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Governments chasing use taxes on private sales

August 28, 2015
The revenue departments of Chicago and Cook County this summer increased enforcement in collecting an assessment that has long been on the books: use tax owed on a vehicle sale between private parties.
The moves come as governmental bodies increasingly bemoan low levels of operational funding, although the use taxes are flat amounts that are far less than the sales tax that is owed when vehicles are purchased from retailers.
The use tax is filed with the Illinois Revenue Department using Form RUT-50. Chicago’s use tax for private sales, which took effect July 1, also is collected by the state department by using Chicago Form 8405.
Use tax on the RUT-50 is calculated two ways: (1) If the vehicle sold for $15,000 or more, several purchase price brackets can lead to a payment of up to $1,500, on a sale of $30,000 or more; or (2) if the vehicle sold for under $15,000, tax is owed based on the vehicle’s age, and can be as little as $25 for a 2004 model.
The Chicago use tax similarly is based on the vehicle’s age, from $80 on a car 1 year old or less to $10 on an 8-year-old car.