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On April 12, 2013, the Illinois Senate passed SB2326, which at the time of this writing is now being considered by the Revenue and Finance Committee of the Illinois House.  Included in the bill is a significant change to the Illinois Common Carrier Tax Exemption (referred to as Illinois “Rolling Stock”) that should be of significant concern to the general aviation community.  The change would directly affect the following Illinois taxes: Use Tax; Service Use Tax; Service Occupation Tax; and Retailer’s Occupation Tax.  The Illinois Aircraft Use Tax would also, presumably, be indirectly affected because of its application of limited exemptions inherited from the Use Tax.


Rolling Stock Rule – Status Quo

The Illinois Rolling Stock rule presently exempts aircraft flown under Part 135 that are used in interstate carriage for hire on a “regular and frequent basis.”  (Other requirements apply, but this article addresses only the amount of interstate commercial use required, as that is the aspect relevant to the proposed legislative change.)  It has not been clear exactly how much use was needed to meet this “regular and frequent” standard, though a 2006 ruling appears to support exemption for an aircraft used in this way 14 times within 9 months.


Rolling Stock Rule – Per Senate Bill 2326

The proposed rule would eliminate the “regular and frequent” standard and replace it with a greater-than-50% test.  As proposed, aircraft owners will have a one-time election that will apply for their entire ownership period to measure use either (1) by the number of aircraft trips (apparently without regard to the length of each trip), or (2) by miles flown (although flight hours will be accepted as a proxy for miles).

An aircraft will then only be exempt if, during each 12-month period, it carries persons or property for hire in interstate commerce for greater than 50% of its total use, under either the trips or miles test, as previously (and irrevocably) elected by the owner.




This proposed change to the Rolling Stock exemption potentially affects not only new aircraft, but also existing aircraft that have met the exemption in prior years.  In order to avoid tax, the exemption must be met continuously for the period of aircraft ownership; if the aircraft ceases to qualify, tax will then be due at that time.  The proposed bill does not appear to provide any relief to owners who purchased their aircraft prior to the statute’s effective date.

With the legislation still before the Illinois House, now is the time for the general aviation community to make its voice heard by alerting representatives of the deleterious effect the proposed rule is likely to have on Illinois aircraft owners and the Illinois economy.


May 3, 2013


Jonathan Levy, Esq.

Legal Director

Advocate Consulting Legal Group, PLLC


Advocate Consulting Legal Group, PLLC is a law firm whose practice is limited to serving the needs of aircraft owners and operators relating to issues of income tax, sales tax, federal aviation regulations, and other related organizational and operational issues.


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