Illinois DOR Clarifies Solar Panel Tax Obligations Under Electricity Excise, Utilities Laws

The Illinois Department of Revenue (DOR) issued a general information letter regarding the application of the Electricity Excise Tax Law and the Public Utilities Revenue Tax Law to situations involving solar panels and power purchase agreements. DOR held that solar panels permanently affixed to real property are not subject to the lease tax, construction contractors incorporating the solar panels owe use tax, companies delivering electricity generated by solar panels may owe electricity excise tax if they meet the definition of a “delivering supplier”, and companies may be exempt from the electricity distribution tax under the Public Utilities Revenue Act if ...