22 QUESTION 4: How does a vehicle qualify for interim use exemption from sales taxes? Beginning July 1, 2008, the Illinois Department of Revenue set forth certain tests for automatic disqualification, safe harbor and situations not involving either of the above with respect to interim use exemption. Certain activities automatically disqualify a vehicle from the interim use exemption. They are: 1. Titling a vehicle in any person other than the retailer, manufacturer, the manufacturer’s captive finance company; or 2. Retailer claims IRC Section 179 depreciation on the vehicle (i.e., treats the vehicle as a totally deductible business expense in the first year); or 3. If the vehicle is leased, the gross receipts from the lease of the vehicle exceed the ultimate sales price of the vehicle. If the dealer meets all six of the following requirements, the vehicle will automatically qualify for the interim use exemption: 1. The vehicle must meet one of the following three requirements. It is: a. Listed in the dealer’s records as inventory; or b. Not depreciated by the dealer under IRC Section 167; or c. Otherwise indicated on dealer’s records, documents or operations as available for sale during the interim use period. 2. The interim use period is less than 24 months. 3. The vehicle is of the same general type sold by the dealer (i.e., a dealer of automobiles and light trucks that purchases another automobile or light truck, regardless of the brand, can do so and have it qualify for interim use, but cannot buy a trailer home or a large truck of a type not otherwise sold by the dealer and then claim interim use). 4. The vehicle is ultimately sold by the dealer. 5. For dealers who also lease or rent vehicles similar to the type of vehicle for which the interim use is claimed, then the dealer’s annual lease/rental revenue for all such vehicles must be less than the annual sales revenue for such vehicles. 6. If the vehicle is leased under a lease agreement for more than 30 days, then the lease agreement must contain a provision that if a buyer is found for the vehicle, then either (i) the lease may be terminated within seven (7) days, or (ii) the lessee will receive a comparable vehicle substituted by the dealer for the vehicle within seven (7) days. Finally, if the vehicle is not automatically disqualified, but does not qualify under the safe harbor, then the Department of Revenue will use all applicable and
RkJQdWJsaXNoZXIy MTg3NDExNQ==