Section  420.1 Purpose

This Part contains rules and regulations for administration of the duties vested in the Department of Revenue by Article VIII of the Liquor Control Act of 1934 [235 ILCS 5].

(Source:  Added at 39 Ill. Reg. 14701, effective October 22, 2015)

Section 420.5  Definitions

For purposes of this Part:

"Act" means the Liquor Control Act of 1934 [235 ILCS 5].

"Airplane license" means a license described in Section 5-1(j) of the Act.

"Alcohol" means the product of distillation of any fermented liquid, whether rectified or diluted, whatever may be the origin thereof, and includes synthetic ethyl alcohol. It does not include denatured alcohol or wood alcohol. [235 ILCS 5/1‑3.01]

"Alcoholic liquor" includes alcohol, spirits, wine and beer, and every liquid or solid, patented or not, containing alcohol, spirits, wine or beer, and capable of being consumed as a beverage by a human being.  The provisions of the Act shall not apply to alcohol used in the manufacture of denatured alcohol produced in accordance with Acts of Congress and regulations promulgated thereunder, nor to any liquid or solid containing .5% or less of alcohol by volume.  No tax provided for in Article VIII of the Act shall apply to wine intended for use and used by any church or religious organization for sacramental purposes, provided that the sacramental wine shall be purchased from a licensed manufacturer or importing distributor under the Act. [235 ILCS 5/1‑3.05]

"Beer" means a beverage obtained by the alcoholic fermentation of an infusion or concoction of barley, or other grain, malt and hops in water, and includes, among other things, beer, ale, stout, lager beer, porter and the like. [235 ILCS 5/1‑3.04]

"Brewer" means a person who is engaged in the manufacture of beer. [235 ILCS 5/1‑3.09]

"Brew pub" means a person who manufactures beer only at a designated premises to make sales to importing distributors, distributors, and nonlicensees for use and consumption only, who stores beer at the designated premises and who is allowed to sell at retail from the licensed premises, provided that a brew pub licensee shall not sell for off‑premises consumption more than 50,000 gallons per year. [235 ILCS 5/1‑3.33]

"Brew pub license" means a license described in Section 5-1(n) of the Act.

"Department" means the Department of Revenue [235 ILCS 5/1‑3.20].

"Distributor" means any person, other than a manufacturer or nonresident dealer licensed under the Act, who is engaged in this State in purchasing, storing, possessing or warehousing any alcoholic liquors for resale or reselling at wholesale, whether within or without this State. [235 ILCS 5/1‑3.15]

"Foreign importer" means anyone other than a nonresident dealer licensed under the Act who imports into this State, from any point outside the United States, any alcoholic liquors other than in bulk for sale to a licensed importing distributor [235 ILCS 5/1‑3.27].

"Importing distributor" means any person other than a nonresident dealer licensed under the Act who imports into this State, from any point in the United States outside this State, whether for himself or herself or for another, any alcoholic liquors for sale or resale, or for use in the manufacture, preparation or compounding of products other than alcoholic liquors, or who imports into this State, from any point in the United States outside this State, for consumption in any one calendar year, more than one gallon of such liquors [235 ILCS 5/1‑3.16].  "Importing distributor" includes an airplane licensee (see Section 1(j) of the Act).

"Liquor Control Commission" means the commission created by Section 3-1 of the Act.

"Manufacturer" means every brewer, fermenter, distiller, rectifier, wine maker, blender, processor, bottler or person who fills or refills an original package, whether for himself or herself or for another, and others engaged in brewing, fermenting, distilling, rectifying or bottling alcoholic liquors as defined in this Section [235 ILCS 5/1‑3.08].  "Manufacturer" includes a manufacturer's licensee and brew pub licensee.

"Nonresident dealer" means any person, firm, partnership, corporation or other legal business entity who or which exports into this State, from any point outside of this State, any alcoholic liquors for sale to Illinois licensed foreign importers or importing distributors.  A nonresident dealer's license shall be restricted to the actual manufacturer of such alcoholic liquors or the primary United States importer of such alcoholic liquors, if manufactured outside of the United States, or the duly registered agent of such manufacturer or importer.  Registration of the agent with the Liquor Control Commission, in such manner and form as it may prescribe, shall be a prerequisite to the issuance of a nonresident dealer's license to an agent. [235 ILCS 5/1-3.29]

"Retailer" means a person who sells, or offers for sale, alcoholic liquor for use or consumption and not for resale in any form. [235 ILCS 5/1‑3.17]

"Spirits" means any beverage that contains alcohol obtained by distillation, mixed with water or other substance in solution, and includes brandy, rum, whiskey, gin or other spirituous liquors, and those liquors when rectified, blended or otherwise mixed with alcohol or other substances. [235 ILCS 5/1-3.02]

"Wine" means any alcoholic beverage obtained by the fermentation of the natural contents of fruits or vegetables containing sugar, including those beverages when fortified by the addition of alcohol or spirits, as defined in this Section. [235 ILCS 5/1‑3.03]

"Winery shipper's license" means a license described in Section 5-1(r) of the Act.

(Source:  Added at 39 Ill. Reg. 14701, effective October 22, 2015)

Section 420.10  Gallonage Taxes

a)         Measure of Tax

1)         Tax Imposed

A)        A tax is imposed upon the privilege of engaging in business as a manufacturer or as an importing distributor of alcoholic liquor.  The tax shall be at the following rates:

i)           $1.39 per gallon for wine containing less than 20% of alcohol by volume other than cider containing less than 7% alcohol by volume;

ii)            23.1¢ per gallon on beer;

iii)        23.1¢ per gallon for cider containing not less than 0.5% alcohol by volume nor more than 7% alcohol by volume; and

iv)          $8.55 per gallon on alcoholic liquor containing 20% or more of alcohol by volume.

B)        The tax applies to alcoholic liquor:

i)             manufactured, imported or purchased tax-free for sale or use by the manufacturer, or as agent for any other person; or

ii)            imported or purchased tax-free for sale or use by the importing distributor, or as agent for any other person. (See 235 ILCS 5/8-1.)

2)         For purposes of this Section, "cider" means any alcoholic beverage obtained by the alcohol fermentation of the juice of apples or pears including, but not limited to, flavored, sparkling, or carbonated cider. [235 ILCS 5/8-1]

b)         Persons Liable for Tax

1)         Sales of alcoholic liquor by an Illinois licensed foreign importer to an Illinois licensed importing distributor of alcoholic liquor are not taxable even if both licenses are held by the same legal entity.

2)         Where one licensed manufacturer or importing distributor sells alcoholic liquor to another licensed manufacturer or importing distributor, the sale may be made tax-free to the extent to which the sale of alcoholic liquor by one Illinois licensed manufacturer or importing distributor to another Illinois licensed manufacturer or importing distributor is authorized by the licensing provisions of Article V of the Act.  When the sale is made tax-free, the purchasing manufacturer or importing distributor is responsible for paying the proper tax unless the purchaser sells the alcoholic liquor that he or she has bought tax-free to another licensed manufacturer or importing distributor under circumstances authorized by the licensing provisions of the Act and elects not to pay the tax.  This procedure may be continued until a licensed manufacturer or importing distributor sells the alcoholic liquor to someone not licensed as a manufacturer or importing distributor, in which event, if the tax liability has not been assumed previously, the manufacturer or importing distributor who makes the sale to a purchaser not licensed as a manufacturer or importing distributor must pay the proper tax when filing his or her return for the month in which he or she makes the taxable sale unless there is some other basis for claiming tax exemption, such as the fact that the sale is in interstate commerce (see Section 420.30) or that the sale is made to a non-beverage user (see Sections 420.500 and 420.110(b)).

3)         The application form for a winery shipper's license filed under the Act includes an acknowledgement consenting to the jurisdiction of the Liquor Control Commission, the Department, and the courts of this State concerning the enforcement of the Act and any related laws, rules and regulations, including authorizing the Department and the Liquor Control Commission to conduct audits for the purpose of ensuring compliance with the Act. A winery shipper licensee must pay to the Department the State liquor gallonage tax under Section 8-1 of the Act for all wine that is sold by the licensee and shipped to a person in this State. For the purposes of Section 8-1 of the Act, a winery shipper licensee shall be taxed in the same manner as a manufacturer of wine. A winery shipper licensee who is not otherwise required to register under the Retailers' Occupation Tax Act [35 ILCS 120] must register under the Use Tax Act [35 ILCS 105] to collect and remit use tax to the Department for all gallons of wine that are sold by the winery shipper licensee and shipped to persons in this State.  If a winery shipper licensee fails to remit the tax imposed under the Act in accordance with the provisions of Article VIII of the Act, the winery shipper's license shall be revoked in accordance with the provisions of Article VII of the Act.  If a winery shipper licensee fails to properly register and remit tax under the Use Tax Act or the Retailers' Occupation Tax Act for all wine that is sold by the winery shipper licensee and shipped to persons in this State, the winery shipper's license shall be revoked in accordance with the provisions of Article VII of the Act.  A winery shipper licensee must collect, maintain and submit to the Liquor Control Commission on a semiannual basis the total number of cases per resident of wine shipped to residents of this State.  [235 ILCS 5/5-1(r)]

4)         If any person received any alcoholic liquors from a manufacturer or importing distributor, with respect to which alcoholic liquors no tax is imposed under Article VIII of the Act, and that alcoholic liquor is thereafter disposed of in such a manner or under such circumstances as may cause that alcoholic liquor to become the base for the tax imposed by Article VIII of the Act, that person shall make the same reports and returns, pay the same taxes and be subject to all other provisions of that Article relating to manufacturers and importing distributors. [235 ILCS 5/8-1]

c)         The tax imposed under Section 8-1 of the Act shall be in addition to all other occupation or privilege taxes imposed by the State of Illinois or any political subdivision of the State. [235 ILCS 5/8-1].

(Source:  Amended at 42 Ill. Reg. 23160, effective November 29, 2018)

Section 420.20  Claims to Recover Erroneously Paid Tax

a)         Requirements Generally:

1)         Where a manufacturer or importing distributor pays, to the Department, an amount of liquor gallonage tax not due under the provisions of Article VIII of the Liquor Control Act of 1934, either as the result of a mistake of fact or an error of law, such taxpayer may file a claim for credit with the Department.  Claims for credit shall be prepared and filed upon forms provided by the Department and available at www.tax.illinois.gov.  Where the claimant is a corporation, the claim filed on behalf of such corporation shall be signed by the president, vice-president, secretary or treasurer or by the properly accredited agent of such corporation.

2)         As to any liquor gallonage tax claim filed with the Department on and after each January 1 and July 1, no amount of tax or penalty erroneously paid more than 3 years prior to such January 1 and July 1, respectively, shall be credited or refunded.

3)         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 this Act will expire less than 6 months after the date a taxpayer files the claim for credit or refund, the statute of limitations is automatically extended for 6 months from the date it would have otherwise expired.  [235 ILCS 5/8-3].

b)         Procedure After Filing of Claims:

The Department will examine each claim for credit as soon as practicable after such claim is filed and will notify the claimant (or its legal representative, if the claim is filed by such legal representative, or if the claimant has died or become incompetent and such legal representative has notified the Department of his appointment and qualification as such legal representative, or if the Department, on its own motion, has substituted such legal representative in the proceeding for the deceased or incompetent claimant) of its Tentative Determination of the amount of credit, if any, to which the claimant or its legal representative is entitled.  If such claimant, or the legal representative of a deceased or incompetent taxpayer, shall, within 60 days after the Department's Notice of Tentative Determination of Claim, file a protest and request a hearing thereon, the Department shall give notice to such claimant, or to the legal representative of a deceased or incompetent taxpayer, of the time and place fixed for such hearing, and shall hold a hearing in conformity with the provisions of the Act, and shall issue its Final Determination of the amount of credit, if any, found to be due as a result of such hearing, to such claimant, or to the legal representative of a deceased or incompetent taxpayer.  If a protest to the Department's Notice of Tentative Determination of Claim is not filed within 60 days and a request for a hearing is not made, the Notice shall become and operate as a Final Determination.

c)         Use Of Credit Memoranda To Satisfy Prior Rights Of Department:

If, following the above procedure, a credit is found to be due, as evidence thereof a credit memorandum for such amount shall be issued in the name of the claimant.  If there is an established unpaid assessment or an admitted unpaid liability, or unpaid penalty, the amount of the credit shall be credited against such tax or penalty due.  If the credit is in an amount less than that of the unpaid liability, it shall be applied pro tanto.  If the amount of the credit exceeds that of the unpaid liability, after crediting an amount sufficient to liquidate or cancel out such 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 as aforesaid, and such 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.  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 the balance of the credit, if any (after cancellation of the credit memorandum applied in liquidation of said assessment), shall be issued in the form of a new credit memorandum and delivered to the person entitled to receive delivery thereof.

d)         Assignment of Credit Memoranda:

Credit memoranda issued in accordance with the provisions of the 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:

1)         That the assignment is made to a person who is subject to the tax imposed by Article VIII of the Liquor Control Act of 1934;

2)         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 him; and

3)         That there is no established assessment or admitted liability unpaid by the assignor:  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, of the claimant-assignor, notice to this effect shall be given the claimant-assignor by the Department.  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.  If there are no unpaid established assessments or unpaid admitted tax liabilities, or unpaid penalties, and if there are no pending proceedings as hereinabove outlined, and if the contemplated assignee is a person who is subject to the tax imposed by Article VIII of the Act, the request for leave to assign shall be approved.  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.  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 unpaid assessment which has been issued to such assignee, or in liquidation of any unpaid penalty, or in liquidation of any unpaid admitted liability of the assignee, 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 it. 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 the balance of the credit, if any (after cancellation of the credit memorandum applied in liquidation of said assessment), shall be issued in the form of a new credit memorandum and delivered to the assignor for transmittal to the assignee.

e)         Submission of Credit Memoranda With Tax Returns:

Credit memoranda, in the hands either of the original claimant or of its assignee, may be claimed on the monthly tax returns, as payment of liquor gallonage tax liability incurred by the holder of such credit memoranda.  If, after applying any such credit memorandum against the amount of tax 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 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.  However, any new credit memorandum, which is issued as provided in this paragraph 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 (c) of this Section) or when leave to assign a credit memorandum is requested (see subsection (d) of this Section).

f)         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).  The two most likely situations where this would be the case 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 at 47 Ill. Reg. 5793, effective April 4, 2023)

Section 420.30  Shipments of Alcoholic Liquors Out of Illinois

a)         Pick-Ups in Illinois By Purchasers:

1)         Manufacturers and importing distributors of alcoholic liquor incur liquor gallonage tax liability when they deliver alcoholic liquor in Illinois to a purchaser from another state, notwithstanding the fact that the purchaser immediately takes or sends the liquor out of Illinois for sale or use outside Illinois, if the liquor is destined for a state into which the purchaser has no legal right, under the laws of such state, to import such alcoholic liquor.

2)         Illinois licensed manufacturers and importing distributors of alcoholic liquor are not liable for payment of liquor gallonage taxes when they deliver alcoholic liquor in Illinois to purchasers who, in their own transportation equipment, immediately transport such alcoholic liquor to a point outside Illinois for sale or use outside Illinois, provided that the purchaser is authorized by the laws of the state of destination to make such importation of alcoholic liquor into that state.  When claiming tax exemption under this paragraph, the manufacturer or importing distributor shall identify such transaction as a "pick-up" on a separate Schedule "C", "Tax-Free Alcoholic Liquor Sales in Interstate Commerce and Foreign Trade", which shall accompany the Liquor Revenue Return filed with the Department by such manufacturer or importing distributor, and each such transaction shall be described in detail on each separate Schedule. To support claimed tax exemption in the type of case under discussion, the manufacturer or importing distributor shall retain, among his books and records, invoices, delivery receipts, copies of reports (if any) required to be made by purchasers to officials of the states into which the purchasers import such alcoholic liquor and any other evidence which will assist in showing that the alcoholic liquor in question was taken out of Illinois by a person who is authorized to make such importation of alcoholic liquor into the state of destination.  The Department reserves the right to make such investigations and to require such additional proof as it may deem necessary to establish the accuracy of claims to tax exemption under this subsection (a)(2).

b)         Shipments Out of Illinois by Manufacturers or Importing Distributors:

1)         Manufacturers or importing distributors are not liable for gallonage taxes with respect to any alcoholic liquors sold by them and shipped by them to points outside Illinois for use outside this State.  The burden of proof to sustain deductions claimed on Liquor Revenue Returns and accompanying Schedules is on the manufacturer or importing distributor who claims any such deduction.

2)         In the event that alcoholic liquors are transported, on order of the purchaser, from a point in this State to a point outside this State by common carrier, the Department of Revenue may request and will regard the original, a photostatic copy of the original or a certified copy of a waybill, freight bill or bill of lading issued by such common carrier and showing a destination outside Illinois, and requiring delivery outside this State, as evidence in support of the deduction.

3)         The term "common carrier" includes "common carrier by motor vehicle" and for the purposes of this regulation "common carrier by vehicle" means a carrier of property who acts generally and continuously as a common carrier, and who has obtained a Certificate of Public Convenience and Necessity or a Permit from the Interstate Commerce Commission to engage in the transportation of property between points in different states.  No waybill, freight bill or bill of lading issued by any carrier by motor vehicle other than a common carrier, as defined above, will be considered by the Department as satisfactory evidence in support of a deduction.

4)         In the event that alcoholic liquors are transported by the seller in his own transportation equipment, on order of the purchaser, from a point in this State to a point outside this State, the Department may request and will regard the following as acceptable evidence of such delivery outside this State:

A)        If the state in which such delivery is made by the seller or his agent requires the purchaser in that state to file a report of his importations into that state, then the Illinois seller must have a copy of such report by the purchaser, relative to the delivery in issue, among such seller's books and records.

B)        If the purchaser's state does not require him to file a report of the importation with officials of such state, the seller must have, among his books and records, a copy of his (the seller's) invoice covering the sale and delivery and an affidavit from the purchaser stating that the alcoholic liquors covered by such invoice were delivered by the seller or his agent and received on a specified date at the designated out-of-State address, which address must be the address of premises owned, leased or otherwise legally possessed by the purchaser.

i)          However, if, upon investigation, the purchaser is found not to be the owner, lessee or other lawful possessor of the premises designated in the copy of the seller's invoice or other documents required herein at the time of the purported delivery, the transaction will not be regarded as a tax-free sale.

ii)         If the purchaser actually accepts delivery in this State, notwithstanding the possession by the seller of any of the types of evidence referred to above, the transaction will not be regarded as a tax-free sale even though the purchaser transports such alcoholic liquors outside this State, unless the transaction qualifies for exemption under subsection (a)(2) of this Section.

iii)        In connection with any claimed exemption from tax on the ground of interstate commerce, the Department reserves the right to require such additional proof as may appear to be necessary.

(Source:  Amended at 26 Ill. Reg. 830, effective January 03, 2003)

Section 420.40  Non-Beverage Alcoholic Preparations and Compounds

a)         Manufacturers who hold non-beverage user's licenses under the Act are not required to pay any gallonage tax when they sell any of the following products which contain alcoholic liquor, but which are unfit for beverage purposes:  Patent and proprietary medicines; medicinal, antiseptic, culinary and toilet preparations; flavoring extracts, syrups and food products; scientific, industrial and chemical products.

b)         Manufacturers or importing distributors selling alcoholic liquor to licensed non-beverage users for use in the manufacture of such products, or for scientific, chemical, experimental or mechanical purposes, are not liable for the gallonage tax on such sales.  The words "non-beverage user" include laboratories, hospitals and sanatoria using alcohol for non-beverage purposes.

c)         Bitters:

1)         Bitters not capable of being consumed as a beverage in their original condition as sold are considered to be non-beverage alcoholic preparations and may be sold without payment of gallonage tax thereon.

2)         In general, the Department will regard exclusion of any bitters from Federal liquor tax by ruling of the United States Department of Treasury as prima facie evidence that such bitters are not capable of being consumed as a beverage, and therefore do not carry a liability for State of Illinois tax.

d)         Malt Tonics:

            Malt tonics, unless medicated, are deemed to be alcoholic liquors, and tax must be paid by manufacturers and importing distributors with respect to the sale or use thereof to the same extent as any other alcoholic liquor.

Section 420.50  Non-Beverage Users of Alcoholic Liquors

a)         Alcoholic Liquors Purchased Free of Tax:

1)         Any person holding a valid uncanceled and unrevoked non-beverage user's license issued by the Illinois Liquor Control Commission, and a proper permit therefor, as provided in Sections (b) and (c) hereof, may purchase alcoholic liquors from licensed manufacturers or importing distributors in a total amount fixed by the class of non-beverage user's license held by him, without the imposition of any tax upon the business of such licensed manufacturer or importing distributor as to alcoholic liquors so sold for use solely for non-beverage purposes.

2)         A non-beverage user's license shall expire only when the quantity of alcoholic liquors which may be purchased under it has been exhausted.

3)         Holders of non-beverage user's licenses may purchase alcoholic liquors free of tax for non-beverage purposes only from manufacturers or importing distributors licensed as such under the laws of Illinois.  They may not manufacture alcoholic liquors, nor import alcoholic liquors into Illinois from outside Illinois.

b)         Procedure to be Followed by Non-Beverage Users Holding Licenses of Class 1 or 2:

1)         Every person holding a non-beverage user's license of class 1 or 2, for the purpose of purchasing alcoholic liquors free of tax for non-beverage purposes, will be issued a book of permits.  The aggregate gallonage permitted to be purchased on each such book of permits equals the total gallonage that may be purchased under the license of the class held by the non-beverage user.

2)         Permits in the proper amount must be surrendered at the time of purchase by the non-beverage user to the manufacturer or importing distributor from whom alcoholic liquors are purchased.  Upon receiving the same, the vendor is then entitled to sell alcoholic liquors to such non-beverage user surrendering such permit without becoming liable for payment of the gallonage taxes thereon.

c)         Procedures to be Followed by Non-Beverage Users Holding Licenses of Class 3, 4 or 5:

1)         Every person holding a non-beverage user's license of class 3, 4 or 5, for the purpose of purchasing alcoholic liquors free of tax for non-beverage purposes, must make application for a "Permit to Purchase Alcoholic Liquors for Non-Beverage Purposes."  Such application must be made on forms prescribed and furnished by the Department, and must set forth a record of alcoholic liquors purchased for non-beverage purposes during the six months preceding the date of making application for such permit.  Such application must also set forth the number of gallons of alcoholic liquors which are desired to be purchased at the time the application for permit is made, as well as the number and class of the non-beverage user's license held by the applicant.

2)         Upon approval of such application, the Department will issue to the applicant a "Permit to Purchase Alcoholic Liquors for Non-Beverage Purposes," which permit will entitle the holder to purchase the number of wine gallons of alcoholic liquors stated thereon free from gallonage tax. Such permit must be surrendered by the non-beverage user at the time of purchase to the manufacturer or importing distributor from whom alcoholic liquors are purchased, and the vendor is then entitled to sell alcoholic liquors to the non-beverage user surrendering such permit without becoming liable for payment of the gallonage taxes imposed by Article VIII of the Act with respect thereto.

3)         When and as the holder of a non-beverage user's license of class 3, 4 or 5 desires to purchase additional alcoholic liquors free of tax, he must apply for and obtain a new permit from the Department, which he will be required to surrender to the vendor in the manner described above.  Any number of permits may be issued to a holder of a non-beverage user's license of class 3, 4 or 5, but such permits in the aggregate will permit the purchase of alcoholic liquors free of tax in a total amount not in excess of the number of gallons specified by the particular class of non-beverage user's license under which such purchases are made.

4)         Manufacturers and importing distributors will be held liable for gallonage taxes with respect to all alcoholic liquors sold in Illinois to holders of non-beverage user's licenses, with respect to which such purchasers have not obtained and surrendered to such manufacturers and importing distributors the required permits as herein prescribed and set forth.

d)         Penalty for Violation of Non-Beverage Use:

No holder of a non-beverage user's license is permitted to sell, give away or otherwise dispose of any alcoholic liquors, purchased under his non-beverage user's license, in any form fit for beverage purposes. Violation of this provision of the law will subject the violator to a penalty of $1.50 for each gallon of alcoholic liquors so diverted, in addition to all other penalties provided by law, including revocation of license.

(Source:  Amended at 15 Ill. Reg. 3498, effective February 21, 1991)

Section 420.60  Act Does Not Apply

The requirements of the Act including the imposition of gallonage taxes, do not apply in the following cases:

a)         To denatured alcohol or wood alcohol.

b)         To alcohol used in the manufacture of denatured alcohol produced in accordance with Acts of Congress and regulations promulgated thereunder.

c)         To any liquid or solid containing one-half of one per cent, or less, of alcohol by volume.

d)         To the making of wine, cider or other alcoholic liquor by a person from fruits, vegetables or grains, or the products thereof, by simple fermentation and without distillation, if it is made solely for the use of the maker, his family and his guests.

Section 420.70  Tax Provisions of Act Do Not Apply

The tax provisions of Article VIII of the Act do not apply to wine intended for use and used by any church or religious organization for sacramental purposes, provided that such wine shall be purchased from a licensed manufacturer or importing distributor under the Act; but no exemption from tax is permitted with respect to wine sold to private persons for such purposes.  (See Sections 420.80(b) and 420.10).)

Section 420.80  Monthly Return

a)         Requirement for Filing

1)         Each manufacturer and importing distributor of alcoholic liquor must file a return on the form approved and provided by the Department between the 1^st and 15^th day of each calendar month, covering transactions in alcoholic liquors during the preceding calendar month.  Payment of the tax in the amount disclosed by the return shall accompany the return.

A)        Voluntary Electronic Filing and Payment of Taxes.  Beginning January 1, 2003, taxpayers may elect to file returns electronically under 86 Ill. Adm. Code 760.  A taxpayer that elects to electronically file a return and accompanying schedules must also make payment through Electronic Funds Transfer as provided in 86 Ill. Adm. Code 750.  Taxpayers who both timely pay tax by Electronic Funds Transfer and timely file returns and schedules electronically shall be entitled to a discount of 2% or $2,000 per return, whichever is less.

B)        Mandatory Electronic Payment of Taxes.  A  taxpayer who has an annual tax liability of $20,000 or more shall make all payments of that tax to the Department by electronic funds transfer. [20 ILCS 2505/2505-210]  

2)         After a first return has been filed by any manufacturer or importing distributor, a return form will be mailed by the Department on or about the first day of each succeeding month to that manufacturer or importing distributor.  However, it is the duty of each manufacturer and importing distributor to obtain forms, and failure to receive forms from the Department will not be an excuse for failing to file returns when and as required by the Act.

3)         Each manufacturer or importing distributor is required to file a return for each month that his or her license is in full force and effect, irrespective of the fact that he or she may not have any tax liability to pay for that month.

4)         In any case in which business is permanently discontinued, or when a stock of alcoholic liquors has been sold in bulk and the taxpayer has gone out of business, the taxpayer should immediately notify the Department of this fact, and upon a proper showing by the taxpayer that his or her license has been canceled by the Illinois Liquor Control Commission, he or she will be permitted to discontinue filing monthly returns.

5)         In completing the Liquor Revenue Return form, the amount of liquor manufactured, rectified, blended or bottled during the month must be included on the return by manufacturers of alcohol and spirits and by first and second class winemakers.  In the case of manufacturers of alcohol and spirits, this item shall include bottled alcoholic liquor produced by the manufacturer in Illinois and bulk alcoholic liquor for which a deduction is being claimed on any schedule accompanying the return.  In the case of first and second class winemaking, this item shall include all wine (whether immediately bottled or not) produced by the winemaker in Illinois.  Wineries that are licensed as manufacturers, but not as first or second class winemakers, do not report anything as manufactured, rectified, blended or bottled.

b)         Schedules Accompanying Return of Manufacturer or Importing Distributor of Alcoholic Liquor

1)         As part of the monthly return of a manufacturer or importing distributor of alcoholic liquor, and to be completed and filed supplementary to the return in specified instances, the Department requires the completion and filing of the schedules described in subsection (b)(2).  The totals of the several columns on each of the schedules must be carried to the corresponding columns and entered on proper lines according to the schedule designation on the monthly tax return.

2)         In every instance in which a manufacturer or importing distributor is required, by any particular schedule, to make a report of alcoholic liquors manufactured, imported, stored on hand or held in warehouses, purchased or otherwise acquired, sold or otherwise transferred, used, bottled, blended, fortified or rectified by that person, the person shall, to comply with the provisions of the Act, also include in the appropriate schedule the alcoholic liquors manufactured, imported, stored on hand or held in warehouses, purchased or otherwise acquired, sold or otherwise transferred, used, bottled, blended, fortified or rectified by that person as agent for others.

A)        Schedule "A" – Alcoholic Liquor Transactions. This schedule must be completed and filed monthly by each importing distributor who imports alcoholic liquors into this State.  This schedule consists of a detailed itemization of the importations, and the importing distributor must include in it all importations of alcoholic liquors, regardless of whether the merchandise is imported in bond or out of bond.  The mere fact that a warehouse acting as agent for the importing distributor receives the merchandise and issues a warehouse receipt does not relieve the importing distributor from reporting the transaction.  All alcoholic liquors imported and stored in public or bonded warehouses, for the account of an importing distributor, must be reported by the importing distributor in this schedule at the time the alcoholic liquors are imported and receipt of the alcoholic liquors for the account of the importing distributor is acknowledged by the warehouse.  This information may not be withheld until withdrawals of the alcoholic liquors from the warehouse are made.  Items of this nature should be reported as importations into Illinois.

B)        Schedule "F" – Alcoholic Liquor Transactions.  In this schedule, manufacturers of alcohol and spirits report only bottled alcoholic liquors purchased tax-free, including transfers in bond covered by the issuance, transfer or negotiation of warehouse receipts.  All other manufacturers and importing distributors, however, must report tax-free purchases of both bottled and bulk alcoholic liquors in this schedule, including transfers in bond covered by the issuance, transfer or negotiation of warehouse receipts.  Bottled alcoholic liquors purchased tax-free and stored in public or bonded warehouses for the account of a manufacturer of alcohol and spirits and all alcoholic liquors purchased tax-free and stored in public or bonded warehouses for the account of other manufacturers (such as wineries) and importing distributors, must be reported in this schedule at the time of purchase, and the report may not be withheld until the alcoholic liquors are withdrawn from the warehouse.

C)        Schedule "G" – Tax-Paid Inventory.  This schedule must be completed by manufacturers and importing distributors who purchase tax-paid alcoholic liquors.

D)        Schedule "C" – Tax-Free Alcoholic Liquor Sales in Interstate Commerce and Foreign Trade. This schedule must be filed by manufacturers or importing distributors who claim deductions on the monthly return of gallonage of alcoholic liquors sold by them and shipped tax-free in interstate or foreign commerce, or delivered tax-free to ships for use outside the continental limits of the United States in foreign commerce as provided in Section 420.140.  Manufacturers and importing distributors must include in the schedule bulk (as well as all other) alcoholic liquors shipped tax-free in interstate or foreign commerce, or delivered tax-free to ships for use outside the continental limits of the United States in foreign commerce as provided in Section 420.140. 

i)          Each manufacturer who includes tax exempt sales of bulk alcoholic liquor in this schedule must verify that the quantity so sold has been included in the Liquor Revenue Return inventory.

ii)         A separate Schedule "C" – Tax-Free Alcoholic Liquor Sales in Interstate Commerce and Foreign Trade must be filed covering shipments into each state.

E)        Schedule "B" – Tax-Free Sales of Alcoholic Liquors to Other Illinois-Licensed Manufacturers and Importing Distributors.  This schedule must be filed by Illinois manufacturers or importing distributors, if the product is manufactured outside of Illinois, who sell alcoholic liquors tax-free to other licensed manufacturers or importing distributors in Illinois. Each manufacturer, who includes in this schedule tax-free sales of bulk alcoholic liquors, must verify that the quantity so sold has been included in the Liquor Revenue Return inventory.  Manufacturers and importing distributors must include in this schedule tax-free sales and transfers of alcoholic liquors in bond, including alcoholic liquors covered by original, transferred or negotiated warehouse receipts.

F)         Schedule "E" –Tax-Free Alcoholic Liquor Sales for Non-Beverage Purposes.  This schedule must be filed by manufacturers and importing distributors who claim deductions on the monthly return for tax-free sales of alcoholic liquors made to holders of non‑beverage user's licenses.  Original permits or coupons permitting the tax-free purchase of alcoholic liquors for non‑beverage purposes must accompany this schedule.  This schedule must also be filed by manufacturers and importing distributors who claim deductions on the monthly return for tax‑free sales of alcoholic liquors to the United States or to a foreign government, their departments, agencies or instrumentalities, for non-beverage purposes.  Each manufacturer, who includes in this schedule sales of bulk alcoholic liquors, must verify that the quantity so sold has been included in the Liquor Revenue Return inventory.  Sales of wine for sacramental purposes must be reported as sales for non-beverage purposes.  The seller should keep in its books and records certifications covering each delivery, and statements signed by the minister, priest or rabbi, showing the quantity of wine in each delivery together with a statement that the wine will be used only for sacramental purposes (see Section 420.70 of this Part).

G)        Schedule "J" – Report of Alcoholic Liquors Lost, Destroyed, or Damaged During Production and Bottling.  Losses incurred during production and bottling alcoholic liquors carried in inventory on the Liquor Revenue Return at the time when the bottling loss occurs must be listed on this schedule.  Bottling losses will not be allowed as tax exempt unless accurate records are maintained and the deduction on the return is supported by this schedule.

H)        Schedule for "Other Illinois Liquor Tax Deductions".  This schedule should be used when manufacturers or importing distributors claim deductions on the monthly return for a gallonage of alcoholic liquors that may not be properly addressed by any of the other schedules supplied by the Department.  Deductions claimed should be explained in detail and filed with the monthly return.  Claimed exemptions from the tax will not be allowed at the time of audit unless supported by competent documentary evidence.  For example, if alcoholic liquors are dumped for the purpose of destroying the alcoholic liquors, claimed exemption from the tax will not be allowed unless supported by an affidavit of a Department or Liquor Control Commission representative who either witnessed the destruction of the alcoholic liquors or provided approval prior to destruction of the alcoholic liquors.  The licensee should retain a copy of the affidavit.  Each manufacturer, who includes in this schedule sales of bulk alcoholic liquors, must verify that the quantity so sold has been included in his Liquor Revenue Return inventory.

I)         Schedule "D" – Tax-Free Bulk Purchases Used in Rectification, Bottling and Blending.  This schedule must be filed by manufacturers of alcohol and spirits, and will consist of a detailed itemization of all purchases of alcoholic liquors in bulk only, to be used in rectification, bottling or blending, or for sale in original containers, with respect to which the Illinois Alcoholic Liquor Tax has not been paid.  All purchases of bulk alcoholic liquors must be included in this schedule irrespective of the fact that the alcoholic liquors are purchased in bond or imported in bond.  The fact that a warehouse, acting as agent for the manufacturer, may receive the alcoholic liquors and issue a warehouse receipt does not relieve the manufacturer from reporting the transaction.  All bulk alcoholic liquors purchased tax-free in Illinois or imported into Illinois by a manufacturer of alcohol and spirits and stored in a public or bonded warehouse for its account must be reported in this schedule at the time the alcoholic liquors are purchased by the manufacturer and received by the warehouse, and this information may not be withheld until the alcoholic liquors are withdrawn from the warehouse.  This is an information schedule only and is not to be entered on the monthly return.

J)         Returned Merchandise.  Alcoholic liquors returned by Illinois licensees to vendors from whom the alcoholic liquors were purchased, and who are located outside of the State of Illinois, must be reported the same as a sale in interstate commerce on Schedule "C"– Tax-Free Sales in Interstate Commerce and Foreign Trade.

i)          Alcoholic liquors returned to Illinois licensees by their customers located outside of the State of Illinois must be reported the same as an importation on Schedule "A" – Alcoholic Liquor Transactions.

ii)         When untaxed alcoholic liquors are returned to a manufacturer or an importing distributor, both parties being Illinois licensees, the person returning the liquors will report the transaction on Schedule "B"– Tax-Free Alcoholic Liquor Sales to Licensed Manufacturers and Importing Distributors, and the one receiving the returned liquors will report on Schedule "F"– Alcoholic Liquor Transactions.

iii)        Tax-paid alcoholic liquors returned to an Illinois manufacturer or importing distributor by someone in Illinois need not be scheduled by the person returning the liquors, but the person receiving the returned liquors must report the transaction on Schedule "G"– Tax-Paid Inventory, the same as a purchase of tax-paid alcoholic liquor.

c)         Statement By Out-of-State Sellers Other Than Illinois Licensed Foreign Importers

Out-of-State sellers, who are not licensed in Illinois as foreign importers, and who sell, to Illinois licensed importing distributors, beer, wine, or alcohol and spirits that are located at some place in the United States outside Illinois, and that are shipped or otherwise delivered into Illinois, are required to file with the Department, within 15 days after the end of each month, on forms prescribed and furnished by the Department, a statement setting forth the names and addresses of the persons in Illinois to whom beer, wine or alcohol and spirits were so sold and shipped or otherwise delivered during the preceding month and the respective quantities so sold and shipped or otherwise delivered.

d)         Information Returns From Illinois Licensed Foreign Importers

1)         The Department has determined it to be necessary, for the proper performance of its functions and duties under the Act, to require licensed foreign importers who are not also licensed in Illinois as importing distributors of alcoholic liquor to file a monthly information return with the Department.  The return must be filed by the 15^th day of the month following the month for which the return is filed.  The return shall contain such information as the Department may reasonably require.

2)         It is not necessary for the special foreign importer information return to be filed by any foreign importer who is also licensed in Illinois as an importing distributor of alcoholic liquor.

(Source:  Amended at 44 Ill. Reg. 265, effective December 23, 2019)

Section 420.90  Books and Records

a)         Manufacturers, Importing Distributors and Foreign Importers:

It is the duty of each manufacturer, importing distributor and foreign importer to keep, at his licensed address or place of business, complete and accurate records of all sales or other dispositions of alcoholic liquor, and complete and accurate records of all alcoholic liquor produced, manufactured, compounded or imported, whether for himself or for another, together with a physical inventory made as of the close of each period for which a return is required, covering all alcoholic liquors on hand.  All books and records, which manufacturers, importing distributors and foreign importers are required by the Act to keep, shall be preserved for a period of 3 years, unless the Department, in writing, authorizes their destruction or disposal at an earlier date.

b)         Shipping Records:

1)         Each manufacturer, importing distributor and foreign importer is required to retain invoices and bills of lading covering purchases and invoices and duplicate copies of bills of lading covering sales of alcoholic liquors.

2)         To support deductions on the ground that deliveries of alcoholic liquors were made outside this State, records shall include satisfactory evidence of delivery to and receipt by out-of-State consignees.  (See Section 420.30.)

c)         Inventories:

1)         A physical inventory must be taken and a record thereof preserved as of the close of business on the last business day of each calendar month.

2)         As to alcoholic liquors owned by them, manufacturers of alcohol and spirits shall include as "Inventory on Hand", only bottled alcoholic liquors and not bulk alcoholic liquors in stock.  As to alcoholic liquors lawfully held by them as agent for another, manufacturers of alcohol and spirits shall include, as "Inventory on Hand", all alcoholic liquors (whether bottled or in bulk) so held by them as agent.  Bottled alcoholic liquors owned by a manufacturer of alcohol and spirits and stored in bonded or other warehouses in Illinois, and bottled or bulk alcoholic liquors lawfully held by a manufacturer of alcohol and spirits as agent for another and stored in bonded or other warehouses in Illinois, must be included in inventory.

3)         Breweries shall include, as "Inventory on Hand", all beer which is on hand when the inventory is required herein to be taken and which has been removed from the Federally bonded premises of the brewery, together with all beer which is on hand when the inventory is taken and which is required to be reported in Schedules "F" – Alcoholic Liquor Transactions, and Schedule "G" – Tax-Paid Inventory, accompanying the Liquor Revenue Return.

4)         Wineries and wine-makers shall include, as "Inventory on Hand", all bottled wine, bulk wine remaining in bottling tanks and all barreled wine whether stored on the licensed premises or elsewhere in Illinois and whether stored in or out of bond, and this is true whether such wine is owned by the winery or lawfully held by the winery as agent for another.

5)         Importing distributors shall include in "Inventory on Hand", both bulk and bottled alcoholic liquors, including those in bond and other warehouses, and this is true whether such alcoholic liquors are owned by the importing distributor or whether such alcoholic liquors are lawfully held by the importing distributor as agent for another.

d)         Invoices of Sale:

1)         Each manufacturer and importing distributor must at the time of sale of any alcoholic liquors render to the purchaser an invoice describing the alcoholic liquor sold (including the tax rate category applicable to the product sold, as described in Section 420.10(a) of this Part), the date of sale, to whom sold, and the quantity sold.  Duplicate copies of all such invoices must be made and preserved by such manufacturer or importing distributor for audit purposes.

2)         Where a manufacturer or importing distributor sells alcoholic liquors to a licensed retailer or distributor, each original and duplicate invoice pertaining to such sale must be printed, stamped, or bear in writing language substantially as follows:

"Payment of Illinois Liquor Tax made by vendor issuing this invoice."

3)         This legend must appear on sales invoices covering tax-paid containers of alcoholic liquors even though the licensed manufacturer or importing distributor purchased the containers of alcoholic liquors covered therein tax-paid.

4)         Where a manufacturer or importing distributor sells any alcoholic liquors to another licensed manufacturer or importing distributor and does not assume the tax liability, each such invoice covering such sale must be printed, stamped or bear written language substantially as follows:

"Liquors described herein sold without payment of Illinois tax to holder of Illinois License No.            "

5)         Where a manufacturer or importing distributor sells alcoholic liquors to a second manufacturer or importing distributor and assumes payment of gallonage tax with respect to such sales, invoices pertaining to such sales should be stamped with the language first set forth in subsection (d)(2).

6)         Failure of any manufacturer or importing distributor to print, stamp or write upon any invoice covering alcoholic liquors sold in Illinois any statement relating to payment of Illinois gallonage tax will oblige the Department to assume that the alcoholic liquors described therein were sold to persons not licensed as Illinois manufacturers or importing distributors, and the vendor is liable for tax with respect to such sales.

e)         Bottling Losses:

At the time of an audit no deduction for bottling losses will be allowed unless accurate records are kept for each month, day by day, of the gallonage dumped or tanked for bottling and the number of cases and bottles produced therefrom, together with an inventory of the amount of beer, wine or alcohol and spirits remaining in the tanks at the end of each month. This deduction is allowable only when it relates to alcoholic liquors which are carried in inventory in the Liquor Revenue Return at the time when such bottling loss occurs.

f)         License Numbers For Purchasers Must Appear On Sales Records:

No manufacturer or importing distributor shall sell or deliver any original package of alcoholic liquor to another person for resale, unless the person to whom such package is sold or delivered is authorized to receive such package in accordance with the provisions of the Act.  All manufacturers or importing distributors must place the license number, if any, of the person receiving such liquors for resale on all receipts, bills, invoices, statements, etc., covering such sales or deliveries.

g)         Records Maintained At Licensed Address:

Books and records of manufacturers and importing distributors must be maintained at the licensed addresses of such manufacturers and importing distributors.  The Department may in its discretion prescribe uniform methods for keeping such records.

h)         Breakage Losses:

1)         At the time of an audit or hearing, no gallonage deduction, on account of breakage, which occurs on the premises of a manufacturer or importing distributor, will be allowed unless complete and accurate records are kept for each month, day by day, of the gallonage spilled or wasted by reason of breaking of containers.

2)         The entry must be made in the breakage record on the date that the loss through breakage occurs, and entry should include the date, the number of bottles, cases or other containers broken, the gallonage of each class of alcoholic liquors spilled or lost from each type of container and the total gallonage lost on that particular day.  In addition, the claimed loss through breakage will not be allowed unless the entries made in the licensee's breakage record are carried over to and entered in such licensee's general books and records.

3)         Likewise, at the time of an audit or hearing, no gallonage deduction on account of breakage, which occurs off the premises of a manufacturer or importing distributor, will be allowed unless supported by competent documentary proof from an independent source.

4)         No allowance for breakage will be made unless the containers of alcoholic liquors which are involved have not had tax paid with respect thereto and unless the alcoholic liquors which are involved are carried in inventory in the Liquor Revenue Return at the time when such breakage occurs.

(Source:  Amended at 26 Ill. Reg. 830, effective January 03, 2003)

Section 420.100  Carriers

a)         It shall be the duty of every railroad company, express company, common or contract carrier, and of every person, firm or corporation that shall bring, carry or transport alcoholic liquors into the State of Illinois for delivery in the State or which are delivered in the State, to prepare and file with the Department of Revenue for each month, not later than the 15th day of the month following that for which it is made, a report stating therein the name of the company, carrier, person, firm or corporation making the report, the period of time covered by the report, the name and business address of each consignor of such alcoholic liquors, the name and business address of each consignee of such alcoholic liquors, the kind and quantity of alcoholic liquors delivered to each consignee, and the date or dates of delivery.  Such report shall be made upon forms prescribed and made available by the Department and shall contain such other information as may reasonably be required by the Department. Reports shall also be filed for shipments to end consumers in this State.  In furtherance of this requirement, it shall be the duty of every railroad company, express company, common or contract carrier, person, firm, or corporation that brings, carries, or transports alcoholic liquor into Illinois for delivery in Illinois to prepare and file with the Department for each month, not later than the 15th day of the month following the month during which the delivery is made, a report containing the name of the company, carrier, person, firm, or corporation making the report, the period of time covered by the report, the name and business address of each consignor of the alcoholic liquor, the name and address of each consignee, and the date of delivery.  The reports shall be made upon forms prescribed by the Department.  Any reports required by this subsection shall be made available to the Illinois Liquor Control Commission upon the Commission's request.

b)         The books, records, supporting papers and documents containing information and data relating to such reports shall be kept and preserved for a period of three years, unless their destruction sooner is authorized, in writing, by the Director, and shall be open and available to inspection by the Director of Revenue or any duly authorized officer, agent or employee of the Department, at all times during business hours of the day.  Every railroad company, express company, common or contract carrier, person, firm, or corporation filing or required to file reports described in subsection (a) of this Section shall, within 30 days after a request by the Department, deliver and make available to the Department the records supporting the reports.

c)           Common or contract carriers will be required to furnish to the Department information covering specific shipments of alcoholic liquors into Illinois when requested to do so, and will also be required to report to the Department upon request all shipments consigned to specific areas during specified periods.

(Source:  Amended at 26 Ill. Reg. 830, effective January 03, 2003)

Section 420.110  Sales to Governmental Bodies

a)         Sales to Governmental Bodies for Beverage Purposes:

In general, manufacturers and importing distributors are liable for gallonage taxes with respect to alcoholic liquors sold by them to governmental bodies (foreign, Federal, State or local), their departments, agencies and instrumentalities, for beverage purposes, if such alcoholic liquor is delivered in Illinois (including any Federal area located within the external boundaries of the State of Illinois) to the purchaser.  However, direct sales of beer, wine, alcohol or spirits to the United States Navy, Army or Air Corps may be made by manufacturers and importing distributors tax-free, provided that such sales are made to officially recognized agencies physically located at military bases.

b)         Sales to Governmental Bodies for Non-Beverage Purposes:

1)         Manufacturers or importing distributors selling alcoholic liquor to the United States or to a Foreign Government, their departments, agencies or instrumentalities, for non-beverage purposes, are liable for liquor gallonage taxes in the absence of proper evidence covering such sales. However, when making such sales, manufacturers and importing distributors are not liable for liquor gallonage tax if they comply with the following requirements:  To claim exemption from the tax when selling alcoholic liquor to the United States or to a Foreign Government, their departments, agencies or instrumentalities, for non-beverage purposes, the manufacturer or importing distributor making such sale should obtain a written statement, signed by an authorized officer or employee of the purchaser and showing the name and address of the seller, the name and address of the purchaser, the date of the purchase and the kind and quantity of alcoholic liquor covered by the statement, and certifying that the alcoholic liquor so purchased is purchased by the named Federal or Foreign governmental body for non-beverage use (describing the alleged non-beverage use with particularity).  The manufacturer or importing distributor making the sale should obtain such statement in duplicate, forward one of the statements to the Department upon request  and retain one among his books and records.  The manufacturer or importing distributor is further required to show the transaction in his monthly return in Schedule "E" – Tax-Free Alcoholic Liquor Sales for Non-beverage Purposes (see Section 420.80(b)(2)(F)).

2)         Sales of alcoholic liquor to State and local governmental bodies for non-beverage purposes are treated the same as sales to other licensed non-beverage users (see Section 420.50 and Section 420.80(b)(2)(F)).

(Source:  Amended at 26 Ill. Reg. 830, effective January 03, 2003)

Section 420.120  Warehousing of Liquors

a)         Certificate of Registration:

Every warehouseman in Illinois who stores any alcoholic liquors for compensation shall make application to the Department for a Certificate of Registration for each location where liquors will be stored.  The application shall state:

1)         The name of the applicant;

2)         the address of his warehouse (if he operates more than one such warehouse, he shall state the address of each such warehouse);

3)         the principal office address if different from the warehouse;

4)         the kind of ownership of the business, viz:  Individual, partnership or corporation, and

5)         such other information as the Department may reasonably require. Forms for such application shall be obtained from the Department.  The Certificate of Registration shall be framed and conspicuously displayed on the premises for which it is issued.

b)         Monthly Returns:

            On or before the 15th day of each calendar month, every warehouseman holding a Certificate of Registration issued by the Department under Article VII-A of the Act shall file a return with the Department covering the preceding calendar month, stating:

1)         The name of the warehouseman;

2)         the number of his Certificate of Registration;

3)         the address of the warehouse;

4)         the name and address of each person from whom any alcoholic liquors were actually or constructively received by him as a warehouseman;

5)         the date or dates on which such alcoholic liquor was so received;

6)         the number and size of the containers in which any alcoholic liquors were so received;

7)         the number and size of the containers to the credit of each such person at the end of the preceding calendar month;

8)         the name and address of each person to whom any alcoholic liquors were actually or constructively delivered by him as a warehouseman;

9)         the date or dates on which the same were so delivered;

10)       the number and size of the containers in which any alcoholic liquors were so delivered, and

11)       from whom any alcoholic liquors so delivered were actually or constructively received.  If no liquors were in storage in any month, the return form should so indicate and be executed and filed in the usual way. Forms for the return are furnished by the Department on request.

c)         Records:

Each warehouseman included in Article VII-A of the Act shall keep or cause to be kept, at his registered address, a record showing all alcoholic liquors actually or constructively received by him as a warehouseman, held, stored or actually or constructively delivered by him as a warehouseman, the name and address of the person depositing same, the name and address of the person to whom delivered and any other information necessary to the proper conduct of such warehouse.  Such records shall, at all times during business hours of the day, be subject to inspection by the Department or its duly authorized agents and employees.  Such records shall be preserved for a period of three (3) years, unless the Department, in writing, authorizes their destruction or disposal at an earlier date.

d)         Final Return:

When storage of alcoholic liquors for compensation is discontinued the Certificate of Registration must be sent to the Department for cancellation accompanied by a final return showing the disposition of alcoholic liquors in storage at the date of discontinuation of business.

e)         Definitions:

1)         "Warehouse" means any room, house, structure, building, place, yard or protected enclosure wherein personal property belonging to another is stored for a compensation.

2)         "Warehouseman" means any person, firm, partnership, association or corporation owning, controlling, operating, managing or leasing any warehouse within this State.

3)         "For compensation" means any direct or indirect charge for storage.

f)         Penalty:

Any person who violates any of the provisions of the Act relating to warehouses, or any of the Rules of the Department for the administration and enforcement thereof, is guilty of a misdemeanor, and upon conviction shall be fined not more than one thousand dollars ($1,000.00), or imprisoned in the county jail for not more than six (6) months, or both in the discretion of the court.  Each day's continuation of such violation shall be a separate and distinct offense.

Section 420.130  Non-Beverage User's Books and Records

a)         Every person licensed as a non-beverage user shall keep books and records which shall be available to investigators or auditors of the Department during regular business hours, and shall retain such books and records at his place of business in Illinois for a period of not less than three years.  Such books and records shall be so kept as correctly to disclose:

1)         The quantity and kind of alcoholic liquors received, showing the name and address of the party from whom received and the permit number on which purchased;

2)         the quantity and kind of alcoholic liquors used;

3)         the quantity and kind of alcoholic liquors on hand at the close of each business day; and

4)         the names of products or purposes for which alcoholic liquors are used.

b)           No non-beverage user shall sell, give away or otherwise dispose of any alcoholic liquor purchased under his license as such non-beverage user, in any form fit for beverage purposes.  Any non-beverage user who violates the provisions of Section 8-11 of the Act shall pay as a penalty to the Department of Revenue the sum of $1.50 for each gallon of alcoholic liquor so diverted, and, in addition, shall be subject to the penalties provided in Section 10-1 of the Act.

(Source:  Amended at 26 Ill. Reg. 830, effective January 03, 2003)

Section 420.140  Tax-Free Sales of Alcoholic Liquor for Use Aboard Ships Operating in Foreign Commerce Outside the Continental Limits of the United States

a)         Subject to the conditions stated in this Section, Illinois licensed manufacturers and importing distributors of alcoholic liquor may make tax-free sales of alcoholic liquor to operators of ships docked in the Port of Chicago where such liquor will be used aboard those ships operating in foreign commerce outside the continental limits of the United States.  However, such sales of alcoholic liquor may not be made tax-free for use on ships operating exclusively on the Great Lakes or the St. Lawrence Seaway between the United States and Canadian ports.

b)         In order for the exemption to apply where the alcoholic liquor will be used aboard ships operating in foreign commerce outside the continental limits of the United States, the sale must be made by an Illinois licensed manufacturer or importing distributor.  Only alcoholic liquor that is exempt from the Federal tax can qualify for the exemption provided for in this Section.

c)         In addition, to sustain a claim to such exemption, the manufacturer or importing distributor shall, upon request of the Department, supply a written statement for the month in which the exemption is claimed, showing the following information:

1)         The name of the manufacturer or importing distributor making the sale;

2)         the name of the ship to which the manufacturer or importing distributor delivers the alcoholic liquor and the name of the shipping line operating such ship;

3)         the kind of alcoholic liquor (including the tax rate category applicable to each product, as described in Section 420.10(a)(1) at this Part) delivered to such purchaser, and the quantity of each such kind of alcoholic liquor so delivered;

4)         the date and place of such delivery; and

5)         a statement that the alcoholic liquor is to be used aboard such ship in foreign commerce outside the continental limits of the United States.

d)           This deduction or claimed exemption must be substantiated by the records the manufacturer or importing distributor keeps to comply with customs' requirements of the Federal Government, and such records must be made available to the Department on request for examination at any time during the usual business hours of the day.

(Source:  Amended at 26 Ill. Reg. 830, effective January 03, 2003)

Section 420.150  Criminal Investigations

a)         All information received by the Department from returns filed under this Act [Liquor Control Act of 1934], or from any investigation conducted under this Act, shall be confidential, except for official purposes, and any person who divulges any such information in any manner, except in accordance with a proper judicial order or as otherwise provided by law, shall be guilty of a Class B misdemeanor. 235 ILCS 5/8-9.

b)         When the Department is engaged in a joint investigation with a law enforcement authority, including, but not limited to, State agency law enforcement, federal agency law enforcement, county sheriffs or municipal police, to enforce the Liquor Control Act of 1934 or another tax act administered by the Department, it is an official purpose within the meaning of Section 8-9 of the Liquor Control Act of 1934 for the Department to furnish information it receives in administering the Liquor Control Act of 1934 with the law enforcement authority. The information shall be provided subject to all confidentiality provisions of Section 8-9 of the Liquor Control Act of 1934. A person receiving information pursuant to an official purpose who divulges any such information in any manner, except in accordance with a proper judicial order or as otherwise provided by law, shall be guilty of a Class B misdemeanor.

(Source:  Added at 46 Ill. Reg. 6759, effective April 12, 2022)