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Illinois - Sales and Use Tax Exemptions and Exemption Certificates

Retailers and service providers are required to pay Illinois Sales Tax (Retailers’ Occupation Tax) and (Service Occupation Tax) on certain sales of tangible personal property. Illinois "Sales tax" is the combination of all state, local, mass transit, water commission, home rule occupation and use, non-home rule occupation and use, park district, and county public safety taxes.

ILLINOIS EXEMPTIONS:

Illinois Exempt Products: Sales of newspapers and magazines; legal tenders, medallions, and gold bullion issued by qualifying governments; sales of tangible personal property to interstate carriers for hire used as rolling stock; jet fuel used in the operation of high impact service facilities; sales of machinery and equipment that will be used primarily in manufacturing or assembling of tangible personal property for wholesale or retail sale or lease and production agriculture; machinery and equipment that replaces machinery and equipment in an existing manufacturing facility as well as machinery and equipment that are for use in an expanded or new manufacturing facility.

Illinois Exempt Organizations: State, local, and federal governments, not-for-profit organizations that are exclusively charitable, religious, or educational; certain senior citizen organizations; county fair associations; not-for-profit organizations that are operated primarily for arts or cultural purposes; certain licensed day care centers (Regulation 130.120, Regulation Section 140.125)

CAUTION : Sales tax exemptions mentioned above are very briefly described. Please see the exemption statute and the applicable regulations for details. Transactions that do not meet the requirements of the exemption statute and its applicable regulations do not qualify for the sales tax exemptions.

ILLINOIS EXEMPTION CERTIFICATES: Customers who make tax-exempt purchases must provide retailers with proper documentation. Retailers who cannot properly document a tax-exempt sale will be liable for paying sales tax on the transaction.

  • CRT-61 Certificate of Resale (Regulation 130.1415)
  • CRT-62 Certificate of Purchase for Expanded Temporary Storage
  • RUT-7 Rolling Stock Certification : The rolling stock exemption applies to items (including repair and replacement parts) that are purchased or used by interstate carriers for hire to be used as rolling stock in interstate commerce.
  • Form ST-587, Machinery and Equipment Exemption Certificate:
  • The graphic arts machinery and equipment exemption applies to purchases of machinery and equipment used primarily (more than 50 percent of the time) in graphic arts production.
  • The farm machinery and equipment exemption applies to purchases of farm machinery and equipment used or leased for use primarily in production agriculture or for use in state or federal agricultural programs; the exemption also applies to repair and replacement parts for qualifying machinery and equipment.
  • The manufacturing machinery and equipment exemption applies to purchases of machinery and equipment used primarily in manufacturing or assembling items for wholesale or retail sale or lease.
  • To document tax-exempt purchases from exempt organizations, retailers must request from the purchaser either a copy of the purchaser’s exemption letter issued by the department or the purchaser’s “E” number. To apply, for an exemption number the organization should send a letter requesting the exemption along with a copy of the minimal documentation including the articles of incorporation, organization's constitution, if unincorporated, by-laws, detailed narrative that explains purposes, functions, and activities of your organization, IRS letter, respecting federal tax-exempt status; brochures and recent financial statement. (Regulation 130.2007)

Tax Publication 104 explains the procedures that retailers must follow in documenting several of the most common Illinois Sales Tax exemptions.

ILLINOIS EXEMPTION CERTIFICATE VERIFICATION: A retailer must contact the Department's Division of Central Registration (217- 785-3707) to verify that a purchaser's resale number is valid. In addition, a retailer may contact the Department's Sales Tax Division (217-782-8881) to verify that a Department issued "E-Number" is valid at the time of purchase.

 
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