The Illinois Department of Revenue has issued a private letter ruling regarding the taxation of software as a service and cloud-based remote work tools. The state explained that providers of this sort of service and tools are not required to collect and remit the service occupation tax. The taxpayer would be “required to remit SOT on the selling price of tangible personal property transferred incident to sales of service if the cost ratio between the tangible personal property and the serviceman’s total annual gross receipts from all sales of service is 35 percent or greater.” In this case, the company’s cost ratio is less than 35 percent. Additionally, the taxpayer was not required to remit Illinois Use Tax on the cost of its applets provided free of charge to customers as the taxpayer was deemed an out-of-state retailer who does not operate servers in Illinois and does not exercise control over the applet in Illinois. The applet was downloaded by Illinois customers through online app stores. (Illinois Department of Revenue, 86 Ill. Adm. Code 130.1935, November 23, 2021)