It sometimes seems we’ve no end to taxes in Illinois. You’d be forgiven thinking that Illinois sales tax (technically the retailer’s occupation tax or ROT) applies to pretty much all situations and in any situation where it doesn’t, some other tax would apply. Examples would include use tax, service tax, motor fuel tax, and so on. Nevertheless, there remain exemptions to sales and related taxes.
Two exemptions are most well known. The first is that for interstate commerce. It applies to sales delivered and used outside of Illinois. The second exemption is for sales to not-for-profit charitable, religious and education organizations. These are not the only exemptions, however, just the two most well known. Some additional exemptions include:
- Machinery and equipment used more than 50% of the time for manufacturing or assembly of products sold or leased at wholesale or retail.
- Farm machinery and equipment (other than motor vehicles) used in agriculture.
- Machinery and equipment used
- Rolling Stock
- Building materials
- Gold Bullion
In our experience, the actual application of these exemptions is rarely as neat and tidy as reading the list might lead you to expect. There are nuances to their application and the key to determine their applicability is a full understanding of the facts and circumstances. The full situation needs to be considered before you can figure out whether any of the above exemptions apply and to what extent they do. Clients are sometimes not aware of how important it is to disclose the facts of their business extensively to determine the appropriate tax treatment.
Horowitz Law Offices represents clients seeking to determine whether a Sales Tax (Retailer Occupation Tax) applies to their situation. You are welcome to ask questions at 312 787 5533 or firstname.lastname@example.org.