ILLINOIS ENTERPRISE ZONE PROGRAM
TAX QUESTIONS AND
ANSWERS
SALES TAX DEDUCTION
What is the sales tax deduction? - The "Retailers' Occupation
Tax Act" 35 ILCS 120/5k, as amended provides that: "Each retailer
whose place of business is within a county or municipality which has established
an enterprise zone pursuant to the "Illinois Enterprise Zone Act" and
who makes a sale of building materials to be incorporated into real estate in
such enterprise zone by remodeling, rehabilitation or new construction, may
deduct receipts from such sales when calculating the tax imposed by this Act."
What is the retailer's role? - A retailer who is located within the
municipality or unincorporated area of a county which has an established
enterprise zone and who makes a sale of building materials to be incorporated
into that enterprise zone may offer a point of sale exemption of the sales tax
and deduct the receipts from those sales on the retailer's sales tax return.
The retailer does not charge sales tax on these sales.
Who is an eligible retailer? - Any retailer whose place of business
is within the corporate limits of the municipality or within the unincorporated
area of the county that authorized the enterprise zone is eligible to deduct
receipts from such sales when calculating the tax imposed by the "Retailers'
Occupation Tax Act" (ROTA).
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 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.
What is the purchaser's role? - The purchaser must give the retailer
a signed Purchaser's Statement providing the address of the property located
within the enterprise zone and attesting that the materials purchased will be
incorporated into that property only.
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 qualities 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.
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