Illinois Administrative Code › Title 86 - REVENUE › Part 150 - USE TAX › Subpart B - DEFINITIONS › Section 150.201 - General Definitions

Current through Register Vol. 48, No. 28, July 12, 2024
"Act" means the Use Tax Act [35 ILCS 105]
"Department" means the Department of
				  Revenue.
"Person" means any natural individual, firm,
				  partnership, association, joint stock company, joint adventure, public or
				  private corporation, limited liability company, or a receiver, executor,
				  trustee, guardian or other representative appointed by order of any
				  court.
"Purchase at retail" means the acquisition of the
				  ownership of or title to tangible personal property through a sale at
				  retail.
"Purchaser" means anyone who, through a sale at
				  retail, acquires the ownership of tangible personal property for a valuable
				  consideration.
For purposes of this Part, "remote retailer" has the same
				  meaning as defined in 86 Ill. Adm. Code
				  131.105.
"Retailer" means and includes every person engaged in
				  the business of
selling tangible personal property for use and not for
				  resale.
Effective October 1, 1974,
a person who is the
				  recipient of a grant or contract under Title VII of the Older Americans Act of
				  1965
[42 U.S.C. 3001 et seq.]
and serves meals to participants
				  in the federal Nutrition Program for the Elderly in return for contributions
				  established in amount by the individual participant pursuant to a schedule of
				  suggested fees as provided for in the federal Act is not a retailer
				  under
the Act
with respect to such transactions.
[35 ILCS
				  105/2 ]
Nonprofit Sellers
A person whose activities are organized and conducted
				  primarily as a not-for-profit service enterprise, and who engages in selling
				  tangible personal property at retail (whether to the public or merely to
				  members and their guests) is a retailer with respect to such transactions,
				  excepting only a person organized and operated exclusively for charitable,
				  religious or educational purposes either:
to the extent of sales by such person to its members,
				  students, patients or inmates of tangible personal property to be used
				  primarily for the purposes of such person, or
to the extent of sales by such person of tangible
				  personal property which is not sold or offered for sale by persons organized
				  for profit. The selling of
schoolbooks
and school supplies by
				  schools at retail to students is not "primarily for the purposes of" the school
				  which does such selling.
This definition
does not apply to nor subject to
				  taxation occasional dinners, social or similar activities of a person organized
				  and operated exclusively for charitable, religious or educational purposes,
				  whether or not such activities are open to the public.
Special Order Sales
A person who holds
oneself
out as
				  being engaged (or who habitually engages) in selling tangible personal property
				  at retail is a retailer
under the Act
with respect to such
				  sales (and not primarily in a service occupation) notwithstanding the fact that
				  such person designs and produces such tangible personal property on special
				  order for the purchaser and in such a way as to render the property of value
				  only to such purchaser, if such tangible personal property so produced on
				  special order serves substantially the same function as stock or standard items
				  of tangible personal property that are sold at retail.
When Construction Contractor or Real Estate Developer is a
				  Retailer A construction contractor or real estate developer
who, in the
				  course of conducting such business, transfers tangible personal property to
				  users or consumers in the finished form in which it was purchased, and which
				  does not become real estate, under any provision of a construction contract or
				  real estate sale or real estate sales agreement entered into with some other
				  person arising out of or because of nontaxable business, is a retailer to the
				  extent of the value of the tangible personal property so transferred.
[35 ILCS
				  105/2 ] See also 86 Ill. Adm. Code
				  130.1940.
Isolated or Occasional Sales
The isolated or occasional sale of tangible personal
				  property at retail by a person who does not hold
oneself
out
				  as being engaged (or who does not habitually engage) in selling such tangible
				  personal property at retail or a sale through a bulk vending machine does not
				  make such person a retailer
under the Act. [35 ILCS 105/2
				  ]
Leasing or Renting Motor Vehicles
A person who is engaged in the business of leasing or
				  renting motor vehicles to others and who, in connection with such business
				  sells any used motor vehicle to a purchaser for
the purchaser's
use and not for the purpose of resale, is a retailer engaged in the
				  business of selling tangible personal property at retail under
the Act
to the extent of the value of the vehicle sold. For the purpose
				  of
this paragraph,
"motor vehicle" has the meaning prescribed
				  in Section 1-157 of the Illinois Vehicle Code
[625 ILCS 5]
, as
				  now or hereafter amended. (Nothing provided herein shall affect liability
				  incurred under
the Act
because of the use of such motor
				  vehicles as a lessor.)
[35 ILCS 105/1a ]
"Retailer maintaining a place of business in this
				  State", or any like term, means and includes any of the following
				  retailers:
A retailer having or maintaining within this State,
				  directly or by a subsidiary, an office, distribution house, sales house,
				  warehouse or other place of business, or any agent or other representative
				  operating within this State under the authority of the retailer or its
				  subsidiary, irrespective of whether such place of business or agent or other
				  representative is located here permanently or temporarily, or whether such
				  retailer or subsidiary is licensed to do business in this State. However, the
				  ownership of property that is located at the premises of a printer with which
				  the retailer has contracted for printing and that consists of the final printed
				  product, property that becomes a part of the final printed product, or copy
				  from which the printed product is produced shall not result in the retailer
				  being deemed to have or maintain an office, distribution house, sales house,
				  warehouse, or other place of business within this State.
[35 ILCS
				  105/2(1) ]
It does not matter that an agent may engage in business on
				  the agent's own account in other transactions, nor that the agent may act as an
				  agent for other persons in other transactions, nor that the agent is not an
				  employee but is an independent contractor acting as an agent. The term "agent"
				  is broader than the term "employee". "Agent" includes anyone acting under the
				  principal's authority in an agency capacity.
Beginning July 1, 2011, a retailer having a contract
				  with a person located in this State under which:
the retailer sells the same or substantially similar
				  line of products as the person located in this State and does so using an
				  identical or substantially similar name, trade name, or trademark as the person
				  located in this State; and
the retailer provides a commission or other
				  consideration to the person located in this State based upon the sale of
				  tangible personal property by the retailer.
The provisions of this paragraph shall apply only if
				  the cumulative gross receipts from sales of tangible personal property by the
				  retailer to customers in this State under all such contracts exceed $10,000
				  during the preceding 4 quarterly periods ending on the last day of March, June,
				  September, and December.
[35 ILCS 105/2
				  (1.2)]
Beginning January 1, 2015,
a retailer having a
				  contract with a person located in this State under which the person, for a
				  commission or other consideration based upon the sale of tangible personal
				  property by the retailer, directly or indirectly refers potential customers to
				  the retailer by providing to the potential customers a promotional code or
				  other mechanism that allows the retailer to track purchases referred by such
				  persons. Examples of mechanisms that allow the retailer to track purchases
				  referred by such persons include but are not limited to the use of a link on
				  the person's Internet website, promotional codes distributed through the
				  person's hand-delivered or mailed material, and promotional codes distributed
				  by the person through radio or other broadcast media. The provisions of this
				  paragraph shall apply only if the cumulative gross receipts from sales of
				  tangible personal property by the retailer to customers who are referred to the
				  retailer by all persons in this State under such contracts exceed $10,000
				  during the preceding 4 quarterly periods ending on the last day of March, June,
				  September, and December. A retailer meeting the requirements of this paragraph
				  shall be presumed to be maintaining a place of business in this State but may
				  rebut this presumption by submitting proof that the referrals or other
				  activities pursued within this State by such persons were not sufficient to
				  meet the nexus standards of the United States Constitution during the preceding
				  4 quarterly periods.
[35 ILCS 105/2 (1.1)]
The following documentation is required in order to rebut
				  this presumption:
Retailer Agreement. The retailer must have an agreement that
				  prohibits persons operating under the agreement from engaging in any
				  solicitation activities in Illinois that refer potential customers to the
				  retailer, including, but not limited to, distributing flyers, coupons,
				  newsletters, and other printed promotional materials or electronic equivalents,
				  verbal soliciting, initiating telephone calls, and sending e-mails or text
				  messages. If the person in Illinois with whom the retailer has an agreement is
				  an organization or corporation, such as a club or nonprofit group, the
				  agreement must provide that the organization will maintain on its website
				  information alerting its members to the prohibition against each of the
				  solicitation activities described in this paragraph. The agreement must be
				  maintained in the retailer's records and shall be made available to the
				  Department for inspection or audit.
Annual Certification. The person or persons operating under
				  the agreement in Illinois shall certify by January 1 of each year, under
				  penalty of perjury, that they have not engaged in any prohibited solicitation
				  activities in Illinois at any time during the previous year. If the person in
				  Illinois with whom the retailer has an agreement is an organization or
				  corporation, the annual certification shall also include a statement from the
				  organization or corporation, signed by an officer of the organization or
				  corporation, certifying that its website includes information directed at its
				  members alerting them to the prohibition against the solicitation activities
				  described in this paragraph. The certification should be made on forms
				  prescribed by the Department, must be completed and provided to the retailer,
				  must be maintained in the retailer's records, and shall be made available to
				  the Department for inspection or audit. If the retailer accepts a properly and
				  timely completed certification in good faith and the retailer does not know or
				  have reason to know that the certification is false or fraudulent, that
				  certification will be conclusive proof that the person that provided the
				  certification was in compliance with the agreement for the year covered by the
				  certification. If the retailer fails to obtain the certifications from all
				  persons operating under the agreements and fails to make those records
				  available upon the Department's request, the presumption that the retailer is
				  maintaining a place of business in Illinois will not be rebutted.
Beginning October 1, 2018, a retailer making sales of
				  tangible personal property to purchasers in Illinois from outside of Illinois
				  if:
the cumulative gross receipts from sales of tangible
				  personal property to purchasers in Illinois are $100,000 or more; or
the retailer enters into 200 or more separate
				  transactions for the sale of tangible personal property to purchasers in
				  Illinois.
Beginning January 1, 2020, neither the gross receipts
				  from nor the number of separate transactions for sales of tangible personal
				  property to purchasers in Illinois that a retailer makes through a marketplace
				  facilitator and for which the retailer has received a certification from the
				  marketplace facilitator pursuant to Section 2d of
the Act
shall be included for purposes of determining whether the retailer has
				  met the thresholds of this paragraph.
[35 ILCS
				  105/2(9) ]
Beginning January 1, 2020, a marketplace facilitator
				  who meets either of the following thresholds is considered the retailer for
				  each sale of tangible personal property made through its
				  marketplace:
the cumulative gross receipts from sales of tangible
				  personal property to purchasers in Illinois by the marketplace facilitator and
				  by marketplace sellers selling through the marketplace are $100,000 or more;
				  or
the marketplace facilitator and marketplace sellers
				  selling through the marketplace cumulatively enter into 200 or more separate
				  transactions for the sale of tangible personal property to purchasers in
				  Illinois.
[35 ILCS
				  105/2(10) and 35 ILCS 105/2d]
For purposes of this definition, a
retailer
without physical presence in this State
or
a marketplace
				  facilitator
shall determine on a quarterly basis, ending on the last
				  day of March, June, September, and December, whether
it
meets
				  either of
the foregoing
criteria for the preceding 12-month
				  period. If the retailer
or marketplace facilitator
meets the
				  threshold of either
criteria
for a 12-month period,
it
is considered a retailer maintaining a place of business in this
				  State and is required to collect and remit
use tax
and file
				  returns for one year.
At the end of that one-year period, the
				  retailer
or marketplace facilitator
shall determine
				  whether
it
met the threshold of either
criteria
during the preceding 12-month period. If the retailer
or
				  market place facilitator
met either of the criteria for the preceding
				  12-month period,
it
is considered a retailer maintaining a
				  place of business in this State and is required to collect and remit
use tax
and file returns for the subsequent year.
If, at the end of a one-year period, a
				  retailer
or marketplace facilitator
that was required to
				  collect and remit the
use tax
determines that
it
did not meet the threshold in either
criteria
during
				  the preceding 12-month period, the retailer
or marketplace facilitator
shall subsequently determine on a quarterly basis, ending on the last
				  day of March, June, September, and December, whether
it
meets
				  the threshold of either
criteria
for the preceding 12-month
				  period.
[35 ILCS
				  105/2(9) and 35 ILCS 105/2d]
NOTE: Beginning January 1, 2021, retailers without physical
				  presence in this State and marketplace facilitators meeting either tax
				  remittance threshold as set out in 86 Ill. Adm. Code
				  131.115(a) and
				  131.135(a),
				  respectively, are liable for all applicable State and locally imposed
				  retailers' occupation taxes administered by the Department of Revenue on all
				  sales made to Illinois purchasers and are no longer only mandatory Use Tax
				  collectors. (See 86 Ill. Adm. Code
				  131.115 and 131.135).
"Sale at retail" means any transfer of the ownership
				  of or title to tangible personal property to a purchaser, for the purpose of
				  use, and not for the purpose of resale in any form as tangible personal
				  property to the extent not first subjected to a use for which it was purchased,
				  for a valuable consideration: Provided that the property purchased is deemed to
				  be purchased for the purpose of resale, despite first being used, to the extent
				  to which it is resold as an ingredient of an intentionally produced product or
				  by-product of manufacturing.
For this purpose, slag produced as an incident to
				  manufacturing pig iron or steel and sold is considered to be an intentionally
				  produced by-product of manufacturing.
"Sale at retail" includes any such transfer made for
				  resale unless made in compliance with Section 2c of the Retailers' Occupation
				  Tax Act
[35 ILCS 120]
, as incorporated by reference into
				  Section 12 of
the Act
. Transactions whereby the possession of
				  the property is transferred but the seller retains the title as security for
				  payment of the selling price are sales.
"Sale at retail" shall also be construed to include
				  any Illinois florist's sales transaction in which the purchase order is
				  received in Illinois by a florist and the sale is for use or consumption, but
				  the Illinois florist has a florist in another state deliver the property to the
				  purchaser or the purchaser's donee in such other state.
Nonreusable tangible personal property that is used
				  by persons engaged in the business of operating a restaurant, cafeteria, or
				  drive-in is a sale for resale when it is transferred to customers in the
				  ordinary course of business as part of the sale of food or beverages and is
				  used to deliver, package, or consume food or beverages, regardless of where
				  consumption of the food or beverages occurs. Examples of those items include
				  but are not limited to nonreusable, paper and plastic cups, plates, baskets,
				  boxes, sleeves, buckets or other containers, utensils, straws, placemats,
				  napkins, doggie bags, and wrapping or packaging materials that are transferred
				  to customers as part of the sale of food or beverages in the ordinary course of
				  business.
The purchase, employment and transfer of such
				  tangible personal property as newsprint and ink for the primary purpose of
				  conveying news (with or without other information) is not a purchase, use or
				  sale of tangible personal property.
"Selling price" means the consideration for a sale
				  valued in money whether received in money or otherwise, including cash,
				  credits, property other than as provided
in this definition,
and services, but, prior to January 1, 2020 and beginning again on
				  January 1, 2022, not including the value of or credit given for traded-in
				  tangible personal property where the item that is traded-in is of like kind and
				  character as that which is being sold; beginning January 1, 2020 and until
				  January 1, 2022, "selling price" includes the portion of the value of or credit
				  given for traded-in motor vehicles of the First Division as defined in Section
				  1-146 of the Illinois Vehicle Code
[625 ILCS 5]
of like kind
				  and character as that which is being sold that exceeds $10,000. "Selling price"
				  shall be determined without any deduction on account of the cost of the
				  property sold, the cost of materials used, labor or service cost or any other
				  expense whatsoever, but does not include interest or finance charges which
				  appear as separate items on the bill of sale or sales contract nor charges that
				  are added to prices by sellers on account of the seller's tax liability under
				  the Retailers' Occupation Tax Act, or on account of the seller's duty to
				  collect, from the purchaser, the tax that is imposed by
the Act,
or, except as otherwise provided with respect to any cigarette tax
				  imposed by a home rule unit, on account of the seller's tax liability under any
				  local occupation tax administered by the Department, or, except as otherwise
				  provided with respect to any cigarette tax imposed by a home rule unit, on
				  account of the seller's duty to collect, from the purchasers, the tax that is
				  imposed under any local use tax administered by the Department. "Selling price"
				  shall include charges that are added to prices by sellers on account of the
				  seller's tax liability under the Cigarette Tax Act, on account of the seller's
				  duty to collect, from the purchaser, the tax imposed under the Cigarette Tax
				  Act, and on account of the seller's duty to collect, from the purchaser, any
				  cigarette tax imposed by a home rule unit.
The phrase "like kind and character" shall be
				  liberally construed (including but not limited to any form of motor vehicle for
				  any form of motor vehicle, or any kind of farm or agricultural implement for
				  any other kind of farm or agricultural implement), while not including a kind
				  of item which, if sold at retail by that retailer, would be exempt from
				  retailers' occupation tax and use tax as an isolated sale.
"Use" means the exercise by any person of any right
				  or power over tangible personal property incident to the ownership of that
				  property, except that it does not include the sale of such property in any form
				  as tangible personal property in the regular course of business to the extent
				  that such property is not first subjected to a use for which it was purchased,
				  and does not include the use of such property by its owner for demonstration
				  purposes: Provided that the property purchased is deemed to be purchased for
				  the purpose of resale, despite first being used, to the extent to which it is
				  resold as an ingredient of an intentionally produced product or by-product of
				  manufacturing. "Use" does not mean demonstration use or interim use of tangible
				  personal property by a retailer before
the retailer
sells that
				  tangible personal property. For watercraft or aircraft, if the period of
				  demonstration use or interim use by the retailer exceeds 18 months, the
				  retailer shall pay on the
retailer's
original cost price the
				  tax imposed by
the Act
, and no credit for that tax is
				  permitted if the watercraft or aircraft is subsequently sold by the retailer.
				  "Use" does not mean the physical incorporation of tangible personal property,
				  to the extent not first subjected to a use for which it was purchased, as an
				  ingredient or constituent, into other tangible personal
				  property
which is sold in the regular course of business
				  or
which the person incorporating such ingredient or
				  constituent therein has undertaken at the time of purchase to cause to be
				  transported in interstate commerce to destinations outside the State of
				  Illinois: Provided that the property purchased is deemed to be purchased for
				  the purpose of resale, despite first being used, to the extent to which it is
				  resold as an ingredient of an intentionally produced product or by-product of
				  manufacturing.
"Watercraft" means a Class 2, Class 3, or Class 4
				  watercraft as defined in Section 3-2 of the Boat Registration and Safety
				  Act
[625 ILCS 45]
, a personal watercraft, or any boat equipped
				  with an inboard motor.
[35 ILCS 105/2]