Illinois Vehicle Purchase by a California Resident not Exempt

Illinois does not provide a use tax exemption for vehicles purchased by non-residents, if the vehicle is registered in a state which does not provide a reciprocal exemption for vehicles purchased by Illinois residents (such as California). In a recent hearing, a taxpayer’s argued that, despite the aforementioned rule, the vehicle should qualify for the replacement vehicle exemption. The replacement vehicle exemption, however, was not applicable because the state defines a replacement vehicle as “a passenger car purchased in Illinois by or on behalf of an insurance company to replace a passenger car of an insured person in settlement of a total loss of a claim”. The taxpayer’s vehicle was merely purchased to replace a another vehicle previously sold. (Administrative Hearing Decision No. UT 06-6, Illinois Department of Revenue, August 2, 2006, received January 2007)

Posted on August 9, 2007