For Illinois use tax purposes, the terms “selling price” and “amount of sale” include the consideration received under a lease of certain motor vehicles that are sold on or after January 1, 2015, specifically for leasing. Affected leased motor vehicles include motor vehicles of the first division, and motor vehicles of the second division that: (1) are self-contained and designed or permanently converted to provide living quarters for recreational, camping, or travel use, with direct walk-through access to the living quarters from the driver's seat; (2) are of the van configuration designed for the transportation of not less than seven or more than 16 passengers; or (3) have a gross vehicle weight rating of 8,000 pounds or less. Consideration includes amounts due at lease signing and all monthly or other regular payments charged over the term of the lease.
The terms apply where the leases are for more than one year. The terms do not apply where leases do not have a defined time period when the lease is entered into, including leases with a defined initial period with the option to continue the lease on a month-to-month or other basis beyond the initial defined period.
“Selling price” includes any amount received that is not calculated at the time the lease is executed, such as excess mileage charges and charges for excess wear and tear. The “selling price” cannot be reduced, and a credit cannot given for traded-in property owned by the lessor or traded-in property owned by the lessee.
For sales in Illinois, lessors are liable for sales tax on those amounts, not use tax, and must file returns for collected tax. The lessor will be entitled to any discount on collecting and remitting the tax to which a retailer would have been entitled.
In the case of a motor vehicle sold for the purpose of leasing, the sale occurs at the time the vehicle is delivered, regardless of the due date of lease payments.
A lessor who incurs sales tax on the sale of a previously leased motor vehicle cannot take a credit in the amount of the sales tax paid against the use tax paid on the original purchase if the selling price of the vehicle was determined under the definition of “selling price” in effect for sales on or after January 1, 2015. P.A. 99-78 (H.B. 4137
), Laws 2015, effective July 20, 2015