SALT Report 2369 – The Illinois Department of Revenue issued a general information letter that discusses the documentation a construction contractor must provide to its supplier when purchasing items on behalf of an exempt organization.
In most cases, sales to exempt religious, charitable, or educational organizations and governmental entities are subject to tax unless the exempt organization or governmental entity has been issued an exemption identification number, or” E” number, from the Department.
Once an organization has been issued an “E” number, Illinois Law, 86 Ill. Adm. Code 130.2075(d), allows construction contractors who will physically incorporate tangible personal property into real estate owned by an exempt organization or governmental to purchase that property tax free on behalf of the organization or entity. To make an exempt purchase, the contractor must provide their suppliers with a certificate that includes all of the following information:
- A statement indicating that the purchases are for conversion into real estate under a contract with an exempt organization or governmental entity,
- The exempt organization or governmental entity’s name and address,
- The date the contract was entered into, and
- The “E” number issued by the Department to the exempt organization or governmental entity
However, only sales of tangible personal property that are invoiced directly to the organization or governmental entity itself will be exempt. Any sales made to an individual member or client of an exempt organization or entity are subject to tax.
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