a) Rental
Purchase Agreement Occupation Tax
1) Beginning
January 1, 2018, the RPOT is imposed upon persons engaged in this State
in the business of renting merchandise under a rental-purchase agreement in
Illinois at the rate of 6.25 % of the gross receipts received from the
business. [35 ILCS 180/10 ]
2) In computing RPOT liability, no deductions
can be made by a merchant from gross receipts or rental prices on account of
the cost of property rented, the cost of materials used, labor or service
costs, incoming freight or transportation costs, overhead costs, processing
charges, salesmen's commissions, interest paid by the taxpayer, or any other
expenses whatsoever. Costs of doing business are an element of the merchant's
gross receipts and are subject to the RPOT even if separately stated on the
bill to the consumer.
3)
In
the case of rental transactions in which the consideration is paid to the
merchant on an installment basis, the amounts of such payments shall be
included by the merchant in gross receipts or rent only as and when payments
are received by the merchant. [35 ILCS 180/5
]
4) The RPOT is solely the
responsibility of the merchant.
5)
When trustees, receivers, executors, or administrators (whether appointed by a
Federal or a State court), by virtue of their appointment, continue to operate,
manage, or control a business and engage in the business of renting merchandise
under lease terms of 4 months or less, they are liable for the RPOT.
b) Rental Purchase Agreement Use
Tax
1) The RPUT is imposed upon the
privilege of using, in this State, merchandise which is rented from a merchant.
Such tax is at the rate of 6.25% of the rental price paid to the merchant under
any rental purchase agreement.
2) The RPUT must be collected from
the consumer by a merchant maintaining a place of business in this State and
remitted to the Department. Merchants shall collect the tax from consumers by
adding the tax to the rental price of the merchandise. The RPUT
shall, when collected, be stated as a distinct item separate and apart
from the rental price of the merchandise.
3) When the RPUT is not paid to a merchant it
shall be paid to the Department directly by any person using such merchandise
within this State. [35 ILCS 180/15 ]
c) How To Determine
Effective Rate
RPOT liability is computed by applying to the gross receipts
the tax rate in effect at the time a consumer takes possession of rented
merchandise. Where a rate change takes effect during a consumer's possession,
all rental receipts received from that consumer after the effective date of the
rate change are subject to the new rate. If a consumer takes possession after a
rate change in a rental transaction in which the merchant received rental
receipts before the date of the rate change and the tax was paid on such
receipts when received by the merchant at the rate in effect when the merchant
received those receipts, no additional tax will be due or credit allowed
because the consumer took possession after the effective date of the rate
change.
