Chicago Automobile Trade Association

Leased-vehicle taxation bill goes nowhere during fall veto session

November 8, 2013
Illinois legislation to change tax calculations on leased vehicles remained standing at the altar as the state’s General Assembly adjourned its fall veto session Nov. 7. Lawmakers still can give the bill final approval next month or in the 2014 spring session.
But the measure has seen two recent bright spots: Officials of the Illinois Revenue Department now indicate their position on House Bill 2317 to be positive, a change from neutral last spring; and House Majority Leader Barbara Flynn Currie, D-Chicago, said she supports the bill.
But House Speaker Michael Madigan, D-Chicago, declined to call the bill during the fall session. Final House approval would advance the bill to Gov. Pat Quinn.
The Senate passed HB 2317 unanimously as the spring legislative session drew to a close. But the bill was not returned to the House until May 31, the session’s scheduled adjournment date, and it was believed House members did not have enough time to consider it then.
The Chicago Automobile Trade Association and the Illinois Automobile Dealers Association have made several runs at the taxation change on long-term leases (more than one year), but revenue officials always focused on near-term shortfalls in tax collection over long-term gains. But immediate gains would be seen in the bill’s structure, under which dealers could not offer trade-in credits to their lease customers.
The changes are projected to increase state revenues $14 million to $28 million annually, based on forecasts of increased leasing activity. Lease transactions in Illinois currently are about half the number in nearby states. After years, Illinois Revenue Department officials have come to agree that Illinois should compute the sales tax on lease deals in the same manner as do 47 other states.
Under House Bill 2317, the taxation change would take effect July 1, 2014. If the House waits until January to pass the bill, the effective date automatically would change to Jan. 1, 2015, but that would not force both legislative chambers to reconsider the matter.


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