Does Illinois Use Tax apply when someone brings a vehicle bought overseas into Illinois after living there as a nonresident?

Plain-English summary

This Illinois General Information Letter answers a question from a retired U.S. Air Force member who was working for the federal government in Germany on a three-year tour (June 2015 to June 2018) and planned to buy a new vehicle overseas, ship it to Illinois, and avoid paying Illinois sales tax. He asked whether owning the vehicle in Germany for six months before shipping it would let him skip the tax.

The Department explained that Illinois Use Tax generally applies when a purchaser brings a motor vehicle into Illinois from an out-of-state retailer; the purchaser must file Form RUT-25 (Motor Vehicle Use Tax Return) and pay tax on the vehicle's selling price within 30 days of bringing it into the state, under Section 10 of the Use Tax Act (35 ILCS 105/10). However, there is an exemption: Use Tax does not apply to tangible personal property (including a vehicle) that a nonresident individual acquired outside Illinois and used outside Illinois for at least 3 months before bringing it into the state, per 86 Ill. Adm. Code 150.315.

The key catch for this taxpayer was residency. Because his letter indicated he would be returning to Illinois after his tour, the Department noted that if Illinois was his "home of record," he would not qualify as a nonresident, and the exemption would not apply — meaning Use Tax would be owed on the vehicle. The Department also pointed out that if the exemption does not apply, depreciation is allowed for the vehicle's out-of-state use by an Illinois resident, per 86 Ill. Adm. Code 150.105, which can reduce the taxable value.

What this means for you

If you are a genuine nonresident bringing property into Illinois

If you truly qualify as a nonresident (not merely living abroad temporarily while Illinois remains your home of record) and you acquired and used the property outside Illinois for at least 3 months before bringing it in, the Use Tax nonresident exemption under 86 Ill. Adm. Code 150.315 may apply, and you may not owe Illinois Use Tax on that item.

If Illinois remains your home of record

If your permanent residence or "home of record" stays in Illinois even while you are stationed or working elsewhere, you are not a nonresident for purposes of this exemption. You would need to file Form RUT-25 and pay Use Tax on the vehicle's selling price within 30 days of bringing it into Illinois, though depreciation for the period of out-of-state use may lower the taxable amount under 86 Ill. Adm. Code 150.105.

Common questions

Does simply owning a vehicle overseas for six months automatically avoid Illinois Use Tax?
No. The letter makes clear that ownership/use duration alone is not enough — the person must also qualify as a nonresident. If Illinois is your home of record, the nonresident exemption does not apply regardless of how long you owned the vehicle abroad.

What form do I use to report Use Tax on a vehicle brought into Illinois?
Form RUT-25, the Motor Vehicle Use Tax Return, must be filed with the Department, and tax on the vehicle's selling price is due within 30 days after the vehicle is brought into Illinois for use, per Section 10 of the Use Tax Act (35 ILCS 105/10).

If I don't qualify for the nonresident exemption, is there any relief on the tax owed?
Yes. If the exemption doesn't apply, depreciation is allowed for the vehicle's out-of-state use by an Illinois resident under 86 Ill. Adm. Code 150.105, which can reduce the taxable value used to calculate the Use Tax due.

Citations and references

• 35 ILCS 105/10 (Section 10 of the Use Tax Act) — requires filing Form RUT-25 and paying Use Tax within 30 days of bringing a motor vehicle into Illinois
• 86 Ill. Adm. Code 150.315 — nonresident exemption from Use Tax for property acquired and used outside Illinois for at least 3 months before entry
• 86 Ill. Adm. Code 150.105 — depreciation allowed for out-of-state use by an Illinois resident
• 2 Ill. Adm. Code 1200.110 — procedures for Private Letter Rulings (PLRs)
• 2 Ill. Adm. Code 1200.120 — General Information Letters (GILs) are not binding Department policy

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2017.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2017/st-17-0009-gil.pdf

Original ruling text

ST 17-0009-GIL 03/15/2017

USE TAX

The Use Tax does not apply to the use in this State of tangible personal property which has
been acquired outside this State by a nonresident individual who then brings the property into
this State for use here, and who has used the property outside this State for more than 90
days. See 86 Ill. Adm. Code 150.315. (This is a GIL.)

March 15, 2017

Dear Mr. Xxxxx:
This letter is in response to your letter dated February 3, 2017, in which you requested
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:
I am a retired from the U.S. Air Force working for the U.S. federal government in
Germany. My three-year tour here is from 15 Jun 2015 to 14 Jun 2018, and I plan to
purchase a new vehicle while station here and return back to Illinois. My question, is it
true that I can ship my 2017 vehicle from Germany to Illinois and not have to pay sales
tax, as long as I own the vehicle in Germany for six months before shipping it to Illinois?

DEPARTMENT’S RESPONSE:
Section 10 of the Use Tax Act, 35 ILCS 105/10, provides that a purchaser of a motor vehicle
from an out-of-State retailer shall file a return (Form RUT-25, Motor Vehicle Use Tax Return) with the
Department and remit the proper amount of tax due on the selling price of the motor vehicle within 30
days after such motor vehicle is brought into this State for use.
The Use Tax does not apply to the use, in this State, of tangible personal property which is
acquired outside this State by a nonresident individual who then brings the property to this State for

ST 17-0009-GIL
Page 2

use here, and who shall have used the property outside this State for at least 3 months before
bringing the property to this State. See 86 Ill. Adm. Code 150.315. However, this exemption is not
applicable if the 3-month requirement is not met, or if the purchase is not made by a nonresident
individual. Your letter indicates that you will be returning to Illinois upon completion of your tour. If
Illinois is your home of record, the nonresident exemption would not apply. If the exemption does not
apply, please note that depreciation is allowed for out-of-State use by an Illinois resident. See 86 Ill.
Adm. Code 150.105.
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,

Cara Bishop
Senior Counsel

CB:bkl