100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB4491

 

Introduced , by Rep. John M. Cabello

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-85
35 ILCS 110/3-70

    Amends the Use Tax Act and the Service Use Tax Act. Reinstates the Manufacturer's Purchase Credit on and after January 1, 2018. Provides that the credit is exempt from the Acts' automatic sunset provisions. Effective immediately.


LRB100 16182 HLH 31303 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4491LRB100 16182 HLH 31303 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
53-85 as follows:
 
6    (35 ILCS 105/3-85)
7    Sec. 3-85. Manufacturer's Purchase Credit. For purchases
8of machinery and equipment made on and after January 1, 1995
9through June 30, 2003, and on and after September 1, 2004
10through August 30, 2014, and on and after January 1, 2018, a
11purchaser of manufacturing machinery and equipment that
12qualifies for the exemption provided by paragraph (18) of
13Section 3-5 of this Act earns a credit in an amount equal to a
14fixed percentage of the tax which would have been incurred
15under this Act on those purchases. For purchases of graphic
16arts machinery and equipment made on or after July 1, 1996 and
17through June 30, 2003, and on and after September 1, 2004
18through August 30, 2014, a purchaser of graphic arts machinery
19and equipment that qualifies for the exemption provided by
20paragraph (6) of Section 3-5 of this Act earns a credit in an
21amount equal to a fixed percentage of the tax that would have
22been incurred under this Act on those purchases. The credit
23earned for purchases of manufacturing machinery and equipment

 

 

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1or graphic arts machinery and equipment shall be referred to as
2the Manufacturer's Purchase Credit. A graphic arts producer is
3a person engaged in graphic arts production as defined in
4Section 2-30 of the Retailers' Occupation Tax Act. Beginning
5July 1, 1996, all references in this Section to manufacturers
6or manufacturing shall also be deemed to refer to graphic arts
7producers or graphic arts production.
8    The amount of credit shall be a percentage of the tax that
9would have been incurred on the purchase of manufacturing
10machinery and equipment or graphic arts machinery and equipment
11if the exemptions provided by paragraph (6) or paragraph (18)
12of Section 3-5 of this Act had not been applicable. The
13percentage shall be as follows:
14        (1) 15% for purchases made on or before June 30, 1995.
15        (2) 25% for purchases made after June 30, 1995, and on
16    or before June 30, 1996.
17        (3) 40% for purchases made after June 30, 1996, and on
18    or before June 30, 1997.
19        (4) 50% for purchases made on or after July 1, 1997.
20    (a) Manufacturer's Purchase Credit earned prior to July 1,
212003. This subsection (a) applies to Manufacturer's Purchase
22Credit earned prior to July 1, 2003. A purchaser of production
23related tangible personal property desiring to use the
24Manufacturer's Purchase Credit shall certify to the seller
25prior to October 1, 2003 that the purchaser is satisfying all
26or part of the liability under the Use Tax Act or the Service

 

 

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1Use Tax Act that is due on the purchase of the production
2related tangible personal property by use of Manufacturer's
3Purchase Credit. The Manufacturer's Purchase Credit
4certification must be dated and shall include the name and
5address of the purchaser, the purchaser's registration number,
6if registered, the credit being applied, and a statement that
7the State Use Tax or Service Use Tax liability is being
8satisfied with the manufacturer's or graphic arts producer's
9accumulated purchase credit. Certification may be incorporated
10into the manufacturer's or graphic arts producer's purchase
11order. Manufacturer's Purchase Credit certification provided
12by the manufacturer or graphic arts producer prior to October
131, 2003 may be used to satisfy the retailer's or serviceman's
14liability under the Retailers' Occupation Tax Act or Service
15Occupation Tax Act for the credit claimed, not to exceed 6.25%
16of the receipts subject to tax from a qualifying purchase, but
17only if the retailer or serviceman reports the Manufacturer's
18Purchase Credit claimed as required by the Department. A
19Manufacturer's Purchase Credit reported on any original or
20amended return filed under this Act after October 20, 2003
21shall be disallowed. The Manufacturer's Purchase Credit earned
22by purchase of exempt manufacturing machinery and equipment or
23graphic arts machinery and equipment is a non-transferable
24credit. A manufacturer or graphic arts producer that enters
25into a contract involving the installation of tangible personal
26property into real estate within a manufacturing or graphic

 

 

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1arts production facility may, prior to October 1, 2003,
2authorize a construction contractor to utilize credit
3accumulated by the manufacturer or graphic arts producer to
4purchase the tangible personal property. A manufacturer or
5graphic arts producer intending to use accumulated credit to
6purchase such tangible personal property shall execute a
7written contract authorizing the contractor to utilize a
8specified dollar amount of credit. The contractor shall
9furnish, prior to October 1, 2003, the supplier with the
10manufacturer's or graphic arts producer's name, registration
11or resale number, and a statement that a specific amount of the
12Use Tax or Service Use Tax liability, not to exceed 6.25% of
13the selling price, is being satisfied with the credit. The
14manufacturer or graphic arts producer shall remain liable to
15timely report all information required by the annual Report of
16Manufacturer's Purchase Credit Used for all credit utilized by
17a construction contractor.
18    No Manufacturer's Purchase Credit earned prior to July 1,
192003 may be used after October 1, 2003. The Manufacturer's
20Purchase Credit may be used to satisfy liability under the Use
21Tax Act or the Service Use Tax Act due on the purchase of
22production related tangible personal property (including
23purchases by a manufacturer, by a graphic arts producer, or by
24a lessor who rents or leases the use of the property to a
25manufacturer or graphic arts producer) that does not otherwise
26qualify for the manufacturing machinery and equipment

 

 

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1exemption or the graphic arts machinery and equipment
2exemption. "Production related tangible personal property"
3means (i) all tangible personal property used or consumed by
4the purchaser in a manufacturing facility in which a
5manufacturing process described in Section 2-45 of the
6Retailers' Occupation Tax Act takes place, including tangible
7personal property purchased for incorporation into real estate
8within a manufacturing facility and including, but not limited
9to, tangible personal property used or consumed in activities
10such as preproduction material handling, receiving, quality
11control, inventory control, storage, staging, and packaging
12for shipping and transportation purposes; (ii) all tangible
13personal property used or consumed by the purchaser in a
14graphic arts facility in which graphic arts production as
15described in Section 2-30 of the Retailers' Occupation Tax Act
16takes place, including tangible personal property purchased
17for incorporation into real estate within a graphic arts
18facility and including, but not limited to, all tangible
19personal property used or consumed in activities such as
20graphic arts preliminary or pre-press production,
21pre-production material handling, receiving, quality control,
22inventory control, storage, staging, sorting, labeling,
23mailing, tying, wrapping, and packaging; and (iii) all tangible
24personal property used or consumed by the purchaser for
25research and development. "Production related tangible
26personal property" does not include (i) tangible personal

 

 

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1property used, within or without a manufacturing facility, in
2sales, purchasing, accounting, fiscal management, marketing,
3personnel recruitment or selection, or landscaping or (ii)
4tangible personal property required to be titled or registered
5with a department, agency, or unit of federal, state, or local
6government. The Manufacturer's Purchase Credit may be used,
7prior to October 1, 2003, to satisfy the tax arising either
8from the purchase of machinery and equipment on or after
9January 1, 1995 for which the exemption provided by paragraph
10(18) of Section 3-5 of this Act was erroneously claimed, or the
11purchase of machinery and equipment on or after July 1, 1996
12for which the exemption provided by paragraph (6) of Section
133-5 of this Act was erroneously claimed, but not in
14satisfaction of penalty, if any, and interest for failure to
15pay the tax when due. A purchaser of production related
16tangible personal property who is required to pay Illinois Use
17Tax or Service Use Tax on the purchase directly to the
18Department may, prior to October 1, 2003, utilize the
19Manufacturer's Purchase Credit in satisfaction of the tax
20arising from that purchase, but not in satisfaction of penalty
21and interest. A purchaser who uses the Manufacturer's Purchase
22Credit to purchase property which is later determined not to be
23production related tangible personal property may be liable for
24tax, penalty, and interest on the purchase of that property as
25of the date of purchase but shall be entitled to use the
26disallowed Manufacturer's Purchase Credit, so long as it has

 

 

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1not expired and is used prior to October 1, 2003, on qualifying
2purchases of production related tangible personal property not
3previously subject to credit usage. The Manufacturer's
4Purchase Credit earned by a manufacturer or graphic arts
5producer expires the last day of the second calendar year
6following the calendar year in which the credit arose. No
7Manufacturer's Purchase Credit may be used after September 30,
82003 regardless of when that credit was earned.
9    A purchaser earning Manufacturer's Purchase Credit shall
10sign and file an annual Report of Manufacturer's Purchase
11Credit Earned for each calendar year no later than the last day
12of the sixth month following the calendar year in which a
13Manufacturer's Purchase Credit is earned. A Report of
14Manufacturer's Purchase Credit Earned shall be filed on forms
15as prescribed or approved by the Department and shall state,
16for each month of the calendar year: (i) the total purchase
17price of all purchases of exempt manufacturing or graphic arts
18machinery on which the credit was earned; (ii) the total State
19Use Tax or Service Use Tax which would have been due on those
20items; (iii) the percentage used to calculate the amount of
21credit earned; (iv) the amount of credit earned; and (v) such
22other information as the Department may reasonably require. A
23purchaser earning Manufacturer's Purchase Credit shall
24maintain records which identify, as to each purchase of
25manufacturing or graphic arts machinery and equipment on which
26the purchaser earned Manufacturer's Purchase Credit, the

 

 

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1vendor (including, if applicable, either the vendor's
2registration number or Federal Employer Identification
3Number), the purchase price, and the amount of Manufacturer's
4Purchase Credit earned on each purchase.
5    A purchaser using Manufacturer's Purchase Credit shall
6sign and file an annual Report of Manufacturer's Purchase
7Credit Used for each calendar year no later than the last day
8of the sixth month following the calendar year in which a
9Manufacturer's Purchase Credit is used. A Report of
10Manufacturer's Purchase Credit Used shall be filed on forms as
11prescribed or approved by the Department and shall state, for
12each month of the calendar year: (i) the total purchase price
13of production related tangible personal property purchased
14from Illinois suppliers; (ii) the total purchase price of
15production related tangible personal property purchased from
16out-of-state suppliers; (iii) the total amount of credit used
17during such month; and (iv) such other information as the
18Department may reasonably require. A purchaser using
19Manufacturer's Purchase Credit shall maintain records that
20identify, as to each purchase of production related tangible
21personal property on which the purchaser used Manufacturer's
22Purchase Credit, the vendor (including, if applicable, either
23the vendor's registration number or Federal Employer
24Identification Number), the purchase price, and the amount of
25Manufacturer's Purchase Credit used on each purchase.
26    No annual report shall be filed before May 1, 1996 or after

 

 

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1June 30, 2004. A purchaser that fails to file an annual Report
2of Manufacturer's Purchase Credit Earned or an annual Report of
3Manufacturer's Purchase Credit Used by the last day of the
4sixth month following the end of the calendar year shall
5forfeit all Manufacturer's Purchase Credit for that calendar
6year unless it establishes that its failure to file was due to
7reasonable cause. Manufacturer's Purchase Credit reports may
8be amended to report and claim credit on qualifying purchases
9not previously reported at any time before the credit would
10have expired, unless both the Department and the purchaser have
11agreed to an extension of the statute of limitations for the
12issuance of a notice of tax liability as provided in Section 4
13of the Retailers' Occupation Tax Act. If the time for
14assessment or refund has been extended, then amended reports
15for a calendar year may be filed at any time prior to the date
16to which the statute of limitations for the calendar year or
17portion thereof has been extended. No Manufacturer's Purchase
18Credit report filed with the Department for periods prior to
19January 1, 1995 shall be approved. Manufacturer's Purchase
20Credit claimed on an amended report may be used, until October
211, 2003, to satisfy tax liability under the Use Tax Act or the
22Service Use Tax Act (i) on qualifying purchases of production
23related tangible personal property made after the date the
24amended report is filed or (ii) assessed by the Department on
25qualifying purchases of production related tangible personal
26property made in the case of manufacturers on or after January

 

 

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11, 1995, or in the case of graphic arts producers on or after
2July 1, 1996.
3    If the purchaser is not the manufacturer or a graphic arts
4producer, but rents or leases the use of the property to a
5manufacturer or graphic arts producer, the purchaser may earn,
6report, and use Manufacturer's Purchase Credit in the same
7manner as a manufacturer or graphic arts producer.
8    A purchaser shall not be entitled to any Manufacturer's
9Purchase Credit for a purchase that is required to be reported
10and is not timely reported as provided in this Section. A
11purchaser remains liable for (i) any tax that was satisfied by
12use of a Manufacturer's Purchase Credit, as of the date of
13purchase, if that use is not timely reported as required in
14this Section and (ii) for any applicable penalties and interest
15for failing to pay the tax when due. No Manufacturer's Purchase
16Credit may be used after September 30, 2003 to satisfy any tax
17liability imposed under this Act, including any audit
18liability.
19    (b) Manufacturer's Purchase Credit earned on and after
20September 1, 2004. This subsection (b) applies to
21Manufacturer's Purchase Credit earned on and after September 1,
222004. Manufacturer's Purchase Credit earned on or after
23September 1, 2004 may only be used to satisfy the Use Tax or
24Service Use Tax liability incurred on production related
25tangible personal property purchased on or after September 1,
262004. A purchaser of production related tangible personal

 

 

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1property desiring to use the Manufacturer's Purchase Credit
2shall certify to the seller that the purchaser is satisfying
3all or part of the liability under the Use Tax Act or the
4Service Use Tax Act that is due on the purchase of the
5production related tangible personal property by use of
6Manufacturer's Purchase Credit. The Manufacturer's Purchase
7Credit certification must be dated and shall include the name
8and address of the purchaser, the purchaser's registration
9number, if registered, the credit being applied, and a
10statement that the State Use Tax or Service Use Tax liability
11is being satisfied with the manufacturer's or graphic arts
12producer's accumulated purchase credit. Certification may be
13incorporated into the manufacturer's or graphic arts
14producer's purchase order. Manufacturer's Purchase Credit
15certification provided by the manufacturer or graphic arts
16producer may be used to satisfy the retailer's or serviceman's
17liability under the Retailers' Occupation Tax Act or Service
18Occupation Tax Act for the credit claimed, not to exceed 6.25%
19of the receipts subject to tax from a qualifying purchase, but
20only if the retailer or serviceman reports the Manufacturer's
21Purchase Credit claimed as required by the Department. The
22Manufacturer's Purchase Credit earned by purchase of exempt
23manufacturing machinery and equipment or graphic arts
24machinery and equipment is a non-transferable credit. A
25manufacturer or graphic arts producer that enters into a
26contract involving the installation of tangible personal

 

 

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1property into real estate within a manufacturing or graphic
2arts production facility may, on or after September 1, 2004,
3authorize a construction contractor to utilize credit
4accumulated by the manufacturer or graphic arts producer to
5purchase the tangible personal property. A manufacturer or
6graphic arts producer intending to use accumulated credit to
7purchase such tangible personal property shall execute a
8written contract authorizing the contractor to utilize a
9specified dollar amount of credit. The contractor shall furnish
10the supplier with the manufacturer's or graphic arts producer's
11name, registration or resale number, and a statement that a
12specific amount of the Use Tax or Service Use Tax liability,
13not to exceed 6.25% of the selling price, is being satisfied
14with the credit. The manufacturer or graphic arts producer
15shall remain liable to timely report all information required
16by the annual Report of Manufacturer's Purchase Credit Used for
17all credit utilized by a construction contractor.
18    The Manufacturer's Purchase Credit may be used to satisfy
19liability under the Use Tax Act or the Service Use Tax Act due
20on the purchase, made on or after September 1, 2004, of
21production related tangible personal property (including
22purchases by a manufacturer, by a graphic arts producer, or by
23a lessor who rents or leases the use of the property to a
24manufacturer or graphic arts producer) that does not otherwise
25qualify for the manufacturing machinery and equipment
26exemption or the graphic arts machinery and equipment

 

 

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1exemption. "Production related tangible personal property"
2means (i) all tangible personal property used or consumed by
3the purchaser in a manufacturing facility in which a
4manufacturing process described in Section 2-45 of the
5Retailers' Occupation Tax Act takes place, including tangible
6personal property purchased for incorporation into real estate
7within a manufacturing facility and including, but not limited
8to, tangible personal property used or consumed in activities
9such as preproduction material handling, receiving, quality
10control, inventory control, storage, staging, and packaging
11for shipping and transportation purposes; (ii) all tangible
12personal property used or consumed by the purchaser in a
13graphic arts facility in which graphic arts production as
14described in Section 2-30 of the Retailers' Occupation Tax Act
15takes place, including tangible personal property purchased
16for incorporation into real estate within a graphic arts
17facility and including, but not limited to, all tangible
18personal property used or consumed in activities such as
19graphic arts preliminary or pre-press production,
20pre-production material handling, receiving, quality control,
21inventory control, storage, staging, sorting, labeling,
22mailing, tying, wrapping, and packaging; and (iii) all tangible
23personal property used or consumed by the purchaser for
24research and development. "Production related tangible
25personal property" does not include (i) tangible personal
26property used, within or without a manufacturing facility, in

 

 

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1sales, purchasing, accounting, fiscal management, marketing,
2personnel recruitment or selection, or landscaping or (ii)
3tangible personal property required to be titled or registered
4with a department, agency, or unit of federal, state, or local
5government. The Manufacturer's Purchase Credit may be used to
6satisfy the tax arising either from the purchase of machinery
7and equipment on or after September 1, 2004 for which the
8exemption provided by paragraph (18) of Section 3-5 of this Act
9was erroneously claimed, or the purchase of machinery and
10equipment on or after September 1, 2004 for which the exemption
11provided by paragraph (6) of Section 3-5 of this Act was
12erroneously claimed, but not in satisfaction of penalty, if
13any, and interest for failure to pay the tax when due. A
14purchaser of production related tangible personal property
15that is purchased on or after September 1, 2004 who is required
16to pay Illinois Use Tax or Service Use Tax on the purchase
17directly to the Department may utilize the Manufacturer's
18Purchase Credit in satisfaction of the tax arising from that
19purchase, but not in satisfaction of penalty and interest. A
20purchaser who uses the Manufacturer's Purchase Credit to
21purchase property on and after September 1, 2004 which is later
22determined not to be production related tangible personal
23property may be liable for tax, penalty, and interest on the
24purchase of that property as of the date of purchase but shall
25be entitled to use the disallowed Manufacturer's Purchase
26Credit, so long as it has not expired and is used on qualifying

 

 

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1purchases of production related tangible personal property not
2previously subject to credit usage. The Manufacturer's
3Purchase Credit earned by a manufacturer or graphic arts
4producer expires the last day of the second calendar year
5following the calendar year in which the credit arose. A
6purchaser earning Manufacturer's Purchase Credit shall sign
7and file an annual Report of Manufacturer's Purchase Credit
8Earned for each calendar year no later than the last day of the
9sixth month following the calendar year in which a
10Manufacturer's Purchase Credit is earned. A Report of
11Manufacturer's Purchase Credit Earned shall be filed on forms
12as prescribed or approved by the Department and shall state,
13for each month of the calendar year: (i) the total purchase
14price of all purchases of exempt manufacturing or graphic arts
15machinery on which the credit was earned; (ii) the total State
16Use Tax or Service Use Tax which would have been due on those
17items; (iii) the percentage used to calculate the amount of
18credit earned; (iv) the amount of credit earned; and (v) such
19other information as the Department may reasonably require. A
20purchaser earning Manufacturer's Purchase Credit shall
21maintain records which identify, as to each purchase of
22manufacturing or graphic arts machinery and equipment on which
23the purchaser earned Manufacturer's Purchase Credit, the
24vendor (including, if applicable, either the vendor's
25registration number or Federal Employer Identification
26Number), the purchase price, and the amount of Manufacturer's

 

 

HB4491- 16 -LRB100 16182 HLH 31303 b

1Purchase Credit earned on each purchase. A purchaser using
2Manufacturer's Purchase Credit shall sign and file an annual
3Report of Manufacturer's Purchase Credit Used for each calendar
4year no later than the last day of the sixth month following
5the calendar year in which a Manufacturer's Purchase Credit is
6used. A Report of Manufacturer's Purchase Credit Used shall be
7filed on forms as prescribed or approved by the Department and
8shall state, for each month of the calendar year: (i) the total
9purchase price of production related tangible personal
10property purchased from Illinois suppliers; (ii) the total
11purchase price of production related tangible personal
12property purchased from out-of-state suppliers; (iii) the
13total amount of credit used during such month; and (iv) such
14other information as the Department may reasonably require. A
15purchaser using Manufacturer's Purchase Credit shall maintain
16records that identify, as to each purchase of production
17related tangible personal property on which the purchaser used
18Manufacturer's Purchase Credit, the vendor (including, if
19applicable, either the vendor's registration number or Federal
20Employer Identification Number), the purchase price, and the
21amount of Manufacturer's Purchase Credit used on each purchase.
22    A purchaser that fails to file an annual Report of
23Manufacturer's Purchase Credit Earned or an annual Report of
24Manufacturer's Purchase Credit Used by the last day of the
25sixth month following the end of the calendar year shall
26forfeit all Manufacturer's Purchase Credit for that calendar

 

 

HB4491- 17 -LRB100 16182 HLH 31303 b

1year unless it establishes that its failure to file was due to
2reasonable cause. Manufacturer's Purchase Credit reports may
3be amended to report and claim credit on qualifying purchases
4not previously reported at any time before the credit would
5have expired, unless both the Department and the purchaser have
6agreed to an extension of the statute of limitations for the
7issuance of a notice of tax liability as provided in Section 4
8of the Retailers' Occupation Tax Act. If the time for
9assessment or refund has been extended, then amended reports
10for a calendar year may be filed at any time prior to the date
11to which the statute of limitations for the calendar year or
12portion thereof has been extended. Manufacturer's Purchase
13Credit claimed on an amended report may be used to satisfy tax
14liability under the Use Tax Act or the Service Use Tax Act (i)
15on qualifying purchases of production related tangible
16personal property made after the date the amended report is
17filed or (ii) assessed by the Department on qualifying
18production related tangible personal property purchased on or
19after September 1, 2004. If the purchaser is not the
20manufacturer or a graphic arts producer, but rents or leases
21the use of the property to a manufacturer or graphic arts
22producer, the purchaser may earn, report, and use
23Manufacturer's Purchase Credit in the same manner as a
24manufacturer or graphic arts producer. A purchaser shall not be
25entitled to any Manufacturer's Purchase Credit for a purchase
26that is required to be reported and is not timely reported as

 

 

HB4491- 18 -LRB100 16182 HLH 31303 b

1provided in this Section. A purchaser remains liable for (i)
2any tax that was satisfied by use of a Manufacturer's Purchase
3Credit, as of the date of purchase, if that use is not timely
4reported as required in this Section and (ii) for any
5applicable penalties and interest for failing to pay the tax
6when due.
7    This Section is exempt from the provisions of Section 3-90.
8(Source: P.A. 96-116, eff. 7-31-09.)
 
9    Section 10. The Service Use Tax Act is amended by changing
10Section 3-70 as follows:
 
11    (35 ILCS 110/3-70)
12    Sec. 3-70. Manufacturer's Purchase Credit. For purchases
13of machinery and equipment made on and after January 1, 1995
14and through June 30, 2003, and on and after September 1, 2004
15through August 30, 2014, and on and after January 1, 2018, a
16purchaser of manufacturing machinery and equipment that
17qualifies for the exemption provided by Section 2 of this Act
18earns a credit in an amount equal to a fixed percentage of the
19tax which would have been incurred under this Act on those
20purchases. For purchases of graphic arts machinery and
21equipment made on or after July 1, 1996 through June 30, 2003,
22and on and after September 1, 2004 through August 30, 2014, a
23purchase of graphic arts machinery and equipment that qualifies
24for the exemption provided by paragraph (5) of Section 3-5 of

 

 

HB4491- 19 -LRB100 16182 HLH 31303 b

1this Act earns a credit in an amount equal to a fixed
2percentage of the tax that would have been incurred under this
3Act on those purchases. The credit earned for the purchase of
4manufacturing machinery and equipment and graphic arts
5machinery and equipment shall be referred to as the
6Manufacturer's Purchase Credit. A graphic arts producer is a
7person engaged in graphic arts production as defined in Section
83-30 of the Service Occupation Tax Act. Beginning July 1, 1996,
9all references in this Section to manufacturers or
10manufacturing shall also refer to graphic arts producers or
11graphic arts production.
12    The amount of credit shall be a percentage of the tax that
13would have been incurred on the purchase of the manufacturing
14machinery and equipment or graphic arts machinery and equipment
15if the exemptions provided by Section 2 or paragraph (5) of
16Section 3-5 of this Act had not been applicable.
17    All purchases prior to October 1, 2003 of manufacturing
18machinery and equipment and graphic arts machinery and
19equipment that qualify for the exemptions provided by paragraph
20(5) of Section 2 or paragraph (5) of Section 3-5 of this Act
21qualify for the credit without regard to whether the serviceman
22elected, or could have elected, under paragraph (7) of Section
232 of this Act to exclude the transaction from this Act. If the
24serviceman's billing to the service customer separately states
25a selling price for the exempt manufacturing machinery or
26equipment or the exempt graphic arts machinery and equipment,

 

 

HB4491- 20 -LRB100 16182 HLH 31303 b

1the credit shall be calculated, as otherwise provided herein,
2based on that selling price. If the serviceman's billing does
3not separately state a selling price for the exempt
4manufacturing machinery and equipment or the exempt graphic
5arts machinery and equipment, the credit shall be calculated,
6as otherwise provided herein, based on 50% of the entire
7billing. If the serviceman contracts to design, develop, and
8produce special order manufacturing machinery and equipment or
9special order graphic arts machinery and equipment, and the
10billing does not separately state a selling price for such
11special order machinery and equipment, the credit shall be
12calculated, as otherwise provided herein, based on 50% of the
13entire billing. The provisions of this paragraph are effective
14for purchases made on or after January 1, 1995.
15    The percentage shall be as follows:
16        (1) 15% for purchases made on or before June 30, 1995.
17        (2) 25% for purchases made after June 30, 1995, and on
18    or before June 30, 1996.
19        (3) 40% for purchases made after June 30, 1996, and on
20    or before June 30, 1997.
21        (4) 50% for purchases made on or after July 1, 1997.
22    (a) Manufacturer's Purchase Credit earned prior to July 1,
232003. This subsection (a) applies to Manufacturer's Purchase
24Credit earned prior to July 1, 2003. A purchaser of production
25related tangible personal property desiring to use the
26Manufacturer's Purchase Credit shall certify to the seller

 

 

HB4491- 21 -LRB100 16182 HLH 31303 b

1prior to October 1, 2003 that the purchaser is satisfying all
2or part of the liability under the Use Tax Act or the Service
3Use Tax Act that is due on the purchase of the production
4related tangible personal property by use of a Manufacturer's
5Purchase Credit. The Manufacturer's Purchase Credit
6certification must be dated and shall include the name and
7address of the purchaser, the purchaser's registration number,
8if registered, the credit being applied, and a statement that
9the State Use Tax or Service Use Tax liability is being
10satisfied with the manufacturer's or graphic arts producer's
11accumulated purchase credit. Certification may be incorporated
12into the manufacturer's or graphic arts producer's purchase
13order. Manufacturer's Purchase Credit certification provided
14by the manufacturer or graphic arts producer prior to October
151, 2003 may be used to satisfy the retailer's or serviceman's
16liability under the Retailers' Occupation Tax Act or Service
17Occupation Tax Act for the credit claimed, not to exceed 6.25%
18of the receipts subject to tax from a qualifying purchase, but
19only if the retailer or serviceman reports the Manufacturer's
20Purchase Credit claimed as required by the Department. A
21Manufacturer's Purchase Credit reported on any original or
22amended return filed under this Act after October 20, 2003
23shall be disallowed. The Manufacturer's Purchase Credit earned
24by purchase of exempt manufacturing machinery and equipment or
25graphic arts machinery and equipment is a non-transferable
26credit. A manufacturer or graphic arts producer that enters

 

 

HB4491- 22 -LRB100 16182 HLH 31303 b

1into a contract involving the installation of tangible personal
2property into real estate within a manufacturing or graphic
3arts production facility, prior to October 1, 2003, may
4authorize a construction contractor to utilize credit
5accumulated by the manufacturer or graphic arts producer to
6purchase the tangible personal property. A manufacturer or
7graphic arts producer intending to use accumulated credit to
8purchase such tangible personal property shall execute a
9written contract authorizing the contractor to utilize a
10specified dollar amount of credit. The contractor shall
11furnish, prior to October 1, 2003, the supplier with the
12manufacturer's or graphic arts producer's name, registration
13or resale number, and a statement that a specific amount of the
14Use Tax or Service Use Tax liability, not to exceed 6.25% of
15the selling price, is being satisfied with the credit. The
16manufacturer or graphic arts producer shall remain liable to
17timely report all information required by the annual Report of
18Manufacturer's Purchase Credit Used for credit utilized by a
19construction contractor.
20    No Manufacturer's Purchase Credit earned prior to July 1,
212003 may be used after October 1, 2003. The Manufacturer's
22Purchase Credit may be used to satisfy liability under the Use
23Tax Act or the Service Use Tax Act due on the purchase of
24production related tangible personal property (including
25purchases by a manufacturer, by a graphic arts producer, or a
26lessor who rents or leases the use of the property to a

 

 

HB4491- 23 -LRB100 16182 HLH 31303 b

1manufacturer or graphic arts producer) that does not otherwise
2qualify for the manufacturing machinery and equipment
3exemption or the graphic arts machinery and equipment
4exemption. "Production related tangible personal property"
5means (i) all tangible personal property used or consumed by
6the purchaser in a manufacturing facility in which a
7manufacturing process described in Section 2-45 of the
8Retailers' Occupation Tax Act takes place, including tangible
9personal property purchased for incorporation into real estate
10within a manufacturing facility and including, but not limited
11to, tangible personal property used or consumed in activities
12such as pre-production material handling, receiving, quality
13control, inventory control, storage, staging, and packaging
14for shipping and transportation purposes; (ii) all tangible
15personal property used or consumed by the purchaser in a
16graphic arts facility in which graphic arts production as
17described in Section 2-30 of the Retailers' Occupation Tax Act
18takes place, including tangible personal property purchased
19for incorporation into real estate within a graphic arts
20facility and including, but not limited to, all tangible
21personal property used or consumed in activities such as
22graphic arts preliminary or pre-press production,
23pre-production material handling, receiving, quality control,
24inventory control, storage, staging, sorting, labeling,
25mailing, tying, wrapping, and packaging; and (iii) all tangible
26personal property used or consumed by the purchaser for

 

 

HB4491- 24 -LRB100 16182 HLH 31303 b

1research and development. "Production related tangible
2personal property" does not include (i) tangible personal
3property used, within or without a manufacturing or graphic
4arts facility, in sales, purchasing, accounting, fiscal
5management, marketing, personnel recruitment or selection, or
6landscaping or (ii) tangible personal property required to be
7titled or registered with a department, agency, or unit of
8federal, state, or local government. The Manufacturer's
9Purchase Credit may be used, prior to October 1, 2003, to
10satisfy the tax arising either from the purchase of machinery
11and equipment on or after January 1, 1995 for which the
12manufacturing machinery and equipment exemption provided by
13Section 2 of this Act was erroneously claimed, or the purchase
14of machinery and equipment on or after July 1, 1996 for which
15the exemption provided by paragraph (5) of Section 3-5 of this
16Act was erroneously claimed, but not in satisfaction of
17penalty, if any, and interest for failure to pay the tax when
18due. A purchaser of production related tangible personal
19property who is required to pay Illinois Use Tax or Service Use
20Tax on the purchase directly to the Department may, prior to
21October 1, 2003, utilize the Manufacturer's Purchase Credit in
22satisfaction of the tax arising from that purchase, but not in
23satisfaction of penalty and interest. A purchaser who uses the
24Manufacturer's Purchase Credit to purchase property which is
25later determined not to be production related tangible personal
26property may be liable for tax, penalty, and interest on the

 

 

HB4491- 25 -LRB100 16182 HLH 31303 b

1purchase of that property as of the date of purchase but shall
2be entitled to use the disallowed Manufacturer's Purchase
3Credit, so long as it has not expired and is used prior to
4October 1, 2003, on qualifying purchases of production related
5tangible personal property not previously subject to credit
6usage. The Manufacturer's Purchase Credit earned by a
7manufacturer or graphic arts producer expires the last day of
8the second calendar year following the calendar year in which
9the credit arose. No Manufacturer's Purchase Credit may be used
10after September 30, 2003 regardless of when that credit was
11earned.
12    A purchaser earning Manufacturer's Purchase Credit shall
13sign and file an annual Report of Manufacturer's Purchase
14Credit Earned for each calendar year no later than the last day
15of the sixth month following the calendar year in which a
16Manufacturer's Purchase Credit is earned. A Report of
17Manufacturer's Purchase Credit Earned shall be filed on forms
18as prescribed or approved by the Department and shall state,
19for each month of the calendar year: (i) the total purchase
20price of all purchases of exempt manufacturing or graphic arts
21machinery on which the credit was earned; (ii) the total State
22Use Tax or Service Use Tax which would have been due on those
23items; (iii) the percentage used to calculate the amount of
24credit earned; (iv) the amount of credit earned; and (v) such
25other information as the Department may reasonably require. A
26purchaser earning Manufacturer's Purchase Credit shall

 

 

HB4491- 26 -LRB100 16182 HLH 31303 b

1maintain records which identify, as to each purchase of
2manufacturing or graphic arts machinery and equipment on which
3the purchaser earned Manufacturer's Purchase Credit, the
4vendor (including, if applicable, either the vendor's
5registration number or Federal Employer Identification
6Number), the purchase price, and the amount of Manufacturer's
7Purchase Credit earned on each purchase.
8    A purchaser using Manufacturer's Purchase Credit shall
9sign and file an annual Report of Manufacturer's Purchase
10Credit Used for each calendar year no later than the last day
11of the sixth month following the calendar year in which a
12Manufacturer's Purchase Credit is used. A Report of
13Manufacturer's Purchase Credit Used shall be filed on forms as
14prescribed or approved by the Department and shall state, for
15each month of the calendar year: (i) the total purchase price
16of production related tangible personal property purchased
17from Illinois suppliers; (ii) the total purchase price of
18production related tangible personal property purchased from
19out-of-state suppliers; (iii) the total amount of credit used
20during such month; and (iv) such other information as the
21Department may reasonably require. A purchaser using
22Manufacturer's Purchase Credit shall maintain records that
23identify, as to each purchase of production related tangible
24personal property on which the purchaser used Manufacturer's
25Purchase Credit, the vendor (including, if applicable, either
26the vendor's registration number or Federal Employer

 

 

HB4491- 27 -LRB100 16182 HLH 31303 b

1Identification Number), the purchase price, and the amount of
2Manufacturer's Purchase Credit used on each purchase.
3    No annual report shall be filed before May 1, 1996 or after
4June 30, 2004. A purchaser that fails to file an annual Report
5of Manufacturer's Purchase Credit Earned or an annual Report of
6Manufacturer's Purchase Credit Used by the last day of the
7sixth month following the end of the calendar year shall
8forfeit all Manufacturer's Purchase Credit for that calendar
9year unless it establishes that its failure to file was due to
10reasonable cause. Manufacturer's Purchase Credit reports may
11be amended to report and claim credit on qualifying purchases
12not previously reported at any time before the credit would
13have expired, unless both the Department and the purchaser have
14agreed to an extension of the statute of limitations for the
15issuance of a notice of tax liability as provided in Section 4
16of the Retailers' Occupation Tax Act. If the time for
17assessment or refund has been extended, then amended reports
18for a calendar year may be filed at any time prior to the date
19to which the statute of limitations for the calendar year or
20portion thereof has been extended. No Manufacturer's Purchase
21Credit report filed with the Department for periods prior to
22January 1, 1995 shall be approved. Manufacturer's Purchase
23Credit claimed on an amended report may be used, prior to
24October 1, 2003, to satisfy tax liability under the Use Tax Act
25or the Service Use Tax Act (i) on qualifying purchases of
26production related tangible personal property made after the

 

 

HB4491- 28 -LRB100 16182 HLH 31303 b

1date the amended report is filed or (ii) assessed by the
2Department on qualifying purchases of production related
3tangible personal property made in the case of manufacturers on
4or after January 1, 1995, or in the case of graphic arts
5producers on or after July 1, 1996.
6    If the purchaser is not the manufacturer or a graphic arts
7producer, but rents or leases the use of the property to a
8manufacturer or a graphic arts producer, the purchaser may
9earn, report, and use Manufacturer's Purchase Credit in the
10same manner as a manufacturer or graphic arts producer.
11    A purchaser shall not be entitled to any Manufacturer's
12Purchase Credit for a purchase that is required to be reported
13and is not timely reported as provided in this Section. A
14purchaser remains liable for (i) any tax that was satisfied by
15use of a Manufacturer's Purchase Credit, as of the date of
16purchase, if that use is not timely reported as required in
17this Section and (ii) for any applicable penalties and interest
18for failing to pay the tax when due. No Manufacturer's Purchase
19Credit may be used after September 30, 2003 to satisfy any tax
20liability imposed under this Act, including any audit
21liability.
22    (b) Manufacturer's Purchase Credit earned on and after
23September 1, 2004. This subsection (b) applies to
24Manufacturer's Purchase Credit earned on or after September 1,
252004. Manufacturer's Purchase Credit earned on or after
26September 1, 2004 may only be used to satisfy the Use Tax or

 

 

HB4491- 29 -LRB100 16182 HLH 31303 b

1Service Use Tax liability incurred on production related
2tangible personal property purchased on or after September 1,
32004. A purchaser of production related tangible personal
4property desiring to use the Manufacturer's Purchase Credit
5shall certify to the seller that the purchaser is satisfying
6all or part of the liability under the Use Tax Act or the
7Service Use Tax Act that is due on the purchase of the
8production related tangible personal property by use of a
9Manufacturer's Purchase Credit. The Manufacturer's Purchase
10Credit certification must be dated and shall include the name
11and address of the purchaser, the purchaser's registration
12number, if registered, the credit being applied, and a
13statement that the State Use Tax or Service Use Tax liability
14is being satisfied with the manufacturer's or graphic arts
15producer's accumulated purchase credit. Certification may be
16incorporated into the manufacturer's or graphic arts
17producer's purchase order. Manufacturer's Purchase Credit
18certification provided by the manufacturer or graphic arts
19producer may be used to satisfy the retailer's or serviceman's
20liability under the Retailers' Occupation Tax Act or Service
21Occupation Tax Act for the credit claimed, not to exceed 6.25%
22of the receipts subject to tax from a qualifying purchase, but
23only if the retailer or serviceman reports the Manufacturer's
24Purchase Credit claimed as required by the Department. The
25Manufacturer's Purchase Credit earned by purchase of exempt
26manufacturing machinery and equipment or graphic arts

 

 

HB4491- 30 -LRB100 16182 HLH 31303 b

1machinery and equipment is a non-transferable credit. A
2manufacturer or graphic arts producer that enters into a
3contract involving the installation of tangible personal
4property into real estate within a manufacturing or graphic
5arts production facility may, on or after September 1, 2004,
6authorize a construction contractor to utilize credit
7accumulated by the manufacturer or graphic arts producer to
8purchase the tangible personal property. A manufacturer or
9graphic arts producer intending to use accumulated credit to
10purchase such tangible personal property shall execute a
11written contract authorizing the contractor to utilize a
12specified dollar amount of credit. The contractor shall furnish
13the supplier with the manufacturer's or graphic arts producer's
14name, registration or resale number, and a statement that a
15specific amount of the Use Tax or Service Use Tax liability,
16not to exceed 6.25% of the selling price, is being satisfied
17with the credit. The manufacturer or graphic arts producer
18shall remain liable to timely report all information required
19by the annual Report of Manufacturer's Purchase Credit Used for
20credit utilized by a construction contractor.
21    The Manufacturer's Purchase Credit may be used to satisfy
22liability under the Use Tax Act or the Service Use Tax Act due
23on the purchase, made on or after September 1, 2004, of
24production related tangible personal property (including
25purchases by a manufacturer, by a graphic arts producer, or a
26lessor who rents or leases the use of the property to a

 

 

HB4491- 31 -LRB100 16182 HLH 31303 b

1manufacturer or graphic arts producer) that does not otherwise
2qualify for the manufacturing machinery and equipment
3exemption or the graphic arts machinery and equipment
4exemption. "Production related tangible personal property"
5means (i) all tangible personal property used or consumed by
6the purchaser in a manufacturing facility in which a
7manufacturing process described in Section 2-45 of the
8Retailers' Occupation Tax Act takes place, including tangible
9personal property purchased for incorporation into real estate
10within a manufacturing facility and including, but not limited
11to, tangible personal property used or consumed in activities
12such as pre-production material handling, receiving, quality
13control, inventory control, storage, staging, and packaging
14for shipping and transportation purposes; (ii) all tangible
15personal property used or consumed by the purchaser in a
16graphic arts facility in which graphic arts production as
17described in Section 2-30 of the Retailers' Occupation Tax Act
18takes place, including tangible personal property purchased
19for incorporation into real estate within a graphic arts
20facility and including, but not limited to, all tangible
21personal property used or consumed in activities such as
22graphic arts preliminary or pre-press production,
23pre-production material handling, receiving, quality control,
24inventory control, storage, staging, sorting, labeling,
25mailing, tying, wrapping, and packaging; and (iii) all tangible
26personal property used or consumed by the purchaser for

 

 

HB4491- 32 -LRB100 16182 HLH 31303 b

1research and development. "Production related tangible
2personal property" does not include (i) tangible personal
3property used, within or without a manufacturing or graphic
4arts facility, in sales, purchasing, accounting, fiscal
5management, marketing, personnel recruitment or selection, or
6landscaping or (ii) tangible personal property required to be
7titled or registered with a department, agency, or unit of
8federal, state, or local government. The Manufacturer's
9Purchase Credit may be used to satisfy the tax arising either
10from the purchase of machinery and equipment on or after
11September 1, 2004 for which the manufacturing machinery and
12equipment exemption provided by Section 2 of this Act was
13erroneously claimed, or the purchase of machinery and equipment
14on or after September 1, 2004 for which the exemption provided
15by paragraph (5) of Section 3-5 of this Act was erroneously
16claimed, but not in satisfaction of penalty, if any, and
17interest for failure to pay the tax when due. A purchaser of
18production related tangible personal property that is
19purchased on or after September 1, 2004 who is required to pay
20Illinois Use Tax or Service Use Tax on the purchase directly to
21the Department may utilize the Manufacturer's Purchase Credit
22in satisfaction of the tax arising from that purchase, but not
23in satisfaction of penalty and interest. A purchaser who uses
24the Manufacturer's Purchase Credit to purchase property on and
25after September 1, 2004 which is later determined not to be
26production related tangible personal property may be liable for

 

 

HB4491- 33 -LRB100 16182 HLH 31303 b

1tax, penalty, and interest on the purchase of that property as
2of the date of purchase but shall be entitled to use the
3disallowed Manufacturer's Purchase Credit, so long as it has
4not expired, on qualifying purchases of production related
5tangible personal property not previously subject to credit
6usage. The Manufacturer's Purchase Credit earned by a
7manufacturer or graphic arts producer expires the last day of
8the second calendar year following the calendar year in which
9the credit arose.
10    A purchaser earning Manufacturer's Purchase Credit shall
11sign and file an annual Report of Manufacturer's Purchase
12Credit Earned for each calendar year no later than the last day
13of the sixth month following the calendar year in which a
14Manufacturer's Purchase Credit is earned. A Report of
15Manufacturer's Purchase Credit Earned shall be filed on forms
16as prescribed or approved by the Department and shall state,
17for each month of the calendar year: (i) the total purchase
18price of all purchases of exempt manufacturing or graphic arts
19machinery on which the credit was earned; (ii) the total State
20Use Tax or Service Use Tax which would have been due on those
21items; (iii) the percentage used to calculate the amount of
22credit earned; (iv) the amount of credit earned; and (v) such
23other information as the Department may reasonably require. A
24purchaser earning Manufacturer's Purchase Credit shall
25maintain records which identify, as to each purchase of
26manufacturing or graphic arts machinery and equipment on which

 

 

HB4491- 34 -LRB100 16182 HLH 31303 b

1the purchaser earned Manufacturer's Purchase Credit, the
2vendor (including, if applicable, either the vendor's
3registration number or Federal Employer Identification
4Number), the purchase price, and the amount of Manufacturer's
5Purchase Credit earned on each purchase.
6    A purchaser using Manufacturer's Purchase Credit shall
7sign and file an annual Report of Manufacturer's Purchase
8Credit Used for each calendar year no later than the last day
9of the sixth month following the calendar year in which a
10Manufacturer's Purchase Credit is used. A Report of
11Manufacturer's Purchase Credit Used shall be filed on forms as
12prescribed or approved by the Department and shall state, for
13each month of the calendar year: (i) the total purchase price
14of production related tangible personal property purchased
15from Illinois suppliers; (ii) the total purchase price of
16production related tangible personal property purchased from
17out-of-state suppliers; (iii) the total amount of credit used
18during such month; and (iv) such other information as the
19Department may reasonably require. A purchaser using
20Manufacturer's Purchase Credit shall maintain records that
21identify, as to each purchase of production related tangible
22personal property on which the purchaser used Manufacturer's
23Purchase Credit, the vendor (including, if applicable, either
24the vendor's registration number or Federal Employer
25Identification Number), the purchase price, and the amount of
26Manufacturer's Purchase Credit used on each purchase.

 

 

HB4491- 35 -LRB100 16182 HLH 31303 b

1    A purchaser that fails to file an annual Report of
2Manufacturer's Purchase Credit Earned or an annual Report of
3Manufacturer's Purchase Credit Used by the last day of the
4sixth month following the end of the calendar year shall
5forfeit all Manufacturer's Purchase Credit for that calendar
6year unless it establishes that its failure to file was due to
7reasonable cause. Manufacturer's Purchase Credit reports may
8be amended to report and claim credit on qualifying purchases
9not previously reported at any time before the credit would
10have expired, unless both the Department and the purchaser have
11agreed to an extension of the statute of limitations for the
12issuance of a notice of tax liability as provided in Section 4
13of the Retailers' Occupation Tax Act. If the time for
14assessment or refund has been extended, then amended reports
15for a calendar year may be filed at any time prior to the date
16to which the statute of limitations for the calendar year or
17portion thereof has been extended. Manufacturer's Purchase
18Credit claimed on an amended report may be used to satisfy tax
19liability under the Use Tax Act or the Service Use Tax Act (i)
20on qualifying purchases of production related tangible
21personal property made after the date the amended report is
22filed or (ii) assessed by the Department on qualifying
23production related tangible personal property purchased on or
24after September 1, 2004.
25    If the purchaser is not the manufacturer or a graphic arts
26producer, but rents or leases the use of the property to a

 

 

HB4491- 36 -LRB100 16182 HLH 31303 b

1manufacturer or a graphic arts producer, the purchaser may
2earn, report, and use Manufacturer's Purchase Credit in the
3same manner as a manufacturer or graphic arts producer. A
4purchaser shall not be entitled to any Manufacturer's Purchase
5Credit for a purchase that is required to be reported and is
6not timely reported as provided in this Section. A purchaser
7remains liable for (i) any tax that was satisfied by use of a
8Manufacturer's Purchase Credit, as of the date of purchase, if
9that use is not timely reported as required in this Section and
10(ii) for any applicable penalties and interest for failing to
11pay the tax when due.
12    This Section is exempt from the provisions of Section 3-75.
13(Source: P.A. 96-116, eff. 7-31-09.)
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.