Ill. Admin. Code tit. 86, § 150.305 - Effect of Limitation that Purchase Must be at Retail from a Retailer to be Taxable
a) The
limitation in the Use Tax Act ("Act") to the effect that the tangible personal
property must be purchased at retail from a retailer excludes, from the use
tax, the use of tangible personal property produced by the user or acquired by
the user by way of a gift or in some manner other than by means of a
purchase.
b) However, although the
user is not taxable on the value of the finished product which the user
produces, such user is taxable on the purchase price of the tangible personal
property that the user purchases and incorporates into such finished product
which the user uses in this State, such purchase being a purchase at retail or
a purchase for use.
c) Although the
donee in a gift situation is not a taxable user, the donor who purchases the
property and gives it away makes a taxable use of the property when making such
gift. For example, if a cellular phone company gives cellular phones to its
customers as part of a sales promotion, it owes use tax on its cost price of
the phones that are given away. In this situation, the cellular company, as
donor, is considered to have used items by giving them away.
d) The limitation that the purchase must be
made at retail from a retailer for the Use Tax Act to apply also excludes, from
the tax, the use of tangible personal property purchased from an isolated or
occasional seller who is not engaged in the business of selling such tangible
personal property. The exclusions discussed in this paragraph are necessary to
make the Use Tax Act complementary to the Retailers' Occupation Tax
Act.
e) The Use Tax Act does not
apply to the rental payments made by a lessee to a lessor. However, except as
is noted in Section 150.306 of this Part, the lessor
is legally the user of the property and is taxable on the purchase price
thereof.
Notes
Amended at 24 Ill. Reg. 10728, effective July 7, 2000
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