Illinois residents eying cars in other states, take heed. The Illinois Department of Revenue (IDOR) has some advice for those planning to make an out-of-state car purchase to avoid a nasty tax surprise. According to a press release, when you bring your shiny new wheels back to Illinois, you could be on the hook for vehicle use tax if you're registered in that state, even if you already paid sales tax elsewhere.
Buying new rides from across state lines might look sexy on paper, but it comes with a hitch. Dealers not well-versed in Illinois' tax code could charge their own state's sales tax by error, as IDOR Director David Harris pointed out. Data from the department indicates residents are not always walking out clear on how to qualify for the exemption required for Illinois buyers.
"Out-of-state dealerships may not always understand Illinois tax laws, and it is important for Illinois buyers who are purchasing a vehicle out-of-state to ensure the dealer knows the vehicle will be titled and registered in Illinois," Harris said in a statement obtained by Illinois Government News. Buyers should ask dealers about an exemption from sales taxes levied at purchase, Harris added, to avoid paying this tax in error.
The IDOR recommends a few straightforward steps for Illinoisans to sidestep this potential double-tax whammy: tell the dealer that the vehicle will be registered in Illinois right off the bat, ask about the out-of-state buyer sales tax exemption, and make sure to get the right exemption form signed – keeping a copy for your records can't hurt either. And after returning to Illinois, cars need to be reported with Form RUT-25 to settle any use tax owed; the form is necessary when registering a vehicle from a non-resident dealer.
To not end up paying more than necessary, the department urges buyers to handle tax details before finalizing any out-of-state vehicle purchase. "Paying attention to the tax details before you finalize an out-of-state vehicle purchase can save you from unexpected costs later," Harris emphasized. For those looking to cruise through their car-buying journey without financial bumps, IDOR suggests reaching out before sealing the deal, either through a call to their helpline numbers or a visit to their website.
