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Governor kills tax exemption for rental cars

November 17, 2010

Sales tax is due on the gross receipts from a sale of a vehicle that will be rented for one year or less, under a law signed Aug. 16 by Illinois Gov. Rod Blagojevich. The change is in Public Act 095-0233.


The tax exemption had existed on Form ST-556 as Line 5 Box E "Sold for Rental Use." The Illinois Revenue Department is expected to revise the form to eliminate Box E.


The department will continue to benefit from use tax paid by persons who rent the vehicles from the rental companies, like Hertz and Avis.


Blagojevich struck the provision that had exempted from sales tax "a motor vehicle of first division, a motor vehicle of the second division that is a self-contained motor vehicle 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, or a motor vehicle of the second division that is of the van configuration designed for the transportation of not less than 7 nor more than 16 passengers, as defined in Section 1-146 of the Illinois Vehicle Code, that is used for automobile renting, as defined in the Automobile Renting Occupation and Use Tax Act."