Illinois Supreme Court Strikes Down Rule on Local Tax Collection

Friday, November 22nd, 2013


On Thursday, the Illinois Supreme Court held that a state rule for determining the location of a sale was invalid.

Illinois permits certain localities to tax persons engaged in "the business of selling" tangible personal property in those localities. Illinois courts have held that this means that the location of "the business of selling" determines which tax applies. The state Department of Revenue ("Department") collects and enforces these taxes.

The contested Department rule indicated that the applicable tax was the tax in the place where purchase orders were accepted. Some Illinois businesses used this rule to avoid higher local taxes. They set up small offices solely to accept purchase orders in counties with lower tax rates. They conducted the rest of their business in counties with higher tax rates.

The Court ruled that the rule was too restrictive; the statutes and case law required a more fact-intensive approach to determine which local tax applied. The "business of selling" consists of more than just accepting purchase orders. To comply with the law, the Department had to look at where a company's whole "business of selling" took place rather than just where the company accepted purchase orders. Because the rule did not allow the Department to look at the whole business, it was invalid.

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

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