Illinois Administrative Code › Title 86 - REVENUE › Part 140 - SERVICE OCCUPATION TAX › Subpart A - NATURE OF TAX › Section 140.145 - Multi-Service Situations

Current through Register Vol. 48, No. 28, July 12, 2024
a)
				Transactions between de minimis servicemen each paying Use Tax. Effective for
				sales made on and after August 14, 1996, if a primary de minimis serviceman who
				incurs a Use Tax liability on his cost price (described in Section
				140.108
				of this Part) subcontracts service work to a secondary de minimis serviceman
				who also incurs a Use Tax liability on his cost price, the primary de minimis
				serviceman does not incur a Use Tax liability if the secondary de minimis
				serviceman has paid, or will remit, Illinois Use Tax on his cost price of any
				tangible personal property transferred to the primary serviceman and certifies
				that fact in writing to the primary de minimis serviceman (Section 2g of the
				Act). For example, a de minimis dentist paying Use Tax on his cost price who
				purchases dentures from a de minimis dental laboratory also paying Use Tax on
				its cost price will not incur Use Tax liability if the de minimis dental
				laboratory pays, or agrees to remit, Illinois Use Tax on its cost price of the
				items used to fabricate the dentures, and certifies this fact in writing to the
				de minimis dentist.
b) The
				certification provided by the secondary de minimis serviceman described in
				subsection (a) shall contain the address of, and be signed and dated by, the
				secondary de minimis serviceman. It shall certify that the secondary de minimis
				serviceman has paid, or will remit, Illinois Use Tax on the cost price of the
				tangible personal property transferred to the primary de minimis serviceman.
				This certification may appear on the invoice to the primary de minimis
				serviceman. The primary de minimis serviceman shall retain this certification
				in his books and records as provided in Section
				140.701 of this
				Part.
c) Multi-service transactions
				between registered servicemen. Primary servicemen who are registered with the
				Department, regardless of whether they are de minimis servicemen paying Service
				Occupation Tax on their cost price or servicemen paying tax on their selling
				price, should provide Certificates of Resale to secondary servicemen who are
				also registered.
d) Multi-service
				transactions between registered and unregistered servicemen each located in
				Illinois. If a registered primary serviceman located in Illinois farms out
				service work to a secondary serviceman located in Illinois who is not
				registered and has opted to incur Use Tax as described in Section
				140.108
				of this Part, tax will be incurred and remitted to the Department at two
				levels. The secondary de minimis serviceman will pay Use Tax to his supplier on
				the tangible personal property transferred to the primary serviceman. Normally,
				the primary serviceman would provide a Certificate of Resale to the secondary
				serviceman to whom he farms out work, for the tangible personal property he
				transfers to his service customers. However, in this instance, the unregistered
				secondary serviceman is not authorized to accept Certificates of Resale from
				his customers (see Section
				140.108(a)
				of this Part). As a result, the registered primary serviceman cannot provide a
				Certificate of Resale to the unregistered secondary serviceman. When the
				registered primary serviceman makes a sale of service to his service customer,
				he will incur Service Occupation Tax on either his selling price or his cost
				price. Because, in these instances, the two servicemen are either not both
				registered or unregistered, tax will be paid twice to the Department.
e) Servicemen engaging in multi-service
				transactions are urged to utilize one of the methods described in subsection
				(a) or (c) of this Section. Use of either of these methods prevents the
				likelihood of tax being incurred by both servicemen, as described in subsection
				(d) of this Section.
f) Except as
				provided in subsection (a) of this Section, when a primary serviceman purchases
				tangible personal property from a secondary serviceman, the primary serviceman
				shall determine his cost price either by using the separately stated selling
				price of tangible personal property set forth on the invoice from the secondary
				serviceman or, if no selling price is separately stated, 50% of the total
				invoice including labor and service charges, in the absence of proof (e.g., the
				secondary serviceman's purchase invoices showing his cost price) of the
				consideration paid by the secondary serviceman for the purchase of such
				property.