Pub. 9 2019 Issue 3

9 Rule, the Military Lending Act, the Equal Credit Opportunity Act, and the creation of the used car 15-day/500 mile warranty for power train components to name a few. IADA was part of a coalition that was able to defeat legislative attempts to reduce the vendors' sales tax collection allowance. Retailers are permitted to retain 1.75% of the sales tax they collect as partial reimbursement for the cost of calculating, collecting, and timely remitting sales tax on behalf of the Department of Revenue. Legislative proposals to cap the vendors' collection allowance at $1,000 per year, which would have cost the average dealership approximately $60,000 per year, stalled out at the end of session. The Bad Every industry in the state felt the sting of some sort of tax or fee increase this year, and motor vehicle dealers were no exception. Senate Bill 690 imposed a cap on the value of the trade-in credit for first division motor vehicles (defined as vehicles designed for carrying no more than 10 people) at $10,000, starting January 1, 2020. Earlier drafts of this legislation had a $10,000 trade-in credit cap for all motor vehicles. The trade-in credit cap contains a use tax component, meaning that Illinois residents who purchase their vehicles in other states will not get a bigger trade-in credit than purchasers who trade their vehicles in to Illinois dealers. Although we were unable to stop the cap, the final version does retain the full trade-in credit for second division vehicles (defined as vehicles designed for carrying more than 10 people, motor homes, and vehicles designed for pulling or carrying freight, cargo, or implements of husbandry). As a reminder, as a trade-off for reducing the taxable base on lease transactions, the trade-in credit was eliminated for lease transactions as of January 1, 2015. It may be beneficial to encourage a customer with a pricey trade-in to consider leasing his or her next vehicle. House Bill 1939 includes a number of tax and fee increases to pay for the road and bridge portion of the infrastructure bill. Title fees will increase, starting July 1, 2019. The fee for a certificate of title will increase from $95 to $150 ($250 for motor homes). However, the duplicate title fee will actually decrease from $95 to $50. The fee for a salvage certificate will increase from $4 to $20 and the fee for a junking certificate will increase from $0 to $10. Motor vehicle registration fees will increase starting with the 2021 registration year. The registration fee for electric vehicles will increase from $35 for a 2-year registration to an amount equal to the registration fee for other first division vehicles, plus $97. The $97 surcharge was added as compensation for the fact that electric vehicles do not pay motor fuel taxes. Also beginning with the 2021 registration year, the annual registration fee for all first division vehicles and Class B vehicles will increase from $101 to $151 and the registration fees for all Class C and higher vehicles will increase by $100 per year. One piece of good news for heavy duty truck buyers is that Senate Bill 1939 repeals the commercial distribution fee beginning July 1, 2020. The Ugly Starting July 1, 2019, we will all feel a little more pain at the pump. The motor fuel tax will increase from 19 cents per gallon to 38 cents per gallon and will be subject to annual Consumer Price Index adjustments. Also beginning on July 1, 2019, the additional tax on diesel fuel will increase from 2.5 cents per gallon to 7.5 cents per gallon. Municipalities in Cook County will be authorized to impose an additional motor fuel tax of up to 3 cents per gallon. Conclusion Industries throughout the state will feel the sting of tax and fee increases in this year's budget. The motor vehicle dealers were one of the only ones to see a benefit in the form of an increased doc fee. Aside from the budget, IADA supported the successful passage of legislation that would expand the use of dealer plates to operate sold vehicles for the purpose of making delivery to customers. IADA also defeated the 6th consecutive attempt to repeal the Sunday Closing Law by Senator Oberweis. Thanks to all of our dealer members who worked with IADA on the various issues impacting our industry this Legislative Session, especially those dealers who responded to IADA’s May 22 legislative update urging dealers to reach out to their state legislators. We will keep you updated on the Governor’s action with these legislative items.  Aside from the budget, IADA supported the successful passage of legislation that would expand the use of dealer plates to operate sold vehicles for the purpose of making delivery to customers. IADA also defeated the 6th consecutive attempt to repeal the Sunday Closing Law by Senator Oberweis.