Illinois Aircraft Use Tax and the 2010 Tax Amnesty

Program

Robert A. McKenzie
and
Edward A. Snyder
ARNSTEIN & LEHR LLP
120 SO U T H RI V E RSI D E P L A ZA | SU ITE 1200
CHI CA G O , I L 60606
P 312.876.71 00 | F 312.876.0 288
ramckenzie@arnstein.com
easnyder@arnstein.com

On October 1, 2010, the State of Illinois began a tax Amnesty Program allowing all taxpayers,
including aircraft owners, to pay their unpaid taxes without penalty or interest. Generally, to
qualify for the Amnesty Program an aircraft owner must owe tax (not just penalties and
interest) for any period ending after June 30, 2002 and before July 1, 2009 and must submit
full payment of that tax no later than November 8, 2010.

Most Aircraft Owners may participate in the Amnesty Program by filing an original or
amended return and making full payment of the tax due on or before November 8, 2010.
Aircraft Owners that are undergoing audit, are disputing a proposed tax in an Administrative
Hearing, or who have already had tax, penalties, and interest assessed may also participate,
but must following the procedures on the Illinois Department of Revenue website at:
www.revenue.state.il.us.

Aircraft Owners that do not participate in the Amnesty Program will be subject to harsh
consequences, including a doubling of the applicable penalties and interest.

Illinois imposes sales or use taxes on most aircraft owners ranging from 6.25% - 9.25% of the
purchase price of their aircraft. If an aircraft is purchased from an in-state dealer, the owner is
charged a sales tax of up to 9.25%, depending on his or her location. If the aircraft is
purchased from a non-dealer or an out-of-state dealer, the owner is required to file a Use Tax
Transaction Return and pay use taxes of 6.25% - 7.25%, in lieu of the sales tax. Non-Illinois
owners can also be subject to the Illinois Aircraft Use Tax if they move their aircraft to Illinois
permanently or for non-temporary storage.

Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice contained in this written or
electronic communication, including any attachments or enclosures, is not intended or written to be used and it
cannot be used by any person or entity for the purpose of (i) avoiding any tax penalties that may be imposed by the
Internal Revenue Service or any other U.S. Federal taxing authority or agency or (ii) promoting, marketing or
recommending to another party any transaction or matter addressed herein.