Illinois Administrative Code › Title 86 - REVENUE › Part 140 - SERVICE OCCUPATION TAX › Subpart E - INTERSTATE COMMERCE › Section 140.501 - Sales of Service Involving Property Originating in Illinois

Current through Register Vol. 48, No. 28, July 12, 2024
a) Where tangible
				personal property is located in this State at the time of its transfer (or is
				subsequently produced in Illinois) as an incident to a sale of service, and is
				then delivered in Illinois, the serviceman incurs Service Occupation Tax
				liability on the selling price of the property. The sale is not deemed to be in
				interstate commerce if the purchaser or his representative receives the
				physical possession of such property in this State. This is so notwithstanding
				the fact that the purchaser may, after receiving physical possession of the
				property in this State, transport or send the property out of the State for use
				outside the State or for use in the conduct of interstate commerce. The place
				at which the contract of sale of the service or contract to sell the service is
				negotiated and executed and the place at which title to the property passes to
				the purchaser are immaterial. The place at which the purchaser resides is also
				immaterial. Except as is set out at Section
				140.501(d)
				of this Part, it also makes no difference that the purchaser is a carrier when
				that happens to be the case.
b) The
				serviceman does not incur Service Occupation Tax liability on property which he
				resells as an incident to a sale of service under an agreement by which the
				serviceman is obligated to make physical delivery of the goods from a point in
				this State to a point outside this State, not to be returned to a point within
				this State, provided that such delivery is actually made. Nor does the tax
				apply to property which the serviceman resells as an incident to a sale of
				service under an agreement by which the serviceman, by carrier (when the
				carrier is not also the purchaser) or by mail, delivers the property from a
				point in this State to a point outside this State, not to be returned to a
				point within this State. The place at which title to the property passes to the
				purchaser is immaterial. The place at which the contract of sale of the service
				or contract to sell the service is negotiated and executed and the place at
				which the purchaser resides are also immaterial. Sales of service of the type
				described in this paragraph are deemed to be within the protection of the
				Commerce Clause of the Constitution of the United States.
c) To establish that the selling price of
				property sold as an incident to any given sale of service is exempt because the
				property is delivered by the serviceman from a point within this State to a
				point outside this State under the terms of an agreement with the purchaser,
				the serviceman will be required to retain in his records, to support deductions
				taken on his tax returns, proof which satisfies the Department that there was
				such an agreement and a bona fide delivery, outside this State, of the property
				involved in the sale of service. The most acceptable proof of this fact will
				be:
1) If shipped by a common carrier: A
				waybill or bill of lading requiring delivery outside this State;
2) if sent by mail: An authorized receipt
				from the United States Post Office Department, for articles sent by registered
				mail, parcel post, ordinary mail or otherwise, showing the name of the
				addressee, the point outside Illinois to which the property is mailed and the
				date of such mailing; if the receipt does not comply with these requirements,
				other supporting evidence will be required;
3) if sent by the serviceman's own
				transportation equipment: A trip sheet signed by the person making delivery for
				the serviceman and showing the name, address and signature of the person to
				whom the goods were delivered outside this State; or, in lieu thereof, an
				affidavit signed by the purchaser or his representative, showing the name and
				address of the serviceman, the name and address of the purchaser and the time
				and place of such delivery outside Illinois by the serviceman, together with
				other supporting data as required by Section
				140.701(c)
				of this Part and by Section 11 of the Act.