100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3753

 

Introduced , by Rep. Jerry Costello, II

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-61
35 ILCS 110/3-51
35 ILCS 115/2d
35 ILCS 120/2-51

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the term "use as rolling stock moving in interstate commerce" means that a person claiming the exemption must: (1) use the vehicles or trailers to transport persons or property for hire; (2) hold, at the time of purchase, an appropriate credential that authorizes a motor carrier to engage in interstate commerce for-hire; and (3) if the person claiming the exemption is a subsidiary of another company, maintain separate books and records, including separate charts of accounts, and assure that all transactions between the transportation company and the parent are commercially reasonable arms-length transactions. Retains the current definition for aircraft and watercraft. Effective immediately.


LRB100 11428 HLH 21851 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3753LRB100 11428 HLH 21851 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Section
53-61 as follows:
 
6    (35 ILCS 105/3-61)
7    Sec. 3-61. Motor vehicles; trailers; use as rolling stock
8definition.
9    (a) Through June 30, 2003, "use as rolling stock moving in
10interstate commerce" in subsections (b) and (c) of Section 3-55
11means for motor vehicles, as defined in Section 1-146 of the
12Illinois Vehicle Code, and trailers, as defined in Section
131-209 of the Illinois Vehicle Code, when on 15 or more
14occasions in a 12-month period the motor vehicle and trailer
15has carried persons or property for hire in interstate
16commerce, even just between points in Illinois, if the motor
17vehicle and trailer transports persons whose journeys or
18property whose shipments originate or terminate outside
19Illinois. This definition applies to all property purchased for
20the purpose of being attached to those motor vehicles or
21trailers as a part thereof.
22    (b) On and after July 1, 2003 and through June 30, 2004,
23"use as rolling stock moving in interstate commerce" in

 

 

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1paragraphs (b) and (c) of Section 3-55 occurs for motor
2vehicles, as defined in Section 1-146 of the Illinois Vehicle
3Code, when during a 12-month period the rolling stock has
4carried persons or property for hire in interstate commerce for
551% of its total trips and transports persons whose journeys or
6property whose shipments originate or terminate outside
7Illinois. Trips that are only between points in Illinois shall
8not be counted as interstate trips when calculating whether the
9tangible personal property qualifies for the exemption but such
10trips shall be included in total trips taken.
11    (c) Beginning July 1, 2004 and through June 30, 2017, "use
12as rolling stock moving in interstate commerce" in paragraphs
13(b) and (c) of Section 3-55 occurs for motor vehicles, as
14defined in Section 1-146 of the Illinois Vehicle Code, when
15during a 12-month period the rolling stock has carried persons
16or property for hire in interstate commerce for greater than
1750% of its total trips for that period or for greater than 50%
18of its total miles for that period. The person claiming the
19exemption shall make an election at the time of purchase to use
20either the trips or mileage method. Persons who purchased motor
21vehicles prior to July 1, 2004 shall make an election to use
22either the trips or mileage method and document that election
23in their books and records. If no election is made under this
24subsection to use the trips or mileage method, the person shall
25be deemed to have chosen the mileage method.
26    For purposes of determining qualifying trips or miles,

 

 

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1motor vehicles that carry persons or property for hire, even
2just between points in Illinois, will be considered used for
3hire in interstate commerce if the motor vehicle transports
4persons whose journeys or property whose shipments originate or
5terminate outside Illinois. The exemption for motor vehicles
6used as rolling stock moving in interstate commerce may be
7claimed only for the following vehicles: (i) motor vehicles
8whose gross vehicle weight rating exceeds 16,000 pounds; and
9(ii) limousines, as defined in Section 1-139.1 of the Illinois
10Vehicle Code. This definition applies to all property purchased
11for the purpose of being attached to those motor vehicles as a
12part thereof.
13    (d) Beginning July 1, 2004 and through June 30, 2017, "use
14as rolling stock moving in interstate commerce" in paragraphs
15(b) and (c) of Section 3-55 occurs for trailers, as defined in
16Section 1-209 of the Illinois Vehicle Code, semitrailers as
17defined in Section 1-187 of the Illinois Vehicle Code, and pole
18trailers as defined in Section 1-161 of the Illinois Vehicle
19Code, when during a 12-month period the rolling stock has
20carried persons or property for hire in interstate commerce for
21greater than 50% of its total trips for that period or for
22greater than 50% of its total miles for that period. The person
23claiming the exemption for a trailer or trailers that will not
24be dedicated to a motor vehicle or group of motor vehicles
25shall make an election at the time of purchase to use either
26the trips or mileage method. Persons who purchased trailers

 

 

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1prior to July 1, 2004 that are not dedicated to a motor vehicle
2or group of motor vehicles shall make an election to use either
3the trips or mileage method and document that election in their
4books and records. If no election is made under this subsection
5to use the trips or mileage method, the person shall be deemed
6to have chosen the mileage method.
7    For purposes of determining qualifying trips or miles,
8trailers, semitrailers, or pole trailers that carry property
9for hire, even just between points in Illinois, will be
10considered used for hire in interstate commerce if the
11trailers, semitrailers, or pole trailers transport property
12whose shipments originate or terminate outside Illinois. This
13definition applies to all property purchased for the purpose of
14being attached to those trailers, semitrailers, or pole
15trailers as a part thereof. In lieu of a person providing
16documentation regarding the qualifying use of each individual
17trailer, semitrailer, or pole trailer, that person may document
18such qualifying use by providing documentation of the
19following:
20        (1) If a trailer, semitrailer, or pole trailer is
21    dedicated to a motor vehicle that qualifies as rolling
22    stock moving in interstate commerce under subsection (c) of
23    this Section, then that trailer, semitrailer, or pole
24    trailer qualifies as rolling stock moving in interstate
25    commerce under this subsection.
26        (2) If a trailer, semitrailer, or pole trailer is

 

 

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1    dedicated to a group of motor vehicles that all qualify as
2    rolling stock moving in interstate commerce under
3    subsection (c) of this Section, then that trailer,
4    semitrailer, or pole trailer qualifies as rolling stock
5    moving in interstate commerce under this subsection.
6        (3) If one or more trailers, semitrailers, or pole
7    trailers are dedicated to a group of motor vehicles and not
8    all of those motor vehicles in that group qualify as
9    rolling stock moving in interstate commerce under
10    subsection (c) of this Section, then the percentage of
11    those trailers, semitrailers, or pole trailers that
12    qualifies as rolling stock moving in interstate commerce
13    under this subsection is equal to the percentage of those
14    motor vehicles in that group that qualify as rolling stock
15    moving in interstate commerce under subsection (c) of this
16    Section to which those trailers, semitrailers, or pole
17    trailers are dedicated. However, to determine the
18    qualification for the exemption provided under this item
19    (3), the mathematical application of the qualifying
20    percentage to one or more trailers, semitrailers, or pole
21    trailers under this subpart shall not be allowed as to any
22    fraction of a trailer, semitrailer, or pole trailer.
23    (e) For aircraft and watercraft purchased on or after
24January 1, 2014, "use as rolling stock moving in interstate
25commerce" in paragraphs (b) and (c) of Section 3-55 occurs
26when, during a 12-month period, the rolling stock has carried

 

 

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1persons or property for hire in interstate commerce for greater
2than 50% of its total trips for that period or for greater than
350% of its total miles for that period. The person claiming the
4exemption shall make an election at the time of purchase to use
5either the trips or mileage method and document that election
6in their books and records. If no election is made under this
7subsection to use the trips or mileage method, the person shall
8be deemed to have chosen the mileage method. For aircraft,
9flight hours may be used in lieu of recording miles in
10determining whether the aircraft meets the mileage test in this
11subsection. For watercraft, nautical miles or trip hours may be
12used in lieu of recording miles in determining whether the
13watercraft meets the mileage test in this subsection.
14    Notwithstanding any other provision of law to the contrary,
15property purchased on or after January 1, 2014 for the purpose
16of being attached to aircraft or watercraft as a part thereof
17qualifies as rolling stock moving in interstate commerce only
18if the aircraft or watercraft to which it will be attached
19qualifies as rolling stock moving in interstate commerce under
20the test set forth in this subsection (e), regardless of when
21the aircraft or watercraft was purchased. Persons who purchased
22aircraft or watercraft prior to January 1, 2014 shall make an
23election to use either the trips or mileage method and document
24that election in their books and records for the purpose of
25determining whether property purchased on or after January 1,
262014 for the purpose of being attached to aircraft or

 

 

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1watercraft as a part thereof qualifies as rolling stock moving
2in interstate commerce under this subsection (e).
3    (f) The election to use either the trips or mileage method
4made under the provisions of subsections (c), (d), or (e) of
5this Section will remain in effect for the duration of the
6purchaser's ownership of that item or, with respect to
7subsections (c) and (d) of this Section, until July 1, 2017,
8whichever occurs sooner.
9    (g) The General Assembly finds:
10        (1) The rolling stock exemption has been repeatedly
11    amended and, between January 1, 1999 and the effective date
12    of this amendatory Act of the 100th General Assembly, has
13    taken 4 forms.
14        (2) The exemption continues to be a subject of dispute,
15    audits, and lack of clarity and is problematic for Illinois
16    businesses.
17        (3) It is essential to provide simplicity and clarity
18    to the issue of when a purchaser such as a trucking company
19    in Illinois qualifies for the rolling stock sales tax
20    exemption.
21        (4) Working with the trucking and hauling community and
22    other interested parties, this amendatory Act of the 100th
23    General Assembly draws a simple bright line that purchasers
24    must meet to qualify for the exemption which is modeled on
25    surrounding states that do not require a test involving
26    trips, or mileage, or both for shipments between points

 

 

HB3753- 8 -LRB100 11428 HLH 21851 b

1    which originate or terminate outside the relevant state.
2    Such a simplified requirement, without a trips or miles
3    qualification, will provide certainty for purchasers such
4    as Illinois trucking businesses and also provide a more
5    easily enforced requirement and audit practice for the
6    Department of Revenue.
7        (5) It is the intent of the General Assembly to
8    establish on and after the effective date of this
9    amendatory Act of the 100th General Assembly an exemption
10    based upon the purchaser's status as a motor carrier which
11    has credentials to engage in interstate commerce for hire.
12    Beginning on July 1, 2017 "use as rolling stock moving in
13interstate commerce" means that a person claiming the exemption
14must:
15        (1) use the vehicles or trailers to transport persons
16    or property for hire;
17        (2) hold, at the time of purchase, an appropriate
18    credential that authorizes a motor carrier to engage in
19    interstate commerce for-hire; and
20        (3) if the person claiming the exemption is a
21    subsidiary of another company, maintain separate books and
22    records, including separate charts of accounts, and assure
23    that all transactions between the transportation company
24    and the parent are commercially reasonable arms-length
25    transactions.
26    Subsection (e) of this Section shall continue to apply to

 

 

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1aircraft and watercraft on and after July 1, 2017.
2    Property purchased for the purpose of being attached to a
3motor vehicle or trailer as a part thereof qualifies as rolling
4stock moving in interstate commerce only if the motor vehicle
5or trailer to which it will be attached qualifies as rolling
6stock moving in interstate commerce under the test set forth in
7this subsection (g).
8(Source: P.A. 98-584, eff. 8-27-13.)
 
9    Section 10. The Service Use Tax Act is amended by changing
10Section 3-51 as follows:
 
11    (35 ILCS 110/3-51)
12    Sec. 3-51. Motor vehicles; trailers; use as rolling stock
13definition.
14    (a) Through June 30, 2003, "use as rolling stock moving in
15interstate commerce" in subsection (b) of Section 3-45 means
16for motor vehicles, as defined in Section 1-46 of the Illinois
17Vehicle Code, and trailers, as defined in Section 1-209 of the
18Illinois Vehicle Code, when on 15 or more occasions in a
1912-month period the motor vehicle and trailer has carried
20persons or property for hire in interstate commerce, even just
21between points in Illinois, if the motor vehicle and trailer
22transports persons whose journeys or property whose shipments
23originate or terminate outside Illinois. This definition
24applies to all property purchased for the purpose of being

 

 

HB3753- 10 -LRB100 11428 HLH 21851 b

1attached to those motor vehicles or trailers as a part thereof.
2    (b) On and after July 1, 2003 and through June 30, 2004,
3"use as rolling stock moving in interstate commerce" in
4paragraphs (4) and (4a) of the definition of "sale of service"
5in Section 2 and subsection (b) of Section 3-45 occurs for
6motor vehicles, as defined in Section 1-146 of the Illinois
7Vehicle Code, when during a 12-month period the rolling stock
8has carried persons or property for hire in interstate commerce
9for 51% of its total trips and transports persons whose
10journeys or property whose shipments originate or terminate
11outside Illinois. Trips that are only between points in
12Illinois shall not be counted as interstate trips when
13calculating whether the tangible personal property qualifies
14for the exemption but such trips shall be included in total
15trips taken.
16    (c) Beginning July 1, 2004 and through June 30, 2017, "use
17as rolling stock moving in interstate commerce" in paragraphs
18(4) and (4a) of the definition of "sale of service" in Section
192 and subsection (b) of Section 3-45 occurs for motor vehicles,
20as defined in Section 1-146 of the Illinois Vehicle Code, when
21during a 12-month period the rolling stock has carried persons
22or property for hire in interstate commerce for greater than
2350% of its total trips for that period or for greater than 50%
24of its total miles for that period. The person claiming the
25exemption shall make an election at the time of purchase to use
26either the trips or mileage method. Persons who purchased motor

 

 

HB3753- 11 -LRB100 11428 HLH 21851 b

1vehicles prior to July 1, 2004 shall make an election to use
2either the trips or mileage method and document that election
3in their books and records. If no election is made under this
4subsection to use the trips or mileage method, the person shall
5be deemed to have chosen the mileage method.
6    For purposes of determining qualifying trips or miles,
7motor vehicles that carry persons or property for hire, even
8just between points in Illinois, will be considered used for
9hire in interstate commerce if the motor vehicle transports
10persons whose journeys or property whose shipments originate or
11terminate outside Illinois. The exemption for motor vehicles
12used as rolling stock moving in interstate commerce may be
13claimed only for the following vehicles: (i) motor vehicles
14whose gross vehicle weight rating exceeds 16,000 pounds; and
15(ii) limousines, as defined in Section 1-139.1 of the Illinois
16Vehicle Code. This definition applies to all property purchased
17for the purpose of being attached to those motor vehicles as a
18part thereof.
19    (d) Beginning July 1, 2004 and through June 30, 2017, "use
20as rolling stock moving in interstate commerce" in paragraphs
21(4) and (4a) of the definition of "sale of service" in Section
222 and subsection (b) of Section 3-45 occurs for trailers, as
23defined in Section 1-209 of the Illinois Vehicle Code,
24semitrailers as defined in Section 1-187 of the Illinois
25Vehicle Code, and pole trailers as defined in Section 1-161 of
26the Illinois Vehicle Code, when during a 12-month period the

 

 

HB3753- 12 -LRB100 11428 HLH 21851 b

1rolling stock has carried persons or property for hire in
2interstate commerce for greater than 50% of its total trips for
3that period or for greater than 50% of its total miles for that
4period. The person claiming the exemption for a trailer or
5trailers that will not be dedicated to a motor vehicle or group
6of motor vehicles shall make an election at the time of
7purchase to use either the trips or mileage method. Persons who
8purchased trailers prior to July 1, 2004 that are not dedicated
9to a motor vehicle or group of motor vehicles shall make an
10election to use either the trips or mileage method and document
11that election in their books and records. If no election is
12made under this subsection to use the trips or mileage method,
13the person shall be deemed to have chosen the mileage method.
14    For purposes of determining qualifying trips or miles,
15trailers, semitrailers, or pole trailers that carry property
16for hire, even just between points in Illinois, will be
17considered used for hire in interstate commerce if the
18trailers, semitrailers, or pole trailers transport property
19whose shipments originate or terminate outside Illinois. This
20definition applies to all property purchased for the purpose of
21being attached to those trailers, semitrailers, or pole
22trailers as a part thereof. In lieu of a person providing
23documentation regarding the qualifying use of each individual
24trailer, semitrailer, or pole trailer, that person may document
25such qualifying use by providing documentation of the
26following:

 

 

HB3753- 13 -LRB100 11428 HLH 21851 b

1        (1) If a trailer, semitrailer, or pole trailer is
2    dedicated to a motor vehicle that qualifies as rolling
3    stock moving in interstate commerce under subsection (c) of
4    this Section, then that trailer, semitrailer, or pole
5    trailer qualifies as rolling stock moving in interstate
6    commerce under this subsection.
7        (2) If a trailer, semitrailer, or pole trailer is
8    dedicated to a group of motor vehicles that all qualify as
9    rolling stock moving in interstate commerce under
10    subsection (c) of this Section, then that trailer,
11    semitrailer, or pole trailer qualifies as rolling stock
12    moving in interstate commerce under this subsection.
13        (3) If one or more trailers, semitrailers, or pole
14    trailers are dedicated to a group of motor vehicles and not
15    all of those motor vehicles in that group qualify as
16    rolling stock moving in interstate commerce under
17    subsection (c) of this Section, then the percentage of
18    those trailers, semitrailers, or pole trailers that
19    qualifies as rolling stock moving in interstate commerce
20    under this subsection is equal to the percentage of those
21    motor vehicles in that group that qualify as rolling stock
22    moving in interstate commerce under subsection (c) of this
23    Section to which those trailers, semitrailers, or pole
24    trailers are dedicated. However, to determine the
25    qualification for the exemption provided under this item
26    (3), the mathematical application of the qualifying

 

 

HB3753- 14 -LRB100 11428 HLH 21851 b

1    percentage to one or more trailers, semitrailers, or pole
2    trailers under this subpart shall not be allowed as to any
3    fraction of a trailer, semitrailer, or pole trailer.
4    (e) For aircraft and watercraft purchased on or after
5January 1, 2014, "use as rolling stock moving in interstate
6commerce" in (i) paragraphs (4) and (4a) of the definition of
7"sale of service" in Section 2 and (ii) subsection (b) of
8Section 3-45 occurs when, during a 12-month period, the rolling
9stock has carried persons or property for hire in interstate
10commerce for greater than 50% of its total trips for that
11period or for greater than 50% of its total miles for that
12period. The person claiming the exemption shall make an
13election at the time of purchase to use either the trips or
14mileage method and document that election in their books and
15records. If no election is made under this subsection to use
16the trips or mileage method, the person shall be deemed to have
17chosen the mileage method. For aircraft, flight hours may be
18used in lieu of recording miles in determining whether the
19aircraft meets the mileage test in this subsection. For
20watercraft, nautical miles or trip hours may be used in lieu of
21recording miles in determining whether the watercraft meets the
22mileage test in this subsection.
23    Notwithstanding any other provision of law to the contrary,
24property purchased on or after January 1, 2014 for the purpose
25of being attached to aircraft or watercraft as a part thereof
26qualifies as rolling stock moving in interstate commerce only

 

 

HB3753- 15 -LRB100 11428 HLH 21851 b

1if the aircraft or watercraft to which it will be attached
2qualifies as rolling stock moving in interstate commerce under
3the test set forth in this subsection (e), regardless of when
4the aircraft or watercraft was purchased. Persons who purchased
5aircraft or watercraft prior to January 1, 2014 shall make an
6election to use either the trips or mileage method and document
7that election in their books and records for the purpose of
8determining whether property purchased on or after January 1,
92014 for the purpose of being attached to aircraft or
10watercraft as a part thereof qualifies as rolling stock moving
11in interstate commerce under this subsection (e).
12    (f) The election to use either the trips or mileage method
13made under the provisions of subsections (c), (d), or (e) of
14this Section will remain in effect for the duration of the
15purchaser's ownership of that item or, with respect to
16subsections (c) and (d) of this Section, until July 1, 2017,
17whichever occurs sooner.
18    (g) The General Assembly finds:
19        (1) The rolling stock exemption has been repeatedly
20    amended and, between January 1, 1999 and the effective date
21    of this amendatory Act of the 100th General Assembly, has
22    taken 4 forms.
23        (2) The exemption continues to be a subject of dispute,
24    audits, and lack of clarity and is problematic for Illinois
25    businesses.
26        (3) It is essential to provide simplicity and clarity

 

 

HB3753- 16 -LRB100 11428 HLH 21851 b

1    to the issue of when a purchaser such as a trucking company
2    in Illinois qualifies for the rolling stock sales tax
3    exemption.
4        (4) Working with the trucking and hauling community and
5    other interested parties, this amendatory Act of the 100th
6    General Assembly draws a simple bright line that purchasers
7    must meet to qualify for the exemption which is modeled on
8    surrounding states that do not require a test involving
9    trips, or mileage, or both for shipments between points
10    which originate or terminate outside the relevant state.
11    Such a simplified requirement, without a trips or miles
12    qualification, will provide certainty for purchasers such
13    as Illinois trucking businesses and also provide a more
14    easily enforced requirement and audit practice for the
15    Department of Revenue.
16        (5) It is the intent of the General Assembly to
17    establish on and after the effective date of this
18    amendatory Act of the 100th General Assembly an exemption
19    based upon the purchaser's status as a motor carrier which
20    has credentials to engage in interstate commerce for hire.
21    Beginning on July 1, 2017 "use as rolling stock moving in
22interstate commerce" means that a person claiming the exemption
23must:
24        (1) use the vehicles or trailers to transport persons
25    or property for hire;
26        (2) hold, at the time of purchase, an appropriate

 

 

HB3753- 17 -LRB100 11428 HLH 21851 b

1    credential that authorizes a motor carrier to engage in
2    interstate commerce for-hire; and
3        (3) if the person claiming the exemption is a
4    subsidiary of another company, maintain separate books and
5    records, including separate charts of accounts, and assure
6    that all transactions between the transportation company
7    and the parent are commercially reasonable arms-length
8    transactions.
9    Subsection (e) of this Section shall continue to apply to
10aircraft and watercraft on and after July 1, 2017.
11    Property purchased for the purpose of being attached to a
12motor vehicle or trailer as a part thereof qualifies as rolling
13stock moving in interstate commerce only if the motor vehicle
14or trailer to which it will be attached qualifies as rolling
15stock moving in interstate commerce under the test set forth in
16this subsection (g).
17(Source: P.A. 98-584, eff. 8-27-13.)
 
18    Section 15. The Service Occupation Tax Act is amended by
19changing Section 2d as follows:
 
20    (35 ILCS 115/2d)
21    Sec. 2d. Motor vehicles; trailers; use as rolling stock
22definition.
23    (a) Through June 30, 2003, "use as rolling stock moving in
24interstate commerce" in subsections (d) and (d-1) of the

 

 

HB3753- 18 -LRB100 11428 HLH 21851 b

1definition of "sale of service" in Section 2 means for motor
2vehicles, as defined in Section 1-146 of the Illinois Vehicle
3Code, and trailers, as defined in Section 1-209 of the Illinois
4Vehicle Code, when on 15 or more occasions in a 12-month period
5the motor vehicle and trailer has carried persons or property
6for hire in interstate commerce, even just between points in
7Illinois, if the motor vehicle and trailer transports persons
8whose journeys or property whose shipments originate or
9terminate outside Illinois. This definition applies to all
10property purchased for the purpose of being attached to those
11motor vehicles or trailers as a part thereof.
12    (b) On and after July 1, 2003 and through June 30, 2004,
13"use as rolling stock moving in interstate commerce" in
14paragraphs (d) and (d-1) of the definition of "sale of service"
15in Section 2 occurs for motor vehicles, as defined in Section
161-146 of the Illinois Vehicle Code, when during a 12-month
17period the rolling stock has carried persons or property for
18hire in interstate commerce for 51% of its total trips and
19transports persons whose journeys or property whose shipments
20originate or terminate outside Illinois. Trips that are only
21between points in Illinois will not be counted as interstate
22trips when calculating whether the tangible personal property
23qualifies for the exemption but such trips will be included in
24total trips taken.
25    (c) Beginning July 1, 2004 and through June 30, 2017, "use
26as rolling stock moving in interstate commerce" in paragraphs

 

 

HB3753- 19 -LRB100 11428 HLH 21851 b

1(d) and (d-1) of the definition of "sale of service" in Section
22 occurs for motor vehicles, as defined in Section 1-146 of the
3Illinois Vehicle Code, when during a 12-month period the
4rolling stock has carried persons or property for hire in
5interstate commerce for greater than 50% of its total trips for
6that period or for greater than 50% of its total miles for that
7period. The person claiming the exemption shall make an
8election at the time of purchase to use either the trips or
9mileage method. Persons who purchased motor vehicles prior to
10July 1, 2004 shall make an election to use either the trips or
11mileage method and document that election in their books and
12records. If no election is made under this subsection to use
13the trips or mileage method, the person shall be deemed to have
14chosen the mileage method.
15    For purposes of determining qualifying trips or miles,
16motor vehicles that carry persons or property for hire, even
17just between points in Illinois, will be considered used for
18hire in interstate commerce if the motor vehicle transports
19persons whose journeys or property whose shipments originate or
20terminate outside Illinois. The exemption for motor vehicles
21used as rolling stock moving in interstate commerce may be
22claimed only for the following vehicles: (i) motor vehicles
23whose gross vehicle weight rating exceeds 16,000 pounds; and
24(ii) limousines, as defined in Section 1-139.1 of the Illinois
25Vehicle Code. This definition applies to all property purchased
26for the purpose of being attached to those motor vehicles as a

 

 

HB3753- 20 -LRB100 11428 HLH 21851 b

1part thereof.
2    (d) Beginning July 1, 2004 and through June 30, 2017, "use
3as rolling stock moving in interstate commerce" in paragraphs
4(d) and (d-1) of the definition of "sale of service" in Section
52 occurs for trailers, as defined in Section 1-209 of the
6Illinois Vehicle Code, semitrailers as defined in Section 1-187
7of the Illinois Vehicle Code, and pole trailers as defined in
8Section 1-161 of the Illinois Vehicle Code, when during a
912-month period the rolling stock has carried persons or
10property for hire in interstate commerce for greater than 50%
11of its total trips for that period or for greater than 50% of
12its total miles for that period. The person claiming the
13exemption for a trailer or trailers that will not be dedicated
14to a motor vehicle or group of motor vehicles shall make an
15election at the time of purchase to use either the trips or
16mileage method. Persons who purchased trailers prior to July 1,
172004 that are not dedicated to a motor vehicle or group of
18motor vehicles shall make an election to use either the trips
19or mileage method and document that election in their books and
20records. If no election is made under this subsection to use
21the trips or mileage method, the person shall be deemed to have
22chosen the mileage method.
23    For purposes of determining qualifying trips or miles,
24trailers, semitrailers, or pole trailers that carry property
25for hire, even just between points in Illinois, will be
26considered used for hire in interstate commerce if the

 

 

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1trailers, semitrailers, or pole trailers transport property
2whose shipments originate or terminate outside Illinois. This
3definition applies to all property purchased for the purpose of
4being attached to those trailers, semitrailers, or pole
5trailers as a part thereof. In lieu of a person providing
6documentation regarding the qualifying use of each individual
7trailer, semitrailer, or pole trailer, that person may document
8such qualifying use by providing documentation of the
9following:
10        (1) If a trailer, semitrailer, or pole trailer is
11    dedicated to a motor vehicle that qualifies as rolling
12    stock moving in interstate commerce under subsection (c) of
13    this Section, then that trailer, semitrailer, or pole
14    trailer qualifies as rolling stock moving in interstate
15    commerce under this subsection.
16        (2) If a trailer, semitrailer, or pole trailer is
17    dedicated to a group of motor vehicles that all qualify as
18    rolling stock moving in interstate commerce under
19    subsection (c) of this Section, then that trailer,
20    semitrailer, or pole trailer qualifies as rolling stock
21    moving in interstate commerce under this subsection.
22        (3) If one or more trailers, semitrailers, or pole
23    trailers are dedicated to a group of motor vehicles and not
24    all of those motor vehicles in that group qualify as
25    rolling stock moving in interstate commerce under
26    subsection (c) of this Section, then the percentage of

 

 

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1    those trailers, semitrailers, or pole trailers that
2    qualifies as rolling stock moving in interstate commerce
3    under this subsection is equal to the percentage of those
4    motor vehicles in that group that qualify as rolling stock
5    moving in interstate commerce under subsection (c) of this
6    Section to which those trailers, semitrailers, or pole
7    trailers are dedicated. However, to determine the
8    qualification for the exemption provided under this item
9    (3), the mathematical application of the qualifying
10    percentage to one or more trailers, semitrailers, or pole
11    trailers under this subpart shall not be allowed as to any
12    fraction of a trailer, semitrailer, or pole trailer.
13    (e) For aircraft and watercraft purchased on or after
14January 1 2014, "use as rolling stock moving in interstate
15commerce" in paragraphs (d) and (d-1) of the definition of
16"sale of service" in Section 2 occurs when, during a 12-month
17period, the rolling stock has carried persons or property for
18hire in interstate commerce for greater than 50% of its total
19trips for that period or for greater than 50% of its total
20miles for that period. The person claiming the exemption shall
21make an election at the time of purchase to use either the
22trips or mileage method and document that election in their
23books and records. If no election is made under this subsection
24to use the trips or mileage method, the person shall be deemed
25to have chosen the mileage method. For aircraft, flight hours
26may be used in lieu of recording miles in determining whether

 

 

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1the aircraft meets the mileage test in this subsection. For
2watercraft, nautical miles or trip hours may be used in lieu of
3recording miles in determining whether the watercraft meets the
4mileage test in this subsection.
5    Notwithstanding any other provision of law to the contrary,
6property purchased on or after January 1, 2014 for the purpose
7of being attached to aircraft or watercraft as a part thereof
8qualifies as rolling stock moving in interstate commerce only
9if the aircraft or watercraft to which it will be attached
10qualifies as rolling stock moving in interstate commerce under
11the test set forth in this subsection (e), regardless of when
12the aircraft or watercraft was purchased. Persons who purchased
13aircraft or watercraft prior to January 1, 2014 shall make an
14election to use either the trips or mileage method and document
15that election in their books and records for the purpose of
16determining whether property purchased on or after January 1,
172014 for the purpose of being attached to aircraft or
18watercraft as a part thereof qualifies as rolling stock moving
19in interstate commerce under this subsection (e).
20    (f) The election to use either the trips or mileage method
21made under the provisions of subsections (c), (d), or (e) of
22this Section will remain in effect for the duration of the
23purchaser's ownership of that item or, with respect to
24subsections (c) and (d) of this Section, until July 1, 2017,
25whichever occurs sooner.
26    (g) The General Assembly finds:

 

 

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1        (1) The rolling stock exemption has been repeatedly
2    amended and, between January 1, 1999 and the effective date
3    of this amendatory Act of the 100th General Assembly, has
4    taken 4 forms.
5        (2) The exemption continues to be a subject of dispute,
6    audits, and lack of clarity and is problematic for Illinois
7    businesses.
8        (3) It is essential to provide simplicity and clarity
9    to the issue of when a purchaser such as a trucking company
10    in Illinois qualifies for the rolling stock sales tax
11    exemption.
12        (4) Working with the trucking and hauling community and
13    other interested parties, this amendatory Act of the 100th
14    General Assembly draws a simple bright line that purchasers
15    must meet to qualify for the exemption which is modeled on
16    surrounding states that do not require a test involving
17    trips, or mileage, or both for shipments between points
18    which originate or terminate outside the relevant state.
19    Such a simplified requirement, without a trips or miles
20    qualification, will provide certainty for purchasers such
21    as Illinois trucking businesses and also provide a more
22    easily enforced requirement and audit practice for the
23    Department of Revenue.
24        (5) It is the intent of the General Assembly to
25    establish on and after the effective date of this
26    amendatory Act of the 100th General Assembly an exemption

 

 

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1    based upon the purchaser's status as a motor carrier which
2    has credentials to engage in interstate commerce for hire.
3    Beginning on July 1, 2017 "use as rolling stock moving in
4interstate commerce" means that a person claiming the exemption
5must:
6        (1) use the vehicles or trailers to transport persons
7    or property for hire;
8        (2) hold, at the time of purchase, an appropriate
9    credential that authorizes a motor carrier to engage in
10    interstate commerce for-hire; and
11        (3) if the person claiming the exemption is a
12    subsidiary of another company, maintain separate books and
13    records, including separate charts of accounts, and assure
14    that all transactions between the transportation company
15    and the parent are commercially reasonable arms-length
16    transactions.
17    Subsection (e) of this Section shall continue to apply to
18aircraft and watercraft on and after July 1, 2017.
19    Property purchased for the purpose of being attached to a
20motor vehicle or trailer as a part thereof qualifies as rolling
21stock moving in interstate commerce only if the motor vehicle
22or trailer to which it will be attached qualifies as rolling
23stock moving in interstate commerce under the test set forth in
24this subsection (g).
25(Source: P.A. 98-584, eff. 8-27-13.)
 

 

 

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1    Section 20. The Retailers' Occupation Tax Act is amended by
2changing Section 2-51 as follows:
 
3    (35 ILCS 120/2-51)
4    Sec. 2-51. Motor vehicles; trailers; use as rolling stock
5definition.
6    (a) Through June 30, 2003, "use as rolling stock moving in
7interstate commerce" in paragraphs (12) and (13) of Section 2-5
8means for motor vehicles, as defined in Section 1-146 of the
9Illinois Vehicle Code, and trailers, as defined in Section
101-209 of the Illinois Vehicle Code, when on 15 or more
11occasions in a 12-month period the motor vehicle and trailer
12has carried persons or property for hire in interstate
13commerce, even just between points in Illinois, if the motor
14vehicle and trailer transports persons whose journeys or
15property whose shipments originate or terminate outside
16Illinois. This definition applies to all property purchased for
17the purpose of being attached to those motor vehicles or
18trailers as a part thereof.
19    (b) On and after July 1, 2003 and through June 30, 2004,
20"use as rolling stock moving in interstate commerce" in
21paragraphs (12) and (13) of Section 2-5 occurs for motor
22vehicles, as defined in Section 1-146 of the Illinois Vehicle
23Code, when during a 12-month period the rolling stock has
24carried persons or property for hire in interstate commerce for
2551% of its total trips and transports persons whose journeys or

 

 

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1property whose shipments originate or terminate outside
2Illinois. Trips that are only between points in Illinois shall
3not be counted as interstate trips when calculating whether the
4tangible personal property qualifies for the exemption but such
5trips shall be included in total trips taken.
6    (c) Beginning July 1, 2004 and through June 30, 2017, "use
7as rolling stock moving in interstate commerce" in paragraphs
8(12) and (13) of Section 2-5 occurs for motor vehicles, as
9defined in Section 1-146 of the Illinois Vehicle Code, when
10during a 12-month period the rolling stock has carried persons
11or property for hire in interstate commerce for greater than
1250% of its total trips for that period or for greater than 50%
13of its total miles for that period. The person claiming the
14exemption shall make an election at the time of purchase to use
15either the trips or mileage method. Persons who purchased motor
16vehicles prior to July 1, 2004 shall make an election to use
17either the trips or mileage method and document that election
18in their books and records. If no election is made under this
19subsection to use the trips or mileage method, the person shall
20be deemed to have chosen the mileage method.
21    For purposes of determining qualifying trips or miles,
22motor vehicles that carry persons or property for hire, even
23just between points in Illinois, will be considered used for
24hire in interstate commerce if the motor vehicle transports
25persons whose journeys or property whose shipments originate or
26terminate outside Illinois. The exemption for motor vehicles

 

 

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1used as rolling stock moving in interstate commerce may be
2claimed only for the following vehicles: (i) motor vehicles
3whose gross vehicle weight rating exceeds 16,000 pounds; and
4(ii) limousines, as defined in Section 1-139.1 of the Illinois
5Vehicle Code. This definition applies to all property purchased
6for the purpose of being attached to those motor vehicles as a
7part thereof.
8    (d) Beginning July 1, 2004 and through June 30, 2017, "use
9as rolling stock moving in interstate commerce" in paragraphs
10(12) and (13) of Section 2-5 occurs for trailers, as defined in
11Section 1-209 of the Illinois Vehicle Code, semitrailers as
12defined in Section 1-187 of the Illinois Vehicle Code, and pole
13trailers as defined in Section 1-161 of the Illinois Vehicle
14Code, when during a 12-month period the rolling stock has
15carried persons or property for hire in interstate commerce for
16greater than 50% of its total trips for that period or for
17greater than 50% of its total miles for that period. The person
18claiming the exemption for a trailer or trailers that will not
19be dedicated to a motor vehicle or group of motor vehicles
20shall make an election at the time of purchase to use either
21the trips or mileage method. Persons who purchased trailers
22prior to July 1, 2004 that are not dedicated to a motor vehicle
23or group of motor vehicles shall make an election to use either
24the trips or mileage method and document that election in their
25books and records. If no election is made under this subsection
26to use the trips or mileage method, the person shall be deemed

 

 

HB3753- 29 -LRB100 11428 HLH 21851 b

1to have chosen the mileage method.
2    For purposes of determining qualifying trips or miles,
3trailers, semitrailers, or pole trailers that carry property
4for hire, even just between points in Illinois, will be
5considered used for hire in interstate commerce if the
6trailers, semitrailers, or pole trailers transport property
7whose shipments originate or terminate outside Illinois. This
8definition applies to all property purchased for the purpose of
9being attached to those trailers, semitrailers, or pole
10trailers as a part thereof. In lieu of a person providing
11documentation regarding the qualifying use of each individual
12trailer, semitrailer, or pole trailer, that person may document
13such qualifying use by providing documentation of the
14following:
15        (1) If a trailer, semitrailer, or pole trailer is
16    dedicated to a motor vehicle that qualifies as rolling
17    stock moving in interstate commerce under subsection (c) of
18    this Section, then that trailer, semitrailer, or pole
19    trailer qualifies as rolling stock moving in interstate
20    commerce under this subsection.
21        (2) If a trailer, semitrailer, or pole trailer is
22    dedicated to a group of motor vehicles that all qualify as
23    rolling stock moving in interstate commerce under
24    subsection (c) of this Section, then that trailer,
25    semitrailer, or pole trailer qualifies as rolling stock
26    moving in interstate commerce under this subsection.

 

 

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1        (3) If one or more trailers, semitrailers, or pole
2    trailers are dedicated to a group of motor vehicles and not
3    all of those motor vehicles in that group qualify as
4    rolling stock moving in interstate commerce under
5    subsection (c) of this Section, then the percentage of
6    those trailers, semitrailers, or pole trailers that
7    qualifies as rolling stock moving in interstate commerce
8    under this subsection is equal to the percentage of those
9    motor vehicles in that group that qualify as rolling stock
10    moving in interstate commerce under subsection (c) of this
11    Section to which those trailers, semitrailers, or pole
12    trailers are dedicated. However, to determine the
13    qualification for the exemption provided under this item
14    (3), the mathematical application of the qualifying
15    percentage to one or more trailers, semitrailers, or pole
16    trailers under this subpart shall not be allowed as to any
17    fraction of a trailer, semitrailer, or pole trailer.
18    (e) For aircraft and watercraft purchased on or after
19January 1, 2014, "use as rolling stock moving in interstate
20commerce" in paragraphs (12) and (13) of Section 2-5 occurs
21when, during a 12-month period, the rolling stock has carried
22persons or property for hire in interstate commerce for greater
23than 50% of its total trips for that period or for greater than
2450% of its total miles for that period. The person claiming the
25exemption shall make an election at the time of purchase to use
26either the trips or mileage method and document that election

 

 

HB3753- 31 -LRB100 11428 HLH 21851 b

1in their books and records. If no election is made under this
2subsection to use the trips or mileage method, the person shall
3be deemed to have chosen the mileage method. For aircraft,
4flight hours may be used in lieu of recording miles in
5determining whether the aircraft meets the mileage test in this
6subsection. For watercraft, nautical miles or trip hours may be
7used in lieu of recording miles in determining whether the
8watercraft meets the mileage test in this subsection.
9    Notwithstanding any other provision of law to the contrary,
10property purchased on or after January 1, 2014 for the purpose
11of being attached to aircraft or watercraft as a part thereof
12qualifies as rolling stock moving in interstate commerce only
13if the aircraft or watercraft to which it will be attached
14qualifies as rolling stock moving in interstate commerce under
15the test set forth in this subsection (e), regardless of when
16the aircraft or watercraft was purchased. Persons who purchased
17aircraft or watercraft prior to January 1, 2014 shall make an
18election to use either the trips or mileage method and document
19that election in their books and records for the purpose of
20determining whether property purchased on or after January 1,
212014 for the purpose of being attached to aircraft or
22watercraft as a part thereof qualifies as rolling stock moving
23in interstate commerce under this subsection (e).
24    (f) The election to use either the trips or mileage method
25made under the provisions of subsections (c), (d), or (e) of
26this Section will remain in effect for the duration of the

 

 

HB3753- 32 -LRB100 11428 HLH 21851 b

1purchaser's ownership of that item or, with respect to
2subsections (c) and (d) of this Section, until July 1, 2017,
3whichever occurs sooner.
4    (g) The General Assembly finds:
5        (1) The rolling stock exemption has been repeatedly
6    amended and, between January 1, 1999 and the effective date
7    of this amendatory Act of the 100th General Assembly, has
8    taken 4 forms.
9        (2) The exemption continues to be a subject of dispute,
10    audits, and lack of clarity and is problematic for Illinois
11    businesses.
12        (3) It is essential to provide simplicity and clarity
13    to the issue of when a purchaser such as a trucking company
14    in Illinois qualifies for the rolling stock sales tax
15    exemption.
16        (4) Working with the trucking and hauling community and
17    other interested parties, this amendatory Act of the 100th
18    General Assembly draws a simple bright line that purchasers
19    must meet to qualify for the exemption which is modeled on
20    surrounding states that do not require a test involving
21    trips, or mileage, or both for shipments between points
22    which originate or terminate outside the relevant state.
23    Such a simplified requirement, without a trips or miles
24    qualification, will provide certainty for purchasers such
25    as Illinois trucking businesses and also provide a more
26    easily enforced requirement and audit practice for the

 

 

HB3753- 33 -LRB100 11428 HLH 21851 b

1    Department of Revenue.
2        (5) It is the intent of the General Assembly to
3    establish on and after the effective date of this
4    amendatory Act of the 100th General Assembly an exemption
5    based upon the purchaser's status as a motor carrier which
6    has credentials to engage in interstate commerce for hire.
7    Beginning on July 1, 2017 "use as rolling stock moving in
8interstate commerce" means that a person claiming the exemption
9must:
10        (1) use the vehicles or trailers to transport persons
11    or property for hire;
12        (2) hold, at the time of purchase, an appropriate
13    credential that authorizes a motor carrier to engage in
14    interstate commerce for-hire; and
15        (3) if the person claiming the exemption is a
16    subsidiary of another company, maintain separate books and
17    records, including separate charts of accounts, and assure
18    that all transactions between the transportation company
19    and the parent are commercially reasonable arms-length
20    transactions.
21    Subsection (e) of this Section shall apply to aircraft and
22watercraft on and after July 1, 2017.
23    Property purchased for the purpose of being attached to a
24motor vehicle or a trailer as a part thereof qualifies as
25rolling stock moving in interstate commerce only if the motor
26vehicle or trailer to which it will be attached qualifies as

 

 

HB3753- 34 -LRB100 11428 HLH 21851 b

1rolling stock moving in interstate commerce under the test set
2forth in this subsection (g).
3(Source: P.A. 98-584, eff. 8-27-13.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.