Ill. Admin. Code tit. 86, § 150.310 - Exemptions to Avoid Multi-State Taxation
a)
To prevent actual or likely
multistate taxation, the tax imposed by the Act does not apply
to the use of tangible personal property in this State under the following
circumstances:
1)
the use,
in this State, of tangible personal property acquired outside this State by a
nonresident individual and brought into this State by the individual
for that individual's own use while temporarily within this
State or while passing through this State; this includes stopping for
fuel, energy, food, or overnight lodging in this State [35 ILCS
105/3-55(a) ] ;
2)
the use, in this State, by owners,
lessors, or shippers of tangible personal property that is utilized by
interstate carriers for hire for use as rolling stock moving in interstate
commerce as long as so used by the interstate carriers for hire, and equipment
operated by a telecommunications provider, licensed as a common carrier by the
Federal Communications Commission, which is permanently installed in or affixed
to aircraft moving in interstate commerce [35 ILCS
105/3-55(c) ] (See also 86 Ill. Adm.
Code 130.340 for more information
concerning this exemption as the same principles apply for use tax
purposes);
3)
the use, in
this State, of tangible personal property that is acquired outside this State
and caused to be brought into this State by a person who has already paid a tax
in another state in respect to the sale, purchase, or use of
that property, to the extent of the amount of the tax properly due and paid in
the other state; for this purpose, state includes the District of
Columbia [35 ILCS
105/3-55(d) ] ;
4)
the temporary storage, in this
State, of tangible personal property that is acquired outside this State and
that, after being brought into this State and stored here temporarily, is used
solely outside this State or is physically attached to or incorporated into
other tangible personal property that is used solely outside this State, or is
altered by converting, fabricating, manufacturing, printing, processing, or
shaping, and, as altered, is used solely outside this State
[35 ILCS
105/3-55(e) ] ;
5)
the temporary storage in this
State of building materials and fixtures that are acquired either in this State
or outside this State by an Illinois registered combination retailer and
construction contractor, and that the purchaser thereafter uses outside this
State by incorporating that property into real estate located outside this
State [35 ILCS
105/3-55(f) ] ;
6) the use, in this State, of a vehicle for
which a drive-away decal has been issued under the provisions of 86 Ill. Adm.
Code 130.605(b)(1).
However, beginning July 1, 2008, if the purchaser of a motor vehicle claims the
exemption provided in Section
130.605(b)(1)
and the motor vehicle is then used in this State for more than 30 days in a
calendar year, the purchaser is liable for use tax on the purchase price of
that motor vehicle, subject to credit for tax properly due and paid to any
other state as provided in subsection (a)(3). [35 ILCS
105/3-55(h) and (h-1)] The assessment
of tax under this subsection (a)(6) by the Department is limited to the period
for which it may issue a notice of tax liability under the Use Tax
Act.
7)
Beginning July 1,
2007, the following exemptions described in subsections (a)(7)(A),
(B), or (C) apply with respect to certain aircraft, as defined in
Section 3 of the Illinois Aeronautics Act [620 ILCS 5]. [35 ILCS
105/3-55 (h-2)(1-3)]
A) If the aircraft is purchased in this
State, no tax is imposed if all of the following conditions are
met:
i)
the aircraft leaves
this State within 15 days after the later of either the issuance of the final
billing for the purchase of the aircraft or the authorized approval for return
to service, completion of the maintenance record entry, and completion of the
test flight and ground test for inspection as required by
14 CFR
91.407;
ii)
the aircraft is not based or
registered in this State after the purchase of the aircraft;
and
iii)
the
purchaser provides the Department with a signed and dated certification, on a
form prescribed by the Department, certifying that the requirements of
this subsection (a)(7)(A) are met. The certificate must also
include the name and address of the purchaser, the address of the location
where the aircraft is to be titled or registered, the address of the primary
physical location of the aircraft, and other information that the Department
may reasonably require. [35 ILCS 105/3-55
(h-2)(1)(A-C)]
B) If the
aircraft is temporarily located in this State for the purpose of a
prepurchase evaluation, no tax is imposed if all of the following conditions
are met:
i)
the aircraft is
not based or registered in this State after the prepurchase evaluation;
and
ii)
the
purchaser provides the Department with a signed and dated certification, on a
form prescribed by the Department, certifying that the requirements of
this subsection (a)(7)(B) are met. The certificate must also
include the name and address of the purchaser, the address of the location
where the aircraft is to be titled or registered, the address of the primary
physical location of the aircraft, and other information that the Department
may reasonably require. [35 ILCS 105/3-55
(h-2)(2)(A-B)]
C) If the
aircraft is temporarily located in this State for the purpose of a
post-sale customization, no tax is imposed if all of the following conditions
are met:
i)
the aircraft
leaves this State within 15 days after the authorized approval for return to
service, completion of the maintenance record entry, and completion of the test
flight and ground test for inspection, as required by
14 CFR
91.407;
ii)
the aircraft is not based or
registered in this State either before or after the post-sale customization;
and
iii)
the
purchaser provides the Department with a signed and dated certification, on a
form prescribed by the Department, certifying that the requirements of
this subsection (a)(7)(C) are met. The certificate must also
include the name and address of the purchaser, the address of the location
where the aircraft is to be titled or registered, the address of the primary
physical location of the aircraft, and other information that the Department
may reasonably require. [35 ILCS 105/3-55
(h-2)(3)(A-C)]
D) The
exemption provided under subsections (a)(7)(B) and (C) does not apply to tax
incurred on any service transactions performed on the aircraft.
E) For purposes of this subsection (a)(7):
"Based in this State" means hangared, stored, or otherwise used, excluding post-sale customizations as defined in this subsection (a)(7)(E), for 10 or more days in each 12-month period immediately following the date of the sale of the aircraft.
"Post-sale customization" means any improvement, maintenance, or repair that is performed on an aircraft following a transfer of ownership of the aircraft.
"Prepurchase evaluation" means an examination of an aircraft to provide a potential purchaser with information relevant to the potential purchase.
"Registered in this State" means an aircraft registered with the Department of Transportation, Aeronautics Division, or titled or registered with the Federal Aviation Administration to an address located in this State.
F)
If tax becomes due under
this subsection (a)(7) because of the purchaser's use of the
aircraft in this State, the purchaser shall file a return with the Department
and pay the tax on the fair market value of the aircraft. This return and
payment of the tax must be made no later than 30 days after the aircraft is
used in a taxable manner in this State. The tax is based on the fair market
value of the aircraft on the date that it is first used in a taxable manner in
this State. [35 ILCS 105/3-55
(h-2)]
8)
The use
or purchase of tangible personal property by a common carrier by rail or motor
that receives the physical possession of the property in Illinois, and that
transports the property, or shares with another common carrier in the
transportation of the property, out of Illinois on a standard uniform bill of
lading showing the seller of the property as the shipper or consignor of the
property to a destination outside Illinois, for use outside Illinois.
[35 ILCS
105/3-55 (g) ]
b) Since exemptions described in subsections
(a)(1), (3) and (4) do not exist as far as the Retailers' Occupation Tax Act is
concerned, and since it would therefore serve no purpose to say that the
exemptions exist for use tax purposes insofar as the seller is merely
collecting use tax to reimburse the seller for retailers' occupation tax on the
same transaction, the Department believes that the legislative intention in
these references to the acquisition of tangible personal property outside this
State was to make the references apply to cases in which the only tax liability
that could be involved is use tax liability.
c) Therefore, exemptions described in
subsections (a)(1), (3) and (4) would not apply except when the tangible
personal property is acquired outside Illinois by the purchaser in such a way
that there is no retailers' occupation tax liability on the part of the seller
in the same transaction.
d) For
information as to when sellers do or do not incur retailers' occupation tax
liability when shipping the tangible personal property from outside Illinois,
see 86 Ill. Adm. Code Part 131.
Notes
Amended at 32 Ill. Reg. 17554, effective October 24, 2008
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