Illinois Adds Transportation Apportionment Formula Regulation

Companies that provide transportation services in Illinois must use a special apportionment formula to determine corporate income tax liability. Illinois added a regulation that defines the terms:

– “transportation company;”

– “transportation services;” and

– “ancillary services.”

What Is a Transportation Company?

A “transportation company” is any company that receives an average of 80% or more of its gross income over a 3-year period from:

– transportation services; or

– ancillary services.

What Are Transportation Services?

The term “transportation services” means the movement of freight or passengers by:

– air;

– land; or

– water.

The term also includes:

– the movement of liquid or gas by pipeline; and

– intermodal services that involve the single movement of freight by multiple carriers.

What Are Ancillary Services?

“Ancillary services” are those services provided to customers with the transportation services. Ancillary services include:

– packing, warehousing, and freight packaging;

– passenger food or beverage sales;

– railroad switching and transportation detention charges;

– in-flight rental of pillows, blankets or headsets;

– airline baggage and reservation services; and

– truck and driver leasing or similar arrangements.

86 Ill. Adm. Code Sec. 100.9715, Illinois Department of Revenue, October 12, 2018

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