Automobile Renting Occupation and Use Tax (ART)
What is the Automobile Renting Occupation and Use Tax (ART)?
The Automobile Renting Occupation Tax Act imposes an occupation tax on renting automobiles in Illinois. The Automobile Renting Use Tax Act imposes a use tax on the privilege of using a rented automobile in Illinois. In either instance, the term of the rental agreement must be for a period of one year or less.
The occupation tax is due on the gross receipts received from rental transactions while the use tax is based on the rental price of the automobile.
Can local governments impose automobile renting taxes?
Yes. Current statutes authorize municipal and county governments to impose, by ordinance or resolution, local automobile renting taxes at a rate not to exceed 1 percent. We administer and enforce the taxes on behalf of the local government that imposes them.
The Regional Transportation Authority (RTA) and the Metro-East Transit District (MED)can also impose automobile renting taxes, but currently have not done so.
How are the rates for ART determined?
The Automobile Renting Occupation Tax rate is based on the location where the automobile is rented. The Automobile Renting Use Tax rate is based on the location where the automobile is registered. The state tax rate is 5 percent. Many municipal and county governments have imposed a local auto renting tax of 1 percent. Currently neither the RTA or MED has imposed a tax. Beginning October 1, 1992, the Metropolitan Pier and Exposition Authority (MPEA) imposed an additional 6 percent tax on the gross receipts of rentals made from businesses within Cook County.
When is this tax distributed?
As is the case with sales tax, Automobile Renting Occupation and Use Tax has a four-month collection cycle. Liability incurred the first month is required to be reported and paid on Form ART-1 which is due the twentieth day of the month following the liability period for which the tax is being reported (the second month). We process the return filed during the third month, and disburse the local governments share during the fourth month.
: Filers who do business from multiple locations must file Form ART-2, which provides for reporting rental receipts based on the tax imposed for that site.
Other important facts?
A 1.6 percent administrative fee is retained by the state treasurer to cover the costs we incur in administering taxes imposed by municipalities. A 2 percent administrative fee is retained by the state treasurer to cover the costs we incur in administering taxes imposed by counties.
Taxpayers are allowed to take a 1.75 percent discount for timely filing and payment of these taxes. Any allowable discount that is taken is reflected in the local government distributions that are made.
If a taxpayer protests a tax liability, those tax dollars will be delayed until the protest is resolved.
Interest earned on these funds is disbursed to municipalities and counties based on each ones share of the total collections.