A recent change in Illinois law means most truckers based in the state will never pay a sales tax on the purchase of their truck.

But many of those truckers – and a few state officials – don’t think that’s the case, and the confusion and misconceptions about the change have many of those truckers angry and ready to leave the state.

The source of the anger is the “rolling stock exemption,” a rule that in the past exempted the sale of trucks from the state’s sales taxes. The exemption was altered June 20 when the governor signed Senate Bill 841 into law.

Many truckers and trucking industry officials thought the bill eliminated the rolling stock exemption on the sale of trucks. Even some state officials contacted by Land Line told the magazine truck purchases would be taxed.

However, Mike Klemens, a spokesman for the department of revenue, said that is not the case. Klemens’ department recently printed a brochure titled “Trucking Company Fact Sheet,” which attempts to clear up the confusion.

Here’s the facts: Klemens said any trucker who pays the Commercial Distribution Fee does not pay the sales tax on a truck purchase. The Commercial Distribution Fee is the name given to the 36 percent hike in registration fees in Illinois. Any big rig driver, either in-state or with IRP plates, pays the fee.

“If you buy a big truck in Illinois, and that large truck is over 8,000 pounds and is for a commercial purpose, then you have to pay the commercial distribution fee, and the purchase of that truck is not subject to tax,” he said. “It’s a new exemption; it’s called the CDF exemption.”

A state official – and several truckers – said earlier they thought trucks that run all their miles in Illinois would have to pay both the sales tax and the Commercial Distribution Fee. But Klemens said that is also incorrect. Even a truck that is 100 percent in-state will pay the Commercial Distribution Fee and will be exempt from sales tax. Under the old rolling stock test, Klemens said, some would have paid sales tax.

There are some cases where truckers would pay a new sales tax, but not on a truck purchase. Some truckers will have to pay sales tax on repair or replacement parts. But if 51 percent of their trips cross outside Illinois, they are exempt from that, too.

Some smaller trucks – principally those below 8,000 pounds – would pay the sales tax on a truck purchase, but no big rig drivers will pay tax on a truck purchase, Klemens said. Even drivers of smaller trucks will escape the tax if 51 percent of their trips are interstate.

Klemens said confusion about the tax is widespread among the trucking industry in Illinois.

“We had a meeting a week ago, had 100 truckers there,” he said. One industry official said at that time that “everyone understands everything but repair and replacement parts.”

After the meeting and the explanation of what the tax covered, Klemens spoke to one trucker who said that he was going to leave Illinois. When Klemens asked why, the trucker said it was to avoid paying sales tax on his truck. 

SB841 has sparked controversy since it first was made law. Trucking officials have publicly opposed it, and several bills were introduced that would overturn the law or refund money truckers have already paid. In addition, grass-roots efforts have sprung up, with large gatherings of truckers calling for an end to the fees imposed under the bill.

Some truckers in Illinois could face more than $1,000 in additional registration fees. In-state truckers received letters earlier this year that said they must pay the fee or lose plates they already paid for. 

--by Mark H. Reddig, associate editor

Mark Reddig can be reached at mark_reddig@landlinemag.com.