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 2 and 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)

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)

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

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).

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)

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)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.415  Tax Collection Brackets for a 2 1/2% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.420  Tax Collection Brackets for a 2 3/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.425  Tax Collection Brackets for a 3% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.430  Tax Collection Brackets for a 3 1/8% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.435  Tax Collection Brackets for a 3 1/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.440  Tax Collection Brackets for a 3 1/2% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.445  Tax Collection Brackets for a 3 3/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.450  Tax Collection Brackets for a 4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.455  Tax Collection Brackets for a 4 1/8% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.460  Tax Collection Brackets for a 4 1/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.465  Tax Collection Brackets for a 4 1/2% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.470  Tax Collection Brackets for a 4 3/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.475  Tax Collection Brackets for a 5% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.480  Tax Collection Brackets for a 5 1/8% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.485  Tax Collection Brackets for a 5 1/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.490  Tax Collection Brackets for a 5 1/2% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.495  Tax Collection Brackets for a 5 3/4% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.500  Tax Collection Brackets for a 6% Rate of Tax (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.505  Optional 1% Schedule (Repealed)

(Source:  Repealed at 8 Ill. Reg. 3704, effective March 12, 1984)

Section 150.510  Exact Collection of Tax Required When Practicable

The Use Tax should be collected exactly at the applicable rate whenever practicable.

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

Section 150.515  Prohibition Against Retailer's Representing That He Will Absorb The Tax

a)         It is unlawful for any retailer to advertise or hold out or state to the public or to any purchaser, consumer or user, directly or indirectly, that the Use Tax or any part thereof will be assumed or absorbed by the retailer or that it will not be added to the selling price of the property sold, or if added that it or any part thereof will be refunded other than when the retailer refunds the selling price and tax because of the merchandise being returned to the retailer or other than when the retailer credits or refunds the tax to the purchaser to support a claim filed with the Department under the Retailers' Occupation Tax Act or under the Use Tax Act.

b)         Any person violating any of the provisions of the law as explained in the preceding sentence is guilty of a misdemeanor and subject to the penalties provided in the Use Tax Act.

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

Section 150.520  Display of Tax Collection Schedule (Repealed)

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

Section 150.525  Methods for Calculating Tax on Sales of Items Subject to Differing Tax Rates (Repealed)

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

Section 150.601  Requirements

When a retailer collects the Use Tax from the purchaser, the retailer should give the purchaser a receipt for the tax so collected if the purchaser demands such a receipt, except as to motor vehicles and other items of tangible personal property which must be titled or registered under an Illinois law, but which cannot be so titled or registered without a Use Tax receipt or exemption determination from the Department.  The receipt should show the name and address of the retailer and the purchaser, the place and date of the purchase, a brief description of the property involved, the amount of the selling price (excluding the value of property taken in trade) on which the tax is based, the amount of the tax and the date when the tax was paid.

(Source:  Amended and effective March 4, 1963)

Section 150.701  When and Where to File a Return

a)         Purchases by Persons not Registered to File Returns

1)         Purchases from Retailers in Illinois.  If a purchaser who is not registered as a retailer under the Retailers' Occupation Tax Act purchases tangible personal property other than a motor vehicle, aircraft, watercraft, trailer, or cigarettes at retail from a retailer in Illinois, but does not pay the use tax to such retailer, the purchaser shall pay the use tax directly to the Department.  Except as provided in subsection (a)(3), such remittance to the Department shall be made by the last day of the month following the month in which the purchaser makes any payment on the selling price of the tangible personal property and shall be accompanied by a return on a form prescribed by the Department.

2)         Taxable Moment for Purchases Made Out-of-State from Retailers.  If a purchaser who is not registered as a retailer under the Retailers' Occupation Tax Act purchases tangible personal property other than a motor vehicle, aircraft, watercraft, trailer, or cigarettes out-of-State at retail from a retailer, but does not pay the use tax to such retailer, the liability for the tax imposed by the Act arises on the date such tangible personal property is brought into this State.  [35 ILCS 105/10]  The purchaser shall pay the use tax directly to the Department.  Except as provided in subsection (a)(3) of this Section, such remittance to the Department shall be made within 30 days after the tangible personal property purchased out-of-State is brought into Illinois and shall be accompanied by a return on a form prescribed by the Department.

3)         However, except as to motor vehicles and aircraft, and except as to cigarettes as defined in the Cigarette Use Tax Act, if the purchaser's annual use tax liability does not exceed $600, the purchaser may file the return on an annual basis on or before April 15^th of the year following the year use tax liability was incurred.  Individual purchasers with an annual use tax liability that does not exceed $600 may, in lieu of the filing and payment requirements in this Section, file and pay in compliance with Section 502.1 of the Illinois Income Tax Act.

4)         When tangible personal property, other than motor vehicles and trailers, is purchased by a lessor, under a lease for one year or longer, executed or in effect at the time of purchase to an interstate carrier for hire, who did not pay the tax imposed by the Act to the retailer, such lessor (by the last day of the month following the calendar month in which such property reverts to the use of such lessor) shall file a return with the Department and pay the tax upon the fair market value of such property on the date of such reversion.  (See Section 130.340(f)(5) and 130.340(g)(5)).  However, in determining the fair market value at the time of reversion, the fair market value of such property shall not exceed the original purchase price of the property that was paid by the lessor at the time of purchase.  Such return shall be filed on a form prescribed by the Department and shall contain such information as the Department may reasonably require.  Such return and payment from the purchaser shall be submitted to the Department sooner than the last day of the month after the month in which the purchase is made.  [35 ILCS 105/10]  This provision applies equally to owners, lessors, or shippers who purchase tangible personal property, other than motor vehicles and trailers, that is utilized by interstate carriers for hire as rolling stock.  For the treatment of an item purchased by a lessor for use as rolling stock other than in a situation where the item is under a lease for one year or longer, executed or in effect at the time of purchase to an interstate carrier for hire, see 86 Ill. Adm. Code 130.340.

5)         If cigarettes, as defined in the Cigarette Use Tax Act, are purchased from a retailer for use in this State by a purchaser who did not pay the tax imposed by the Act to the retailer, and a purchaser who does not file returns with the Department as a retailer under Section 9 of the Act, such purchaser must, within 30 days after acquiring the cigarettes, file a return with the Department and pay the tax upon that portion of the selling price so paid by the purchaser for the cigarettes.  When cigarettes, as defined in the Cigarette Use Tax Act, are purchased out-of-state from a retailer for use in this State by a purchaser who did not pay the tax imposed by the Act to the retailer, and a purchaser who does not file returns with the Department as a retailer under Section 9 of the Act, the liability for the tax imposed by the Act arises on the date such cigarettes are brought into this State.  The purchaser shall, within 30 days after such cigarettes are brought into this State, file with the Department, upon a form to be prescribed and supplied by the Department, a return for the cigarettes purchased.  [35 ILCS 105/10]

b)         A user who is liable to pay use tax directly to the Department only occasionally and not on a frequently recurring basis, and who is not required to file returns with the Department as a retailer under Section 9 of the Use Tax Act, or under the Retailers' Occupation Tax Act, or as a registrant with the Department under the Service Occupation Tax Act [35 ILCS 115] or the Service Use Tax Act [35 ILCS 110], need not register with the Department.  However, if such a user has a frequently recurring direct use tax liability to pay to the Department, such user is required to register with the Department on forms prescribed by the Department and to obtain and display a certificate of registration from the Department.  In that event, all of the provisions of Section 9 of the Act concerning the filing of regular monthly, quarterly or annual tax returns and all of the provisions of Section 2a of the "Retailers' Occupation Tax Act" concerning the requirements for registrants to post bond or other security with the Department, as the provisions of such sections now exist or may hereafter be amended, shall apply to such users.  [35 ILCS 105/10]

c)         In general, the provisions of Subpart E of the Retailers' Occupation Tax Regulations (86 Ill. Adm. Code 130) (including the authorization, under some circumstances, for quarterly tax returns and annual tax returns, but not the requirement of an annual information return) shall apply to returns of registered users under the Act.

d)         Also, registered users under the Act are subject to the provisions of the Retailers' Occupation Tax Regulations.

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

Section 150.705  Use Tax on Items that are Titled or Registered in Illinois

a)         Motor vehicles, as used in this Regulation, include passenger cars, trucks, busses, motorcycles, and any kind of vehicle which is required to be titled under the Illinois Vehicle Code [625 ILCS 5/1].

b)         Implement of husbandry means:

Every vehicle designed and adapted exclusively for agricultural, horticultural, or livestock raising operations, including farm wagons, wagon trailers or like vehicles used in connection therewith, or for lifting or carrying an implement of husbandry provided that no farm wagon, wagon trailer or like vehicle having a gross weight of more than 36,000 pounds, shall be included hereunder. [625 ILCS 5/1-130]

c)         Special mobile equipment means:

Every vehicle not designed or used primarily for the transportation of persons or property and only incidentally operated or moved over a highway, including but not limited to:  street sweepers, ditch digging apparatus, well boring apparatus and road construction and maintenance machinery such as asphalt spreaders, bituminous mixers, bucket loaders, tractors other than truck tractors, ditchers, levelling graders, finishing machines, motor graders, road rollers, scarifiers, earth moving carryalls and scrapers, power shovels and drag lines, and self-propelled cranes and earth moving equipment.  The term does not include house trailers, dump trucks, truck mounted transit mixers, cranes or shovels, or other vehicles designed for the transportation of persons or property to which machinery has been attached. [625 ILCS 5/1-191]

d)         For purposes of this Section, "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.  [35 ILCS 105/10]

e)         Where the purchaser is paying use tax directly to the Department with respect to a motor vehicle, watercraft, or aircraft, or with respect to an implement of husbandry or special mobile equipment as to which an optional certificate of title will be applied for to the Illinois Secretary of State, such payment shall be made separately from any other use tax liability, retailers' occupation tax liability, or other liability.  The return and tax remittance or proof of exemption from the tax that is imposed by the Act may be transmitted to the Department by way of the State agency with which, or State officer with whom, the tangible personal property must be titled or registered (if titling or registration is required) if the Department and such agency or State officer determine that this procedure will expedite the processing of applications for title or registration.

f)         With each return, the purchaser shall remit the proper amount of tax due (or shall submit satisfactory evidence that the sale is not taxable if that is the case), to the Department or its agents, whereupon the Department shall issue, in the purchaser's name, a tax receipt (or a certificate of exemption if the Department is satisfied that the particular sale is tax exempt) which such purchaser may submit to the agency with which, or State officer with whom, the purchaser must title or register the tangible personal property that is involved (if titling or registration is required) in support of such purchaser's application for an Illinois certificate or other evidence of title or registration to such tangible personal property.  When a purchaser pays a tax imposed by the Act directly to the Department, the Department (upon request therefor from such purchaser) shall issue an appropriate receipt to such purchaser showing that the purchaser has paid such tax to the Department.  Such receipt shall be sufficient to relieve the purchaser from further liability for the tax to which such receipt may refer.  [35 ILCS 105/10]  The same comments apply to an implement of husbandry or special mobile equipment for which an optional title is being sought.

g)         The receipt or certificate of exemption will be needed in securing an Illinois title to the watercraft from the Department of Natural Resources; or to the motor vehicle, implement of husbandry or special mobile equipment for which an optional title is being sought from the Illinois Secretary of State; or a certificate of registration for the aircraft from the Illinois Department of Transportation, Division of Aeronautics.

h)         When a purchaser pays the tax directly to the Department on a motor vehicle, watercraft, or aircraft, or on an implement of husbandry or special mobile equipment for which the purchaser is seeking an optional title, so that the tax is being paid on a transaction by transaction basis, the purchaser should also send the Department a copy of the bill of sale or dealer's invoice relating to such property for examination.

i)          In addition, beginning January 1, 2001, with respect to motor vehicles, aircraft, watercraft, and trailers (and implements of husbandry or special mobile equipment for which the purchaser intends to apply for an optional title), a purchaser of such tangible personal property for use in this State, who purchases such tangible personal property from an out-of-state retailer, shall file with the Department, not later than 30 days after such tangible personal property is brought into this State for use, upon a form prescribed and supplied by the Department, a return for each such item of tangible personal property purchased, except that if, in the same transaction,

1)         a purchaser of motor vehicles, aircraft, watercraft, or trailers who is a retailer of motor vehicles, aircraft, watercraft, or trailers purchases more than one motor vehicle, aircraft, watercraft, or trailer for the purpose of resale or

2)         a purchaser of motor vehicles, aircraft, watercraft, or trailers purchases more than one motor vehicle, aircraft, watercraft, or trailer for use as qualifying rolling stock (see 86 Ill. Adm. Code 130.340) as provided in Section 3-55 of the Act,

then the purchaser may report the purchase of all motor vehicles, aircraft, watercraft, or trailers involved in that transaction to the Department on a single return prescribed by the Department.  [35 ILCS 105/10]  For purposes of the exception in subsection (i)(2) above, purchasers may only report multiple purchases of items of like kind and character on a single return.  For example, purchasers may report the purchase of 15 motor vehicles on a single return. However, purchasers may not report the purchase of 10 trailers and 5 motor vehicles on a single return.  Such a purchase requires one return for the trailers and a second return for the motor vehicles.

j)          For information concerning the procedure to be followed in accounting for the tax when the purchaser buys a motor vehicle, watercraft, or aircraft (or an implement of husbandry or special mobile equipment for which the purchaser is going to apply for an optional title) at retail in Illinois and pays the tax to the retailer rather than directly to the Department, see 86 Ill. Adm. Code 130.540.

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

Section 150.710  Procedure in Claiming Exemption from Use Tax

When a purchaser does not incur any Use Tax liability with respect to a particular transaction due to its status as an exempt entity (e.g., the purchaser is a church, charity, school or governmental body that has applied for and obtained an exemption identification number, see Section 130.2007), it must provide its exemption identification number to the retailer at the time of making the purchase in order to document the exempt nature of the transaction.

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

Section 150.715  Receipt for Tax or Proof of Exemption Must Accompany Application for Title or Registration

a)         The purchaser of a motor vehicle, watercraft, aircraft, implement of husbandry or special mobile equipment if an optional title is being sought, should pay the entire Use Tax at the time of purchasing the property, even if the purchaser pays the selling price in installments, thus enabling the purchaser to secure the receipt necessary to show that he has paid the Use Tax in full when applying to the Secretary of State or Department of Natural Resources for a title, or to the Division of Aeronautics for a certificate of registration.

b)         An application for an Illinois certificate of title for any motor vehicle or watercraft (or implement of husbandry or special mobile equipment if an optional title is being applied for), or for an Illinois certificate of registration for any aircraft, whether purchased in Illinois or outside Illinois, and even if previously titled or registered in another state, must be accompanied by either an exemption determination from the Department of Revenue showing that no tax imposed pursuant to the Use Tax Act is owed by anyone with respect to such property, or a receipt from the Department of Revenue showing that any tax so imposed has been paid.

c)         In the absence of such a receipt for payment or determination of exemption from the Department, no certificate of title or certificate of registration, as the case may be, will be issued to such applicant.

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

Section 150.716  Display Certificates for House Trailers (Repealed)

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

Section 150.720  Issuance of Title or Registration Where Retailer Fails or Refuses to Remit Tax Collected by Retailer from User

No retailer's failure or refusal to remit tax hereunder shall preclude a user, who has paid the proper tax to the retailer, from obtaining his certificate of title or registration upon satisfying the Department that such user has paid the proper tax (if tax is due) to the retailer.

(Source:  Amended and effective December 5, 1974)

Section 150.725  Direct Payment of Tax by User to Department on Intrastate Purchase Under Certain Circumstances

If the user who would otherwise pay tax to the retailer wants the transaction reporting return filed and the payment of tax or proof of exemption made to the Department before the retailer is willing to take these actions and such user has not paid the tax to the retailer, such user may certify to the fact of such delay by the retailer and may (upon the Department being satisfied of the truth of such certification) transmit the information required by the transaction reporting return and the remittance for tax or proof of exemption directly to the Department and obtain his tax receipt or exemption determination, in which event the transaction reporting return and tax remittance (if a tax payment was required) shall be credited by the Department to the proper retailer's account with the Department, but without the 1.75% discount being allowed.  When the user pays the tax directly to the Department as aforesaid, he shall pay the tax in the same amount and in the same form in which it would be remitted if the tax had been remitted to the Department by the retailer.

(Source:  Amended at 15 Ill. Reg. 5861, effective April 5, 1991)

Section 150.730  Direct Reporting of Use Tax to Department by Registered Retailers

If the user who must remit the Use Tax directly to the Department is also a registered retailer either under the Retailers' Occupation Tax Act or under the Use Tax Act, he shall (except in the case of motor vehicles, watercraft, aircraft, or implements of husbandry or special mobile equipment for which such user intends to apply for an optional title, which are to be reported separately) report the Use Tax information in the space provided for that purpose on the return which he files as a retailer.

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

Section 150.801  When Out-of-State Retailers Must Register and Collect Use Tax

a)         A retailer who is registered under the Retailers' Occupation Tax Act need not obtain a separate Certificate of Registration under the Use Tax Act.  However, prior to January 1, 2025, a retailer maintaining a place of business in this State who is not registered under the Retailers' Occupation Tax Act, must apply to the Department for a Certificate of Registration to collect use tax on an application form furnished by the Department.  Each such retailer shall list with the Department the names and addresses of all the retailer's agents operating in this State and the location of any and all of the retailer's distribution houses, offices, or other places of business in this State. On and after January 1, 2025, all retailers maintaining a place of business in this State making retail sales to Illinois customers must register under the Retailers' Occupation Tax Act and incur State and local retailers' occupation tax on all retail sales to Illinois customers, including retail sales from locations outside of Illinois.

b)         For a definition of "retailer maintaining a place of business in this State", see Section 150.201 of this Part.

c)         Every retailer maintaining a place of business in this State must act as a use tax collector for this State.  Through December 31, 2024, examples of cases in which a retailer will be required to collect and remit use tax though not incurring any retailers' occupation tax liability with respect to the transaction are as follows:

1)         Retailers who have Illinois retail outlets subject to the Retailers' Occupation Tax Act are required to collect and remit use tax; as such, when the retailer ships tangible personal property to a purchaser in Illinois from inventory located outside Illinois via interstate mail that has no connection with the Illinois retail outlets, the retailer must still collect and remit use tax even though such completely interstate mail transactions are not subject to retailers' occupation tax. For tax imposition and sourcing on and after January 1, 2025, see subsection (d).

2)         Out-of-State retailers, who have any kind of place of business in Illinois or any kind of order-soliciting or order-taking representative either stationed in Illinois or coming into Illinois from time to time, must collect and remit use tax from Illinois purchasers for use even though the seller is not required to pay retailers' occupation tax when the seller does nothing in Illinois except to solicit orders. For tax imposition and sourcing on and after January 1, 2025, see subsection (d).

d)         On and after January 1, 2025, every retailer maintaining a place of business in this State incurs State and local retailers' occupation tax on all retail sales to Illinois customers, including retail sales from locations outside of Illinois and must continue to act as a Use Tax collector for this State. These retailers are allowed to retain the amount of Use Tax paid to reimburse themselves for their Retailers' Occupation Tax liability incurred on those sales. See 86 Ill. Adm. Code 150.130(b). Examples of cases in which a retailer will be required to collect and remit Use Tax while also incurring State and local retailers' occupation tax liability with respect to the transaction are as follows:

1)         Retailers maintaining a place of business in this State who have Illinois retail outlets subject to the Retailers' Occupation Tax Act are required to collect and remit Use Tax; as such, when the retailer ships tangible personal property to a purchaser in Illinois from inventory located outside Illinois via interstate mail that has no connection with the Illinois retail outlets, the retailer must collect and remit Use Tax and remit State and local retailers' occupation tax at the rate in effect at the Illinois location to which the tangible personal property is shipped or delivered or at which possession is taken by the purchaser on such mail transactions.

2)         Retailers maintaining a place of business in this State, who have any kind of place of business in Illinois or any kind of order-soliciting or order-taking representative either stationed in Illinois or coming into Illinois from time to time, must collect and remit Use Tax from Illinois purchasers for use and the retailer is to pay State and local retailers' occupation tax at the rate in effect at the Illinois location to which the tangible personal property is shipped or delivered or at which possession is taken by the purchaser.

e)         For rules regarding out-of-State retailers without a physical presence in this State prior to January 1, 2021, see Section 150.803, Wayfair Nexus – Nexus without Physical Presence – Provisions Controlling from October 1, 2018, through December 31, 2020.  For more information on tax remittance obligations based on economic nexus without physical presence on and after January 1, 2021, see the administrative rules implementing the Leveling the Playing Field for Illinois Retail Act at 86 Ill. Adm. Code Part 131.

(Source:  Amended at 49 Ill. Reg. 8640, effective June 13, 2025)

Section 150.802  Trade Show Appearances

a)         Except as provided in subsection (c), the presence of a remote retailer or its representative in Illinois to engage in trade show activities brings that retailer within the definition found in Section 2 of the Use Tax Act of a "retailer maintaining a place of business in this State".  As a result, the retailer is required to register with the Department and collect and remit Use Tax on all sales to Illinois purchasers. On and after January 1, 2025, all retailers maintaining a place of business in this State making retail sales to Illinois customers must register under the Retailers' Occupation Tax Act and incur State and local retailers' occupation tax on all retail sales to Illinois customers from locations outside of Illinois.

b)         Beginning January 1, 2021, remote retailers that meet a tax remittance threshold set out in 86 Ill. Adm. Code 131.115 and that qualify under the safe harbor provisions established in subsection (c) do not have physical presence.  As a result, such a remote retailer is required to register with the Department and remit all applicable State and local retailers' occupation taxes on all sales to Illinois purchasers. However, on and after January 1, 2025, remote retailers that meet a tax remittance threshold must register with the Department and remit all applicable State and local retailers' occupation taxes on all sales to Illinois purchasers regardless of whether they qualify under the safe harbor provisions established in subsection (c).

c)         Safe Harbor – Requirements.  The presence in Illinois of a remote retailer for purposes of engaging in trade show activities will not result in the determination that the retailer has physical presence if the retailer meets each of the following 3 conditions:

1)         The retailer attends no more than 2 Illinois trade shows during the preceding 12-month period.

2)         The retailer is physically present at those 2 Illinois trade shows for an aggregate total of no more than 8 days during the preceding 12-month period.  For purposes of calculating the 8 days, the Department will apply the following criteria:

A)        Days during which a retailer is present in Illinois but is not engaged in activity related to the trade show will not count toward the 8-day limit. For example, a retailer arrives in Illinois on the day before a trade show begins and stays in a hotel the night before the trade show.  The day before the trade show begins will not count as one of the 8 days.  Similarly, if a retailer stays in Illinois as a tourist for 3 days after the trade show, those 3 days will not count toward the 8 days.

B)        It does not matter whether the retailer has one representative at the Illinois trade show or more than one representative at the Illinois trade show.  In both situations, each day of the trade show only counts as one of the 8 days.

C)        Any portion of a day that a retailer is physically present at an Illinois trade show counts as a whole day.  For example, if the only representative at the trade show leaves the trade show after one hour, that hour counts as a whole day.

D)        Days spent setting up displays prior to a trade show and days spent tearing down displays after a trade show do not count toward the 8 days.

3)         Combined gross receipts from sales made subject to Retailers' Occupation Tax at all Illinois trade shows during the preceding 12-month period do not exceed $10,000 (see subsection (f)). 

d)         For purposes of this Section, a representative need not be an agent.  It does not matter that a representative may engage in business on his or her own account in other transactions, nor that he or she may act as a representative for other persons in other transactions.  Similarly, it does not matter that a representative is not an employee but is an independent contractor acting as a representative.  The term "representative" is broader than the term "employee" and includes anyone acting under the seller's authority.

e)         "Trade show activity" means any activity, traditionally conducted at conventions, trade shows or similar meetings, whose purpose is, in whole or part, to create, maintain or enhance a business market in Illinois.  "Trade show activity" includes activities to attract persons in an industry generally, as well as members of the public, to the trade show for the purpose of displaying industry products or to stimulate interest in and demand for industry products or services, or to educate persons engaged in the industry in the development of new products and services. 

f)         Sales made by retailers at an Illinois trade show are subject to Retailers' Occupation Tax, including applicable local taxes, regardless of whether the retailer falls within the safe harbor for Use Tax collection or of the amount of gross receipts from sales at the trade show.  For rules regarding liability for Retailers' Occupation Tax and applicable local taxes, see 86 Ill. Adm. Code 270.115.  Retailers making retail sales at Illinois trade shows must be registered under the Retailers' Occupation Tax Act and must file all returns required under that Act (see 86 Ill. Adm. Code 130.501).  Remote retailers who have not met a tax remittance threshold set out in 86 Ill. Adm. Code 131.115 that are subject to Retailers' Occupation Tax as a result of sales of tangible personal property made at trade shows may comply with their return and payment obligations by completing a Special Event Tax Collection Report and Payment Coupon Form.  Event coordinators generally distribute this form to event participants; if they fail to do so, however, retailers may contact the Department directly to obtain this form.  The Special Event Tax Collection Report and Payment Coupon Form may only be utilized by retailers attending no more than 2 trade shows for an aggregate total of no more than 8 days during any calendar year.  Retailers exceeding this limit must register with the Department and file returns on a regular basis.

g)         EXAMPLE 1:  An athletic clothing and shoe retailer located outside Illinois maintains a display booth at a sports and fitness exposition that runs for 2 days immediately prior to the Chicago Marathon.  Attendance at the expo is the only activity of the retailer in Illinois during the previous 12 months.  At the expo, the retailer displays new merchandise to race participants, provides information to local athletic stores regarding its product line, and distributes promotional materials such as t-shirts, hats, and other gear.  The retailer also makes sales at the expo totaling $20,000.  Presence at the expo creates nexus for the retailer.  While the retailer only attends one trade show for less than 8 days, its sales total more than $10,000.  As a result, the retailer has not met all 3 requirements necessary for safe harbor.  Prior to January 1, 2025, its presence at the expo requires it to collect Use Tax on sales made into Illinois from its out-of-State location.  Additionally, on and after January 1, 2025, its presence at the expo requires the retailer to remit State and local retailers' occupation tax on sales made into Illinois from its out-of-State location. As explained in subsection (f), all sales ($20,000) made at the trade show by the retailer are subject to Retailers' Occupation Tax.

EXAMPLE 2:  An out-of-State flooring manufacturer who has not met a tax remittance threshold set out in 86 Ill. Adm. Code 131.115 attends 2 trade shows in Illinois each year for the purpose of exhibiting its products to builders, contractors, and the general public.  Seven employees of the manufacturer attend each show and are physically present for a combined total of 10 days.  The employees are present for 2 of the 10 days for purposes of setting up and tearing down displays.  No sales are made at the trade shows.  The manufacturer's attendance at the trade shows meets all 3 requirements for safe harbor.  Consequently, the manufacturer has not established physical presence in Illinois through its trade show activity and is not considered a retailer maintaining a place of business in this State. As such, the manufacturer is not required to collect Use Tax and does not incur retailers' occupation tax liability on sales into Illinois from its out-of-State location.

EXAMPLE 3:  A remote retailer holds its annual management meeting in Chicago.  The purpose of the meeting is to provide orientation for new managers, instruct managers about new company policies and procedures, and conduct team building exercises.  The purpose of the annual meeting is not to create, maintain or enhance a business market in Illinois.  Consequently, the meeting does not constitute a trade show, and the retailer's presence in Illinois for these purposes does not create tax collection or remittance obligations.

EXAMPLE 4:  A tech company developing mobile voting apps using blockchain technology sends 3 interns to Chicago to attend a trade show.  While there, they talk to different vendors about new developments in the field.  The tech company is not engaging in "trade show activities" merely by sending interns as visitors to the trade show.

EXAMPLE 5:  Company A sends a representative to a trade show to present a seminar promoting the benefits and upcoming availability of its newest biotech product.  Presentation of the seminar constitutes a trade show activity, and if other activities of Company A fall outside the safe harbor rules in subsection (c), nexus for tax collection and remittance is established.

EXAMPLE 6:  Company Z hosts a booth at a trade show.  It displays its products, answers inquiries about the products and collects orders for the products that will be finalized and fulfilled several weeks later at its corporate headquarters in New York.  Company Z's activities constitute trade show activities and if its other activities fall outside the safe harbor rules in subsection (c), nexus for tax collection and remittance is established.

(Source:  Amended at 49 Ill. Reg. 8640, effective June 13, 2025)

Section 150.803  Wayfair Nexus – Nexus Without Physical Presence – Provisions Controlling from October 1, 2018 through December 31, 2020

a)         Background.  The concept of nexus in Illinois has evolved as a result of several court cases and legislation enacted over time. This Section 150.803 specifically describes economic nexus without any physical presence in Illinois and Use Tax collection and remittance obligations associated with that nexus beginning on October 1, 2018. However, beginning January 1, 2021, Public Acts 101-0031 and 101-0604 implemented a series of structural changes to the Illinois sales tax laws requiring remote retailers without physical presence in Illinois who meet a tax remittance threshold in subsection (b)(1) to register with the Department and remit all applicable State and local retailers’ occupation taxes administered by the Department, in addition to their existing requirement to collect and remit Use Tax as provided in this Section. As a result, beginning January 1, 2021, these remote retailers’ primary tax obligation is Retailers’ Occupation Tax. For more information on tax remittance obligations based on economic nexus without physical presence on and after January 1, 2021, see the administrative rules implementing the Leveling the Playing Field for Illinois Retail Act at 86 Ill. Adm. Code 131.

b)         An out-of-State retailer making sales to Illinois purchasers from locations outside Illinois is required to register with the Department and collect and remit Use Tax on those sales if it falls within the definition of a "retailer maintaining a place of business in this State" in Section 2 of the Use Tax Act [35 ILCS 105].  The Department is authorized to require these retailers to act as tax collectors because they have established sufficient contacts, or nexus, with Illinois.  There are two groups of out-of-State retailers that must collect Use Tax on sales to Illinois purchasers:

1)         Out-of-State Retailers With a Physical Presence in Illinois. Prior to October 1, 2018, out-of-State retailers must have a physical presence in Illinois before they can be required to collect Use Tax.  The types of activities constituting a physical presence, as limited by the series of court cases described in this subsection (b)(1), are found in Section 2 of the Use Tax Act's definition of a "retailer maintaining a place of business in this State".  (See 35 ILCS 105/2).  The physical presence requirement was established in a series of United States Supreme Court decisions.  See, for example, Scripto v. Carson, 362 U.S. 207 (1960); National Bellas Hess v. Department of Revenue of the State of Illinois, 386 U.S. 753 (1967); Quill Corporation v. North Dakota, 504 U.S. 298 (1992).  In 1996, the Illinois Supreme Court ruled that remote retailers need only "more than the slightest" physical presence to be required to collect Use Tax.  See Brown's Furniture v. Wagner, 171 Ill. 2d 410 (1996).  Any out-of-State retailer that has a physical presence in Illinois will continue to be required to act as a Use Tax collector.  Regulations describing these types of retailers are found at 86 Ill. Adm. Code 150.801 and 150.802. 

2)         Beginning October 1, 2018, Out-of-State Retailers Without a Physical Presence in Illinois.  In South Dakota v. Wayfair, Inc., No. 17-494 (U.S. June 21, 2018), the U.S. Supreme Court upheld a South Dakota statute that imposed tax collection obligations on out-of-State retailers that met specific selling thresholds but had no physical presence in the state.  This decision abrogated the longstanding physical presence requirement of Quill, deeming it "unsound and incorrect".  Illinois P.A. 100-0587 enacted nexus standards, effective October 1, 2018, that are virtually identical to those upheld in Wayfair.  This Section explains the requirements for "Wayfair nexus" in Illinois. 

NOTE: The provisions of this Section do not apply to out-of-State retailers with a physical presence in Illinois. However, if an out-of-State retailer loses physical presence nexus, it must evaluate whether it has Wayfair nexus pursuant to subsection (c).

c)         Wayfair Nexus.  P.A. 100-0587 requires out-of-State retailers with no physical presence in Illinois to register and to collect and remit Use Tax, as provided in this subsection (c):

1)         Beginning October 1, 2018, a retailer making sales of tangible personal property to purchasers in Illinois from outside of Illinois must register with the Department and collect and remit Use Tax if:

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

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

2)         A retailer shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets either of the criteria of subsection (c)(1) for the preceding 12-month period.  If the retailer meets either of the criteria of subsection (c)(1) for a 12-month period, he or she is considered a retailer maintaining a place of business in Illinois and is required to collect and remit the Use Tax and file returns for one year.  

A)        At the end of that one-year period, the retailer shall determine whether he or she met either of the criteria of subsection (c)(1) during the preceding 12-month period.  If the retailer met either of the criteria in subsection (c)(1) for the preceding 12-month period, he or she is considered a retailer maintaining a place of business in Illinois and is required to collect and remit Use Tax and file returns for the subsequent year.

B)        If, at the end of a one-year period, a retailer that was required to collect and remit the Use Tax determines that he or she did not meet either of the criteria in subsection (c)(1) during the preceding 12-month period, the retailer shall subsequently determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets either of the criteria of subsection (c)(1) for the preceding 12-month period. [35 ILCS 105/2(9)]

d)         Out-of-State Retailers Who Lose Physical Presence Nexus. If an out-of-State retailer loses its physical presence nexus with Illinois, that retailer must first determine whether it has Wayfair nexus under subsection (c) prior to ceasing its collection and remittance of Use Tax. To determine if it has met a tax remittance threshold, the retailer must review its sales for the preceding 12-month period beginning with the last day of the most recently passed quarter (March, June, September, and December). If an out-of-State retailer loses its physical presence nexus and determines it meets a tax remittance threshold as established in subsection (c), it must maintain its registration with the Department and continue to collect and remit Use Tax for the remainder of the one-year period that begins on the first day following the 12-month lookback period in which it met a tax remittance threshold. If January 1, 2021, falls during this one-year period, the retailer must collect and remit only Use Tax for all sales made through December 31, 2020. Beginning January 1, 2021, this retailer must remit State and local retailers’ occupation tax on all sales for the remainder of that one-year period. See “Background” in subsection (a) and 86 Ill. Adm. Code 131.115. For periods beginning January 1, 2021 or after, for administrative purposes, if a retailer loses physical presence nexus in the middle of a quarter, and determines that it has Wayfair nexus as discussed above, the retailer must maintain its registration with the Department and continue to collect and remit Use Tax until the end of the current month. Beginning on the first day of the following month, the retailer must register to remit State and local retailers’ occupation tax for the remainder of the one-year period that begins on the first day following the 12-month lookback period in which it met a tax remittance threshold.

Example 1: Out-of-State Retailer A loses its physical presence nexus with Illinois on February 15, 2019. To determine if it meets a threshold in subsection (c)(1), Out-of-State Retailer A reviews its sales for the 12-month period beginning January 1, 2018, through December 31, 2018. The retailer determines it has met a threshold. Out-of-State Retailer A must register and begin collecting and remitting Use Tax based on its Wayfair nexus on March 1, 2019 and continue to collect and remit Use Tax until December 31, 2019.

Example 2: Out-of-State Retailer B loses its physical presence nexus with Illinois on February 15, 2021. To determine if it meets a threshold in subsection (c)(1), Out-of-State Retailer B reviews its sales for the 12-month period beginning January 1, 2020, through December 31, 2020. The retailer determines it has met a threshold. Out-of-State Retailer B must continue to collect and remit Use Tax through the end of February 2021 and must register as a remote retailer and begin remitting State and local retailers’ occupation tax on March 1, 2021 and continue to remit State and local retailers’ occupation tax through December 31, 2021.

e)         Preliminary Evaluation of Applicability of this Section.  This Section is not applicable to the specific types of out-of-State retailers described in subsections (e)(1) and (e)(2).  Out-of-State retailers are cautioned to first evaluate these provisions to determine whether they must proceed to calculate the thresholds under subsection (e)(3). 

1)         This Section applies only to out-of-State retailers who do not have a physical presence in Illinois.  While out-of-State retailers may believe they do not have a physical presence in Illinois, they must carefully examine their activities in making this determination.  Many times, such retailers actually do have a physical presence in Illinois because they maintain inventory in Illinois from which sales are filled.  When sales made to Illinois purchasers are filled from Illinois inventory, these retailers incur Retailers' Occupation Tax liability on those sales.  The presence of inventory in Illinois creates physical presence nexus for these out-of-State retailers with respect to sales they make from outside Illinois that are not filled from their Illinois inventory.  As a result of this physical presence nexus, they are required to collect Use Tax on sales made to Illinois purchasers from outside Illinois that are not filled from their Illinois inventory.  Out-of-State retailers that engage in these types of selling are not subject to this Section because they already have nexus through their physical presence in Illinois.

A)        Through December 31, 2020, out-of-State retailers who are making sales through a marketplace and whose inventory is in the possession of a marketplace facilitator in Illinois and is used to fulfill sales made over a marketplace have physical presence in Illinois. This is because the out-of-State retailer is considered to be the retailer with respect to these sales. See 86 Ill. Adm. Code 150.804(i)(4).

B)        Beginning January 1, 2021, remote retailers whose only inventory is in the possession of a marketplace facilitator in Illinois and is used exclusively to fulfill sales made over a marketplace that meets a tax remittance threshold do not have physical presence in Illinois.  This is because the marketplace facilitator is considered the retailer with respect to all sales made over the marketplace beginning January 1, 2021.  See 86 Ill. Adm. Code 131.105 for definitions.

2)         This Section does not apply to out-of-State retailers who exclusively make nontaxable sales (i.e., 100% of their sales to Illinois purchasers are exempt). 

EXAMPLE:  If Out-of-State Retailer A's only activities are sales of exempt manufacturing machinery and equipment to Illinois manufacturers, it is not required to register with the Department.  If Out-of-State Retailer A makes any taxable sales, however, this Section applies and it must determine whether it meets either of the thresholds in subsection (c)(1) and is required to collect Use Tax; the rules provided in subsection (e)(3)(E)(i) through (v) must be applied when making this determination.  For example, for purposes of determining if it has met the thresholds under subsection (c)(1), the manufacturer must include its exempt sales as provided in subsection (e)(3)(E)(v).

3)         Calculation of the Number of Separate Transactions or Amount of Gross Receipts.  Wayfair nexus is created if an out-of-State retailer's cumulative gross receipts from sales of tangible personal property to purchasers in Illinois are $100,000 or more, or if it enters into 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois.  

A)        "Gross receipts" means all the consideration actually received for a sale by the out-of-State retailer.  See 86 Ill. Adm. Code 130.401 for additional information regarding gross receipts.  Subsection (e)(3)(E) of this Section describes the types of transactions for which gross receipts must be included or excluded for purposes of determining if the threshold under subsection (c)(1)(A) is met.

B)        "Illinois purchaser" means a person in Illinois who, through a sale at retail, acquires the ownership of tangible personal property for a valuable consideration.  [35 ILCS 105/2]

C)        "Entering into a sale" occurs when an out-of-State retailer has taken action that binds it to a sale.  This may occur even though the tangible personal property that has been sold has not yet shipped to the purchaser. 

EXAMPLE:  On August 20, 2018, an out-of-State retailer takes actions binding it to a sale that is scheduled for shipment on October 15.  This sale must be included in the calculation used to determine the retailer's sales transactions for its initial lookback period (see subsection (f)(1)).

D)        "Separate transactions" means sales transactions that are documented on separate invoices, regardless of the manner in which the tangible personal property is delivered to the purchaser. 

EXAMPLE 1:  A purchaser orders 12 items of clothing from an out-of-State retailer.  He receives an invoice confirming his order of 12 items.  However, due to a back order, 3 of the clothing items are shipped separately from the other 9 items.  Shipment of the 3 back-ordered items, even with a separate shipping invoice, is not considered a separate transaction because the original transaction was invoiced as one sale. 

EXAMPLE 2:  A purchaser places an order of home repair tools at 8:00 a.m. from an out-of-State retailer.  She receives an invoice confirming her order at 8:15 a.m.  At 2:00 p.m., the purchaser realizes she needs 5 other tools to complete the job and orders these tools from the same out-of-State retailer.  The out-of-State retailer confirms this order with a separate invoice.  In this example, two different transactions have occurred.  This is the case, even if the retailer sends all the ordered tools to the purchaser in one package.

EXAMPLE 3:  A mother places an order with Company B for care packages to be delivered to her son's dormitory at 8 scheduled intervals during the school year.  Each delivery is separately invoiced.  These are counted as 8 separate transactions.

E)        Out-of-State retailers must apply the following rules governing whether a transaction should be included or excluded when determining if they meet either of the thresholds in subsection (c)(1):

i)          Sales for resale must be excluded.  (See 86 Ill. Adm. Code 130.201.)

EXAMPLE:  Out-of-State Retailer A makes sales of seedlings to Company B.  Company B provides a resale certificate indicating that 60% of the seedlings will be sold to customers at retail (a purchase for resale) and that it will use 40% of the seedlings in its landscaping business (a purchase for use). If Out-of-State Retailer A calculates the threshold using gross receipts, it should include only 40% of the gross receipts.  If it calculates the threshold using transactions, however, the entire transaction with Company B must be included. 

ii)         Sales of tangible personal property that is required to be registered with an agency of this State, including motor vehicles, watercraft, aircraft, and trailers, that are made from locations outside Illinois to Illinois purchasers must be excluded.  Taxes on these items will continue to be paid, as required by Section 10 of the Use Tax Act, by purchasers as a condition of titling or registering these items.

iii)        Occasional sales must be excluded.  (See 86 Ill. Adm. Code 130.110.)  Occasional sales are not considered sales at retail.  For example, a retailer that engages in selling computers and software over the Internet closes a regional office in Michigan.  As part of that closure, it sells its office furniture and printing equipment on an Internet marketplace platform.  Transactions and gross receipts from these sales are excluded from the calculation because they are not considered sales at retail.  

iv)        Sales made by an out-of-State retailer that are subject to Retailers' Occupation Tax must be excluded.  For example, sales made by an out-of-State retailer at an Illinois trade show that are subject to Retailers' Occupation Tax are excluded for purposes of calculating the thresholds in subsection (c)(1).  

v)         All sales of tangible personal property, other than those excluded by this subsection (e)(3)(E), even if they are exempt from tax, must be included for purposes of calculating the thresholds in subsection (c)(1). 

f)         Determination of Obligation to Begin Tax Collection on October 1, 2018; Determination of Obligation to Continue Tax Collection

1)         In order to determine if it is required to begin collecting Use Tax on October 1, 2018 for sales made on and after October 1, 2018, an out-of-State retailer must examine its selling activities for the period September 1, 2017 through August 31, 2018.  If it met either of the thresholds in subsection (c)(1) during this period, it must register with the Department and collect Use Tax for a one-year period on sales made to Illinois purchasers on and after October 1, 2018.  Filing frequency may be monthly or quarterly, as provided in accordance with regulations at 86 Ill. Adm. Code 130.501 (monthly filing applies when a retailer's average monthly tax liability exceeds $200) and 130.502 (quarterly filing applies when a retailer's average monthly tax liability does not exceed $200).  For monthly filers, the first return for sales made in October 2018 is due on or before November 20, 2018.  

2)         At the end of the one-year collection period in subsection (f)(1), the out-of-State retailer must examine its sales for the year it collected Use Tax. If it determines its sales to Illinois purchasers met either of the thresholds in subsection (c)(1) during that year, it must continue to collect taxes for another year.  The out-of-State retailer must make this analysis each year thereafter that it is required to collect Use Tax.

3)         Alternatively, if, at the end of the one-year collection period in subsection (f)(1), the out-of-State retailer determines that its sales to Illinois purchasers did not meet either of the thresholds in subsection (c)(1) during that year, it may discontinue acting as a Use Tax collector. 

A)        The Department strongly recommends that out-of-State retailers continue collecting the Use Tax as a courtesy to their Illinois purchasers, as those purchasers will still incur a Use Tax liability that they must otherwise self-assess and remit directly to the Department.  Out-of-State retailers may change their filing frequency with the Department at this time in accordance with 86 Ill. Adm. Code 130.501 (monthly, as noted in subsection (d)(1) of this Section), 130.502 (quarterly, as noted in subsection (d)(1) of this Section), or 130.510 (annual filing applies if a retailer's average monthly tax liability does not exceed $50).  

B)        If an out-of-State retailer is no longer required to collect Use Tax and chooses to discontinue collection, it must notify the Department.  

C)        If an out-of-State retailer is no longer required to collect Use Tax and has chosen to discontinue collection, it must redetermine, on a rolling quarterly basis, whether it is obligated to once more begin collecting Use Tax.  For each quarter ending on the last day of March, June, September, and December, the out-of-State retailer must examine its sales for the immediately preceding 12-month period to determine whether it met either of the thresholds in subsection (c)(1).  If it met either of those thresholds during that 12-month lookback period, it must collect Use Tax for the following 12-month period.  At the end of that 12-month period, it must examine its sales as provided in subsections (f)(2) and (f)(3) to determine if it must continue to collect tax.  

g)         Determination of Tax Collection Obligation of Out-of-State Retailers that First Begin Making Sales On and After October 1, 2018.  Out-of-State retailers that first begin making sales to Illinois purchasers on and after October 1, 2018 must determine, on a quarterly basis, whether they are obligated to begin collecting tax.  For each quarter ending on the last day of March, June, September, and December, the out-of-State retailer must examine its sales for the immediately preceding 12-month period to determine whether it met either of the thresholds in subsection (c)(1).  If it met either of those thresholds during that 12-month lookback period, it must collect Use Tax for the following 12-month period.  At the end of that 12-month period, it must examine its sales as provided in subsections (f)(2) and (f)(3) to determine if it must continue to collect tax.

EXAMPLE 1:  Out-of-State Retailer A makes sales to Illinois customers beginning on November 1, 2019.  At the end of December (its first quarterly period), it calculates that it made 500 sales transactions to Illinois purchasers.  As a result, it is required to collect taxes on sales to Illinois purchasers for a one-year period beginning January 1, 2020 through December 31, 2020.  On December 31, 2020, it must examine its sales to Illinois purchasers for the one-year lookback period beginning January 1, 2020 through December 31, 2020, to determine if it must continue to collect tax.

EXAMPLE 2:  Out-of-State Retailer A makes sales to Illinois customers beginning on December 1, 2019.  At the end of December 2019 (its first quarterly period), it calculates that it has not met the selling thresholds for the previous 12-month period.  Out-of-State Retailer A is not required to begin collecting taxes at this time.  At the end of March 2020 (its next quarterly period), however, it determines that it made $200,000 in sales for the preceding 12-month period.  As a result, it is required to collect Use Tax on sales to Illinois purchasers for a one-year period beginning April 1, 2020 through March 31, 2021.  On March 31, 2021, it must examine its sales to Illinois purchasers for the one-year lookback period beginning April 1, 2020 through March 31, 2021 to determine if it must continue to collect tax.

h)         Affected Out-of-State Retailers. Out-of-State retailers are advised to closely examine all their activities to determine if they are required to register under the nexus standards of P.A. 100-0587.  For instance, out-of-State retailers that voluntarily collect Use Tax may become mandatory Use Tax collectors.  Other out-of-State retailers, such as telephone, television and catalog sellers, may be required to register and collect and remit Use Tax on sales to Illinois purchasers.  Other types of out-of-State retailers that may be required to register could include: 

1)         out-of-State retailers without physical presence in Illinois who make sales to Illinois purchasers using a traditional drop-ship arrangement.  (See 86 Ill. Adm. Code 130.225.)

2)         out-of-State retailers without physical presence who make sales to Illinois purchasers using an Internet marketplace prior to January 1, 2020 platform.

3)         out-of-State retailers that meet the "safe harbor" rules for trade shows, but who may nonetheless meet the Wayfair thresholds.  (See 86 Ill. Adm. Code 150.802.)

EXAMPLE:  Retailer A operates a booth at a trade show and meets the "safe harbor" rules for trade show attendance.  Prior to October 1, 2018, it would not be required to collect Use Tax on sales made from outside Illinois to Illinois purchasers because it is not considered to have a physical presence in Illinois.  On August 1, 2018, however, it determines that it has met the thresholds under this Section for collecting Use Tax on sales made from outside Illinois to Illinois customers.  Beginning October 1, 2018, it is required to collect and remit Use Tax on all sales to Illinois purchasers. 

NOTE:  It must also remit Retailers' Occupation Tax on any sales it makes to purchasers at an Illinois trade show.  (See Section 150.802(f).) 

4)         Internet Auctioneers.  86 Ill. Adm. Code 130.1915 provides additional information regarding the tax liability of auctioneers.

i)          Tax Collection.  Once an out-of-State retailer determines it has nexus, it must register with the Department and collect and remit Use Tax on the sales it makes to Illinois purchasers from its out-of-State location.  Such out-of-State retailers are subject to all provisions of the Use Tax Act and regulations promulgated under that Act.  (See 86 Ill. Adm. Code 150.)

1)         Sales made to purchasers by out-of-State retailers from out-of-State locations are subject to the State 6.25% Use Tax (1% for qualifying low-rate items; see 86 Ill. Adm. Code 130.310 and 130.311).

2)         Illinois tax statutes do not authorize local jurisdictions, except for the City of Chicago, to impose Use Tax on general merchandise (the tax imposed by the City of Chicago is collected by the City of Chicago and not by the Department).  As a result, there is no local Use Tax for out-of-State retailers to collect on returns filed with the Department.

3)         Illinois tax statutes only authorize local jurisdictions to impose occupation taxes upon retailers who are engaged in the business of selling tangible personal property within that jurisdiction.  Activities that constitute "engaging in the occupation of selling tangible personal property" are described in Department regulations (see, 86 Ill. Adm. Code 270.115).  Typical examples include brick and mortar stores making over-the-counter sales.  Retailers that engage in selling tangible personal property in Illinois are subject to the 6.25% State Retailers' Occupation Tax and any applicable local occupation taxes.

j)          Tax Distribution – Differences in Distribution of Use Tax and Retailers' Occupation Tax

1)         Use Tax remitted by out-of-State retailers is distributed differently than Retailers' Occupation Tax and local occupation taxes.  The 1.25% local share of the State 6.25% Use Tax is deposited into the State and Local Sales Tax Reform Fund (see 30 ILCS 105/6z-17).  After amounts are transferred to the Tax Compliance and Administration Fund, specific percentages are allocated to the City of Chicago, the Regional Transportation Authority Occupation and Use Tax Replacement Fund, and the Madison County Mass Transit District.  Next, specific amounts are transferred into the Build Illinois Fund.  The remainder of the monies are transferred into the Local Government Distributive Fund [30 ILCS 115], from which they are distributed to all municipalities and counties (except for Chicago, which is distributed as described in this subsection (j)(1)) based upon the population of each municipality or county in proportion to the total State population. 

2)         In contrast, the 1.25% local share of the 6.25% State Retailers' Occupation Tax, as well as the entire amount of locally-imposed occupation taxes, are distributed to the local taxing jurisdiction in which the selling occurred.  The location in which selling occurs is determined in accordance with Department regulations (see, 86 Ill. Adm. Code 270.115).

(Source:  Amended at 47 Ill. Reg. 2142, effective January 24, 2023)

Section 150.804  Marketplace Facilitators – Provisions Controlling from January 1, 2020 through December 31, 2020

a)         Definitions

"Affiliate" or "Affiliated with" means a person that, with respect to another person:

has a direct or indirect ownership interest of more than 5% in the other person; or

is related to the other person because a third person, or a group of third persons who are affiliated with each other, holds a direct or indirect ownership interest of more than 5% in the related person.

"Marketplace" means a physical or electronic place, forum, platform, application, or other method by which a marketplace seller sells or offers to sell tangible personal property.  Examples of marketplaces include, but are not limited to:

auctions, internet marketplace platforms on which tangible personal property is offered for sale;

antique malls;

home shopping networks selling tangible personal property over television, cable, or satellite networks; or

consignment shops selling tangible personal property on behalf of numerous persons.

"Marketplace facilitator" means a person who, pursuant to an agreement with an unrelated third-party marketplace seller, directly or indirectly through one or more affiliates facilitates a sale by an unrelated third-party marketplace seller by performing both of the activities outlined in subsection (c)(1).

"Marketplace seller" means a person that sells or offers to sell tangible personal property through a marketplace operated by an unrelated third-party marketplace facilitator.  (Section 2d of the Act)

"Retail sales".  For purposes of this Section, all sales made through a marketplace by a marketplace facilitator on behalf of unrelated third-party marketplace sellers are considered sales made by a retailer at retail.  

"Unrelated third party", for purposes of this Section, means a person that, with respect to another person, has a direct or indirect ownership interest of 5% or less in the other person.  A person is also considered to be an unrelated third party when a third person, or group of third persons who are affiliated with each other, hold a direct or indirect ownership interest of 5% or less in the other person.

b)         General Provisions Applicable from January 1, 2020 through December 31, 2020; Tax Collection

1)         Scope of Regulations – Preliminary Considerations 

A)        This Section 150.804 applies to marketplace facilitators and marketplace sellers from January 1, 2020 through December 31, 2020.  Beginning January 1, 2021, provisions of Public Act 101-0604 and Public Act 101-0031 take effect and modify the tax obligations of marketplace facilitators and marketplace sellers.  Beginning January 1, 2021, marketplace facilitators who meet a tax remittance threshold in subsection (d) are required to remit State and local retailers’ occupation tax and are no longer subject only to Use Tax collection. Such marketplace facilitators are considered Illinois retailers for all sales made through the marketplace. For further information on the application of the Retailers’ Occupation Tax Act to marketplace facilitators, see 86 Ill. Adm. Code 131.130, 131.135, 131.140, and 131.145.

B)        The provisions of this Section apply when the only tax required to be remitted to the Department by marketplace facilitators for sales made on behalf of marketplace sellers through the marketplace is Use Tax.  A marketplace facilitator is considered the retailer for those sales and must register, collect Use Tax from purchasers, and remit that Use Tax to the Department. 

C)        Marketplace facilitators are not considered the retailer for sales made on behalf of marketplace sellers through the marketplace that are subject to Retailers' Occupation Tax.  Marketplace sellers are considered the retailer for those sales.  The manner in which these transactions may be handled is set out in subsection (i). 

D)        Marketplace facilitators and marketplace sellers are not required to remit tax on sales of tangible personal property that is required to be registered with an agency of this State, including motor vehicles, watercraft, aircraft, and trailers, that are made from locations outside Illinois to Illinois purchasers.  Taxes on these items will continue to be paid, as required by Section 10 of the Use Tax Act [35 ILCS 105], by purchasers as a condition of titling or registering these items.

EXAMPLE 1:  Ponchos for Pooches makes sales of rain gear for dogs through an internet marketplace that meets the requirements of subsection (d).  The rain gear is handmade in Portland, Oregon and then shipped directly to Illinois purchasers.  Beginning on January 1, 2020, the marketplace facilitator, rather than Ponchos for Pooches, is considered the retailer of the rain gear and must collect and remit Use Tax to the Department. 

EXAMPLE 2:  Sales made to Illinois purchasers by Ponchos for Pooches have skyrocketed.  As a result, the company now has several employees located in Illinois, and the rain gear those employees produce is inventoried in a warehouse located in Kankakee.  Sales to Illinois purchasers are frequently shipped from the Kankakee warehouse.  Any sales fulfilled from inventory in the Kankakee warehouse are subject to Retailers' Occupation Tax, including local occupation taxes, because the property sold is located in the inventory of Ponchos for Pooches in Kankakee at the time of sale.  (See, for example, 86 Ill. Adm. Code 270.115.)  Through December 31, 2020, the marketplace facilitator is no longer considered the retailer for these sales.  Ponchos for Pooches is liable for Retailers' Occupation Tax on these sales and must register with the Department to remit Retailers' Occupation Tax on those sales.  In this example, the marketplace facilitator has decided to collect all taxes due from purchasers on these sales (including any local occupation tax reimbursements) and transmits them to Ponchos for Pooches.  Ponchos for Pooches then remits Retailers' Occupation Tax on these sales to the Department.  In this situation, the marketplace facilitator is held harmless for tax on amounts collected and remitted to Ponchos for Pooches. 

2)         Tax Collection: On and after January 1, 2020, except as provided in subsections (b)(1)(C) and (i)(4), every marketplace facilitator that meets either of the thresholds in subsection (d) is considered the retailer for each retail sale of tangible personal property made on behalf of marketplace sellers through its marketplace.  The marketplace facilitator must register with the Department and collect and remit any Use Tax due for marketplace sales made on behalf of marketplace sellers to Illinois purchasers.  The obligations of marketplace facilitators are more fully explained in subsection (h).  However, beginning January 1, 2021, State and local retailers’ occupation taxes are due on all sales made through a marketplace (see subsection (b)(1)(A)).

c)         Determination of Status as a Marketplace Facilitator

1)         A person is considered a marketplace facilitator if he or she, pursuant to an agreement with an unrelated third-party marketplace seller, directly or indirectly through one or more affiliates facilitates a sale by an unrelated third-party marketplace seller by doing both of the following:

A)        listing or advertising for sale by the marketplace seller, in a marketplace, tangible personal property that is subject to tax under the Act; and  

B)        either directly or indirectly, through agreements or arrangements with third parties, collecting payment from the customer and transmitting that payment to the marketplace seller regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services. (Section 2d of the Act)

2)         A marketplace facilitator must indicate to purchasers on its marketplace that the tangible personal property is being sold on behalf of an identified marketplace seller.  If the marketplace seller is not identified to the purchaser on the marketplace, then, for tax collection and remittance purposes, the marketplace facilitator is considered the seller of the tangible personal property.  If none of the tangible personal property sold over a marketplace is identified to purchasers on the marketplace as tangible personal property sold on behalf of an identified marketplace seller, the requirements of subsection (c)(1)(A) are not met.  (See EXAMPLE 5.)

EXAMPLE 1:  Carabibi, a social media network, provides a forum in which persons using the network can buy and sell used tangible personal property.  Carabibi functions solely as an advertising platform bringing buyers and sellers together.  Once the buyer and seller have contacted each other over the network, they must negotiate the sale and make payment arrangements themselves.  While the forum provided by Carabibi constitutes a marketplace as defined in subsection (a), Carabibi is not considered a marketplace facilitator because it does not engage in the activities described in subsection (c)(1)(B).

EXAMPLE 2:  Paymate is a payment processing business appointed by merchants to handle payment transactions from various channels, such as credit cards and debit cards.  Its sole activity with respect to marketplace sales is to handle financial transactions between two parties on the marketplace.  Paymate is not a marketplace facilitator because it does not engage in the activities described in subsection (c)(1)(A).

EXAMPLE 3:  CouponCrowd operates an online platform that sells coupons that can be redeemed by purchasers at various retail stores that have contracted with CouponCrowd to promote their businesses.  CouponCrowd lists the coupons for sale, sells the coupons to purchasers, and processes payment for the purchase of the coupons.  CouponCrowd is not a marketplace facilitator.  The sale of a coupon is the sale of an intangible, not the sale of tangible personal property.  Marketplace facilitators must engage in facilitating sales of tangible personal property. 

EXAMPLE 4:  Mandameal is an online and mobile food-ordering and delivery service.  It works with a variety of partner restaurants by listing meals available for purchase and delivery.  Customers place food orders using Mandameal, which then processes payments for the purchased meals and delivers the orders.  Although Mandameal is considered a marketplace facilitator because it engages in each of the activities in subsection (c)(1), the provisions of this Section do not apply to it because the tax liability incurred for sales made using Mandameal is Retailers' Occupation Tax liability, not Use Tax liability.  In this example, the business model and contract used by Mandameal demonstrate that liability for sales made over the platform is properly placed on the partner restaurants.  Consequently, the partner restaurants must be registered as retailers and remit Retailers' Occupation Tax to the Department for all sales made using Mandameal.  Even if the business model and contract used by Mandameal demonstrates that the liability for the sales made over the platform is instead properly placed on Mandameal, the provisions of this Section would still not apply, since the liability that Mandameal would incur in this case is Retailers' Occupation Tax liability, not Use Tax liability.

EXAMPLE 5:  Visualeyes operates a specialized online marketplace that sells various brands of contact lenses to purchasers.  Visualeyes makes purchases for resale from various suppliers of the contact lenses offered for sale on its marketplace.  Its marketplace does not indicate to purchasers using the marketplace that the sales are made on behalf of any identified marketplace sellers.  In this example, Visualeyes is not a marketplace facilitator.  It is simply an online retailer making its own sales of contact lenses.  Whether it is required to collect and remit taxes depends upon whether it has sufficient nexus with Illinois.  (See, for example, Section 150.803.)

d)         Marketplace Facilitators – Determination of Obligation to Collect and Remit Tax.  A marketplace facilitator, as defined in subsection (c)(1), must collect and remit Use Tax on all sales through the marketplace and is considered the retailer for each retail sale of tangible personal property made through its marketplace on behalf of marketplace sellers (except as provided in subsections (b)(1)(C) and (i)(4)) if either of the following thresholds is met:

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

2)         The marketplace facilitator and marketplace sellers selling through the marketplace cumulatively enter into 200 or more separate transactions through the marketplace for the sale of tangible personal property to purchasers in Illinois. (Section 2d of the Act)

e)         A marketplace facilitator shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether it meets the threshold of subsection (d)(1) or (2) for the preceding 12-month period.  If the marketplace facilitator meets the threshold of either subsection (d)(1) or (2) for a 12-month period, it is considered a retailer maintaining a place of business in Illinois and is required to collect and remit the Use Tax and file returns for one year for all sales made over its platform.

1)         At the end of that one-year period, the marketplace facilitator shall determine whether it met the threshold of either subsection (d)(1) or (2) during the preceding 12-month period.  If the marketplace facilitator met the threshold of either subsection (d)(1) or (2) for the preceding 12-month period, it is considered a retailer maintaining a place of business in Illinois and is required to collect and remit Use Tax (or, on and after January 1, 2021, Retailers’ Occupation Tax (see subsection (b)(1)(A))) and file returns for the subsequent year for all sales made over its platform.

2)         If, at the end of a one-year period, a marketplace facilitator that was required to collect and remit the Use Tax (or, on and after January 1, 2021, Retailers’ Occupation Tax (see subsection (b)(1)(A))) determines that it did not meet the threshold of either subsection (d)(1) or (2) during the preceding 12-month period, the 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 subsection (d)(1) or (2) for the preceding 12-month period. (Section 2d of the Act)

f)         "Gross Receipts" and "Separate Transactions" Defined.  The following definitions must be applied by a marketplace facilitator when determining if it meets either of the thresholds in subsection (d):

1)         "Gross receipts" means all the consideration actually received for a sale by a marketplace seller.  (See 86 Ill. Adm. Code 130.401 for additional information regarding gross receipts.) Subsection (g) describes what kinds of transactions must be included or excluded when determining whether the threshold based on gross receipts in subsection (d)(1) is met.

2)         "Illinois purchaser" means a person in Illinois who, through a sale at retail, acquires the ownership of tangible personal property for a valuable consideration.  (See Section 2 of the Act, definition of "Purchaser".)

3)         "Entering into a sale" occurs when a marketplace seller has taken action that binds it to a sale.  This may occur, even though the tangible personal property that has been sold has not yet shipped to the purchaser.

EXAMPLE:  On December 15, 2019, a marketplace seller takes actions binding it to a sale that is scheduled for shipment on January 15, 2020.  This sale must be included in the calculation used to determine the marketplace facilitator's sales transactions for its initial lookback period under subsection (e).

4)         "Separate transactions" means sales transactions that are documented on separate invoices, regardless of the manner in which the tangible personal property is delivered to the purchaser.

EXAMPLE 1: A purchaser orders 12 items of clothing from a marketplace seller.  He receives an invoice confirming his order of 12 items.  However, due to a back order, 3 of the clothing items are shipped separately from the other 9 items.  Shipment of the 3 back-ordered items, even with a separate shipping invoice, is not considered a separate transaction because the original transaction was invoiced as one sale.

EXAMPLE 2: A purchaser places an order of home repair tools at 8:00 a.m. from a marketplace seller.  She receives an invoice confirming her order at 8:15 a.m.  At 2:00 p.m., the purchaser realizes she needs 5 other tools to complete the job and orders these tools from the same marketplace seller.  The marketplace seller confirms this order with a separate invoice.  In this example, two different transactions have occurred.  This is the case, even if the marketplace seller sends all the ordered tools to the purchaser in one package.

EXAMPLE 3: A mother places an order with Marketplace Seller B for care packages to be delivered to her son's dormitory at 8 scheduled intervals during the school year.  Each delivery is separately invoiced.  These are counted as 8 separate transactions.

g)         Transactions that are included or excluded in determining if either of the thresholds in subsection (d) are met.  A marketplace facilitator must apply the following provisions in determining whether a transaction should be included or excluded for purposes of determining if it meets either of the thresholds in subsection (d):

1)         Sales for resale must be excluded.  (See 86 Ill. Adm. Code 130.201.)

EXAMPLE:  Marketplace Seller A makes a sale of seedlings to Company B over a marketplace.  Company B provides a resale certificate indicating that 60% of the seedlings will be sold to customers at retail (a purchase for resale) and that it will use 40% of the seedlings in its landscaping business (a purchase for use). If the marketplace facilitator calculates its threshold using gross receipts, it should include only 40% of the gross receipts from this sale.  If it calculates its threshold using transactions, however, the entire transaction with Company B must be included.

2)         Sales of tangible personal property that is required to be registered with an agency of this State, including motor vehicles, watercraft, aircraft, and trailers, that are made from locations outside Illinois to Illinois purchasers must be excluded.  Taxes on these items will continue to be paid, as required by Section 10 of the Act, by purchasers as a condition of titling or registering these items.

3)         Sales made through the marketplace on behalf of a marketplace seller or by a marketplace facilitator that are subject to Retailers' Occupation Tax must be excluded.  For example, sales made through a marketplace on behalf of a marketplace seller that are filled from inventory located in an Illinois warehouse are excluded for purposes of calculating the thresholds in subsection (d).

4)         All sales of tangible personal property, other than those excluded by this subsection (g), even if they are exempt from tax, must be included for purposes of calculating the thresholds in subsection (d).

h)         Obligations of Marketplace Facilitators

1)         A marketplace facilitator shall enter into an agreement with each of its marketplace sellers to facilitate sales of tangible personal property by that marketplace seller.  The agreement shall contain a certification by the marketplace facilitator that, except as provided in subsection (i), the marketplace facilitator assumes the rights and duties of a retailer under the Act with respect to collection and remittance of Use Tax on all sales made by the marketplace seller through the marketplace. (Section 2d(d) of the Act) The marketplace facilitator shall maintain the agreement in its books and records for review and inspection upon demand by the Department.

2)         A marketplace facilitator must maintain books and records containing the name, address and FEIN of all marketplace sellers making sales through its marketplace and provide those records to the Department upon demand.

3)         A marketplace facilitator shall collect Use Tax as required by Section 3-45 of the Act for all sales made through its marketplace, based on information provided by marketplace sellers.  However, marketplace facilitators are not required to collect tax on sales of tangible personal property that is required to be registered with an agency of this State, including motor vehicles, watercraft, aircraft, and trailers, that are made from locations outside Illinois to Illinois purchasers.  Taxes on these items will continue to be paid, as required by Section 10 of the Act, by purchasers as a condition of titling or registering these items.  When Retailers' Occupation Tax is incurred on a sale made through the marketplace on behalf of a marketplace seller, a marketplace facilitator may, as provided in subsection (i), collect Use Tax from the purchaser, along with any local tax reimbursements, and transmit it to the marketplace seller for remittance to the Department as Retailers' Occupation Tax. 

4)         A marketplace facilitator shall register with the Department and file returns in accordance with procedures required by the Act. 

5)         A marketplace facilitator shall maintain for review and inspection upon demand by the Department books and records for all sales made through a marketplace on behalf of marketplace sellers consistent with the requirements in Section 11 of the Use Tax Act.

6)         A marketplace facilitator shall file a separate return for its own sales made over the marketplace, apart from the return for sales made through the marketplace on behalf of marketplace sellers.

7)         An affiliate of a marketplace facilitator shall file its own return for sales it makes over the marketplace provided it is a retailer maintaining a place of business in this State pursuant to Section 2 of the Act. 

8)         If, for any reason, the Department is prohibited from enforcing the marketplace facilitator's duty under the Act to collect and remit taxes pursuant to this Section, the duty to collect and remit such taxes reverts to the marketplace seller that is a retailer maintaining a place of business in this State pursuant to Section 2 of the Act. (Section 2d(l) of the Act)

i)          Obligations of Marketplace Sellers

1)         A marketplace seller shall furnish to the marketplace facilitator information that is necessary for the marketplace facilitator to correctly collect and remit Use Tax on each retail sale.  The information may include a certification that an item being sold is taxable, not taxable, exempt from taxation, or taxable at a specified rate. (Section 2d(f) of the Act)

2)         Books and Records.  Each marketplace seller shall maintain books and records for all sales made through a marketplace in accordance with the requirements of the Act.  Each marketplace seller shall furnish those books and records to the marketplace facilitator upon the reasonable request of the marketplace facilitator.

3)         A marketplace seller that makes sales to Illinois purchasers in addition to those made through a marketplace must determine if it is required to separately register and collect and remit Use Tax on those sales.  If the marketplace seller is a "retailer maintaining a place of business in this State" under Section 2 of the Act, it is required to separately register and remit Use Tax on those sales to Illinois purchasers.  In determining if it has Wayfair nexus (see 86 Ill. Adm. Code 150.803), neither the gross receipts from nor the number of separate transactions for sales of tangible personal property to purchasers in Illinois that a marketplace seller makes through a marketplace facilitator and for which it has received a certification from the marketplace facilitator as provided in Section 2d of the Act shall be included for purposes of determining whether it meets the Wayfair thresholds. (Section 2d of the Act) 

4)         A marketplace seller must separately register and remit tax on all sales of tangible personal property, including those made over a marketplace, that result in Retailers' Occupation Tax.  For sales made over the marketplace that result in Retailers' Occupation Tax, the marketplace seller is considered the retailer and must remit tax on those sales as provided in the Retailers' Occupation Tax Act, as well as applicable local occupation taxes.  The marketplace facilitator is not considered the retailer with respect to those sales.

5)         If a marketplace seller is required to remit Retailers' Occupation Tax for sales to Illinois purchasers made through a marketplace, the marketplace facilitator is authorized to collect all taxes due from the purchaser on those sales, including local tax reimbursements, and transmit them to the marketplace seller for remittance to the Department as Retailers' Occupation Tax.  If a marketplace facilitator collects and transmits tax in this manner, it is not liable for tax on amounts so collected and remitted. 

j)          Hold Harmless Provisions

1)         A marketplace seller shall be held harmless for liability for the collection and remittance of Use Tax when a marketplace facilitator fails to correctly collect and remit tax after having been provided with information by a marketplace seller to correctly collect and remit tax.

2)         If a marketplace facilitator demonstrates to the satisfaction of the Department that its failure to correctly collect and remit Use Tax on a sale resulted from its good faith reliance on incorrect or insufficient information provided by a marketplace seller, it shall be relieved of liability for the tax on that sale.  In this case, a marketplace seller is liable for any resulting Use Tax due.

k)         Nothing in this Section affects the tax liability of a purchaser.  If the tax is not collected and remitted as required, the purchaser shall remit the Use Tax to the Department.

(Source:  Amended at 47 Ill. Reg. 2142, effective January 24, 2023)

Section 150.805  Voluntary Registration by Certain Out-of-State Retailers

The Department may, in its discretion, upon application, authorize the collection of the Use Tax by any retailer not maintaining a place of business within this State within the meaning of the Use Tax Act and Subpart B of this Part.  Such retailer shall be issued, without charge, a permit to collect such tax.  When so authorized, it shall be the duty of such retailer to collect the tax upon all tangible personal property sold to his knowledge for use within this State, in the same manner and subject to the same requirements, as a retailer maintaining a place of business within this State.

(Source:  Amended and effective November 21, 1967)

Section 150.810  Incorporation by Reference

In general, the provisions of Subpart G of the Retailers' Occupation Tax Regulations (86 Ill. Adm. Code 130) shall apply to all registrations under the Use Tax Act.

(Source:  Amended and effective November 21, 1967)

Section 150.901  When and Where to File

a)         Every retailer required or authorized to collect use tax must file a return each month by the twentieth day of the month covering the preceding calendar month, except when the retailer is authorized to file tax returns on a quarterly or annual basis as hereinafter provided.  The Department has combined the retailers' use tax return form with the retailers' occupation tax return form.

b)         On and after January 1, 2018, (except for returns required to be filed prior to January 1, 2023 for motor vehicles, watercraft, aircraft, and trailers that are required to be registered with an agency of this State), with respect to retailers whose annual gross receipts average $20,000 or more, all returns required to be filed pursuant to the Act shall be filed electronically. On and after January 1, 2023, with respect to retailers whose annual gross receipts average $20,000 or more, all returns required to be filed pursuant to the Act, including, but not limited to, returns for motor vehicles, watercraft, aircraft, and trailers that are required to be registered with an agency of this State, shall be filed electronically. Retailers who demonstrate that they do not have access to the Internet or demonstrate hardship in filing electronically may petition the Department to waive the electronic filing requirement.

c)         Where such tangible personal property is sold under a conditional sales contract, or under any other form of sale wherein the payment of the principal sum, or a part thereof, is extended beyond the close of the period for which the return is filed, the retailer, in collecting the tax (except as to motor vehicles, watercraft, aircraft, and trailers that are required to be registered with an agency of this State), may collect for each tax return period, only the tax applicable to that part of the selling price actually received during such tax return period.  [35 ILCS 105/9]

d)         In its regular monthly, quarterly, or annual return, each retailer shall also include the total amount of use tax due upon the purchase price of tangible personal property (other than a motor vehicle, watercraft, or aircraft on which the tax is to be paid separately from the regular monthly, quarterly, or annual return) purchased by it at retail from a retailer, but as to which such tax was not collected by the vendor from the retailer filing such return, and such retailer shall remit the amount of such tax to the Department when filing such return.

e)         If the retailer files its retailers' occupation tax returns on the gross sales basis, rather than on the gross receipts basis, the retailer will be required to report the use tax information that is included in the retailer’s returns on the basis of gross sales (or on the basis of gross purchases in the case of reporting purchases for the retailer's use).

f)         If the retailer's average monthly tax liability to the Department does not exceed $200, the Department may authorize the retailer's returns to be filed on a quarter annual basis, with the return for January, February, and March of a given year being due by April 20 of such year; with the return for April, May and June of a given year being due by July 20 of such year; with the return for July, August and September of a given year being due by October 20 of such year, and with the return for October, November and December of a given year being due by January 20 of the following year.

g)         If the retailer's average monthly tax liability to the Department does not exceed $50, the Department may authorize the retailer's returns to be filed on an annual basis, with the return for a given year being due by January 20 of the following year.

h)         Such quarter annual and annual returns, as to form and substance, shall be subject to the same requirements as monthly returns.

i)          Notwithstanding any other provision in the Act concerning the time within which a retailer may file its return, in the case of any retailer who ceases to engage in a kind of business which makes the retailer responsible for filing returns under the Act, such retailer shall file a final return under the Act with the Department not more than one month after discontinuing such business.  [35 ILCS 105/9]

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

Section 150.905  Deduction for Collecting Tax

The retailer, in remitting the use tax collected from the purchaser, may deduct 1.75% thereof, not to exceed $1,000 per month beginning on January 1, 2025, or $5.00 per calendar year, whichever is greater, as an allowance for the retailer's cost incurred in collecting the tax, keeping records, preparing and filing returns, remitting the tax and supplying data to the Department on request.  In the case of retailers who report and pay the tax on a transaction-by-transaction basis, as provided in Section 9 of the Act, such discount shall be taken with each such tax remittance instead of when such retailer files such periodic return.  The discount allowed under this Section is allowed only for returns that are filed in the manner required by the Act.  [35 ILCS 105/9]  This allowance is available when the tax is remitted with a return that is filed when due under the Act, but is not available in any case in which the tax is paid late (with or without a return, and whether formally assessed by the Department or not).  The Department may disallow the discount for retailers whose certificate of registration is revoked at the time the return is filed, but only if the Department's decision to revoke the certificate of registration has become final.  [35 ILCS 105/9]  Also, this discount for collecting the tax is not allowable when the use tax is remitted directly to the Department by a user.

(Source:  Amended at 49 Ill. Reg. 10815, effective August 8, 2025)

Section 150.910  Incorporation by Reference

In general, the provisions of Subpart E of the Retailers' Occupation Tax Regulations (86 Ill. Adm. Code 130) shall apply to returns under the Use Tax Act.

(Source:  Amended and effective November 29, 1972)

Section 150.915  Itemization of Receipts from Sales and the Tax Among the Different States from Which Sales are Made into Illinois

In reporting receipts from sales that are subject to Use Tax but not to Retailers' Occupation Tax on the return form, if the seller filing the return makes such sales into Illinois from more than one state other than Illinois, such seller must file a supplemental schedule, which the Department will furnish, showing an itemization of such receipts and the tax for each state from which such seller makes such sales that result in tangible personal property being delivered or shipped into Illinois.

(Source:  Amended and effective November 29, 1972)

Section 150.1001  General Information

All civil penalties, 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 (except that these apply from the date when the tax is due rather than from the date when the gross receipts are received and except that, in the case of a failure to file a return required by the Act, no notice of tax liability shall be issued on and after July 1 and January 1 covering tax due with that return during any month or period more than 6 years before that July 1 or January 1, respectively), are the same under the Use Tax Act as under the Illinois Retailers' Occupation Tax  Act.  For information concerning civil penalties and interest see the Uniform Penalty and Interest Act [35 ILCS 735/3] and 86 Ill. Adm. Code 700. For information concerning criminal penalties, see Section 14 of the Use Tax Act.

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

Section 150.1101  General Information

a)         The "selling price", which is subject to the Use Tax when a sale at retail is made, includes the consideration for the sale valued in money, whether received in money or otherwise, including cash, credits, property other than as hereinafter provided, 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 when 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, 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.  "Selling price" does not include 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 Use Tax 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.  [35 ILCS 105/2]

b)         The phrase "like kind and character" includes, but is not limited to, the trading of any kind of motor vehicle on the purchase of any kind of motor vehicle, or the trading of any kind of farm implement on the purchase of any kind of farm 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 or occasional sale.

c)         A motor vehicle traded to a farm implement dealer for a farm implement would not qualify for the exemption unless such farm implement dealer is also a motor vehicle dealer because the farm implement dealer's sale of the motor vehicle would be exempt as an isolated or occasional sale.  A farm implement traded to a motor vehicle dealer for a motor vehicle would not qualify for the exemption unless such dealer is also a farm implement dealer because the motor vehicle dealer's sale of the farm implement would be an exempt isolated or occasional sale.  A farm implement traded for a motor vehicle, or a motor vehicle traded for a farm implement, would qualify for the exemption if the seller is engaged in business both as a motor vehicle dealer and a farm implement dealer.  Agricultural produce or animals traded for a motor vehicle or for a farm implement would not qualify for the exemption.

d)         The real test is whether the retail sale of the traded-in tangible personal property by the person who accepted it in trade would be subject to Use Tax, or whether such sale would be exempt as an isolated or occasional sale.  In the former event, the tangible personal property qualifies for the trade-in exemption.  In the latter event, it does not.

e)         No purchase of tangible personal property at retail from a person engaged in the business of selling that kind of property shall be deemed to be exempt from the Use Tax by reason of the fact that the tangible personal property which is being purchased was acquired by the seller as a trade-in, rather than being purchased by the seller.  The Use Tax applies to used tangible personal property (however acquired by the seller who is engaged in the business of selling that kind of property), as well as to new tangible personal property, as long as the sale is being made at retail by a person engaged in the business of selling that kind of property.

(Source:  Amended at 46 Ill. Reg. 18162, effective October 25, 2022)

Section 150.1201  General Information

To avoid needless repetition, the substance and provisions of all Retailers' Occupation Tax Regulations, (86 Ill. Adm. Code 130), (whether characterized as Rules, Articles or by some other designation), which are now in effect or which may hereafter be amended or promulgated, and which are not incompatible with the Use Tax Act or any special Regulations that may be promulgated by the Department thereunder, are incorporated herein by reference and made a part hereof.

(Source:  Amended and effective May 21, 1962)

Section 150.1301  Users' Records

a)         When a user claims that he has paid the Use Tax to his vendor, he will have sufficient records to sustain this contention in case of an examination of his records by the Department if the vendor is registered with the Department as a retailer under the Retailers' Occupation Tax Act or the Use Tax Act, and if such user has either a receipt for the Use Tax from the vendor or an invoice from the vendor billing the Use Tax separately from the selling price of the tangible personal property supplemented with proof in the user's records that he has paid such invoice including the Use Tax.

b)         If the user is obligated to pay the Use Tax directly to the Department, he must have adequate records to show that he has fulfilled this obligation and to support his claim (if any) that certain purchases for use are not subject to the Use Tax.

c)         For example, if the user claims that he has paid a tax in another state with respect to the sale, purchase or use of the same tangible personal property, the user must have, among his records, a receipt for such tax from an authorized collector of the tax or other proof that the user has paid a billing for such tax.

(Source:  Amended and effective August 21, 1974)

Section 150.1305  Retailers' Books and Records

a)         Every retailer required or authorized to collect taxes under the Act and every person using in this State tangible personal property purchased at retail from a retailer shall keep such records, receipts, invoices and other pertinent books, documents, memoranda and papers as the Department shall require, in such form as the Department shall require.  For purposes of this Section, "records" means all data maintained by the taxpayer, including data on paper, microfilm, microfiche or any type of machine-sensible data compilation. See 86 Ill. Adm. Code 130 Subpart H for books and records requirements for retailers.

b)         For the purpose of administering and enforcing the provisions hereof, the Department, or any officer or employee of the Department designated, in writing, by the Director thereof, may hold investigations and hearings concerning any matters covered herein and may examine any books, papers, records, documents or memoranda of any retailer or purchaser bearing upon the sales or purchases of tangible personal property, the privilege of using which is taxed under the Act, and may require the attendance of such person or any officer or employee of such person, or of any person having knowledge of the facts, and may take testimony and require proof for its information.

c)         Any person who fails to keep books and records or fails to produce books and records for examination, as required by this Section, is liable to pay to the Department, for deposit into the Tax Compliance and Administration Fund, a penalty of $1,000 for the first failure to keep books and records or produce books and records for examination and a penalty of $3,000 for each subsequent failure to keep books and records or produce books and records for examination as required by this Section.  The penalties imposed under this Section shall not apply if the taxpayer shows that the taxpayer acted with ordinary business care and prudence.  [35 ILCS 105/11]  (See also 86 Ill. Adm. Code 130.801).

d)         If a retailer is required or authorized to collect use tax, the retailer's records must show that the retailer collects such tax in accordance with the brackets prescribed in TABLE A of this Part and that the retailer states such tax separately to the purchaser from the selling price of the tangible personal property which the retailer is selling, 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.

e)         The retailer can prove compliance with the requirement of stating the use tax as a separate item from the selling price by showing the tax separately on invoices or sales tickets that are issued to the retailer's customers, by having the tax shown separately from prices on a copy of the cash register tape, or, in a proper case as explained hereinafter, by publicly posting an appropriate sign.  The sign procedure described subsequently in this Rule may not be relied upon to prove collection of the tax by the retailer from the retailer's customers as a separate item in types of transactions in which such retailer does issue invoices or sales tickets to customers.  For this purpose, a credit card receipt is not construed to come within the terms of "invoices" or "sales tickets" as used in this Rule.

(Source:  Amended at 49 Ill. Reg. 8640, effective June 13, 2025)

Section 150.1310  Use of Signs to Prove Collection of Tax as a Separate Item

a)         The tax imposed by the Act shall when collected be stated as a distinct item separate and apart from the selling price of the tangible personal property.  However, where it is not possible to state the sales tax separately in situations such as sales from vending machines or sales of liquor by the drink the Department may by rule exempt such sales from this requirement so long as purchasers are notified by a sign that the tax is included in the selling price.  [35 ILCS 105/3a]  If the retailer who is entitled to use the posted sign procedure wishes to comply with the requirement in question without raising prices, the retailer may do this by publicly displaying a sign stating that all tangible personal property for which a given charge is made is being sold for a specified amount, with the use tax and home rule or other local retailers' occupation tax being a specified amount based on the applicable tax collection schedule that is set out in TABLE A of this Part, and with the total equaling the entire charge which the seller makes for such tangible personal property.

b)         Another acceptable form of sign (assuming a 6.25% use tax and 1% local retailers' occupation tax rate to be applicable) may read: charges from 08 cents to 22 cents, inclusive, represent 1 cent use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; charges from 23 cents to 36 cents, inclusive, represent 2 cents use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; charges from 37 cents to 51 cents, inclusive, represent 3 cents use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; charges from 52 cents to 66 cents, inclusive, represent 4 cents use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; charges from 67 cents to 81 cents, inclusive, represent 5 cents use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; charges from 82 cents to 96 cents, inclusive, represent 6 cents use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; charges from 97 cents to $1.10, inclusive, represent 7 cents use tax and local retailers' occupation tax, and the balance is the price of the merchandise being sold; each additional charge of 13 or 14 cents, depending upon rounding, or any part thereof shall represent 1 cent use tax and local retailers' occupation tax, and the balance shall represent the price of the merchandise being sold.

c)         In the case of the first 2 types of signs referred to hereinabove, appropriate adjustments would have to be made if the rate of the local retailers' occupation tax is not 1%.

d)         The requirements in question will be met if the sign (when the sign procedure is authorized under the terms of this Section) states that the selling price of the tangible personal property includes the use tax and home rule or other local retailers' occupation tax or some equivalent expression.  The sign need not mention the local retailers' occupation tax if the retailer is located in an area in which no local retailers' occupation tax is in effect.

e)         If a sign is relied on to lay the basis for saying that the use tax is being stated separately to the purchaser from the selling price of the property, the sign should be dated to indicate for what period it was in effect and should be retained by the seller among the seller's books and records in the event of a subsequent audit by the Department.  Except in the case of fraud or the willful failure to file returns, the maximum period for keeping records for use tax purposes is 3½ years.

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

Section 150.1315  Consequence of Not Complying with Requirement of Collecting Use Tax Separately From the Selling Price

An important consequence of not complying with the requirement of stating the Use Tax separately from the selling price of the property in a manner authorized by this Regulation is the retailer's loss of the benefit of the deduction for a tax-collected item on his tax return form.

(Source:  Amended and effective August 21, 1974)

Section 150.1320  Incorporation by Reference

In general, the provisions of various Retailers' Occupation Tax Regulations relative to books and records, such as Subpart H (dealing with books and records generally), Section 130.605 (concerning proof of out-of-State deliveries), Subpart N (concerning certificates of resale), etc., shall apply to the subject of books and records under the Use Tax Act.

(Source:  Amended and effective August 21, 1974)

Section 150.1401  Claims for Credit – Limitations – Procedure

a)         When Purchasers May File Claims

If it shall appear that an amount of tax or penalty or interest has been paid in error under the Act to the Department by a purchaser, as distinguished from the retailer, whether such amount be paid through a mistake of fact or an error of law, such purchaser may file a claim for credit or refund with the Department in accordance with Sections 6, 6a, 6b, 6c, and 6d of the Retailers' Occupation Tax Act.  [35 ILCS 105/19]

b)         When Retailers May File Claims – Unjust Enrichment Prohibited

1)         If it shall appear that an amount of tax or penalty or interest has been paid in error to the Department under the Act by a retailer who is required or authorized to collect and remit the use tax, whether such amount be paid through a mistake of fact or error of law, such retailer may file a claim for credit or refund with the Department in accordance with Sections 6, 6a, 6b, 6c, and 6d of the Retailers' Occupation Tax Act, provided that no credit or refund shall be allowed for any amount paid by any such retailer unless it shall appear that the retailer bore the burden of such amount and did not shift the burden of the amount to anyone else (as in the case of a duplicated tax payment which the retailer made to the Department and did not collect from anyone else), or unless it shall appear that the retailer or the retailer's legal representative has unconditionally repaid such amount to the retailer's vendee:

A)        who bore the burden and has not shifted such burden directly or indirectly in any manner whatsoever;

B)        who, if the retailer has shifted such burden, has repaid unconditionally such amount to the retailer's vendee; and

C)        who is not entitled to receive any reimbursement from any other source than from the retailer's vendor, nor to be relieved of such burden in any other manner whatsoever.  [35 ILCS 105/19]

2)         If it shall appear that an amount of tax has been paid in error under the Act by the purchaser to a retailer, who retained such tax as reimbursement for the retailer's tax liability on the same sale under the Retailers' Occupation Tax Act, and who remitted the amount involved to the Department under the Retailers' Occupation Tax Act, whether such amount be paid through a mistake of fact or an error of law, the procedure for recovering such tax shall be that prescribed in Section 6, 6a, 6b, 6c, and 6d of the Retailers' Occupation Tax Act.  [35 ILCS 105/19]

3)         The retailer will be considered to have satisfied the unconditional repayment requirement where it provides its purchaser with an instrument upon which the purchaser can make a demand upon the retailer/claimant for payment of the tax recovered if the claim is allowed.  The retailer's provision of unconditional promissory notes or irrevocable credit memoranda to its purchasers who paid tax in error would satisfy this requirement.  The purpose of requiring the retailer to make an unconditional repayment to its purchasers is to prevent unjust enrichment on the part of the retailer.  Therefore, in order to establish that it was not unjustly enriched, the retailer filing a claim for credit must be able to demonstrate that it gave unconditional promissory notes or irrevocable credit memoranda to its purchasers who paid tax in error to the retailer.

c)         Time Limit on the Filing of Claims

As to any claim for credit or refund filed with the Department on and after January 1 but on or before June 30 of any given year, no amount of tax or penalty or interest erroneously paid (either in total or partial liquidation of a tax or penalty or interest under the Act) more than 3 years prior to such January 1 shall be credited or refunded, and as to any such claim filed on and after July 1 but on or before December 31 of any given year, no amount of tax or penalty or interest erroneously paid (either in total or partial liquidation of a tax or penalty or interest under the Act) more than 3 years prior to such July 1 shall be credited or refunded.  [35 ILCS 105/21]  Except that if both the Department and the taxpayer have agreed to an extension of time to issue a notice of tax liability as provided in Section 4 of the Retailers' Occupation Tax Act, such claim may be filed at any time prior to the expiration of the period agreed upon.  [35 ILCS 120/6]  No claim shall be allowed for any amount paid to the Department, whether paid voluntarily or involuntarily, if paid in total or partial liquidation of an assessment which had become final before the claim for credit or refund to recover the amount so paid is filed with the Department, or if paid in total or partial liquidation of a judgment or order of court.  [35 ILCS 105/21]  (See also 86 Ill. Adm. Code 130.1501(a)(4)(A)-(E) for examples).

d)         Beginning June 25, 2021, for any period included in a claim for credit or refund for which the statute of limitations for issuing a notice of tax liability under the Act will expire less than 6 months after the date a taxpayer files the claim for credit or refund, the statute of limitations for issuing a notice of tax liability is automatically extended for 6 months from the date it would have otherwise expired.  [35 ILCS 105/21]

e)         Procedure for Filing of Claims

1)         Claims for credit shall be prepared and filed upon forms provided by the Department and available at https://tax.illinois.gov/.  The claim shall be signed by the claimant (or by the claimant's legal representative if the claimant shall have died or become a person under legal disability), or by a duly authorized agent of the claimant or the claimant's legal representative.  [35 ILCS 105/19]  Where the claimant is a corporation, the claim filed on behalf of the corporation shall be signed by the president, vice-president, secretary, or treasurer or by the properly accredited agent of the corporation.

2)         A claim for credit or refund shall be considered to have been filed with the Department on the date upon which it is received by the Department.

3)         Upon receipt of any claim for credit or refund filed under the Act, any officer or employee of the Department, authorized in writing by the Director of Revenue to acknowledge receipt of the claims on behalf of the Department, shall execute on behalf of the Department, and shall deliver or mail to the claimant or the claimant's duly authorized agent, a written receipt, acknowledging that the claim has been filed with the Department, describing the claim in sufficient detail to identify it and stating the date upon which the claim was received by the Department.

4)         Such written receipt shall be prima facie evidence that the Department received the claim described in such receipt and shall be prima facie evidence of the date when such claim was received by the Department.

5)         In the absence of a written receipt, the records of the Department as to when the claim was received by the Department, or as to whether or not the claim was received at all by the Department, shall be deemed to be prima facie correct upon these questions in the event of any dispute between the claimant (or the claimant's legal representative) and the Department concerning these questions.  [35 ILCS 105/19]

f)         Procedure After Filing of Claims

1)         As soon as practicable after a claim for credit or refund is filed, the Department shall examine each claim and determine the amount of credit or refund to which the claimant or the claimant's legal representative, in the event that the claimant shall have died or become a person under legal disability, is entitled and shall, by its Notice of Tentative Determination of Claim, notify the claimant or the claimant's representative of such determination, which shall be prima facie correct.  [35 ILCS 105/20]

2)         If such claimant, or the legal representative of a deceased claimant or a claimant who is under legal disability shall, within 60 days after the Department's Notice of Tentative Determination of Claim, file a protest and request a hearing, the Department shall give notice to such claimant, or the legal representative of a deceased claimant, or a claimant who is under legal disability of the time and place fixed for such hearing, and shall hold a hearing in conformity with the provisions of the Act.  On or after July 1, 2013, protests concerning matters that are subject to the jurisdiction of the Illinois Independent Tax Tribunal shall be filed with the Tax Tribunal in accordance with the Illinois Independent Tax Tribunal Act of 2012, and hearings concerning those matters shall be held before the Tribunal in accordance with that Act.  The Department shall issue its Final Determination of the amount, if any, found to be due as a result of a hearing before the Department or the Tribunal, to such claimant, or the legal representative of a deceased claimant or a claimant who is a person under legal disability.

3)         If a protest to the Department's Notice of Tentative Determination of Claim is not filed within 60 days and a request for hearing is not made as provided in subsection (f)(2), the Notice shall become and operate as a Final Determination.  [35 ILCS 105/20]

g)         Use of Credit Memoranda to Satisfy Prior Rights of Department

1)         If, following the above procedure, a credit is found to be due, a credit memorandum for the amount shall be issued in the name of the claimant.  If there is an established unpaid assessment or an admitted unpaid liability under the Use Tax Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, or the Service Use Tax Act, or under a local Retailers' Occupation Tax or Service Occupation Tax administered by the Department against the claimant, or unpaid penalty, or unpaid interest, the amount of the credit shall be credited against the tax or penalty or interest due.  If the credit is in an amount less than that of the unpaid liability, it shall be applied to the extent it reduces such liability.

2)         If the amount of the credit exceeds that of the unpaid liability, after crediting an amount sufficient to liquidate or cancel out the unpaid liability, a new credit memorandum shall be issued for an amount representing the difference between that of the original credit found to be due and that of the liability liquidated or paid, and the new credit memorandum shall be delivered to the person entitled to receive delivery thereof, provided that no proceeding is pending against the claimant to establish an unpaid liability under the Act or under the Retailers' Occupation Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, or under a local retailers' occupation tax or service occupation tax administered by the Department.

3)         If proceedings are pending to determine whether or not any tax or penalty or interest is due under the Act or under the Retailers' Occupation Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, or any local occupation or use tax administered by the Department, from such person, the Department may withhold issuance of the credit or refund pending the final disposition of such proceedings and may apply such credit or refund against any amount found to be due to the Department as a result of such proceedings.  The balance, if any, of the credit or refund shall be issued to the person entitled thereto.  [35 ILCS 105/22]

4)         If a taxpayer is notified that due to overpayments, a verified credit balance is available, the taxpayer may file a claim for credit.

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

Section 150.1405  Disposition of Credit Memoranda by Holders Thereof

a)         Assignment of Credit Memoranda

1)         Credit memoranda issued under the Use Tax Act ("Act") may be assigned or transferred only after a request for that purpose is filed with the Department upon forms prescribed and furnished by it, and subject to the following conditions:

A)        that the assignment is made to a person who is subject to the Act or to the Retailers' Occupation Tax Act, the Service Occupation Tax Act, or the Service Use Tax Act;

B)        that there is no proceeding pending to establish an unpaid liability against the assignor pursuant to notice given of the Department's proposal to assess an amount against the assignor either under the Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, or any local retailers' occupation tax or service occupation tax administered by the Department; and

C)        that there is no established assessment or admitted tax liability or interest or penalty unpaid by the assignor, either under the Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, or any local retailers' occupation tax or service occupation tax administered by the Department: Provided, that if the amount of the credit memorandum must first be applied, in whole or in part, against an established unpaid assessment which has been issued to the claimant-assignor, or in total or partial liquidation of an unpaid admitted tax liability, or unpaid penalty, or unpaid interest, of the claimant-assignor, notice to this effect shall be given the claimant-assignor by the Department.

2)         If any balance is due such claimant-assignor, after application of the credit memorandum in the manner and to the purposes aforesaid, such balance may be assigned upon receipt by the Department of instructions to that effect.

3)         If there are no unpaid established assessments, unpaid admitted tax liabilities, unpaid penalties, or unpaid amounts of interest due from the claimant-assignor, and if there are no pending proceedings as herein outlined against the claimant-assignor, and if the contemplated assignee is a person who is subject to the Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, or the Service Use Tax Act, the request for leave to assign shall be approved.

4)         The original credit memorandum shall be canceled, and a new credit memorandum shall be issued to the assignee in the amount shown on the canceled memorandum.

5)         However, before a credit memorandum is issued to the assignee, the amount of such credit shall be applied, to the extent that may be necessary, in liquidation of any established or admitted unpaid liability due from the assignee under the Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, or any local retailers' occupation tax or service occupation tax administered by the Department, and a credit memorandum for the balance of the credit, if any, shall then be issued to the assignee: Provided that there is no proceeding pending against the assignee to establish an unpaid liability against the assignee under any of said Acts.

6)         If a proceeding to establish such an unpaid liability is pending, the credit memorandum shall be held by the Department until such proceeding is concluded; and if such proceeding results in the issuance of an assessment which becomes final under the Act, the credit shall be applied by the Department, to the extent which may be necessary, in liquidation of such assessment, and any interest that may accrue thereon, and the balance of the credit, if any (after cancellation of the credit memorandum applied in liquidation of such liability), shall be issued in the form of a new credit memorandum and delivered to the assignor for transmittal to the assignee.

b)         Submission of Credit Memoranda with Tax Returns

1)         Credit memoranda, in the hands either of the original claimant or of the claimant's assignee, may be submitted to the Department, along with use tax returns, in payment of any tax liability or penalty or interest due under the Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, the Service Use Tax Act, or any local retailers' occupation tax or service occupation tax administered by the Department, incurred by the holder of such credit memoranda.

2)         If, after applying any such credit memorandum against the amount of liability shown to be due by the tax return with which the credit memorandum is submitted, there is a balance of the credit memorandum in favor of the taxpayer, the Department will cancel the credit memorandum which the taxpayer submits with the taxpayer's return and will issue and deliver to such taxpayer a new credit memorandum for such balance.  This process will be followed until the credit, to which such taxpayer is entitled, is exhausted.

3)         However, any new credit memorandum, which is issued for a balance of credit due the taxpayer after applying the amount of a credit memorandum to the payment of current taxes, is subject to the prior rights of the Department to the same extent that such prior rights take precedence when a credit memorandum is first issued (see subsection (a) of this Section) or when leave to assign a credit memorandum is requested (see Section 150.1405(a) of this Part).

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

Section 150.1410  Refunds

In case the Department determines that the claimant is entitled to a refund, such refund shall be made only from such appropriation as may be available for that purpose.  If it appears unlikely that the amount appropriated would permit everyone having a claim allowed during the period covered by such appropriation to elect to receive a cash refund, the Department will make such refunds only in hardship cases (i.e., in cases in which the claimant cannot use a credit memorandum).  An example of such a hardship case would be one in which a user pays Use Tax to the Department, under circumstances in which the tax is not due, on a motor vehicle purchased outside Illinois.  Since this is a nonrecurring liability, the claimant would not be able to use a credit memorandum and would probably have to sell it at a loss.  Two other instances of hardship with respect to the claimant's receipt of a credit memorandum under the Use Tax Act are the situation in which the claimant has discontinued business and the situation in which the claimant will have a small volume of liability to the Department in the foreseeable future, but receives a large credit memorandum which it therefore might take the claimant a long time to liquidate by using it to pay current taxes.  In these instances, the claimant probably would have to sell the credit memorandum at a loss in order to realize anything from it within any reasonable period of time.

(Source:  Amended and effective August 26, 1971)

Section 150.1415  Interest

a)         Any credit or refund that is allowed under the Act shall bear interest at the rate of 1% per month or fraction thereof from the date when the erroneous payment for which the credit or refund is being allowed was made to the Department until the credit memorandum is issued or the refund is paid, until January 1, 1994. Interest shall not be paid on claims filed after the effective date of the Uniform Penalty and Interest Act and 86 Ill. Adm. Code 700 except such interest which is paid in accordance with Section 3-2 of the Act. (Section 3-9 of the Uniform Penalty and Interest Act [35 ILCS 735/3-9])

            EXAMPLE:  A taxpayer files a claim for credit with the Department on January 15, 1994 for an overpayment of Use Tax.  The overpayment occurred in October 1992 when the taxpayer self-assessed tax on a purchase of manufacturing machinery and equipment from an unregistered out-of-state retailer and then remitted the tax directly to the Department.  The credit memorandum is issued on June 15, 1994.  Interest shall be paid at the rate of 1% per month for the period from October 1992 through December 31, 1993; and at the semiannually adjusted interest rate imposed pursuant to the Act and these rules from January 1, 1994 through June 15, 1994, the date on which the credit memorandum was issued by the Department.

b)         No interest will be allowed if the overpayment is found by the Department to have been made deliberately for the purpose of drawing interest, or if the overpayment is ascertained not to have been bona fide for some other reason.

c)         When a claim that is allowed is paid by means of a credit memorandum, the claim will be considered to have been paid when the credit memorandum is issued by the Department to the claimant, and no interest will be allowed or paid by the Department for any period subsequent to that, even if the claimant does not use or assign the credit memorandum immediately after it is issued.

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

Section 150.1420  Verified Credit

a)         Verified credit.  A verified credit is a specific type of credit arising under Section 3 of the Retailers' Occupation Tax Act, which states:

If any payment provided for in this Section exceeds the taxpayer's liabilities under this Act, the Use Tax Act, the Service Occupation Tax Act and the Service Use Tax Act, as shown on an original monthly return, the Department shall, if requested by the taxpayer, issue to the taxpayer a credit memorandum no later than 30 days after the date of payment. The credit evidenced by such credit memorandum may be assigned by the taxpayer to a similar taxpayer under this Act, the Use Tax Act, the Service Occupation Tax Act or the Service Use Tax Act, in accordance with reasonable rules and regulations to be prescribed by the Department. If no such request is made, the taxpayer may credit such excess payment against tax liability subsequently to be remitted to the Department under this Act, the Use Tax Act, the Service Occupation Tax Act or the Service Use Tax Act, in accordance with reasonable rules and regulations prescribed by the Department. If the Department subsequently determined that all or any part of the credit taken was not actually due to the taxpayer, the taxpayer's vendor's discount shall be reduced, if necessary, to reflect the difference between the credit taken and that actually due, and that taxpayer shall be liable for penalties and interest on such difference.  [35 ILCS 120/3]

b)         Verified credit – explanation – no interest paid.  A verified credit is an amount of tax overpaid in a prior period that may be rolled over and applied to subsequent tax liabilities without the need to comply with the formalities involved in submitting a claim for credit.  Since the taxpayer has the immediate use of the verified credit to apply against its liability without the need to file a claim for credit and prove the overpayment, interest is not paid on verified credits.  (See 86 Ill. Adm. Code 700.230(a)(2)).  Verified credits appear on a Taxpayer Statement listing a taxpayer's unpaid balance, available credits or returns not filed.

c)         Verified credit − How used.  A verified credit may be used by a taxpayer in only 3 ways:

1)         It can be used to offset liability of the taxpayer that arises under this Act, the Retailers' Occupation Tax Act, the Service Occupation Tax Act, or the Service Use Tax Act subsequent to the origination of the verified credit;

2)         It can be converted to a credit memorandum no later than 30 days after the date of overpayment, by making a request to the Department using forms prescribed by the Department and available at https://tax.illinois.gov/.  See 35 ILCS 120/6a, for information required to be included.  Interest is not paid on verified credits that are converted to credit memoranda in accordance with this subsection (c)(2); and

3)         It can be converted to a credit memorandum at any time, starting 30 days after the date of over payment, by making a request to the Department using forms prescribed by the Department and available at https://tax.illinois.gov/, and without regard to the limitations on claims for refund.  See 86 Ill. Adm. Code 150.1401, for information on limitations and procedures.  Interest is not paid on verified credits that are converted to credit memoranda in accordance with this subsection (c)(3).

d)         A verified credit that is converted to a credit memorandum under this subsection (d) may be assigned to another taxpayer in the same manner as other credit memoranda issued to taxpayers by the Department.  See 86 Ill. Adm. Code 150.1405.

(Source:  Amended at 49 Ill. Reg. 10815, effective August 8, 2025)

Section 150.TABLE A   Tax Collection Brackets