Illinois Telecommunications Service Agreement
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FAQ
Tax-exempt goods Some goods are exempt from sales tax under Illinois law. Examples include fuel for international flights, gold bullion issued by qualifying governments, and newspapers and magazines.
For more information about common exemptions, see Publication 104, Common Sales and Use Tax Exemptions. Sales to state, local, and federal governments. Sales to not-for-profit organizations that are exclusively charitable, religious, or educational. Sales of newspapers and magazines.
However, in California, assembly labor is taxable. The exceptions for taxable labor are repair and installation labor.
Illinois does not tax sales of service. Illinois does impose service occupation tax on items of tangible personal property transferred as an incident to sales of service.
Municipal Telecommunications Tax may be imposed in ¼ percent increments and may not exceed 6 percent. For example, a municipality may impose the tax at the rate of 3% or 4.25%, but not at the rate of 3.33% or 3.80%.
The Illinois (IL) state sales tax rate is currently 6.25%. Depending on local municipalities, the total tax rate can be as high as 11%.
Services in Illinois are generally not taxable. However, if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
A construction contractor does not need to collect sales tax when incorporating tangible personal property into real estate under a construction contract. In this scenario, Illinois law considers the construction contractor the end user of the items permanently incorporated into real estate.
