Rental Purchase Agreement Occupation Tax is imposed on the gross receipts received on or after January 1, 2018, from the renting of tangible personal property under a rental purchase agreement, an arrangement typically known as a “rent-to-own” transaction. You must pay the Rental Purchase Agreement Occupation Tax if, in the ordinary course of your business, you regularly lease, offer to lease, or arrange for the leasing of merchandise under a rental purchase agreement. You also must pay this tax if you have been assigned an interest in a rental purchase agreement.
“Renting” is considered any transfer of the possession or right to possession of merchandise to a user for a valuable consideration under a rental purchase agreement. Gross receipts include the total rental price or leasing price but do not include receipts received for delivery, reinstatement, processing, waiver, or club program fees.
“Rental price” means the consideration for renting merchandise valued in money, whether received in money or otherwise, including cash, credits, property, and services. Rental price shall be determined without any deduction on account of the cost of the property rented, the cost of materials used, labor or service cost, or any other expense whatsoever.
Rental price does not include the following:
A “rental purchase agreement” is an agreement for the use of merchandise by a consumer for personal, family, or household purposes for an initial period of four months or less that is automatically renewable with each payment after the initial period and that permits the consumer to become the owner of the merchandise. These transactions are governed by the Rental-Purchase Agreement Act, 815 ILCS 655/0.01 et seq.
Note: Rental Purchase Agreement Occupation Tax does not apply to items that must be titled or registered by an agency of the state of Illinois (e.g., motor vehicles, watercraft, etc.).
The Rental Purchase Agreement Occupation Tax rate is 6.25 percent (.0625).
Form/Filing & Payment Requirements
You must submit Form ST-201, Rental Purchase Agreement Occupation Tax Return, to report and pay the Rental Purchase Agreement Occupation Tax. Illinois law requires Form ST-201 to be filed electronically, and the tax to be paid electronically. Use MyTax Illinois to file your Form ST-201 and pay any tax due.
To request a waiver of the electronic return filing and payment mandate, complete Form IL-900-EW, Electronic Waiver Request, which is available from the Department by request at 217 782-7897, 1 800 732-8866, or 217 782-3336. If granted and unless renewed, this waiver shall not exceed two years.
You must submit Form ST-201, along with your payment for any tax due, on or before the 20th day of the month following the end of your reporting period.
If you have one business but rent merchandise at more than one location (site), you must combine the receipts from each particular location on Form ST-201.
If you have more than one business that rents merchandise, you must register each business separately to report and pay the Rental Purchase Agreement Occupation Tax.
One-Time Transitional Use Tax Credit
Taxpayers who are subject to the Rental Purchase Agreement Occupation Tax are allowed to claim a one-time credit for Use Tax paid on tangible personal property previously purchased for the purpose of renting to the business’s customers under rental purchase agreements. Taxpayers wanting to claim this credit must submit Form ST-206, Rental Purchase Agreement Occupation Tax One-Time Transitional Use Tax Credit Application Form. Credit is allowed only for Use Tax paid on merchandise that was purchased from July 1, 2017, through December 31, 2017, and that is subject to the Rental Purchase Agreement Occupation Tax. Form ST-206 is due no later than April 2, 2018.