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Illinois Department of Revenue
Common Sales Tax Exemptions
Publication 104
Purpose:
To explain the procedures that Sales to exempt Sale for resale
retailers must follow in document-
ing several of the most common organizations Illinois businesses may purchase
In Illinois, only organizations that items tax free to resell. Sales tax is
Illinois Sales Tax exemptions
have applied for and received an then collected and paid when the
Objectives: exemption identification number (“E” items are sold at retail.
number) from the Illinois Department To document tax-exempt purchases
To identify several of the most
of Revenue qualify as sales-tax- of such items, retailers must keep in
common exemptions
exempt purchasers. Examples of their books and records a certificate
To explain how retailers and organizations that may qualify for tax- of resale containing
servicepersons must document exempt status include units of govern- the seller’s name and address,
sales of tax-exempt items ment, churches, charities, schools,
the purchaser’s name and address,
To provide additional references county fair organizations, and certain
for information about each senior citizen organizations. Once an identification or description of
exemption such organizations have been the items purchased for resale,
granted their “E” numbers, they may a statement from the purchaser
purchase items tax free to further that the items are being purchased
General information their organizational purposes. for resale,
Retailers and servicepersons are To document tax-exempt purchases the purchaser’s signature and the
required to pay Illinois Sales Tax from such organizations, retailers date of signing, and
(Retailers’ Occupation Tax and must request from the purchaser one of the following:
Service Occupation Tax) on certain either
— the purchaser’s active Illinois
sales of tangible personal property. a copy of the purchaser’s exemp- business tax number (IBT)
In meeting their sales tax obliga- tion letter issued by the depart- number issued by the depart-
tions, retailers and servicepersons ment or ment,
are permitted to reimburse them- the purchaser’s “E” number. (In this — the purchaser’s active resale
selves by collecting the tax from case, before completing the number issued by the depart-
their customers. transaction, retailers should verify ment, or
Customers who make tax-exempt this number by calling the depart-
— a statement that the purchaser
purchases must provide retailers ment at 217 782-8881).
is an out-of-state purchaser who
with proper documentation. In some For more detailed information about will always sell (and deliver) to
cases, retailers are required to exempt organizations, see 86 Illinois his or her customers outside
submit this documentation with their Administrative Code 130.2005 and Illinois.
tax returns; see the instructions for 130.2007, and Brochure PIO-37.
each return for further information. Purchasers may either document their
Retailers who cannot properly tax-exempt purchases by completing
document a tax-exempt sale will be Form CRT-61, Certificate of Resale,
liable for paying sales tax on the or by making their own certificate. A
transaction. copy of the certificate must be
provided to the retailer. Certificates of
To obtain one of our forms or a copy Resale should be updated at least
of the administrative code, please every three years.
see the phone numbers and ad- For more detailed information about
dresses listed at the end of this this exemption, see 86 Illinois Admin-
publication. istrative Code 130.1405.
Page 1 of 4
Common Sales Tax Exemptions
Commercial Distribution “D” plates and pays the Commer- for which the purchaser is applying for
cial Distribution Fee. apportioned plates. In this situation, the
Fee (CDF) Sales Tax dealer completes a “title only” applica-
Purchases of repair and replacement
Exemption parts may qualify for a sales tax tion at the time of purchase and the
Through June 30, 2005, the CDF exemption if the motor vehicle or trailer purchaser applies for the necessary
sales tax exemption applies to the is used in a manner that qualifies for registration with the Illinois Secretary of
purchase of a second division motor the rolling stock exemption. Use Form State. The purchaser will then be
vehicle or trailer if all of the following RUT-7, Rolling Stock Certification, to required to pay the Commercial
qualifications are met. document the sale of repair and Distribution Fee directly to the Illinois
1 The manufacturer’s gross vehicle replacement parts for a motor vehicle Secretary of State.
weight rating (GVWR) is more than or trailer for which the CDF sales tax For more detailed information about
8,000 pounds. exemption was claimed. this exemption, see 86 Illinois Admin-
2 The motor vehicle or trailer will be The purchaser must continue to pay istrative Code 130.341.
used primarily for commercial the Commercial Distribution Fee in
subsequent years. Otherwise, the
Rolling stock
purposes.
vehicle no longer qualifies for the The rolling stock exemption applies to
3 The Commercial Distribution Fee items (including repair and replace-
administered by the Illinois Secre- CDF sales tax exemption and Illinois
Use Tax is due on the purchase price. ment parts) that are purchased or
tary of State is paid used by interstate carriers for hire to
— when the vehicle or trailer is To properly document the exemption, be used as rolling stock in interstate
registered at the time of pur- registered dealers must keep in their commerce.
chase (or, directly to the Illinois books and records a written certifi-
cate from the purchaser stating the The rolling stock exemption qualifica-
Secretary of State when the tions are based on the type of item
purchaser applies for appor- following:
sold as shown in the next two sec-
tioned plates) and the name and address of pur- tions.
— in subsequent registration years. chaser;
Note: If the original purchase of a
Note: “Used for commercial pur- the description and Vehicle Identifi- second division motor vehicle or
poses” means that persons or prop- cation Number of the motor vehicle trailer qualified for the CDF sales tax
erty are transported as part of a or motor vehicles being purchased; exemption, the following criteria must
commercial or industrial enterprise, the name and address of seller; be met for any repair or replacement
whether for-hire or not. the date of purchase; parts purchases to qualify for the
Although the Commercial Distribution a statement that the vehicle will be rolling stock exemption.
Fee may be imposed and paid, that registered under Section 3-815(a) 1. For aircraft, watercraft, and rail
does not mean that the second or 3-818(a) of the Illinois Vehicle carrier items (and repair and
division motor vehicle or trailer Code or in such other manner replacement parts)
purchase automatically qualifies for whereby the registration of that The aircraft, watercraft, or rail
the CDF sales tax exemption. All motor vehicle will require the carrier item must be used by an
other qualifications identified in this payment of the Commercial interstate carrier for hire to carry
publication must be met. Distribution Fee imposed under persons or commodities in inter-
Examples of purchases that do not Section 3-815.1 of the Illinois state commerce on a regular and
qualify for the exemption are listed Vehicle Code and that such vehicle frequent basis.
below. will remain validly registered in 2. For second division motor
1 The purchase of a pick-up truck such a manner for subsequent vehicles and trailers (and repair
with a manufacturer’s GVWR of registration years; and and replacement parts)
7,000 pounds, even if the pur- the signature of purchaser. A motor vehicle must have a
chaser claims that the vehicle will To document their tax-exempt pur- gross vehicle weight rating
carry loads that will cause it to chases of qualified items, purchasers (GVWR) greater than 16,000
weigh more than 8,000 pounds. may complete Form CDF-7, Commer- pounds. The GVWR is the weight
2 The purchase of a pick-up truck cial Distribution Fee (CDF) Sales Tax identified by the manufacturer or
with a GVWR of 8,200 pounds to Exemption Certification, and provide manufacturers as the maximum
be used primarily for personal use. a copy to their sellers. loaded weight that the motor
3 The purchase of a sports utility The only “title only” transactions for vehicle can carry safely.
vehicle (SUV) with a GVWR of which the CDF sales tax exemption can
7,000 pounds when the purchaser be claimed at the time of purchase are
chooses to register the vehicle with those purchases from Illinois dealers
Page 2 of 4 PUB-104 (R-7/04)
Common Sales Tax Exemptions
A motor vehicle or trailer must — possess a valid number issued their books and records an exemption
carry persons or property for hire by another regulatory agency, certificate containing
in interstate commerce for either such as the Federal Aviation the seller’s name and address,
— more than 50 percent of its total Administration.
the purchaser’s name and address,
trips in a 12-month period, or To document tax-exempt purchases
an identification or description of
— more than 50 percent of its total of such items, retailers must keep in
the items purchased,
miles in a 12-month period. their books and records
a statement from the purchaser
Trips or mileage of a motor vehicle the seller’s name and address,
that the items are being used
or trailer for which persons or the purchaser’s name and address, primarily in production agriculture
property are carried for hire just the purchaser’s certification or in a state or federal agricultural
between points in Illinois may be number as described above, program, and
used to qualify for the exemption if
an identification or description of the purchaser’s signature and the
the journey of the passenger or
the items purchased, date of signing.
shipment of the property either
originates or terminates outside a statement that the purchaser is Purchasers may document their tax-
Illinois. purchasing the items for use as exempt purchases either by complet-
rolling stock in interstate com- ing Form ST-587, Machinery and
It is not the type of item that deter-
merce for hire, and Equipment Exemption Certificate, or
mines whether or not it qualifies for
the purchaser’s signature and the by making their own certificate. A copy
use as rolling stock, but how the item
date of signing. of the certificate must be provided to
is used by an interstate carrier for
the retailer.
hire. Only those items specifically Purchasers of vehicles should
used as rolling stock will qualify for document their tax-exempt purchases For more detailed information about
this exemption. For example, items do by completing Form RUT-7, Rolling this exemption, see 86 Illinois Admin-
not qualify for use as rolling stock Stock Affidavit, and providing a copy istrative Code 130.305.
when they are used only to their retailers. Purchasers also
must identify which method will be
Manufacturing machin-
to transport company officers,
employees, customers or others used to document the exemption — ery and equipment
not for hire (even if the persons trips or mileage. This choice must be The manufacturing machinery and
cross state lines); or documented on the required tax equipment exemption applies to
return. Once made, this election purchases of machinery and equip-
to transport property that a busi-
cannot be changed. If no choice is ment used primarily (more than 50
ness owns or is selling and deliver-
indicated, the purchaser will be percent of the time) in manufacturing
ing to customers (even if the items
deemed to have chosen the mileage or assembling items for wholesale or
cross state lines); or
method. retail sale or lease.
as support vehicles (other than
For more detailed information about To document tax-exempt purchases
those specifically used for “escort”
this exemption, see 86 Illinois Admin- of such items, retailers must keep in
service) when the vehicles do not
istrative Code 130.340. their books and records one of the
haul persons or commodities for
following:
hire in interstate commerce. Farm machinery and the purchaser’s active Illinois
Purchasers must provide documenta- equipment business tax number (IBT) issued
tion to retailers that they are interstate
The farm machinery and equipment by the department
carriers for hire.
exemption applies to purchases of the purchaser’s active resale
When required by law, the carrier farm machinery and equipment used number issued by the department
must possess a valid certificate of or leased for use primarily (more than
authority number issued by the an exemption certificate containing
50 percent of the time) in production
federal Interstate Commerce agriculture or for use in state or — the seller’s name and address,
Commission (ICC). federal agricultural programs; the — the purchaser’s name and
When not required by law to exemption also applies to repair and address,
possess the certificate named replacement parts for qualifying — an identification or description of
above, the carrier must either machinery and equipment. Excluded the items purchased,
— possess a valid certificate of from this exemption are motor
— a statement from the purchaser
authority number issued by the vehicles required to be registered
that the items are being used
Illinois Commerce Commission under the Illinois Motor Vehicle Code.
primarily in manufacturing or
for a qualifying vehicle or To document tax-exempt purchases assembling items for wholesale
of such items, retailers must keep in or retail sale or lease, and
PUB-104 (R-7/04) Page 3 of 4
Common Sales Tax Exemptions
— the purchaser’s signature and Interstate commerce Recently repealed
the date of signing. The interstate commerce exemption exemptions
Purchasers may document their tax- applies to sales made from Illinois Effective July 1, 2003, several exemp-
exempt purchases either by complet- businesses that are delivered outside tions have been repealed. These
ing Form ST-587, Machinery and Illinois and are not returned to Illinois exemptions are listed below.
Equipment Exemption Certificate, or for use.
by making their own certificate. A copy Pollution control facilities
The documentation to validate use of
of the certificate must be provided to this exemption depends upon the Oil field exploration, drilling, and
the retailer. manner in which the merchandise is production equipment
For more detailed information about delivered. Coal exploration, mining,
this exemption, see 86 Illinois Admin- If the item is shipped by common offhighway hauling, processing,
istrative Code 130.1405. carrier, retailers must keep in their maintenance, and reclamation
books and records a waybill or bill equipment
Graphic arts machinery Distillation machinery and equip-
of lading showing the delivery
and equipment address outside Illinois. ment
The graphic arts machinery and If the item is sent by mail, retailers Aggregate exploration, mining,
equipment exemption applies to must keep in their books and offhighway hauling, processing
purchases of machinery and equip- records a receipt from the U.S. maintenance, and reclamation
ment used primarily (more than 50 Postal Service showing the name equipment
percent of the time) in graphic arts of the addressee, the delivery Machines and parts for machines
production. address outside Illinois, and the used in commercial, coin-operated
To document tax-exempt purchases date the item was mailed. amusement and vending busi-
of such items, retailers must keep in If retailers use their own transpor- nesses if a use or occupation tax is
their books and records an exemption tation equipment, they must keep paid on the gross receipts from
certificate containing in their books and records a trip these machines
the seller’s name and address, sheet containing the name, ad-
the purchaser’s name and address, dress, and signature of the out-of-
Other exemptions
state purchaser and the signature The exemptions discussed above do
an identification or description of not represent a comprehensive list of
the items purchased, of the person making the delivery.
Illinois Sales Tax exemptions. If you
a statement from the purchaser This exemption does not apply to
have questions about any exemption,
that the items are being used sales to out-of-state buyers in which
write or call us.
primarily in graphic arts production, the buyer takes physical possession
and of the item in Illinois.
the purchaser’s signature and the For more detailed information about
date of signing. this exemption, see 86 Illinois Admin-
istrative Code 130.605.
Purchasers may document their tax-
exempt purchases either by complet-
ing Form ST-587, Machinery and
Equipment Exemption Certificate, or
by making their own certificates. A
copy of the certificate must be given
to the retailer.
For more detailed information about
this exemption, see 86 Illinois Admin-
istrative Code 130.325.
For information Call us at 1 800 732-8866 or 217 782-3336.
or forms Call our TDD (telecommunications device for the deaf) at 1 800 544-5304.
Write us at Illinois Department of Revenue, P.O. Box 19044, Springfield, IL 62794-9044.
Visit our Web site at tax.illinois.gov.
Call our 24-hour Forms Order Line at 1 800 356-6302.
Printed by authority of the State of Illinois
(2,000 - 10/04 - 2050346)
Page 4 of 4 PUB-104 (R-7/04)
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