Illinois: Documenting Exempt Sales for Foreign Diplomats
- Sales Tax News
- Feb 17, 2015 | Gail Cole
There is a new policy regarding sales to governmental bodies, foreign diplomats and consular personnel in Illinois, effective January 1, 2015.
Sales of tangible personal property made to a federal, state, local or foreign governmental body are now exempt from the Retailers’ Occupation Tax “only if the governmental body has an active exemption identification number (‘E-number’)....” Buyers must provide this E-number to sellers at the time of sale, which allows the seller to record that number rather than collect the tax.
Furthermore, sales are only exempt when made directly to qualifying federal state, local or foreign governmental bodies. As explained in applicable Illinois Administrative Code:
“If an individual governmental employee provides a credit card to the retailer containing the name of the employee along with the name of the governmental body, tax will be due even if the employee provides an active E-number.”
Four types of Diplomatic Tax Exemption Cards are currently being issued, and each card identifies the types of exemptions to which the cardholder is entitled. Retailers may electronically verify the authenticity of Diplomatic Tax Exemption Cards.
Some types of exemption cards:
- Mission Tax Exemption – Official Purchases Only: purchases must be paid only by check or credit card bearing the name of the associated diplomatic or consular mission.
- Personal Tax Exemption: purchases may be made with any type of payment (cash, personal check, credit card, etc.).
A Diplomatic Tax Exemption card does not, in and of itself, exempt the holder from paying Illinois occupation or use taxes on the purchase of a vehicle. The Office of Foreign Missions (OFM), which issues Diplomatic Tax Exemption Cards to qualifying consular officials and foreign diplomats, has final say on whether or not the holder of the card is eligible for an exemption from Illinois occupation or use taxes on the purchase of a motor vehicle. The OFM will supply the seller with a letter stating that a purchaser is eligible for the exemption on the sale of the vehicle, and this letter, along with a copy of the Tax Exempt Card, validates the exempt sale for the Illinois Department of Revenue.
Additional details are available in Illinois Administrative Code, Title 86, Section 130.2080.
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