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Presentation by Revenue Department, Secretary of State draws 170

November 22, 2010

Dealership personnel greeted an Illinois Revenue Department official with a series of complaints of unresolved errors, at a CATA seminar Oct. 18. A representative of the Illinois Secretary of State’s office also attended the seminar, "License, Title & Tax review." 

Susie Lonzerotti, a supervisor of the Revenue Department’s vehicle tax processing division, acknowledged the problems and pointed to a mounting workload imposed on a shrinking staff.

 

Scott Mickie, a dealership service representative of the secretary of state’s vehicle services department, also fielded questions and complaints. 

Lonzerotti said revenue tax specialists in her division once numbered 57, but the staff has been whittled to 26. About 58,000 Form ST-556s await processing by the division.

 

"We’re backlogged," she conceded. 

Lonzerotti focused discussion on a revenue department change effective Feb. 1, 2005, that calls for Illinois dealers to collect sales tax from residents of nine states with which the state does not have a reciprocal exemption. Notably, Indiana and Michigan are among the nine states.

 

If the nonresident accepts delivery in Illinois, then Illinois dealers must collect sales tax at the nonresident’s state sales tax rate, and submit it to Springfield. If the dealer delivers the vehicle to the nonresident’s state, then no tax is due. In Section 5 of Form ST-556, the dealer would mark Box G, Other, and write "Dealer delivered." 

Lease transactions remain exempt for out-of-staters.

 

Responding to a question, Lonzerotti said that if a sale to an Indianan falls through after a Form ST-556 is filed, credit can be obtained by filing a Form ST-556-X. 

If the revenue department incorrectly assesses sales tax based on, say, Chicago’s rate, but the customer does not reside in Chicago, the dealership should complete the assessment worksheet and return it with a copy of the bill of sale, which indicates the customer’s address.

 

Lonzerotti explained Section 6, Line 10, regarding credit for any tax previously paid: 

"Leasing Company A purchases a vehicle from Dealer 1 and pays the tax to Dealer 1. Dealer 1 completes and files an ST-556 for the vehicle, and remits any tax to the revenue department. Leasing Company A then sells—usually, at the end of the lease—the same vehicle to a customer.

 

"Leasing Company A must file an ST-556 with the Department and can take credit on Line 10 for the tax they paid to Dealer 1 when Leasing Company A originally purchased the vehicle. 

"No credit can be taken on Line 10 if Leasing Company A sells the vehicle back to a dealer in order for the dealer to get credit for the sale. An example: if Ford Motor Credit sells a leased car to ABC Ford Dealer, then ABC Ford Dealer sells the car to a customer. No credit can be taken on Line 10 for that transaction."

 

Also, leases originate in the state where the transaction occurs, not where the lessee or leasing company resides. 

The American Red Cross has extended offers to recent hurricane victims which gives the victims tax-free status when buying merchandise. That offer, however, does not apply to vehicles purchased in Illinois.

 

Lonzerotti offered two telephone numbers in her division for dealers to call to resolve problems. If the matter is related to a return, call 217-785-6606. If the matter concerns an assessment, call 217-785-5353. Or, look to the revenue department’s Web site, www.tax.illinois.gov/

 

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