Drop Shipments of Products for Resale Discussed

The Illinois Department of Revenue has issued a general information letter discussing drop shipments from Illinois manufacturers to Illinois customers of products that are sold to the customers by an out-of-state distributor. Assuming the manufacturer has received adequate information from the distributor that the sale is for resale, the department will consider the transaction to be a purchase for resale and will not require the manufacturer to collect tax from the Illinois customer, even if the customer picks up the equipment from the manufacturer. The letter advises that the failure of distributors to present an active Illinois registration or resale number and a certification that the sale is a sale for resale creates a rebuttable presumption that the sale is not for resale. However, this presumption may be rebutted by other evidence.

General Information Letter ST 13-0042-GIL, Illinois Department of Revenue, August 23, 2013