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CATA, Revenue Dept. to meet over dealer cash

November 17, 2010

Representatives of the Illinois state and metropolitan dealer associations will meet this week with the Illinois Revenue Department to negotiate the department’s attempt to tax dealer cash.


The department has proposed changes to the Illinois code on retailers’ occupation tax, to extract sales tax from certain rebates and dealer incentives. The CATA mailed a draft of the proposal to all dealer members this month.


A major obstacle to comply with the changes involves developing a method to accurately calculate taxes for stair-step programs and lump-sum payments.


No other state is believed to tax dealer cash, but the Illinois Revenue Department’s rules appear to be written more broadly than those in other states. Meanwhile, the department’s negotiations continue with the CATA and the Illinois Automobile Dealers Association, based in Springfield.