Bill Text: IL HB1497 | 2023-2024 | 103rd General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Automobile Renting Occupation and Use Tax Act. Amends various definitions to exempt car-sharing from the tax imposed under the Act if tax due on the automobile under the Retailers' Occupation Tax Act or Use Tax Act was paid upon the purchase of the automobile or when the automobile was brought into Illinois. Provides that the taxes imposed under the Act do not apply to any amounts paid or received for peer-to-peer car sharing, as defined in the Car-Sharing Program Act, or the privilege of sharing a shared vehicle through a car-sharing program, as defined in the Car-Sharing Program Act, if the shared vehicle owner paid applicable taxes upon the purchase of the automobile. Defines "applicable taxes". Further amends the Illinois Vehicle Code. Provides that a person who rents a motor vehicle to another may hold the renter liable for physical or mechanical damage to the rented motor vehicle that occurs during the time the motor vehicle is under the rental agreement. Creates limits on liability due to theft based on the MSRP of the stolen vehicle. Provides that, beginning on the effective date and for 6 months after, a person who rents a motor vehicle to another shall provide notice to the renter of the motor vehicle of the changes reflected in the amendatory Act. Requires the notice to be posted in a conspicuous and unobscured place that is separate and apart from any other information. Effective immediately, except that the changes to the Illinois Vehicle Code take effect on January 1, 2024.

Spectrum: Moderate Partisan Bill (Democrat 4-1)

Status: (Passed) 2023-08-11 - Public Act . . . . . . . . . 103-0520 [HB1497 Detail]

Download: Illinois-2023-HB1497-Enrolled.html

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AN ACT concerning transportation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Automobile Renting Occupation and Use Tax
Act is amended by changing Section 2 and adding Section 6 as
follows:
(35 ILCS 155/2) (from Ch. 120, par. 1702)
Sec. 2. Definitions. "Renting" means any transfer of the
possession or right to possession of an automobile to a user
for a valuable consideration for a period of one year or less.
"Renting" does not include making a charge for the use of
an automobile where the rentor, either himself or through an
agent, furnishes a service of operating an automobile so that
the rentor remains in possession of the automobile, because
this does not constitute a transfer of possession or right to
possession of the automobile.
"Renting" does not include the making of a charge by an
automobile dealer for the use of an automobile as a
demonstrator in connection with the dealer's business of
selling, where the charge is merely made to recover the costs
of operating the automobile as a demonstrator and is not
intended as a rental or leasing charge in the ordinary sense.
"Renting" does not include peer-to-peer car sharing, as

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defined in Section 5 of the Car-Sharing Program Act, if tax due
on the automobile under the Retailers' Occupation Tax Act or
Use Tax Act was paid upon the purchase of the automobile or
when the automobile was brought into Illinois. The car-sharing
program shall ask a shared vehicle owner if the shared vehicle
owner paid applicable taxes at the time of purchase.
Notwithstanding any law to the contrary, the car-sharing
program shall have the right to rely on the shared vehicle
owner's response and to be held legally harmless for such
reliance.
"Automobile" means (1) any motor vehicle of the first
division, or (2) a motor vehicle of the second division which:
(A) is a self-contained motor vehicle designed or permanently
converted to provide living quarters for recreational, camping
or travel use, with direct walk through access to the living
quarters from the driver's seat; (B) is of the van
configuration designed for the transportation of not less than
7 nor more than 16 passengers, as defined in Section 1-146 of
the Illinois Vehicle Code; or (C) has a Gross Vehicle Weight
Rating, as defined in Section 1-124.5 of the Illinois Vehicle
Code, of 8,000 pounds or less.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, limited liability company, or a receiver,
executor, trustee, conservator or other representative

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appointed by order of any court.
"Rentor" means any person, firm, corporation or
association engaged in the business of renting or leasing
automobiles to users. For this purpose, the objective of
making a profit is not necessary to make the renting activity a
business.
"Rentor" does not include a car-sharing program or a
shared-vehicle owner, as defined in Section 5 of the
Car-Sharing Program Act, if tax due on the automobile under
the Retailers' Occupation Tax Act or Use Tax Act was paid upon
the purchase of the automobile or when the automobile was
brought into Illinois. The car-sharing program shall ask a
shared vehicle owner if the shared vehicle owner paid
applicable taxes at the time of purchase. Notwithstanding any
law to the contrary, the car-sharing program shall have the
right to rely on the shared vehicle owner's response and to be
held legally harmless for such reliance.
"Rentee" means any user to whom the possession, or the
right to possession, of an automobile is transferred for a
valuable consideration for a period of one year or less,
whether paid for by the "rentee" or by someone else.
"Rentee" does not include a shared-vehicle driver, as
defined in Section 5 of the Car-Sharing Program Act, if tax due
on the automobile under the Retailers' Occupation Tax Act or
Use Tax Act was paid upon the purchase of the automobile or
when the automobile was brought into Illinois. The car-sharing

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program shall ask a shared vehicle owner if the shared vehicle
owner paid applicable taxes at the time of purchase.
Notwithstanding any law to the contrary, the car-sharing
program shall have the right to rely on the shared vehicle
owner's response and to be held legally harmless for such
reliance.
"Gross receipts" from the renting of tangible personal
property or "rent" means the total rental price or leasing
price. In the case of rental transactions in which the
consideration is paid to the rentor on an installment basis,
the amounts of such payments shall be included by the rentor in
gross receipts or rent only as and when payments are received
by the rentor.
"Gross receipts" does not include receipts received by an
automobile dealer from a manufacturer or service contract
provider for the use of an automobile by a person while that
person's automobile is being repaired by that automobile
dealer and the repair is made pursuant to a manufacturer's
warranty or a service contract where a manufacturer or service
contract provider reimburses that automobile dealer pursuant
to a manufacturer's warranty or a service contract and the
reimbursement is merely made to recover the costs of operating
the automobile as a loaner vehicle.
"Rental price" means the consideration for renting or
leasing an automobile valued in money, whether received in
money or otherwise, including cash credits, property and

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services, and shall be determined without any deduction on
account of the cost of the property rented, the cost of
materials used, labor or service cost, or any other expense
whatsoever, but does not include charges that are added by a
rentor on account of the rentor's tax liability under this Act
or on account of the rentor's duty to collect, from the rentee,
the tax that is imposed by Section 4 of this Act. The phrase
"rental price" does not include compensation paid to a rentor
by a rentee in consideration of the waiver by the rentor of any
right of action or claim against the rentee for loss or damage
to the automobile rented and also does not include a
separately stated charge for insurance or recovery of
refueling costs or other separately stated charges that are
not for the use of tangible personal property.
"Rental price" does not include consideration paid for
peer-to-peer car sharing to a shared-vehicle owner or a
car-sharing program, as those terms are defined in Section 5
of the Car-Sharing Program Act, if tax due on the automobile
under the Retailers' Occupation Tax Act or Use Tax Act was paid
upon the purchase of the automobile or when the automobile was
brought into Illinois. The car-sharing program shall ask a
shared vehicle owner if the shared vehicle owner paid
applicable taxes at the time of purchase. Notwithstanding any
law to the contrary, the car-sharing program shall have the
right to rely on the shared vehicle owner's response and to be
held legally harmless for such reliance.

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(Source: P.A. 98-574, eff. 1-1-14.)
(35 ILCS 155/6 new)
Sec. 6. Applicability. The taxes imposed by Sections 3 and
4 of this Act do not apply to any amounts paid or received for
peer-to-peer car sharing, as defined in Section 5 of the
Car-Sharing Program Act, or the privilege of sharing a shared
vehicle through a car-sharing program, as defined in Section 5
of the Car-Sharing Program Act, if the shared vehicle owner
paid applicable taxes upon the purchase of the automobile.
As used in this Section, "applicable taxes" means, with
respect to vehicles purchased in Illinois, the retailers'
occupation tax levied under the Retailers' Occupation Tax Act
or the use tax levied under the Use Tax Act. "Applicable
taxes", with respect to vehicles not purchased in Illinois,
refers to the sales, use, excise, or other generally
applicable tax that is due upon the purchase of a vehicle in
the jurisdiction in which the vehicle was purchased.
Notwithstanding any law to the contrary, the car-sharing
program shall have the right to rely on the shared vehicle
owner's response and to be held legally harmless for such
reliance.
Section 10. The Illinois Vehicle Code is amended by
changing Section 6-305.2 as follows:

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(625 ILCS 5/6-305.2)
Sec. 6-305.2. Limited liability for damage.
(a) Damage to private passenger vehicle. A person who
rents a motor vehicle to another may hold the renter liable to
the extent permitted under subsections (b) through (d) for
physical or mechanical damage to the rented motor vehicle that
occurs during the time the motor vehicle is under the rental
agreement.
(b) Limits on liability due to theft for a : vehicle having
an MSRP of $50,000 or less. The total liability of a renter who
rents from another a motor vehicle that has an MSRP of $50,000
or less and that is stolen shall be the actual and reasonable
costs incurred by the loss due to theft of the rental motor
vehicle up to $5,000; provided, however, that if it is
established that the renter or authorized driver failed to
exercise ordinary care while in possession of the vehicle or
that the renter or authorized driver committed or aided and
abetted the commission of a theft, then the damages shall be
the actual and reasonable costs of the rental vehicle up to its
fair market value, as determined by the customary market for
the sale of the vehicle. renter under subsection (a) for
damage to a motor vehicle with a Manufacturer's Suggested
Retail Price (MSRP) of $50,000 or less may not exceed all of
the following:
(1) The lesser of:
(A) Actual and reasonable costs that the person

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who rents a motor vehicle to another incurred to
repair the motor vehicle or that the rental company
would have incurred if the motor vehicle had been
repaired, which shall reflect any discounts, price
reductions, or adjustments available to the rental
company; or
(B) The fair market value of that motor vehicle
immediately before the damage occurred, as determined
in the customary market for the retail sale of that
motor vehicle; and
(2) Actual and reasonable costs incurred by the loss
due to theft of the rental motor vehicle up to $2,000;
provided, however, that if it is established that the
renter or an authorized driver failed to exercise ordinary
care while in possession of the vehicle or that the renter
or an authorized driver committed or aided and abetted the
commission of the theft, then the damages shall be the
actual and reasonable costs of the rental vehicle up to
its fair market value, as determined by the customary
market for the sale of that vehicle.
For purposes of this subsection (b), for the period prior
to June 1, 1998, the maximum amount that may be recovered from
an authorized driver shall not exceed $6,000; for the period
beginning June 1, 1998 through May 31, 1999, the maximum
recovery shall not exceed $7,500; and for the period beginning
June 1, 1999 through May 31, 2000, the maximum recovery shall

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not exceed $9,000. Beginning June 1, 2000, and annually each
June 1 thereafter, the maximum amount that may be recovered
from an authorized driver under this subsection (b) shall be
increased by $500 above the maximum recovery allowed
immediately prior to June 1 of that year.
(b-5) Limits on liability due to theft for a : vehicle
having an MSRP of more than $50,000. The total liability of a
renter who rents from another a motor vehicle that has an MSRP
of more than $50,000 and that is stolen shall be the actual and
reasonable cost incurred by the loss due to theft of the rental
motor vehicle up to $40,000; provided, however that if it is
established that the renter or authorized driver failed to
exercise ordinary care while in possession of the vehicle or
that the renter or authorized driver committed or aided and
abetted the commission of a theft, then the damages shall be
the actual and reasonable costs of the rental vehicle up to its
fair market value, as determined by the customary market for
the sale of the vehicle. renter under subsection (a) for
damage to a motor vehicle with a Manufacturer's Suggested
Retail Price (MSRP) of more than $50,000 may not exceed all of
the following:
(1) the lesser of:
(A) actual and reasonable costs that the person
who rents a motor vehicle to another incurred to
repair the motor vehicle or that the rental company
would have incurred if the motor vehicle had been

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repaired, which shall reflect any discounts, price
reductions, or adjustments available to the rental
company; or
(B) the fair market value of that motor vehicle
immediately before the damage occurred, as determined
in the customary market for the retail sale of that
motor vehicle; and
(2) the actual and reasonable costs incurred by the
loss due to theft of the rental motor vehicle up to
$40,000.
The maximum recovery for a motor vehicle with a
Manufacturer's Suggested Retail Price (MSRP) of more than
$50,000 under this subsection (b-5) shall not exceed $40,000
on the effective date of this amendatory Act of the 99th
General Assembly. On October 1, 2016, and for the next 3 years
thereafter, the maximum amount that may be recovered from an
authorized driver under this subsection (b-5) shall be
increased by $2,500 above the prior year's maximum recovery.
On October 1, 2020, and for each year thereafter, the maximum
amount that may be recovered from an authorized driver under
this subsection (b-5) shall be increased by $1,000 above the
prior year's maximum recovery.
(b-10) Beginning on the effective date of this amendatory
Act of the 103rd General Assembly and for 6 months after, a
person who rents a motor vehicle to another shall provide
notice to the renter of the motor vehicle of the changes

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reflected in this amendatory Act of the 103rd General
Assembly. The notice shall be posted in a conspicuous and
unobscured place that is separate and apart from any other
information.
(c) Multiple recoveries prohibited. Any person who rents a
motor vehicle to another may not hold the renter liable for any
amounts that the rental company recovers from any other party.
(d) Repair estimates. A person who rents a motor vehicle
to another may not collect or attempt to collect the amount
described in subsection (b) or (b-5) unless the rental company
obtains an estimate from a repair company or an appraiser in
the business of providing such appraisals on the costs of
repairing the motor vehicle, makes a copy of the estimate
available upon request to the renter who may be liable under
subsection (a), or the insurer of the renter, and submits a
copy of the estimate with any claim to collect the amount
described in subsection (b) or (b-5). In order to collect the
amount described in subsection (b-5), a person renting a motor
vehicle to another must also provide the renter's personal
insurance company with reasonable notice and an opportunity to
inspect damages.
(d-5) In the event of loss due to theft of the rental motor
vehicle with a MSRP more than $50,000, the rental company
shall provide reasonable notice of the theft to the renter's
personal insurance company.
(e) Duty to mitigate. A claim against a renter resulting

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from damage or loss to a rental vehicle must be reasonably and
rationally related to the actual loss incurred. A rental
company shall mitigate damages where possible and shall not
assert or collect any claim for physical damage which exceeds
the actual costs of the repair, including all discounts or
price reductions.
(f) No rental company shall require a deposit or an
advance charge against the credit card of a renter, in any
form, for damages to a vehicle which is in the renter's
possession, custody, or control. No rental company shall
require any payment for damage to the rental vehicle, upon the
renter's return of the vehicle in a damaged condition, until
after the cost of the damage to the vehicle and liability
therefor is agreed to between the rental company and renter or
is determined pursuant to law.
(g) If insurance coverage exists under the renter's
personal insurance policy and the coverage is confirmed during
regular business hours, the renter may require that the rental
company must submit any claims to the renter's personal
insurance carrier as the renter's agent. The rental company
shall not make any written or oral representations that it
will not present claims or negotiate with the renter's
insurance carrier. For purposes of this Section, confirmation
of coverage includes telephone confirmation from insurance
company representatives during regular business hours. After
confirmation of coverage, the amount of claim shall be

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resolved between the insurance carrier and the rental company.
(Source: P.A. 99-201, eff. 10-1-15.)
Section 99. Effective date. This Act takes upon becoming
law, except that Section 10 takes effect on January 1, 2024.