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We have determined that a number of All Terrain Vehicle (ATV) dealers are not correctly charging sales tax when they sell these vehicles. Specifically:
Dealers are issuing drive-away permits and not charging tax to out-of-state buyers of ATVs when possession of the vehicle is taken in Illinois. This also applies to motor bikes that may not be licensed for use on public roadways.
Dealers are reporting that they delivered ATVs out of state and not charging sales tax when the purchaser actually picked up the ATV in Illinois.
Dealers are accepting farm machinery and equipment exemptions for ATVs not primarily used in production agriculture.
Dealers are not completing Form ST-556, Sales Tax Transaction Return, as is required with the sale of any ATV.
Solution Dealers should review the Form ST-556 instructions and appropriately charge sales tax. If a dealer has not filed the Form ST-556, it should be filed as soon as possible. If the Form ST-556 has already been filed reporting an incorrect amount of sales tax, Form ST-556-X, Amended Sales Tax Transaction Return, should be filed showing the proper sales tax due. To help dealers comply with the law, we have the following guidance:
view Illinois regulation 86 Ill. Adm. Code 130.605 (b). ATVs are not eligible for issuance of drive-away permits. Sales tax must be charged when an out-of-state customer takes delivery of an ATV at an Illinois dealership.
CA-2007-03 Front (N-06/07)