Could an Illinois non-home-rule village's voter-approved municipal sales tax apply to boats and automobiles?

Plain-English summary

A village considered asking voters to approve a 0.5% Non-Home Rule Municipal sales-tax increase and wanted to exclude boats and automobiles from the tax.

IDOR said the items covered by the tax were set by statute. Titled and registered property, including boats and automobiles, was already excluded from the Non-Home Rule Municipal Retailers' Occupation Tax.

The Department supplied sample ballot and ordinance language that specifically excluded titled and registered property. If the referendum passed and the village adopted the tax, the village had to send IDOR certified election results and a certified copy of the ordinance.

What this means for you

The village did not need a discretionary local carve-out for boats and vehicles because the statutory tax base already excluded property titled and registered by an Illinois agency.

Common questions

Could the local tax apply to automobiles? No.

Could it apply to boats? No.

Who set the covered tax base? Illinois statute, not the village's case-by-case choice.

Citations and references

• 65 ILCS 5/8-11-1.1, 8-11-1.2, and 8-11-1.3.
• 86 Ill. Adm. Code 693.101.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2015.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2015/st-15-0014-gil.pdf

Original ruling text

ST 15-0014-GIL 03/16/2015 LOCAL TAXES
The Non-Home Rule Municipal Retailers’ Occupation Tax may not be imposed
on an item of tangible personal property that is titled and registered by an agency
of this State's government. See 86 Ill. Adm. Code 693.101. (This is a GIL.)

March 16, 2015

Dear XXXX:
This letter is in response to your letter January 27, 2015, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings
(“PLRs”) are issued by the Department in response to specific taxpayer inquiries
concerning the application of a tax statute or rule to a particular fact situation. A PLR is
binding on the Department, but only as to the taxpayer who is the subject of the request
for ruling and only to the extent the facts recited in the PLR are correct and complete.
Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General
Information Letter (“GIL”) is to direct taxpayers to Department regulations or other
sources of information regarding the topic about which they have inquired. A GIL is not
a statement of Department policy and is not binding on the Department. See 2 Ill. Adm.
Code 1200.120. You may access our website at www.tax.illinois.gov to review
regulations, letter rulings and other types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
We represent the Village of XXXX as its corporate counsel. The Village is
considering submitting for referendum an ordinance which would increase its sales tax
rate by an increment of 0.5%. If such a referendum were to be approved by the voters,
the Village is considering exempting from the scope of the sales tax sales of boats and
automobiles. Would you be kind enough to provide us a letter ruling as to the Illinois
Department of Revenue’s position as to whether such exemptions would be valid from
the perspective of the Illinois Department of Revenue? Thank you.
DEPARTMENT’S RESPONSE:
The items that are subject to the Non-Home Rule Municipal Retailers’
Occupation Tax are set by statute. See 65 ILCS 5/8-11-1.1, 8-11-1.2, and 8-11-1.3. In
the case of the Non-Home Rule Municipal Retailers’ Occupation Tax, titled and
registered property, such as boats and automobiles, are excluded from this local tax.
See 86 Ill. Adm. Code 693.101.
Enclosed are a sample ballot question and a sample ordinance that XXXX may
use to properly impose the Non-Home Rule Municipal Retailers’ Occupation Tax and
Non-Home Rule Municipal Service Occupation Tax. You will note that the ordinance
language specifically excludes titled and registered property.

If the referendum passes and XXXX adopts this tax, please send a certified copy
of the Ordinance imposing the tax in addition to certified election results to:
Local Tax Allocation Division
Illinois Department of Revenue
101 W. Jefferson St.
MC 3-500
Springfield, IL 62702
If you have additional questions, you may contact the Local Tax Allocation
Division at (217) 785-6518.
I hope this information is helpful. If you require additional information, please
visit our website at www.tax.illinois.gov or contact the Department’s Taxpayer
Information Division at (217) 782-3336.

Very truly yours,

Samuel J. Moore
Associate Counsel
Enc.