Are fees charged for parking violations (like parking near a fire hydrant) subject to Illinois's Parking Excise Tax?

Plain-English summary

A private parking lot/garage operator asked whether the fees it charges for parking violations -- like parking near a fire hydrant or too close to a crosswalk -- are subject to Illinois's Parking Excise Tax, since those charges aren't for the basic privilege of using a parking spot but are instead a penalty for breaking parking rules on private property (not tickets issued on behalf of a municipality).

The Parking Excise Tax applies to "the privilege of using... a parking space in a parking area or garage," at 6% for hourly/daily/weekly parking or 9% for monthly/annual parking. The taxable "purchase price" is defined broadly -- it captures not just the base parking rate but also markups, service fees, convenience fees, facilitation fees, cancellation fees, and overtime fees, regardless of what they're called, as long as they're related to or incidental to actually obtaining the parking privilege.

But the regulation draws a real line: "purchase price" specifically EXCLUDES optional, separately stated charges that aren't for the use or privilege of parking itself. Applying that here, a genuine parking-VIOLATION fee -- charged because someone broke a rule (parked somewhere prohibited), not because they paid for the right to park -- isn't "related to or incidental to obtaining the use or privilege of using" the space. So as long as the violation charge is separately stated and is truly a penalty rather than a disguised parking fee, it falls outside the tax.

What this means for you

Private parking lot and garage operators

Genuine violation/penalty fees (no-parking-zone fines, fire-lane violations, etc.) can be charged without adding the Parking Excise Tax, as long as they're separately stated on the customer's bill and are truly penalties for rule-breaking rather than a repackaged parking charge. Keep your invoicing clear about what's a parking fee versus what's a violation penalty.

Businesses charging various add-on fees at parking facilities

The Parking Excise Tax's "purchase price" definition is intentionally broad for anything tied to obtaining the parking privilege -- service fees, convenience fees, cancellation fees, and overtime fees are all taxable by name, regardless of terminology. Don't assume relabeling a fee avoids the tax; the test is whether the charge is related to or incidental to the parking privilege itself, not what you call it. A true, separately-stated non-parking charge (like a genuine rule-violation fine) is the narrow exception.

Accountants and tax professionals

Note the asymmetry: MOST ancillary parking-related fees (markups, convenience/facilitation fees, cancellation fees, overtime charges) ARE swept into the taxable purchase price by the regulation's own non-exhaustive list, while only charges genuinely unrelated to the parking privilege -- like this violation-fee example -- fall under the narrow "optional, separately stated" carve-out.

Common questions

Q: Are parking-violation fines charged by a private lot operator subject to the Parking Excise Tax? A: No, as long as the fee is separately stated and is genuinely a penalty for violating parking rules rather than a repackaged charge for the parking privilege itself.

Q: What IS included in the Parking Excise Tax's taxable "purchase price"? A: Any and all charges related to or incidental to obtaining the parking privilege -- including markups, service fees, convenience fees, facilitation fees, cancellation fees, and overtime fees -- regardless of what they're called.

Q: What are the Parking Excise Tax rates?
A: 6% of the purchase price for parking paid on an hourly, daily, or weekly basis, and 9% for parking paid on a monthly or annual basis.

Q: Did the Department address fees collected on behalf of a municipality? A: No. The requester described private violation fees that were not collected for a municipality. The response does not decide how municipally collected charges are treated.

Q: Can I rely on this letter for my own parking facility's fee structure? A: No. This is a General Information Letter -- not binding on the Department. Confirm your specific fee categories and invoicing with a tax professional.

Citations and references

Statutes:

• 35 ILCS 525 (Parking Excise Tax Law)

Regulations:

• 86 Ill. Adm. Code 195.100 (imposition of the Parking Excise Tax)
• 86 Ill. Adm. Code 195.110(a) (tax rates)
• 86 Ill. Adm. Code 195.105 (definition of "purchase price"; exclusion for optional, separately stated non-parking charges)

Source

• Landing page: Illinois 2026 Sales Tax Letter Rulings
• Original PDF: ST26-0004-GIL.pdf

Original ruling text

ST 26-0004-GIL 01/23/2026 PARKING EXCISE TAX
Separately stated charges that are not related to or incidental to obtaining the use or privilege of using a parking space in a parking area or garage would not be subject to the tax. 35 ILCS 525; 86 Ill. Adm. Code 195. (This is a GIL). January 23, 2026 NAME EMAIL Dear NAME: This letter is in response to your letter dated January 1, 2026, 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 https://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 reaching out as I was referred by Taxpayer Assistance to contact legal regarding our question for taxability for Illinois Parking Excise Tax. My question is in regard to charges for violations or tickets that we charge to parkers who park somewhere they cannot such as near a fire hydrant, too close to a crosswalk, etc. Would these charges be applicable to the IL Parking Excise Tax as the charge is not for the privilege to park in a spot, garage, or lot? It should also be noted that these are not collected on behalf of a municipality and are entirely related to privately owned lots, garages, etc. I appreciate any help you can provide with answering our question as we wish to ensure we are compliant in working with Illinois.

NAME
Page 2
January 23, 2026
DEPARTMENT’S RESPONSE:
The Illinois Parking Excise Tax Act (the “Act”) imposes a Parking Excise Tax (the “Tax”) “on the privilege of using in this State a parking space in a parking area or garage”. 86 Ill. Adm. Code 195.100. The tax is imposed at the rate of 6% of the purchase price for a parking space paid for on an hourly, daily, or weekly basis; and 9% of the purchase price for a parking space paid for on a monthly or annual basis. 86 Ill. Adm. Code 195.110(a). “Purchase price” means the consideration paid for the purchase of a parking space in a parking area or garage, valued in money, whether received in money or otherwise, including cash, gift cards, credits, and property, and shall be determined without any deduction on account of the cost of materials used, labor or service costs, or any other expense whatsoever. “Purchase price” includes any and all charges that the recipient pays related to or incidental to obtaining the use or privilege of using a parking space in a parking area or garage, including but not limited to any and all related markups, service fees, convenience fees, facilitation fees, cancellation fees, overtime fees, or other such charges, regardless of terminology. 86 Ill. Adm. Code 195.105. Purchase price does not include “optional, separately stated charges not for the use or privilege of using a parking space in the parking area or garage.” 86 Ill. Adm. Code 195.105. Generally, separately stated charges for violations of parking rules that are not related to or incidental to obtaining the use or privilege of using a parking space in a parking area or garage would not be subject to the tax. I hope this information is helpful. If you require additional information, please visit our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer Information Division at 800-732-8866. Very truly yours, Edward Mroczkowski Associate Counsel EM:slc