On November 9, 2012, the Cook County board of commissioners passed the Use of Non-Titled Personal Property Tax Ordinance(Cook County Ordinance 12-O-63). This ordinance imposes a 1.25% use tax on non-titled tangible personal property purchased outside of Cook County that is subsequently used within Cook County.
The ordinance was effective April 1, 2013, with the first monthly tax return due May 20, 2013. It should be noted that this new tax will be assessed in addition to the 1.00% Non-Titled Tangible Personal Property Use Tax that is already assessed by the City of Chicago. Additionally, no credits are allowed for other local taxes that are paid on the purchase of the property, such as other Illinois local taxes or another state’s local tax.
Non-Titled Tangible Personal Property
As noted in the ordinance, non-titled tangible personal property consists of tangible personal property, other than realty, that has not been “registered or titled with an agency of the State.” Examples of titled property that are excluded from this tax are vehicles and aircraft.
Basis of Non-Titled Tangible Personal Property
The ordinance states that, “The tax shall be at the rate of 1.25% of the non-titled personal property’s value when first subject to use in the County.” The sample returns on the Cook County website provide more detail as to what constitutes “value” by listing 4 allowable specific methods of valuation.
Who is Affected?
All legal entities who, in the course of business, acquire non-titled tangible personal property outside of Cook County which is subsequently used within Cook County are liable for this tax. Such entities are required to register within 30 days of formation, or risk the assessment of penalties. Additionally, Cook County has begun sending registration notices to entities located within the Cook County limits which state that registration is required within 20 days of receipt of the notice. Registration must be completed online at the Cook County website.
Cook County has also clarified that, “Taxpayers who are natural individuals not engaged in business are still responsible for this tax.” This means that all individuals located within Cook County who purchase and put to use non-titled tangible personal property, even if it is not a business use, are required to file an individual use tax return. Cook County has stated that the Individual Tax Return form will be located on their website, but so far it is not available.
Annual Tax Credit
Any entity or person with a liability under this tax is entitled to an annual tax credit for the first $3,500 of property that would be subject to this tax each year ($43.75 of tax credit). If an entity or person is liable for tax that would be a covered by the tax credit, a monthly return is still required to be filed in order to claim the credit.
Exempt Uses and Property
Cook County has released a comprehensive list of uses of non-titled personal property and types of non-titled personal property that are exempt from the tax. That list can be found here. In general, most uses and types of non-titled personal property will be taxable.
Filing the Returns
Once registered, a taxpayer will receive official pre-printed tax returns from Cook County. Monthly returns are required to be filed along with payment (if applicable) by the 20th day of the following month, even if no tax is due.
Potential Legal Issues
Tax professionals have made the case that Cook County is not authorized to impose this new tax, and that it may violate the U.S. and Illinois Constitutions. We are not aware of any actual legal challenges filed against it thus far, and recommend compliance at this time.
If you’d like additional information or assistance with registering and filing for the tax, please don’t hesitate to call your contact at ECS for assistance or visit the Cook County website.
2013 Tax Due Dates:
June 15th –
2nd estimated tax payments for 2013 due for Individuals and Corporations
June 30th –
Monthly Illinois wage report for May due (employers with 250 or more employees)
July 31st –
2nd quarter 2013 employer payroll tax returns due
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