What do I file if I recently purchased a boat?

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Purchase from a non-retailer

If you acquire a watercraft from a person or business that is not in the business or selling watercraft at retail, you must file Form RUT-75, Aircraft/Watercraft Use Tax Transaction Return. You must pay 6.25% watercraft use tax on the watercraft's purchase price. 35 ILCS 158/15-15.

Transactions between non-immediate family members

Purchase price is defined as reasonable consideration paid for a watercraft received in money, cash, credits, property, services, etc., and including the value of any motor sold with, or in conjunction with, the watercraft. 35 ILCS 158/15-15. In a case of a gift or transfer where there is no consideration paid, tax is imposed on the fair market value on the date the watercraft or the share of the watercraft was acquired or the date the watercraft was brought into the State, whichever is later, unless the taxpayer can demonstrate that a different value is reasonable. 86 Ill. Adm. Code 153.110(b). In cases of tax avoidance, IDOR may utilize contracted vendors to determine the validity of the purchase price stated on tax returns. 35 ILCS 158/15-30.

Transaction between immediate family members

In the case of a watercraft transfer between immediate family members (i.e., a spouse, parent, brother, sister, or child), reasonable consideration ordinarily means the consideration paid, unless it appears from the facts and circumstances that the primary motivation of the transfer was the avoidance of tax. 35 ILCS 158/15-5. You must pay 6.25% watercraft use tax on the amount paid to the immediate family member. In the case of gifts between immediate family members, no tax is due unless it appears from the facts and circumstances that the primary motivation of the transfer was the avoidance of tax. 86 Ill. Adm. Code 153.110(b). In cases of tax avoidance, IDOR may utilize contracted vendors to determine the validity of the purchase price stated on tax returns. 35 ILCS 158/15-30.

Transfer of Fractional Shares of Watercraft

If you acquire an ownership share of a watercraft, watercraft use tax is imposed on the purchase price of the share acquired. All owners are jointly and severally liable for any tax due as a result of the purchase, gift, or transfer of an ownership share of the watercraft. 35 ILCS 158/15-15. In the case of ownership shares sold between immediate family members, purchase price ordinarily means the consideration actually paid, unless it appears from the facts and circumstances that the primary motivation of the selling of the shares was the avoidance of tax. Tax is due on the amount paid to the immediate family member. In the case of a share of a watercraft acquired by gift between family members, no tax is due unless it appears from the facts and circumstances that the primary motivation of the share transfer was the avoidance of tax. 86 Ill. Adm. Code 153.110(c). In cases of tax avoidance, IDOR may utilize contracted vendors to determine the validity of the purchase price stated on tax returns. 35 ILCS 158/15-30. There is no provision for a trade-in allowance under Watercraft Use Tax Law. For more information, see 35 ILCS 158/15-1 et seq., and 86 Ill. Adm. Code 153.101 et seq.

Purchase from a registered retailer

If you purchase a watercraft for use from a registered retailer (e.g., dealer), the retailer will collect and remit the tax for you utilizing Form ST-556, Sales Tax Transaction Return. The tax is based on the purchase price, and the tax rate is determined by the location of the dealership. Note that some local governments also may impose a separate local use tax on the transaction. If you leased a boat, see "What do I file if I recently leased a boat?"

Note: If you are a lessee (e.g., lease customer) and you purchased a watercraft at the end of a lease, the lessor is considered a retailer and will collect and remit use tax for you using Form ST-556.

Purchase from an unregistered, out-of-state retailer
If you purchase a watercraft from an unregistered, out-of-state retailer (e.g., dealer), you must file Form RUT-25, Vehicle Use Tax Return and pay the tax. The tax is based on the watercraft's purchase price. The tax rate is determined by the address at which the watercraft will be registered or titled in Illinois. Please refer to the Form RUT-25 Instructions for details regarding which rate should be used based on the address used for registration or titling. Again, note that some local governments also may impose a separate local use tax on the transaction. If you leased a boat, see “What do I file if I recently leased a boat?”

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