What is the sales tax deduction and what is the retailer's role?

 

 

Each retailer who makes a qualified sale of building materials to be incorporated into real estate in an enterprise zone established by a county or municipality under the Illinois Enterprise Zone Act by remodeling, rehabilitation or new construction, may deduct receipts from such sales when calculating the tax imposed by this Act. For purposes of this Section, "qualified sale" means a sale of building materials that will be incorporated in to real estate as part of a building project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the administrator of the enterprise zone in which the building project is located. To document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the Certificate of Eligibility for Sales Tax Exemption issued by the administrator of the enterprise zone into which the building materials will be incorporated.

The Certificate of Eligibility for Sales Tax Exemption must contain:

1. a statement that the building project identified in the Certificate meets all the requirements for the building material exemption contained in the enterprise zone ordinance of the jurisdiction in which the building project is located;
   
2. the location or address of the building project; and
   
3. the signature of the administrator of the enterprise zone in which the building project is located. In addition, the retailer must obtain certification from the purchaser that contains:
   
4. a statement that the building materials are being purchased for incorporation into real estate located in an Illinois enterprise zone;
   
5. the location or address of the real estate into which the building materials will be incorporated;
   
6. the name of the enterprise zone in which that real estate is located;
   
7. a description of the building materials being purchased; and
   
8. the purchaser's signature and date of purchase.

The ordinance that governs the enterprise zone into which the building materials will be incorporated may neither require nor prohibit the purchase of building materials from any retailer or class of retailers in order to qualify for the exemption.

How does the enterprise zone sales tax deduction effect the Regional Transit Authority
Retailers' Occupation Tax (RTA ROT), the Metro-East ROT, the County Water Commission Tax,
Home Rule Municipal Tax, and the County Supplemental Tax?

 

 

Once the gross receipts from sales of building materials are excluded from the Illinois Retailers' Occupation Tax base by virtue of exempted building materials, these receipts are also excluded from the RTA and the Metro-East ROT base.

Do all retailers offer a point of sale exemption?

 

 

No. Retailers are not required by law to participate. The purchaser must ask the retailer for cooperation on this incentive. Retailers have, however, demonstrated good cooperation throughout the history of this program, as this incentive permits them to give customers a "break" without cost to themselves.

What qualifies as "building materials" eligible for the sales tax deduction?

 

 

Building materials that are eligible for the enterprise zone sales tax deduction include items that are permanently affixed to real property such as lumber, mortar, glued-down carpets, paint, wallpaper and similar affixed items.