Ill. Admin. Code tit. 86, § 140.145 - Multi-Service Situations
a)
Transactions between de minimis servicemen each paying Use Tax. Effective for
sales made on and after August 14, 1996, if a primary de minimis serviceman who
incurs a Use Tax liability on his cost price (described in Section
140.108
of this Part) subcontracts service work to a secondary de minimis serviceman
who also incurs a Use Tax liability on his cost price, the primary de minimis
serviceman does not incur a Use Tax liability if the secondary de minimis
serviceman has paid, or will remit, Illinois Use Tax on his cost price of any
tangible personal property transferred to the primary serviceman and certifies
that fact in writing to the primary de minimis serviceman (Section 2g of the
Act). For example, a de minimis dentist paying Use Tax on his cost price who
purchases dentures from a de minimis dental laboratory also paying Use Tax on
its cost price will not incur Use Tax liability if the de minimis dental
laboratory pays, or agrees to remit, Illinois Use Tax on its cost price of the
items used to fabricate the dentures, and certifies this fact in writing to the
de minimis dentist.
b) The
certification provided by the secondary de minimis serviceman described in
subsection (a) shall contain the address of, and be signed and dated by, the
secondary de minimis serviceman. It shall certify that the secondary de minimis
serviceman has paid, or will remit, Illinois Use Tax on the cost price of the
tangible personal property transferred to the primary de minimis serviceman.
This certification may appear on the invoice to the primary de minimis
serviceman. The primary de minimis serviceman shall retain this certification
in his books and records as provided in Section
140.701 of this
Part.
c) Multi-service transactions
between registered servicemen. Primary servicemen who are registered with the
Department, regardless of whether they are de minimis servicemen paying Service
Occupation Tax on their cost price or servicemen paying tax on their selling
price, should provide Certificates of Resale to secondary servicemen who are
also registered.
d) Multi-service
transactions between registered and unregistered servicemen each located in
Illinois. If a registered primary serviceman located in Illinois farms out
service work to a secondary serviceman located in Illinois who is not
registered and has opted to incur Use Tax as described in Section
140.108
of this Part, tax will be incurred and remitted to the Department at two
levels. The secondary de minimis serviceman will pay Use Tax to his supplier on
the tangible personal property transferred to the primary serviceman. Normally,
the primary serviceman would provide a Certificate of Resale to the secondary
serviceman to whom he farms out work, for the tangible personal property he
transfers to his service customers. However, in this instance, the unregistered
secondary serviceman is not authorized to accept Certificates of Resale from
his customers (see Section
140.108(a)
of this Part). As a result, the registered primary serviceman cannot provide a
Certificate of Resale to the unregistered secondary serviceman. When the
registered primary serviceman makes a sale of service to his service customer,
he will incur Service Occupation Tax on either his selling price or his cost
price. Because, in these instances, the two servicemen are either not both
registered or unregistered, tax will be paid twice to the Department.
e) Servicemen engaging in multi-service
transactions are urged to utilize one of the methods described in subsection
(a) or (c) of this Section. Use of either of these methods prevents the
likelihood of tax being incurred by both servicemen, as described in subsection
(d) of this Section.
f) Except as
provided in subsection (a) of this Section, when a primary serviceman purchases
tangible personal property from a secondary serviceman, the primary serviceman
shall determine his cost price either by using the separately stated selling
price of tangible personal property set forth on the invoice from the secondary
serviceman or, if no selling price is separately stated, 50% of the total
invoice including labor and service charges, in the absence of proof (e.g., the
secondary serviceman's purchase invoices showing his cost price) of the
consideration paid by the secondary serviceman for the purchase of such
property.
Notes
Amended at 25 Ill. Reg. 4971, effective March 23, 2001
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