Perspectives

Illinois final local Retail Occupation Tax sourcing rules

Multistate tax alert | October 1, 2014

​In this tax alert, we provide a brief overview of the Illinois Supreme Court's decision in in Hartney Fuel Oil Co. v. Hamer and then summarize the final local ROT sourcing rules.

Retail Occupation Tax sourcing rules

In late June 2014 the Illinois Department of Revenue (“DOR”) submitted final local Retail Occupation Tax (“ROT”) sourcing rules to the Secretary of State for publication in response to the Illinois Supreme Court’s decision in Hartney Fuel Oil Co. v. Hamer, 2013 IL 115130 (Nov. 21, 2013).1 The sourcing rules provide guidance for determining which local ROT applies to multi-jurisdictional retailers.

In Hartney the Illinois Supreme Court invalidated the DOR’s prior local ROT sourcing rules.2 The court found fault with two aspects of the rules. First, the rules did not “amply prescribe the fact-intensive inquiry contemplated by” previous case law.3 Second, the rules “impermissibly constrict[ed] the scope of” the statute by “allowing for only one potentially minor step in the business of selling to conclusively govern tax situs.”4

The final sourcing rules (submitted to the Illinois Secretary of State on Jun. 25, 2014) are available on the DOR’s website at: http://www.revenue.state.il.us/News/HartneyDecision.htm.
Hartney Fuel Oil Co. v. Hamer, 2013 IL 115130 at ¶ 61-67 (Nov. 21, 2013).
Id., at ¶ 61.
Id. For additional information on the Hartney decision, see our External Tax Alert dated Nov. 26, 2013, accessible at: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Tax/us_tax_multistate_IL_112713.pdf.

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The Multistate Tax Alert Archive includes external tax alerts issued by Deloitte Tax LLP's Multistate Tax practice during the last three years. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. The alerts provide a brief summary of specific multistate developments relevant to taxpayers, tax professionals, and other interested persons.

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