State Tax Day - Current, S.16, Illinois—Sales and Use Tax: Late Software Lease or Rental Charges Are Taxable, (Jun 10, 2026)

Illinois issued a general information letter discussing the taxation of charges when a customer's lease or rental payment for software is late. Businesses and individuals are subject to sales tax on gross receipts from leases of tangible personal property. Gross receipts include all the consideration actually received by the seller, except traded-in tangible personal property. If a seller adds a late charge or other penalty to the base retail price in the event that the purchaser does not pay within a specified time and the penalty is paid to the seller, the penalty becomes part of the taxable gross receipts from the sale. This also applies to applies to gross receipts from lease transactions.

General Information Letter ST 26-0016-GIL, Illinois Department of Revenue, May 5, 2026, ¶404-256