Illinois Sales Tax Graphics Arts Exemption Audit Attorney

Illinois sales tax graphic arts exemption
By: Mansoor Ansari
In a recent victory, our Firm was able to reduce our client’s liability by about $19000.00 after a failed Informal Conference Board hearing.
Taxpayer in effect argued that its website graphic design activities constitute “graphic arts production” since both the Illinois statutes and the applicable regulation makes engaging in “graphic arts production” a condition precedent to qualification for the graphic arts exemption. Showing that the Taxpayer is engaged in “graphic arts production” is a statutory and regulatory prerequisite to establishing that the Taxpayer’s computers, software and other items qualify for the graphic arts exemption.
The NAICS classifications enumerated in the statue and regulations pertaining to the “graphic arts” exemption, on their face, cover only various methods of printing and print production, and services directly related to these activities. Section 130.325(b)(1)(C) underscores this limitation, stating that “[t]he exemption applies to machinery and equipment used in graphic arts production processes, as those processes are described in the NAICS [.] While the NAICS subsectors referenced in subsection (b)(1)(A) describe types of graphic arts establishments that typically engage in graphic arts production, the exemption is not limited to qualifying machinery and equipment used by the establishments described in the NAICS, but rather, to qualifying machinery and equipment used in the printing processes described in the NAICS (for example, lithography, gravure, flexography, screen printing, quick printing, digital printing and trade services such as prepress and binding and finishing services).”
Contact our office to learn more about your audit and if this exemption applies to your business.
Phone: (888) 577-1482