AUTHORITY: Implementing the Automobile Renting Occupation and Use Tax Act [35 ILCS 155] and authorized by Section 2505-25 of the Civil Administrative Code of Illinois [20 ILCS 2505/2505-25].

SOURCE: Adopted at 9 Ill. Reg. 13098, effective August 12, 1985; amended at 16 Ill. Reg. 4867, effective March 12, 1992; amended at 25 Ill. Reg. 8329, effective June 22, 2001.

SUBPART A: NATURE OF THE TAX

 

Section 190.101  Description, Rate and Base of the Tax

 

a)         The Automobile Renting Use Tax (Section 4 of the Automobile Renting Occupation and Use Tax Act (the Act) (Ill. Rev. Stat. 1991, ch. 120, pars. 1701 et seq.)) is a tax imposed upon the privilege of using, in this State, an automobile rented from an automobile rentor under lease terms of one year or less.  The tax is imposed at the rate of 5% of the rental price paid to the rentor.

 

b)         "Use" means any incident of control by a rentee, including the possession or the right to possession, over an automobile pursuant to a rental agreement for that automobile under a rental term of one year or less.

 

c)         However, if the automobile rentor from whom the automobile is rented would not be taxable under the Act despite all elements of the rental transaction occurring in Illinois, then the tax imposed by the Act shall not apply to the use of the rented automobile in this State. For example, a rentee of an automobile from a rentor who qualifies as an isolated or occasional rentor so as not to incur Automobile Renting Occupation Tax liability does not incur Automobile Renting Use Tax liability when using that rented automobile in Illinois.

 

(Source:  Amended at 16 Ill. Reg. 4867, effective March 12, 1992)

 

Section 190.105  Relation of Automobile Renting Use Tax to Automobile Renting Occupation Tax

 

The Automobile Renting Use Tax complements the Automobile Renting Occupation Tax.  That is why the Automobile Renting Use Tax is restricted to situations in which automobiles are rented from automobile rentors under lease terms of one year or less.

 

Section 190.110  Collection of the Tax from Rentees by Automobile Rentors Maintaining a Place of Business in This State

 

a)         The Automobile Renting Use Tax must be collected from rentees by all rentors maintaining a place of business in this State.  "Rentor maintaining a place of business in this State" shall mean and include any automobile rentor having or maintaining in this State, directly or by a subsidiary, an office, distribution point, warehouse or other facility or place of business, or any agent or other representative operating in this State under the authority of the rentor or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such rentor or subsidiary is licensed to do business in this State.  The term "rentor maintaining a place of business in this State" has the same scope and effect as does the term "retailer maintaining a place of business in this State" by virtue of the incorporation of Section 2 of the Use Tax Act (Ill. Rev. Stat. 1991, ch. 120, par. 439.2) into Section 4 of the Act.

 

b)         It does not matter that an agent may engage in business on his own account in other transactions, or that the agent may act as agent for other persons in other transactions, or that the agent is not an employee but is an independent contractor acting as agent.  The term "agent" is broader than the term "employee".  "Agent" includes anyone acting under the principal's authority in an agency capacity.

 

(Source:  Amended at 16 Ill. Reg. 4867, effective March 12, 1992)

 

Section 190.115  Accounting for the Tax

 

a)         If the rentor is required or authorized to collect the Automobile Renting Use Tax, then the rentee must pay the tax to the rentor.  However, the rentor's failure to collect the tax from the rentee does not prevent the Department of Revenue (the Department) from collecting the tax directly from the rentee whether the rentor's liability to remit tax is to remit it in the form of Automobile Renting Occupation Tax or in the form of Automobile Renting Use Tax.  If the rentee rents an automobile from a rentor under lease terms of one year or less but does not pay the Automobile Renting Use Tax to that rentor, the rentee shall pay the Automobile Renting Use Tax directly to the Department.

 

b)         The rentor must remit the Automobile Renting Use Tax he collects to the Department, but first reduces what he must remit in this connection by the Automobile Renting Occupation Tax (if any) which he is required to pay and does pay to the Department in connection with the same automobile rental transaction.

 

Section 190.120  How to Avoid Paying Tax on Automobile Renting Use Tax Collected from the Rentee

 

a)         Taxable rental receipts, on the basis of which Automobile Renting Use Tax must be collected and remitted to the Department in transactions that are subject to the Automobile Renting Use Tax despite being exempt from the Automobile Renting Occupation Tax because of interstate commerce, do not include separately stated charges which are added to the rental price on account of the rentor's duty to collect the Automobile Renting Use Tax.

 

b)         If a rentor does not keep a detailed record for the return period of the Automobile Renting Use Tax which he collects so as clearly to segregate these added charges from other receipts, absent information to the contrary, it will be assumed that the Automobile Renting Use Tax collected equals 5% of the taxable receipts received in such return period from taxable automobile rentals if the rentor collects the Automobile Renting Use Tax in accordance with the bracket system prescribed by the Department in 86 Ill. Adm. Code 150.Table A and states such tax to rentees separately from the rental price of the automobile as the rentor is required to do.

 

c)         The rentor may eliminate the amount of Automobile Renting Use Tax he collects from total rental receipts to arrive at his taxable rental receipts by subtracting the amount collected from the rentee as Automobile Renting Use Tax, as shown by such rentor's books and records, from those total rental receipts.  The rentor may also accomplish this result by subtracting, from the total rental receipts which he receives from taxable automobile rentals, the figure obtained by dividing such rental receipts by 105 and multiplying the result by 5.

 

d)         In collecting the Automobile Renting Use Tax from a rentee, the rentor must state the tax as a distinct item separate and apart from the rental price of the automobile.  If the tax is not stated as a separate item, it will be irrebutably presumed that the tax was not collected from the rentee, and the rentor will be entitled to no deduction from total rental receipts for collection of the tax from the rentee.  The best evidence that the tax was stated as a separate item is a receipt given to the rentee which shows the tax as a distinct item separate and apart from the rental price of the automobile. ( Section 4 of the Act)

 

(Source:  Amended at 16 Ill. Reg. 4867, effective March 12, 1992)

SUBPART B: EXEMPT AUTO RENTING USES AND AUTO RENTEES NOT SUBJECT TO THE TAX

 

Section 190.125  Exemptions to Avoid Multi-State Transactions

 

a)         To prevent actual multi-state taxation, the Automobile Renting Use Tax does not apply to the use in this State of automobiles rented under lease terms of one year or less under the following circumstances:

 

1)         the use, in this State, of an automobile rented outside this State by a non-resident and brought into this State by that non-resident for his or her own use while temporarily within this State or while passing through this State, and

 

2)         the use, in this State, of an automobile rented outside this State by any person who has already paid a rental tax in another state to the extent of the amount of such tax properly due and paid in such other state (for this purpose, "State" includes the District of Columbia).

 

b)         Since the exemptions set out immediately above at subsections (a)(1) and (2) of this Section do not exist as far as the Automobile Renting Occupation Tax is concerned, these two exemptions have application only where the sole tax liability involved is Automobile Renting Use Tax.  If the rentor in the same transaction incurs Automobile Renting Occupation Tax liability, these exemptions have no application.

 

Section 190.130  Non-Resident Exemptions

 

The Automobile Renting Use Tax does not apply to the use, in this State, of an automobile rented outside this State by a non-resident individual who then brings that automobile to this State for use here if that individual has used the rented automobile outside this State at least three months before bringing the rented automobile to this State.

 

(Source:  Amended at 25 Ill. Reg. 8329, effective June 22, 2001)

 

Section 190.135  Meaning of "Rented Outside This State"

 

"Rented Outside This State", in addition to its usual and popular meaning, shall include the delivery, by the rentor, outside Illinois, of an automobile rented in Illinois under a lease term of one year or less and delivered by the rentor from a point in this State to a point outside this State.

 

Section 190.140  Exempt Rentees

 

a)         Governmental bodies are exempt from the Automobile Renting Use Tax.

 

b)         Corporations, societies, associations, foundations or institutions organized and operated exclusively for charitable, religious or educational purposes are exempt from Automobile Renting Use Tax.

 

c)         Not-for-profit corporations, societies, associations, foundations, institutions or organizations which have no compensated officers or employees and which are organized and operated primarily for the recreation of persons 55 years of age or older are exempt from Automobile Renting Use Tax.  (Ill. Rev. Stat. 1983, ch. 120, par. 1703).

SUBPART C: RECEIPT FOR THE TAX

 

Section 190.145  Receipt

 

When an automobile rentor collects Automobile Renting Use Tax from a rentee, the rentor should give the rentee a receipt for the tax so collected if the rentee demands such a receipt.  The receipt should show the name and address of the rentor and the rentee, the place and date of the automobile rental, a brief description of the automobile rented, the amount of the rental price, the lease term, the amount of the tax and the date on which the tax was paid. The Automobile Renting Use Tax shall be stated as a distinct item separate and apart from the rental price of the automobile.  The best evidence that the tax was stated as a separate item is a receipt given to the rentee which shows the tax as a distinct item separate and apart from the rental price of the automobile.

SUBPART D: INFORMATION CONCERNING PAYMENT OF THE AUTOMOBILE RENTING USE TAX

 

Section 190.150  How the Tax is Paid

 

a)         If a rentee rents an automobile from an automobile rentor authorized to collect Illinois Automobile Renting Use Tax, the rentee shall pay the tax to that rentor.

 

b)         If a rentee rents an automobile from an automobile rentor but does not pay the Automobile Renting Use Tax to that rentor, the rentee must pay the tax directly to the Department.  This would be the case, for example, where the rental was made from an out-of-State rentor not registered to collect Illinois Automobile Renting Use Tax.  When the rentee reports the tax directly to the Department, the tax for any rental payment is due no later than the last day of the month following the month in which the rentee makes that rental payment to the rentor and the remittance shall be accompanied by a return form which the Department shall provide on request.

 

c)         A rentee who is liable to pay the Automobile Renting Use Tax directly to the Department only occasionally and not on a frequently recurring basis (and who is not required to file returns as an automobile rentor) need not register with the Department.  Such rentees may pay the tax and file Automobile Renting Use Tax returns only as and when they incur their occasional liability.

 

d)         However, if a rentee has a frequently recurring direct Automobile Renting Use Tax liability, that rentee must register with the Department and file regular monthly tax returns on which the tax is reported.

 

e)         If a rentee who must remit the Automobile Renting Use Tax directly to the Department is also registered with the Department as an automobile rentor, that rentee shall report the Automobile Renting Use Tax information in the space provided for that purpose on the Automobile Renting Occupation Tax return.

 

Section 190.155  Procedure to Obtain Letter Ruling Documenting Exemption

 

If the rentee is exempt from Automobile Renting Use Tax liability with respect to a particular transaction (as would be the case, for example, where the rentee is a church, charity, school or governmental body), the rentee may present pertinent facts to the Department and secure from the Department an exemption ruling documenting the exempt status of the rentee or of the particular rental transaction.

SUBPART E: REGISTRATION OF OUT-OF-STATE RENTORS

 

Section 190.160  When Out-of-State Rentors Must Register to Collect Automobile Renting Use Tax

 

a)         A rentor who is registered under the Automobile Renting Occupation and Use Tax Act need not obtain a separate Certificate of Registration under the Automobile Renting Occupation and Use Tax Act.  However, any automobile rentor maintaining a place of business in this State, if not registered under the Automobile Renting Occupation and Use Tax Act must apply to the Department for a Certificate of Registration on an application form furnished by the Department.  Each such rentor shall list with the Department the names and addresses of all agents operating in this State and the location of any and all distribution points, warehouses, offices or other places of business in this State.

 

b)         For a definition of "rentor maintaining a place of business in this State", see Section 190.110(a) of this Part.

 

c)         Every rentor maintaining a place of business in this State must act as an Automobile Renting Use Tax collector for this State when that rentor makes delivery of the rental automobile to the rentee in Illinois even though that rentor does not incur any Automobile Renting Occupation Tax liability as a result of the transaction.  For example:

 

1)         Out-of-State rentors having Illinois rental outlets which are subject to the Automobile Renting Occupation and Use Tax Act are required to collect and remit Automobile Renting Use Tax, as such, when shipping or delivering rental automobiles to rentees in Illinois, from outside Illinois in transactions which have no connection with the Illinois rental outlets.  This is true even though the interstate delivery would not subject the out-of-State rentor to Automobile Renting Occupation Tax.

 

2)         Out-of-State rentors having any kind of business in Illinois or any kind of representative or agent either stationed in Illinois or coming into Illinois from time to time must collect and remit Automobile Renting Use Tax, as such, when shipping or delivering the automobile to the rentee in Illinois.  This is true even though the rentor would not incur Automobile Renting Occupation Tax liability on the transaction because the Illinois agent has no authority to accept orders so as to create Illinois rental contracts but is authorized only to solicit orders in Illinois for acceptance by the rentor outside Illinois and because the automobile is not located in Illinois at the time it is rented.

 

Section 190.165  Voluntary Registration by Out-of-State Rentors

 

The Department will, upon application, authorize the collection of the Automobile Renting Use Tax by any rentor not maintaining a place of business in this State.  Such a rentor, upon application, may be issued, without charge, a permit to collect such tax.  When so authorized, it shall be the duty of such rentors to collect the tax upon rental receipts from all rental automobiles shipped or delivered to rentees in Illinois pursuant to orders accepted outside Illinois in the same manner and subject to the same requirements as a rentor maintaining a place of business in this State. However, no such authorization will be granted when the application is made for a purpose other than the collection of the Automobile Renting Use Tax.

SUBPART F: RENTORS' RETURNS

 

Section 190.170  When and Where to File

 

a)         Every rentor required or authorized to collect the Automobile Renting Use Tax must file a return each month by the twentieth day of the month covering the preceding calendar month, except when the rentor is authorized to file returns on an annual basis as hereinafter provided.  The return shall be filed on a form prescribed by the Department.

 

b)         Since Automobile Renting Occupation Tax and Automobile Renting Use Tax are due only as and when rental receipts are actually received, the rentor, in collecting Automobile Renting Use Tax, may collect, for each return period, only the tax applicable to those rental receipts actually received during the return period.

 

c)         If the rentor's average monthly tax liability to the Department does not exceed $50.00, the Department may authorize returns to be filed on an annual basis, with the return for a given year due by January 20 of the following year.

 

d)         Annual returns, as to form and substance, shall be subject to the same requirements as monthly returns.

 

(Source:  Amended at 16 Ill. Reg. 4867, effective March 12, 1992)

SUBPART G: INCORPORATION BY REFERENCE

Section 190.175 Incorporation of Certain Sections of 86 Ill. Adm. Code

 

a)         The substance and provisions of the Sections of 86 Ill. Adm. Code set out below are incorporated herein by reference and are made a part hereof.  For purposes of this incorporation, references in the incorporated Sections to:

 

1)         persons engaged in the business of selling tangible personal property at retail mean persons engaged in the business of renting automobiles for periods of one year or less for valuable consideration;

 

2)         sellers and retailers mean automobile rentors;

 

3)         users and purchasers mean automobile rentees;

 

4)         sales or sales at retail mean automobile rentals under lease terms of one year or less;

 

5)         the Retailers' Occupation Tax Act (Ill. Rev. Stat. 1991, ch. 120, pars. 440 et seq.) mean the Automobile Renting Occupation and Use Tax Act;

 

6)         the Use Tax Act (Ill. Rev. Stat. 1991, ch. 120, pars. 439.1 et seq.) mean the Automobile Renting Occupation and Use Tax Act;

 

7)         selling price mean receipts from the rental of automobiles under  lease terms of one year or less;

 

8)         purchase price mean the rental price paid to an automobile rentor for the rental of an automobile under lease terms of one year or less; and

 

9)         returns mean Automobile Renting Use Tax returns or that portion of the Automobile Renting Occupation Tax Return on which Automobile Renting Use Tax can be reported.

 

b)         On that basis, the following Sections and Subparts of 86 Ill. Adm. Code 150 (Use Tax Regulations) are incorporated herein:

 

86 Ill. Adm. Code 150.120

86 Ill. Adm. Code 150.510

86 Ill. Adm. Code 150.515

86 Ill. Adm. Code 150.520

86 Ill. Adm. Code 150.1001

86 Ill. Adm. Code 150.1301

86 Ill. Adm. Code 150.1305       –     except for references to the impossibility of showing the tax as a separate item and except for language authorizing the posted sign method of showing tax as a separate item.

 

86 Ill. Adm. Code 150.1315

86 Ill. Adm. Code 150:  Subpart M

86 Ill. Adm. Code 150.Table A

 

c)         86 Ill. Adm. Code 180.101          –     except subsection (a) and except that the reference in subsection (c) to Automobile Renting Occupation Tax means Automobile Renting Use Tax.

 

86 Ill. Adm. Code 180.125          –     except that the reference to gross receipts on which the Automobile Renting Use Tax must be computed.

 

86 Ill. Adm. Code 180.130

86 Ill. Adm. Code 180.135          –     except that the reference to exemption from Automobile Renting Occupation Tax in subsection (a) means exemption from Automobile Renting Use Tax.

 

d)        On the same basis, the following Sections and Subparts of 86 Ill. Adm. Code 130 (Retailers' Occupation Tax Regulations) are incorporated herein:

 

86 Ill. Adm. Code 130.505(a)

86 Ill. Adm. Code 130.510

86 Ill. Adm. Code 130.515

86 Ill. Adm. Code 130.520

86 Ill. Adm. Code 130.525

86 Ill. Adm. Code 130.535(a)

86 Ill. Adm. Code 130.545

86 Ill. Adm. Code 130.701(f)(1)

86 Ill. Adm. Code 130.701(f)(2)

86 Ill. Adm. Code 130.701(f)(3)

86 Ill. Adm. Code 130.701(g)

86 Ill. Adm. Code 130.710

86 Ill. Adm. Code 130.725

86 Ill. Adm. Code 130.730

86 Ill. Adm. Code 130.735

86 Ill. Adm. Code 130.745

86 Ill. Adm. Code 130:

Subpart H                               –      except for Subsection 810(c) and except for the reference to sales for resale and the reference to services in Subsections 130.810(a) and (b). In addition, the reference to exemptions from Retailers' Occupation Tax in Subsection 130.810(a) means exemption from Automobile Renting Use Tax liability.

 

86 Ill. Adm. Code 130:

Subpart I                                 –     except for those provisions in Subsections 130.905(a) and (b) which refer to interest being due at less than 2% per month.

 

86 Ill. Adm. Code 130:

Subpart J

86 Ill. Adm. Code 130:

Subpart L

86 Ill. Adm. Code 130:

Subpart M

86 Ill. Adm. Code 130:

Subpart O

86 Ill. Adm. Code 130:

Subpart P                                 –    except for Section 130.1605.

 

86 Ill. Adm. Code 130:

Subpart Q

86 Ill. Adm. Code 130:

Subpart R

 

(Source: Amended at 16 Ill. Reg. 4867, effective March 12, 1992)