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Cook County, Illinois, Enacts Use Tax on Non-Titled Property

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May 2013

Summary

Effective April 1, 2013, Cook County, Illinois, imposes a 1.25 percent use tax on the privilege of using non-titled personal property purchased outside the county for use within the county.[1] Cook County has imposed a use tax on titled tangible personal property (e.g., vehicles) for many years.[2] However, during Cook County’s fiscal year 2013 budget process, the county extended this tax to non-titled personal property.

The new use tax applies to non-titled personal property, defined as “tangible personal property as set forth in the Illinois Use Tax Act, other than tangible personal property that is registered or titled with an agency of the State.”[3] The tax is in addition to the Illinois use tax and the City of Chicago Non-Titled Personal Property Use Tax. Sellers should not collect the tax; rather, it must be self-assessed by purchasers of items bought outside the county for use within the county.[4]

Cook County’s use tax is imposed on the purchaser or user when the property is “first subject to use in the county.”[5] If the purchaser resides in Cook County or the property was delivered to a location in the county, the property is presumed to have satisfied these criteria on the date of delivery, thereby subjecting the property to the use tax.[6]

Individual taxpayers will receive an annual tax credit for the first $3,500 of non-titled personal property purchased outside Cook County. The credit is nonrefundable and may not be applied to another taxable year.[7]

Items exempt from the tax include:[8]

  • Non-titled personal property exempt from tax under the Illinois Use Tax Act;
  • Food for human consumption that is to be consumed off the premises where it is sold, other than alcoholic beverages, soft drinks, and food which has been prepared for immediate consumption within the county; and
  • Prescription and non-prescription medicines, drugs, medical appliances used by persons who are public aid recipients in nursing homes, as well as insulin, urine testing materials, syringes, and needles used by natural persons who are diabetics for personal use.

Cook County also excludes certain uses of property including:[9]

  • Property acquired outside the county by a nonresident individual that is temporarily used in the county or while passing through the county;
  • Property acquired outside the county that is temporarily stored in the county provided the property is used solely outside the county and never within the county boundaries;
  • Building materials and fixtures temporarily stored in the county by a combination retailer and construction contractor registered with the state, provided the contractor thereafter incorporates the building materials and fixtures into real estate located outside the county;
  • Property acquired by nonresident individuals while they are not residing within the county, if such individuals use the property outside the county for at least three months prior to bringing the property into the county; and
  • Property acquired and used in the course of business by a person who relocates to the county, or opens an office, plant, or other facility in the county, provided the property has been used for at least three months outside the county by the person before being moved into the county.

Cook County requires every person who acquires non-titled personal property from outside the county that is subject to the use tax to register with the Cook County Department of Revenue. After registration is completed, taxpayers will receive official pre-printed tax returns from the Cook County Department of Revenue. The tax return and any payment due must be remitted on or before the 20th day of the month following the date the property becomes subject to the county use tax.[10]

MFA Insights

Concerns have been raised by Illinois taxpayer advocacy groups regarding the validity of the tax without express authorization by the Illinois legislature.[11] Additionally, the tax does not provide a mechanism to allow a credit for taxes paid to other state and local jurisdictions.

As such there are many unresolved issues with the imposition and administration of the tax. Nevertheless, taxpayers should proceed with registration and remittance of the tax to minimize their risk. If the tax is ultimately invalidated, or if the county implements a mechanism to allow a credit for taxes paid to other jurisdictions, refund opportunities should be explored for overpayments of tax. MFA will continue to monitor developments with the Cook County use tax and keep you informed as these issues are debated and resolved.


[1] The 2013 Cook County Budget enacted on November 9, 2012, imposes a use tax on the privilege of using non-titled personal property purchased outside the county for use within the county. Article XIX, Non-Titled Personal Property Use Tax, Cook County Code. Cook County Ordinance 12-O-63, effective April 1, 2013. A copy of the Cook County tax ordinance is available here.

[2] Cook County Code Secs. 74‐270 ‐ 74‐283 and Illinois Counties Code Sec. 5‐1008 (55 ILCS 5/5‐1008) provide that a home rule county (e.g., Cook County) may impose a use tax on tangible personal property titled or registered to a person within the county.

[3] Cook County Code Secs. 74-651 and 74-652.

[4] Cook County Code Sec. 74-652(b).

[5] Cook County Code Sec. 74-652.

[6] Cook County Code Sec. 74-652(c).

[7] Cook County Code Sec. 74-654.

[8] Cook County Code Secs. 74-654 and 74-655.

[9] Cook County Code Sec. 74-656.

[10] Cook County Code Sec. 74-656. Additional information about registering for the Cook County use tax can be found here.

[11] See Analysis of Proposed Cook County Use of Non-titled Personal Property Tax Ordinance, Taxpayers’ Federation of Illinois, October 2012.

Material Discussed in this Alert is meant to provide general information and should not be acted on without obtaining professional advice tailored to your firm's individual needs. The information is for general guidance only and is not a substitute for professional advice.

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Shannan Gilmartin Cuddy
Lead Partner — State and Local Tax Practice
(978) 557-5338
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