FY 2025-30, Changes Related to Motor Vehicle Transactions for Automobile Dealers

P.A. 104-0006 adds a presumption that the exemption for a motor vehicle that is sold in Illinois to a nonresident where the vehicle is not titled in Illinois does not apply if the purchaser is a nonresident LLC and a member of the LLC is a resident of Illinois.

Note: A purchasing nonresident LLC with a member who is a resident of Illinois may rebut the presumption that the exemption does not apply by providing evidence, such as proof the item is insured for primary use at an address outside of Illinois or proof that the item will be permanently stored or garaged at a physical address out of Illinois, to their selling retailer to properly claim the nonresident purchaser exemption.

A Private Party Vehicle Use Tax is imposed on the privilege of using, in Illinois, any motor vehicle as defined in Section 1-146 of the Illinois Vehicle Code acquired in a non-retail transaction by gift, transfer, or purchase. P.A. 104-0006 clarifies that, if you are registered under Section 2a of the Retailers’ Occupation Tax Act as a retailer of motor vehicles, when you purchase a motor vehicle from a private party for the purpose of resale, you are exempt from the Private Party Vehicle Use Tax. This does not change the fact that when the vehicle is then sold at retail, the registered retailer owes Retailers’ Occupation Tax on that sale.

Note: Limousine, as defined in Section 1-139.1 of the Illinois Vehicle Code, means any privately owned first division vehicle intended to be used for the transportation of persons for-hire when the payment is not based on a meter charge, but is prearranged for a designated destination.

Both Forms ST-556, Sales Tax Transaction Return, and ST-556-LSE, Transaction Return for Leases, provide an exemption from Illinois sales tax for certain items that are required to be titled or registered that are sold outright or sold for lease to be used for rolling stock to haul persons or commodities for hire in interstate commerce. On and after July 1, 2025, P.A. 104-0006 provides that the rolling stock exemption for limousines applies only if those limousines are not used to provide transportation network company services, as defined in the Transportation Network Providers Act (625 ILCS 57/Act). A transportation network company, also known as a rideshare service, is an entity operating in this State that uses a digital network or software application service to connect passengers to transportation network company services provided by transportation network company drivers, who typically use their private vehicles to provide the rideshare service.