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Building Materials Exemption Certification FAQ's

 
 

Building Materials Exemption Reporting FAQ's

If you have additional inquiries, you may submit them by e-mail with the form at the bottom of this page.

Who is eligible to obtain an Illinois Department of Revenue Building Materials Exemption Certificate (BMEC)?

  1. Each construction contractor or other entity that purchases building materials to be permanently incorporated into real estate in an Enterprise Zone or River Edge Redevelopment Zone by rehabilitation, remodeling or new construction.
  2. Each construction contractor or other entity that purchases building materials that will be permanently incorporated into a High Impact Business location as designated by the Department of Commerce and Economic Opportunity.

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How do I apply for a Building Materials Exemption Certificate (BMEC)?

All applications must be submitted through the “Business Incentives Reporting and Building Materials Exemption Certification” area on the Department of Revenue’s website.

The following groups have specific instructions:

  1. Construction contractors or other entities seeking exemption certificates must go through the Zone Administrator of the zone where the project is located or through the High Impact Business project manager.
    IMPORTANT: If you are a sole proprietor using a Social Security Number (SSN) as your business’ identification number, you must first obtain an “Applicant ID” through the Building Materials Exemption Certificate program.
  2. Zone Administrators must submit applications for those construction contractors or other entities purchasing materials to permanently incorporate into real estate in an Enterprise Zone or River Edge Redevelopment Zone.
  3. High Impact Business project managers must submit applications for those construction contractors or other entities purchasing materials to be permanently incorporated into a High Impact Business location.

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What do I do if I don’t know which zone I’m in or who the Zone Administrator is for my zone. How do I find that information?

Zone maps, Zone Administrators and zone contacts are available from the Illinois Department of Commerce and Economic Opportunity at the following link:

http://www.illinois.gov/dceo/ExpandRelocate/Incentives/taxassistance/Pages/EnterpriseZone.aspx

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What information does a Zone Administrator or High Impact Business project manager have to provide to apply for an exemption certificate?

  1. Name, address and e-mail address of the construction contractor or other entity seeking a certificate;
  2. Name of the Enterprise Zone or River Edge Redevelopment Zone (not necessary for High Impact Business locations);
  3. The address (or location) of the project;
  4. The estimated amount of the exemption based on the percentage of the contract that consists of materials;
  5. The project’s expected completion date;
  6. Federal Employer Identification Number (FEIN)

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What if the applicant does not have an FEIN?

An applicant without an FEIN must go to the Department of Revenue’s secure website and enter his or her Social Security number.  The department will provide an Applicant ID, which the applicant can bring to the Zone Administrator or High Impact Business project manager to complete the application.

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What information does a construction contractor seeking an Applicant ID have to provide to be assigned this number?

  1. Name;
  2. Social Security number (SSN);
  3. e-mail address;
  4. mailing address; and
  5. phone number

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For how long is a certificate valid?

Certificates are valid for a maximum of two years. The exact expiration date of each certificate will vary and is based upon the expected project completion date provided at the time the application is submitted.

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Am I able to use the certificate up to and including the date of expiration?

No. The expiration date on the certificate is the date the certificate is no longer valid.

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Do I need a new certificate if the original is expired, but my project is not complete?

Yes. If your Building Materials Exemption Certificate is set to expire before your project is complete, you must seek a renewal through the Zone Administrator or High Impact Business project manager who submitted your original application.

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Does a contractor or other entity purchasing exempt building materials need to apply for and receive a separate certificate each time it wants to make an exempt purchase?

No.  Each certificate allows the contractor or entity identified on the certificate to make unlimited purchases of eligible building materials for the project identified on the certificate until the expiration date identified on the certificate.  However, each time building materials are purchased, the purchaser must leave with the seller a completed EZ-1 form, identifying what was purchased, who made the purchase, for what project the purchase was made, and the purchaser’s exemption certificate number.

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Can a contractor or other entity use a certificate to purchase materials for a new project if the new project is at the same location as the one identified on the certificate?

No.  The certificate is good for the project identified to the Zone Administrator or High Impact Business project manager when the application was submitted.  The original application included a contract amount.  A new contract, or expansion of a contract beyond what was identified in the certificate application, would constitute a new project and require a new exemption certificate.

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Can a contractor or other entity use the same certificate to purchase materials for multiple projects?

No.  Each certificate is unique to that project. It cannot be used for any other project and can only be used for the project for which it was issued.

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If an applicant must secure a new certificate for each project, how much information will have to be resubmitted?

The applicant must provide identifying business information only for the first certificate.  Each subsequent certificate can be issued based on the contractor’s FEIN or previously-issued ID, the location of the project, an estimate of the dollar amount of the materials subject to exemption, and the expected date that the project will conclude.

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I am a Zone Administrator. What if I make an error, need to edit or change information when filling in the certificate?

If you are still on the Certificate Information page, just click the link in the field that is incorrect, and enter the correct information. If you are already on the verify certificate page, click cancel and go back to the previous page (the Certificate Information page) to make the necessary changes. DO NOT RESCIND THE CERTIFICATE. Doing so will NOT allow you to start over. Once you rescind a certificate a new certificate CANNOT be created under that contractor’s ID for that project.

Rescinded certificates can only be reinstated by contacting  the Department of Revenue.

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I am a Zone Administrator. I accidently rescinded a certificate. How do I issue a new one?

Once a certificate is rescinded by you, it is invalid. You will not be able to issue a new certificate for that contractor for that project. You will need to contact the Department of Revenue to reinstate a rescinded certificate.

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How does an applicant access the certificate once it is issued?

The Department will send a message to the e-mail address submitted on the application with a link.  The applicant can access its exemption certificate by clicking on the link in the e-mail message and following the directions provided.

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How will a retailer know when a purchaser has a valid exemption certificate?

When purchasing tax exempt building materials, the purchaser must submit a signed statement to the retailer that contains the certificate number, the zone, the project, and the materials being purchased. Form EZ-1, Building Materials Exemption Certification, contains all necessary information and will be provided to certificate holders when they receive their certificates. Form EZ-1 is also available for download here.

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When will contractors and other entities have to begin using Department of Revenue issued certificates?

July 1, 2013.

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Are unexpired certificates issued by Zone Administrators before July 1, 2013 still valid after July 1, 2013?

No. Only certificates issued by the Illinois Department of Revenue are valid after July 1, 2013.  Any contractor or other entity possessing a valid building materials exemption certificate issued by a Zone Administrator, must apply for a new certificate from the Department of Revenue for the project.

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What are the penalties for misuse of an exemption certificate?

Certificate holders are responsible for ensuring that their certificates are used only to make qualified purchases. A certificate holder who uses the certificate or allows it to be used to improperly avoid tax will be assessed taxes and penalties on the purchase, an additional monetary penalty equal to the state and local sales taxes on the purchase, and may be barred from securing additional certificates.

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What qualifies as "building materials" eligible for sales tax deduction?

Building materials that are eligible for the sales tax deduction include items that are permanently affixed to real property such as lumber, mortar, glued-down carpets, paint, wallpaper, and similar affixed items.

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Who should be issued a Building Materials Exemption Certificate for a project that does not use contractors?

Building Materials Exemption Certificates should be applied for and issued to the entity that will be making purchases of exempt materials, whether contractor or other entity. The certificate holder is responsible for ensuring that the certificate is used only to make qualified purchases.

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I am a retailer and have many exemption certificates on file for various churches, schools and businesses that make purchases at my store. Are these certificates no good?

This new certificate process applies only to the Enterprise Zone-related businesses. Beginning July 1, 2013, those businesses must have a new certificate and they must show it to you each time they make a purchase. This program and this process do not impact other entities holding exemption certificates.

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Who is required to file a Building Material Exemption report?

You must file a report if you were issued a Building Materials Exemption Certificate by the Illinois Department of Revenue to purchase tax exempt building materials for a high impact business, or for a business located in an Enterprise Zone or River Edge Redevelopment Zone.

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When would the report be due for a certificate obtained in 2014?

All reports for the Building Materials Exemption Certificates issued during the previous year are due no later than May 31 of the following year. For certificates obtained in 2014, reports are due no later than May 31, 2015. However, because that date falls on a Sunday, the deadline to file defaults to the following business day, Monday, June 1, 2015.

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Do I need to file a report for each project I purchased building materials for in 2013?

You must file a single Building Materials Exemption report. Your filing will contain all of your certificates for all projects that were active for 2013, the current reporting year. You must supply information for each certificate under the appropriate certificate and appropriate project on a single report.

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For which year or time period am I filing?

You must report the value of all tax exempt building materials purchased between July 1, 2013, and December 31, 2013. The law requires reports to be filed with the Illinois Department of Revenue on or before May 31 annually. If a due date falls on a weekend or a holiday, a report is due the next business day. In 2014, May 31 falls on a Saturday, so the reports are due no later than Monday, June 2, 2014.

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What information will I need to file a report?

You will need the identification number you used to register for your Building Materials Exemption Certificate, which is your Federal Employer Identification Number (FEIN), Social Security Number (SSN), or Applicant Identification Number. You will need to report the value of the building materials purchased with each of your certificates.

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Last year I did not need to file a report. Why do I need to file one this year?

Public Act 98-0109, effective July 25, 2013, mandates that Building Materials Exemption Certificate holders report their project-related tax exempt purchases for each Enterprise Zone, River Edge Redevelopment Zone, or High Impact Business project by May 31 of the following year.

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How long is each certificate good for?

Each certificate is good for no more than two years from the date of issuance. Each certificate’s expiration date is identified on the certificate.

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What do I do if I make a mistake or need to correct a report that I already filed?

If you make a mistake or need to correct a report that you already filed with us, you must submit an entirely new report for all of your certificates again, even the ones that were correctly filed the first time. Please log into your account and file a new report. This new report will completely replace your earlier submissions.

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How do I report if I hold certificates for multiple projects in multiple Enterprise Zones?

The reporting application will provide a list of all certificates issued for your identification number that were active at some point during the calendar year of the report.. You must report purchases for each project under the certificate number for that project.

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Should I report tax exempt purchases I made using building material exemption certificates that were issued by Enterprise Zone Administrators before July 1, 2013?

No. This report is only for holders of certificates issued by the Illinois Department of Revenue. The Department began issuing certificates to be used on or after July 1, 2013. The value of tax exempt building materials purchased between January 1, 2013 and June 30, 2013 should be reported by the businesses on the appropriate business report, either the Enterprise zone, River Edge Redevelopment Zone, or High Impact Business report.

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Can you explain the following message that showed while completing my BMEC report, and what I need to do: “Warning: One or more of your certificates is missing exemption information. If this is correct, click next.”?

This is a warning message that displays when the exempt building material purchase amount is listed as 0.00 for one or more of your certificates in your BMEC report. If the purchased amount of 0.00 is correct, you can choose to proceed and click “next.” If the purchased amount is not 0.00, please correct the number to represent the correct amount purchased, and then click “next.”

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After I file my report, will I received a confirmation that it has been completed?

Immediately after you have submitted your report, a confirmation page will appear. You should print or write down the confirmation number given. You will need this number in order to view your report, if you choose to at a later date. Please note: once the window of time for filing your report ends (soon after June 2, 2014), you will no longer be able to log into the reporting interface to view past reports.

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After I have filed my completed report and I have my confirmation number, how long should I keep these records?

The Illinois Department of Revenue recommends that you keep your confirmation number at least through the end of the filing deadline in case you wish to view your report again. You should keep your reports with your tax returns and information, and follow the standard time frame for keeping tax records for audit purposes. Please note: once the window of time for filing your report ends (soon after June 2, 2014), you will no longer be able to log into the reporting interface to view past reports.

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