86 Ill. Adm. Code 140.110 — Example of Methods Used by Servicemen to Determine Liability

# Example of Methods Used by Servicemen to Determine Liability

TITLE 86: REVENUE CHAPTER I: DEPARTMENT OF REVENUE PART 140 SERVICE OCCUPATION TAX SECTION 140.110 EXAMPLE OF METHODS USED BY SERVICEMEN TO DETERMINE LIABILITY

Section 140.110 Example of Methods Used by Servicemen to Determine Liability An auto mechanic contracts to repair a customer's automobile. In this example, the serviceman's entire bill to the customer is $500. Labor costs account for $300 of the total, and the serviceman's cost price of parts transferred totals $100. The selling price of the parts, if separately stated, would be $200. The following chart represents the manner in which this serviceman might incur tax under the different methods discussed in Sections 140.106, 140.108 and 140.109. a) Registered Serviceman Cost Price Selling Price Gross Receipts Service Occupation Tax Base Separately Stated $100 $200 $500 $200 (Selling price) Not Separately Stated $100 -0- $500 $250 (½ of gross receipts) De Minimis (paying SOT on cost price) $100 $200 $500 $100 (Cost price) b) De minimis serviceman not required to be registered as a retailer under Section 2a of the Retailers' Occupation Tax Act. Cost Price Selling Price Gross Receipts Service Occupation Tax Base $100 $200 $500 (Not subject to Service Occupation Tax if not required to be registered as a retailer under Section 2a of the Retailers' Occupation Tax Act. Subject instead to Use Tax on $100, see Section 140.108.) (Source: Added at 25 Ill. Reg. 4971, effective March 23, 2001)

Section 140.110 Example of Methods Used by Servicemen to Determine Liability

An auto mechanic contracts to repair a customer's automobile. In this example, the serviceman's entire bill to the customer is $500. Labor costs account for $300 of the total, and the serviceman's cost price of parts transferred totals $100. The selling price of the parts, if separately stated, would be $200. The following chart represents the manner in which this serviceman might incur tax under the different methods discussed in Sections 140.106, 140.108 and 140.109.

a) Registered Serviceman

Cost

Price

Selling

Price

Gross

Receipts

Service

Occupation

Tax Base

Separately Stated

$100

$200

$500

$200

(Selling price)

Not Separately Stated

$100

-0-

$500

$250

(½ of gross receipts)

De Minimis (paying SOT on cost price)

$100

$200

$500

$100

(Cost price)

b) De minimis serviceman not required to be registered as a retailer under Section 2a of the Retailers' Occupation Tax Act.

Cost

Price

Selling

Price

Gross

Receipts

Service Occupation

Tax Base

$100

$200

$500

(Not subject to Service Occupation Tax if not required to be registered as a retailer under Section 2a of the Retailers' Occupation Tax Act. Subject instead to Use Tax on $100, see Section 140.108.)

(Source: Added at 25 Ill. Reg. 4971, effective March 23, 2001)