Motor Fuels Tax Minute, Episode 22: Illinois Book-Outs

In this week’s episode of Motor Fuels Tax Minute, our hosts will discuss the Cook County, Illinois court case and what it means for motor fuels tax.

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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 22

00:00:00

Emilda: Welcome to Weaver’s Motor Fuel Tax Minute, where we talk all things motor fuel. A question from one of our listeners came in regarding the Cook County, Illinois book-outs.

Leanne, do you have an update on that?

00:00:13

Leanne: Yes, Emilda, there was a recent case in Cook County, Illinois, relating to book-outs of motor fuel. For those of you that don’t know, Cook County, Illinois, is one of the counties in the country that has its own motor fuel tax.

The county recently took a position in a court case that book-out transactions, which are typically financially settled transactions, meaning there is no movement of inventory and no actual change of ownership, would be subject to the Cook County fuel tax if the parties in the chain weren’t licensed.

This is significant because most parties settle book-outs without recording them on tax returns and without considering any tax implications, because the effect is that nothing happened — the fuel didn’t move, the ownership didn’t change. It was a way of hedging risk.

Now we have to look at what does this mean going forward.

Do book-out transactions have to be invoiced with tax? Does everybody have to look at who is licensed? Could this have a broader scope throughout the country?

Right now, it’s just in Cook County, Illinois. It does mean participants in Cook County, Illinois, will have to make sure that everybody is licensed, even in a book-out situation, not just physical transfer.

We will want to keep an eye on it in other counties and other states to see if they pay any attention to it.

00:01:32

Kelly: That was a lot of great information. Leanne, thank you so much. It will definitely be interesting to see if the federal or the states start going in the same direction.

That’s it for our Motor Fuel Tax Minute. Keep those questions coming in and we will get some swag out to you.

00:01:32

Leanne: Thank you.