Illinois – Updated Chicago Parking Tax Guidance

SALT Report 2817 – The Chicago Department of Finance issued an information bulletin regarding recent amendments to the Chicago parking tax. The parking tax is imposed on all vehicles that are parked in a parking lot or garage in the city of Chicago.

The bulletin reflects recent amendments to the parking tax ordinance that changed the previously imposed tiered tax rate to a percentage-based tax rate effective July 1, 2013. The percentage rate is expected to be revenue neutral for the City and is designed to simplify the administrative and compliance process for taxpayers.  The amendments are as follows:

Imposition of Tax

The tax imposed for parking a car for a 24-hour period or any fraction thereof, is 18% of the charge or fee paid for parking on a Saturday or Sunday.

The tax imposed for parking a car on a Monday, Tuesday, Wednesday, Thursday or Friday for a 24-hour period or any fraction thereof, will be 20% of the charge or fee paid.

The tax imposed for parking a car on either a weekly or monthly basis is 20% of the total charge or fee paid for parking.

Weekday/Weekend Overlap

If a taxable period starts on a weekday and ends on a weekend, the weekend rate of 18% will apply to that entire period.  However, if a taxable period starts on a weekend and ends on a weekday, the weekday rate of 20% will apply to that entire period.

Pre-Purchased Parking

If a customer purchases bulk validation tickets or coupons for future use and the date of use cannot be determined, the operator selling the tickets or coupons should sell both weekday and weekend tickets that can be redeemed on the applicable day.  In this case the 18% weekend rate will apply to the weekend tickets, and the 20% weekday rate will apply to the weekday tickets.

Valet Operators

The 15% “safe harbor” is no longer allowed effective July 1, 2013.  Therefore, all valet parking operators are required to collect and remit parking tax using the 18% and 20% rates described above.

When filing a return, all revenues received should be indicated on Line 1.  However, any revenues received from a vehicle that is parked on the street can be deducted on line 2(e) of the tax return. Valet operators must maintain documentation to verify the street parking deduction.

Additionally, if a valet operator parks a vehicle in a lot or garage and remits the tax directly to that operator they can deduct those revenues on line 2 (e) of their annual return so long as they maintain documentation indicating that the tax has been paid to another operator.

Annual Tax Returns

All garage and lot operators are required to file an annual tax return with the Department for each lot, garage, or site they operate.  The returns must include all gross revenues and parker counts by category as well as any authorized deductions by site.

Examples

To provide further clarity, the bulletin provides several examples for each situation described above.

For Further Information

Chicago Department of Finance – Chicago Parking Tax Information Bulletin