This ruling is filed under 'Miscellaneous,' but it's actually about Illinois's new Parking Excise Tax (effective January 1, 2020): if I'm a commercial landlord and I give my office tenants free parking spaces as a lease amenity -- no separate charge, bundled into their rent -- do I have to collect and remit the Parking Excise Tax on those spaces?

Plain-English summary

This ruling is filed under the generic label "Miscellaneous," but it is actually about Illinois's brand-new Parking Excise Tax. A full-service commercial real estate operating company owns and manages multi-unit commercial office buildings in Illinois and leases office space to commercial tenants. As part of many of those leases, the company gratuitously gives tenants a designated number of "Reserved" and/or "Unreserved" parking spaces -- sometimes because local zoning laws legally require it, and sometimes simply as a competitive amenity. The parking is bundled into the tenant's monthly rent: there's no separate invoice or charge for it, the rent doesn't change based on how many spaces a tenant uses, and a tenant gets no refund or credit if it doesn't use its spaces. Access is limited to each tenant's own employees and guests (some lots even have security gates), and the general public cannot park there.

The company asked whether it would have to collect and remit the newly enacted Illinois Parking Excise Tax (created by P.A. 101-0031, effective January 1, 2020) on these free parking spaces. The Department's answer was no.

The Parking Excise Tax (35 ILCS 525/10-10) is imposed at 6% of the "purchase price" for parking paid on an hourly, daily, or weekly basis, and 9% of the purchase price for parking paid on a monthly or annual basis. But the tax is collected from the purchaser by the "operator" of the parking area or garage, and 35 ILCS 525/10-5 defines an "operator" as someone who engages in the business of operating a parking area or garage, or who collects consideration for parking. The Department reasoned that because the company charges no separate consideration -- no "purchase price," no "charge or fee paid for parking" -- for the parking spaces it provides, and because the spaces are given only as a free amenity folded into rent that doesn't change based on parking use, the company is not acting as an "operator" of a parking area or garage under the Act. Without consideration flowing to the company for the parking itself, there is nothing for the tax to attach to, and the company has no obligation to collect or remit the tax on those free spaces.

Important caveats from the Department itself: this is a new tax that had only just taken effect (the letter is dated August 9, 2019, ahead of the tax's January 1, 2020 effective date), and at the time of the ruling the Department said it was still in the process of drafting formal rules for the Act. The Department explicitly noted that its position on this issue could change once those rules went through the public rulemaking process.

What this means for you

Commercial landlords / property managers who provide free tenant parking

If you provide parking spaces to commercial tenants at no separate charge -- as a lease amenity bundled into rent, with no separate invoice, no refund for unused spaces, and access limited to tenants' own employees and guests -- this ruling supports treating those spaces as outside the Parking Excise Tax, because you aren't collecting the "consideration" that would make you an "operator" under the Act.

If you charge separately for parking, or parking use affects rent

This ruling turns entirely on the absence of any separate charge or consideration for parking. If your leases separately itemize a parking charge, adjust rent based on parking usage, or otherwise involve payment tied specifically to the parking spaces, this reasoning would not apply, and you should evaluate your specific facts against the Act's definitions of "operator," "purchase price," and "charge or fee paid for parking."

Everyone relying on this letter

Remember this is a GIL, not a PLR -- it is not binding on the Department and does not reflect a formal Department policy statement. The Department itself flagged that it was still drafting rules for the Parking Excise Tax and that its position "may change during the rulemaking process." Confirm current guidance before relying on this conclusion for a new or ongoing tax dispute.

Common questions

Q: Does a landlord have to collect Illinois Parking Excise Tax on parking spaces it gives tenants for free as a lease amenity?
A: No, according to this letter -- as long as there's no separate charge or consideration for the parking, the landlord is not an "operator" of a parking area or garage under the Act and has no collection obligation on those spaces.

Q: Why doesn't the free parking count as taxable under the Act?
A: The tax is measured against a "purchase price" or "charge or fee paid for parking," both of which require actual consideration. Because the parking here is bundled into rent that doesn't change based on parking use, with no separate invoice and no refund for unused spaces, there is no consideration specifically for the parking, so nothing triggers the tax.

Q: Is the property management company an "operator" under the Parking Excise Tax Act?
A: The Department said no. An "operator" is someone who engages in the business of operating a parking area or garage, or who collects consideration for parking. Because the company is in the business of operating commercial office buildings (not parking lots) and collects no separate consideration for parking, it does not meet the definition.

Q: When did the Parking Excise Tax take effect, and is this guidance still current?
A: The tax took effect January 1, 2020, under P.A. 101-0031. At the time of this August 2019 letter, the Department said it was still drafting formal rules for the new Act and specifically warned that its position could change once those rules went through the public rulemaking process, so this GIL should not be treated as the last word.

Q: Does this letter bind the Department in other cases?
A: No. It is a General Information Letter (GIL), not a Private Letter Ruling (PLR). A GIL is not a statement of Department policy and is not binding on the Department, even for the requesting taxpayer.

Citations and references

Statutes cited:

• 35 ILCS 525/10-10 (imposes the Parking Excise Tax: 6% of the purchase price for parking paid hourly/daily/weekly, 9% for parking paid monthly/annually)
• 35 ILCS 525/10-5 (defines "operator," "parking area or garage," "charge or fee paid for parking," and "purchase price")

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2019.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2019/st19-0016-gil.pdf

Original ruling text

ST 19-0016-GIL 08/09/2019 MISCELLANEOUS
This letter discusses the Parking Excise Tax Act. 35 ILCS 525/. (This is a GIL.)

August 9, 2019
Re: General Information Letter Request Pursuant to 2 Ill. Admin Code 1200.120
Dear Xxxx:
This letter is in response to your letter dated July 19, 2019, in which you requested information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
I.

General Information

We represent a Client who is a full-service commercial real estate operating company
(“Client”). Client is not currently engaged in litigation or audit with the Illinois
Department of Revenue regarding the question presented below. To the best of our
knowledge, the Department has not previously ruled regarding this issue for any Illinois
taxpayer. Client’s question involves the department’s application of its newly enacted
Illinois Parking Excise Tax pursuant to Illinois Public Act 101-0031 (“Parking Tax”) to
Client’s business operations. Simply, Client’s question is whether the Parking Tax
applies to no charge parking (i.e. free) offered as an amenity to its commercial tenants?
Pursuant to 2 Ill. Admin Code 1200.120, client hereby requests the Department provide
guidance with regards to its newly enacted Parking Tax to ensure that Client is
compliant with the new tax, effective January 1, 2020.
II.

Business Operation Facts

Clients owns multi-unit commercial office buildings located in Illinois (“Office Buildings”).
Client leases office space to individuals or businesses who use the space exclusively
for commercial purposes (“Commercial Tenants”). Client often serves as the property
manager of its Office Buildings. Client has engaged us to determine if they are required
to collect Illinois Parking Excise Tax on free parking spaces provided to its Commercial
Tenants located in parking lots connected to, or adjacent to the Office Buildings.

ST 19-0016 GIL
Page 2
The Commercial Tenants’ parking rights are governed exclusively by the terms of the
parties’ lease agreements. Client gratuitously offers its Commercial Tenants a
designated number of “Reserved” parking spaces, “Unreserved” parking spaces, or a
combination of both. The parking spaces are a commercial amenity for its tenants and
a Client operating expense which is necessary in the competitive field of commercial
real estate. Moreover, pursuant to many local zoning requirements, Client is often
legally required to provide parking spaces to its Commercial Tenants. The number of
parking spaces granted to an individual Commercial Tenant is dependent on the size of
office space leased from Client and/or the number of employees of the Commercial
Tenant. The parking spaces are strictly available for use by the individual Commercial
Tenant’s employees and/or the Commercial Tenants’ customers and designated guests.
The monthly rent charged by Client to its Commercial Tenants for the lease of the office
space is unaffected by the number or type of parking spaces provided to Commercial
Tenants. Similarly, the monthly rent due is unaffected by whether the Commercial
Tenant does not use some or all the parking spaces. For example, if a Commercial
Tenant does not use the parking space, it is not entitled to a refund or credit of the
monthly rent. Client’s limitation of parking spots to each Commercial Tenant prevents
overcrowding, ensures parking is available for its Commercial Tenants, ensures the
parking lot is only used by tenant employees and/or customers rather than the general
public, and increases the safety of the Commercial Tenants. Most, but not all, parking
lots contain a security gate for which Commercial Tenant’s employees or guests must
swipe a parking badge to enter the gated parking lot.
Client never issues its Commercial Tenants an invoice or separately charges its
Commercial Tenants for the use of the parking lot.
III.

Question Presented:

Whether Taxpayer’s Commercial Tenants are subject to the Illinois Parking Excise Tax
on “no charge” parking spaces, which are not separately bargained for in the lease
agreement and for which are provided to Commercial Tenants as an amenity for their
monthly lease of office space?
IV.

Legal Authorities

On June 28, 2019, the Illinois Governor approved Illinois Public Act 101-0031 which,
among other things, created the “Parking Excise Tax Act.” Effective January 1, 2020, “a
tax is imposed on the privilege of using in this State a parking space in a parking area or
garage for the use of parking one or more motor vehicles…at the rate of …9% of the
purchase price for a parking space paid for on a monthly or annual basis. P.A. 1010031, 10-10(a) Notably, the tax is to be collected from the purchaser by the operator of
the parking lot. Id at 10-10(b).
The following terms are defined by the act and pertinent to this inquiry:
“‘Charge of fee paid for parking’ means the gross amount of consideration for the use or
privilege of parking a motor vehicle in or upon any parking lot or garage in the State,

ST 19-0016 GIL
Page 3
collected by an operator and valued in money, whether received in money or otherwise,
including cash, credits, property and services, determined without any deduction for
costs or expenses, but not including charges that are added to the charge or fee on
account of the tax imposed by this Act or on account of any other tax imposed on the
charge or fee.” Id. At 10-5.
“‘Operator’ means any person who engages in the business of operating a parking area
or garage, or who, directly or through an agreement or arrangement with another party,
collects the consideration for parking or storage of motor vehicles…” Id.
“‘Parking area or garage’ means any real estate, building, structure, premises,
enclosure or other place, whether enclosed or not, except a public way, within the state,
where motor vehicles, recreational vehicles, or other self-propelled vehicles, are stored,
housed or parked for hire, charge, fee or other valuable consideration in a condition
ready for use, or where rent or compensation is paid to the owner, manager, operator or
lessee of the premises for the housing, storing, sheltering, keeping or maintaining motor
vehicles, recreational vehicles, or other self-propelled vehicles….” Id.
“‘Purchase price’ means the consideration paid for the purchase of a parking space in a
parking area or garage, valued in money, whether received in money or otherwise,
including cash, gift cards, credits, and property, and shall be determined without any
deduction on account of the cost of materials used, labor or service costs, or any other
expense whatsoever…” Id.
“‘Purchase price’ includes any and all charges that the recipient pays related to or
incidental to obtaining the use or privilege of using a parking space in a parking area or
garage, including, but not limited to any and all related markups, service fees,
convenience fees, facilitation fees, cancellation fees, overtime fees, or other such
charges, regardless of terminology. However, “purchase price” shall not include
consideration paid for …(1) optional, separately stated charges not for the use or
privilege of using a parking space in the parking area or garage….” Id.
V.

Brief Conclusions
(1) Free parking offered to Commercial Tenants as an amenity to the tenants’ lease
of office space is not subject to the Parking Lot Tax because there is no charge,
or purchase price, for the parking spaces; and
(2) Client is not engaged in the business of operating a parking lot and therefore has
no obligation to collect Parking Lot Tax from its Commercial Tenants.

VI.

Legal Analysis

Illinois’ recently enacted Parking Lot Tax is imposed on the purchase price, or gross
amount of consideration, for the use or privilege of parking a motor vehicle in or upon
any parking lot or garage in Illinois. The Act defines purchase price as the
consideration paid for the parking space, valued in money or otherwise. While the tax is
imposed on the purchasers, or users of the parking lot, the tax is to be collected by

ST 19-0016 GIL
Page 4
parking lot operators, who are defined as those businesses “engage[d] in the business
of operating a parking area or garage, or who, … collects the consideration for parking
or storage of motor vehicles.” P.A. 101-0031, 10-5.
Here, the Parking Lot Tax is not applicable to Client’s business operations for two
reasons. First and foremost, Client does not charge a purchase price upon its
Commercial Tenants for the use or privilege of parking a motor vehicle in Client’s Office
Building parking lots. See ST-13-0043-GIL (Redemption of a hotel chain’s “reward
points’ for a stay at one of its hotels is not subject to Hotel Operators’ Tax liability
because no gross receipts were collected as part of the patron’s hotel stay).
Accordingly, Client does not collect consideration of any kind for the Commercial
Tenants’ use of or privilege of parking on or upon the parking lots located adjacent to or
on the premises of the Office Buildings. The Commercial tenants use of the parking lot
is a complimentary amenity that is legally required to be provided by Client pursuant to
local zoning laws or necessary in the competitive field of commercial real estate, or
both.
Secondly, the Parking Lot Tax is not applicable to Client’s business operations because
Client is engaged in the business of operating commercial real estate properties and
pertinent here, it is not engaged in the business of operating parking lots, and therefore,
does not qualify as a parking lot operator under the Act. As stated above, Client derives
no consideration from its Commercial tenants for their use of the Parking Lot.
Moreover, the Commercial Tenant’s monthly rent payment for their lease of the Office
Building space is unaffected by the use or non-use of the parking spaces. Lastly, the
parking lot is exclusively available to Commercial Tenants and its guests and customers
only. Client’s parking lots located upon or adjacent to its Office Buildings are not
available for use to the general public.
VII.

Summary

Client request the Department confirm its analysis of the application of the newly
enacted Parking Lot Tax, as set forth above. Should the Department contend
otherwise, Client requests the Department provide its legal analysis and authorities for
such conclusions.
DEPARTMENT’S RESPONSE:
Beginning on January 1, 2020, a tax is imposed on the privilege of using in this State a parking
space in a parking area or garage for the use of parking one or more motor vehicles, recreational
vehicles, or other self-propelled vehicles, at the rate of:
1) 6% of the purchase price for a parking space paid for on an hourly, daily, or weekly basis;
and
2) 9% of the purchase price for a parking space paid for on a monthly or annual basis. 35
ILCS 525/10-10.

ST 19-0016 GIL
Page 5
“‘Operator’ means any person who engages in the business of operating a parking area or
garage, or who, directly or through an agreement or arrangement with another party, collects the
consideration for parking or storage of motor vehicles, recreational vehicles, or other self-propelled
vehicles, at that parking place.”
“‘Parking area or garage’ means any real estate, building, structure, premises, enclosure or
other place, whether enclosed or not, except a public way, within the state, where motor vehicles,
recreational vehicles, or other self-propelled vehicles, are stored, housed or parked for hire, charge,
fee or other valuable consideration in a condition ready for use, or where rent or compensation is paid
to the owner, manager, operator or lessee of the premises for the housing, storing, sheltering,
keeping or maintaining motor vehicles, recreational vehicles, or other self-propelled vehicles.”
“‘Purchase price’ means the consideration paid for the purchase of a parking space in a
parking area or garage, valued in money, whether received in money or otherwise, including cash, gift
cards, credits, and property, and shall be determined without any deduction on account of the cost of
materials used, labor or service costs, or any other expense whatsoever.”
The Department believes the Client is not an operator of a parking area or garage. A parking
area or garage is a place where motor vehicles, recreational vehicles, or other self-propelled vehicles,
are stored, housed or parked for hire, charge, fee or other valuable consideration. For the Parking
Excise Tax to apply, an operator must receive consideration for the use of a parking space.
“Consideration” is defined broadly. However, when a lessor provides commercial tenants parking
spaces at “no charge” that are provided to commercial tenants as an amenity for their monthly lease
of office space, the lessor is not engaged in the business of operating a parking area or garage and is
not required to collect and remit taxes on the parking spaces provided to commercial tenants.
Thank you for your letter. The Department is in the process of drafting rules for the Act. We
will address the issue you raise in the Department’s rules. After the Department’s proposed rules
have been published in the Illinois Register, the public will have an opportunity to provide comments.
The Department’s position may change during the rulemaking process.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Richard S. Wolters
Associate Counsel

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