The City of Chicago municipal ordinance imposes a tax on the lease or rental of certain personal property used in the City of Chicago. As of January 1, 2015, the personal property lease transaction tax rate increased to 9% of receipts or charges (up from 8%). The liability for payment of the tax is on the lessee, while the duty to remit the tax to the City is on the lessor.
Personal property subject to the tax includes all property, other than real property, including, but not limited to, motor and other vehicles, construction equipment, household and office equipment, clothing, computing and electronic equipment, sporting and gaming equipment, and lease time on equipment not otherwise itself rented.
The ordinance sets forth certain exemptions to the personal property lease transaction tax. Governmental, charitable, educations, and religious organizations are exempt from the tax. Additionally, there are twelve types of exempt leases:
- Property leased outside the City that is primarily used outside the City;
- Property that is leased from a party subject to the City’s occupation taxes;
- Leases of “rolling stock” in interstate commerce by an interstate carrier for hire;
- Leases of property where the rental price is paid by inserting one or more coins or bills of U.S. currency into an attached mechanism;
- Leases of medical equipment or appliances for the purpose of correcting or treating parts of his or her own body;
- The lease of a ground transportation vehicle if the lessor is subject to the ground transportation tax;
- Leases of property where the lessor and lessee are members of the same related group. “Related” means companies under a parent corporation/person that owns 100% of the voting stock of subsidiaries either directly or indirectly;
- Leases by a membership organization to a member of such membership organization;
- The nonpossessory lease of computers involving clearing of stock transactions ;
- The nonpossessory lease of a computer used to deposit, withdraw, transfer, or lend money or securities (i.e., ATM machines, banking transactions);
- The nonpossessory computer lease in which the customer’s use or control of the computer is de minimis and the related charge is predominantly for information transferred (i.e., the nonpossessory lease of a computer to receive current price quotations); and
- Lease of motion picture film by theaters (which are subject to the City Amusement Tax).
If your business involves the lease or rental of personal property used in the City of Chicago it is important to know whether your business transactions are subject to the personal property lease transaction tax. The City of Chicago Department of Finance can impose fines and penalties on individuals and businesses that fail to pay the required tax.
If you have any questions or concerns regarding this issue, please contact:
(312) 368-0100 or email@example.com.