As reported in FY 2015-03, for certain vehicles sold for lease after January 1, 2015, any sales and use tax due is reported on either Form RUT-25-LSE or Form ST-556-LSE, and the selling price used to calculate the tax due is the amount due at lease signing, plus the total amount of payments over the term of the lease. Form LSE-1, Tax Return for Vehicle Leasing Companies, is used to calculate tax due on any additional reportable amount that was not previously reported on either Form RUT-25-LSE or Form ST-556-LSE. Examples of additional reportable amounts include charges for excess wear and tear, excess mileage charges, and lease payments not reported on the original return. This return must be filed by the leasing company that has been leasing an item that the user has titled or registered in Illinois. Form LSE-1 is filed on a monthly basis and includes the additional reportable amounts from all leases for that month. The return is due on the 20th of the month following the month for which the return is filed. Form LSE-1 must be filed electronically, and the tax due must be paid electronically.
Public Act 98-628 created this new structure for reporting sales and use taxes for certain vehicles sold for lease, and per Public Act 98-1080, this legislative change was effective January 1, 2015. The Illinois Department of Revenue has begun accepting Form LSE-1 return filings and payments beginning with the September 2015 filing period. The fact that Form LSE-1 could not be filed prior to the September 2015 filing period does not excuse leasing companies from the obligation to file Form LSE-1 for tax obligations that would have been due during the period of January 1, 2015 to September 30, 2015. These taxpayers must maintain their records for transactions that must be reported on Form LSE-1 and report their obligations on their initial Form LSE-1 return filing. Any Form LSE-1 return and any accompanying tax payment due that would be required to be filed and paid for January through September, 2015 must be reported on the September 2015 Form LSE-1 due by October 20, 2015. Further, the Department will not assess penalties or interest on transactions that would have been due during this period, provided taxpayers properly report and pay the tax with that first September 2015 Form LSE-1 by October 20, 2015.