Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart D - GROSS RECEIPTS › Section 130.455 - Motor Vehicle Leasing and Trade-In Allowances

Current through Register Vol. 48, No. 28, July 12, 2024
a) Definitions
"Advance Trade Credit" means a trade-in credit earned as the
				  result of the trade-in of a vehicle on the future purchase of a vehicle where
				  the purchaser is contractually obligated to make a purchase within 9 months
				  after the advance trade.
"Dealer" means any person engaged in the business of selling
				  vehicles at retail.
"Dealer Credit" means an advance trade credit maintained on
				  the books of the dealer where the purchaser is contractually obligated to make
				  a purchase within 9 months after the advance trade.
"Lease" means a true lease of a vehicle for a term of more
				  than one year.
"Lessee" means any person that acquires possession of a
				  vehicle pursuant to a lease.
"Lessor" means any person engaged in the business of leasing
				  vehicles to other persons.
"Purchaser" means any person, whether an individual consumer
				  or a lessor, that purchases a vehicle from a dealer.
b) Valuation of Traded-in Vehicles
1) The selling price of a vehicle does not
				include
the value of or credit given
for traded-in tangible
				personal property where the item that is traded-in is of like kind and
				character as that which is being sold.
The value of
a
				traded-in vehicle is the amount of value assigned to the vehicle without regard
				for outstanding debt owed on the traded-in vehicle by any party. (Section 1 of
				the Act)
2) The amount of
credit given
for a traded-in vehicle is the value assigned to
				the vehicle, reduced by any cash payments received by the purchaser or title
				holder of the traded-in vehicle. The reduction of the value by offsetting cash
				payments results in the actual
credit given
for the traded-in
				vehicle. Where cash payment is made to the purchaser or the title holder of the
				traded-in vehicle, the trade-in credit is equal to the actual
credit
				given
for the vehicle. (Section 1 of the Act)
Example:
Value of Trade-In
Credit Given
Trade-In Credit
Trade-In Vehicle
$20,000
$20,000
With $3,000 Lien
$20,000
$20,000
With $2,000 Cash Back to Purchaser
$20,000
$18,000
$18,000
3)
				Notwithstanding subsections (b)(1) and (b)(2),
beginning January 1,
				2020 and until January 1, 2022, "selling price" includes the portion of the
				value of, or credit given for, traded-in motor vehicles of the First Division
				as defined in Section 1-146 of the Illinois Vehicle Code of like kind and
				character as that which is being sold that exceeds $10,000.
(Section 1
				of the Act) The full value of any trade-in may still be used to reduce the
				price of an item purchased; however, beginning January 1, 2020 and until
				January 1, 2022, the trade-in credit taken on the return for the trade in of a
				first division motor vehicle is limited to $10,000.
EXAMPLE
Value of Traded-In First Division Motor
							 Vehicle
Credit Given
Trade-In Credit
Trade-In Vehicle
$20,000
$20,000
$10,000
With $3,000 Lien
$20,000
$20,000
$10,000
With $2,000 Cash Back to Purchaser
$20,000
$18,000
$10,000