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Some dealers don't conform to revised Revenue Department form

November 24, 2010

Illinois dealers who have not properly adapted to a revision eight months ago to the state revenue department's Form ST-556 may find themselves subject to fines for submitting paperwork that cannot be processed. The Illinois Department of Revenue revised its Form ST- 556, used to report sales tax, to allow a leasing company to take a tax credit when a vehicle the company originally purchased to lease subsequently is sold at retail by the company.

Some dealers who use a computer to print the tax information on their ST-556 forms are filing the new revision of the form, but they have not adjusted their computer programs to correctly print on that revision, said Arnold Wells, the vehicle tax liaison of the Illinois Department of Revenue. "As a result," Wells said, "the tax information (Part 6 on the new form) prints on the wrong lines on the form. Returns that are filed in this manner are considered 'unprocessable' returns and may be subject to penalty." The revenue department last fall sent to dealers, certain software vendors and tax practitioners an informational bulletin that outlines the changes to Form ST-556. The bulletin can be retrieved from the department's Web site, I

n part, the bulletin states: "Before you begin using the revised forms, you will need to make some adjustments in your computer program to allow for the form changes. For Lines 10 through 14, you must change the line identifications and the calculations used to arrive at the figures entered on those lines. Below Line 10, you must add a line on which to report the tax return number of the ST-556 on which you previously paid tax for the same item."

The revised Form ST-556 primarily impacts leasing companies. However, it affects all businesses that file the ST- 556 return because of the revisions made to the form itself. Under the change, dealers who both lease items in Illinois and retail the same items at the end of the lease may take credit for the previously paid tax. If the original tax was $1,000, and then $600 is due when the vehicle is sold, the business may report a $600 credit on Line 10 of the revised ST-556. No balance remains for the other $400; that difference is gone. Form ST-556 must be filed with the revenue department to report the retail sale of items-vehicles, watercraft, aircraft, trailers and mobile homes-which must be titled in Illinois.