Ill. Admin. Code tit. 86 § 195.110

Current through Register Vol. 48, No. 45, November 8, 2024

Section 195.110 - Tax Imposed

a)Beginning on January 1, 2020, a tax is imposed on the privilege of using in this State a parking space in a parking area or garage for the use of parking one or more motor vehicles, recreational vehicles, or other self-propelled vehicles.

1)The tax is imposed at the rate of:

A)6% of the purchase price for a parking space paid for on an hourly, daily, or weekly basis; and

B)9% of the purchase price for a parking space paid for on a monthly or annual basis. [35 ILCS 525/10-10 ]

2) The rate of tax shall be determined based on the rental period agreed to by the operator and the purchaser in the contract for the parking space.

EXAMPLE: A purchaser contracts with an operator to rent a parking space on a month-to-month basis. The contract permits the purchaser to make payments twice a month. The tax is imposed at the rate of 9%.

b)The tax shall be collected from the purchaser by the operator.

c)An operator that has paid or remitted the tax imposed by the Act to another operator in connection with the same parking transaction, or the use of the same parking space, that is subject to tax under the Act, shall be entitled to a credit for the tax paid or remitted against the amount of tax owed under the Act, provided that the other operator is registered under the Act. The operator claiming the credit shall have the burden of proving it is entitled to claim a credit. [35 ILCS 525/10-10(c) ] An invoice to the operator that separately states "tax paid" or states "all taxes included" is sufficient documentation to permit the operator to claim the credit.

d) The operator of a parking area or garage must collect the tax on the purchase of all parking spaces in a parking area or garage unless the operator is exempt from collecting the tax or the tax is not due on the transaction. The Act does not provide an exemption for purchases of parking spaces by a person that intends to resell the parking spaces.

EXAMPLE 1: A hotel purchases the privilege of using 50 parking spaces at an adjacent parking garage at a price of $100 per space per month for the purpose of reselling the use of the spaces to its hotel guests. The garage must charge the hotel $109 per parking space ($100 plus tax of $9, using the monthly rate of 9%), and it must remit the $9 in tax per parking space to the Department. If the hotel resells the use of a parking space to a guest at a price of $20 per day, it must charge its guest $21.20 ($20 plus tax of $1.20, using the daily rate of 6%). At the end of the month, the hotel will be required to remit the difference between the total amount of tax it collected from its guests for daily parking during the month and the $450 in tax that it paid to the garage for the parking spaces.

EXAMPLE 2: A grocery store owner rents 10 parking spaces from an adjoining landowner for $1,000 per month and allows its customers to park free while shopping in its store. The landowner must collect and remit tax (9% x $1,000, or $90) on the purchase price paid by the grocery store owner to the landowner to lease the parking spaces. The grocery store has no tax liability for providing free spaces to its customers.

e) Marketing or Facilitating Rentals Until July 1, 2023

1) From January 1, 2020 through June 30, 2023 a person who, for a fee, assists an operator in marketing or facilitating the rental of the operator's parking spaces, reserves parking spaces for customers in the operator's parking area or garage, collects the purchase price from customers, and remits the purchase price to the operator (less the fee if permitted by the agreement), is not engaged in the business of operating a parking area or garage if the following conditions are met:

A) the person has no ownership interest in, or legal right to operate, lease or license, parking areas or garages;

B) the operator controls and sets the inventory of parking spaces customers may reserve using the person's services;

C) the operator establishes the purchase price for the parking spots;

D) the person markets or facilitates the rental of the parking spaces at the purchase price set by the operator;

E) the person represents to prospective customers that all taxes are included in the purchase price or separately states the tax based on the purchase price set by the operator;

F) any additional fees charged to customers and retained by the person are separately stated; and

G) the operator is registered with the Department to collect and remit the tax imposed by the Act.

2) If the conditions listed in subsection (e)(1) are not met, the person is engaged in the business of operating a parking area or garage and is responsible for registering with the Department and collecting and remitting the tax on the purchase price received from the customer. The person may take a credit for the tax paid by the operator. The operator is responsible for remitting tax to the Department on the amount received from the person. (See subsection (c).)

EXAMPLE: A company provides a service in which an individual may contact the company by use of the Internet to locate and reserve a parking space in a parking area or garage near a particular venue. The company does not have any ownership interest in, or legal right to operate, lease or license, parking areas or garages. The operator of a garage with which the company has an agreement has advised the company that the company can reserve up to 10 spaces in the operator's garage and the purchase price for parking spaces in the garage is $15. The company charges the purchaser $15 for the parking space. The company states on its website that all taxes are included in the purchase price. Based on the agreement with the owner of the garage, for each space that is rented by the company, the company retains $1 plus 10% of the $15 purchase price paid by the purchaser. ($1 + .10 x $15 = $2.50.) Per the agreement, the company forwards the balance of $12.50 to the garage owner. The garage owner is registered with the Department and remits tax on the $15 purchase price. Because the agreement between the company and operator meets the requirements of subsection (e)(1), the company is not required to register with the Department and remit tax on $2.50.

3) A fee, retained by the person that assists an operator in marketing or facilitating the rental of the operator's parking spaces, is a cost of doing business of the operator and is not deductible from the purchase price for purposes of calculating the tax the operator must remit to the Department. The operator is liable on the full purchase price paid by the customer for the parking space. Any additional fees charged to customers and retained by the person are also taxable unless the person separately states the fees to the purchaser and the fees are not related to, or incidental to, obtaining the use or privilege of using a parking space in a parking area or garage. (See the definition of "purchase price".)

f) If a business provides the location of available parking spaces to persons for a fee and does not collect the actual cost of parking in the selected parking area or garage, the fee is not taxable.

EXAMPLE: A company provides a web application that allows a person to locate and rent available parking spaces in the area the person wishes to find a parking space. The app also provides the purchaser with the prices for each of the available parking spaces. The fee for finding a parking space is $5. The person selects a parking space that costs $15 and is charged the $5 fee. The company charges the purchaser the $5 fee but does not charge the person the $15 for the cost of the parking space. The garage owner collects the $15 parking fee and the tax of $0.90 from the purchaser when the purchaser enters or exits the garage. The $5 fee is not taxable.

g) If a lessor of commercial real estate is required by the terms of a lease to provide a minimum number of parking spaces to the lessee for use by the lessee's employees, customers, or clients, the lessor is not considered to be engaged in the business of operating a parking area or garage, unless the lease agreement identifies a specific value for the parking spaces.

EXAMPLE 1: A lessor leases 2,000 square feet of office space to a lessee for $15,000 a month. The terms of the lease require the lessor to provide the tenant with 20 parking spaces in the parking garage and 10 surface parking spaces. The consideration for the parking spaces is not specified in monthly lease rental or on the books and records of the lessor. The parking spaces are not subject to tax.

EXAMPLE 2: A professional sports team sells season skybox tickets to attend home games for $100,000. Six parking passes at no additional charge are included in the price of the skybox. The sports team does not separately state the value of the 6 parking passes on its books and records. The person renting a skybox also can purchase extra parking spaces for the standard rate of $50 per game. The 6 parking passes included in the price of the skyboxes are not subject to tax. The purchase price paid for the extra parking spaces are taxable.

h) A lessor of an enclosed storage space or unit leased for the storage of tangible personal property is not required to collect the tax unless the lessor knows at the time the lease is agreed upon or executed that the storage space or unit will be used for parking a motor vehicle, recreational vehicle or self-propelled vehicle, except as otherwise provided by Section 195.115(e). A lessor may obtain knowledge by receiving the information orally from the lessee or by the lessee identifying the contents of the storage unit in the lease. A lease or other material that states storage spaces or units may be used to store motor vehicles, recreational vehicles, or self-propelled vehicles, or states the storage of motor vehicles, recreational vehicles, or self-propelled vehicles is not prohibited, does not impart knowledge to the lessor at the time a lease is agreed upon or executed that the storage space or unit will be used for parking a motor vehicle, recreational vehicle or self-propelled vehicle. The fact that the lessor believes that some lessees may be using the storage spaces or units to park motor vehicles, recreational vehicles, or self-propelled vehicles does not impose an obligation on the lessor to collect the tax.

1) A storage unit owner engaged in the business of operating a parking area or garage must register to collect and remit tax. However, Section 195.115(e) states that, if the operator of the parking area or garage does not act as the operator of more than a total of 3 parking spaces located in the State, the operator is exempt from collecting and remitting tax. A storage owner must register when it rents the fourth storage unit and must begin collecting and remitting tax on all 4 storage units.

2) A storage unit owner may not apportion consideration received from the rental of a storage unit between the space used for storage of a vehicle and the space used for the storage of other tangible personal property.

i)If any operator or booking intermediar.y erroneously collects tax or collects more from the purchaser than the purchaser's liability for the transaction, the purchaser shall have a legal right to claim a refund of that amount from the operator or booking intermediary However, if the amount is not refunded to the purchaser for any reason, the operator or booking intermediary is liable to pay that amount to the Department. [35 ILCS 525/10-10(d) ]

j) If an operator or booking intermediary that facilitates the processing and fulfillment of a reservation for an operator that is not registered under Section 10-30 of the Act advertises a single rate ("all taxes included"), the operator or booking intermediary must determine the base amount of the purchase price to properly calculate and remit the tax.

EXAMPLE 1: A parking operator charges a customer a single rate of $200 per week. The amount includes the 6% State tax. The operator must determine the base amount of the purchase price paid for parking. The calculation used to calculate the base amount of the purchase price paid for parking is $200 ÷ (1 + .06) = $188.68. The amount of $188.68 is the base amount of the purchase price for determining the amount of tax. The State tax that the operator must remit is $11.32 (.06 x 188.68).

EXAMPLE 2: A parking operator charges a customer a single rate of $200 per week. The amount includes a 22% city tax, 9% county tax, and the 6% State tax. To determine the base amount of the purchase price paid for parking, the operator must first determine the combined tax rate for all qualifying parking taxes charged the customer (0.22 + 0.09 + 0.06 = .37). The calculation used to calculate the base amount of the purchase price paid for parking is $200 ÷ (1 + .37) = $145.99. The amount of $145.99 is the base amount of the purchase price used for determining the taxes that can be deducted from the single rate of $200 and the amount of State tax that must be remitted by the operator. The city tax would be $32.12 (.22 x $145.98), the county tax would be $13.14 (.09 x $145.99), and the State tax that the operator must remit is $8.76 (.06 x $145.99).

EXAMPLE 3: A booking intermediary charges and collects a single rate of $30 from a purchaser for the use of a parking space in an unregistered operator's garage. The amount includes the 6% State tax. The booking intermediary must determine the base amount of the purchase price paid for parking. The calculation used to calculate the base amount of the purchase price paid for parking is $30 ÷ (1 + .06) = $28.30. The amount of $28.30 is the base amount of the purchase price for determining the amount of tax. The State tax that the booking intermediary must remit on behalf of the unregistered operator is $1.70 (.06 x $28.30).

k) If a purchaser pays for the entire term of a parking space in advance (i.e., weekly, monthly, annually), the tax shall be collected and remitted in the month received.

EXAMPLE: The purchaser pays $2,400 in January to park in a parking space for a year. The entire $2,400 is subject to tax when received and reported on the return for January.

l) A person that provides payment processing, collection functions, parking area maintenance, or security functions is not an operator subject to the tax when:

1) all parking revenues flow directly to the operator;

2) the operator sets the parking rates;

3) the person is paid a separate fee for the service provided; and

4) the sign at the parking area or garage does not identify the person as the operator.

EXAMPLE: A municipality operates a parking area. It retains a company to install machines on the lot that accept electronic payments. The company also provides a mobile application that permits a person to pay for parking electronically. All payments made by a customer, either by using the machine on the lot or the mobile application, are paid to the municipality. The municipality pays the company a fee for its services. The municipality is the operator of the lot and, pursuant to Section 195.115(b), is not required to collect and remit the tax.

m) Booking Intermediaries

1)Booking intermediaries shall collect the tax on the purchase price paid by purchasers on behalf of registered operators. If a booking intermediary charges a separate service charge that is included in the purchase price, the tax shall be collected on that separate service charge as well, even if the separate service charge is retained by the booking intermediary. [35 ILCS 525/10-10 (b-5)] Until December 31, 2023, an operator is responsible for remitting tax to the Department on separately stated charges on a receipt imposed on a customer by a booking intermediary and retained by the booking intermediary.

EXAMPLE 1: A booking intermediary charges and collects $30 from a purchaser for the use of a parking space in an operator's garage. The $30 includes a charge of $25 set by the operator to use the parking space in the operator's garage and a charge of $5 that is imposed and retained by the booking intermediary for facilitating the use of the parking space by the purchaser. The $5 charge is not separately stated on the receipt. Per the agreement between the operator and the booking intermediary, the booking intermediary receives a 20% commission on each parking space it facilitates on its platform for the operator (.20 x $25 = $5). The booking intermediary forwards $20 to the operator. The operator has a parking excise tax liability of $1.80 (.06 x $30).

EXAMPLE 2: A booking intermediary charges and collects $35 from a purchaser for the use of a parking space in an operator's garage. The receipt shows a parking charge of $30 set by the operator to use the parking space in the operator's garage and a separately stated service charge of $5 that is imposed and retained by the booking intermediary for facilitating the use of the parking space by the purchaser. Per the agreement between the operator and the booking intermediary, the booking intermediary receives a 20% commission on each parking space it facilitates on its platform for the operator (.20 x $30 = $6). The booking intermediary forwards $24 to the operator. The operator has a parking excise tax liability of $2.10 (.06 x $35).

2)Notwithstanding the provisions of this subsection (m), beginning on January 1, 2024, if a booking intermediary facilitates the processing and fulfillment of the reservation for an operator that is not registered under Section 10-30 of the Act, then the tax shall be collected on the purchase price from the purchaser by the booking intermediary on behalf of the operator, and the tax shall be remitted to the Department by the booking intermediary. The booking intermediary that facilitates the processing and fulfillment of the reservation for an operator that is not registered under Section 10-30 of the Act and the unregistered operator are jointly and severally liable for payment of the tax to the Department. [35 ILCS 525/10-10(b) ]

EXAMPLE 1: A booking intermediary charges and collects $25 from a purchaser for the use of a parking space in an unregistered operator's garage. The $25 includes a charge of $20 set by the operator to use the parking space in the operator's garage and a charge of $5 that is imposed and retained by the booking intermediary for facilitating the use of the parking space by the purchaser. The $5 charge is not separately stated on the receipt. Per the agreement between the operator and the booking intermediary, the booking intermediary receives a 10% commission on each parking space it facilitates on its platform for the operator (.10 x $20 = $2). The booking intermediary has a parking tax liability of $0.30 (.06 x $5) on its service fee and a parking tax liability of $1.20 (.06 x $20) on the remainder of the amount paid by the purchaser that the booking intermediary is obligated to collect on behalf of the unregistered operator, for a total parking tax liability of $1.50.

EXAMPLE 2: A booking intermediary charges and collects $35 from a purchaser for the use of a parking space in an unregistered operator's garage. The $35 includes a charge of $30 set by the operator to use the parking space in the operator's garage and a separately stated service charge of $5 imposed and retained by the booking intermediary for facilitating the use of the parking space by the purchaser. Per the agreement between the operator and the booking intermediary, the booking intermediary receives a 20% commission on each parking space it facilitates on behalf of the operator (.20 x $30 = $6). The booking intermediary has a parking excise tax liability of $0.30 (.06 x $5) on its service fee and a parking tax liability of $1.80 (.06 x $30) on the remainder of the amount paid by the purchaser that the booking intermediary is obligated to collect on behalf unregistered operator, for a total parking excise tax liability of $2.10.

3)Beginning January 1, 2024, booking intermediaries are liable for and shall remit the tax to the Department on any separately stated service fee that the booking intermediary charges to the customer. Operators are liable for the remittance of tax under the Act on the remainder of the purchase price for the transaction. Booking intermediaries and operators are subject to audit on all such sales. [35 ILCS 525/10-10 (b-5)]

EXAMPLE 1: A booking intermediary charges and collects $40 from a purchaser for the use of a parking space in a registered operator's garage. The $40 includes a charge of $35 set by the operator to use the parking space in the operator's garage and a charge of $5 that is imposed and retained by the booking intermediary for facilitating the use of the parking space by the purchaser. The $5 charge is not separately stated. Per the agreement between the operator and the booking intermediary, the booking intermediary receives a 20% commission on each parking space it facilitates on behalf of the operator (.20 x $35 = $7). The booking intermediary forwards $28 to the operator. The operator has a parking excise tax liability of $2.40 (.06 x $40).

EXAMPLE 2: A booking intermediary charges and collects $25 from a purchaser for the use of a parking space in a registered operator's garage. The $25 includes a charge of $20 set by the operator to use the parking space in the operator's garage and a separately stated service charge of $5 imposed and retained by the booking intermediary for facilitating the use of the parking space by the purchaser. Per the agreement between the operator and the booking intermediary, the booking intermediary receives a 15% commission on each parking space it rents on behalf of the operator (.15 x $20 = $3). The booking intermediary forwards $17 to the operator. The operator has a parking excise tax liability of $1.20 (.06 x $20). The booking intermediary has a parking excise tax liability of $0.30 (.06 x $5).

4) Any and all markups, services fees, convenience fees, facilitation fees, cancellations fees, overtime fees, or other such charges related to or incidental to obtaining the use or privilege of using a parking space in a parking area or garage that are added to the customer's invoice by a booking intermediary shall for tax purposes be treated in the same manner as a service charge in the examples in subsection (m).

Ill. Admin. Code tit. 86, § 195.110

Added at 44 Ill. Reg. 9222, effective 5/13/2020

Amended at 48 Ill. Reg. 12523, effective 8/5/2024