Section 130.110 Occasional Sales

Section 130

TITLE 86: REVENUE

CHAPTER I: DEPARTMENT OF REVENUE

PART 130 RETAILERS' OCCUPATION TAX

SECTION 130.110 OCCASIONAL SALES

Section 130.110  Occasional

Sales

a)         Since the Act does not impose a tax upon persons who are not

engaged in the business of selling tangible personal property, persons who make

isolated or occasional sales thereof do not incur tax liability.

b)         For example, if a retailer sells tangible personal property,

such as machinery or other capital assets, which the retailer has used in its

business and no longer needs, and which the retailer does not otherwise engage

in selling, the retailer does not incur Retailers' Occupation Tax liability

when selling such tangible personal property even if the sales are at retail

and even if the retailer may be required to make a considerable number of such

sales in order to dispose of such tangible personal property, because such

sales are isolated or occasional and do not constitute a business of selling

tangible personal property at retail.

c)         However, construction contractors and real estate developers

are not considered to be isolated or occasional sellers of tangible personal

property to the extent noted in Section 130.1940(c) and (d) of this Part.

d)         Where persons engage primarily in the business of selling

tangible personal property other than for use or consumption (such as the

business of selling tangible personal property primarily to purchasers for resale),

the mere fact that their sales for use or consumption may comprise but a small

fraction of their total sales does not make the retail sales isolated or

occasional.  The vendor is liable for tax measured by the gross receipts from

such retail sales.

e)         Regarding sale/leaseback situations, typically customer A

purchases equipment from retailer B, and then sells it to lessor C who leases

the equipment back to customer A

r use or consumption may comprise but a small

fraction of their total sales does not make the retail sales isolated or

occasional.  The vendor is liable for tax measured by the gross receipts from

such retail sales.

e)         Regarding sale/leaseback situations, typically customer A

purchases equipment from retailer B, and then sells it to lessor C who leases

the equipment back to customer A.  Customer A has paid tax when purchasing the

equipment in the first transaction under a taxable retail sale and the second

transaction where customer A sells the equipment to lessor C is a nontaxable

occasional sale so long as A is not otherwise in the business of selling

like-kind property.

The leaseback transaction between

lessor C and customer A is not a taxable lease if the

lease

is

entered

into merely as a security agreement that does not involve a transfer of

possession or control from the lessor to the lessee

. [35 ILCS 120/1]

f)         When a person purchases an item of tangible personal property

with the intent of reselling the item to a purchaser for use or consumption,

that person engages in conduct equivalent to holding itself out as a retailer.

In such a situation, the initial purchase is a sale for resale and the

subsequent sale is a taxable sale at retail subject to Retailers' Occupation

Tax, not an occasional sale.  For example, if a hospital possessing an

exemption identification number issued by the Department purchases a computer

system with the intent of reselling the computer system to a group of doctors,

the hospital may not resell the computer system to the group of doctors without

incurring Retailers' Occupation Tax.  In this instance, the hospital is holding

itself out as a retailer and its sale of the computer system to the group of

doctors is taxable. The hospital should provide a Certificate of Resale to its

supplier on the purchase of the computer system

r system to a group of doctors,

the hospital may not resell the computer system to the group of doctors without

incurring Retailers' Occupation Tax.  In this instance, the hospital is holding

itself out as a retailer and its sale of the computer system to the group of

doctors is taxable. The hospital should provide a Certificate of Resale to its

supplier on the purchase of the computer system.  It is improper for the

hospital to use its exemption identification number to purchase the computer

system in these circumstances.

g)         No sales made on a marketplace are considered to be occasional

sales. (86 Ill. Adm. Code 131.140(b)(3)). (For further information on the

application of the Act to marketplace facilitators, see 86 Ill. Adm. Code

131.130, 131.135, 131.140, and 131.145.)