A construction contractor does not need to collect sales tax when incorporating taxable items of tangible personal property into real estate under a construction contract. In this scenario, Illinois law considers the construction contractor the end user of the items permanently incorporated into real estate. The construction contractor must either pay tax on the cost price of these items directly to its supplier or remit the tax directly to the Illinois Department of Revenue.
Illinois law considers a construction contractor selling taxable items of a tangible personal property over the counter to be a retail making taxable retail sales. See 86 Ill. Admin. Code Section 130.1940 and 130.2075.