St 13-0068-gil 11/27/2013 construction contractors
ST 13-0068-GIL 11/27/2013 CONSTRUCTION CONTRACTORS Construction contractors who physically incorporate tangible personal property into real estate owned by exem
pt organizations or governmental entities that hold tax exempt “E” numbers can
purchase such property tax free by providing their suppliers with the certification described in 86 Ill. Adm. Code 130.2075(d). See 86 Ill. Adm. Code Section 130.2075. (This is a GIL.)
This letter is in response to your letter dated November 20, 2013, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the Department in response to specific taxpayer inquiries concerning the application of a tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the topic about which they have inquired. A GIL is not a statement of Department policy and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at to review regulations, letter rulings and other types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
We would like to verify if our customer COMPANY could use Contractor Exempt Purchase Certificate and Contract to be exempt from Illinois sales tax. Attached are copies of our sales order no. XXXX, Contractor Exempt Purchase Certificate and Contract that COMPANY had provided to us. We appreciate your written advice in this regard.
For liabilities incurred by sellers of floor coverings, please see 86 Ill. Adm. Code
130.2101entitled “Sellers of Floor Coverings.”
Sales to exempt organizations (organizations that qualify as exclusively religious,
charitable, or educational) and governmental entities are subject to tax unless the exempt organization or governmental entity has obtained an active exemption identification number ("E" number) from the Department. See 86 Ill. Adm. Code 130.2007 and 130.2080. Persons or
businesses selling tangible personal property to these organizations or governmental entities must be provided with an "E" number for the sales to be tax exempt, unless another exemption can be documented. It is important to note that only sales of tangible personal property invoiced to the organization or governmental entity itself are exempt. Sales made to an individual member or client of an exempt organization or entity are generally subject to tax.
If a person or business is contractually required to purchase tangible personal property for
incorporation into real estate, then that person or business would be acting as a construction contractor. Construction contractors in Illinois are deemed to be the end users of tangible personal property purchased for incorporation into real property and owe Use Tax on those materials. 86 Ill. Adm. Code 130.2075. However, purchases of tangible personal property by a construction contractor for incorporation into the real estate owned by an exempt organization or governmental entity that posses a valid “E” number at the time of sale may be made free of Illinois Retailers’ Occupation Tax and Use Tax under the provisions of 86 Ill. Adm. Code 130.2075(d).
In claiming the exemption from tax, the construction contractor must provide its supplier
with a certification stating that its purchases are for conversion into real estate under a contract with an exempt organization or governmental entity, identifying the organization or entity by name and address and stating on what date the contract was entered into. The construction contractor must also provide the “E” number issued by the Department to the organization or entity for which the purchasing contractor is acting. See 86 Ill. Adm. Code 130.2075(d)(4).
I hope this information is helpful. If you require additional information, please visit our
website ator contact the Department’s Taxpayer Information Division at (217) 782-3336.
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