Illinois Tax Requirements for Watercraft and Snowmobiles

At the time you apply for an Illinois title or registration with the Illinois Department of Natural Resources for a watercraft or snowmobile you purchased or leased, you are required to submit either payment of tax or proof that no tax is due before your watercraft or snowmobile can be titled or registered.

The Illinois Department of Revenue is responsible for administering the collection of tax and providing the necessary tax forms. You must make separate payments for tax due and title and/or registration fees. Make your tax payment payable to the Illinois Department of Revenue and your payment for title fees payable to the Illinois Department of Natural Resources. Note: Failing to title or register the item does not prevent the department from imposing the tax due on the purchase.

One of the following forms must be used to pay tax or prove that no tax is due:

• Form RUT-25, Vehicle Use Tax Transaction Return, due no later than 30 days after the date the watercraft or snowmobile is brought into Illinois or the date of purchase from an out-of-state dealer, lending institution, or leasing company selling at retail; or
• Form RUT-25-LSE, Use Tax Return for Lease Transactions, due no later than 30 days after the date the watercraft or snowmobile is brought into Illinois or the date of lease; or
• Form RUT-75, Aircraft/Watercraft Use Tax Transaction Return, is due no later than 30 days from the date of acquisition or the date the watercraft is brought into Illinois, whichever is later if acquired by gift, transfer, donation, or non-retail purchase; or
• Form ST-556, Sales Tax Transaction Return, due no later than 20 days after the date of delivery of the watercraft or snowmobile if purchased from an Illinois dealer or leasing company; or
• Form ST-556-LSE, Transaction Return for Leases, due no later than 20 days after the date of delivery of the watercraft or snowmobile being leased.

Note: For more detailed information, refer to the instructions provided with each return.

The tax return you are required to file has a specific due date. You should file your tax return and pay any tax due by that date to avoid penalty and interest charges even though you may not be able to complete your application for title. When you are unable to complete your application for title, you should submit your tax return and any tax payment directly to the Illinois Department of Revenue. When you are ready to complete your title and/or registration forms, you must provide proof that tax has been paid.

The purchase (or acquisition by gift or transfer) of a snowmobile from an individual or other private party who is not a retailer of the item purchased is not subject to tax and does not require a tax form when you apply for title or registration.

You must use Form RUT-75 to report your purchase of the watercraft. You should attach a copy of the purchase agreement/invoice.

When an Illinois resident purchases or leases a watercraft or snowmobile from an out-of-state dealer and will register the watercraft or snowmobile in Illinois, the sale and subsequent tax due is reported on Form RUT-25 when you bring the item into Illinois. You should attach a copy of the bill of sale as proof of the purchase price.

If you are leasing the watercraft or snowmobile from an out-of-state retailer, you must use Form RUT-25-LSE when you bring the item into Illinois. Attach a copy of the bill of sale or lease contract, as appropriate, as proof of the selling price and of any tax previously paid. If you cannot obtain the proper documentation, you may submit a letter from the leasing company or selling dealer.

If you originally purchased (or acquired by gift or transfer) your snowmobile from an individual or other private party who is not a retailer of the item purchased, the purchase is not subject to tax and does not require a tax form when you apply for title.

If you originally purchased (or acquired by gift, transfer or donation) your watercraft after 9/1/04 from a person or business who is not a retailer of the item purchased, you must use Form RUT-75 to report your purchase of the watercraft. You should attach a copy of the purchase agreement/invoice.

If the transaction is between immediate family members, tax is due on the amount paid. Otherwise tax is due on the purchase price or fair market value of the watercraft on the date it was purchased or brought into Illinois, whichever is later. The purchase price or fair market value must include the value of any motor sold as a part of the transaction.

If you originally purchased your watercraft or snowmobile from a dealer, lending institution, leasing company, or other retailer, you must use Form RUT-25 when you bring the watercraft or snowmobile into Illinois. You should attach a copy of the bill of sale or other proof of the purchase price. If you had the watercraft or snowmobile registered in another state for more than three months, you must use Form RUT-25 to reflect the fact that no tax is due.

If you are leasing the watercraft or snowmobile from an unregistered out-of-state retailer, you must use Form RUT-25-LSE when you bring the item into Illinois. Attach a copy of the bill of sale or lease contract, as appropriate, as proof of the selling price and of any tax previously paid. If you cannot obtain the proper documentation, you may submit a letter from the leasing company or selling dealer.

On Form RUT-25, the exemption for using the watercraft or snowmobile outside Illinois for more than three months applies only to individuals moving into Illinois. It does not apply to businesses, leasing companies, or lessees moving into Illinois, or military persons whose home of record is in Illinois. In these situations, tax is due; however, a credit for tax properly paid to another state and a reasonable allowance for depreciation for prior out-of-state use are allowed.

As the owner of the watercraft or snowmobile, the lessor generally is liable for Illinois Use Tax and responsible for filing and paying this tax using Form RUT-25-LSE when the item is brought into Illinois. However, you, the lessee, may be required to assume this responsibility. If you must do so, you should attach a letter from the leasing company or a copy of the lease agreement to Form RUT-25-LSE as proof of the purchase price and tax previously paid to another state.

If the out-of-state leasing company is registered with the Illinois Department of Revenue to collect Illinois tax, then Form ST-556 is used to report the purchase. Generally, the out-of-state leasing company will complete and file this tax return along with the required title forms for you.

If the out-of-state leasing company is not registered, you will be required to report your purchase. To do so, you must use Form RUT-25. Since Form RUT-25 is due no later than 30 days after the “date (the watercraft or snowmobile is) brought into Illinois” and you already have possession of the watercraft or snowmobile in Illinois, use the actual purchase date for both the “purchase date” and the “date brought into Illinois” on the return. You should attach a copy of the bill of sale as proof of the purchase price.

Generally, the dealer will complete and file the proper tax return along with the required title forms for you. The dealer will use Form ST-556 to report your purchase.

If the Illinois leasing company, lending agency, or other retailer is registered with the Illinois Department of Revenue to collect Illinois tax, then Form ST-556 is used to report the purchase. Generally, the leasing company, lending agency, or retailer will complete and file this tax return along with the required title forms for you. If this is a transaction for lease, the registered retailer will complete Form ST-556-LSE instead.

If the Illinois leasing company, lending agency, or retailer is not registered, you will be required to report your purchase. To do so, you must use Form RUT-25. Since Form RUT-25 is due no later than 30 days after the date the watercraft or snowmobile is brought into Illinois and you already have possession of the item in Illinois, use the actual purchase date for both the "purchase date" and the "date brought into Illinois" on the return. You should attach a copy of the bill of sale as proof of the purchase price. If this is a transaction for lease, you will complete Form RUT-25-LSE instead. Attach a copy of the bill of sale or lease contract, as appropriate, as proof of the selling price and of any tax previously paid. If you cannot obtain the proper documentation, you may submit a letter from the leasing company or selling dealer.

If the broker/agent does not take title to the watercraft or snowmobile and you purchase the item from an individual or private party who is not a retailer of the item purchased, the purchase of a snowmobile is not subject to tax and does not require a tax form when you apply for title; however, the purchase of a watercraft must be reported on Form RUT-75 with an attached purchase agreement/invoice.

If the broker/agent does not take title to the watercraft or snowmobile and you purchase the item from a retailer of the item purchased, the purchase is subject to tax and requires the appropriate tax form to be filed by the required due date.

If the broker/agent takes title to the watercraft or snowmobile and you purchase the item from the broker/agent, a retail sale has occurred. The purchase is subject to tax and requires the appropriate tax form to be filed by the required due date.

You can obtain tax forms by

• requesting them from the Illinois Department of Natural Resources, where you are applying for title
• calling our 24-hour Forms Order Line at 1 800 356-6302
• writing us at
  
  ILLINOIS DEPARTMENT OF REVENUE
  PO BOX 19010
  SPRINGFIELD IL 62794-9010

You can get tax help by

• calling our Taxpayer Assistance Division at 1 800 732-8866 or 217 782-3336
• calling our TDD (telecommunications device for the deaf) at 1 800 544-5304
• using this website
• writing to
  
  ILLINOIS DEPARTMENT OF REVENUE
  PO BOX 19044
  SPRINGFIELD IL 62794-9044