Illinois service occupation tax (SOT) applies to sales of prescription drugs to prescription drug providers (PDPs) under the Medicare Part D Prescription Plan because the drugs are not sold directly to the government. Sales to Medicare and Medicaid are exempt as sales to a government body. Under the plan, the government provides funds on a per capita basis to the PDPs, and the PDPs act as private insurance companies under contract with the government. The SOT is not considered a premium tax, fee, or other similar assessment that federal law prohibits from being imposed by any state on payments that a PDP makes on behalf of a Part D Plan.(General Information Letter ST 13-0037-GIL, Illinois Department of Revenue, August 2, 2013)