November 25, 1998; amended at 24 Ill. Reg. 10728, effective July 7, 2000; amended at 25 Ill. Reg. 953, effective January 8, 2001; emergency amendment at 25 Ill. Reg. 1821, effective January 16, 2001, for a maximum of 150 days; amended at 25 Ill. Reg. 5059, effective March 23, 2001; amended at 25 Ill. Reg. 6540, effective May 3, 2001; amended at 25 Ill. Reg. 10937, effective August 13, 2001; amended at 26 Ill. Reg. 971, effective January 15, 2002; amended at 26 Ill. Reg. 9902, effective June 24, 2002; amended at 27 Ill. Reg. 1607, effective January 15, 2003; emergency amendment at 27 Ill. Reg. 11209, effective July 1, 2003, for a maximum of 150 days; emergency expired November 27, 2003; emergency amendment at 28 Ill. Reg. 15266, effective November 3, 2004, for a maximum of 150 days; emergency expired April 1, 2005; amended at 29 Ill. Reg. 7079, effective April 26, 2005; emergency amendment at 32 Ill. Reg. 8806, effective May 29, 2008, for a maximum of 150 days; emergency expired October 25, 2008; amended at 32 Ill. Reg. 17554, effective October 24, 2008; amended at 32 Ill. Reg. 19149, effective December 1, 2008; amended at 38 Ill. Reg. 20022, effective October 1, 2014; amended at 39 Ill. Reg. 11085, effective July 21, 2015; amended at 40 Ill. Reg. 13471, effective September 12, 2016; amended at 42 Ill. Reg. 15446, effective July 27, 2018; emergency amendment at 42 Ill. Reg. 17247, effective September 11, 2018, for a maximum of 150 days; emergency expired February 7, 2019; amended at 42 Ill. Reg. 23143, effective November 29, 2018; amended at 43 Ill. Reg. 13333, effective November 1, 2019; emergency amendment at 44 Ill. Reg. 383, effective December 23, 2019, for a maximum of 150 days; emergency expired May 20, 2020; emergency amendment at 44 Ill. Reg. 577, effective December 27, 2019, for a maximum of 150 days; emergency expired May 24, 2020; amended at 44 Ill. Reg. 14002, effective August 11, 2020; amended at 44 Ill. Reg. 14744, effective August 26, 2020; amended at 46 Ill. Reg. 18162, effective October 25, 2022; amended at 46 Ill. Reg. 18851, effective November 1, 2022; amended at 47 Ill. Reg. 2142, effective January 24, 2023; amended at 47 Ill. Reg. 5781, effective April 4, 2023; amended at 47 Ill. Reg. 6133, effective April 12, 2023; amended at 47 Ill. Reg. 6330, effective April 18, 2023; amended at 48 Ill. Reg. 1950, effective January 18, 2024; amended at 48 Ill. Reg. 6836, effective April 24, 2024; amended at 48 Ill. Reg. 14836, effective September 25, 2024.

SUBPART A: NATURE OF THE TAX

Section 150.101 Description of the Tax

a) The Use Tax is a privilege tax imposed on the privilege of using, in this State, any kind of tangible personal property that is purchased anywhere at retail from a retailer, as "retailer" is defined in the Use Tax Act.

b) The tax is not on the privilege of using any particular commodity, but on the privilege of using anything which happens to come within the general designation of "tangible personal property".

c) Tangible personal property includes the following:

1) Computer software, see also 86 Ill. Adm. Code 130.1935;

2) Photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for commercial exhibition; and

3) Beginning January 1, 2001, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. [35 ILCS 105/3]

d) However, if the seller of tangible personal property for use would not be taxable under the Retailers' Occupation Tax Act (35 ILCS 120/1 et seq.) despite all elements of the sale occurring in Illinois, then the tax imposed by the Use Tax Act shall not apply to the use of such tangible personal property in this State.

e) For example, a purchaser of tangible personal property from a seller who qualifies as an isolated or occasional seller so as not to incur Retailers' Occupation Tax liability is not liable for the Use Tax when using such property in Illinois.

(Source: Amended at 47 Ill. Reg. 6133, effective April 12, 2023)

Section 150.105 Rate and Base of Tax

a) The rate of the use tax after December 31, 1989, is 6.25% of either the selling price or the fair market value, if any, of the tangible personal property involved. [35 ILCS 105/3-10]

1) In all cases where property functionally used or consumed is the same as the property that was purchased at retail, then the tax is imposed on the selling price of the property. [35 ILCS 105/3-10]

2) In all cases where property functionally used or consumed is a by-product or waste product that has been refined, manufactured, or produced from property purchased at retail, then the tax is imposed on the lower of the fair market value, if any, of the specific property so used in this State or on the selling price of the property purchased at retail. [35 ILCS 105/3-10]

3) For purposes of this Section "fair market value" means the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. The fair market value shall be established by Illinois sales by the taxpayer of the same property as that functionally used or consumed, or if there are no such sales by the taxpayer, then comparable sales or purchases of property of like kind and character in Illinois. [35 ILCS 105/3-10]

4) If the property that is purchased at retail from a retailer is acquired outside Illinois and used outside Illinois before being brought to Illinois for use here and is nevertheless taxable under the Use Tax Act, the "selling price" on which the tax is computed shall be reduced by an amount which represents a reasonable allowance for depreciation for the period of such prior out-of-State use. [35 ILCS 105/3-10]

b) Effective January 1, 1990 and prior to July 1, 2003, sales of gasohol are subject to tax, based upon 70% of the proceeds of sales. On and after July 1, 2003 and on or before July 1, 2017, tax shall be based upon 80% of the proceeds from sales of gasohol. After July 1, 2017, and prior to January 1, 2024, tax shall be based upon 100% of the proceeds of sales of gasohol. On and after January 1, 2024, and prior to January 1, 2029, tax shall be based upon 90% of the proceeds of sales of gasohol. On and after January 1, 2029, tax shall be based upon 100% of the proceeds of sales of gasohol. Effective July 1, 2003, if at any time, the tax under the Use Tax Act on sales of gasohol is imposed at the rate of 1.25%, then the tax imposed by the Use Tax Act applies to 100% of the proceeds of sales of gasohol made during that time. [35 ILCS 105/3-10]

c) On and after July 1, 2003 and on or before December 31, 2028, use tax does not apply to the proceeds of sales of majority blended ethanol fuel but applies to 100% of the proceeds of sales made thereafter. [35 ILCS 105/3-10]

d) With respect to biodiesel blends with no less than 1% and no more than 10% biodiesel, the tax imposed by the Use Tax Act applies to 80% of the proceeds of sales made on or after July 1, 2003 and on or before December 31, 2018 and 100% of the proceeds of sales made after December 31, 2018 and before January 1, 2024. On and after January 1, 2024 and on or before December 31, 2030, the taxation of biodiesel, renewable diesel, and biodiesel blends shall be as provided in Section 3-5.1 of the Use Tax Act, which is reflected in 86 Ill. Adm. Code 130.320. If, at any time, however, the tax under the Use Tax Act on sales of biodiesel blends with no less than 1% and no more than 10% biodiesel is imposed at the rate of 1.25%, then the tax imposed by the Use Tax Act applies to 100% of the proceeds of sales of biodiesel blends with no less than 1% and no more than 10% biodiesel made during that time. [35 ILCS 105/3-10]

e) With respect to biodiesel and biodiesel blends with more than 10% but no more than 99% biodiesel, the tax imposed by the Use Tax Act does not apply to the proceeds of sales made on or after July 1, 2003 and on or before December 31, 2023. On and after January 1, 2024, the taxation of biodiesel, renewable diesel, and biodiesel blends shall be as provided in Section 3-5.1 of the Use Tax Act, which is reflected in 86 Ill. Adm. Code 130.320. [35 ILCS 105/3-10]

f) With respect to mid-range ethanol blends, the tax imposed by the Use Tax Act applies to 80% of the proceeds of sales made on or after January 1, 2024 and on or before December 31, 2028 and 100% of the proceeds of sales made thereafter. If, at anytime, however, the tax under the Use Tax Act on sales of mid-range ethanol blends is imposed at the rate of 1.25%, then the tax imposed by the Act applies to 100% of the proceeds of sales of mid-range ethanol blends made during that time. [35 ILCS 105/3-10]

(Source: Amended at 48 Ill. Reg. 14836, effective September 25, 2024)

Section 150.110 How to Compute Depreciation

a) For the purpose of determining the "reasonable allowance for depreciation" in the case of motor vehicles brought into the State before July 1, 2024, the Department will presume that the average life expectancy of a motor vehicle is 50 months and that the rate of depreciation that is therefore allowable is 2% of the selling price each month for such period of prior out-of-State use. A fraction of a month (including any period which is less than a month after the date of purchase) will be disregarded.

For motor vehicles brought into the State on or after July 1, 2024, for the purpose of determining the "reasonable allowance for depreciation", the Department will presume that the average life expectancy of a motor vehicle is 60 months and that the rate of depreciation that is therefore allowable is 1.67% of the selling price each month for such period of prior out-of-State use.

b) For purposes of this Section, a "month" does not mean a calendar month, but means a period of one month from the date of purchase. A fraction of a month (including any period which is less than a month after the date of purchase) will be disregarded. For example, if the motor vehicle was bought on the fifth day of one month, one month of depreciation will be considered to have accrued on the fifth day of the following month. In no case will depreciation be allowed for any period of time before the physical possession of the motor vehicle is delivered to the purchaser.

Example: A person purchases a car for $15,000 on July 2and does not bring the car into Illinois until September 1. The prior out-of-State use is only 1 month since partial months are disregarded. The taxable base will be reduced by $251 (1.67% of $15,000).

c) Effective January 1, 1968, as to tangible personal property other than motor vehicles brought into the State before July 1, 2024, a "reasonable allowance for depreciation" is deemed by the Department to be the amount of depreciation determined by use of the straight line method of depreciation. For purposes of depreciation, the service life for tangible personal property other than motor vehicles brought into the State on or after July 1, 2024, shall be the useful life or recovery period allowed under federal law for like kind of property, or in the event of a settlement agreement, the useful life or recovery period agreed to in such settlement between the taxpayer and the Internal Revenue Service or the Department.

(Source: Amended at 48 Ill. Reg. 6836, effective April 24, 2024)

Section 150.115 How To Determine Effective Rate

a) For the purposes of the Use Tax Act, any tax liability incurred with respect to a sale of tangible personal property made in the regular course of business shall be computed by applying, to the selling price of such sale, the tax rate in effect as of the date of delivery of such property: Provided that if delivery occurs after the tax rate changes, in a transaction in which payments on the selling price were made by the purchaser before the date of the rate change and tax was paid by the purchaser to the seller or to the Department on such payments when they were made by the purchaser in accordance with 86 Ill. Adm. Code 130.430 at the rate which was in effect when such payments were made to the seller, no additional tax will be due or credit allowed because of delivery of the property occurring after the rate change.

b) Furthermore, in the case of sales of building materials to real estate improvement construction contractors for use in performing construction contracts for third persons, if such property is delivered to the contractor after the effective date of a rate increase but will be used in performing a binding construction contract which was entered into before the effective date of the increase and under which the contractor is legally unable to shift the burden of the tax rate increase to his customer, the applicable tax rate will be the rate which was in effect before the effective date of the rate increase. Before a supplier may deliver materials to a construction contractor after the effective date of a tax rate increase at the rate which was in effect prior thereto, the purchasing contractor must give such supplier a written, signed certification stating that specifically described materials are being purchased for use in performing a binding contract which was entered into before the effective date of the rate increase (specifying such date) and under which the contractor is legally unable to shift the burden of the tax rate increase to his customer, identifying the construction contract in question by its date and by naming the contractor's customer under the contract and by describing the nature of the construction work involved, and by giving the location of the job site where the construction contract is being performed or is to be performed.

(Source: Amended and effective September 9, 1969)

Section 150.120 Effective Date of New Taxes

When something that has been exempted becomes liable as to purchases that are made on and after some particular date, the date of purchase for this purpose shall be deemed to be the date of the delivery of the property. This is true even if such delivery is made under a contract that was entered into before the effective date of the new tax.

(Source: Amended and effective September 9, 1969)

Section 150.125 Relation of Use Tax to Retailers' Occupation Tax

The Use Tax Act complements the Retailers' Occupation Tax Act. That is why the Use Tax is restricted to cases in which the property is purchased at retail from a retailer.

(Source: Amended and effective September 9, 1969)

Section 150.130 Accounting for the Tax

a) If the retailer is required or authorized to collect the Use Tax, then the purchaser must pay the tax to the retailer. However, the retailer's failure to collect the tax from the purchaser does not prevent the Department from collecting the tax directly from the purchaser whether the retailer's liability to remit the tax is to remit it in the form of Retailers' Occupation Tax or in the form of Use Tax. If the user purchases the tangible personal property at retail from a retailer, but does not pay the Use Tax to such retailer, the purchaser shall pay the Use Tax directly to the Department.

b) The retailer must remit the Use Tax which he collects to the Department. However, since the Retailers' Occupation Tax and Use Tax work together in a complementary manner, the retailer may first reduce the amount of Use Tax he must remit by the amount of Retailers' Occupation Tax (if any) which he is required to and does pay to the Department with respect to the same sale.

(Source: Amended at 24 Ill. Reg. 10728, effective July 7, 2000)

Section 150.135 How to Avoid Paying Tax on Use Tax Collected From the Purchaser

a) Taxable receipts, on the basis of which Use Tax must be collected and remitted to the Department in transactions that are subject to the Use Tax despite being exempt from the Retailers' Occupation Tax because of interstate commerce, do not include charges which are added to prices on account of the seller's duty to collect the Use Tax.

b) If a retailer does not keep a detailed record for the return period of the Use Tax which he collects so as clearly to segregate these added charges from other receipts, it will at least in general be assumed that the Use Tax collected equals 6.25% of the receipts received in such return period from taxable sales if the retailer collects the Use Tax in accordance with the bracket schedule prescribed by the Department in Section 150.Table A and states such tax separately from the selling price of the tangible personal property, as the retailer is required to do.

c) The retailer may eliminate the amount of Use Tax which he collects from the total receipts which he receives from taxable sales in arriving at his taxable receipts from such sales by subtracting the amount so collected from the purchaser as Use Tax, as shown by such retailer's books and records, or he may accomplish this result by subtracting, from the total receipts which he receives from taxable sales, the figure obtained by dividing such receipts by 106.25 and multiplying the result by 6.25.

d) The seller will not be entitled to any deduction from total receipts because of having collected Use Tax from the purchaser if the seller, in collecting such tax, does not state it to the purchaser as a separate item from the selling price, unless the Department finds that it is not possible, under the facts of the case, for the retailer to collect the tax from the purchaser as a separate item from the selling price and that the retailer is therefore permitted to collect the tax by including it in the selling price of the tangible personal property. See Section 150.1310 of this Part for additional information regarding the circumstances under which tax need not be stated as a separate item.

(Source: Amended at 24 Ill. Reg. 10728, effective July 7, 2000)

SUBPART B: DEFINITIONS

Section 150.201 General Definitions

"Act" means the Use Tax Act [35 ILCS 105]

"Department" means the Department of Revenue.

"Person" means any natural individual, firm, partnership, association, joint stock company, joint adventure, public or private corporation, limited liability company, or a receiver, executor, trustee, guardian or other representative appointed by order of any court.

"Purchase at retail" means the acquisition of the ownership of or title to tangible personal property through a sale at retail.

"Purchaser" means anyone who, through a sale at retail, acquires the ownership of tangible personal property for a valuable consideration.

For purposes of this Part, "remote retailer" has the same meaning as defined in 86 Ill. Adm. Code 131.105.

"Retailer" means and includes every person engaged in the business of selling tangible personal property for use and not for resale.

Effective October 1, 1974, a person who is the recipient of a grant or contract under Title VII of the Older Americans Act of 1965 [42 U.S.C. 3001 et seq.] and serves meals to participants in the federal Nutrition Program for the Elderly in return for contributions established in amount by the individual participant pursuant to a schedule of suggested fees as provided for in the federal Act is not a retailer under the Act with respect to such transactions. [35 ILCS 105/2]

Nonprofit Sellers

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 a retailer with respect to such transactions, excepting only a person organized and operated exclusively for charitable, religious or educational purposes either:

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

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. The selling of schoolbooks and school supplies by schools at retail to students is not "primarily for the purposes of" the school which does such selling.

This definition does not apply to nor subject to taxation occasional dinners, social or similar activities of a person organized and operated exclusively for charitable, religious or educational purposes, whether or not such activities are open to the public.

Special Order Sales

A person who holds oneself out as being engaged (or who habitually engages) in selling tangible personal property at retail is a retailer under the Act with respect to such sales (and not primarily in a service occupation) notwithstanding the fact that such person designs and produces such tangible personal property on special order for the purchaser and in such a way as to render the property of value only to such purchaser, if such tangible personal property so produced on special order serves substantially the same function as stock or standard items of tangible personal property that are sold at retail.

When Construction Contractor or Real Estate Developer is a Retailer

A construction contractor or real estate developer who, in the course of conducting such business, transfers tangible personal property to users or consumers in the finished form in which it was purchased, and which does not become real estate, under any provision of a construction contract or real estate sale or real estate sales agreement entered into with some other person arising out of or because of nontaxable business, is a retailer to the extent of the value of the tangible personal property so transferred. [35 ILCS 105/2] See also 86 Ill. Adm. Code 130.1940.

Isolated or Occasional Sales

The isolated or occasional sale of tangible personal property at retail by a person who does not hold oneself out as being engaged (or who does not habitually engage) in selling such tangible personal property at retail or a sale through a bulk vending machine does not make such person a retailer under the Act. [35 ILCS 105/2]

Leasing or Renting Motor Vehicles

A person who is engaged in the business of leasing or renting motor vehicles to others and who, in connection with such business sells any used motor vehicle to a purchaser for the purchaser's use and not for the purpose of resale, is a retailer engaged in the business of selling tangible personal property at retail under the Act to the extent of the value of the vehicle sold. For the purpose of this paragraph, "motor vehicle" has the meaning prescribed in Section 1-157 of the Illinois Vehicle Code [625 ILCS 5], as now or hereafter amended. (Nothing provided herein shall affect liability incurred under the Act because of the use of such motor vehicles as a lessor.) [35 ILCS 105/1a]

"Retailer maintaining a place of business in this State", or any like term, means and includes any of the following retailers:

A retailer having or maintaining within this State, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business, or any agent or other representative operating within this State under the authority of the retailer or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such retailer or subsidiary is licensed to do business in this State. However, the ownership of property that is located at the premises of a printer with which the retailer has contracted for printing and that consists of the final printed product, property that becomes a part of the final printed product, or copy from which the printed product is produced shall not result in the retailer being deemed to have or maintain an office, distribution house, sales house, warehouse, or other place of business within this State. [35 ILCS 105/2(1)]

It does not matter that an agent may engage in business on the agent's own account in other transactions, nor that the agent may act as an agent for other persons in other transactions, nor that the agent is not an employee but is an independent contractor acting as an agent. The term "agent" is broader than the term "employee". "Agent" includes anyone acting under the principal's authority in an agency capacity.

Beginning July 1, 2011, a retailer having a contract with a person located in this State under which:

the retailer sells the same or substantially similar line of products as the person located in this State and does so using an identical or substantially similar name, trade name, or trademark as the person located in this State; and

the retailer provides a commission or other consideration to the person located in this State based upon the sale of tangible personal property by the retailer.

The provisions of this paragraph shall apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to customers in this State under all such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December. [35 ILCS 105/2(1.2)]

Beginning January 1, 2015, a retailer having a contract with a person located in this State under which the person, for a commission or other consideration based upon the sale of tangible personal property by the retailer, directly or indirectly refers potential customers to the retailer by providing to the potential customers a promotional code or other mechanism that allows the retailer to track purchases referred by such persons. Examples of mechanisms that allow the retailer to track purchases referred by such persons include but are not limited to the use of a link on the person's Internet website, promotional codes distributed through the person's hand-delivered or mailed material, and promotional codes distributed by the person through radio or other broadcast media. The provisions of this paragraph shall apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to customers who are referred to the retailer by all persons in this State under such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December. A retailer meeting the requirements of this paragraph shall be presumed to be maintaining a place of business in this State but may rebut this presumption by submitting proof that the referrals or other activities pursued within this State by such persons were not sufficient to meet the nexus standards of the United States Constitution during the preceding 4 quarterly periods. [35 ILCS 105/2(1.1)]

The following documentation is required in order to rebut this presumption:

Retailer Agreement. The retailer must have an agreement that prohibits persons operating under the agreement from engaging in any solicitation activities in Illinois that refer potential customers to the retailer, including, but not limited to, distributing flyers, coupons, newsletters, and other printed promotional materials or electronic equivalents, verbal soliciting, initiating telephone calls, and sending e-mails or text messages. If the person in Illinois with whom the retailer has an agreement is an organization or corporation, such as a club or nonprofit group, the agreement must provide that the organization will maintain on its website information alerting its members to the prohibition against each of the solicitation activities described in this paragraph. The agreement must be maintained in the retailer's records and shall be made available to the Department for inspection or audit.

Annual Certification. The person or persons operating under the agreement in Illinois shall certify by January 1 of each year, under penalty of perjury, that they have not engaged in any prohibited solicitation activities in Illinois at any time during the previous year. If the person in Illinois with whom the retailer has an agreement is an organization or corporation, the annual certification shall also include a statement from the organization or corporation, signed by an officer of the organization or corporation, certifying that its website includes information directed at its members alerting them to the prohibition against the solicitation activities described in this paragraph. The certification should be made on forms prescribed by the Department, must be completed and provided to the retailer, must be maintained in the retailer's records, and shall be made available to the Department for inspection or audit. If the retailer accepts a properly and timely completed certification in good faith and the retailer does not know or have reason to know that the certification is false or fraudulent, that certification will be conclusive proof that the person that provided the certification was in compliance with the agreement for the year covered by the certification. If the retailer fails to obtain the certifications from all persons operating under the agreements and fails to make those records available upon the Department's request, the presumption that the retailer is maintaining a place of business in Illinois will not be rebutted.

Beginning October 1, 2018, a retailer making sales of tangible personal property to purchasers in Illinois from outside of Illinois if:

the cumulative gross receipts from sales of tangible personal property to purchasers in Illinois are $100,000 or more; or

the retailer enters into 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois.

Beginning January 1, 2020, neither the gross receipts from nor the number of separate transactions for sales of tangible personal property to purchasers in Illinois that a retailer makes through a marketplace facilitator and for which the retailer has received a certification from the marketplace facilitator pursuant to Section 2d of the Act shall be included for purposes of determining whether the retailer has met the thresholds of this paragraph. [35 ILCS 105/2(9)]

Beginning January 1, 2020, a marketplace facilitator who meets either of the following thresholds is considered the retailer for each sale of tangible personal property made through its marketplace:

the cumulative gross receipts from sales of tangible personal property to purchasers in Illinois by the marketplace facilitator and by marketplace sellers selling through the marketplace are $100,000 or more; or

the marketplace facilitator and marketplace sellers selling through the marketplace cumulatively enter into 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois. [35 ILCS 105/2(10) and 35 ILCS 105/2d]

For purposes of this definition, a retailer without physical presence in this State or a marketplace facilitator shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether it meets either of the foregoing criteria for the preceding 12-month period. If the retailer or marketplace facilitator meets the threshold of either criteria for a 12-month period, it is considered a retailer maintaining a place of business in this State and is required to collect and remit use tax and file returns for one year.

At the end of that one-year period, the retailer or marketplace facilitator shall determine whether it met the threshold of either criteria during the preceding 12-month period. If the retailer or marketplace facilitator met either of the criteria for the preceding 12-month period, it is considered a retailer maintaining a place of business in this State and is required to collect and remit use tax and file returns for the subsequent year.

If, at the end of a one-year period, a retailer or marketplace facilitator that was required to collect and remit the use tax determines that it did not meet the threshold in either criteria during the preceding 12-month period, the retailer or marketplace facilitator shall subsequently determine on a quarterly basis, ending on the last day of March, June, September, and December, whether it meets the threshold of either criteria for the preceding 12-month period. [35 ILCS 105/2(9) and 35 ILCS 105/2d]

NOTE: Beginning January 1, 2021, retailers without physical presence in this State and marketplace facilitators meeting either tax remittance threshold as set out in 86 Ill. Adm. Code 131.115(a) and 131.135(a), respectively, are liable for all applicable State and locally imposed retailers' occupation taxes administered by the Department of Revenue on all sales made to Illinois purchasers and are no longer only mandatory Use Tax collectors. (See 86 Ill. Adm. Code 131.115 and 131.135).

"Sale at retail" means any transfer of the ownership of or title to tangible personal property to a purchaser, for the purpose of use, and not for the purpose of resale in any form as tangible personal property to the extent not first subjected to a use for which it was purchased, for a valuable consideration: Provided that the property purchased is deemed to be purchased for the purpose of resale, despite first being used, to the extent to which it is resold as an ingredient of an intentionally produced product or by-product of manufacturing.

For this purpose, slag produced as an incident to manufacturing pig iron or steel and sold is considered to be an intentionally produced by-product of manufacturing.

"Sale at retail" includes any such transfer made for resale unless made in compliance with Section 2c of the Retailers' Occupation Tax Act [35 ILCS 120], as incorporated by reference into Section 12 of the Act. Transactions whereby the possession of the property is transferred but the seller retains the title as security for payment of the selling price are sales.

"Sale at retail" shall also be construed to include any Illinois florist's sales transaction in which the purchase order is received in Illinois by a florist and the sale is for use or consumption, but the Illinois florist has a florist in another state deliver the property to the purchaser or the purchaser's donee in such other state.

Nonreusable tangible personal property that is used by persons engaged in the business of operating a restaurant, cafeteria, or drive-in is a sale for resale when it is transferred to customers in the ordinary course of business as part of the sale of food or beverages and is used to deliver, package, or consume food or beverages, regardless of where consumption of the food or beverages occurs. Examples of those items include but are not limited to nonreusable, paper and plastic cups, plates, baskets, boxes, sleeves, buckets or other containers, utensils, straws, placemats, napkins, doggie bags, and wrapping or packaging materials that are transferred to customers as part of the sale of food or beverages in the ordinary course of business.

The purchase, employment and transfer of such tangible personal property as newsprint and ink for the primary purpose of conveying news (with or without other information) is not a purchase, use or sale of tangible personal property.

"Selling price" means the consideration for a sale valued in money whether received in money or otherwise, including cash, credits, property other than as provided in this definition, and services, but, prior to January 1, 2020 and beginning again on January 1, 2022, not including the value of or credit given for traded-in tangible personal property where the item that is traded-in is of like kind and character as that which is being sold; beginning January 1, 2020 and until January 1, 2022, "selling price" includes the portion of the value of or credit given for traded-in motor vehicles of the First Division as defined in Section 1-146 of the Illinois Vehicle Code [625 ILCS 5] of like kind and character as that which is being sold that exceeds $10,000. "Selling price" shall be determined without any deduction on account of the cost of the property sold, the cost of materials used, labor or service cost or any other expense whatsoever, but does not include interest or finance charges which appear as separate items on the bill of sale or sales contract nor charges that are added to prices by sellers on account of the seller's tax liability under the Retailers' Occupation Tax Act, or on account of the seller's duty to collect, from the purchaser, the tax that is imposed by the Act, or, except as otherwise provided with respect to any cigarette tax imposed by a home rule unit, on account of the seller's tax liability under any local occupation tax administered by the Department, or, except as otherwise provided with respect to any cigarette tax imposed by a home rule unit, on account of the seller's duty to collect, from the purchasers, the tax that is imposed under any local use tax administered by the Department. "Selling price" shall include charges that are added to prices by sellers on account of the seller's tax liability under the Cigarette Tax Act, on account of the seller's duty to collect, from the purchaser, the tax imposed under the Cigarette Tax Act, and on account of the seller's duty to collect, from the purchaser, any cigarette tax imposed by a home rule unit.

The phrase "like kind and character" shall be liberally construed (including but not limited to any form of motor vehicle for any form of motor vehicle, or any kind of farm or agricultural implement for any other kind of farm or agricultural implement), while not including a kind of item which, if sold at retail by that retailer, would be exempt from retailers' occupation tax and use tax as an isolated sale.

"Use" means the exercise by any person of any right or power over tangible personal property incident to the ownership of that property, except that it does not include the sale of such property in any form as tangible personal property in the regular course of business to the extent that such property is not first subjected to a use for which it was purchased, and does not include the use of such property by its owner for demonstration purposes: Provided that the property purchased is deemed to be purchased for the purpose of resale, despite first being used, to the extent to which it is resold as an ingredient of an intentionally produced product or by-product of manufacturing. "Use" does not mean demonstration use or interim use of tangible personal property by a retailer before the retailer sells that tangible personal property. For watercraft or aircraft, if the period of demonstration use or interim use by the retailer exceeds 18 months, the retailer shall pay on the retailer's original cost price the tax imposed by the Act, and no credit for that tax is permitted if the watercraft or aircraft is subsequently sold by the retailer. "Use" does not mean the physical incorporation of tangible personal property, to the extent not first subjected to a use for which it was purchased, as an ingredient or constituent, into other tangible personal property

which is sold in the regular course of business or

which the person incorporating such ingredient or constituent therein has undertaken at the time of purchase to cause to be transported in interstate commerce to destinations outside the State of Illinois: Provided that the property purchased is deemed to be purchased for the purpose of resale, despite first being used, to the extent to which it is resold as an ingredient of an intentionally produced product or by-product of manufacturing.

"Watercraft" means a Class 2, Class 3, or Class 4 watercraft as defined in Section 3-2 of the Boat Registration and Safety Act [625 ILCS 45], a personal watercraft, or any boat equipped with an inboard motor. [35 ILCS 105/2]

(Source: Amended at 48 Ill. Reg. 6836, effective April 24, 2024)

SUBPART C: KINDS OF USES AND USERS NOT TAXED

Section 150.301 Cross References

a) For information concerning the definition of "use", see Section 150.201 of this Part.

b) As was mentioned in Section 150.101 of this Part, the user of tangible personal property is not subject to the Use Tax when the seller of such tangible personal property would not incur Retailers' Occupation Tax liability even though all elements of the sale occurred in Illinois.

(Source: Amended and effective March 12, 1976)

Section 150.305 Effect of Limitation that Purchase Must be at Retail from a Retailer to be Taxable

a) The limitation in the Use Tax Act ("Act") to the effect that the tangible personal property must be purchased at retail from a retailer excludes, from the use tax, the use of tangible personal property produced by the user or acquired by the user by way of a gift or in some manner other than by means of a purchase.

b) However, although the user is not taxable on the value of the finished product which the user produces, such user is taxable on the purchase price of the tangible personal property that the user purchases and incorporates into such finished product which the user uses in this State, such purchase being a purchase at retail or a purchase for use.

c) Although the donee in a gift situation is not a taxable user, the donor who purchases the property and gives it away makes a taxable use of the property when making such gift. For example, if a cellular phone company gives cellular phones to its customers as part of a sales promotion, it owes use tax on its cost price of the phones that are given away. In this situation, the cellular company, as donor, is considered to have used items by giving them away.

d) The limitation that the purchase must be made at retail from a retailer for the Use Tax Act to apply also excludes, from the tax, the use of tangible personal property purchased from an isolated or occasional seller who is not engaged in the business of selling such tangible personal property. The exclusions discussed in this paragraph are necessary to make the Use Tax Act complementary to the Retailers' Occupation Tax Act.

e) The Use Tax Act does not apply to the rental payments made by a lessee to a lessor. However, except as is noted in Section 150.306 of this Part, the lessor is legally the user of the property and is taxable on the purchase price thereof.

(Source: Amended at 48 Ill. Reg. 6836, effective April 24, 2024)

Section 150.306 Interim Use and Demonstration Exemptions

a) Interim Use Exemption

1) Except as otherwise provided in this subsection (a) and in subsection (c) of this Section, tangible personal property purchased by a retailer for resale, and used by the retailer or his or her agents prior to its ultimate sale at retail, is exempt from Use Tax, provided that the tangible personal property is of the same general type of property sold by that retailer and is carried as inventory on the books of the retailer or is otherwise available for sale during the interim use period. Beginning July 1, 2008, the following provisions apply to persons claiming the interim use exemption:

A) The interim use exemption may not be claimed for any item if any of the following circumstances exist:

i) title to the item is held by any party other than the retailer, except that title may be held by the retailer, the manufacturer of the item, or a captive finance company;

ii) the retailer elects to claim an Internal Revenue Code section 179 deduction on the item as a depreciable business asset; or

iii) if the item is leased by the retailer, the aggregate gross receipts received from all leasing of the item by the retailer exceeds the retailer's selling price of the item.

B) Safe Harbor Rule. For items that are not excluded from the exemption under subsection (a)(1)(A), interim use will be deemed to occur if the retailer satisfies all of requirements of subsections (a)(1)(B)(i) through (vi):

i) The item is one of the following:

• listed in the retailer's records as part of inventory;

• not depreciated by the retailer under Internal Revenue Code section 167; or

• otherwise shown by the retailer's records, documents, or operations as available for sale during the interim use period.

ii) The period of use or lease of the item by the retailer is less than 24 months.

iii) The item is of the same general type of property sold by the retailer.

iv) The item is ultimately sold by the retailer.

v) If the retailer receives revenues from the lease of the same general type of property as the item for which interim use is claimed, then the annual total of such lease revenues must be less than the annual total of the sales revenues received from the property.

vi) If the item is leased under a lease agreement for more than 30 days, the lease agreement must contain a provision that, if the retailer locates a buyer for the item, the lease may be terminated within 7 days or the lessee may receive comparable property substituted by the retailer for the item within 7 days.

C) If the item is not excluded from the exemption under subsection (a)(1)(A) and does not fall under the safe harbor provisions of subsection (a)(1)(B) and, if the item is leased, the retailer is primarily a retailer as provided by subsection (a)(3), then the Department shall review all applicable and available facts to determine if the interim use exemption applies, including, but not limited to:

i) The retail sales history or records of the type of items in question.

ii) Inventory records.

iii) Advertising of the item and, if the item is a vehicle, any advertisements on the vehicle and at the location of the vehicle.

iv) Manufacturer's contract terms, conditions, discounts and rebates.

v) Length and location of use or lease prior to sale.

vi) Whether depreciation under Internal Revenue Code section 167 was taken by the retailer.

vii) Ownership and control documents, including but not limited to books, records, titles and insurance documents.

viii) If the item is leased, whether the contracts signed by lessee indicate the vehicle is available for recall, substitution allowance and sale during the lease period.

D) For purposes of this subsection (a)(1), the term "captive finance company" means a wholly owned subsidiary of a manufacturing company that finances wholesale or retail purchases from that manufacturing company.

2) To the extent provided by and limited under subsections (a) and (c), the leasing of tangible personal property by persons who are primarily engaged in the business of selling such property at retail is within the interim use exemption if the property is available for sale during the lease period. Except as to motor vehicles described in subsection (a)(4), the interim use exemption is not available to persons who purchase tangible personal property with the intent to engage in the business of leasing that property and who sell the property only as an incident to their leasing activity. Persons who are primarily engaged in the business of leasing motor vehicles may not claim an interim use exemption when purchasing motor vehicles for use in their business even though the lessors are subject to Retailers' Occupation Tax on the sale of used motor vehicles pursuant to 35 ILCS 120/1c. Motor vehicles of the first division, as defined in Section 1-146 of the Illinois Vehicle Code [625 ILCS 5/1-146], are exempt from Use Tax if the vehicles purchased are to be rented under lease terms of one year or less. (See 35 ILCS 105/3-5(10).)

3) In determining whether a taxpayer is "primarily" a retailer, the Department will examine only the activities of his Illinois operations. In addition, the Department will examine the activities of divisions of a corporate entity that are not separately registered with the Department. If divisions of a corporate entity are separately registered, however, their activities will not be examined in making this determination.

4) To the extent provided by and limited under subsection (a), the leasing of motor vehicles by motor vehicle dealers is within the interim use exemption if the leased motor vehicles are available for sale during the lease period. For example, many times motor vehicle dealers enter into leases of motor vehicles with lessees and simultaneously sell both those motor vehicles and leases to third parties. If a motor vehicle dealer enters into a lease of a motor vehicle with a lessee and simultaneously sells that motor vehicle to a third party, the interim use exemption is available to the dealer in regard to the purchase of the motor vehicle when it was purchased by the dealer for lease, provided that the motor vehicle is available for sale during the lease period. However, the dealer's sale of the motor vehicle, with or without the lease, to the third party is taxable and the third party incurs a Use Tax liability.

5) Until June 30, 2008, the leasing of motor vehicles by motor vehicle manufacturers to their employees is within the interim use exemption if the leased motor vehicles are carried as inventory on the books of the manufacturers or are otherwise available for sale during the lease period. Beginning on July 1, 2008 and thereafter, a manufacturer may claim the interim use exemption for tangible personal property leased to its employees, or otherwise used by its employees, only when the manufacturer is registered as a retailer and the use of that property would qualify under all of the requirements of this subsection (a) and subsection (c).

b) Demonstration Use Exemption

1) Except as provided in subsection (c), tangible personal property purchased for resale and used by its owner for demonstration purposes is not subject to Use Tax.

2) The leasing of tangible personal property by a retailer to prospective buyers for the purpose of allowing them to ascertain whether the property suits their particular needs and for the purpose of trying to induce them to buy the property is a use for demonstration purposes, except as provided in subsection (c).

3) The demonstration use exemption may not be claimed for tangible personal property purchased for resale that is consumed or destroyed in order to promote or demonstrate the product available for sale or is given away to a prospective customer as an inducement to make future purchases. For example, a retail grocer offering free samples of pizza to customers in his or her store in order to promote the sale of a new frozen pizza would not be able to claim a demonstration use exemption on his or her purchase price of the pizza consumed in the promotion.

4) A vendor may not claim a demonstration use exemption on the use of a competing product, not available for sale by that vendor, even though the vendor uses the competing product to assist in the demonstration of the product he or she sells. Nor may a vendor claim a demonstration use exemption on ancillary items used in the demonstration of a product (i.e., a microwave used to heat the pizza samples in the above example). The demonstration use exemption is available only to a vendor of the product being demonstrated.

c) Aircraft and Watercraft

For watercraft or aircraft, if the period of demonstration use or interim use by the retailer exceeds 18 months, the retailer shall pay Use Tax on the original cost price of the aircraft or watercraft, and no credit for that tax is permitted if the aircraft or watercraft is subsequently sold by the retailer. For purposes of this Section, the term "watercraft" means a Class 2, Class 3 or Class 4 watercraft as defined in Section 3-2 of the Boat Registration and Safety Act [625 ILCS 45/3-2], a personal watercraft, or any boat equipped with an inboard motor.

d) When the term "lease" is used in this Section, it is intended to also encompass the "rental" of tangible personal property.

(Source: Amended at 32 Ill. Reg. 17554, effective October 24, 2008)

Section 150.310 Exemptions to Avoid Multi-State Taxation

a) To prevent actual or likely multistate taxation, the tax imposed by the Act does not apply to the use of tangible personal property in this State under the following circumstances:

1) the use, in this State, of tangible personal property acquired outside this State by a nonresident individual and brought into this State by the individual for that individual's own use while temporarily within this State or while passing through this State; this includes stopping for fuel, energy, food, or overnight lodging in this State [35 ILCS 105/3-55(a)];

2) the use, in this State, by owners, lessors, or shippers of tangible personal property that is utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce as long as so used by the interstate carriers for hire, and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce [35 ILCS 105/3-55(c)] (See also 86 Ill. Adm. Code 130.340 for more information concerning this exemption as the same principles apply for use tax purposes);

3) the use, in this State, of tangible personal property that is acquired outside this State and caused to be brought into this State by a person who has already paid a tax in another state in respect to the sale, purchase, or use of that property, to the extent of the amount of the tax properly due and paid in the other state; for this purpose, state includes the District of Columbia [35 ILCS 105/3-55(d)];

4) the temporary storage, in this State, of tangible personal property that is acquired outside this State and that, after being brought into this State and stored here temporarily, is used solely outside this State or is physically attached to or incorporated into other tangible personal property that is used solely outside this State, or is altered by converting, fabricating, manufacturing, printing, processing, or shaping, and, as altered, is used solely outside this State [35 ILCS 105/3-55(e)];

5) the temporary storage in this State of building materials and fixtures that are acquired either in this State or outside this State by an Illinois registered combination retailer and construction contractor, and that the purchaser thereafter uses outside this State by incorporating that property into real estate located outside this State [35 ILCS 105/3-55(f)];

6) the use, in this State, of a vehicle for which a drive-away decal has been issued under the provisions of 86 Ill. Adm. Code 130.605(b)(1). However, beginning July 1, 2008, if the purchaser of a motor vehicle claims the exemption provided in Section 130.605(b)(1) and the motor vehicle is then used in this State for more than 30 days in a calendar year, the purchaser is liable for use tax on the purchase price of that motor vehicle, subject to credit for tax properly due and paid to any other state as provided in subsection (a)(3). [35 ILCS 105/3-55(h) and (h-1)] The assessment of tax under this subsection (a)(6) by the Department is limited to the period for which it may issue a notice of tax liability under the Use Tax Act.

7) Beginning July 1, 2007, the following exemptions described in subsections (a)(7)(A), (B), or (C) apply with respect to certain aircraft, as defined in Section 3 of the Illinois Aeronautics Act [620 ILCS 5]. [35 ILCS 105/3-55(h-2)(1-3)]

A) If the aircraft is purchased in this State, no tax is imposed if all of the following conditions are met:

i) the aircraft leaves this State within 15 days after the later of either the issuance of the final billing for the purchase of the aircraft or the authorized approval for return to service, completion of the maintenance record entry, and completion of the test flight and ground test for inspection as required by 14 CFR 91.407;

ii) the aircraft is not based or registered in this State after the purchase of the aircraft; and

iii) the purchaser provides the Department with a signed and dated certification, on a form prescribed by the Department, certifying that the requirements of this subsection (a)(7)(A) are met. The certificate must also include the name and address of the purchaser, the address of the location where the aircraft is to be titled or registered, the address of the primary physical location of the aircraft, and other information that the Department may reasonably require. [35 ILCS 105/3-55(h-2)(1)(A-C)]

B) If the aircraft is temporarily located in this State for the purpose of a prepurchase evaluation, no tax is imposed if all of the following conditions are met:

i) the aircraft is not based or registered in this State after the prepurchase evaluation; and

ii) the purchaser provides the Department with a signed and dated certification, on a form prescribed by the Department, certifying that the requirements of this subsection (a)(7)(B) are met. The certificate must also include the name and address of the purchaser, the address of the location where the aircraft is to be titled or registered, the address of the primary physical location of the aircraft, and other information that the Department may reasonably require. [35 ILCS 105/3-55(h-2)(2)(A-B)]

C) If the aircraft is temporarily located in this State for the purpose of a post-sale customization, no tax is imposed if all of the following conditions are met:

i) the aircraft leaves this State within 15 days after the authorized approval for return to service, completion of the maintenance record entry, and completion of the test flight and ground test for inspection, as required by 14 CFR 91.407;

ii) the aircraft is not based or registered in this State either before or after the post-sale customization; and

iii) the purchaser provides the Department with a signed and dated certification, on a form prescribed by the Department, certifying that the requirements of this subsection (a)(7)(C) are met. The certificate must also include the name and address of the purchaser, the address of the location where the aircraft is to be titled or registered, the address of the primary physical location of the aircraft, and other information that the Department may reasonably require. [35 ILCS 105/3-55(h-2)(3)(A-C)]

D) The exemption provided under subsections (a)(7)(B) and (C) does not apply to tax incurred on any service transactions performed on the aircraft.

E) For purposes of this subsection (a)(7):

"Based in this State" means hangared, stored, or otherwise used, excluding post-sale customizations as defined in this subsection (a)(7)(E), for 10 or more days in each 12-month period immediately following the date of the sale of the aircraft.

"Post-sale customization" means any improvement, maintenance, or repair that is performed on an aircraft following a transfer of ownership of the aircraft.

"Prepurchase evaluation" means an examination of an aircraft to provide a potential purchaser with information relevant to the potential purchase.

"Registered in this State" means an aircraft registered with the Department of Transportation, Aeronautics Division, or titled or registered with the Federal Aviation Administration to an address located in this State.

F) If tax becomes due under this subsection (a)(7) because of the purchaser's use of the aircraft in this State, the purchaser shall file a return with the Department and pay the tax on the fair market value of the aircraft. This return and payment of the tax must be made no later than 30 days after the aircraft is used in a taxable manner in this State. The tax is based on the fair market value of the aircraft on the date that it is first used in a taxable manner in this State. [35 ILCS 105/3-55(h-2)]

8) The use or purchase of tangible personal property by a common carrier by rail or motor that receives the physical possession of the property in Illinois, and that transports the property, or shares with another common carrier in the transportation of the property, out of Illinois on a standard uniform bill of lading showing the seller of the property as the shipper or consignor of the property to a destination outside Illinois, for use outside Illinois. [35 ILCS 105/3-55(g)]

b) Since exemptions described in subsections (a)(1), (3) and (4) do not exist as far as the Retailers' Occupation Tax Act is concerned, and since it would therefore serve no purpose to say that the exemptions exist for use tax purposes insofar as the seller is merely collecting use tax to reimburse the seller for retailers' occupation tax on the same transaction, the Department believes that the legislative intention in these references to the acquisition of tangible personal property outside this State was to make the references apply to cases in which the only tax liability that could be involved is use tax liability.

c) Therefore, exemptions described in subsections (a)(1), (3) and (4) would not apply except when the tangible personal property is acquired outside Illinois by the purchaser in such a way that there is no retailers' occupation tax liability on the part of the seller in the same transaction.

d) For information as to when sellers do or do not incur retailers' occupation tax liability when shipping the tangible personal property from outside Illinois, see 86 Ill. Adm. Code Part 131.

(Source: Amended at 48 Ill. Reg. 6836, effective April 24, 2024)

Section 150.311 Commercial Distribution Fee Sales Tax Exemption (Repealed)

(Source: Repealed at 42 Ill. Reg. 23143, effective November 29, 2018)

Section 150.315 Non-resident Exemptions

a) The Use Tax does not apply to the use, in this State, of tangible personal property which is acquired outside this State by a nonresident individual who then brings the property to this State for use here, and who shall have used the property outside this State for at least 3 months before bringing the property to this State.

b) Where a business that is not operated in Illinois, but which does operate in another state, is moved to Illinois or opens up an office, plant or other business facility in Illinois, such business shall not be taxed on its use, in Illinois, of used tangible personal property, other than items of tangible personal property that must be titled or registered with the State of Illinois or whose registration with the United States Government must be filed with the State of Illinois, that the business bought outside Illinois and used outside Illinois in the operation of such business for at least 3 months before moving such used property to Illinois for use here.

(Source: Amended at 24 Ill. Reg. 10728, effective July 7, 2000)

Section 150.320 Meaning of "Acquired Outside This State"

"Acquired outside this State", as used in the various tax exemption and tax credit provisions in the Use Tax Act, in addition to its usual and popular meaning, shall include the delivery, outside Illinois, of tangible personal property that is purchased in this State and delivered from a point in this State to the point of delivery outside this State.

(Source: Amended and effective March 12, 1976)

Section 150.325 Charitable, Religious, Educational, and Senior Citizens Recreational Organizations as Buyers

a) The use tax shall not apply to the use of tangible personal property purchased by a governmental body, corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, or educational purposes, or by a not-for-profit corporation, society, association, foundation, institution, or organization that has no compensated officers or employees and that is organized and operated primarily for the recreation of persons 55 years of age or older. A limited liability company may qualify for the exemption under this paragraph only if the limited liability company is organized and operated exclusively for educational purposes. [35 ILCS 105/3-5(4)]

b) On and after July 1, 1987, none of the entities noted in subsection (a) shall be entitled to make tax-free purchases at retail unless it has an active exemption identification number issued by the Department. [35 ILCS 105/3-5(4)]

(Source: Amended at 48 Ill. Reg. 6836, effective April 24, 2024)

Section 150.330 Governmental Bodies as Buyers

a) The Use Tax does not apply to purchases by governmental bodies. Effective March 17, 1965, purchases by State-chartered banks and by Federal and State savings and loan associations for use are subject to the Use Tax. Effective February 1, 1970, purchases by national banks for use are also subject to Use Tax, provided that such tax does not apply to property which is the subject matter of a written contract of purchase entered into by a national bank prior to September 1, 1969.

b) On and after July 1, 1987, no governmental bodies who would otherwise be able to make tax-free purchases at retail may make tax-free purchases at retail unless such governmental bodies have an active exemption identification number issued by the Department.

(Source: Amended at 14 Ill. Reg. 6835, effective April 19, 1990)

Section 150.331 Persons Who Lease Tangible Personal Property to Exempt Hospitals

a) Effective January 1, 1996 through December 31, 2000, and on and after August 2, 2001, computers and communications equipment utilized for any hospital purpose that are purchased by persons who lease those items to exempt hospitals are not subject to Use Tax. As noted in this subsection, the exemption is not available during the period January 1, 2001 through August 1, 2001 because it expired under the provisions of Section 3-90 of the Use Tax Act [35 ILCS 105/3-90] and was not reinstated until August 2, 2001. The exemption is otherwise available, provided that:

1) the computers and communications equipment described above must all be purchased for lease to a tax exempt hospital under a lease that has been executed or is in effect at the time of purchase;

2) the lease must be for a period of one year or longer; and

3) the lease must be to a hospital that has an active tax exemption identification number issued by the Department under Section 1g of the Retailers' Occupation Tax Act (see 86 Ill. Adm. Code 130.2007).

b) Effective January 1, 1996 through December 31, 2000, and on and after August 2, 2001, equipment, other than that specified in subsection (a), used in the diagnosis, analysis, or treatment of hospital patients that is purchased by persons who lease that equipment to exempt hospitals is not subject to Use Tax. As noted in this subsection, the exemption is not available during the period January 1, 2001 through August 1, 2001 because it expired under the provisions of Section 3-90 of the Use Tax Act [35 ILCS 105/3-90] and was not reinstated until August 2, 2001. The exemption is otherwise available, provided that:

1) the equipment described above must all be purchased for lease to a tax exempt hospital under a lease that has been executed or is in effect at the time of purchase;

2) the lease must be for a period of one year or longer; and

c) The purchaser must provide the certification described below to the seller.

1) When this exemption may be properly claimed on the purchase of computer or other communications equipment, the purchaser must give the seller a certification stating that the computer or other communications equipment is being purchased for lease to a tax exempt hospital under a lease for a period of one year or longer executed or in effect at the time of the purchase.

2) When this exemption may be properly claimed on the purchase of equipment used in the diagnosis, analysis, or treatment of hospital patients, the purchaser must give the seller a certification stating that the equipment is being purchased for lease to a tax exempt hospital under a lease for a period of one year or longer executed or in effect at the time of the purchase, and that the equipment is for use in the diagnosis, analysis, or treatment of hospital patients.

3) The certification described in subsections (c)(1) and (c)(2) of this Section must also contain all of the following:

A) The seller's name and address;

B) The purchaser's name and address;

C) A description of the tangible personal property being purchased;

D) The purchaser's signature and date of signing;

E) The name and address of the hospital and its tax exemption identification number issued by the Department; and

F) The date the lease was executed and the lease period.

d) For purposes of this Section, "hospital patients" means persons who seek any form of medical care including, but not limited to, medical treatment, testing, diagnosis, or therapy at a hospital or at another location under the control and supervision of a hospital. For example, persons who are sent by doctors for X-rays or other tests at qualifying hospitals, even though those persons are not admitted to those hospitals, are considered hospital patients.

e) If computers or other equipment are purchased by a lessor under the provisions of this Section and the computers or other equipment are used in a manner that does not qualify for the exemption or are used in any other non-exempt manner, the lessor is liable for the appropriate tax imposed under the Use Tax Act. Computers or other equipment being leased under qualifying leases that were entered into between January 1, 1996 and December 31, 2000 pursuant to the provisions of this Section continue to be exempt after January 1, 2001 until such time as the computers or other equipment is no longer being leased under those qualifying leases or is used in any other non-qualifying manner. In the event that the computers or other equipment is no longer leased in an exempt manner or is used in any other non-exempt manner, the amount of Use Tax liability incurred by the lessor is based on the fair market value of the computers or other equipment at the time the non-qualifying use occurred.

(Source: Amended at 26 Ill. Reg. 971, effective January 15, 2002)

Section 150.332 Persons Who Lease Tangible Personal Property to Governmental Bodies

a) Effective January 1, 1996 through December 31, 2000, and on and after August 2, 2001, sales of tangible personal property to a lessor who leases that property to a governmental body are not subject to Use Tax. As noted in this subsection, the exemption is not available during the period January 1, 2001 through August 1, 2001 because it expired under the provisions of Section 3-90 of the Use Tax Act [35 ILCS 105/3-90] and was not reinstated until August 2, 2001. The exemption is otherwise available, provided that:

1) the tangible personal property must be purchased for lease to a governmental body under a lease that has been executed or is in effect at the time of purchase;

2) the lease must be for a period of one year or longer; and

3) the lease must be to a governmental body that has an active tax exemption identification number issued by the Department under Section 1g of the Retailers' Occupation Tax Act (see 86 Ill. Adm. Code 130.2007).

b) When this exemption may be properly claimed, the purchaser must give the seller a certification stating that the property is being purchased for lease to a governmental body, under a lease of one year or longer executed or in effect at the time of the purchase, and containing all of the following:

1) The seller's name and address;

2) The purchaser's name and address;

3) A description of the tangible personal property being purchased;

4) The purchaser's signature and date of signing;

5) The name of the governmental body and its tax exemption identification number issued by the Department; and

6) The date the lease was executed and the lease period.

c) If the property is purchased by a lessor under the provisions of this Section and the property is used in a manner that does not qualify for the exemption or is used in any other non-exempt manner, the lessor is liable for the appropriate tax imposed under the Use Tax Act. The property being leased under qualifying leases that were entered into between January 1, 1996 and December 31, 2000 pursuant to the provisions of this Section continue to be exempt after January 1, 2001 until such time as the property is no longer being leased under those qualifying leases or is used in any other non-qualifying manner. In the event that the property is no longer leased in an exempt manner or is used in any other non-exempt manner, the amount of Use Tax liability incurred by the lessor is based on the fair market value of the property at the time the non-qualifying use occurred.

(Source: Amended at 26 Ill. Reg. 971, effective January 15, 2002)

Section 150.335 Game or Game Birds Purchased at Game Breeding and Hunting Areas or Exotic Game Hunting Areas

Beginning July 20, 1999, Use Tax shall not apply to game or game birds purchased at:

a) a game breeding and hunting preserve area licensed by the Department of Natural Resources (see Section 3.27 of the Wildlife Code [520 ILCS 5/3.27]);

b) an exotic game hunting area licensed by the Department of Natural Resources (see Section 3.34 of the Wildlife Code [520 ILCS 5/3.34]); or

c) a hunting enclosure approved through rules adopted by the Department of Natural Resources.

(Source: Added at 24 Ill. Reg. 10728, effective July 7, 2000)

Section 150.336 Fuel Brought into Illinois in Locomotives

Beginning July 29, 1999, Use Tax shall not apply to fuel acquired outside this State and brought into this State in the fuel supply tanks of locomotives engaged in freight hauling and passenger service for interstate commerce.

Section 150.337 Food, Drugs, Medicines and Medical Appliances When Purchased for Use by a Person Receiving Medical Assistance under the Illinois Public Aid Code (Repealed)

(Source: Repealed at 48 Ill. Reg. 6836, effective April 24, 2024)

Section 150.340 Manufacturing Machinery and Equipment; Production Related Tangible Personal Property; Department Determination of Amount of Exemption (Repealed)

(Source: Repealed at 42 Ill. Reg. 23143, effective November 29, 2018)

SUBPART D: COLLECTION OF THE USE TAX FROM USERS BY RETAILERS

Section 150.401 Collection of the Tax by Retailers From Users

a) Retailers who come within the definition of a "retailer maintaining a place of business in this State", as set out in Section 150.201(i) of this Part and in Section 2 of the Use Tax Act, and other retailers who are authorized to collect the Use Tax, shall collect the tax from users by adding the tax to the selling price of tangible personal property, when sold for use, in the manner prescribed in this Regulation and in Section 150.1305 of this Part.

b) Whenever possible and practicable, the Use Tax shall, when collected, be stated as a distinct item separate and apart from the selling price of the tangible personal property. However, for procedures for complying with this requirement under varying circumstances, see Section 150.1305 of this Part.

c) It will be assumed that the seller is not collecting the tax if he does not state it as a separate item from the selling price of the tangible personal property, unless the circumstances are such, as described in Section 150.1305 of this Part, as to warrant the public displaying of a sign stating that the selling price of the tangible personal property includes the Use Tax and the local Retailers' Occupation Tax when applicable.

d) In the case of sales of 13¢ or more through vending machines which do not provide for the collection of the tax as a separate item, it will be assumed that the retailer is collecting the tax by including it in the selling price of the tangible personal property if the retailer (through his advertising or other activities) does not do anything affirmatively to negative that assumption.

(Source: Amended at 5 Ill. Reg. 11072, effective October 6, 1981)

Section 150.405 Tax Collection Brackets

Retailers subject to any of the local taxes administered by the Department (e.g., Home Rule Municipal Retailers' Occupation Tax, Special County Retailers' Occupation Tax for Public Safety, Non-Home Rule Municipal Retailers' Occupation Tax, Home Rule County Retailers' Occupation Tax, Metro East Mass Transit District Retailers' Occupation Tax, County Water Commission Retailers' Occupation Tax, or Regional Transportation Authority Retailers' Occupation Tax or a combination thereof) may use the charts in Table A to determine tax for the appropriate combined rate of tax, or multiply the transaction amount by the appropriate combined rate of tax, rounding up to the nearest unit.

(Source: Amended at 24 Ill. Reg. 10728, effective July 7, 2000)

Section 150.410 Tax Collection Brackets for a 2 1/4% Rate of Tax (Repealed)