How does Illinois tax items that must be titled or registered with an Illinois agency?

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Items that must be titled or registered with an Illinois agency include, without limitation, motor vehicles (e.g., cars, trucks, vans, buses, etc.), motorcycles, watercraft, aircraft (e.g., airplanes, helicopters, hot-air balloons, gliders, etc.), trailers, motor homes, manufactured (mobile) homes, snowmobiles, and all-terrain vehicles (ATVs). Generally, any applicable taxes must be paid before the item can be registered or titled.

Vehicles purchased from a retailer, registered and licensed with the Illinois Department of Revenue (IDOR) to collect and remit the vehicle sales tax, are reported on Form ST-556, Sales Tax Transaction Return. This form is used to report a sale of any of the above-listed vehicles. This form also can be filed by registered, out-of-state retailers (e.g., dealers, leasing companies) selling to Illinois residents.

If you sell items at retail in Illinois and, as part of the same transaction, the items are simultaneously leased and those items are of the type that must be titled or registered by an agency of Illinois state government (e.g., vehicles, watercraft, aircraft, trailers, and manufactured (mobile) homes), you must report these sales for lease on Form ST-556-LSE, Transaction Return for Leases. Note: If you are a leasing company selling such an item at the end of a lease, do not file Form ST-556-LSE. Instead, use Form ST-556, Sales Tax Transaction Return.

Beginning January 1, 2025, Public Act 103-592 amends the ROT Act to provide that a lease of tangible personal property, excluding items that must be titled and registered with an agency of state government (other than trailers that are not semitrailers as defined in Section 1-187 of the Illinois Vehicle Code), is considered a sale at retail. You must file Form ST-1 if you are in the business of leasing or renting tangible personal property.

You must complete Form LSE-3, Lease/Rental Payments for Certain Titled or Registered Property, when you file Form LSE-1, Tax Return for Vehicle Leasing Companies, or Form LSE-1-X, Amended Tax Return for Vehicle Leasing Companies, if you had receipts for leases or rentals of the following titled or registered property:

• trailers, other than semitrailers as defined in Section 1-187 of the Illinois Vehicle Code, that are required to be registered with an agency of this State; or
• items that are required to be titled with an agency of this State but not required to be registered with an agency of this State, such as all-terrain vehicles (“ATVs”), off-road motorcycles, and manufactured (mobile) homes located in a mobile home park.

You must complete Form RUT-25, Vehicle Use Tax Transaction Return, if you purchased a motor vehicle, watercraft, aircraft, trailer, manufactured (mobile) home, snowmobile, or ATV from an unregistered, out-of-state retailer and will title or register the item in Illinois. Out-of-state leasing companies should not use this form to report sales to an Illinois resident at the end of a lease. Instead, these leasing companies must register with IDOR and file Form ST-556, Sales Tax Transaction Return. For more information, see Form ST-556 Sales Tax Transaction Return Instructions.

You must complete Form RUT-25-LSE, Use Tax Return for Lease Transactions, if you are titling or registering in Illinois a motor vehicle, watercraft, aircraft, trailer, manufactured (mobile) home, snowmobile, or ATV that you leased through an unregistered, out-of-state retailer. Do not use Form RUT-25-LSE for non-leased items purchased from an unregistered, out-of-state retailer. Instead, use Form RUT-25, Vehicle Use Tax Transaction Return. Also, do not use Form RUT-25-LSE if you leased an item through an Illinois retailer. Instead, the retailer must complete Form ST-556-LSE, Transaction Return for Leases.

You must file Form RUT-50, Private Party Vehicle Use Tax Transaction, if you acquired a vehicle by purchase, gift, donation, or transfer from a private party. Note: Form RUT-49, Vehicle Transaction Affidavit, is available to verify information reported or provide information not reported on Form RUT-50. This form can also be used in lieu of a bill of sale with Form RUT-50.

If you acquire an aircraft or watercraft by gift, donation, transfer, or non-retail purchase, you must file Form RUT-75, Aircraft/Watercraft Use Tax Transaction Return. For purposes of Form RUT-75, “aircraft” includes airplanes, helicopters, hot-air balloons, ultra lights, gliders, blimps, dirigibles, seaplanes, and anything else defined as an “aircraft” in Section 3 of the Illinois Aeronautics Act. “Watercraft” includes Class 2, Class 3, and Class 4 watercraft as defined in Section 3-2 of the Boat Registration and Safety Act; and personal watercraft (e.g., jet skis, wave runners, etc.) as defined in Section 1-2 of the Boat Registration and Safety Act. This definition does not include canoes or kayaks. See 625 ILCS 45/1-2 and 3-2. Form RUT-75 can be filed electronically using MyTax Illinois. Individuals filing electronically must enter a social security number (SSN) and have a prior year IL-1040, Individual Income Tax Return, on file with IDOR. Taxpayers filing using their SSN will also be required to provide their Prior Year Adjusted Gross Income (AGI). The information entered must match the information on file with IDOR to utilize this filing method. See Form RUT-75 Instructions for more information.

The form can also be obtained when you license and title your aircraft or watercraft at the appropriate state agency, i.e., the Illinois Department of Transportation (for aircraft) or the Illinois Department of Natural Resources (for watercraft). Do not make copies of the form prior to completing. This form has a unique transaction number that should not be duplicated. Doing so could delay processing.

See the Illinois Tax Requirements for Cars, Trucks, Vans, Motorcycles, ATVs, Trailers, and Mobile Homes page and the Sales and Use Taxes information page for more information.