Section 694.101  Nature of the Non-Home Rule Municipal Service Occupation Tax

 

a)         Authority to Impose Tax

 

1)         Pursuant to the Non-Home Rule Municipal Service Occupation Tax Act [65 ILCS 5/8-11-1.4], the corporate authorities of a non-home rule municipality may impose, by ordinance or resolution adopted in the manner described in Section 8-11-1.1, a tax upon all persons engaged in the municipality in the business of making sales of service.  If imposed, the tax shall be imposed on the selling price of all tangible personal property transferred by such servicemen, either in the form of tangible personal property or in the form of real estate, as an incident to a sale of service.  The proceeds of the tax may be used for public infrastructure or for property tax relief or both, as defined in Section 8-11-1.2.

 

2)         The tax imposed may not be more than 1% and may be imposed only in ¼% increments.

 

3)         If the tax is approved by referendum on or after July 14, 2010, and before August 5, 2024, the corporate authorities of the non-home rule municipality may, until January 1, 2031, use the proceeds of the tax for expenditure on municipal operations, in addition to or in lieu of any expenditure on public infrastructure or for property tax relief.  If the tax is approved by ordinance or resolution adopted on or after August 5, 2024, the corporate authorities of the non-home rule municipality, may until January 1, 2031, use the proceeds of the tax for expenditure on municipal operations, in addition to or in lieu of any expenditure on public infrastructure or for property tax relief.  [65 ILCS 5/8-11-1.3]

 

4)         The tax may not be imposed on tangible personal property taxed at the 1% rate under the Service Occupation Tax Act [35 ILCS 115].  [65 ILCS 5/8-11-1.4]  For guidance on the types of tangible personal property taxed at the 1% rate, see 86 Ill. Adm. Code 130.310 and 130.311.

 

5)         Beginning December 1, 2019, this tax is not imposed on sales of aviation fuel unless the tax revenue is expended for airport-related purposes.  If a municipality does not have an airport-related purpose to which it dedicates aviation fuel tax revenue, then aviation fuel is excluded from the tax.  Each municipality must comply with the certification requirements for airport-related purposes under Section 2-22 of the Retailers' Occupation Tax Act.  [65 ILCS 5/8-11-1.4]  "Aviation fuel" means jet fuel and aviation gasoline.  [35 ILCS 115/9]  "Airport-related purposes" has the meaning ascribed in Section 6z-20.2 of the State Finance Act [30 ILCS 105].  This exclusion for aviation fuel only applies for so long the revenue use requirements of 49 U.S.C. 47107(b) and 49 U.S.C. 47133 are binding on the municipality.

 

6)         The tax imposed by a municipality pursuant to this Section and all civil penalties that may be assessed as an incident thereof shall be collected and enforced by the Department of Revenue.  [65 ILCS 5/8-11-1.4]

 

b)         Passing on the Tax

The legal incidence of the Non-Home Rule Municipal Service Occupation Tax is on the serviceman.  Nevertheless, the General Assembly has authorized persons subject to this tax to reimburse themselves for their serviceman's tax liability by separately stating such tax as an additional charge, which charge may be stated in combination, in a single amount, with State tax which servicemen are authorized to collect under the Service Use Tax Act [35 ILCS 110], pursuant to such bracket schedules the Department has prescribed.  [65 ILCS 5/8-11-1.4] (See 86 Ill. Adm. Code 150.Table A).

 

c)         Exclusion from "Selling Price"

Any amount added by a serviceman to the selling price of tangible personal property as an incident to service because of a Non-Home Rule Municipal Service Occupation Tax, the Service Occupation Tax, the Service Use Tax, or any other local occupation tax administered by the Department, shall not be regarded as a part of the selling price that is subject to such Non-Home Rule Municipal Service Occupation Tax.

 

(Source:  Amended at 49 Ill. Reg. 3312, effective February 26, 2025)

 

Section 694.105  Registration and Returns

 

a)         A serviceman's registration under the Service Occupation Tax Act [35 ILCS 115] or the Retailers' Occupation Tax Act [35 ILCS 120] is sufficient for the purposes of the Non-Home Rule Municipal Service Occupation Tax Act.  No special registration for a Non-Home Rule Municipal Service Occupation Tax is required.

 

b)         The information required for the Non-Home Rule Municipal Service Occupation Tax shall be furnished on the taxpayer's Service Occupation Tax return form.

 

c)         If applicable, aviation fuel tax returns shall be filed in accordance with Section 9 of the Service Occupation Tax Act and 86 Ill. Adm. Code 130.541 except that the retailer's discount is not allowed for taxes paid on aviation fuel that are subject to this revenue use requirement of 49 U.S.C. 47107(b) and 49 U.S.C. 47133.  [65 ILCS 5/8-11-1.4]  (See also 86 Ill. Adm. Code 694.101(a)(5)).

 

(Source:  Amended at 49 Ill. Reg. 3312, effective February 26, 2025)

 

Section 694.110  Claims to Recover Erroneously Paid Tax

 

Claims for Multiple Taxes.  If a claimant files a claim for refund on a transaction that was subject to State and local taxes administered by the Department, the claim need not be filed separately for each type of tax.  A single claim for the total of all applicable taxes will suffice. The claim will be audited, heard, or otherwise processed as a single claim whenever possible. A single credit memorandum will be issued that may be used by the claimant or his authorized assignee to pay State or local tax liability as authorized in 86 Ill. Adm. Code 140.1505(b)(1).

 

Section 694.115  Jurisdictional Questions

 

a)         When used in this Part, "municipal" and "municipality" mean a city, village, or incorporated town, including an incorporated town that has superseded a civil township.

 

b)         If the Illinois Service Occupation Tax on a transaction is being remitted to the Department by the serviceman, the serviceman shall also pay Non-Home Rule Service Occupation Tax to the Department on the same transaction if the serviceman's place of business is located in the municipality.

 

Section 694.120  Service Occupation Tax Regulations

 

To avoid needless repetition, the substance and provisions of all Service Occupation Tax regulations (86 Ill. Adm. Code 140) that are not incompatible with the Non-Home Rule Municipal Service Occupation Tax Act shall apply to the tax imposed pursuant to this Part.

 

Section 694.125  Penalties, Interest and Procedures

 

All penalties (both civil and criminal) and provisions concerning interest and procedures (such as the making of assessments, the venue and mode of conducting hearings, subpoenas, matters pertaining to judicial review and other procedural subjects), together with statutes of limitation, are the same under the Non-Home Rule Municipal Service Occupation Tax Act as under the Illinois Service Occupation Tax Act [35 ILCS 115].

 

Section 694.130  Ordinance Filing Deadlines; When Tax Rate Change Applies

 

a)         If an ordinance or resolution imposing the tax, discontinuing the tax, or effecting a change in the rate of tax under Section 8-11-1.1 of the Act is adopted, a certified copy of that ordinance or resolution shall be filed with the Department of Revenue, either:

 

1)         on or before the first day of April, whereupon the Department shall proceed to administer and enforce the ordinance as of the first day of July next following the adoption and filing; or

 

2)         on or before the first day of October, whereupon the Department shall proceed to administer and enforce the ordinance as of the first day of January next following the adoption and filing. [65 ILCS 5/8-11-1.1(c)]

 

b)         Until August 5, 2024, the effective date of P.A. 103-0781, in the case of the imposition of or increase in the tax rate, the corporate authorities must also file a certification that the ordinance or resolution received referendum approval.

 

c)         For purposes of determining which tax rate applies, the date of the sale of service is deemed to be the date of the delivery, to the user, of the tangible personal property that the serviceman retransfers as an incident to service.

 

(Source:  Amended at 49 Ill. Reg. 3312, effective February 26, 2025)