Section 280.101  Nature of the Home Rule Municipal Service Occupation Tax

a)         Authority to Impose Tax

1)         Pursuant to Section 8-11-5 of the Illinois Municipal Code [65 ILCS 5], the corporate authorities of a home rule municipality may impose a tax upon all persons engaged, in such municipality, in the business of making sales of service at the same rate of tax imposed pursuant to Section 8-11-1 of the Illinois Municipal Code [65 ILCS 5/8-11-1], of the selling price of all tangible personal property transferred by such servicemen either in the form of tangible personal property or in the form of real estate.  If imposed, such tax shall only be imposed in ¼% increments. 

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

3)         Beginning December 1, 2019, this tax may not be imposed on sales of aviation fuel unless the tax revenue is expended for airport-related purposes.  If a municipality does not have an airport-related purpose to which it dedicates aviation fuel tax revenue, then aviation fuel shall be excluded from tax.  Each municipality must comply with the certification requirements for airport-related purposes under Section 2-22 of the Retailers' Occupation Tax Act [35 ILCS 120].  [65 ILCS 5/8-11-5]  "Aviation fuel" means jet fuel and aviation gasoline.  [35 ILCS 115/9]  "Airport-related purposes" has the meaning ascribed in Section 6z-20.2 of the State Finance Act [30 ILCS 105].  This exception for aviation fuel only applies for so long as the revenue use requirements of 49 U.S.C. 47107(b) and 49 U.S.C. 47133 are binding on the State. 

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

b)         Passing on the Tax

The legal incidence of the Home Rule Municipal Service Occupation Tax is on the serviceman.  Nevertheless, the General Assembly has authorized persons subject to this tax to reimburse themselves for their serviceman's tax liability by separately stating such tax as an additional charge, which charge may be stated in combination, in a single amount, with State tax which servicemen are authorized to collect under the Service Use Tax Act [35 ILCS 115], pursuant to such bracket schedules as the Department has prescribed.  [65 ILCS 5/8-11-5]  (See 86 Ill. Adm. Code 150.Table A).

c)         Exclusion from "Selling Price "

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

(Source:  Amended at 49 Ill. Reg. 3219, effective February 26, 2025)