Information for exclusively charitable, religious, or educational organizations; governmental bodies; and certain other tax-exempt organizations

Qualified organizations, as determined by the Illinois Department of Revenue (IDOR), are exempt from paying sales taxes in Illinois. The exemption allows an organization to buy items tax-free. In addition, their property may be exempt from property taxes.

The state has its own criteria for determining eligibility and the rules differ for the sales tax and property tax exemptions. The criteria is governed by the state statues that apply:

• Retailers' Occupation Tax Act (35 ILCS 120/) for sales tax exemptions.
• Pro perty Tax Code ( 35 ILCS 200/) for property tax exemptions.

Note: There is no fee to apply. A charitable organization isn't necessarily qualified because it has a charter from the Secretary of State's office designating it as a not-for-profit corporation, or an exemption from federal taxes under Section 501(c)(3) of the Internal Revenue Code. Although the information is relevant, it doesn't prove the charitable nature of the organization.

Sales Tax Exemptions

Who qualifies for a sales tax exemption?

Your organization must be

• not-for-profit, and
• organized and operated exclusively for charitable, religious, educational, or governmental purposes,

to qualify for the exemption from state and local sales tax.

Who receives sales tax exemptions?

Sales tax exemptions are given to

• Churches
• Exclusively charitable organizations
• Licensed not-for-profit day care centers
• Not-for-profit organizations that are operated primarily for arts or cultural purposes
• Qualifying senior citizen organizations
• Schools
• State, local, and federal governments, including fire districts and fire protection districts
  

Who doesn't qualify for a sales tax exemption?

Some organizations do charitable work but aren't primarily organized and operated for charitable purposes. Therefore, they don't qualify for this exemption. These include civic and fraternal organizations, such as

• American Legions,
• AmVets,
• Chambers of Commerce,
• Elks Clubs,
• Lions Clubs,
• Rotary Clubs,
• Veterans of Foreign Wars, and
• Unions and trade associations.
  

Do nursing homes and not-for-profit hospitals qualify for the exemption?

Not-for-profit hospitals and nursing homes that qualify as exclusively charitable institutions are not subject to sales tax when selling food or medicine to their patients. Hospital dining facilities that are not open to the general public are also exempt.

However, a hospital or hospital auxiliary incurs a sales tax liability when selling candy, chewing gum, tobacco products, and razor blades, since these items aren't necessary for basic hospital service and place the hospital in competition with community businesses.

How does an organization apply for a sales tax exemption (e-number)?

There is no fee to apply. Your organization should submit their request to us using MyTax Illinois or at the address located at the end of this section. If eligible, IDOR will issue your organization a sales tax exemption number (e-number). The sales tax exemption may take up to 90 days to process and it is not retroactive. Your organization must give this number to a merchant to make purchases tax-free.

To apply, your organization should submit Form STAX-1, Application for Sales Tax Exemption or Apply for or Renew a Sales Tax Exemption online using MyTax Illinois, and include a copy of the minimal documentation:

• The articles of incorporation,
• The organization's constitution, if unincorporated,
• The by-laws,
• A detailed narrative that explains purposes, functions, and activities of your organization,
• The IRS letter, reflecting federal tax-exempt status if your organization has one,
• Brochures or other printed material explaining the purposes, functions, and activities of your organization,
• The most recent financial statement. If the organization is a religious organization, they do not need to submit a financial statement with the initial request, and
• Any other information that describes the purposes, functions, and activities of your organization.

If your organization's name or address changes after your E-number has been assigned, submit Form STAX-300-C, Sales Tax Exemption Business Information Update. For a name change, you also must submit with Form STAX-300-C copies of your organization's articles of incorporation, if incorporated, or your organization's constitution, if unincorporated.

What if an exempt organization sells items?

Organizations that possess active e-numbers are also allowed to engage in a very limited amount of retail selling without incurring sales tax liability. An exempt organization may engage in sales to members, noncompetitive sales, and certain occasional dinners and similar activities (no more than two times a year) without incurring sales tax liability. See 86 Ill. Adm. Code 130.2005(a)(2) through (a)(4).

If your organization is exempt from paying sales taxes on its purchases, it still must collect sales taxes on items it sells, except in the three instances below.

• The items are sold only to the organization's members, students, patients, or inmates.
• The sales are from occasional dinners open to the general public, no more than twice in any one year.
• The sales are not in direct competition with businesses in the community.

The money your organization raises from any of these instances must be intended to further the charitable purpose of the organization for the exemption to apply.

Note: Gift shops or rummage stores operated by exempt organizations are commercial enterprises that are in competition with community businesses and are ineligible for a sales tax exemption on the sales they make.

See 86 Ill. Adm. Code 130.2081 for more information about tax-free purchases .

Is there a way to verify an e-number?

Yes, verify a sales tax exemption number (e-number) using MyTax Illinois. Also, see 86 Ill. Adm. Code 130.2081 for information about documenting purchases made with an e-number .

Do you need additional sales tax exemption information?

Please see 86 Ill. Adm. Code Section 130.2007 and 86 Ill. Adm. Code Section 130.2081 for more information about e-numbers or contact us by

• Email: rev.e99@illinois.gov
• Phone: 217-782-8881
• Mail: ILLINOIS DEPARTMENT OF REVENUE
  SALES TAX EXEMPTION SECTION 3-520
  101 WEST JEFFERSON STREET
  SPRINGFIELD, IL 62702
  

Property Tax Exemptions

Properties of religious, charitable, and educational organizations, as well as units of federal, state and local governments, are eligible for exemption from property taxes to the extent provided by law. The organization must apply for the exemption with the County Board of Review which reviews the application and forwards it to the Illinois Department of Revenue for the final administrative decision. For information contact the County Board of Review.

Who qualifies for a property tax exemption?

Your organization must

• be an exclusively beneficent and charitable, religious, educational, or governmental organization, and
• own the property that is used exclusively for charitable, religious, educational, or governmental purposes and not leased or used for profit,

to qualify for a property tax exemption.

Who doesn't qualify for a property tax exemption?

Some organizations do charitable work but aren't primarily organized and operated for charitable purposes. Therefore, they don't qualify for this exemption. These include civic and fraternal organizations, such as

• American Legions,
• AmVets,
• Chambers of Commerce,
• Elks Clubs,
• Lions Clubs,
• Rotary Clubs,
• Veterans of Foreign Wars, and
• Unions and trade associations.

How does an organization apply for a property tax exemption?

To apply, your organization should complete one of the following four applications, available from the chief county assessment officer (CCAO).

• Charitable organizations should complete Form PTAX-300, Application for Non-homestead Property Tax Exemption. You must include copies of
  • Proof of ownership, (deed, contract for deed, title insurance policy, condemnation order and proof of payment, etc.)
  • A picture of the property,
  • Any leases or contracts on the property, and
  • A notarized affidavit of use of the property.

  Educational and governmental organizations, other than federal and state agencies, should also complete Form PTAX-300. The required attachments are listed on that form.

  • Federal and state agencies should complete Form PTAX-300-FS, Application for Federal/State Agency Property Tax Exemption. The required attachments are listed on that form.
  • Religious organizations should complete Form PTAX-300-R, Application for Religious Property Tax Exemption. The required attachments are listed on that form.
  • Hospitals applying under 35 ILCS 200/15-86 should complete Form PTAX-300-H, Application for Hospital Property Tax Exemption. The required attachments are listed on that form.

  Once you've completed the application, submit it, along with all required documents, to the county board of review. The board will hold a hearing and evaluate all the information submitted before making a recommendation.

  All the documents are then forwarded to IDOR for a final determination. This decision is final unless a formal hearing is requested by the applicant or another party to the matter.

  Do you need additional property tax exemption information?

  • Phone: 217 785-2252
  • Mail :

  ILLINOIS DEPARTMENT OF REVENUE
  LOCAL GOVERNMENT SERVICES 3-520
  101 WEST JEFFERSON STREET
  SPRINGFIELD IL 62702