Common Sales Tax Exemptions

              Illinois Department of Revenue
Publication 104
Common Sales Tax Exemptions
General information
Retailers and servicepersons are
required to pay Illinois Sales Tax
(Retailers’ Occupation Tax and
Service Occupation Tax) on certain
sales of tangible personal property.
In meeting their sales tax obliga-tions,
retailers and servicepersons
are permitted to reimburse them-selves
by collecting the tax from
their customers.
Customers who make tax-exempt
purchases must provide retailers
with proper documentation. In some
cases, retailers are required to
submit this documentation with their
tax returns; see the instructions for
each return for further information.
Retailers who cannot properly
document a tax-exempt sale will be
liable for paying sales tax on the
transaction.
To obtain one of our forms or a copy
of the administrative code, please
see the phone numbers and ad-dresses
listed at the end of this
publication.
Sales to exempt
organizations
In Illinois, only organizations that
have applied for and received an
exemption identification number (“E”
number) from the Illinois Department
of Revenue qualify as sales-tax-exempt
purchasers. Examples of
organizations that may qualify for tax-exempt
status include units of govern-ment,
churches, charities, schools,
county fair organizations, and certain
senior citizen organizations. Once
such organizations have been
granted their “E” numbers, they may
purchase items tax free to further
their organizational purposes.
To document tax-exempt purchases
from such organizations, retailers
must request from the purchaser
either
a copy of the purchaser’s exemp-tion
letter issued by the depart-ment
or
the purchaser’s “E” number. (In this
case, before completing the
transaction, retailers should verify
this number by calling the depart-ment
at 217 782-8881).
For more detailed information about
exempt organizations, see 86 Illinois
Administrative Code 130.2005 and
130.2007, and Brochure PIO-37.
Sale for resale
Illinois businesses may purchase
items tax free to resell. Sales tax is
then collected and paid when the
items are sold at retail.
To document tax-exempt purchases
of such items, retailers must keep in
their books and records a certificate
of resale containing
the seller’s name and address,
the purchaser’s name and address,
an identification or description of
the items purchased for resale,
a statement from the purchaser
that the items are being purchased
for resale,
the purchaser’s signature and the
date of signing, and
one of the following:
—the purchaser’s active Illinois
business tax number (IBT)
number issued by the depart-ment,
—the purchaser’s active resale
number issued by the depart-ment,
or
—a statement that the purchaser
is an out-of-state purchaser who
will always sell (and deliver) to
his or her customers outside
Illinois.
Purchasers may either document their
tax-exempt purchases by completing
Form CRT-61, Certificate of Resale,
or by making their own certificate. A
copy of the certificate must be
provided to the retailer. Certificates of
Resale should be updated at least
every three years.
For more detailed information about
this exemption, see 86 Illinois Admin-istrative
Code 130.1405.
Page 1 of 4
Purpose:
To explain the procedures that
retailers must follow in document-ing
several of the most common
Illinois Sales Tax exemptions
Objectives:
To identify several of the most
common exemptions
To explain how retailers and
servicepersons must document
sales of tax-exempt items
To provide additional references
for information about each
exemption