In anticipation of the legislation required to bring Illinois into compliance with FAA regulations, the Illinois Department of Revenue has developed a new sales tax return (ST-70) for reporting sales of aviation fuel. Although this legislation has not yet passed, the Department has decided to move forward with implementing this new aviation fuel sales tax return. This is effective with taxes collected December 1, 2017 and reported January 20, 2017.
It is important to note that this is not a new tax, but instead a new way to report and track tax previously reported on the ST-1, Sales and Use Tax, and E911 Surcharge Return. You can register as an aviation fuel retailer with the Department electronically on mytax.illinois.gov.
If you have one business but sell aviation fuel at more than one location, you must collect and remit sales and use taxes according to the rates of each particular location. Please see the FY 2018-13-A Bulletin for more information.
Federal law (49 USC § 47133) requires that "state and local taxes" on aviation fuel be used for airport purposes. While 5% of our 6.25% State tax is grandfathered, the IATA and IPAA along with the Illinois Department of Transportation and Department of Revenue have been in discussions throughout the year regarding the remaining 1.25% State Tax. Although Illinois failed to meet its deadline, the expectation is that we have a bill passed at the beginning of the 2018 Legislative Session.
The current point of contention is a proposal to distribute funds based on "enplanements." The IATA opposes this and has proposed instead to allow a priority rating system determined by IDOT. We are continuing to work with the State on this issue and hope for swift resolution in the upcoming months.
Federal Law 49 USC § 47133
FAA's Policy Amendment on aviation fuel tax revenue usage.
Illinois' Senate Bill 482, Amendment 2 from November 2017, containing the "enplanement" language.