There are a number of cases, all of which involve the rental of tangible personal property prior to sale, which are helpful in determining whether the use of the cars by the children of Weaver-Yemm's owners and the use of the trucks by the service department were interim uses and consequently exempt from the imposition of a use tax. The seminal case is Illinois Road Equipment Co. v. Department of Revenue (1965), 32 Ill.2d 576, 207 N.E.2d 425. Illinois Road Equipment Co. involved two retail sellers of heavy construction equipment who would periodically lease machinery to prospective buyers. During the time the machinery was being rented it remained in the sellers' inventories.
The parties do not dispute that the leasing and construction use of the equipment would be a "use" of the property unless it comes within the demonstration or interim use exceptions of section 2. Both sides rely heavily upon the decision in Illinois Road Equipment Co. v. Department of Revenue (1965), 32 Ill.2d 576, 207 N.E.2d 425. There the supreme court affirmed a circuit court order, on administrative review, setting aside a Department of Revenue use tax assessment against two equipment dealers who rented some of the equipment in their inventory. The rental revenue of one dealer was less than 1% of its gross revenue, while that of the other was not stated. The evidence indicated that the rentals were made as a method of inducing sales, although sales did not always result.
taxes the privilege of using tangible personal property within the State. ( United Air Lines, Inc. v. Johnson (1981), 84 Ill.2d 446, 449.) Functionally, the Use Tax Act serves to tax property purchased out of State by Illinois residents that is not taxable under the Retailers' Occupation Tax Act or the tax act of another State. The Use Tax Act thus prevents the avoidance of the Retailers' Occupation Tax Act and at the same time attempts to eliminate the competitive disadvantage of in-State businesses. United Air Lines, Inc. v. Johnson (1981), 84 Ill.2d 446, 450; Illinois Road Equipment Co. v. Department of Revenue (1965), 32 Ill.2d 576, 580; Turner v. Wright (1957), 11 Ill.2d 161, appeal dismissed (1957), 355 U.S. 65, 2 L.Ed.2d 106, 78 S.Ct. 140. In 1961, the legislature amended the Use Tax Act and the Retailers' Occupation Tax Act by adding a provision which had the effect of exempting newspapers and periodicals from the taxes:
Cf. Appalachian Elec. Power Co. v. Koontz, 138 W. Va. 84, 76 S.E.2d 863 (1953) (income derived from late payment surcharges is incidental to business as public utility so taxable under Code, 11-13-2(d), not at miscellaneous service rate, Code, 11-13-2(h)). Leasing the equipment is not the equivalent of use by the appellees nor is it done for demonstration purposes. This contrasts with Illinois Road Equip. Co. v. Dep't of Revenue, 32 Ill.2d 576, 207 N.E.2d 425 (1965), relied upon by appellees (similar transaction held to fall under exceptions to State use tax as either interim use or use for demonstration by retailer). We cannot conclude, therefore, that appellees' rental businesses are part of their wholesale sales businesses.
1 et seq.) Its basic purposes are to complement the Retailers' Occupation Tax Act by preventing the evasion of tax on purchases made outside the State and to equalize the competitive disadvantage of Illinois retailers who face retailers' occupation tax liability. ( Illinois Road Equipment Co. v. Department of Revenue (1965), 32 Ill.2d 576, 580.) As stated earlier, the Illinois use tax is imposed on the privilege of using personal property within the State.
Next, with regard to the transactions falling under the "rental or lease sales" category, it is our opinion that the hearing officer correctly characterized each of these transactions as a single sale at retail for use or consumption, the sale price being the agreed price in the sales contract. (See Illinois Road Equipment Co. v. Department of Revenue, 32 Ill.2d 576.) Moreover, while the taxpayer argues, as it did before the circuit court, that it was taxed twice for the full sales price, first when the sales contract and lease were executed and second when the conditional sales contract was executed at the expiration of the lease, we find that the record substantiates the officer's finding that the taxpayer was assessed only once on the full sales price as stated in the sales contract.
Like the exemption for leases of real property, this one is to some extent surplusage; it excludes what would in all likelihood be held outside the scope of the act anyway. Cf. Illinois Road Equipment Co. v. Department of Revenue, 32 Ill.2d 576.)
Brown discusses the relationship between the two acts ( Brown, 295 Ill. App. 3d at 1034-35, 693 N.E.2d at 1258-59). The basic purposes of UTA are to complement ROTA by preventing evasion of taxes on interstate purchases and protecting Illinois retailers from competition advantages of out-of-state retailers not required to collect sales tax from Illinois purchasers. Illinois Road Equipment Co. v. Department of Revenue, 32 Ill. 2d 576, 580, 207 N.E.2d 425, 427 (1965). The relationship of the acts is not directly at issue in this case, and because CILCO did not appeal, we need not discuss UTA.
( Modern Dairy Co. v. Department of Revenue (1952), 413 Ill. 55, 108 N.E.2d 8.) Although the UTA and its local counterparts complement the occupational taxes ( Illinois Road Equipment Co. v. Department of Revenue (1965), 32 Ill.2d 576, 207 N.E.2d 425), we find they are quite different in scope and thus are not readily comparable. • 13 It is necessary to examine the Department regulations that set guidelines as to what is and is not considered "engaged in the business of selling" for local occupational tax purposes.
Our supreme court has held that the basic purposes of the Use Tax Act "are to complement the Retailers' Occupation Tax Act by preventing the evasion of tax on purchases made outside the State and to equalize the competitive disadvantage of Illinois retailers who face retailers' occupation tax liability. ( Illinois Road Equipment Co. v. Department of Revenue (1965), 32 Ill.2d 576, 580.)" ( United Air Lines, Inc. v. Johnson (1981), 84 Ill.2d 446, 450, 419 N.E.2d 899; see also American Airlines, Inc. v. Department of Revenue (1974), 58 Ill.2d 251, 252, 319 N.E.2d 28; Howard Worthington, Inc. v. Department of Revenue (1981), 96 Ill. App.3d 1132, 421 N.E.2d 1030.) Plaintiff's argument focuses exclusively on the latter purpose, while disclaiming the legitimacy of the former.