Illinois Issues Guidance on Parking Excise Tax

The Illinois Department of Revenue (DOR) has issued information regarding the state’s Parking Excise Tax (See 35 ILCS 525/10-1 et seq.), which was enacted as part of Illinois Public Act 101-0031. Effective January 1, 2020, operators of parking spaces, parking areas, and garages are required to collect and remit Parking Excise Tax based on the purchase price (rent) paid by the purchaser to park a motor vehicle, recreational vehicle, or other self-propelled vehicle in the parking space. An operator:

• Engages in the business of renting, for a charge, parking spaces for the purpose of parking or storing motor vehicles, recreational vehicles, or other self-propelled vehicles, even if the charge is to another parking operator, or
• Provides parking valet services for a charge, or
• Collects from the purchaser the charge for parking (i.e., acts as a facilitator or aggregator)

Operators are not required to collect the Parking Excise Tax under the following circumstances:

• The operator is engaged in the business of renting three or fewer parking spaces throughout Illinois
• The parking space is owned and operated by the federal government, the State of Illinois, state universities created by statute, and units of local government
• The parking space is provided for residential off-street parking for home, apartment tenants, or condominium occupants, and is covered by the lease or separate agreement between the landlord and tenant; and
• The parking space is provided for hospital employees and is owned and operated by the hospital for which they work.

The Parking Excise Tax is imposed at the following rates:

• 6% of the purchase price for a parking space paid for on an hourly, daily, or weekly basis; or
• 9% of the purchase price for a parking space paid for on a monthly or annual basis.

Operators are required to register with the DOR to collect and remit Parking Excise Tax. The Parking Excise Tax Act requires that registration for this tax be completed electronically, which can be done on the MyTax Illinois website. Form PE-100 (Parking Excise Tax Return) is used to report and pay the tax. It must be filed and paid electronically via the MyTax Illinois website. For PE-100 and payment are due by the last day of the calendar month following the end of the reporting period. Form PE-100 is due monthly. There is an exception for operators of parking areas for 14 days or less in a calendar, in which case the filing frequency is annually. New registrants will receive a letter informing them if they are monthly or annual filers. Operators are allowed to take a cost of collection discount if the return is filed and total tax due is paid by the due date. The discount is 1.75% of the tax due, not to exceed $1000 per month.

The DOR has also issued a General Information Letter (GIL) regarding the applicability of the Parking Excise Tax. Per the GIL, free parking offered to commercial tenants as an amenity to the leasing of office space is not subject to the Parking Excise Tax since there is no charge, or purchase price, for the parking spaces. The lessor is not engaged in the business of operating a parking lot and therefore is not obligated to collect Parking Excise Tax from its commercial tenants under these circumstances. (Informational Bulletin FY 2020-07, Illinois Department of Revenue, November 2019; General Information Letter ST 19-0016-GIL, Illinois Department of Revenue, August 9, 2019, released October 2019)