Illinois – Taxability of Transfer of Car to Stepchild

1/17/2013

SALT Report 2049 – The Illinois Department of Revenue issued a revised decision regarding the taxability of a vehicle transfer to a step-child.  As previously reported in SALT Report 1899 the Department determined that the family use tax exemption provided in 625 ILCS 5/3-1001 extends the lower tax rate to vehicles that are transferred to step-children.

However, the Department notes that the decision in the previously issued letter sent to the Taxpayer has been rescinded because the language in 625 ILCS 5/3-1001 clearly excludes step-children.  The statute states that a tax rate of $15 applies under the following circumstances:

(1) The transferee or purchaser of the motor vehicle is the spouse, mother, father, brother, sister or child of the transferor

Accordingly, the Department determined that the Taxpayer was liable for the standard Illinois private vehicle use tax on the transfer of a car to his stepson because the lower tax rate does not extend to stepchildren.

For Further Information:

Illinois Department of Revenue – General Information Letter ST 12-0061-GIL