Enterprise Zones All Over IL - Exempt from Sales Tax on Materials

[Tom Shallcross]

Chicagoland and Illinois investors - this has come up several times in conversations so I wanted to post it here to ensure everyone was aware of the opportunity to be exempt from sales tax on your building materials.

Illinois has designated Enterprise Zones (not to be confused with qualified opportunity zones) and the different areas are listed here: https://www2.illinois.gov/dceo/ExpandRelocate/Incentives/taxassistance/pages/ezmaps.aspx

Chicago has 6 zones and they are not all located in underdeveloped areas.  These zones claim to be for "stimulating growth in depressed areas" and many of these areas do indeed fit that category, but areas of Bucktown, Avondale, North Center, Roscoe Village and Ravenswood all qualify so don't dismiss your property because you feel you are in an A or B area. I have a large flip in Avondale that qualified and saved us about 8k in material costs. 

Contact info for Chicago is here: https://www.chicago.gov/city/en/depts/dcd/supp_info/enterprise_zone_program.html, you just reach out to Joanne and it's a 2 page application where you'll need to show ownership and approved permits, and outline high-level scope of work. I can't speak to the other IL enterprise zones areas outside of Chicago, but I would assume it's a similar process.

Took me about 48hrs to get approved and you just show the approved form when purchasing at your supplier. If your sub will be purchasing directly, he needs to fill out a separate form after you are approved which he can then show the supplier. ABT has been the only supplier for us that did not honored it, but Ferguson did so we didn't have to pay taxes on any of materials for a very large rehab. 

Interactive map for Chicago can be found here: https://data.cityofchicago.org/Community-Economic-Development/Boundaries-Enterprise-Zones/64xf-pyvh.

Save some money on your materials!

[Rishi B.]

Great post @Tom Shallcross. Was able to get the exemption on renovating a building in Bridgeport earlier this year, thought it might be helpful to others to detail how it works with specific vendors –

Home Depot – easiest vendor to work with, they’ll link it to your phone number and also it will stay on your online profile for online orders. If you do self checkout in store, you’ll always have to hit “request help” before paying, an associate will have to come over to enter in your Tax Exempt ID/phone number for you

Menards – pretty easy as well, sign up on their site, they’ll email you barcodes. Keep one on your phone for them to scan after they ring everything up at the register. It will also stay on your online account for online orders.

Lowe’s – not as easy, at least for me. They require something like re-registering your status every 60 days. Need to sign up on Lowesforpros.com, they have a separate Tax Exempt management system that’s kind of scattered.

Amazon – if you don’t have one already, I believe you’ll need a separate business account to add a Tax Exempt ID. Careful, they automatically apply it to things in your cart for whatever you buy (they’re not discerning what’s building materials for you). You can manually remove it for certain items, but I did a lot of returns on non building material stuff I bought because I didn’t realize it was being automatically applied until well after.

Ikea – I think it only works with online orders/kitchen dept for them - I used it for countertops but wouldn't have made the effort if I knew beforehand how much trouble it was going to be. It's nearly impossible because you can never get anyone on the phone, I found a gracious person on the Ikea subreddit who helped me out. Send me a message and I can provide the email addresses I used.  Had to email my docs to    get confirmation from them that it was in good standing. Then, I made my purchase, paid the sales tax, emailed the receipt and my EZ form again to , and they just credited the CC with the tax amount about a week later without even emailing me anything/providing a receipt or any sort of transaction record.

Side note, the Enterprise zone may also save on transfer taxes if the building is 1-4 units, my initial closing statement had it in there, but I think it was the title company who caught that it was a 6 unit so it didn't apply. But this piece can be a massive savings opportunity in addition to materials costs.