JFB – Tax Consulting LLC
Effective July 1st, manufacturers in Illinois no longer have to pay sales tax on most of the supplies and consumables used in a manufacturing facility. The Department of Revenue published Informational Bulletin FY 2019-28 which covers the general rules prior to their updating the appropriate regulation.
The law recites the following as production related tangible personal property that is used or consumed in a manufacturing process: property that is purchased for incorporation into real property within a manufacturing facility, supplies and consumables used in a manufacturing facility including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel, and fire and safety equipment.
This addition to the law is in the same statute granting sales tax exemption for machinery and equipment used in manufacturing. While it appears to read that these new items would also be exempt if used in the production of graphic arts, clarification will have to be provided by the Department of Revenue.
IDOR form ST-587 is the exemption certificate that the manufacturer should provide to its vendor in order to document the exemption. Since this form is not yet set up to permit a “blanket” exemption for all future purchases, the manufacturer is required to provide the form for each purchase order.
I goods were delivered after June 30th, you should contact your vendor, provide a ST-587 and ask for a refund of sales tax paid (or short pay open invoices).
Joseph F. Bigane III