What do I file if I am moving into Illinois with a leased vehicle?

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If you are a lessor (e.g., a leasing company) and you purchased a vehicle to lease to others from an out-of-state retailer that is not registered with the Illinois Department of Revenue (IDOR), you must file Form RUT-25-LSE to report the transaction and pay the tax. Attach a copy of the bill of sale as proof of the selling price and of any tax previously paid. If you cannot obtain the proper documentation, you may submit a letter from the retailer. Please note that the nonresident exemption does not apply to nonresident business entities (e.g., leasing companies) relocating to Illinois. 35 ILCS 105/3-70; 86 Ill. Adm. Code 150.315.

While the legal incidence of tax is on the lessor (leasing company), if you are a lessee (e.g., the lease customer) and you leased a vehicle through an out-of-state retailer (e.g., a leasing company, vehicle dealer, etc.) that is not registered with IDOR, you must file Form RUT-25-LSE to report the transaction and pay the tax. This is because, generally, leases contain contractual provisions stating that the lessees will reimburse the lessors for their tax costs. It is not because of Illinois tax law. When you file Form RUT-25-LSE, attach a copy of the lease contract as proof of the selling price and of any tax previously paid. If you cannot obtain the proper documentation, you may submit a letter from the leasing company. Please note that the nonresident exemption does not apply to lessees relocating to Illinois. 35 ILCS 105/3-70; 86 Ill. Adm. Code 150.305(e).

Note: If you are a lessee and you leased a vehicle from a retailer outside of Illinois and used the vehicle outside of Illinois before bringing it to Illinois for use, the selling price is subject to a reasonable allowance for depreciation for the period of prior out-of-state use. 35 ILCS 105/3-10. Also, if you leased the vehicle outside of Illinois and already paid a tax in another state on the lease of the vehicle, credit is authorized under the Use Tax Act for taxes properly due and paid to the other state. 35 ILCS 105/3-55(d).

Form RUT-25-LSE is generally obtained when you license and title your vehicle at a local driver's license facility or currency exchange. Do not make copies of the form prior to completing. The form has a unique transaction number that should not be duplicated. Doing so could delay processing.

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