Effective January 1, 2024, Illinois enacted a new exemption for purchases of tangible personal property made by active-duty members of the United States armed forces when the federal government is the payor. This exemption applies to the Retailers’ Occupation Tax Act, the Service Occupation Tax Act, the Use Tax Act, and the Service Use Tax Act. Of note, the exemption does not include personal purchases made by active-duty service members.
“The exemption does not apply to personal purchases made by active duty members of the armed forces.”
Claiming the Exemption
To qualify, active-duty service members must fulfill specific requirements, including presenting valid military identification, utilizing payment methods directly linked to the federal government, and completing Form ST-590-M, or the “Certificate of Eligibility for Military Purchase Exemption,” at the time of the transaction. This form serves as documented proof validating eligibility for the exemption.
Additionally, the payment for the purchase must be made directly from the federal government. Accepted payment methods include various options such as a federal government-issued credit card or a check where the federal government owns the account.
Document Compliance
Retailers are responsible for retaining Form ST-590-M as proof of the exemption for a minimum of six years. The Illinois Department of Revenue (Department) may request this form as evidence that no taxes were applicable to the sale of the specified property.
Blanket Certificates
Further, there's an option for active-duty personnel to use a blanket certificate, Form ST-590-M, as proof of continuous eligibility for the exemption with any seller. This blanket certificate must be kept updated, and retailers should ask for a new one if any information changes. Otherwise, all certificates should be updated at least once every three years.
The Takeaway
As with other exemptions and tax compliance, it is essential to follow the outlined steps and to retain proper documentation to successfully claim this exemption. No need to go it alone, let us help ensure your tax compliance.