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JM Aviation, Inc. v. Department of Revenue

Case Date: 06/02/2003
Court: 1st District Appellate
Docket No: 1-02-0379 Rel

FIRST DIVISION
June 2, 2003



No. 1-02-0379

 

JM AVIATION, INC., ) Appeal from the
) Circuit Court of
                  Plaintiff-Appellant,  ) Cook County
)
)
       v. ) No. 01 L 50537
)
THE DEPARTMENT OF REVENUE, ) Honorable
) John A. Ward,
                  Defendant-Appellee. ) Judge Presiding.

 

JUSTICE SMITH delivered the opinion of the court:

This is an action for administrative review of the Illinois Department of Revenue's(the Department) determination that plaintiff JM Aviation, Inc. (JM Aviation), owed stateuse tax on its purchase of a used airplane. The circuit court affirmed the Department. On appeal, JM Aviation contends that is does not owe any use tax, alleging that thepurchase was an isolated or occasional sale and, thus, constituted an exception to theRetailers' Occupation Tax Act (35 ILCS 120/1 et seq. (West 1996)) (hereinafter ROTA)and Use Tax Act (35 ILCS 105/1 et seq. (West 1996)) (hereinafter UTA). Specifically,JM Aviation argues that it purchased the airplane from an entity that neither held itselfout as a seller of aircraft nor habitually engaged in the selling of aircraft. No issues areraised on the pleadings. For the reasons that follow, we affirm.

FACTS

In Weber-Stephen Products, Inc. v. Department of Revenue, 324 Ill. App. 3d 893(2001), this court previously described the statutory framework of what is commonlyknown as the Illinois sales tax, which consists of two separate, complementary taxes,i.e., the retailers' occupation tax and the use tax.

"The ROTA imposes an occupational tax upon retailers, persons engagedin the business of selling at retail tangible personal property. [Citations.] Under ROTA, Illinois retailers are required to remit to the State apercentage of the gross receipts of every retail sale. [Citation.] The usetax is assessed the same way and on the same transactions, but the UTAimposes a tax on the purchaser-user of property for the privilege of usingthis property in Illinois, regardless of where the sale occurred. [Citations.] The State therefore benefits by taxing in-state retailers and purchases andalso out-of-state purchases by consumers for use in Illinois which couldnot be reached by the ROTA.

When a single purchase occurs, Illinois retailers collect both formsof sales tax from the consumer. However, if the retailer pays the ROTAtax to the State, he or she does not have to pay, and may keep, the usetax. [Citations.] If the retailer is outside Illinois and therefore has noROTA or UTA obligations, the purchaser-user in Illinois must pay the usetax directly to the State. [Citations.]

The UTA does not apply to out-of-state transactions that would beexempt under the ROTA if the sale occurred in Illinois. [Citations.] If aseller of personal property is excluded from paying the ROTA tax, despiteall elements of the sale occurring in Illinois, then the user of that propertyis also excluded from the imposition of use tax. [Citations.] ROTAprovides an exception:

'The isolated or occasional sale of tangible personalproperty at retail by a person who does not hold himself outas being engaged (or who does not habitually engage) inselling such tangible personal property at retail *** does notconstitute engaging in a business of selling such tangiblepersonal property at retail within the meaning of the Act ***.' [Citation.]

A nonretailer who makes an occasional or isolated sale does not incurROTA liability and therefore the purchaser-user does not incur UTA taxes. 86 Ill. Adm. Code