CHICAGO PERSONAL PROPERTY LEASE TRANSACTION TAX

Municipal Code of Chicago tit. 3, ch. 3-32

in effect

Municipal Code of Chicago § 3-32-010 Title.

3-32-010 Title. This chapter shall be known and may be cited as the "Chicago Personal Property Lease Transaction Tax Ordinance". The tax imposed by this chapter shall be known as the "Chicago Personal Property Lease Transaction Tax" or the "Chicago Transaction Tax", and is imposed in addition to all other taxes imposed by the City of Chicago, the State of Illinois or any other municipal corporation or political subdivision of the State of Illinois. (Added Coun. J. 12-15-92, p. 27387)

Municipal Code of Chicago § 3-32-020 Definitions.

3-32-020 Definitions. When any of the following words or terms are used in this chapter, whether or not capitalized and whether or not used in a conjunctive or connective form, they shall have the meaning or construction ascribed to them in this section: A. [Reserved] B. "City" means the City of Chicago. C. "Computer" means, but not by way of limitation, a device that accepts, processes, stores, retrieves or outputs data including, but not limited to, storage and telecommunication devices or other computer hardware connected to or used with computers. D. "Computer program" or "program" means, but not by way of limitation, a series of coded instructions or statements in a form acceptable to a computer and intended for execution on a computer, either directly or indirectly, to bring about a certain result, such as causing the computer to process data and supply the results of the data processing. E. "Computer software" or "software" means, but not by way of limitation, data and information that are associated with the hardware of a computer such as a collection of computer programs, routines, compilers, assemblers, translators, manuals, circuit diagrams and operation procedures. F. "Data" or "database" means, but not by way of limitation, a representation of information, knowledge, facts, concepts or instructions, including program documentation, which is prepared in a formalized manner and is stored or processed in or transmitted by a computer. Data may be in any form including, but not limited to, reports, printouts, magnetic or optical storage media, punch cards or data stored internally in the memory of the computer. G. "Department" means the Department of Finance of the City. H. [Reserved] I. "Lease" or "rental" means any transfer of the possession or use of personal property, but not title or ownership, to a user for consideration, whether or not designated as a lease, rental, license or by some other term, and includes a "nonpossessory lease". The term "nonpossessory lease" means a lease or rental wherein use but not possession of the personal property is transferred and includes, but is not limited to, leased time on or use of any and all personal property not otherwise itself rented, such as leased time on or for the use of addressing machines, billboards, calculators, computers, computer software, copying equipment or data processing equipment, whether the time is fully or partially utilized, and specifically includes a "nonpossessory computer lease". The term "nonpossessory computer lease" means a nonpossessory lease in which the customer obtains access to the provider's computer and uses the computer and its software to input, modify or retrieve data or information, in each case without the intervention (other than de minimis intervention) of personnel acting on behalf of the provider. The term "nonpossessory computer lease" includes, but is not limited to, time sharing or time or other use of a computer with other users. In the case of a nonpossessory computer lease, the location of the terminal or other device by which a user accesses the computer shall be deemed to be the place of lease or rental and the place of use of the computer for purposes of the tax imposed by this chapter. In the case of a nonpossessory computer lease where the user accesses the provider's computer from a mobile device, the rules set forth in the Illinois Mobile Telecommunications Sourcing Conformity Act ("Act"), 35 ILCS 638, as amended, may be utilized for the purpose of determining which customers and charges are subject to the tax imposed by this chapter. If those rules indicate that the tax applies, it shall be presumed that the tax does, apply unless the contrary is established by books, records or other documentary evidence. The words "lease" or "rental" shall not be construed to include an agreement which constitutes a bona fide conditional sale of personal property. The primary consideration in determining whether an agreement is a conditional sale rather than a lease or rental is whether the lessee under the agreement both is required to make payments the sum of which is at least equal to the lessor's cost of the personal property and, under the terms of the agreement, has the option of taking title to or ownership of the personal property for nominal or no consideration after all payments required under the agreement have been made. The words "lease" or "rental" shall not be construed to include an agreement which grants certain rights to a person, or the person's agent, to install, remove, operate, improve and maintain, and collect fees from, certain designated parking meters pursuant to a concession agreement. The words "lease" or "rental" shall include a transfer of the use of software within the meaning of this chapter only if, for purposes of the Illinois Retailers' Occupation Tax and Illinois Use Tax, the software is not "custom" software and the transfer is what has sometimes been referred to as an exempt license of software, but which is more accurately described as a license by which the possession or use of software is transferred, but not title or ownership. J. "Lease or rental payment period" means the length of time or period of use that is covered by a single lease or rental payment as agreed to under the terms of the lease or rental agreement. K. "Lease price" or "rental price" means the consideration for the lease or rental of personal property, valued in money, whether received in money or otherwise, including cash, credits, property and services, determined without any deduction for costs or expenses whatsoever. The term "lease price" or "rental price" includes any and all charges that the lessee pays incidental to obtaining the lease or rental of personal property, including but not limited to any and all related markups, service fees, convenience fees, facilitation fees, cancellation fees, late return fees, late payment fees and other such charges, regardless of terminology. The term "lease price" or "rental price" does not include charges that are added to the price by a lessor on account of the tax imposed by this chapter or on account of any other tax imposed on the lessee for the lease or rental of personal property. The term "lease price" or "rental price" shall exclude separately stated optional charges not for the use of personal property and annual membership fees paid to the operator of the bike share program created and owned by the Chicago Department of Transportation. The fact that the lessee could have avoided the charge by obtaining the lease or rental from or through a different lessor, pursuant to different terms, or through a course of performance that would have avoided the obligation to pay the charge, does not make the charge "optional". The "lease price" or "rental price", in the case of a nonpossessory computer lease, includes all charges for the use of the computer's hardware, computer software, computer programs and databases for any purpose whether or not the charge for use is measured by the actual amount of time used or by some other measure. A transfer of the use or ownership of personal property, or a provision of a service, that is ancillary to a nonpossessory computer lease shall be deemed a separate transaction for purposes of determining whether the charge for the transfer or the service is includible in the lease or rental price of the nonpossessory computer lease only if the transfer or service is optional. The charge for a transfer or service that is not optional shall be included in the lease or rental price of the underlying nonpossessory computer lease, even if a separate charge for the transfer or service is stated in a contract or invoice. A transfer or service shall be considered optional for this purpose only if the lessee could have obtained the same nonpossessory computer lease from the same lessor without the transfer or service. L. "Lessee" means any person who leases or rents personal property from another, whether the lease or rental price is paid by the lessee or by another person. M. "Lessor" means any person, including the assignee of any lease or rental agreement, who leases or rents personal property to users or who, directly or through an agreement or arrangement with another party, collects the consideration for the lease or rental of personal property. The term includes, but is not limited to, persons engaged in the business of facilitating the lease or rental of personal property for consideration, whether on-line, in person or otherwise. The term does not include banks, credit card companies, payment processors or other persons whose involvement is limited to performing functions similar to those performed by such entities. N. "Membership organization" means a corporation or other person that is organized on a membership basis. A person that is wholly owned by members of a membership organization, and that is operated primarily to furnish goods, services or facilities to members of the organization, shall be deemed a membership organization, its owners shall be deemed its members, and the membership organization and the deemed membership organization shall be treated as a member of the other. A person having trading privileges on an exchange that either is a membership organization, or is directly or indirectly owned 100 percent by a membership organization, shall be treated as a member of the membership organization. The term "membership organization" does not include an organization whose primary purpose is to sell or lease personal property to persons who do not manage the organization, have the right to elect management, or have trading privileges on the organization. O. [Reserved] P. "Person" means any individual, receiver, administrator, executor, conservator, trust, estate, partnership, joint venture, club, joint stock company, business trust, corporation, association, limited liability company, membership organization, syndicate, society, or any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit, or otherwise, or the State of Illinois or any political subdivision thereof, or the United States or any instrumentality thereof. Q. "Personal property" means any and all property other than real property. R. "Use" means the exercise of any right to or power over personal property by a lessee incident to the lease or rental of that property including, but not limited to, the permanent or temporary storage, stationing or garaging of personal property by the lessee. "Use" by a lessee includes not only the use of personal property directly by the lessee but also the use of personal property by the lessee's agents, representatives or other authorized designees. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 11-10-94, p. 59125, § 4.3, effective 7-1-95; Amend Coun. J. 2-8-06, p. 68737, § 1; Amend Coun. J. 12-4-08, p. 50506, § 7; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3; Amend Coun. J. 11-19-14, p. 98063, § 3; Amend Coun. J. 10-28-15, p. 12062, Art. I, § 1; Amend Coun. J. 11-16-16, p. 38042, Art. III, § 2; Amend Coun. J. 11-21-17, p. 61858, Art. II, § 3; Amend Coun. J. 10-27-21, p. 40504, Art. VI, § 2)

Municipal Code of Chicago § 3-32-030 Tax imposed.

3-32-030 Tax imposed. A. Except as otherwise provided in this chapter, a tax is imposed upon: (1) the lease or rental in the city of personal property, or (2) the privilege of using in the city personal property that is leased or rented outside the city. The incidence of the tax and the obligation to pay the tax are upon the lessee of the personal property. B. The rate of the tax shall be fifteen percent of the lease or rental price and shall not be increased prior to January 1, 2028. The tax shall be paid by the lessee at the time of each lease or rental payment, and each tax payment shall be determined by applying the tax rate to the lease or rental payment. C. For purposes of this chapter, the lease or rental of personal property shall be deemed to take place at the location where the lessee takes possession or delivery of the personal property. D. Notwithstanding subsection 3-32-030 A., a lessee of personal property leased or rented in the city shall not be required to pay tax for any lease or rental payment period in which the personal property is used solely outside the city; provided, however, that this subsection 3-32-030 D. shall not apply to the lease or rental payment period in which the lessee takes possession or delivery of the personal property at a location in the city. E. To prevent multiple taxation, any lessee that uses in the city personal property leased or rented outside the city may claim a credit against the tax imposed by this chapter equal to any municipal tax properly due and actually paid to another municipality with respect to the lease or rental of such personal property. The credit may not exceed the amount of the tax imposed by this chapter that otherwise would be due. F. Nothing in this chapter shall be construed to impose a tax upon any transaction or privilege which, under the constitutions of the United States or the State of Illinois, may not be made the subject of taxation by the city. (Added Coun. J. 12-15-92, p. 27387; Corrected. 10-7-93, p. 39594; Amend Coun. J. 11-13-07, p. 15814, § 1; Amend Coun. J. 11-19-14, p. 98063, § 3; Amend Coun. J. 10-28-15, p. 12062, Art. I, § 1; Amend Coun. J. 11-26-19, p. 11514, Art. VII, § 1; Amend Coun. J. 11-24-20, p. 24619, Art. I, § 1; Amend Coun. J. 12-16-24, p. 23004, Part 1, Art. VIII, § 1; Amend Coun. J. 12-19-25, p. 38125, Art. II, § 1)

Municipal Code of Chicago § 3-32-040 Exempt lessees.

3-32-040 Exempt lessees. Notwithstanding any other provision of this chapter, the following lessees shall be exempt from the tax imposed by this chapter: A. A lessee that is a governmental body; B. A lessee that is an organization organized and operated exclusively for charitable, educational or religious purposes. (Added Coun. J. 12-15-92, p. 27387)

Municipal Code of Chicago § 3-32-050 Exempt leases, rentals or uses.

3-32-050 Exempt leases, rentals or uses. A. Notwithstanding any other provision of this chapter, the following leases, rentals or uses shall be exempt from the tax imposed by this chapter: (1) The use in the city of personal property leased or rented outside the city if the property is primarily used (more than 50 percent) outside the city. (2) The lease, rental or use of personal property that is leased or rented from a person subject to the tax imposed by Section 3-40-040, Section 3-40-170 or Section 3-40-310 of this Code, as amended, provided that such tax is imposed upon the receipts attributable to leases or rentals to the lessee and further provided that the tax is passed on to the lessee as a separate charge pursuant to Section 9-221 of the Public Utilities Act, as amended, 220 ILCS 5/9-221. (3) The lease, rental or use by an interstate carrier for hire of rolling stock actually moving in interstate commerce. (4) The lease, rental or use of personal property where the lease or rental price is paid in its entirety by inserting one or more coins or bills of currency of the United States into a mechanism attached to the personal property. (5) The lease, rental or use of medical appliances or medical equipment by a person for the purpose of correcting or treating parts of his or her own body. (6) The lease, rental or use of a ground transportation vehicle, as that term is defined by Chapter 3-46 of this Code, for the purpose of providing ground transportation, but only if the lessor is subject to the Chicago ground transportation tax with respect to such vehicle. This exemption is not available to a transportation network provider, transportation network driver, or transportation network vehicle owner. (7) The lease, rental or use of personal property if the lessor and lessee are members of the same related group. For purposes of this exemption, the term "related group" means a person and all other persons directly or indirectly owned 100 percent by the person. A person shall be deemed to own a corporation if it directly or indirectly owns 100 percent of the corporation's outstanding voting stock. (8) The lease, rental or use of personal property that is leased by a membership organization to a member of such membership organization, or by a person that is wholly owned directly or indirectly by one or more membership organizations to a member of any of such membership organizations, provided that substantially all of the lessor's leases of personal property of the same type are to such members. (9) The nonpossessory lease of a computer to effectuate the execution, clearing, processing, matching or recording of a trade on a board of trade designated as a contract market by the Commodity Futures Trading Commission or on a securities exchange registered with the Securities and Exchange Commission, or any other trade of any security (as defined in section 475(c)(2) of the Internal Revenue Code of 1986, as amended, without regard to the last sentence thereof), or any comparable security with respect to commodities, whether or not the parties to the lease also are parties to the trade. (10) The nonpossessory lease of a computer to effectuate the deposit, withdrawal, transfer or loan of money or securities, including any related review of accounts or investment options by the account owner, whether or not the parties to the lease also are parties to the deposit, withdrawal, transfer or loan. (11) Under rules to be prescribed by the department, the nonpossessory lease of a computer in which the customer's use or control of the provider's computer is de minimis and the related charge is predominantly for information transferred to the customer rather than for the customer's use or control of the computer, such as the nonpossessory lease of a computer to receive either current price quotations or other information having a fleeting or transitory character. (12) The lease, rental or use of a motion picture film by an owner, manager or operator of an amusement that exhibits the film to patrons who are subject to the tax imposed by Section 4-156-020 of this Code. (13) In accordance with the terms of this subsection, and pursuant to procedures to be established by the comptroller, the nonpossessory lease of a computer, where the lessor or lessee is a small new business, as the term "small new business" is defined in this subsection. (a) For purposes of this subsection, the term "small new business" shall mean a business that (i) holds a valid and current business license issued by the City or another jurisdiction, (ii) during the most recent full calendar year prior to the annual tax year for which the exemption provided by this subsection is sought had under $25 million in gross receipts or sales, as the term "gross receipts or sales" is defined for federal income tax purposes, and (iii) has been in operation for fewer than 60 months. For the purpose of calculating the $25 million limit, gross receipts or sales will be combined if they are received by members of a single unitary business group. For purposes of this subsection, the term "unitary business group" is as defined for Illinois income tax purposes. For the purpose of calculating the 60 month limit, time in operation will be deemed to have begun during the first calendar month in which the business seeking the exemption first received any gross receipts or sales. Also for the purpose of calculating the 60 month limit, time in operation will include any earlier time during which any of the following businesses were in operation (i) another existing business, if that business is a member of the same unitary business group as the business seeking the exemption, (ii) a business that is no longer in operation, but that would be a member of the same unitary business group as the business seeking the exemption, if it were still in operation; (iii) a business whose liabilities would be liabilities of the business seeking the exemption, pursuant to Illinois law concerning successor liability; or (iv) any other business that is reasonably determined by the Comptroller to be substantially similar or a predecessor to the one seeking the exemption, based on factors including, but not limited to, common ownership, management, employees, assets, line of business and location. (b) A small new business that is the lessor of a nonpossessory computer lease shall not be required to collect tax on its charges for such nonpossessory computer lease. (c) A small new business that is the lessee of a nonpossessory computer lease shall not be required to pay tax on its charges for such nonpossessory computer lease. To document this exemption, the lessor must obtain from the lessee and retain in its business records a copy of the lessee's lease tax exemption certificate, in a form to be provided by the Comptroller. B. For purposes of applying any of the exemptions contained in this section, every lease or rental payment period shall be deemed a separate transaction or privilege. Any person claiming an exemption shall have the burden of proving entitlement to the exemption for each lease or rental payment period for which the exemption is claimed. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 11-10-94, p. 59125, § 4.3, effective 7-1-95; Corrected. 3-9-95, p. 66769; Amend Coun. J. 11-19-03, p. 14216, § 2.1; Amend Coun. J. 2-8-06, p. 68737, § 1; Amend Coun. J. 11-19-14, p. 98063, § 3; Amend Coun. J. 10-28-15, p. 12062, Art. I, § 1; Amend Coun. J. 11-26-19, p. 11514, Art. VII, § 2)

Municipal Code of Chicago § 3-32-060 Leases for re-lease.

3-32-060 Leases for re-lease. A. A lessee of personal property shall not be required to pay the tax imposed by this chapter for any lease or rental payment period in which the lessee in turn will act as a lessor of the same property, provided that the lessee supplies to its lessor a written verification that the property is being leased for re-lease, together with either (A) a re-lease certificate issued by the department, or (B) documentary evidence that the subsequent lease is exempt from or otherwise not subject to, the tax. B. Subsection A of this section shall not apply if the lessee in turn will act as a lessor of the same property in a transaction that is exempt pursuant to subsection 3-32-050 A.(4), A.(7) or A.(8) of this chapter. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 11-10-94, p. 59125, § 4.3, effective 7-1-95)

Municipal Code of Chicago § 3-32-070 Collection and remittance responsibilities of lessors.

3-32-070 Collection and remittance responsibilities of lessors. A. It shall be the duty of each lessor to collect the tax imposed by this chapter from the lessee at the time of each lease or rental payment, and to remit the tax to the department in accordance with Section 3-32-080 of this chapter. In the event that a lessor fails to collect or remit the tax required to be collected by this section, the lessor shall be liable to the city for the amount of such tax. B. In the case of an assignment of a lease or rental agreement, the original lessor shall not be required to collect and remit tax which becomes due after the assignment, provided that the original lessor separately stated the amount of the tax on the face of the agreement. C. The tax imposed by this chapter, when collected or billed, shall be stated as a distinct item separate and apart from the lease or rental price of the personal property. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 12-12-01, p. 75777, § 2.14; Amend Coun. J. 11-19-08, p. 48243, Art. I, § 4)

Municipal Code of Chicago § 3-32-080 Tax remittance and returns.

3-32-080 Tax remittance and returns. A. (1) On or before the last day of each calendar month, every lessor shall remit to the department the tax attributable to lease or rental payments received during the immediately preceding calendar month and shall file with the department a remittance return. The remittance return shall be in a form prescribed by the comptroller, containing such information as the comptroller may reasonably require. (2) A lessor may remit tax and file remittance returns on the accrual rather than cash basis, provided that the lessor receives prior authorization from the department. B. If a lessor fails to collect the tax imposed by this chapter from a lessee, then the lessee shall file a return and pay the tax directly to the department on or before the date required by subsection 3-32-080(A). C. Notwithstanding any other provision of this chapter, for all periods beginning on or after January 1, 2000, (1) all tax returns shall be filed with the department on an annual basis on or before August 15 of each year in accordance with Sections 3-4-186 and 3-4-189 of this Code, (2) all tax payments and remittances shall be made in accordance with either Section 3-4-187 (payment of actual tax liabilities) or Section 3-4-188 (payment of estimated taxes), and (3) the provisions of Sections 3-4-186, 3-4-187, 3-4-188 and 3-4-189 shall control over any contrary provisions in this chapter regarding the subjects covered by those sections. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 11-17-99, p. 18040, § 2.1; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3)

Municipal Code of Chicago § 3-32-090 Registration.

3-32-090 Registration. A. Every lessor that maintains an office or principal place of business in the city or that is required to collect the tax imposed by this chapter shall register with the comptroller within 30 days after establishing an office or principal place of business in the city or becoming subject to tax collection responsibilities, as the case may be. B. If any information provided by a lessor on a registration form ceases to be accurate, then the lessor shall file a corrected form with the department prior to the following January 1st. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 3-31-04, p. 20916, § 3.13; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3)

Municipal Code of Chicago § 3-32-100 Contents of lease agreements.

3-32-100 Contents of lease agreements. Every lease or rental agreement, or memorandum of lease or rental, shall indicate the date of the transaction which it evidences, the name of the lessor and the lessee, the personal property to which it relates, the number and duration of lease or rental payment periods, and the amount of each lease or rental payment. All formal leases, rental agreements and memoranda of leases or rentals shall bear a number upon their face. No more than one formal lease or rental agreement, or memorandum of lease or rental, made by a lessor on any given date shall bear the same number. The number identifying the lease or rental agreement, or memorandum of lease or rental, shall be entered and recorded in the books of account required to be kept by Section 3-32-110. (Added Coun. J. 12-15-92, p. 27387)

Municipal Code of Chicago § 3-32-110 Maintaining books and records.

3-32-110 Maintaining books and records. Every lessor and lessee shall retain for at least five years accurate books and records of each transaction or activity requiring that person to collect and remit or to pay the tax imposed by this chapter, including all original source documents. All such books and records shall be kept in the English language and, at all reasonable times during business hours of the day, shall be open to inspection by the department. (Added Coun. J. 12-15-92, p. 27387)

Municipal Code of Chicago § 3-32-120 Rules and regulations.

3-32-120 Rules and regulations. The comptroller is authorized to adopt, promulgate and enforce rules and regulations pertaining to the administration and enforcement of this chapter. (Added Coun. J. 12-15-92, p. 27387; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3)

Municipal Code of Chicago § 3-32-130 Application of Uniform Revenue Procedures Ordinance.

3-32-130 Application of Uniform Revenue Procedures Ordinance. Whenever not inconsistent with the provisions of this chapter or whenever this chapter is silent, the provisions of the Uniform Revenue Procedures Ordinance, Chapter 3-4 of this Code, as amended, shall apply and supplement this chapter. (Added Coun. J. 12-15-92, p. 27387)

Source: City of Chicago, Municipal Code of Chicago (American Legal Publishing, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/chicago/latest/chicago_il/0-0-0-2606429Fetched: 10/24/2026