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Illinois Department of Revenue amends sales tax regulations on transportation and delivery charges

The Illinois Department of Revenue recently has amended the Retailers’ Occupation Tax (sales tax) regulation concerning the treatment of transportation and delivery charges to reflect the Illinois Supreme Court’s decision in Kean v. Wal-Mart Stores Inc. Specifically, the regulation provides that outgoing transportation and delivery charges are subject to sales tax when there is an inseparable link between the sale of tangible personal property and its transportation or delivery. The regulation provides safe harbors and clarifies the treatment of mixed transactions that include taxable and nontaxable delivery charges, exempt items, or items taxed at different rates. Also, numerous examples are included throughout the regulation. The new provisions retroactively apply on and after Nov. 19, 2009 — the date of the Kean decision. The Department also amended a separate regulation to provide that the tax treatment of shipping and handling charges follows the treatment of transportation and delivery charges.

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