Illinois DOR Issues Guidance on Sales Tax for Medical Services and Drugs

The Illinois Department of Revenue (DOR) issued a general information letter providing guidance on the application of sales and service occupation taxes to medical services and prescription drugs. The letter states that providers of medical services are generally considered engaged in the business of selling services, and prescription drugs and medical appliances transferred incident to the service are taxed at a reduced 1 percent state rate plus applicable local taxes. The letter outlines four methods servicepersons can use to calculate their tax base on the transfer of tangible personal property incident to the service. [Il. Dep’t of Revenue, ST 26-0018-GIL, ...