- Illinois Department of Revenue ruled that online AI services, such as chatbots and cloud-hosted software, are not subject to Illinois sales tax.
- The ruling clarifies that these services are considered similar to Software as a Service (SaaS), which is generally not taxable in Illinois.
- Developer tools like SDKs and APIs, if provided free and hosted out of state, also do not trigger Illinois Use Tax.
- Businesses using or selling online AI tools typically have no Illinois sales or use tax liability, but should stay updated on state tax guidance.
Source: salestaxinstitute.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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