Press Room: Tax Release

March 27, 2013

Cook County Use Tax on Non-Titled Personal Property – New Reporting Requirements Effective April ‘13

The Cook County Board of Commissioners recently took action to pass a new use tax on non-titled tangible personal property, which will go into effect on April 1, 2013. This action was undertaken as a result of recent events surrounding the determination of the local sales tax rate in Illinois. There has been much written in the press regarding the determination of the local tax rates. Several lawsuits have also been filed against taxpayers and consultants that have established planning structures to change the sourcing of local rate determinations of sales and purchases of property to be used in Cook County. 

Cook County will impose a 1.25% use tax for the privilege of using certain non-titled tangible personal property in the county for a business. The use tax is imposed on individuals and businesses that use property in a business within the boundaries of Cook County (less a credit for $3,500). The tax applies to all non-titled tangible personal property purchased outside of Cook County and subsequently brought into and used in Cook County. The tax is imposed on the property’s value when first subject to use in the county. Property registered or titled with the state (e.g., boats, automobiles, etc.) is excluded. Typical purchases brought into the county that would be subject to the new tax include computer hardware, furniture, office equipment and supplies. Canned computer software, which the state defines as tangible personal property, would also be subject to this new tax.

Several issues arise from this new ordinance:

  • Is the tax allowable under the Illinois Constitution?
  • How does a taxpayer protect their rights to a refund if the tax is deemed unconstitutional?
  • What are the reporting and registration requirements?
  • How is the value of the property determined?
  • How is the term use defined?
  • How is property temporarily used in Cook County treated?
  • How would the taxability of items at the state level affect the Cook County use tax base?
  • How is the use of intangible property treated?

…and many others.

Our professionals can assist you in:

  • Reviewing your reporting requirements;
  • Assessing the scope of these provisions as they relate to your business; and
  • Identifying potential next steps to comply with and/or protect a payment made should the tax be determined to be unconstitutional.

If you feel you may be affected by this notice, please contact your WTAS advisor as soon as possible.