The Chicago Department of Finance issued a revision to the city’s application of the lease for re-lease exemption to include certain software and cloud products. The revision will apply effective July 1, 2020. In general, the Department will follow Illinois’ sale for resale exemption statutes, as reflected in regulations, including 86 Ill. Adm. Code 130.1935, which states: “Value-added resellers who acquire software for relicensing or transfer to consumers after modification or adaptation of the software may acquire the software as a sale for resale by presenting their suppliers with valid certificates …”
In an example given by the Department, a company with the following scenario asked if the lease for-release exemption would apply: The company pays for Infrastructure as a Service (IaaS) and makes the software it develops available on the hosted infrastructure as a web app with a subscription. The Department stated that the lease for re-lease may apply to the extent the company incorporates products that are leased to the company by the IaaS provider. Previously, the Department stated that an exemption would not be available in that scenario. (City of Chicago November 2015 Information Bulletin – Revised, Effective July 1, 2020)