Tax on Watercraft

              Effective September 1, 2004, tax is owed
when a watercraft is acquired by gift,
donation, transfer, or non-retail purchase if
the watercraft will be used in Illinois.
Note: For the purposes of this bulletin, the
term “non-retail purchase” means a
purchase from a person or entity that is not
in the business of selling watercraft at retail.
Generally, two groups are affected by
these changes —
individuals, businesses, and other
entities who will use a watercraft in
Illinois that was acquired by gift,
donation, transfer, or non-retail
purchase; and
lessors who are engaged in the
business of leasing or renting water-craft
and who sell a used watercraft in
connection with that business to a
purchaser who will use the watercraft
for his or her own use.
Individuals, businesses, and other
entities should read the section in this
bulletin titled, “Watercraft Use Tax.”
Lessors should read the section in this
bulletin titled, “Sales of Watercraft by
Lessors.”
How is “watercraft” defined?
For the purposes of this bulletin, the term
“watercraft” includes
Class 2, Class 3, and Class 4 water-craft
as defined in Section 3-2 of the
Boat Registration and Safety Act; and
personal watercraft as defined in
Section 1-2 of the Boat Registration
and Safety Act (jet skis, wave runners,
etc.).
The term “watercraft” does not include
For information
or forms...
To:
1 Individuals, businesses, and other entities who acquire
watercraft through gift, donation, transfer, or non-retail
purchase
2 All watercraft lessors
Call us at:
1 800 732-8866 or
217 782-3336
Call our TDD
(telecommunications device
for the deaf) at:
1 800 544-5304
Write us at:
Illinois Department of Revenue
P.O. Box 19044
Springfield, IL 62794-9044
Visit our Web site at:
www.ILtax.com
Call
our 24-hour
Forms Order Line at:
1 800 356-6302
Brian A. Hamer
Director of Revenue
Printed by authority of the State of Illinois
250,000 copies - 7/04
Class 1 watercraft as defined in
Section 3-2 of the boat and Safety
Registration and Safety Act, or
canoes and kayaks.
Watercraft Use Tax
You must pay Watercraft Use Tax if you
use a watercraft in Illinois that was ac-quired
by gift, donation, transfer, or non-retail
purchase.
On what amount must
Watercraft Use Tax be paid?
You must pay Watercraft Use Tax on the
watercraft’s purchase price, including the
value of any motor sold with, or as part of,
the transaction.
Note: If you purchase or acquire a share of
a watercraft, you must pay Watercraft Use
Tax on the share’s purchase price.
The term “purchase price” is defined below.
Except for transactions between
immediate family members, the pur-chase
price is the fair market value on
the date the watercraft or share of
watercraft was acquired or brought into
Illinois, whichever is later, unless you
can demonstrate that another value is
reasonable.
In cases of transfers between immedi-ate
family members, the purchase price
is the amount actually paid unless it
appears from the facts and circum-stances
that the primary motivation for
the transfer was to avoid the payment
of tax.
If you acquired the watercraft outside
Illinois before you brought it into Illinois,
you will receive a credit for tax properly due
and paid to another state.
Note: You may not receive credit for any
watercraft that you used as a trade-in.
This bulletin is written to
inform you of recent
changes; it does not replace
statutes, rules and regula-tions,
or court decisions.
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Illinois Department of Revenue
Informational Bulletin
Tax on Watercraft
Illinois Department of Revenue
Informational Bulletin July 2004
FY 2005-04