86 Ill. Adm. Code 130.220 — Sales to Lessors of Tangible Personal Property

# Sales to Lessors of Tangible Personal Property

ADMINISTRATIVE CODE

TITLE 86: REVENUECHAPTER I: DEPARTMENT OF REVENUEPART 130 RETAILERS' OCCUPATION TAXSECTION 130.220 SALES TO LESSORS OF TANGIBLE PERSONAL PROPERTY

Section 130.220 Sales to Lessors of Tangible Personal Property a) Effective August 1, 1967, and through December 31, 2024, the sale of tangible personal property to a purchaser who will act as a lessor of such tangible personal property is a sale at retail and is subject to Retailers' Occupation Tax. Also, effective August 1, 1967, and through December 31, 2024, the sale of tangible personal property that is used, employed or consumed by the purchaser in or upon other tangible personal property as to which such purchaser acts as a lessor is a sale at retail and so is subject to Retailers' Occupation Tax. (See also Section 130.2010 of this Part.) Effective January 1, 2025, the tax imposed under the Act, except as otherwise provided in the Act, applies to persons engaged in the business of leasing at retail tangible personal property (other than motor vehicles, watercraft, aircraft, and semitrailers, as defined in Section 1-187 of the Illinois Vehicle Code, that are required to be registered with an agency of this State). The tax applies with respect to leases in effect, entered into, or renewed on or after January 1, 2025. [35 ILCS 120/1.05; 35 ILCS 120/2] b) On and after January 1, 2025, a sale to a lessor of tangible personal property who is subject to the tax on leases implemented by Public Act 103-592 for the purpose of leasing that property, shall be made tax-free on the ground of being a sale for resale, provided the other provisions of Section 130.210 are met. [35 ILCS 120/2c] Lessors of tangible personal property that are subject to a tax on lease receipts imposed by a home rule unit of local government whose ordinance imposing the lease tax was adopted prior to January 1, 2023 are authorized to purchase such property tax free for resale notwithstanding that they are exempt from Retailers' Occupation Tax on gross receipts from the lease of the property if it is subject to such local lease tax. [35 ILCS 120/2-5(49) and Section 130.210(e)] c) A separate exemption exists for the sale of an automobile to an automobile rentor for use as a rental automobile under lease terms of one year or less, provided the lessor gives proper certification to the seller. 35 ILCS 120/2-5(5)] The exemption does not apply to a retail sale of repair or replacement parts for rental automobiles. (See Section 130.120(v).) For the sale of a motor vehicle to a purchaser who will act as lessor of the motor vehicle when the exemption under this subsection (c) does not apply, see Sections 130.454 and 130.455. d) All gross receipts received from the sale or lease of tangible personal property at retail are presumed to be subject to Retailers' Occupation Tax. No deduction will be permitted for any value attributable to intangible property or rights transferred in a sale of tangible personal property at retail if there is not clear evidence from the books and records of the retailer that the sale of such intangible property has been contracted for separately from the sale or lease of the tangible personal property. In no event will the combined sale of tangible and intangible property be permitted to reduce the tax base of the tangible personal property being sold below the fair market value of similar tangible personal property sold separately. e) Through December 31, 2024, sales of tangible personal property to lessors are subject to Retailers' Occupation Tax liability as provided in this Section even if the tangible personal property is leased to an exempt entity that has been issued an exemption identification number under Section 130.2007 of this Part. The only exemption from this provision is if the purchases of the tangible personal property qualify under Section 130.2011 (computers, communications equipment, and equipment used in diagnosis, analysis, or treatment that are leased to exempt hospitals) or 130.2012 (tangible personal property leased to a governmental body) of this Part. (Source: Amended at 50 Ill. Reg. 1119, effective January 8, 2026)

Section 130.220 Sales to Lessors of Tangible Personal Property

a) Effective August 1, 1967, and through December 31, 2024, the sale of tangible personal property to a purchaser who will act as a lessor of such tangible personal property is a sale at retail and is subject to Retailers' Occupation Tax. Also, effective August 1, 1967, and through December 31, 2024, the sale of tangible personal property that is used, employed or consumed by the purchaser in or upon other tangible personal property as to which such purchaser acts as a lessor is a sale at retail and so is subject to Retailers' Occupation Tax. (See also Section 130.2010 of this Part.) Effective January 1, 2025, the tax imposed under the Act, except as otherwise provided in the Act, applies to persons engaged in the business of leasing at retail tangible personal property (other than motor vehicles, watercraft, aircraft, and semitrailers, as defined in Section 1-187 of the Illinois Vehicle Code, that are required to be registered with an agency of this State). The tax applies with respect to leases in effect, entered into, or renewed on or after January 1, 2025. [35 ILCS 120/1.05; 35 ILCS 120/2]

b) On and after January 1, 2025, a sale to a lessor of tangible personal property who is subject to the tax on leases implemented by Public Act 103-592 for the purpose of leasing that property, shall be made tax-free on the ground of being a sale for resale, provided the other provisions of Section 130.210 are met. [35 ILCS 120/2c] Lessors of tangible personal property that are subject to a tax on lease receipts imposed by a home rule unit of local government whose ordinance imposing the lease tax was adopted prior to January 1, 2023 are authorized to purchase such property tax free for resale notwithstanding that they are exempt from Retailers' Occupation Tax on gross receipts from the lease of the property if it is subject to such local lease tax. [35 ILCS 120/2-5(49) and Section 130.210(e)]

c) A separate exemption exists for the sale of an automobile to an automobile rentor for use as a rental automobile under lease terms of one year or less, provided the lessor gives proper certification to the seller. 35 ILCS 120/2-5(5)] The exemption does not apply to a retail sale of repair or replacement parts for rental automobiles. (See Section 130.120(v).) For the sale of a motor vehicle to a purchaser who will act as lessor of the motor vehicle when the exemption under this subsection (c) does not apply, see Sections 130.454 and 130.455.

d) All gross receipts received from the sale or lease of tangible personal property at retail are presumed to be subject to Retailers' Occupation Tax. No deduction will be permitted for any value attributable to intangible property or rights transferred in a sale of tangible personal property at retail if there is not clear evidence from the books and records of the retailer that the sale of such intangible property has been contracted for separately from the sale or lease of the tangible personal property. In no event will the combined sale of tangible and intangible property be permitted to reduce the tax base of the tangible personal property being sold below the fair market value of similar tangible personal property sold separately.

e) Through December 31, 2024, sales of tangible personal property to lessors are subject to Retailers' Occupation Tax liability as provided in this Section even if the tangible personal property is leased to an exempt entity that has been issued an exemption identification number under Section 130.2007 of this Part. The only exemption from this provision is if the purchases of the tangible personal property qualify under Section 130.2011 (computers, communications equipment, and equipment used in diagnosis, analysis, or treatment that are leased to exempt hospitals) or 130.2012 (tangible personal property leased to a governmental body) of this Part.

(Source: Amended at 50 Ill. Reg. 1119, effective January 8, 2026)