100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB1669

 

Introduced 2/9/2017, by Sen. Karen McConnaughay

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201
35 ILCS 5/224 new
35 ILCS 105/3-5
35 ILCS 105/3-50  from Ch. 120, par. 439.3-50
35 ILCS 105/3-85
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 110/3-5
35 ILCS 110/3-70
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 115/3-5
35 ILCS 115/9  from Ch. 120, par. 439.109
35 ILCS 120/2-5
35 ILCS 120/2-45  from Ch. 120, par. 441-45
35 ILCS 120/3  from Ch. 120, par. 442

    Amends the Illinois Income Tax Act. Reinstates the research and development credit for tax years ending on or after January 1, 2017, and provides that the credit applies on a permanent basis. Provides that the credit may be carried forward for a period of 20 years (instead of 5 years). Creates an apprenticeship income tax credit. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the manufacturing and assembling machinery and equipment exemption includes graphic arts machinery and equipment and production related tangible personal property. Provides that the exemption for coal and aggregate exploration, mining, off-highway hauling, processing, maintenance, and reclamation equipment applies on a permanent basis. Effective immediately.


LRB100 06197 HLH 16231 b

 

 

A BILL FOR

 

SB1669LRB100 06197 HLH 16231 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 Illinois Income Tax Act is amended by
5changing Section 201 and by adding Section 224 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    Sec. 201. Tax Imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by
17subsection (d-1):
18        (1) In the case of an individual, trust or estate, for
19    taxable years ending prior to July 1, 1989, an amount equal
20    to 2 1/2% of the taxpayer's net income for the taxable
21    year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending

 

 

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1    after June 30, 1989, an amount equal to the sum of (i) 2
2    1/2% of the taxpayer's net income for the period prior to
3    July 1, 1989, as calculated under Section 202.3, and (ii)
4    3% of the taxpayer's net income for the period after June
5    30, 1989, as calculated under Section 202.3.
6        (3) In the case of an individual, trust or estate, for
7    taxable years beginning after June 30, 1989, and ending
8    prior to January 1, 2011, an amount equal to 3% of the
9    taxpayer's net income for the taxable year.
10        (4) In the case of an individual, trust, or estate, for
11    taxable years beginning prior to January 1, 2011, and
12    ending after December 31, 2010, an amount equal to the sum
13    of (i) 3% of the taxpayer's net income for the period prior
14    to January 1, 2011, as calculated under Section 202.5, and
15    (ii) 5% of the taxpayer's net income for the period after
16    December 31, 2010, as calculated under Section 202.5.
17        (5) In the case of an individual, trust, or estate, for
18    taxable years beginning on or after January 1, 2011, and
19    ending prior to January 1, 2015, an amount equal to 5% of
20    the taxpayer's net income for the taxable year.
21        (5.1) In the case of an individual, trust, or estate,
22    for taxable years beginning prior to January 1, 2015, and
23    ending after December 31, 2014, an amount equal to the sum
24    of (i) 5% of the taxpayer's net income for the period prior
25    to January 1, 2015, as calculated under Section 202.5, and
26    (ii) 3.75% of the taxpayer's net income for the period

 

 

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1    after December 31, 2014, as calculated under Section 202.5.
2        (5.2) In the case of an individual, trust, or estate,
3    for taxable years beginning on or after January 1, 2015,
4    and ending prior to January 1, 2025, an amount equal to
5    3.75% of the taxpayer's net income for the taxable year.
6        (5.3) In the case of an individual, trust, or estate,
7    for taxable years beginning prior to January 1, 2025, and
8    ending after December 31, 2024, an amount equal to the sum
9    of (i) 3.75% of the taxpayer's net income for the period
10    prior to January 1, 2025, as calculated under Section
11    202.5, and (ii) 3.25% of the taxpayer's net income for the
12    period after December 31, 2024, as calculated under Section
13    202.5.
14        (5.4) In the case of an individual, trust, or estate,
15    for taxable years beginning on or after January 1, 2025, an
16    amount equal to 3.25% of the taxpayer's net income for the
17    taxable year.
18        (6) In the case of a corporation, for taxable years
19    ending prior to July 1, 1989, an amount equal to 4% of the
20    taxpayer's net income for the taxable year.
21        (7) In the case of a corporation, for taxable years
22    beginning prior to July 1, 1989 and ending after June 30,
23    1989, an amount equal to the sum of (i) 4% of the
24    taxpayer's net income for the period prior to July 1, 1989,
25    as calculated under Section 202.3, and (ii) 4.8% of the
26    taxpayer's net income for the period after June 30, 1989,

 

 

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1    as calculated under Section 202.3.
2        (8) In the case of a corporation, for taxable years
3    beginning after June 30, 1989, and ending prior to January
4    1, 2011, an amount equal to 4.8% of the taxpayer's net
5    income for the taxable year.
6        (9) In the case of a corporation, for taxable years
7    beginning prior to January 1, 2011, and ending after
8    December 31, 2010, an amount equal to the sum of (i) 4.8%
9    of the taxpayer's net income for the period prior to
10    January 1, 2011, as calculated under Section 202.5, and
11    (ii) 7% of the taxpayer's net income for the period after
12    December 31, 2010, as calculated under Section 202.5.
13        (10) In the case of a corporation, for taxable years
14    beginning on or after January 1, 2011, and ending prior to
15    January 1, 2015, an amount equal to 7% of the taxpayer's
16    net income for the taxable year.
17        (11) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2015, and ending after
19    December 31, 2014, an amount equal to the sum of (i) 7% of
20    the taxpayer's net income for the period prior to January
21    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
22    of the taxpayer's net income for the period after December
23    31, 2014, as calculated under Section 202.5.
24        (12) In the case of a corporation, for taxable years
25    beginning on or after January 1, 2015, and ending prior to
26    January 1, 2025, an amount equal to 5.25% of the taxpayer's

 

 

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1    net income for the taxable year.
2        (13) In the case of a corporation, for taxable years
3    beginning prior to January 1, 2025, and ending after
4    December 31, 2024, an amount equal to the sum of (i) 5.25%
5    of the taxpayer's net income for the period prior to
6    January 1, 2025, as calculated under Section 202.5, and
7    (ii) 4.8% of the taxpayer's net income for the period after
8    December 31, 2024, as calculated under Section 202.5.
9        (14) In the case of a corporation, for taxable years
10    beginning on or after January 1, 2025, an amount equal to
11    4.8% of the taxpayer's net income for the taxable year.
12    The rates under this subsection (b) are subject to the
13provisions of Section 201.5.
14    (c) Personal Property Tax Replacement Income Tax.
15Beginning on July 1, 1979 and thereafter, in addition to such
16income tax, there is also hereby imposed the Personal Property
17Tax Replacement Income Tax measured by net income on every
18corporation (including Subchapter S corporations), partnership
19and trust, for each taxable year ending after June 30, 1979.
20Such taxes are imposed on the privilege of earning or receiving
21income in or as a resident of this State. The Personal Property
22Tax Replacement Income Tax shall be in addition to the income
23tax imposed by subsections (a) and (b) of this Section and in
24addition to all other occupation or privilege taxes imposed by
25this State or by any municipal corporation or political
26subdivision thereof.

 

 

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1    (d) Additional Personal Property Tax Replacement Income
2Tax Rates. The personal property tax replacement income tax
3imposed by this subsection and subsection (c) of this Section
4in the case of a corporation, other than a Subchapter S
5corporation and except as adjusted by subsection (d-1), shall
6be an additional amount equal to 2.85% of such taxpayer's net
7income for the taxable year, except that beginning on January
81, 1981, and thereafter, the rate of 2.85% specified in this
9subsection shall be reduced to 2.5%, and in the case of a
10partnership, trust or a Subchapter S corporation shall be an
11additional amount equal to 1.5% of such taxpayer's net income
12for the taxable year.
13    (d-1) Rate reduction for certain foreign insurers. In the
14case of a foreign insurer, as defined by Section 35A-5 of the
15Illinois Insurance Code, whose state or country of domicile
16imposes on insurers domiciled in Illinois a retaliatory tax
17(excluding any insurer whose premiums from reinsurance assumed
18are 50% or more of its total insurance premiums as determined
19under paragraph (2) of subsection (b) of Section 304, except
20that for purposes of this determination premiums from
21reinsurance do not include premiums from inter-affiliate
22reinsurance arrangements), beginning with taxable years ending
23on or after December 31, 1999, the sum of the rates of tax
24imposed by subsections (b) and (d) shall be reduced (but not
25increased) to the rate at which the total amount of tax imposed
26under this Act, net of all credits allowed under this Act,

 

 

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1shall equal (i) the total amount of tax that would be imposed
2on the foreign insurer's net income allocable to Illinois for
3the taxable year by such foreign insurer's state or country of
4domicile if that net income were subject to all income taxes
5and taxes measured by net income imposed by such foreign
6insurer's state or country of domicile, net of all credits
7allowed or (ii) a rate of zero if no such tax is imposed on such
8income by the foreign insurer's state of domicile. For the
9purposes of this subsection (d-1), an inter-affiliate includes
10a mutual insurer under common management.
11        (1) For the purposes of subsection (d-1), in no event
12    shall the sum of the rates of tax imposed by subsections
13    (b) and (d) be reduced below the rate at which the sum of:
14            (A) the total amount of tax imposed on such foreign
15        insurer under this Act for a taxable year, net of all
16        credits allowed under this Act, plus
17            (B) the privilege tax imposed by Section 409 of the
18        Illinois Insurance Code, the fire insurance company
19        tax imposed by Section 12 of the Fire Investigation
20        Act, and the fire department taxes imposed under
21        Section 11-10-1 of the Illinois Municipal Code,
22    equals 1.25% for taxable years ending prior to December 31,
23    2003, or 1.75% for taxable years ending on or after
24    December 31, 2003, of the net taxable premiums written for
25    the taxable year, as described by subsection (1) of Section
26    409 of the Illinois Insurance Code. This paragraph will in

 

 

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1    no event increase the rates imposed under subsections (b)
2    and (d).
3        (2) Any reduction in the rates of tax imposed by this
4    subsection shall be applied first against the rates imposed
5    by subsection (b) and only after the tax imposed by
6    subsection (a) net of all credits allowed under this
7    Section other than the credit allowed under subsection (i)
8    has been reduced to zero, against the rates imposed by
9    subsection (d).
10    This subsection (d-1) is exempt from the provisions of
11Section 250.
12    (e) Investment credit. A taxpayer shall be allowed a credit
13against the Personal Property Tax Replacement Income Tax for
14investment in qualified property.
15        (1) A taxpayer shall be allowed a credit equal to .5%
16    of the basis of qualified property placed in service during
17    the taxable year, provided such property is placed in
18    service on or after July 1, 1984. There shall be allowed an
19    additional credit equal to .5% of the basis of qualified
20    property placed in service during the taxable year,
21    provided such property is placed in service on or after
22    July 1, 1986, and the taxpayer's base employment within
23    Illinois has increased by 1% or more over the preceding
24    year as determined by the taxpayer's employment records
25    filed with the Illinois Department of Employment Security.
26    Taxpayers who are new to Illinois shall be deemed to have

 

 

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1    met the 1% growth in base employment for the first year in
2    which they file employment records with the Illinois
3    Department of Employment Security. The provisions added to
4    this Section by Public Act 85-1200 (and restored by Public
5    Act 87-895) shall be construed as declaratory of existing
6    law and not as a new enactment. If, in any year, the
7    increase in base employment within Illinois over the
8    preceding year is less than 1%, the additional credit shall
9    be limited to that percentage times a fraction, the
10    numerator of which is .5% and the denominator of which is
11    1%, but shall not exceed .5%. The investment credit shall
12    not be allowed to the extent that it would reduce a
13    taxpayer's liability in any tax year below zero, nor may
14    any credit for qualified property be allowed for any year
15    other than the year in which the property was placed in
16    service in Illinois. For tax years ending on or after
17    December 31, 1987, and on or before December 31, 1988, the
18    credit shall be allowed for the tax year in which the
19    property is placed in service, or, if the amount of the
20    credit exceeds the tax liability for that year, whether it
21    exceeds the original liability or the liability as later
22    amended, such excess may be carried forward and applied to
23    the tax liability of the 5 taxable years following the
24    excess credit years if the taxpayer (i) makes investments
25    which cause the creation of a minimum of 2,000 full-time
26    equivalent jobs in Illinois, (ii) is located in an

 

 

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1    enterprise zone established pursuant to the Illinois
2    Enterprise Zone Act and (iii) is certified by the
3    Department of Commerce and Community Affairs (now
4    Department of Commerce and Economic Opportunity) as
5    complying with the requirements specified in clause (i) and
6    (ii) by July 1, 1986. The Department of Commerce and
7    Community Affairs (now Department of Commerce and Economic
8    Opportunity) shall notify the Department of Revenue of all
9    such certifications immediately. For tax years ending
10    after December 31, 1988, the credit shall be allowed for
11    the tax year in which the property is placed in service,
12    or, if the amount of the credit exceeds the tax liability
13    for that year, whether it exceeds the original liability or
14    the liability as later amended, such excess may be carried
15    forward and applied to the tax liability of the 5 taxable
16    years following the excess credit years. The credit shall
17    be applied to the earliest year for which there is a
18    liability. If there is credit from more than one tax year
19    that is available to offset a liability, earlier credit
20    shall be applied first.
21        (2) The term "qualified property" means property
22    which:
23            (A) is tangible, whether new or used, including
24        buildings and structural components of buildings and
25        signs that are real property, but not including land or
26        improvements to real property that are not a structural

 

 

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1        component of a building such as landscaping, sewer
2        lines, local access roads, fencing, parking lots, and
3        other appurtenances;
4            (B) is depreciable pursuant to Section 167 of the
5        Internal Revenue Code, except that "3-year property"
6        as defined in Section 168(c)(2)(A) of that Code is not
7        eligible for the credit provided by this subsection
8        (e);
9            (C) is acquired by purchase as defined in Section
10        179(d) of the Internal Revenue Code;
11            (D) is used in Illinois by a taxpayer who is
12        primarily engaged in manufacturing, or in mining coal
13        or fluorite, or in retailing, or was placed in service
14        on or after July 1, 2006 in a River Edge Redevelopment
15        Zone established pursuant to the River Edge
16        Redevelopment Zone Act; and
17            (E) has not previously been used in Illinois in
18        such a manner and by such a person as would qualify for
19        the credit provided by this subsection (e) or
20        subsection (f).
21        (3) For purposes of this subsection (e),
22    "manufacturing" means the material staging and production
23    of tangible personal property by procedures commonly
24    regarded as manufacturing, processing, fabrication, or
25    assembling which changes some existing material into new
26    shapes, new qualities, or new combinations. For purposes of

 

 

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1    this subsection (e) the term "mining" shall have the same
2    meaning as the term "mining" in Section 613(c) of the
3    Internal Revenue Code. For purposes of this subsection (e),
4    the term "retailing" means the sale of tangible personal
5    property for use or consumption and not for resale, or
6    services rendered in conjunction with the sale of tangible
7    personal property for use or consumption and not for
8    resale. For purposes of this subsection (e), "tangible
9    personal property" has the same meaning as when that term
10    is used in the Retailers' Occupation Tax Act, and, for
11    taxable years ending after December 31, 2008, does not
12    include the generation, transmission, or distribution of
13    electricity.
14        (4) The basis of qualified property shall be the basis
15    used to compute the depreciation deduction for federal
16    income tax purposes.
17        (5) If the basis of the property for federal income tax
18    depreciation purposes is increased after it has been placed
19    in service in Illinois by the taxpayer, the amount of such
20    increase shall be deemed property placed in service on the
21    date of such increase in basis.
22        (6) The term "placed in service" shall have the same
23    meaning as under Section 46 of the Internal Revenue Code.
24        (7) If during any taxable year, any property ceases to
25    be qualified property in the hands of the taxpayer within
26    48 months after being placed in service, or the situs of

 

 

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1    any qualified property is moved outside Illinois within 48
2    months after being placed in service, the Personal Property
3    Tax Replacement Income Tax for such taxable year shall be
4    increased. Such increase shall be determined by (i)
5    recomputing the investment credit which would have been
6    allowed for the year in which credit for such property was
7    originally allowed by eliminating such property from such
8    computation and, (ii) subtracting such recomputed credit
9    from the amount of credit previously allowed. For the
10    purposes of this paragraph (7), a reduction of the basis of
11    qualified property resulting from a redetermination of the
12    purchase price shall be deemed a disposition of qualified
13    property to the extent of such reduction.
14        (8) Unless the investment credit is extended by law,
15    the basis of qualified property shall not include costs
16    incurred after December 31, 2018, except for costs incurred
17    pursuant to a binding contract entered into on or before
18    December 31, 2018.
19        (9) Each taxable year ending before December 31, 2000,
20    a partnership may elect to pass through to its partners the
21    credits to which the partnership is entitled under this
22    subsection (e) for the taxable year. A partner may use the
23    credit allocated to him or her under this paragraph only
24    against the tax imposed in subsections (c) and (d) of this
25    Section. If the partnership makes that election, those
26    credits shall be allocated among the partners in the

 

 

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1    partnership in accordance with the rules set forth in
2    Section 704(b) of the Internal Revenue Code, and the rules
3    promulgated under that Section, and the allocated amount of
4    the credits shall be allowed to the partners for that
5    taxable year. The partnership shall make this election on
6    its Personal Property Tax Replacement Income Tax return for
7    that taxable year. The election to pass through the credits
8    shall be irrevocable.
9        For taxable years ending on or after December 31, 2000,
10    a partner that qualifies its partnership for a subtraction
11    under subparagraph (I) of paragraph (2) of subsection (d)
12    of Section 203 or a shareholder that qualifies a Subchapter
13    S corporation for a subtraction under subparagraph (S) of
14    paragraph (2) of subsection (b) of Section 203 shall be
15    allowed a credit under this subsection (e) equal to its
16    share of the credit earned under this subsection (e) during
17    the taxable year by the partnership or Subchapter S
18    corporation, determined in accordance with the
19    determination of income and distributive share of income
20    under Sections 702 and 704 and Subchapter S of the Internal
21    Revenue Code. This paragraph is exempt from the provisions
22    of Section 250.
23    (f) Investment credit; Enterprise Zone; River Edge
24Redevelopment Zone.
25        (1) A taxpayer shall be allowed a credit against the
26    tax imposed by subsections (a) and (b) of this Section for

 

 

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1    investment in qualified property which is placed in service
2    in an Enterprise Zone created pursuant to the Illinois
3    Enterprise Zone Act or, for property placed in service on
4    or after July 1, 2006, a River Edge Redevelopment Zone
5    established pursuant to the River Edge Redevelopment Zone
6    Act. For partners, shareholders of Subchapter S
7    corporations, and owners of limited liability companies,
8    if the liability company is treated as a partnership for
9    purposes of federal and State income taxation, there shall
10    be allowed a credit under this subsection (f) to be
11    determined in accordance with the determination of income
12    and distributive share of income under Sections 702 and 704
13    and Subchapter S of the Internal Revenue Code. The credit
14    shall be .5% of the basis for such property. The credit
15    shall be available only in the taxable year in which the
16    property is placed in service in the Enterprise Zone or
17    River Edge Redevelopment Zone and shall not be allowed to
18    the extent that it would reduce a taxpayer's liability for
19    the tax imposed by subsections (a) and (b) of this Section
20    to below zero. For tax years ending on or after December
21    31, 1985, the credit shall be allowed for the tax year in
22    which the property is placed in service, or, if the amount
23    of the credit exceeds the tax liability for that year,
24    whether it exceeds the original liability or the liability
25    as later amended, such excess may be carried forward and
26    applied to the tax liability of the 5 taxable years

 

 

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1    following the excess credit year. The credit shall be
2    applied to the earliest year for which there is a
3    liability. If there is credit from more than one tax year
4    that is available to offset a liability, the credit
5    accruing first in time shall be applied first.
6        (2) The term qualified property means property which:
7            (A) is tangible, whether new or used, including
8        buildings and structural components of buildings;
9            (B) is depreciable pursuant to Section 167 of the
10        Internal Revenue Code, except that "3-year property"
11        as defined in Section 168(c)(2)(A) of that Code is not
12        eligible for the credit provided by this subsection
13        (f);
14            (C) is acquired by purchase as defined in Section
15        179(d) of the Internal Revenue Code;
16            (D) is used in the Enterprise Zone or River Edge
17        Redevelopment Zone by the taxpayer; and
18            (E) has not been previously used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (f) or
21        subsection (e).
22        (3) The basis of qualified property shall be the basis
23    used to compute the depreciation deduction for federal
24    income tax purposes.
25        (4) If the basis of the property for federal income tax
26    depreciation purposes is increased after it has been placed

 

 

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1    in service in the Enterprise Zone or River Edge
2    Redevelopment Zone by the taxpayer, the amount of such
3    increase shall be deemed property placed in service on the
4    date of such increase in basis.
5        (5) The term "placed in service" shall have the same
6    meaning as under Section 46 of the Internal Revenue Code.
7        (6) If during any taxable year, any property ceases to
8    be qualified property in the hands of the taxpayer within
9    48 months after being placed in service, or the situs of
10    any qualified property is moved outside the Enterprise Zone
11    or River Edge Redevelopment Zone within 48 months after
12    being placed in service, the tax imposed under subsections
13    (a) and (b) of this Section for such taxable year shall be
14    increased. Such increase shall be determined by (i)
15    recomputing the investment credit which would have been
16    allowed for the year in which credit for such property was
17    originally allowed by eliminating such property from such
18    computation, and (ii) subtracting such recomputed credit
19    from the amount of credit previously allowed. For the
20    purposes of this paragraph (6), a reduction of the basis of
21    qualified property resulting from a redetermination of the
22    purchase price shall be deemed a disposition of qualified
23    property to the extent of such reduction.
24        (7) There shall be allowed an additional credit equal
25    to 0.5% of the basis of qualified property placed in
26    service during the taxable year in a River Edge

 

 

SB1669- 18 -LRB100 06197 HLH 16231 b

1    Redevelopment Zone, provided such property is placed in
2    service on or after July 1, 2006, and the taxpayer's base
3    employment within Illinois has increased by 1% or more over
4    the preceding year as determined by the taxpayer's
5    employment records filed with the Illinois Department of
6    Employment Security. Taxpayers who are new to Illinois
7    shall be deemed to have met the 1% growth in base
8    employment for the first year in which they file employment
9    records with the Illinois Department of Employment
10    Security. If, in any year, the increase in base employment
11    within Illinois over the preceding year is less than 1%,
12    the additional credit shall be limited to that percentage
13    times a fraction, the numerator of which is 0.5% and the
14    denominator of which is 1%, but shall not exceed 0.5%.
15    (g) (Blank).
16    (h) Investment credit; High Impact Business.
17        (1) Subject to subsections (b) and (b-5) of Section 5.5
18    of the Illinois Enterprise Zone Act, a taxpayer shall be
19    allowed a credit against the tax imposed by subsections (a)
20    and (b) of this Section for investment in qualified
21    property which is placed in service by a Department of
22    Commerce and Economic Opportunity designated High Impact
23    Business. The credit shall be .5% of the basis for such
24    property. The credit shall not be available (i) until the
25    minimum investments in qualified property set forth in
26    subdivision (a)(3)(A) of Section 5.5 of the Illinois

 

 

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1    Enterprise Zone Act have been satisfied or (ii) until the
2    time authorized in subsection (b-5) of the Illinois
3    Enterprise Zone Act for entities designated as High Impact
4    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
5    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
6    Act, and shall not be allowed to the extent that it would
7    reduce a taxpayer's liability for the tax imposed by
8    subsections (a) and (b) of this Section to below zero. The
9    credit applicable to such investments shall be taken in the
10    taxable year in which such investments have been completed.
11    The credit for additional investments beyond the minimum
12    investment by a designated high impact business authorized
13    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
14    Enterprise Zone Act shall be available only in the taxable
15    year in which the property is placed in service and shall
16    not be allowed to the extent that it would reduce a
17    taxpayer's liability for the tax imposed by subsections (a)
18    and (b) of this Section to below zero. For tax years ending
19    on or after December 31, 1987, the credit shall be allowed
20    for the tax year in which the property is placed in
21    service, or, if the amount of the credit exceeds the tax
22    liability for that year, whether it exceeds the original
23    liability or the liability as later amended, such excess
24    may be carried forward and applied to the tax liability of
25    the 5 taxable years following the excess credit year. The
26    credit shall be applied to the earliest year for which

 

 

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1    there is a liability. If there is credit from more than one
2    tax year that is available to offset a liability, the
3    credit accruing first in time shall be applied first.
4        Changes made in this subdivision (h)(1) by Public Act
5    88-670 restore changes made by Public Act 85-1182 and
6    reflect existing law.
7        (2) The term qualified property means property which:
8            (A) is tangible, whether new or used, including
9        buildings and structural components of buildings;
10            (B) is depreciable pursuant to Section 167 of the
11        Internal Revenue Code, except that "3-year property"
12        as defined in Section 168(c)(2)(A) of that Code is not
13        eligible for the credit provided by this subsection
14        (h);
15            (C) is acquired by purchase as defined in Section
16        179(d) of the Internal Revenue Code; and
17            (D) is not eligible for the Enterprise Zone
18        Investment Credit provided by subsection (f) of this
19        Section.
20        (3) The basis of qualified property shall be the basis
21    used to compute the depreciation deduction for federal
22    income tax purposes.
23        (4) If the basis of the property for federal income tax
24    depreciation purposes is increased after it has been placed
25    in service in a federally designated Foreign Trade Zone or
26    Sub-Zone located in Illinois by the taxpayer, the amount of

 

 

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1    such increase shall be deemed property placed in service on
2    the date of such increase in basis.
3        (5) The term "placed in service" shall have the same
4    meaning as under Section 46 of the Internal Revenue Code.
5        (6) If during any taxable year ending on or before
6    December 31, 1996, any property ceases to be qualified
7    property in the hands of the taxpayer within 48 months
8    after being placed in service, or the situs of any
9    qualified property is moved outside Illinois within 48
10    months after being placed in service, the tax imposed under
11    subsections (a) and (b) of this Section for such taxable
12    year shall be increased. Such increase shall be determined
13    by (i) recomputing the investment credit which would have
14    been allowed for the year in which credit for such property
15    was originally allowed by eliminating such property from
16    such computation, and (ii) subtracting such recomputed
17    credit from the amount of credit previously allowed. For
18    the purposes of this paragraph (6), a reduction of the
19    basis of qualified property resulting from a
20    redetermination of the purchase price shall be deemed a
21    disposition of qualified property to the extent of such
22    reduction.
23        (7) Beginning with tax years ending after December 31,
24    1996, if a taxpayer qualifies for the credit under this
25    subsection (h) and thereby is granted a tax abatement and
26    the taxpayer relocates its entire facility in violation of

 

 

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1    the explicit terms and length of the contract under Section
2    18-183 of the Property Tax Code, the tax imposed under
3    subsections (a) and (b) of this Section shall be increased
4    for the taxable year in which the taxpayer relocated its
5    facility by an amount equal to the amount of credit
6    received by the taxpayer under this subsection (h).
7    (i) Credit for Personal Property Tax Replacement Income
8Tax. For tax years ending prior to December 31, 2003, a credit
9shall be allowed against the tax imposed by subsections (a) and
10(b) of this Section for the tax imposed by subsections (c) and
11(d) of this Section. This credit shall be computed by
12multiplying the tax imposed by subsections (c) and (d) of this
13Section by a fraction, the numerator of which is base income
14allocable to Illinois and the denominator of which is Illinois
15base income, and further multiplying the product by the tax
16rate imposed by subsections (a) and (b) of this Section.
17    Any credit earned on or after December 31, 1986 under this
18subsection which is unused in the year the credit is computed
19because it exceeds the tax liability imposed by subsections (a)
20and (b) for that year (whether it exceeds the original
21liability or the liability as later amended) may be carried
22forward and applied to the tax liability imposed by subsections
23(a) and (b) of the 5 taxable years following the excess credit
24year, provided that no credit may be carried forward to any
25year ending on or after December 31, 2003. This credit shall be
26applied first to the earliest year for which there is a

 

 

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1liability. If there is a credit under this subsection from more
2than one tax year that is available to offset a liability the
3earliest credit arising under this subsection shall be applied
4first.
5    If, during any taxable year ending on or after December 31,
61986, the tax imposed by subsections (c) and (d) of this
7Section for which a taxpayer has claimed a credit under this
8subsection (i) is reduced, the amount of credit for such tax
9shall also be reduced. Such reduction shall be determined by
10recomputing the credit to take into account the reduced tax
11imposed by subsections (c) and (d). If any portion of the
12reduced amount of credit has been carried to a different
13taxable year, an amended return shall be filed for such taxable
14year to reduce the amount of credit claimed.
15    (j) Training expense credit. Beginning with tax years
16ending on or after December 31, 1986 and prior to December 31,
172003, a taxpayer shall be allowed a credit against the tax
18imposed by subsections (a) and (b) under this Section for all
19amounts paid or accrued, on behalf of all persons employed by
20the taxpayer in Illinois or Illinois residents employed outside
21of Illinois by a taxpayer, for educational or vocational
22training in semi-technical or technical fields or semi-skilled
23or skilled fields, which were deducted from gross income in the
24computation of taxable income. The credit against the tax
25imposed by subsections (a) and (b) shall be 1.6% of such
26training expenses. For partners, shareholders of subchapter S

 

 

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1corporations, and owners of limited liability companies, if the
2liability company is treated as a partnership for purposes of
3federal and State income taxation, there shall be allowed a
4credit under this subsection (j) to be determined in accordance
5with the determination of income and distributive share of
6income under Sections 702 and 704 and subchapter S of the
7Internal Revenue Code.
8    Any credit allowed under this subsection which is unused in
9the year the credit is earned may be carried forward to each of
10the 5 taxable years following the year for which the credit is
11first computed until it is used. This credit shall be applied
12first to the earliest year for which there is a liability. If
13there is a credit under this subsection from more than one tax
14year that is available to offset a liability the earliest
15credit arising under this subsection shall be applied first. No
16carryforward credit may be claimed in any tax year ending on or
17after December 31, 2003.
18    (k) Research and development credit. For tax years ending
19after July 1, 1990 and prior to December 31, 2003, and
20beginning again for tax years ending on or after December 31,
212004, and ending prior to January 1, 2016, a taxpayer shall be
22allowed a credit against the tax imposed by subsections (a) and
23(b) of this Section for increasing research activities in this
24State. The credit allowed against the tax imposed by
25subsections (a) and (b) shall be equal to 6 1/2% of the
26qualifying expenditures for increasing research activities in

 

 

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1this State. For partners, shareholders of subchapter S
2corporations, and owners of limited liability companies, if the
3liability company is treated as a partnership for purposes of
4federal and State income taxation, there shall be allowed a
5credit under this subsection to be determined in accordance
6with the determination of income and distributive share of
7income under Sections 702 and 704 and subchapter S of the
8Internal Revenue Code.
9    For purposes of this subsection, "qualifying expenditures"
10means the qualifying expenditures as defined for the federal
11credit for increasing research activities which would be
12allowable under Section 41 of the Internal Revenue Code and
13which are conducted in this State, "qualifying expenditures for
14increasing research activities in this State" means the excess
15of qualifying expenditures for the taxable year in which
16incurred over qualifying expenditures for the base period,
17"qualifying expenditures for the base period" means: (1) for
18tax years ending prior to December 31, 2017, the average of the
19qualifying expenditures for each year in the base period; and
20(2) for tax years ending on or after December 31, 2017, 50% of
21the average of the qualifying expenditures for each year in the
22base period, and "base period" means the 3 taxable years
23immediately preceding the taxable year for which the
24determination is being made.
25    Any credit in excess of the tax liability for the taxable
26year may be carried forward. A taxpayer may elect to have the

 

 

SB1669- 26 -LRB100 06197 HLH 16231 b

1unused credit shown on its final completed return carried over
2as a credit against the tax liability for the following 20 5
3taxable years or until it has been fully used, whichever occurs
4first; provided that no credit earned in a tax year ending
5prior to December 31, 2003 may be carried forward to any year
6ending on or after December 31, 2003.
7    If an unused credit is carried forward to a given year from
82 or more earlier years, that credit arising in the earliest
9year will be applied first against the tax liability for the
10given year. If a tax liability for the given year still
11remains, the credit from the next earliest year will then be
12applied, and so on, until all credits have been used or no tax
13liability for the given year remains. Any remaining unused
14credit or credits then will be carried forward to the next
15following year in which a tax liability is incurred, except
16that no credit can be carried forward to a year which is more
17than 5 years after the year in which the expense for which the
18credit is given was incurred.
19    No inference shall be drawn from this amendatory Act of the
2091st General Assembly in construing this Section for taxable
21years beginning before January 1, 1999.
22    It is the intent of the General Assembly that the credit
23established under this subsection (k) shall apply for all tax
24years ending on or after December 31, 2004, including, but not
25limited to, tax years ending on or after January 1, 2017.
26    This subsection (k) is exempt from the provisions of

 

 

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1Section 250.
2    (l) Environmental Remediation Tax Credit.
3        (i) For tax years ending after December 31, 1997 and on
4    or before December 31, 2001, a taxpayer shall be allowed a
5    credit against the tax imposed by subsections (a) and (b)
6    of this Section for certain amounts paid for unreimbursed
7    eligible remediation costs, as specified in this
8    subsection. For purposes of this Section, "unreimbursed
9    eligible remediation costs" means costs approved by the
10    Illinois Environmental Protection Agency ("Agency") under
11    Section 58.14 of the Environmental Protection Act that were
12    paid in performing environmental remediation at a site for
13    which a No Further Remediation Letter was issued by the
14    Agency and recorded under Section 58.10 of the
15    Environmental Protection Act. The credit must be claimed
16    for the taxable year in which Agency approval of the
17    eligible remediation costs is granted. The credit is not
18    available to any taxpayer if the taxpayer or any related
19    party caused or contributed to, in any material respect, a
20    release of regulated substances on, in, or under the site
21    that was identified and addressed by the remedial action
22    pursuant to the Site Remediation Program of the
23    Environmental Protection Act. After the Pollution Control
24    Board rules are adopted pursuant to the Illinois
25    Administrative Procedure Act for the administration and
26    enforcement of Section 58.9 of the Environmental

 

 

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1    Protection Act, determinations as to credit availability
2    for purposes of this Section shall be made consistent with
3    those rules. For purposes of this Section, "taxpayer"
4    includes a person whose tax attributes the taxpayer has
5    succeeded to under Section 381 of the Internal Revenue Code
6    and "related party" includes the persons disallowed a
7    deduction for losses by paragraphs (b), (c), and (f)(1) of
8    Section 267 of the Internal Revenue Code by virtue of being
9    a related taxpayer, as well as any of its partners. The
10    credit allowed against the tax imposed by subsections (a)
11    and (b) shall be equal to 25% of the unreimbursed eligible
12    remediation costs in excess of $100,000 per site, except
13    that the $100,000 threshold shall not apply to any site
14    contained in an enterprise zone as determined by the
15    Department of Commerce and Community Affairs (now
16    Department of Commerce and Economic Opportunity). The
17    total credit allowed shall not exceed $40,000 per year with
18    a maximum total of $150,000 per site. For partners and
19    shareholders of subchapter S corporations, there shall be
20    allowed a credit under this subsection to be determined in
21    accordance with the determination of income and
22    distributive share of income under Sections 702 and 704 and
23    subchapter S of the Internal Revenue Code.
24        (ii) A credit allowed under this subsection that is
25    unused in the year the credit is earned may be carried
26    forward to each of the 5 taxable years following the year

 

 

SB1669- 29 -LRB100 06197 HLH 16231 b

1    for which the credit is first earned until it is used. The
2    term "unused credit" does not include any amounts of
3    unreimbursed eligible remediation costs in excess of the
4    maximum credit per site authorized under paragraph (i).
5    This credit shall be applied first to the earliest year for
6    which there is a liability. If there is a credit under this
7    subsection from more than one tax year that is available to
8    offset a liability, the earliest credit arising under this
9    subsection shall be applied first. A credit allowed under
10    this subsection may be sold to a buyer as part of a sale of
11    all or part of the remediation site for which the credit
12    was granted. The purchaser of a remediation site and the
13    tax credit shall succeed to the unused credit and remaining
14    carry-forward period of the seller. To perfect the
15    transfer, the assignor shall record the transfer in the
16    chain of title for the site and provide written notice to
17    the Director of the Illinois Department of Revenue of the
18    assignor's intent to sell the remediation site and the
19    amount of the tax credit to be transferred as a portion of
20    the sale. In no event may a credit be transferred to any
21    taxpayer if the taxpayer or a related party would not be
22    eligible under the provisions of subsection (i).
23        (iii) For purposes of this Section, the term "site"
24    shall have the same meaning as under Section 58.2 of the
25    Environmental Protection Act.
26    (m) Education expense credit. Beginning with tax years

 

 

SB1669- 30 -LRB100 06197 HLH 16231 b

1ending after December 31, 1999, a taxpayer who is the custodian
2of one or more qualifying pupils shall be allowed a credit
3against the tax imposed by subsections (a) and (b) of this
4Section for qualified education expenses incurred on behalf of
5the qualifying pupils. The credit shall be equal to 25% of
6qualified education expenses, but in no event may the total
7credit under this subsection claimed by a family that is the
8custodian of qualifying pupils exceed $500. In no event shall a
9credit under this subsection reduce the taxpayer's liability
10under this Act to less than zero. This subsection is exempt
11from the provisions of Section 250 of this Act.
12    For purposes of this subsection:
13    "Qualifying pupils" means individuals who (i) are
14residents of the State of Illinois, (ii) are under the age of
1521 at the close of the school year for which a credit is
16sought, and (iii) during the school year for which a credit is
17sought were full-time pupils enrolled in a kindergarten through
18twelfth grade education program at any school, as defined in
19this subsection.
20    "Qualified education expense" means the amount incurred on
21behalf of a qualifying pupil in excess of $250 for tuition,
22book fees, and lab fees at the school in which the pupil is
23enrolled during the regular school year.
24    "School" means any public or nonpublic elementary or
25secondary school in Illinois that is in compliance with Title
26VI of the Civil Rights Act of 1964 and attendance at which

 

 

SB1669- 31 -LRB100 06197 HLH 16231 b

1satisfies the requirements of Section 26-1 of the School Code,
2except that nothing shall be construed to require a child to
3attend any particular public or nonpublic school to qualify for
4the credit under this Section.
5    "Custodian" means, with respect to qualifying pupils, an
6Illinois resident who is a parent, the parents, a legal
7guardian, or the legal guardians of the qualifying pupils.
8    (n) River Edge Redevelopment Zone site remediation tax
9credit.
10        (i) For tax years ending on or after December 31, 2006,
11    a taxpayer shall be allowed a credit against the tax
12    imposed by subsections (a) and (b) of this Section for
13    certain amounts paid for unreimbursed eligible remediation
14    costs, as specified in this subsection. For purposes of
15    this Section, "unreimbursed eligible remediation costs"
16    means costs approved by the Illinois Environmental
17    Protection Agency ("Agency") under Section 58.14a of the
18    Environmental Protection Act that were paid in performing
19    environmental remediation at a site within a River Edge
20    Redevelopment Zone for which a No Further Remediation
21    Letter was issued by the Agency and recorded under Section
22    58.10 of the Environmental Protection Act. The credit must
23    be claimed for the taxable year in which Agency approval of
24    the eligible remediation costs is granted. The credit is
25    not available to any taxpayer if the taxpayer or any
26    related party caused or contributed to, in any material

 

 

SB1669- 32 -LRB100 06197 HLH 16231 b

1    respect, a release of regulated substances on, in, or under
2    the site that was identified and addressed by the remedial
3    action pursuant to the Site Remediation Program of the
4    Environmental Protection Act. Determinations as to credit
5    availability for purposes of this Section shall be made
6    consistent with rules adopted by the Pollution Control
7    Board pursuant to the Illinois Administrative Procedure
8    Act for the administration and enforcement of Section 58.9
9    of the Environmental Protection Act. For purposes of this
10    Section, "taxpayer" includes a person whose tax attributes
11    the taxpayer has succeeded to under Section 381 of the
12    Internal Revenue Code and "related party" includes the
13    persons disallowed a deduction for losses by paragraphs
14    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
15    Code by virtue of being a related taxpayer, as well as any
16    of its partners. The credit allowed against the tax imposed
17    by subsections (a) and (b) shall be equal to 25% of the
18    unreimbursed eligible remediation costs in excess of
19    $100,000 per site.
20        (ii) A credit allowed under this subsection that is
21    unused in the year the credit is earned may be carried
22    forward to each of the 5 taxable years following the year
23    for which the credit is first earned until it is used. This
24    credit shall be applied first to the earliest year for
25    which there is a liability. If there is a credit under this
26    subsection from more than one tax year that is available to

 

 

SB1669- 33 -LRB100 06197 HLH 16231 b

1    offset a liability, the earliest credit arising under this
2    subsection shall be applied first. A credit allowed under
3    this subsection may be sold to a buyer as part of a sale of
4    all or part of the remediation site for which the credit
5    was granted. The purchaser of a remediation site and the
6    tax credit shall succeed to the unused credit and remaining
7    carry-forward period of the seller. To perfect the
8    transfer, the assignor shall record the transfer in the
9    chain of title for the site and provide written notice to
10    the Director of the Illinois Department of Revenue of the
11    assignor's intent to sell the remediation site and the
12    amount of the tax credit to be transferred as a portion of
13    the sale. In no event may a credit be transferred to any
14    taxpayer if the taxpayer or a related party would not be
15    eligible under the provisions of subsection (i).
16        (iii) For purposes of this Section, the term "site"
17    shall have the same meaning as under Section 58.2 of the
18    Environmental Protection Act.
19    (o) For each of taxable years during the Compassionate Use
20of Medical Cannabis Pilot Program, a surcharge is imposed on
21all taxpayers on income arising from the sale or exchange of
22capital assets, depreciable business property, real property
23used in the trade or business, and Section 197 intangibles of
24an organization registrant under the Compassionate Use of
25Medical Cannabis Pilot Program Act. The amount of the surcharge
26is equal to the amount of federal income tax liability for the

 

 

SB1669- 34 -LRB100 06197 HLH 16231 b

1taxable year attributable to those sales and exchanges. The
2surcharge imposed does not apply if:
3        (1) the medical cannabis cultivation center
4    registration, medical cannabis dispensary registration, or
5    the property of a registration is transferred as a result
6    of any of the following:
7            (A) bankruptcy, a receivership, or a debt
8        adjustment initiated by or against the initial
9        registration or the substantial owners of the initial
10        registration;
11            (B) cancellation, revocation, or termination of
12        any registration by the Illinois Department of Public
13        Health;
14            (C) a determination by the Illinois Department of
15        Public Health that transfer of the registration is in
16        the best interests of Illinois qualifying patients as
17        defined by the Compassionate Use of Medical Cannabis
18        Pilot Program Act;
19            (D) the death of an owner of the equity interest in
20        a registrant;
21            (E) the acquisition of a controlling interest in
22        the stock or substantially all of the assets of a
23        publicly traded company;
24            (F) a transfer by a parent company to a wholly
25        owned subsidiary; or
26            (G) the transfer or sale to or by one person to

 

 

SB1669- 35 -LRB100 06197 HLH 16231 b

1        another person where both persons were initial owners
2        of the registration when the registration was issued;
3        or
4        (2) the cannabis cultivation center registration,
5    medical cannabis dispensary registration, or the
6    controlling interest in a registrant's property is
7    transferred in a transaction to lineal descendants in which
8    no gain or loss is recognized or as a result of a
9    transaction in accordance with Section 351 of the Internal
10    Revenue Code in which no gain or loss is recognized.
11(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
12eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
13eff. 7-16-14.)
 
14    (35 ILCS 5/224 new)
15    Sec. 224. Apprenticeship Education expense credit.
16    (a) For tax years ending after December 31, 2017, a
17taxpayer who is the employer of one or more qualifying
18apprentices shall be allowed a credit against the tax imposed
19by subsections (a) and (b) of Section 201 for qualified
20education expenses incurred on behalf of the qualifying
21apprentices. The credit shall be equal to 100% of qualified
22education expenses, but in no event may the total credit under
23this Section claimed by an employer of a qualifying apprentice
24in any year exceed $3,500. In no event shall a credit under
25this subsection reduce the taxpayer's liability under this Act

 

 

SB1669- 36 -LRB100 06197 HLH 16231 b

1to less than zero. This Section is exempt from the provisions
2of Section 250 of this Act.
3    (b) For purposes of this Section:
4    "Qualifying apprentices" means individuals who (i) are
5residents of the State of Illinois, (ii) are between the ages
6of 16 and 30 years old at the close of the school year for which
7a credit is sought, and (iii) during the school year for which
8a credit is sought were full-time apprentices enrolled in an
9apprenticeship program which is registered with the US
10Department of Labor, Office of Apprenticeship.
11    "Qualified education expense" means the amount incurred on
12behalf of a qualifying apprentice of up to $3,500 for tuition,
13book fees, and lab fees at the school or community college in
14which the apprentice is enrolled during the regular school
15year.
16    "School" means any public or nonpublic secondary school in
17Illinois, or any community college that is in compliance with
18Title VI of the Civil Rights Act of 1964, except that nothing
19shall be construed to allow a student to attend a community
20college not a part of an approved apprenticeship program to
21qualify for the credit under this Section.
22    "Employer" means, with respect to qualifying apprentices,
23an Illinois taxpayer who is the employer of the qualifying
24apprentices.
 
25    Section 10. The Use Tax Act is amended by changing Sections

 

 

SB1669- 37 -LRB100 06197 HLH 16231 b

13-5, 3-50, and 3-85 as follows:
 
2    (35 ILCS 105/3-5)
3    Sec. 3-5. Exemptions. Use of the following tangible
4personal property is exempt from the tax imposed by this Act:
5    (1) Personal property purchased from a corporation,
6society, association, foundation, institution, or
7organization, other than a limited liability company, that is
8organized and operated as a not-for-profit service enterprise
9for the benefit of persons 65 years of age or older if the
10personal property was not purchased by the enterprise for the
11purpose of resale by the enterprise.
12    (2) Personal property purchased by a not-for-profit
13Illinois county fair association for use in conducting,
14operating, or promoting the county fair.
15    (3) Personal property purchased by a not-for-profit arts or
16cultural organization that establishes, by proof required by
17the Department by rule, that it has received an exemption under
18Section 501(c)(3) of the Internal Revenue Code and that is
19organized and operated primarily for the presentation or
20support of arts or cultural programming, activities, or
21services. These organizations include, but are not limited to,
22music and dramatic arts organizations such as symphony
23orchestras and theatrical groups, arts and cultural service
24organizations, local arts councils, visual arts organizations,
25and media arts organizations. On and after the effective date

 

 

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1of this amendatory Act of the 92nd General Assembly, however,
2an entity otherwise eligible for this exemption shall not make
3tax-free purchases unless it has an active identification
4number issued by the Department.
5    (4) Personal property purchased by a governmental body, by
6a corporation, society, association, foundation, or
7institution organized and operated exclusively for charitable,
8religious, or educational purposes, or by a not-for-profit
9corporation, society, association, foundation, institution, or
10organization that has no compensated officers or employees and
11that is organized and operated primarily for the recreation of
12persons 55 years of age or older. A limited liability company
13may qualify for the exemption under this paragraph only if the
14limited liability company is organized and operated
15exclusively for educational purposes. On and after July 1,
161987, however, no entity otherwise eligible for this exemption
17shall make tax-free purchases unless it has an active exemption
18identification number issued by the Department.
19    (5) Until July 1, 2003, a passenger car that is a
20replacement vehicle to the extent that the purchase price of
21the car is subject to the Replacement Vehicle Tax.
22    (6) Until July 1, 2003 and beginning again on September 1,
232004 through August 30, 2014, graphic arts machinery and
24equipment, including repair and replacement parts, both new and
25used, and including that manufactured on special order,
26certified by the purchaser to be used primarily for graphic

 

 

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1arts production, and including machinery and equipment
2purchased for lease. Equipment includes chemicals or chemicals
3acting as catalysts but only if the chemicals or chemicals
4acting as catalysts effect a direct and immediate change upon a
5graphic arts product. Beginning on August 31, 2014, graphic
6arts machinery and equipment is included in the manufacturing
7and assembling machinery and equipment exemption under
8paragraph (18).
9    (7) Farm chemicals.
10    (8) Legal tender, currency, medallions, or gold or silver
11coinage issued by the State of Illinois, the government of the
12United States of America, or the government of any foreign
13country, and bullion.
14    (9) Personal property purchased from a teacher-sponsored
15student organization affiliated with an elementary or
16secondary school located in Illinois.
17    (10) A motor vehicle that is used for automobile renting,
18as defined in the Automobile Renting Occupation and Use Tax
19Act.
20    (11) Farm machinery and equipment, both new and used,
21including that manufactured on special order, certified by the
22purchaser to be used primarily for production agriculture or
23State or federal agricultural programs, including individual
24replacement parts for the machinery and equipment, including
25machinery and equipment purchased for lease, and including
26implements of husbandry defined in Section 1-130 of the

 

 

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1Illinois Vehicle Code, farm machinery and agricultural
2chemical and fertilizer spreaders, and nurse wagons required to
3be registered under Section 3-809 of the Illinois Vehicle Code,
4but excluding other motor vehicles required to be registered
5under the Illinois Vehicle Code. Horticultural polyhouses or
6hoop houses used for propagating, growing, or overwintering
7plants shall be considered farm machinery and equipment under
8this item (11). Agricultural chemical tender tanks and dry
9boxes shall include units sold separately from a motor vehicle
10required to be licensed and units sold mounted on a motor
11vehicle required to be licensed if the selling price of the
12tender is separately stated.
13    Farm machinery and equipment shall include precision
14farming equipment that is installed or purchased to be
15installed on farm machinery and equipment including, but not
16limited to, tractors, harvesters, sprayers, planters, seeders,
17or spreaders. Precision farming equipment includes, but is not
18limited to, soil testing sensors, computers, monitors,
19software, global positioning and mapping systems, and other
20such equipment.
21    Farm machinery and equipment also includes computers,
22sensors, software, and related equipment used primarily in the
23computer-assisted operation of production agriculture
24facilities, equipment, and activities such as, but not limited
25to, the collection, monitoring, and correlation of animal and
26crop data for the purpose of formulating animal diets and

 

 

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1agricultural chemicals. This item (11) is exempt from the
2provisions of Section 3-90.
3    (12) Until June 30, 2013, fuel and petroleum products sold
4to or used by an air common carrier, certified by the carrier
5to be used for consumption, shipment, or storage in the conduct
6of its business as an air common carrier, for a flight destined
7for or returning from a location or locations outside the
8United States without regard to previous or subsequent domestic
9stopovers.
10    Beginning July 1, 2013, fuel and petroleum products sold to
11or used by an air carrier, certified by the carrier to be used
12for consumption, shipment, or storage in the conduct of its
13business as an air common carrier, for a flight that (i) is
14engaged in foreign trade or is engaged in trade between the
15United States and any of its possessions and (ii) transports at
16least one individual or package for hire from the city of
17origination to the city of final destination on the same
18aircraft, without regard to a change in the flight number of
19that aircraft.
20    (13) Proceeds of mandatory service charges separately
21stated on customers' bills for the purchase and consumption of
22food and beverages purchased at retail from a retailer, to the
23extent that the proceeds of the service charge are in fact
24turned over as tips or as a substitute for tips to the
25employees who participate directly in preparing, serving,
26hosting or cleaning up the food or beverage function with

 

 

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1respect to which the service charge is imposed.
2    (14) Until July 1, 2003, oil field exploration, drilling,
3and production equipment, including (i) rigs and parts of rigs,
4rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
5tubular goods, including casing and drill strings, (iii) pumps
6and pump-jack units, (iv) storage tanks and flow lines, (v) any
7individual replacement part for oil field exploration,
8drilling, and production equipment, and (vi) machinery and
9equipment purchased for lease; but excluding motor vehicles
10required to be registered under the Illinois Vehicle Code.
11    (15) Photoprocessing machinery and equipment, including
12repair and replacement parts, both new and used, including that
13manufactured on special order, certified by the purchaser to be
14used primarily for photoprocessing, and including
15photoprocessing machinery and equipment purchased for lease.
16    (16) Coal and aggregate exploration, mining, off-highway
17hauling, processing, maintenance, and reclamation equipment,
18including replacement parts and equipment, and including
19equipment purchased for lease, but excluding motor vehicles
20required to be registered under the Illinois Vehicle Code. The
21changes made to this Section by Public Act 97-767 apply on and
22after July 1, 2003, but no claim for credit or refund is
23allowed on or after August 16, 2013 (the effective date of
24Public Act 98-456) for such taxes paid during the period
25beginning July 1, 2003 and ending on August 16, 2013 (the
26effective date of Public Act 98-456). This item (16) is exempt

 

 

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1from the provisions of Section 3-90.
2    (17) Until July 1, 2003, distillation machinery and
3equipment, sold as a unit or kit, assembled or installed by the
4retailer, certified by the user to be used only for the
5production of ethyl alcohol that will be used for consumption
6as motor fuel or as a component of motor fuel for the personal
7use of the user, and not subject to sale or resale.
8    (18) Manufacturing and assembling machinery and equipment
9used primarily in the process of manufacturing or assembling
10tangible personal property for wholesale or retail sale or
11lease, whether that sale or lease is made directly by the
12manufacturer or by some other person, whether the materials
13used in the process are owned by the manufacturer or some other
14person, or whether that sale or lease is made apart from or as
15an incident to the seller's engaging in the service occupation
16of producing machines, tools, dies, jigs, patterns, gauges, or
17other similar items of no commercial value on special order for
18a particular purchaser. The exemption provided by this
19paragraph (18) does not include machinery and equipment used in
20(i) the generation of electricity for wholesale or retail sale;
21(ii) the generation or treatment of natural or artificial gas
22for wholesale or retail sale that is delivered to customers
23through pipes, pipelines, or mains; or (iii) the treatment of
24water for wholesale or retail sale that is delivered to
25customers through pipes, pipelines, or mains. The provisions of
26Public Act 98-583 are declaratory of existing law as to the

 

 

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1meaning and scope of this exemption. Beginning on August 31,
22014, manufacturing and assembling machinery and equipment
3also includes, but is not limited to, graphic arts machinery
4and equipment, as defined in paragraph (6) of this Section, and
5production related tangible personal property, as defined in
6Section 3-50. The exemption provided by this paragraph (18) is
7exempt from the provisions of Section 3-90.
8    (19) Personal property delivered to a purchaser or
9purchaser's donee inside Illinois when the purchase order for
10that personal property was received by a florist located
11outside Illinois who has a florist located inside Illinois
12deliver the personal property.
13    (20) Semen used for artificial insemination of livestock
14for direct agricultural production.
15    (21) Horses, or interests in horses, registered with and
16meeting the requirements of any of the Arabian Horse Club
17Registry of America, Appaloosa Horse Club, American Quarter
18Horse Association, United States Trotting Association, or
19Jockey Club, as appropriate, used for purposes of breeding or
20racing for prizes. This item (21) is exempt from the provisions
21of Section 3-90, and the exemption provided for under this item
22(21) applies for all periods beginning May 30, 1995, but no
23claim for credit or refund is allowed on or after January 1,
242008 for such taxes paid during the period beginning May 30,
252000 and ending on January 1, 2008.
26    (22) Computers and communications equipment utilized for

 

 

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1any hospital purpose and equipment used in the diagnosis,
2analysis, or treatment of hospital patients purchased by a
3lessor who leases the equipment, under a lease of one year or
4longer executed or in effect at the time the lessor would
5otherwise be subject to the tax imposed by this Act, to a
6hospital that has been issued an active tax exemption
7identification number by the Department under Section 1g of the
8Retailers' Occupation Tax Act. If the equipment is leased in a
9manner that does not qualify for this exemption or is used in
10any other non-exempt manner, the lessor shall be liable for the
11tax imposed under this Act or the Service Use Tax Act, as the
12case may be, based on the fair market value of the property at
13the time the non-qualifying use occurs. No lessor shall collect
14or attempt to collect an amount (however designated) that
15purports to reimburse that lessor for the tax imposed by this
16Act or the Service Use Tax Act, as the case may be, if the tax
17has not been paid by the lessor. If a lessor improperly
18collects any such amount from the lessee, the lessee shall have
19a legal right to claim a refund of that amount from the lessor.
20If, however, that amount is not refunded to the lessee for any
21reason, the lessor is liable to pay that amount to the
22Department.
23    (23) Personal property purchased by a lessor who leases the
24property, under a lease of one year or longer executed or in
25effect at the time the lessor would otherwise be subject to the
26tax imposed by this Act, to a governmental body that has been

 

 

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1issued an active sales tax exemption identification number by
2the Department under Section 1g of the Retailers' Occupation
3Tax Act. If the property is leased in a manner that does not
4qualify for this exemption or used in any other non-exempt
5manner, the lessor shall be liable for the tax imposed under
6this Act or the Service Use Tax Act, as the case may be, based
7on the fair market value of the property at the time the
8non-qualifying use occurs. No lessor shall collect or attempt
9to collect an amount (however designated) that purports to
10reimburse that lessor for the tax imposed by this Act or the
11Service Use Tax Act, as the case may be, if the tax has not been
12paid by the lessor. If a lessor improperly collects any such
13amount from the lessee, the lessee shall have a legal right to
14claim a refund of that amount from the lessor. If, however,
15that amount is not refunded to the lessee for any reason, the
16lessor is liable to pay that amount to the Department.
17    (24) Beginning with taxable years ending on or after
18December 31, 1995 and ending with taxable years ending on or
19before December 31, 2004, personal property that is donated for
20disaster relief to be used in a State or federally declared
21disaster area in Illinois or bordering Illinois by a
22manufacturer or retailer that is registered in this State to a
23corporation, society, association, foundation, or institution
24that has been issued a sales tax exemption identification
25number by the Department that assists victims of the disaster
26who reside within the declared disaster area.

 

 

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1    (25) Beginning with taxable years ending on or after
2December 31, 1995 and ending with taxable years ending on or
3before December 31, 2004, personal property that is used in the
4performance of infrastructure repairs in this State, including
5but not limited to municipal roads and streets, access roads,
6bridges, sidewalks, waste disposal systems, water and sewer
7line extensions, water distribution and purification
8facilities, storm water drainage and retention facilities, and
9sewage treatment facilities, resulting from a State or
10federally declared disaster in Illinois or bordering Illinois
11when such repairs are initiated on facilities located in the
12declared disaster area within 6 months after the disaster.
13    (26) Beginning July 1, 1999, game or game birds purchased
14at a "game breeding and hunting preserve area" as that term is
15used in the Wildlife Code. This paragraph is exempt from the
16provisions of Section 3-90.
17    (27) A motor vehicle, as that term is defined in Section
181-146 of the Illinois Vehicle Code, that is donated to a
19corporation, limited liability company, society, association,
20foundation, or institution that is determined by the Department
21to be organized and operated exclusively for educational
22purposes. For purposes of this exemption, "a corporation,
23limited liability company, society, association, foundation,
24or institution organized and operated exclusively for
25educational purposes" means all tax-supported public schools,
26private schools that offer systematic instruction in useful

 

 

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1branches of learning by methods common to public schools and
2that compare favorably in their scope and intensity with the
3course of study presented in tax-supported schools, and
4vocational or technical schools or institutes organized and
5operated exclusively to provide a course of study of not less
6than 6 weeks duration and designed to prepare individuals to
7follow a trade or to pursue a manual, technical, mechanical,
8industrial, business, or commercial occupation.
9    (28) Beginning January 1, 2000, personal property,
10including food, purchased through fundraising events for the
11benefit of a public or private elementary or secondary school,
12a group of those schools, or one or more school districts if
13the events are sponsored by an entity recognized by the school
14district that consists primarily of volunteers and includes
15parents and teachers of the school children. This paragraph
16does not apply to fundraising events (i) for the benefit of
17private home instruction or (ii) for which the fundraising
18entity purchases the personal property sold at the events from
19another individual or entity that sold the property for the
20purpose of resale by the fundraising entity and that profits
21from the sale to the fundraising entity. This paragraph is
22exempt from the provisions of Section 3-90.
23    (29) Beginning January 1, 2000 and through December 31,
242001, new or used automatic vending machines that prepare and
25serve hot food and beverages, including coffee, soup, and other
26items, and replacement parts for these machines. Beginning

 

 

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1January 1, 2002 and through June 30, 2003, machines and parts
2for machines used in commercial, coin-operated amusement and
3vending business if a use or occupation tax is paid on the
4gross receipts derived from the use of the commercial,
5coin-operated amusement and vending machines. This paragraph
6is exempt from the provisions of Section 3-90.
7    (30) Beginning January 1, 2001 and through June 30, 2016,
8food for human consumption that is to be consumed off the
9premises where it is sold (other than alcoholic beverages, soft
10drinks, and food that has been prepared for immediate
11consumption) and prescription and nonprescription medicines,
12drugs, medical appliances, and insulin, urine testing
13materials, syringes, and needles used by diabetics, for human
14use, when purchased for use by a person receiving medical
15assistance under Article V of the Illinois Public Aid Code who
16resides in a licensed long-term care facility, as defined in
17the Nursing Home Care Act, or in a licensed facility as defined
18in the ID/DD Community Care Act, the MC/DD Act, or the
19Specialized Mental Health Rehabilitation Act of 2013.
20    (31) Beginning on the effective date of this amendatory Act
21of the 92nd General Assembly, computers and communications
22equipment utilized for any hospital purpose and equipment used
23in the diagnosis, analysis, or treatment of hospital patients
24purchased by a lessor who leases the equipment, under a lease
25of one year or longer executed or in effect at the time the
26lessor would otherwise be subject to the tax imposed by this

 

 

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1Act, to a hospital that has been issued an active tax exemption
2identification number by the Department under Section 1g of the
3Retailers' Occupation Tax Act. If the equipment is leased in a
4manner that does not qualify for this exemption or is used in
5any other nonexempt manner, the lessor shall be liable for the
6tax imposed under this Act or the Service Use Tax Act, as the
7case may be, based on the fair market value of the property at
8the time the nonqualifying use occurs. No lessor shall collect
9or attempt to collect an amount (however designated) that
10purports to reimburse that lessor for the tax imposed by this
11Act or the Service Use Tax Act, as the case may be, if the tax
12has not been paid by the lessor. If a lessor improperly
13collects any such amount from the lessee, the lessee shall have
14a legal right to claim a refund of that amount from the lessor.
15If, however, that amount is not refunded to the lessee for any
16reason, the lessor is liable to pay that amount to the
17Department. This paragraph is exempt from the provisions of
18Section 3-90.
19    (32) Beginning on the effective date of this amendatory Act
20of the 92nd General Assembly, personal property purchased by a
21lessor who leases the property, under a lease of one year or
22longer executed or in effect at the time the lessor would
23otherwise be subject to the tax imposed by this Act, to a
24governmental body that has been issued an active sales tax
25exemption identification number by the Department under
26Section 1g of the Retailers' Occupation Tax Act. If the

 

 

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1property is leased in a manner that does not qualify for this
2exemption or used in any other nonexempt manner, the lessor
3shall be liable for the tax imposed under this Act or the
4Service Use Tax Act, as the case may be, based on the fair
5market value of the property at the time the nonqualifying use
6occurs. No lessor shall collect or attempt to collect an amount
7(however designated) that purports to reimburse that lessor for
8the tax imposed by this Act or the Service Use Tax Act, as the
9case may be, if the tax has not been paid by the lessor. If a
10lessor improperly collects any such amount from the lessee, the
11lessee shall have a legal right to claim a refund of that
12amount from the lessor. If, however, that amount is not
13refunded to the lessee for any reason, the lessor is liable to
14pay that amount to the Department. This paragraph is exempt
15from the provisions of Section 3-90.
16    (33) On and after July 1, 2003 and through June 30, 2004,
17the use in this State of motor vehicles of the second division
18with a gross vehicle weight in excess of 8,000 pounds and that
19are subject to the commercial distribution fee imposed under
20Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
211, 2004 and through June 30, 2005, the use in this State of
22motor vehicles of the second division: (i) with a gross vehicle
23weight rating in excess of 8,000 pounds; (ii) that are subject
24to the commercial distribution fee imposed under Section
253-815.1 of the Illinois Vehicle Code; and (iii) that are
26primarily used for commercial purposes. Through June 30, 2005,

 

 

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1this exemption applies to repair and replacement parts added
2after the initial purchase of such a motor vehicle if that
3motor vehicle is used in a manner that would qualify for the
4rolling stock exemption otherwise provided for in this Act. For
5purposes of this paragraph, the term "used for commercial
6purposes" means the transportation of persons or property in
7furtherance of any commercial or industrial enterprise,
8whether for-hire or not.
9    (34) Beginning January 1, 2008, tangible personal property
10used in the construction or maintenance of a community water
11supply, as defined under Section 3.145 of the Environmental
12Protection Act, that is operated by a not-for-profit
13corporation that holds a valid water supply permit issued under
14Title IV of the Environmental Protection Act. This paragraph is
15exempt from the provisions of Section 3-90.
16    (35) Beginning January 1, 2010, materials, parts,
17equipment, components, and furnishings incorporated into or
18upon an aircraft as part of the modification, refurbishment,
19completion, replacement, repair, or maintenance of the
20aircraft. This exemption includes consumable supplies used in
21the modification, refurbishment, completion, replacement,
22repair, and maintenance of aircraft, but excludes any
23materials, parts, equipment, components, and consumable
24supplies used in the modification, replacement, repair, and
25maintenance of aircraft engines or power plants, whether such
26engines or power plants are installed or uninstalled upon any

 

 

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1such aircraft. "Consumable supplies" include, but are not
2limited to, adhesive, tape, sandpaper, general purpose
3lubricants, cleaning solution, latex gloves, and protective
4films. This exemption applies only to the use of qualifying
5tangible personal property by persons who modify, refurbish,
6complete, repair, replace, or maintain aircraft and who (i)
7hold an Air Agency Certificate and are empowered to operate an
8approved repair station by the Federal Aviation
9Administration, (ii) have a Class IV Rating, and (iii) conduct
10operations in accordance with Part 145 of the Federal Aviation
11Regulations. The exemption does not include aircraft operated
12by a commercial air carrier providing scheduled passenger air
13service pursuant to authority issued under Part 121 or Part 129
14of the Federal Aviation Regulations. The changes made to this
15paragraph (35) by Public Act 98-534 are declarative of existing
16law.
17    (36) Tangible personal property purchased by a
18public-facilities corporation, as described in Section
1911-65-10 of the Illinois Municipal Code, for purposes of
20constructing or furnishing a municipal convention hall, but
21only if the legal title to the municipal convention hall is
22transferred to the municipality without any further
23consideration by or on behalf of the municipality at the time
24of the completion of the municipal convention hall or upon the
25retirement or redemption of any bonds or other debt instruments
26issued by the public-facilities corporation in connection with

 

 

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1the development of the municipal convention hall. This
2exemption includes existing public-facilities corporations as
3provided in Section 11-65-25 of the Illinois Municipal Code.
4This paragraph is exempt from the provisions of Section 3-90.
5    (37) Beginning January 1, 2017, menstrual pads, tampons,
6and menstrual cups.
7(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
898-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
91-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
107-29-15; 99-855, eff. 8-19-16.)
 
11    (35 ILCS 105/3-50)  (from Ch. 120, par. 439.3-50)
12    Sec. 3-50. Manufacturing and assembly exemption. The
13manufacturing and assembling machinery and equipment exemption
14includes machinery and equipment that replaces machinery and
15equipment in an existing manufacturing facility as well as
16machinery and equipment that are for use in an expanded or new
17manufacturing facility. The machinery and equipment exemption
18also includes machinery and equipment used in the general
19maintenance or repair of exempt machinery and equipment or for
20in-house manufacture of exempt machinery and equipment.
21Beginning on August 31, 2014, the manufacturing and assembling
22machinery and equipment exemption also includes graphic arts
23machinery and equipment, as defined in paragraph (6) of Section
243-5, and production related tangible personal property, as
25defined in this Section. The machinery and equipment exemption

 

 

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1does not include machinery and equipment used in (i) the
2generation of electricity for wholesale or retail sale; (ii)
3the generation or treatment of natural or artificial gas for
4wholesale or retail sale that is delivered to customers through
5pipes, pipelines, or mains; or (iii) the treatment of water for
6wholesale or retail sale that is delivered to customers through
7pipes, pipelines, or mains. The provisions of this amendatory
8Act of the 98th General Assembly are declaratory of existing
9law as to the meaning and scope of this exemption. For the
10purposes of this exemption, terms have the following meanings:
11        (1) "Manufacturing process" means the production of an
12    article of tangible personal property, whether the article
13    is a finished product or an article for use in the process
14    of manufacturing or assembling a different article of
15    tangible personal property, by a procedure commonly
16    regarded as manufacturing, processing, fabricating, or
17    refining that changes some existing material into a
18    material with a different form, use, or name. In relation
19    to a recognized integrated business composed of a series of
20    operations that collectively constitute manufacturing, or
21    individually constitute manufacturing operations, the
22    manufacturing process commences with the first operation
23    or stage of production in the series and does not end until
24    the completion of the final product in the last operation
25    or stage of production in the series. For purposes of this
26    exemption, photoprocessing is a manufacturing process of

 

 

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1    tangible personal property for wholesale or retail sale.
2        (2) "Assembling process" means the production of an
3    article of tangible personal property, whether the article
4    is a finished product or an article for use in the process
5    of manufacturing or assembling a different article of
6    tangible personal property, by the combination of existing
7    materials in a manner commonly regarded as assembling that
8    results in an article or material of a different form, use,
9    or name.
10        (3) "Machinery" means major mechanical machines or
11    major components of those machines contributing to a
12    manufacturing or assembling process.
13        (4) "Equipment" includes an independent device or tool
14    separate from machinery but essential to an integrated
15    manufacturing or assembly process; including computers
16    used primarily in a manufacturer's computer assisted
17    design, computer assisted manufacturing (CAD/CAM) system;
18    any subunit or assembly comprising a component of any
19    machinery or auxiliary, adjunct, or attachment parts of
20    machinery, such as tools, dies, jigs, fixtures, patterns,
21    and molds; and any parts that require periodic replacement
22    in the course of normal operation; but does not include
23    hand tools. Equipment includes chemicals or chemicals
24    acting as catalysts but only if the chemicals or chemicals
25    acting as catalysts effect a direct and immediate change
26    upon a product being manufactured or assembled for

 

 

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1    wholesale or retail sale or lease.
2        (5) "Production related tangible personal property"
3    means all tangible personal property that is used or
4    consumed by the purchaser in a manufacturing facility in
5    which a manufacturing process described in Section 2-45 of
6    the Retailers' Occupation Tax Act takes place, including
7    and includes, without limitation, tangible personal
8    property that is purchased for incorporation into real
9    estate within a manufacturing facility and including, but
10    not limited to, tangible personal property that is used or
11    consumed in activities such as research and development,
12    preproduction material handling, receiving, quality
13    control, inventory control, storage, staging, and
14    packaging for shipping and transportation purposes.
15    Tangible personal property used or consumed by the
16    purchaser for research and development is considered
17    "production related tangible personal property" regardless
18    of use within or without a manufacturing facility.
19    "Production related tangible personal property" does not
20    include (i) tangible personal property that is used, within
21    or without a manufacturing facility, in sales, purchasing,
22    accounting, fiscal management, marketing, personnel
23    recruitment or selection, or landscaping or (ii) tangible
24    personal property that is required to be titled or
25    registered with a department, agency, or unit of federal,
26    State, or local government.

 

 

SB1669- 58 -LRB100 06197 HLH 16231 b

1    The manufacturing and assembling machinery and equipment
2exemption includes production related tangible personal
3property that is purchased on or after July 1, 2007 and on or
4before June 30, 2008. The exemption for production related
5tangible personal property is subject to both of the following
6limitations:
7        (1) The maximum amount of the exemption for any one
8    taxpayer may not exceed 5% of the purchase price of
9    production related tangible personal property that is
10    purchased on or after July 1, 2007 and on or before June
11    30, 2008. A credit under Section 3-85 of this Act may not
12    be earned by the purchase of production related tangible
13    personal property for which an exemption is received under
14    this Section.
15        (2) The maximum aggregate amount of the exemptions for
16    production related tangible personal property awarded
17    under this Act and the Retailers' Occupation Tax Act to all
18    taxpayers may not exceed $10,000,000. If the claims for the
19    exemption exceed $10,000,000, then the Department shall
20    reduce the amount of the exemption to each taxpayer on a
21    pro rata basis.
22The Department may adopt rules to implement and administer the
23exemption for production related tangible personal property.
24    The manufacturing and assembling machinery and equipment
25exemption includes the sale of materials to a purchaser who
26produces exempted types of machinery, equipment, or tools and

 

 

SB1669- 59 -LRB100 06197 HLH 16231 b

1who rents or leases that machinery, equipment, or tools to a
2manufacturer of tangible personal property. This exemption
3also includes the sale of materials to a purchaser who
4manufactures those materials into an exempted type of
5machinery, equipment, or tools that the purchaser uses himself
6or herself in the manufacturing of tangible personal property.
7This exemption includes the sale of exempted types of machinery
8or equipment to a purchaser who is not the manufacturer, but
9who rents or leases the use of the property to a manufacturer.
10The purchaser of the machinery and equipment who has an active
11resale registration number shall furnish that number to the
12seller at the time of purchase. A user of the machinery,
13equipment, or tools without an active resale registration
14number shall prepare a certificate of exemption for each
15transaction stating facts establishing the exemption for that
16transaction, and that certificate shall be available to the
17Department for inspection or audit. The Department shall
18prescribe the form of the certificate. Informal rulings,
19opinions, or letters issued by the Department in response to an
20inquiry or request for an opinion from any person regarding the
21coverage and applicability of this exemption to specific
22devices shall be published, maintained as a public record, and
23made available for public inspection and copying. If the
24informal ruling, opinion, or letter contains trade secrets or
25other confidential information, where possible, the Department
26shall delete that information before publication. Whenever

 

 

SB1669- 60 -LRB100 06197 HLH 16231 b

1informal rulings, opinions, or letters contain a policy of
2general applicability, the Department shall formulate and
3adopt that policy as a rule in accordance with the Illinois
4Administrative Procedure Act.
5    The exemption under this Section is exempt from the
6provisions of Section 3-90.
7(Source: P.A. 98-583, eff. 1-1-14.)
 
8    (35 ILCS 105/3-85)
9    Sec. 3-85. Manufacturer's Purchase Credit. For purchases
10of machinery and equipment made on and after January 1, 1995
11through June 30, 2003, and on and after September 1, 2004
12through August 30, 2014, a purchaser of manufacturing machinery
13and equipment that qualifies for the exemption provided by
14paragraph (18) of Section 3-5 of this Act earns a credit in an
15amount equal to a fixed percentage of the tax which would have
16been incurred under this Act on those purchases. For purchases
17of graphic arts machinery and equipment made on or after July
181, 1996 and through June 30, 2003, and on and after September
191, 2004 through August 30, 2014, a purchaser of graphic arts
20machinery and equipment that qualifies for the exemption
21provided by paragraph (6) of Section 3-5 of this Act earns a
22credit in an amount equal to a fixed percentage of the tax that
23would have been incurred under this Act on those purchases. The
24credit earned for purchases of manufacturing machinery and
25equipment or graphic arts machinery and equipment shall be

 

 

SB1669- 61 -LRB100 06197 HLH 16231 b

1referred to as the Manufacturer's Purchase Credit. A graphic
2arts producer is a person engaged in graphic arts production as
3defined in Section 2-30 of the Retailers' Occupation Tax Act.
4Beginning July 1, 1996, all references in this Section to
5manufacturers or manufacturing shall also be deemed to refer to
6graphic arts producers or graphic arts production.
7    The amount of credit shall be a percentage of the tax that
8would have been incurred on the purchase of manufacturing
9machinery and equipment or graphic arts machinery and equipment
10if the exemptions provided by paragraph (6) or paragraph (18)
11of Section 3-5 of this Act had not been applicable. The
12percentage shall be as follows:
13        (1) 15% for purchases made on or before June 30, 1995.
14        (2) 25% for purchases made after June 30, 1995, and on
15    or before June 30, 1996.
16        (3) 40% for purchases made after June 30, 1996, and on
17    or before June 30, 1997.
18        (4) 50% for purchases made on or after July 1, 1997.
19    (a) Manufacturer's Purchase Credit earned prior to July 1,
202003. This subsection (a) applies to Manufacturer's Purchase
21Credit earned prior to July 1, 2003. A purchaser of production
22related tangible personal property desiring to use the
23Manufacturer's Purchase Credit shall certify to the seller
24prior to October 1, 2003 that the purchaser is satisfying all
25or part of the liability under the Use Tax Act or the Service
26Use Tax Act that is due on the purchase of the production

 

 

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1related tangible personal property by use of Manufacturer's
2Purchase Credit. The Manufacturer's Purchase Credit
3certification must be dated and shall include the name and
4address of the purchaser, the purchaser's registration number,
5if registered, the credit being applied, and a statement that
6the State Use Tax or Service Use Tax liability is being
7satisfied with the manufacturer's or graphic arts producer's
8accumulated purchase credit. Certification may be incorporated
9into the manufacturer's or graphic arts producer's purchase
10order. Manufacturer's Purchase Credit certification provided
11by the manufacturer or graphic arts producer prior to October
121, 2003 may be used to satisfy the retailer's or serviceman's
13liability under the Retailers' Occupation Tax Act or Service
14Occupation Tax Act for the credit claimed, not to exceed 6.25%
15of the receipts subject to tax from a qualifying purchase, but
16only if the retailer or serviceman reports the Manufacturer's
17Purchase Credit claimed as required by the Department. A
18Manufacturer's Purchase Credit reported on any original or
19amended return filed under this Act after October 20, 2003
20shall be disallowed. The Manufacturer's Purchase Credit earned
21by purchase of exempt manufacturing machinery and equipment or
22graphic arts machinery and equipment is a non-transferable
23credit. A manufacturer or graphic arts producer that enters
24into a contract involving the installation of tangible personal
25property into real estate within a manufacturing or graphic
26arts production facility may, prior to October 1, 2003,

 

 

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1authorize a construction contractor to utilize credit
2accumulated by the manufacturer or graphic arts producer to
3purchase the tangible personal property. A manufacturer or
4graphic arts producer intending to use accumulated credit to
5purchase such tangible personal property shall execute a
6written contract authorizing the contractor to utilize a
7specified dollar amount of credit. The contractor shall
8furnish, prior to October 1, 2003, the supplier with the
9manufacturer's or graphic arts producer's name, registration
10or resale number, and a statement that a specific amount of the
11Use Tax or Service Use Tax liability, not to exceed 6.25% of
12the selling price, is being satisfied with the credit. The
13manufacturer or graphic arts producer shall remain liable to
14timely report all information required by the annual Report of
15Manufacturer's Purchase Credit Used for all credit utilized by
16a construction contractor.
17    No Manufacturer's Purchase Credit earned prior to July 1,
182003 may be used after October 1, 2003. The Manufacturer's
19Purchase Credit may be used to satisfy liability under the Use
20Tax Act or the Service Use Tax Act due on the purchase 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

 

 

SB1669- 64 -LRB100 06197 HLH 16231 b

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

 

 

SB1669- 65 -LRB100 06197 HLH 16231 b

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,
6prior to October 1, 2003, to satisfy the tax arising either
7from the purchase of machinery and equipment on or after
8January 1, 1995 for which the exemption provided by paragraph
9(18) of Section 3-5 of this Act was erroneously claimed, or the
10purchase of machinery and equipment on or after July 1, 1996
11for which the exemption provided by paragraph (6) of Section
123-5 of this Act was erroneously claimed, but not in
13satisfaction of penalty, if any, and interest for failure to
14pay the tax when due. A purchaser of production related
15tangible personal property who is required to pay Illinois Use
16Tax or Service Use Tax on the purchase directly to the
17Department may, prior to October 1, 2003, utilize the
18Manufacturer's Purchase Credit in satisfaction of the tax
19arising from that purchase, but not in satisfaction of penalty
20and interest. A purchaser who uses the Manufacturer's Purchase
21Credit to purchase property which is later determined not to be
22production related tangible personal property may be liable for
23tax, penalty, and interest on the purchase of that property as
24of the date of purchase but shall be entitled to use the
25disallowed Manufacturer's Purchase Credit, so long as it has
26not expired and is used prior to October 1, 2003, on qualifying

 

 

SB1669- 66 -LRB100 06197 HLH 16231 b

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. No
6Manufacturer's Purchase Credit may be used after September 30,
72003 regardless of when that credit was earned.
8    A purchaser earning Manufacturer's Purchase Credit shall
9sign and file an annual Report of Manufacturer's Purchase
10Credit Earned 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 earned. A Report of
13Manufacturer's Purchase Credit Earned shall be filed on forms
14as prescribed or approved by the Department and shall state,
15for each month of the calendar year: (i) the total purchase
16price of all purchases of exempt manufacturing or graphic arts
17machinery on which the credit was earned; (ii) the total State
18Use Tax or Service Use Tax which would have been due on those
19items; (iii) the percentage used to calculate the amount of
20credit earned; (iv) the amount of credit earned; and (v) such
21other information as the Department may reasonably require. A
22purchaser earning Manufacturer's Purchase Credit shall
23maintain records which identify, as to each purchase of
24manufacturing or graphic arts machinery and equipment on which
25the purchaser earned Manufacturer's Purchase Credit, the
26vendor (including, if applicable, either the vendor's

 

 

SB1669- 67 -LRB100 06197 HLH 16231 b

1registration number or Federal Employer Identification
2Number), the purchase price, and the amount of Manufacturer's
3Purchase Credit earned on each purchase.
4    A purchaser using Manufacturer's Purchase Credit shall
5sign and file an annual Report of Manufacturer's Purchase
6Credit Used for each calendar year no later than the last day
7of the sixth month following the calendar year in which a
8Manufacturer's Purchase Credit is used. A Report of
9Manufacturer's Purchase Credit Used shall be filed on forms as
10prescribed or approved by the Department and shall state, for
11each month of the calendar year: (i) the total purchase price
12of production related tangible personal property purchased
13from Illinois suppliers; (ii) the total purchase price of
14production related tangible personal property purchased from
15out-of-state suppliers; (iii) the total amount of credit used
16during such month; and (iv) such other information as the
17Department may reasonably require. A purchaser using
18Manufacturer's Purchase Credit shall maintain records that
19identify, as to each purchase of production related tangible
20personal property on which the purchaser used Manufacturer's
21Purchase Credit, the vendor (including, if applicable, either
22the vendor's registration number or Federal Employer
23Identification Number), the purchase price, and the amount of
24Manufacturer's Purchase Credit used on each purchase.
25    No annual report shall be filed before May 1, 1996 or after
26June 30, 2004. A purchaser that fails to file an annual Report

 

 

SB1669- 68 -LRB100 06197 HLH 16231 b

1of Manufacturer's Purchase Credit Earned or an annual Report of
2Manufacturer's Purchase Credit Used by the last day of the
3sixth month following the end of the calendar year shall
4forfeit all Manufacturer's Purchase Credit for that calendar
5year unless it establishes that its failure to file was due to
6reasonable cause. Manufacturer's Purchase Credit reports may
7be amended to report and claim credit on qualifying purchases
8not previously reported at any time before the credit would
9have expired, unless both the Department and the purchaser have
10agreed to an extension of the statute of limitations for the
11issuance of a notice of tax liability as provided in Section 4
12of the Retailers' Occupation Tax Act. If the time for
13assessment or refund has been extended, then amended reports
14for a calendar year may be filed at any time prior to the date
15to which the statute of limitations for the calendar year or
16portion thereof has been extended. No Manufacturer's Purchase
17Credit report filed with the Department for periods prior to
18January 1, 1995 shall be approved. Manufacturer's Purchase
19Credit claimed on an amended report may be used, until October
201, 2003, to satisfy tax liability under the Use Tax Act or the
21Service Use Tax Act (i) on qualifying purchases of production
22related tangible personal property made after the date the
23amended report is filed or (ii) assessed by the Department on
24qualifying purchases of production related tangible personal
25property made in the case of manufacturers on or after January
261, 1995, or in the case of graphic arts producers on or after

 

 

SB1669- 69 -LRB100 06197 HLH 16231 b

1July 1, 1996.
2    If the purchaser is not the manufacturer or a graphic arts
3producer, but rents or leases the use of the property to a
4manufacturer or graphic arts producer, the purchaser may earn,
5report, and use Manufacturer's Purchase Credit in the same
6manner as a manufacturer or graphic arts producer.
7    A purchaser shall not be entitled to any Manufacturer's
8Purchase Credit for a purchase that is required to be reported
9and is not timely reported as provided in this Section. A
10purchaser remains liable for (i) any tax that was satisfied by
11use of a Manufacturer's Purchase Credit, as of the date of
12purchase, if that use is not timely reported as required in
13this Section and (ii) for any applicable penalties and interest
14for failing to pay the tax when due. No Manufacturer's Purchase
15Credit may be used after September 30, 2003 to satisfy any tax
16liability imposed under this Act, including any audit
17liability.
18    (b) Manufacturer's Purchase Credit earned on and after
19September 1, 2004 and through August 30, 2014. This subsection
20(b) applies to Manufacturer's Purchase Credit earned on and
21after September 1, 2004 and through August 30, 2014. No
22Manufacturer's Purchase Credit may be used after September 30,
232014 to satisfy any tax liability incurred on purchases of
24production related tangible personal property made on or before
25August 30, 2014 or to satisfy any audit liability established
26after September 30, 2014. Manufacturer's Purchase Credit

 

 

SB1669- 70 -LRB100 06197 HLH 16231 b

1earned on or after September 1, 2004 may only be used to
2satisfy the Use Tax or Service Use Tax liability incurred on
3production related tangible personal property purchased on or
4after September 1, 2004. A purchaser of production related
5tangible personal property desiring to use the Manufacturer's
6Purchase Credit shall certify to the seller that the purchaser
7is satisfying all or part of the liability under the Use Tax
8Act or the Service Use Tax Act that is due on the purchase of
9the production related tangible personal property by use of
10Manufacturer's Purchase Credit. The Manufacturer's Purchase
11Credit certification must be dated and shall include the name
12and address of the purchaser, the purchaser's registration
13number, if registered, the credit being applied, and a
14statement that the State Use Tax or Service Use Tax liability
15is being satisfied with the manufacturer's or graphic arts
16producer's accumulated purchase credit. Certification may be
17incorporated into the manufacturer's or graphic arts
18producer's purchase order. Manufacturer's Purchase Credit
19certification provided by the manufacturer or graphic arts
20producer may be used to satisfy the retailer's or serviceman's
21liability under the Retailers' Occupation Tax Act or Service
22Occupation Tax Act for the credit claimed, not to exceed 6.25%
23of the receipts subject to tax from a qualifying purchase, but
24only if the retailer or serviceman reports the Manufacturer's
25Purchase Credit claimed as required by the Department. The
26Manufacturer's Purchase Credit earned by purchase of exempt

 

 

SB1669- 71 -LRB100 06197 HLH 16231 b

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

 

 

SB1669- 72 -LRB100 06197 HLH 16231 b

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

 

 

SB1669- 73 -LRB100 06197 HLH 16231 b

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

 

 

SB1669- 74 -LRB100 06197 HLH 16231 b

1property may be liable for tax, penalty, and interest on the
2purchase of that property as of the date of purchase but shall
3be entitled to use the disallowed Manufacturer's Purchase
4Credit, so long as it has not expired and is used on qualifying
5purchases of production related tangible personal property not
6previously subject to credit usage. The Manufacturer's
7Purchase Credit earned by a manufacturer or graphic arts
8producer expires the last day of the second calendar year
9following the calendar year in which the credit arose. A
10purchaser earning Manufacturer's Purchase Credit shall sign
11and file an annual Report of Manufacturer's Purchase Credit
12Earned for each calendar year no later than the last day of the
13sixth 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

 

 

SB1669- 75 -LRB100 06197 HLH 16231 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. A purchaser using
6Manufacturer's Purchase Credit shall sign and file an annual
7Report of Manufacturer's Purchase Credit Used for each calendar
8year no later than the last day of the sixth month following
9the calendar year in which a Manufacturer's Purchase Credit is
10used. A Report of Manufacturer's Purchase Credit Used shall be
11filed on forms as prescribed or approved by the Department and
12shall state, for each month of the calendar year: (i) the total
13purchase price of production related tangible personal
14property purchased from Illinois suppliers; (ii) the total
15purchase price of production related tangible personal
16property purchased from out-of-state suppliers; (iii) the
17total amount of credit used during such month; and (iv) such
18other information as the Department may reasonably require. A
19purchaser using Manufacturer's Purchase Credit shall maintain
20records that identify, as to each purchase of production
21related tangible personal property on which the purchaser used
22Manufacturer's Purchase Credit, the vendor (including, if
23applicable, either the vendor's registration number or Federal
24Employer Identification Number), the purchase price, and the
25amount of Manufacturer's Purchase Credit used on each purchase.
26    A purchaser that fails to file an annual Report of

 

 

SB1669- 76 -LRB100 06197 HLH 16231 b

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

 

 

SB1669- 77 -LRB100 06197 HLH 16231 b

1Manufacturer's Purchase Credit in the same manner as a
2manufacturer or graphic arts producer. A purchaser shall not be
3entitled to any Manufacturer's Purchase Credit for a purchase
4that is required to be reported and is not timely reported as
5provided in this Section. A purchaser remains liable for (i)
6any tax that was satisfied by use of a Manufacturer's Purchase
7Credit, as of the date of purchase, if that use is not timely
8reported as required in this Section and (ii) for any
9applicable penalties and interest for failing to pay the tax
10when due.
11(Source: P.A. 96-116, eff. 7-31-09.)
 
12    Section 15. The Service Use Tax Act is amended by changing
13Sections 2, 3-5, and 3-70 as follows:
 
14    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
15    Sec. 2. Definitions.
16    "Use" means the exercise by any person of any right or
17power over tangible personal property incident to the ownership
18of that property, but does not include the sale or use for
19demonstration by him of that property in any form as tangible
20personal property in the regular course of business. "Use" does
21not mean the interim use of tangible personal property nor the
22physical incorporation of tangible personal property, as an
23ingredient or constituent, into other tangible personal
24property, (a) which is sold in the regular course of business

 

 

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1or (b) which the person incorporating such ingredient or
2constituent therein has undertaken at the time of such purchase
3to cause to be transported in interstate commerce to
4destinations outside the State of Illinois.
5    "Purchased from a serviceman" means the acquisition of the
6ownership of, or title to, tangible personal property through a
7sale of service.
8    "Purchaser" means any person who, through a sale of
9service, acquires the ownership of, or title to, any tangible
10personal property.
11    "Cost price" means the consideration paid by the serviceman
12for a purchase valued in money, whether paid in money or
13otherwise, including cash, credits and services, and shall be
14determined without any deduction on account of the supplier's
15cost of the property sold or on account of any other expense
16incurred by the supplier. When a serviceman contracts out part
17or all of the services required in his sale of service, it
18shall be presumed that the cost price to the serviceman of the
19property transferred to him or her by his or her subcontractor
20is equal to 50% of the subcontractor's charges to the
21serviceman in the absence of proof of the consideration paid by
22the subcontractor for the purchase of such property.
23    "Selling price" means the consideration for a sale valued
24in money whether received in money or otherwise, including
25cash, credits and service, and shall be determined without any
26deduction on account of the serviceman's cost of the property

 

 

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1sold, the cost of materials used, labor or service cost or any
2other expense whatsoever, but does not include interest or
3finance charges which appear as separate items on the bill of
4sale or sales contract nor charges that are added to prices by
5sellers on account of the seller's duty to collect, from the
6purchaser, the tax that is imposed by this Act.
7    "Department" means the Department of Revenue.
8    "Person" means any natural individual, firm, partnership,
9association, joint stock company, joint venture, public or
10private corporation, limited liability company, and any
11receiver, executor, trustee, guardian or other representative
12appointed by order of any court.
13    "Sale of service" means any transaction except:
14        (1) a retail sale of tangible personal property taxable
15    under the Retailers' Occupation Tax Act or under the Use
16    Tax Act.
17        (2) a sale of tangible personal property for the
18    purpose of resale made in compliance with Section 2c of the
19    Retailers' Occupation Tax Act.
20        (3) except as hereinafter provided, a sale or transfer
21    of tangible personal property as an incident to the
22    rendering of service for or by any governmental body, or
23    for or by any corporation, society, association,
24    foundation or institution organized and operated
25    exclusively for charitable, religious or educational
26    purposes or any not-for-profit corporation, society,

 

 

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1    association, foundation, institution or organization which
2    has no compensated officers or employees and which is
3    organized and operated primarily for the recreation of
4    persons 55 years of age or older. A limited liability
5    company may qualify for the exemption under this paragraph
6    only if the limited liability company is organized and
7    operated exclusively for educational purposes.
8        (4) a sale or transfer of tangible personal property as
9    an incident to the rendering of service for interstate
10    carriers for hire for use as rolling stock moving in
11    interstate commerce or by lessors under a lease of one year
12    or longer, executed or in effect at the time of purchase of
13    personal property, to interstate carriers for hire for use
14    as rolling stock moving in interstate commerce so long as
15    so used by such interstate carriers for hire, and equipment
16    operated by a telecommunications provider, licensed as a
17    common carrier by the Federal Communications Commission,
18    which is permanently installed in or affixed to aircraft
19    moving in interstate commerce.
20        (4a) a sale or transfer of tangible personal property
21    as an incident to the rendering of service for owners,
22    lessors, or shippers of tangible personal property which is
23    utilized by interstate carriers for hire for use as rolling
24    stock moving in interstate commerce so long as so used by
25    interstate carriers for hire, and equipment operated by a
26    telecommunications provider, licensed as a common carrier

 

 

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1    by the Federal Communications Commission, which is
2    permanently installed in or affixed to aircraft moving in
3    interstate commerce.
4        (4a-5) on and after July 1, 2003 and through June 30,
5    2004, a sale or transfer of a motor vehicle of the second
6    division with a gross vehicle weight in excess of 8,000
7    pounds as an incident to the rendering of service if that
8    motor vehicle is subject to the commercial distribution fee
9    imposed under Section 3-815.1 of the Illinois Vehicle Code.
10    Beginning on July 1, 2004 and through June 30, 2005, the
11    use in this State of motor vehicles of the second division:
12    (i) with a gross vehicle weight rating in excess of 8,000
13    pounds; (ii) that are subject to the commercial
14    distribution fee imposed under Section 3-815.1 of the
15    Illinois Vehicle Code; and (iii) that are primarily used
16    for commercial purposes. Through June 30, 2005, this
17    exemption applies to repair and replacement parts added
18    after the initial purchase of such a motor vehicle if that
19    motor vehicle is used in a manner that would qualify for
20    the rolling stock exemption otherwise provided for in this
21    Act. For purposes of this paragraph, "used for commercial
22    purposes" means the transportation of persons or property
23    in furtherance of any commercial or industrial enterprise
24    whether for-hire or not.
25        (5) a sale or transfer of machinery and equipment used
26    primarily in the process of the manufacturing or

 

 

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1    assembling, either in an existing, an expanded or a new
2    manufacturing facility, of tangible personal property for
3    wholesale or retail sale or lease, whether such sale or
4    lease is made directly by the manufacturer or by some other
5    person, whether the materials used in the process are owned
6    by the manufacturer or some other person, or whether such
7    sale or lease is made apart from or as an incident to the
8    seller's engaging in a service occupation and the
9    applicable tax is a Service Use Tax or Service Occupation
10    Tax, rather than Use Tax or Retailers' Occupation Tax. The
11    exemption provided by this paragraph (5) does not include
12    machinery and equipment used in (i) the generation of
13    electricity for wholesale or retail sale; (ii) the
14    generation or treatment of natural or artificial gas for
15    wholesale or retail sale that is delivered to customers
16    through pipes, pipelines, or mains; or (iii) the treatment
17    of water for wholesale or retail sale that is delivered to
18    customers through pipes, pipelines, or mains. The
19    provisions of this amendatory Act of the 98th General
20    Assembly are declaratory of existing law as to the meaning
21    and scope of this exemption. The exemption under this
22    paragraph (5) is exempt from the provisions of Section
23    3-75.
24        (5a) the repairing, reconditioning or remodeling, for
25    a common carrier by rail, of tangible personal property
26    which belongs to such carrier for hire, and as to which

 

 

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1    such carrier receives the physical possession of the
2    repaired, reconditioned or remodeled item of tangible
3    personal property in Illinois, and which such carrier
4    transports, or shares with another common carrier in the
5    transportation of such property, out of Illinois on a
6    standard uniform bill of lading showing the person who
7    repaired, reconditioned or remodeled the property to a
8    destination outside Illinois, for use outside Illinois.
9        (5b) a sale or transfer of tangible personal property
10    which is produced by the seller thereof on special order in
11    such a way as to have made the applicable tax the Service
12    Occupation Tax or the Service Use Tax, rather than the
13    Retailers' Occupation Tax or the Use Tax, for an interstate
14    carrier by rail which receives the physical possession of
15    such property in Illinois, and which transports such
16    property, or shares with another common carrier in the
17    transportation of such property, out of Illinois on a
18    standard uniform bill of lading showing the seller of the
19    property as the shipper or consignor of such property to a
20    destination outside Illinois, for use outside Illinois.
21        (6) until July 1, 2003, a sale or transfer of
22    distillation machinery and equipment, sold as a unit or kit
23    and assembled or installed by the retailer, which machinery
24    and equipment is certified by the user to be used only for
25    the production of ethyl alcohol that will be used for
26    consumption as motor fuel or as a component of motor fuel

 

 

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1    for the personal use of such user and not subject to sale
2    or resale.
3        (7) at the election of any serviceman not required to
4    be otherwise registered as a retailer under Section 2a of
5    the Retailers' Occupation Tax Act, made for each fiscal
6    year sales of service in which the aggregate annual cost
7    price of tangible personal property transferred as an
8    incident to the sales of service is less than 35%, or 75%
9    in the case of servicemen transferring prescription drugs
10    or servicemen engaged in graphic arts production, of the
11    aggregate annual total gross receipts from all sales of
12    service. The purchase of such tangible personal property by
13    the serviceman shall be subject to tax under the Retailers'
14    Occupation Tax Act and the Use Tax Act. However, if a
15    primary serviceman who has made the election described in
16    this paragraph subcontracts service work to a secondary
17    serviceman who has also made the election described in this
18    paragraph, the primary serviceman does not incur a Use Tax
19    liability if the secondary serviceman (i) has paid or will
20    pay Use Tax on his or her cost price of any tangible
21    personal property transferred to the primary serviceman
22    and (ii) certifies that fact in writing to the primary
23    serviceman.
24    Tangible personal property transferred incident to the
25completion of a maintenance agreement is exempt from the tax
26imposed pursuant to this Act.

 

 

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1    Exemption (5) also includes machinery and equipment used in
2the general maintenance or repair of such exempt machinery and
3equipment or for in-house manufacture of exempt machinery and
4equipment. On and after August 31, 2014, exemption (5) also
5includes graphic arts machinery and equipment, as defined in
6paragraph (5) of Section 3-5, and production related tangible
7personal property, as defined in this Section. The machinery
8and equipment exemption does not include machinery and
9equipment used in (i) the generation of electricity for
10wholesale or retail sale; (ii) the generation or treatment of
11natural or artificial gas for wholesale or retail sale that is
12delivered to customers through pipes, pipelines, or mains; or
13(iii) the treatment of water for wholesale or retail sale that
14is delivered to customers through pipes, pipelines, or mains.
15The provisions of this amendatory Act of the 98th General
16Assembly are declaratory of existing law as to the meaning and
17scope of this exemption. For the purposes of exemption (5),
18each of these terms shall have the following meanings: (1)
19"manufacturing process" shall mean the production of any
20article of tangible personal property, whether such article is
21a finished product or an article for use in the process of
22manufacturing or assembling a different article of tangible
23personal property, by procedures commonly regarded as
24manufacturing, processing, fabricating, or refining which
25changes some existing material or materials into a material
26with a different form, use or name. In relation to a recognized

 

 

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1integrated business composed of a series of operations which
2collectively constitute manufacturing, or individually
3constitute manufacturing operations, the manufacturing process
4shall be deemed to commence with the first operation or stage
5of production in the series, and shall not be deemed to end
6until the completion of the final product in the last operation
7or stage of production in the series; and further, for purposes
8of exemption (5), photoprocessing is deemed to be a
9manufacturing process of tangible personal property for
10wholesale or retail sale; (2) "assembling process" shall mean
11the production of any article of tangible personal property,
12whether such article is a finished product or an article for
13use in the process of manufacturing or assembling a different
14article of tangible personal property, by the combination of
15existing materials in a manner commonly regarded as assembling
16which results in a material of a different form, use or name;
17(3) "machinery" shall mean major mechanical machines or major
18components of such machines contributing to a manufacturing or
19assembling process; and (4) "equipment" shall include any
20independent device or tool separate from any machinery but
21essential to an integrated manufacturing or assembly process;
22including computers used primarily in a manufacturer's
23computer assisted design, computer assisted manufacturing
24(CAD/CAM) system; or any subunit or assembly comprising a
25component of any machinery or auxiliary, adjunct or attachment
26parts of machinery, such as tools, dies, jigs, fixtures,

 

 

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1patterns and molds; or any parts which require periodic
2replacement in the course of normal operation; but shall not
3include hand tools; "equipment" . Equipment includes chemicals
4or chemicals acting as catalysts but only if the chemicals or
5chemicals acting as catalysts effect a direct and immediate
6change upon a product being manufactured or assembled for
7wholesale or retail sale or lease; and (5) "production related
8tangible personal property" means all tangible personal
9property that is used or consumed by the purchaser in a
10manufacturing facility in which a manufacturing process
11described in Section 2-45 of the Retailers' Occupation Tax Act
12takes place, including tangible personal property that is
13purchased for incorporation into real estate within a
14manufacturing facility, and including, but not limited to,
15tangible personal property that is used or consumed in
16activities such as preproduction material handling, receiving,
17quality control, inventory control, storage, staging,
18packaging for shipping and transportation purposes, and all
19tangible personal property used or consumed by the purchaser
20for research and development; "production related tangible
21personal property" does not include (i) tangible personal
22property that is used, within or without a manufacturing
23facility, in sales, purchasing, accounting, fiscal management,
24marketing, personnel recruitment or selection, or landscaping,
25or (ii) tangible personal property that is required to be
26titled or registered with a department, agency, or unit of

 

 

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1federal, State, or local government. The purchaser of such
2machinery and equipment who has an active resale registration
3number shall furnish such number to the seller at the time of
4purchase. The user of such machinery and equipment and tools
5without an active resale registration number shall prepare a
6certificate of exemption for each transaction stating facts
7establishing the exemption for that transaction, which
8certificate shall be available to the Department for inspection
9or audit. The Department shall prescribe the form of the
10certificate.
11    Any informal rulings, opinions or letters issued by the
12Department in response to an inquiry or request for any opinion
13from any person regarding the coverage and applicability of
14exemption (5) to specific devices shall be published,
15maintained as a public record, and made available for public
16inspection and copying. If the informal ruling, opinion or
17letter contains trade secrets or other confidential
18information, where possible the Department shall delete such
19information prior to publication. Whenever such informal
20rulings, opinions, or letters contain any policy of general
21applicability, the Department shall formulate and adopt such
22policy as a rule in accordance with the provisions of the
23Illinois Administrative Procedure Act.
24    On and after July 1, 1987, no entity otherwise eligible
25under exemption (3) of this Section shall make tax free
26purchases unless it has an active exemption identification

 

 

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1number issued by the Department.
2    The purchase, employment and transfer of such tangible
3personal property as newsprint and ink for the primary purpose
4of conveying news (with or without other information) is not a
5purchase, use or sale of service or of tangible personal
6property within the meaning of this Act.
7    "Serviceman" means any person who is engaged in the
8occupation of making sales of service.
9    "Sale at retail" means "sale at retail" as defined in the
10Retailers' Occupation Tax Act.
11    "Supplier" means any person who makes sales of tangible
12personal property to servicemen for the purpose of resale as an
13incident to a sale of service.
14    "Serviceman maintaining a place of business in this State",
15or any like term, means and includes any serviceman:
16        1. having or maintaining within this State, directly or
17    by a subsidiary, an office, distribution house, sales
18    house, warehouse or other place of business, or any agent
19    or other representative operating within this State under
20    the authority of the serviceman or its subsidiary,
21    irrespective of whether such place of business or agent or
22    other representative is located here permanently or
23    temporarily, or whether such serviceman or subsidiary is
24    licensed to do business in this State;
25        1.1. having a contract with a person located in this
26    State under which the person, for a commission or other

 

 

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1    consideration based on the sale of service by the
2    serviceman, directly or indirectly refers potential
3    customers to the serviceman by providing to the potential
4    customers a promotional code or other mechanism that allows
5    the serviceman to track purchases referred by such persons.
6    Examples of mechanisms that allow the serviceman to track
7    purchases referred by such persons include but are not
8    limited to the use of a link on the person's Internet
9    website, promotional codes distributed through the
10    person's hand-delivered or mailed material, and
11    promotional codes distributed by the person through radio
12    or other broadcast media. The provisions of this paragraph
13    1.1 shall apply only if the cumulative gross receipts from
14    sales of service by the serviceman to customers who are
15    referred to the serviceman by all persons in this State
16    under such contracts exceed $10,000 during the preceding 4
17    quarterly periods ending on the last day of March, June,
18    September, and December; a serviceman meeting the
19    requirements of this paragraph 1.1 shall be presumed to be
20    maintaining a place of business in this State but may rebut
21    this presumption by submitting proof that the referrals or
22    other activities pursued within this State by such persons
23    were not sufficient to meet the nexus standards of the
24    United States Constitution during the preceding 4
25    quarterly periods;
26        1.2. beginning July 1, 2011, having a contract with a

 

 

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1    person located in this State under which:
2            A. the serviceman sells the same or substantially
3        similar line of services as the person located in this
4        State and does so using an identical or substantially
5        similar name, trade name, or trademark as the person
6        located in this State; and
7            B. the serviceman provides a commission or other
8        consideration to the person located in this State based
9        upon the sale of services by the serviceman.
10    The provisions of this paragraph 1.2 shall apply only if
11    the cumulative gross receipts from sales of service by the
12    serviceman to customers in this State under all such
13    contracts exceed $10,000 during the preceding 4 quarterly
14    periods ending on the last day of March, June, September,
15    and December;
16        2. soliciting orders for tangible personal property by
17    means of a telecommunication or television shopping system
18    (which utilizes toll free numbers) which is intended by the
19    retailer to be broadcast by cable television or other means
20    of broadcasting, to consumers located in this State;
21        3. pursuant to a contract with a broadcaster or
22    publisher located in this State, soliciting orders for
23    tangible personal property by means of advertising which is
24    disseminated primarily to consumers located in this State
25    and only secondarily to bordering jurisdictions;
26        4. soliciting orders for tangible personal property by

 

 

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1    mail if the solicitations are substantial and recurring and
2    if the retailer benefits from any banking, financing, debt
3    collection, telecommunication, or marketing activities
4    occurring in this State or benefits from the location in
5    this State of authorized installation, servicing, or
6    repair facilities;
7        5. being owned or controlled by the same interests
8    which own or control any retailer engaging in business in
9    the same or similar line of business in this State;
10        6. having a franchisee or licensee operating under its
11    trade name if the franchisee or licensee is required to
12    collect the tax under this Section;
13        7. pursuant to a contract with a cable television
14    operator located in this State, soliciting orders for
15    tangible personal property by means of advertising which is
16    transmitted or distributed over a cable television system
17    in this State; or
18        8. engaging in activities in Illinois, which
19    activities in the state in which the supply business
20    engaging in such activities is located would constitute
21    maintaining a place of business in that state.
22(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
 
23    (35 ILCS 110/3-5)
24    Sec. 3-5. Exemptions. Use of the following tangible
25personal property is exempt from the tax imposed by this Act:

 

 

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1    (1) Personal property purchased from a corporation,
2society, association, foundation, institution, or
3organization, other than a limited liability company, that is
4organized and operated as a not-for-profit service enterprise
5for the benefit of persons 65 years of age or older if the
6personal property was not purchased by the enterprise for the
7purpose of resale by the enterprise.
8    (2) Personal property purchased by a non-profit Illinois
9county fair association for use in conducting, operating, or
10promoting the county fair.
11    (3) Personal property purchased by a not-for-profit arts or
12cultural organization that establishes, by proof required by
13the Department by rule, that it has received an exemption under
14Section 501(c)(3) of the Internal Revenue Code and that is
15organized and operated primarily for the presentation or
16support of arts or cultural programming, activities, or
17services. These organizations include, but are not limited to,
18music and dramatic arts organizations such as symphony
19orchestras and theatrical groups, arts and cultural service
20organizations, local arts councils, visual arts organizations,
21and media arts organizations. On and after the effective date
22of this amendatory Act of the 92nd General Assembly, however,
23an entity otherwise eligible for this exemption shall not make
24tax-free purchases unless it has an active identification
25number issued by the Department.
26    (4) Legal tender, currency, medallions, or gold or silver

 

 

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1coinage issued by the State of Illinois, the government of the
2United States of America, or the government of any foreign
3country, and bullion.
4    (5) Until July 1, 2003 and beginning again on September 1,
52004 through August 30, 2014, graphic arts machinery and
6equipment, including repair and replacement parts, both new and
7used, and including that manufactured on special order or
8purchased for lease, certified by the purchaser to be used
9primarily for graphic arts production. Equipment includes
10chemicals or chemicals acting as catalysts but only if the
11chemicals or chemicals acting as catalysts effect a direct and
12immediate change upon a graphic arts product. Beginning on
13August 31, 2014, graphic arts machinery and equipment is
14included in the manufacturing and assembling machinery and
15equipment exemption under Section 2 of this Act.
16    (6) Personal property purchased from a teacher-sponsored
17student organization affiliated with an elementary or
18secondary school located in Illinois.
19    (7) Farm machinery and equipment, both new and used,
20including that manufactured on special order, certified by the
21purchaser to be used primarily for production agriculture or
22State or federal agricultural programs, including individual
23replacement parts for the machinery and equipment, including
24machinery and equipment purchased for lease, and including
25implements of husbandry defined in Section 1-130 of the
26Illinois Vehicle Code, farm machinery and agricultural

 

 

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1chemical and fertilizer spreaders, and nurse wagons required to
2be registered under Section 3-809 of the Illinois Vehicle Code,
3but excluding other motor vehicles required to be registered
4under the Illinois Vehicle Code. Horticultural polyhouses or
5hoop houses used for propagating, growing, or overwintering
6plants shall be considered farm machinery and equipment under
7this item (7). Agricultural chemical tender tanks and dry boxes
8shall include units sold separately from a motor vehicle
9required to be licensed and units sold mounted on a motor
10vehicle required to be licensed if the selling price of the
11tender is separately stated.
12    Farm machinery and equipment shall include precision
13farming equipment that is installed or purchased to be
14installed on farm machinery and equipment including, but not
15limited to, tractors, harvesters, sprayers, planters, seeders,
16or spreaders. Precision farming equipment includes, but is not
17limited to, soil testing sensors, computers, monitors,
18software, global positioning and mapping systems, and other
19such equipment.
20    Farm machinery and equipment also includes computers,
21sensors, software, and related equipment used primarily in the
22computer-assisted operation of production agriculture
23facilities, equipment, and activities such as, but not limited
24to, the collection, monitoring, and correlation of animal and
25crop data for the purpose of formulating animal diets and
26agricultural chemicals. This item (7) is exempt from the

 

 

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1provisions of Section 3-75.
2    (8) Until June 30, 2013, fuel and petroleum products sold
3to or used by an air common carrier, certified by the carrier
4to be used for consumption, shipment, or storage in the conduct
5of its business as an air common carrier, for a flight destined
6for or returning from a location or locations outside the
7United States without regard to previous or subsequent domestic
8stopovers.
9    Beginning July 1, 2013, fuel and petroleum products sold to
10or used by an air carrier, certified by the carrier to be used
11for consumption, shipment, or storage in the conduct of its
12business as an air common carrier, for a flight that (i) is
13engaged in foreign trade or is engaged in trade between the
14United States and any of its possessions and (ii) transports at
15least one individual or package for hire from the city of
16origination to the city of final destination on the same
17aircraft, without regard to a change in the flight number of
18that aircraft.
19    (9) Proceeds of mandatory service charges separately
20stated on customers' bills for the purchase and consumption of
21food and beverages acquired as an incident to the purchase of a
22service from a serviceman, to the extent that the proceeds of
23the service charge are in fact turned over as tips or as a
24substitute for tips to the employees who participate directly
25in preparing, serving, hosting or cleaning up the food or
26beverage function with respect to which the service charge is

 

 

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1imposed.
2    (10) Until July 1, 2003, oil field exploration, drilling,
3and production equipment, including (i) rigs and parts of rigs,
4rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
5tubular goods, including casing and drill strings, (iii) pumps
6and pump-jack units, (iv) storage tanks and flow lines, (v) any
7individual replacement part for oil field exploration,
8drilling, and production equipment, and (vi) machinery and
9equipment purchased for lease; but excluding motor vehicles
10required to be registered under the Illinois Vehicle Code.
11    (11) Proceeds from the sale of photoprocessing machinery
12and equipment, including repair and replacement parts, both new
13and used, including that manufactured on special order,
14certified by the purchaser to be used primarily for
15photoprocessing, and including photoprocessing machinery and
16equipment purchased for lease.
17    (12) Coal and aggregate exploration, mining, off-highway
18hauling, processing, maintenance, and reclamation equipment,
19including replacement parts and equipment, and including
20equipment purchased for lease, but excluding motor vehicles
21required to be registered under the Illinois Vehicle Code. The
22changes made to this Section by Public Act 97-767 apply on and
23after July 1, 2003, but no claim for credit or refund is
24allowed on or after August 16, 2013 (the effective date of
25Public Act 98-456) for such taxes paid during the period
26beginning July 1, 2003 and ending on August 16, 2013 (the

 

 

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1effective date of Public Act 98-456). This item (12) is exempt
2from the provisions of Section 3-75.
3    (13) Semen used for artificial insemination of livestock
4for direct agricultural production.
5    (14) Horses, or interests in horses, registered with and
6meeting the requirements of any of the Arabian Horse Club
7Registry of America, Appaloosa Horse Club, American Quarter
8Horse Association, United States Trotting Association, or
9Jockey Club, as appropriate, used for purposes of breeding or
10racing for prizes. This item (14) is exempt from the provisions
11of Section 3-75, and the exemption provided for under this item
12(14) applies for all periods beginning May 30, 1995, but no
13claim for credit or refund is allowed on or after the effective
14date of this amendatory Act of the 95th General Assembly for
15such taxes paid during the period beginning May 30, 2000 and
16ending on the effective date of this amendatory Act of the 95th
17General Assembly.
18    (15) Computers and communications equipment utilized for
19any hospital purpose and equipment used in the diagnosis,
20analysis, or treatment of hospital patients purchased by a
21lessor who leases the equipment, under a lease of one year or
22longer executed or in effect at the time the lessor would
23otherwise be subject to the tax imposed by this Act, to a
24hospital that has been issued an active tax exemption
25identification number by the Department under Section 1g of the
26Retailers' Occupation Tax Act. If the equipment is leased in a

 

 

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1manner that does not qualify for this exemption or is used in
2any other non-exempt manner, the lessor shall be liable for the
3tax imposed under this Act or the Use Tax Act, as the case may
4be, based on the fair market value of the property at the time
5the non-qualifying use occurs. No lessor shall collect or
6attempt to collect an amount (however designated) that purports
7to reimburse that lessor for the tax imposed by this Act or the
8Use Tax Act, as the case may be, if the tax has not been paid by
9the lessor. If a lessor improperly collects any such amount
10from the lessee, the lessee shall have a legal right to claim a
11refund of that amount from the lessor. If, however, that amount
12is not refunded to the lessee for any reason, the lessor is
13liable to pay that amount to the Department.
14    (16) Personal property purchased by a lessor who leases the
15property, under a lease of one year or longer executed or in
16effect at the time the lessor would otherwise be subject to the
17tax imposed by this Act, to a governmental body that has been
18issued an active tax exemption identification number by the
19Department under Section 1g of the Retailers' Occupation Tax
20Act. If the property is leased in a manner that does not
21qualify for this exemption or is used in any other non-exempt
22manner, the lessor shall be liable for the tax imposed under
23this Act or the Use Tax Act, as the case may be, based on the
24fair market value of the property at the time the
25non-qualifying use occurs. No lessor shall collect or attempt
26to collect an amount (however designated) that purports to

 

 

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1reimburse that lessor for the tax imposed by this Act or the
2Use Tax Act, as the case may be, if the tax has not been paid by
3the lessor. If a lessor improperly collects any such amount
4from the lessee, the lessee shall have a legal right to claim a
5refund of that amount from the lessor. If, however, that amount
6is not refunded to the lessee for any reason, the lessor is
7liable to pay that amount to the Department.
8    (17) Beginning with taxable years ending on or after
9December 31, 1995 and ending with taxable years ending on or
10before December 31, 2004, personal property that is donated for
11disaster relief to be used in a State or federally declared
12disaster area in Illinois or bordering Illinois by a
13manufacturer or retailer that is registered in this State to a
14corporation, society, association, foundation, or institution
15that has been issued a sales tax exemption identification
16number by the Department that assists victims of the disaster
17who reside within the declared disaster area.
18    (18) Beginning with taxable years ending on or after
19December 31, 1995 and ending with taxable years ending on or
20before December 31, 2004, personal property that is used in the
21performance of infrastructure repairs in this State, including
22but not limited to municipal roads and streets, access roads,
23bridges, sidewalks, waste disposal systems, water and sewer
24line extensions, water distribution and purification
25facilities, storm water drainage and retention facilities, and
26sewage treatment facilities, resulting from a State or

 

 

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1federally declared disaster in Illinois or bordering Illinois
2when such repairs are initiated on facilities located in the
3declared disaster area within 6 months after the disaster.
4    (19) Beginning July 1, 1999, game or game birds purchased
5at a "game breeding and hunting preserve area" as that term is
6used in the Wildlife Code. This paragraph is exempt from the
7provisions of Section 3-75.
8    (20) A motor vehicle, as that term is defined in Section
91-146 of the Illinois Vehicle Code, that is donated to a
10corporation, limited liability company, society, association,
11foundation, or institution that is determined by the Department
12to be organized and operated exclusively for educational
13purposes. For purposes of this exemption, "a corporation,
14limited liability company, society, association, foundation,
15or institution organized and operated exclusively for
16educational purposes" means all tax-supported public schools,
17private schools that offer systematic instruction in useful
18branches of learning by methods common to public schools and
19that compare favorably in their scope and intensity with the
20course of study presented in tax-supported schools, and
21vocational or technical schools or institutes organized and
22operated exclusively to provide a course of study of not less
23than 6 weeks duration and designed to prepare individuals to
24follow a trade or to pursue a manual, technical, mechanical,
25industrial, business, or commercial occupation.
26    (21) Beginning January 1, 2000, personal property,

 

 

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1including food, purchased through fundraising events for the
2benefit of a public or private elementary or secondary school,
3a group of those schools, or one or more school districts if
4the events are sponsored by an entity recognized by the school
5district that consists primarily of volunteers and includes
6parents and teachers of the school children. This paragraph
7does not apply to fundraising events (i) for the benefit of
8private home instruction or (ii) for which the fundraising
9entity purchases the personal property sold at the events from
10another individual or entity that sold the property for the
11purpose of resale by the fundraising entity and that profits
12from the sale to the fundraising entity. This paragraph is
13exempt from the provisions of Section 3-75.
14    (22) Beginning January 1, 2000 and through December 31,
152001, new or used automatic vending machines that prepare and
16serve hot food and beverages, including coffee, soup, and other
17items, and replacement parts for these machines. Beginning
18January 1, 2002 and through June 30, 2003, machines and parts
19for machines used in commercial, coin-operated amusement and
20vending business if a use or occupation tax is paid on the
21gross receipts derived from the use of the commercial,
22coin-operated amusement and vending machines. This paragraph
23is exempt from the provisions of Section 3-75.
24    (23) Beginning August 23, 2001 and through June 30, 2016,
25food for human consumption that is to be consumed off the
26premises where it is sold (other than alcoholic beverages, soft

 

 

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1drinks, and food that has been prepared for immediate
2consumption) and prescription and nonprescription medicines,
3drugs, medical appliances, and insulin, urine testing
4materials, syringes, and needles used by diabetics, for human
5use, when purchased for use by a person receiving medical
6assistance under Article V of the Illinois Public Aid Code who
7resides in a licensed long-term care facility, as defined in
8the Nursing Home Care Act, or in a licensed facility as defined
9in the ID/DD Community Care Act, the MC/DD Act, or the
10Specialized Mental Health Rehabilitation Act of 2013.
11    (24) Beginning on the effective date of this amendatory Act
12of the 92nd General Assembly, computers and communications
13equipment utilized for any hospital purpose and equipment used
14in the diagnosis, analysis, or treatment of hospital patients
15purchased by a lessor who leases the equipment, under a lease
16of one year or longer executed or in effect at the time the
17lessor would otherwise be subject to the tax imposed by this
18Act, to a hospital that has been issued an active tax exemption
19identification number by the Department under Section 1g of the
20Retailers' Occupation Tax Act. If the equipment is leased in a
21manner that does not qualify for this exemption or is used in
22any other nonexempt manner, the lessor shall be liable for the
23tax imposed under this Act or the Use Tax Act, as the case may
24be, based on the fair market value of the property at the time
25the nonqualifying use occurs. No lessor shall collect or
26attempt to collect an amount (however designated) that purports

 

 

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1to reimburse that lessor for the tax imposed by this Act or the
2Use Tax Act, as the case may be, if the tax has not been paid by
3the lessor. If a lessor improperly collects any such amount
4from the lessee, the lessee shall have a legal right to claim a
5refund of that amount from the lessor. If, however, that amount
6is not refunded to the lessee for any reason, the lessor is
7liable to pay that amount to the Department. This paragraph is
8exempt from the provisions of Section 3-75.
9    (25) Beginning on the effective date of this amendatory Act
10of the 92nd General Assembly, personal property purchased by a
11lessor who leases the property, under a lease of one year or
12longer executed or in effect at the time the lessor would
13otherwise be subject to the tax imposed by this Act, to a
14governmental body that has been issued an active tax exemption
15identification number by the Department under Section 1g of the
16Retailers' Occupation Tax Act. If the property is leased in a
17manner that does not qualify for this exemption or is used in
18any other nonexempt manner, the lessor shall be liable for the
19tax imposed under this Act or the Use Tax Act, as the case may
20be, based on the fair market value of the property at the time
21the nonqualifying use occurs. No lessor shall collect or
22attempt to collect an amount (however designated) that purports
23to reimburse that lessor for the tax imposed by this Act or the
24Use Tax Act, as the case may be, if the tax has not been paid by
25the lessor. If a lessor improperly collects any such amount
26from the lessee, the lessee shall have a legal right to claim a

 

 

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1refund of that amount from the lessor. If, however, that amount
2is not refunded to the lessee for any reason, the lessor is
3liable to pay that amount to the Department. This paragraph is
4exempt from the provisions of Section 3-75.
5    (26) Beginning January 1, 2008, tangible personal property
6used in the construction or maintenance of a community water
7supply, as defined under Section 3.145 of the Environmental
8Protection Act, that is operated by a not-for-profit
9corporation that holds a valid water supply permit issued under
10Title IV of the Environmental Protection Act. This paragraph is
11exempt from the provisions of Section 3-75.
12    (27) Beginning January 1, 2010, materials, parts,
13equipment, components, and furnishings incorporated into or
14upon an aircraft as part of the modification, refurbishment,
15completion, replacement, repair, or maintenance of the
16aircraft. This exemption includes consumable supplies used in
17the modification, refurbishment, completion, replacement,
18repair, and maintenance of aircraft, but excludes any
19materials, parts, equipment, components, and consumable
20supplies used in the modification, replacement, repair, and
21maintenance of aircraft engines or power plants, whether such
22engines or power plants are installed or uninstalled upon any
23such aircraft. "Consumable supplies" include, but are not
24limited to, adhesive, tape, sandpaper, general purpose
25lubricants, cleaning solution, latex gloves, and protective
26films. This exemption applies only to the use of qualifying

 

 

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1tangible personal property transferred incident to the
2modification, refurbishment, completion, replacement, repair,
3or maintenance of aircraft by persons who (i) hold an Air
4Agency Certificate and are empowered to operate an approved
5repair station by the Federal Aviation Administration, (ii)
6have a Class IV Rating, and (iii) conduct operations in
7accordance with Part 145 of the Federal Aviation Regulations.
8The exemption does not include aircraft operated by a
9commercial air carrier providing scheduled passenger air
10service pursuant to authority issued under Part 121 or Part 129
11of the Federal Aviation Regulations. The changes made to this
12paragraph (27) by Public Act 98-534 are declarative of existing
13law.
14    (28) Tangible personal property purchased by a
15public-facilities corporation, as described in Section
1611-65-10 of the Illinois Municipal Code, for purposes of
17constructing or furnishing a municipal convention hall, but
18only if the legal title to the municipal convention hall is
19transferred to the municipality without any further
20consideration by or on behalf of the municipality at the time
21of the completion of the municipal convention hall or upon the
22retirement or redemption of any bonds or other debt instruments
23issued by the public-facilities corporation in connection with
24the development of the municipal convention hall. This
25exemption includes existing public-facilities corporations as
26provided in Section 11-65-25 of the Illinois Municipal Code.

 

 

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1This paragraph is exempt from the provisions of Section 3-75.
2    (29) Beginning January 1, 2017, menstrual pads, tampons,
3and menstrual cups.
4(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
598-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
67-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
 
7    (35 ILCS 110/3-70)
8    Sec. 3-70. Manufacturer's Purchase Credit. For purchases
9of machinery and equipment made on and after January 1, 1995
10and through June 30, 2003, and on and after September 1, 2004
11through August 30, 2014, a purchaser of manufacturing machinery
12and equipment that qualifies for the exemption provided by
13Section 2 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
17through June 30, 2003, and on and after September 1, 2004
18through August 30, 2014, a purchase of graphic arts machinery
19and equipment that qualifies for the exemption provided by
20paragraph (5) 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 the purchase of manufacturing machinery and
24equipment and graphic arts machinery and equipment shall be
25referred to as the Manufacturer's Purchase Credit. A graphic

 

 

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1arts producer is a person engaged in graphic arts production as
2defined in Section 3-30 of the Service Occupation Tax Act.
3Beginning July 1, 1996, all references in this Section to
4manufacturers or manufacturing shall also refer to graphic arts
5producers or graphic arts production.
6    The amount of credit shall be a percentage of the tax that
7would have been incurred on the purchase of the manufacturing
8machinery and equipment or graphic arts machinery and equipment
9if the exemptions provided by Section 2 or paragraph (5) of
10Section 3-5 of this Act had not been applicable.
11    All purchases prior to October 1, 2003 and on and after
12September 1, 2004 and through August 30, 2014 of manufacturing
13machinery and equipment and graphic arts machinery and
14equipment that qualify for the exemptions provided by paragraph
15(5) of Section 2 or paragraph (5) of Section 3-5 of this Act
16qualify for the credit without regard to whether the serviceman
17elected, or could have elected, under paragraph (7) of Section
182 of this Act to exclude the transaction from this Act. If the
19serviceman's billing to the service customer separately states
20a selling price for the exempt manufacturing machinery or
21equipment or the exempt graphic arts machinery and equipment,
22the credit shall be calculated, as otherwise provided herein,
23based on that selling price. If the serviceman's billing does
24not separately state a selling price for the exempt
25manufacturing machinery and equipment or the exempt graphic
26arts machinery and equipment, the credit shall be calculated,

 

 

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1as otherwise provided herein, based on 50% of the entire
2billing. If the serviceman contracts to design, develop, and
3produce special order manufacturing machinery and equipment or
4special order graphic arts machinery and equipment, and the
5billing does not separately state a selling price for such
6special order machinery and equipment, the credit shall be
7calculated, as otherwise provided herein, based on 50% of the
8entire billing. The provisions of this paragraph are effective
9for purchases made on or after January 1, 1995.
10    The percentage shall be as follows:
11        (1) 15% for purchases made on or before June 30, 1995.
12        (2) 25% for purchases made after June 30, 1995, and on
13    or before June 30, 1996.
14        (3) 40% for purchases made after June 30, 1996, and on
15    or before June 30, 1997.
16        (4) 50% for purchases made on or after July 1, 1997.
17    (a) Manufacturer's Purchase Credit earned prior to July 1,
182003. This subsection (a) applies to Manufacturer's Purchase
19Credit earned prior to July 1, 2003. A purchaser of production
20related tangible personal property desiring to use the
21Manufacturer's Purchase Credit shall certify to the seller
22prior to October 1, 2003 that the purchaser is satisfying all
23or part of the liability under the Use Tax Act or the Service
24Use Tax Act that is due on the purchase of the production
25related tangible personal property by use of a Manufacturer's
26Purchase Credit. The Manufacturer's Purchase Credit

 

 

SB1669- 110 -LRB100 06197 HLH 16231 b

1certification must be dated and shall include the name and
2address of the purchaser, the purchaser's registration number,
3if registered, the credit being applied, and a statement that
4the State Use Tax or Service Use Tax liability is being
5satisfied with the manufacturer's or graphic arts producer's
6accumulated purchase credit. Certification may be incorporated
7into the manufacturer's or graphic arts producer's purchase
8order. Manufacturer's Purchase Credit certification provided
9by the manufacturer or graphic arts producer prior to October
101, 2003 may be used to satisfy the retailer's or serviceman's
11liability under the Retailers' Occupation Tax Act or Service
12Occupation Tax Act for the credit claimed, not to exceed 6.25%
13of the receipts subject to tax from a qualifying purchase, but
14only if the retailer or serviceman reports the Manufacturer's
15Purchase Credit claimed as required by the Department. A
16Manufacturer's Purchase Credit reported on any original or
17amended return filed under this Act after October 20, 2003
18shall be disallowed. The Manufacturer's Purchase Credit earned
19by purchase of exempt manufacturing machinery and equipment or
20graphic arts machinery and equipment is a non-transferable
21credit. A manufacturer or graphic arts producer that enters
22into a contract involving the installation of tangible personal
23property into real estate within a manufacturing or graphic
24arts production facility, prior to October 1, 2003, may
25authorize a construction contractor to utilize credit
26accumulated by the manufacturer or graphic arts producer to

 

 

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1purchase the tangible personal property. A manufacturer or
2graphic arts producer intending to use accumulated credit to
3purchase such tangible personal property shall execute a
4written contract authorizing the contractor to utilize a
5specified dollar amount of credit. The contractor shall
6furnish, prior to October 1, 2003, the supplier with the
7manufacturer's or graphic arts producer's name, registration
8or resale number, and a statement that a specific amount of the
9Use Tax or Service Use Tax liability, not to exceed 6.25% of
10the selling price, is being satisfied with the credit. The
11manufacturer or graphic arts producer shall remain liable to
12timely report all information required by the annual Report of
13Manufacturer's Purchase Credit Used for credit utilized by a
14construction contractor.
15    No Manufacturer's Purchase Credit earned prior to July 1,
162003 may be used after October 1, 2003. The Manufacturer's
17Purchase Credit may be used to satisfy liability under the Use
18Tax Act or the Service Use Tax Act due on the purchase of
19production related tangible personal property (including
20purchases by a manufacturer, by a graphic arts producer, or a
21lessor who rents or leases the use of the property to a
22manufacturer or graphic arts producer) that does not otherwise
23qualify for the manufacturing machinery and equipment
24exemption or the graphic arts machinery and equipment
25exemption. "Production related tangible personal property"
26means (i) all tangible personal property used or consumed by

 

 

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

 

 

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1landscaping or (ii) tangible personal property required to be
2titled or registered with a department, agency, or unit of
3federal, state, or local government. The Manufacturer's
4Purchase Credit may be used, prior to October 1, 2003, to
5satisfy the tax arising either from the purchase of machinery
6and equipment on or after January 1, 1995 for which the
7manufacturing machinery and equipment exemption provided by
8Section 2 of this Act was erroneously claimed, or the purchase
9of machinery and equipment on or after July 1, 1996 for which
10the exemption provided by paragraph (5) of Section 3-5 of this
11Act was erroneously claimed, but not in satisfaction of
12penalty, if any, and interest for failure to pay the tax when
13due. A purchaser of production related tangible personal
14property who is required to pay Illinois Use Tax or Service Use
15Tax on the purchase directly to the Department may, prior to
16October 1, 2003, utilize the Manufacturer's Purchase Credit in
17satisfaction of the tax arising from that purchase, but not in
18satisfaction of penalty and interest. A purchaser who uses the
19Manufacturer's Purchase Credit to purchase property which is
20later determined not to be production related tangible personal
21property may be liable for tax, penalty, and interest on the
22purchase of that property as of the date of purchase but shall
23be entitled to use the disallowed Manufacturer's Purchase
24Credit, so long as it has not expired and is used prior to
25October 1, 2003, on qualifying purchases of production related
26tangible personal property not previously subject to credit

 

 

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1usage. The Manufacturer's Purchase Credit earned by a
2manufacturer or graphic arts producer expires the last day of
3the second calendar year following the calendar year in which
4the credit arose. No Manufacturer's Purchase Credit may be used
5after September 30, 2003 regardless of when that credit was
6earned.
7    A purchaser earning Manufacturer's Purchase Credit shall
8sign and file an annual Report of Manufacturer's Purchase
9Credit Earned for each calendar year no later than the last day
10of the sixth month following the calendar year in which a
11Manufacturer's Purchase Credit is earned. A Report of
12Manufacturer's Purchase Credit Earned shall be filed on forms
13as prescribed or approved by the Department and shall state,
14for each month of the calendar year: (i) the total purchase
15price of all purchases of exempt manufacturing or graphic arts
16machinery on which the credit was earned; (ii) the total State
17Use Tax or Service Use Tax which would have been due on those
18items; (iii) the percentage used to calculate the amount of
19credit earned; (iv) the amount of credit earned; and (v) such
20other information as the Department may reasonably require. A
21purchaser earning Manufacturer's Purchase Credit shall
22maintain records which identify, as to each purchase of
23manufacturing or graphic arts machinery and equipment on which
24the purchaser earned Manufacturer's Purchase Credit, the
25vendor (including, if applicable, either the vendor's
26registration number or Federal Employer Identification

 

 

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1Number), the purchase price, and the amount of Manufacturer's
2Purchase Credit earned on each purchase.
3    A purchaser using Manufacturer's Purchase Credit shall
4sign and file an annual Report of Manufacturer's Purchase
5Credit Used for each calendar year no later than the last day
6of the sixth month following the calendar year in which a
7Manufacturer's Purchase Credit is used. A Report of
8Manufacturer's Purchase Credit Used shall be filed on forms as
9prescribed or approved by the Department and shall state, for
10each month of the calendar year: (i) the total purchase price
11of production related tangible personal property purchased
12from Illinois suppliers; (ii) the total purchase price of
13production related tangible personal property purchased from
14out-of-state suppliers; (iii) the total amount of credit used
15during such month; and (iv) such other information as the
16Department may reasonably require. A purchaser using
17Manufacturer's Purchase Credit shall maintain records that
18identify, as to each purchase of production related tangible
19personal property on which the purchaser used Manufacturer's
20Purchase Credit, the vendor (including, if applicable, either
21the vendor's registration number or Federal Employer
22Identification Number), the purchase price, and the amount of
23Manufacturer's Purchase Credit used on each purchase.
24    No annual report shall be filed before May 1, 1996 or after
25June 30, 2004. A purchaser that fails to file an annual Report
26of Manufacturer's Purchase Credit Earned or an annual Report of

 

 

SB1669- 116 -LRB100 06197 HLH 16231 b

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

 

 

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1    If the purchaser is not the manufacturer or a graphic arts
2producer, but rents or leases the use of the property to a
3manufacturer or a graphic arts producer, the purchaser may
4earn, report, and use Manufacturer's Purchase Credit in the
5same manner as a manufacturer or graphic arts producer.
6    A purchaser shall not be entitled to any Manufacturer's
7Purchase Credit for a purchase that is required to be reported
8and is not timely reported as provided in this Section. A
9purchaser remains liable for (i) any tax that was satisfied by
10use of a Manufacturer's Purchase Credit, as of the date of
11purchase, if that use is not timely reported as required in
12this Section and (ii) for any applicable penalties and interest
13for failing to pay the tax when due. No Manufacturer's Purchase
14Credit may be used after September 30, 2003 to satisfy any tax
15liability imposed under this Act, including any audit
16liability.
17    (b) Manufacturer's Purchase Credit earned on and after
18September 1, 2004 and through August 30, 2014. This subsection
19(b) applies to Manufacturer's Purchase Credit earned on or
20after September 1, 2004 and through August 30, 2014.
21Manufacturer's Purchase Credit earned on or after September 1,
222004 and through August 30, 2014 may only be used to satisfy
23the Use Tax or Service Use Tax liability incurred on production
24related tangible personal property purchased on or after
25September 1, 2004 and through August 30, 2014. A purchaser of
26production related tangible personal property desiring to use

 

 

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

 

 

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1manufacturing or graphic arts production facility may, on or
2after September 1, 2004, authorize a construction contractor to
3utilize credit accumulated by the manufacturer or graphic arts
4producer to purchase the tangible personal property. A
5manufacturer or graphic arts producer intending to use
6accumulated credit to purchase such tangible personal property
7shall execute a written contract authorizing the contractor to
8utilize a specified dollar amount of credit. The contractor
9shall furnish the supplier with the manufacturer's or graphic
10arts producer's name, registration or resale number, and a
11statement that a specific amount of the Use Tax or Service Use
12Tax liability, not to exceed 6.25% of the selling price, is
13being satisfied with the credit. The manufacturer or graphic
14arts producer shall remain liable to timely report all
15information required by the annual Report of Manufacturer's
16Purchase Credit Used for credit utilized by a construction
17contractor.
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 a
23lessor 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 pre-production 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 or graphic

 

 

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1arts facility, in sales, purchasing, accounting, fiscal
2management, marketing, personnel recruitment or selection, or
3landscaping or (ii) tangible personal property required to be
4titled or registered with a department, agency, or unit of
5federal, state, or local government. The Manufacturer's
6Purchase Credit may be used to satisfy the tax arising either
7from the purchase of machinery and equipment on or after
8September 1, 2004 for which the manufacturing machinery and
9equipment exemption provided by Section 2 of this Act was
10erroneously claimed, or the purchase of machinery and equipment
11on or after September 1, 2004 for which the exemption provided
12by paragraph (5) of Section 3-5 of this Act was erroneously
13claimed, but not in satisfaction of penalty, if any, and
14interest for failure to pay the tax when due. A purchaser of
15production related tangible personal property that is
16purchased on or after September 1, 2004 who is required to pay
17Illinois Use Tax or Service Use Tax on the purchase directly to
18the Department may utilize the Manufacturer's Purchase Credit
19in satisfaction of the tax arising from that purchase, but not
20in satisfaction of penalty and interest. A purchaser who uses
21the Manufacturer's Purchase Credit to purchase property on and
22after September 1, 2004 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, on qualifying purchases of production related
2tangible personal property not previously subject to credit
3usage. The Manufacturer's Purchase Credit earned by a
4manufacturer or graphic arts producer expires the last day of
5the second calendar year following the calendar year in which
6the credit arose.
7    A purchaser earning Manufacturer's Purchase Credit shall
8sign and file an annual Report of Manufacturer's Purchase
9Credit Earned for each calendar year no later than the last day
10of the sixth month following the calendar year in which a
11Manufacturer's Purchase Credit is earned. A Report of
12Manufacturer's Purchase Credit Earned shall be filed on forms
13as prescribed or approved by the Department and shall state,
14for each month of the calendar year: (i) the total purchase
15price of all purchases of exempt manufacturing or graphic arts
16machinery on which the credit was earned; (ii) the total State
17Use Tax or Service Use Tax which would have been due on those
18items; (iii) the percentage used to calculate the amount of
19credit earned; (iv) the amount of credit earned; and (v) such
20other information as the Department may reasonably require. A
21purchaser earning Manufacturer's Purchase Credit shall
22maintain records which identify, as to each purchase of
23manufacturing or graphic arts machinery and equipment on which
24the purchaser earned Manufacturer's Purchase Credit, the
25vendor (including, if applicable, either the vendor's
26registration number or Federal Employer Identification

 

 

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

 

 

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

 

 

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1purchaser shall not be entitled to any Manufacturer's Purchase
2Credit for a purchase that is required to be reported and is
3not timely reported as provided in this Section. A purchaser
4remains liable for (i) any tax that was satisfied by use of a
5Manufacturer's Purchase Credit, as of the date of purchase, if
6that use is not timely reported as required in this Section and
7(ii) for any applicable penalties and interest for failing to
8pay the tax when due.
9(Source: P.A. 96-116, eff. 7-31-09.)
 
10    Section 20. The Service Occupation Tax Act is amended by
11changing Sections 2, 3-5, and 9 as follows:
 
12    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
13    Sec. 2. "Transfer" means any transfer of the title to
14property or of the ownership of property whether or not the
15transferor retains title as security for the payment of amounts
16due him from the transferee.
17    "Cost Price" means the consideration paid by the serviceman
18for a purchase valued in money, whether paid in money or
19otherwise, including cash, credits and services, and shall be
20determined without any deduction on account of the supplier's
21cost of the property sold or on account of any other expense
22incurred by the supplier. When a serviceman contracts out part
23or all of the services required in his sale of service, it
24shall be presumed that the cost price to the serviceman of the

 

 

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1property transferred to him by his or her subcontractor is
2equal to 50% of the subcontractor's charges to the serviceman
3in the absence of proof of the consideration paid by the
4subcontractor for the purchase of such property.
5    "Department" means the Department of Revenue.
6    "Person" means any natural individual, firm, partnership,
7association, joint stock company, joint venture, public or
8private corporation, limited liability company, and any
9receiver, executor, trustee, guardian or other representative
10appointed by order of any court.
11    "Sale of Service" means any transaction except:
12    (a) A retail sale of tangible personal property taxable
13under the Retailers' Occupation Tax Act or under the Use Tax
14Act.
15    (b) A sale of tangible personal property for the purpose of
16resale made in compliance with Section 2c of the Retailers'
17Occupation Tax Act.
18    (c) Except as hereinafter provided, a sale or transfer of
19tangible personal property as an incident to the rendering of
20service for or by any governmental body or for or by any
21corporation, society, association, foundation or institution
22organized and operated exclusively for charitable, religious
23or educational purposes or any not-for-profit corporation,
24society, association, foundation, institution or organization
25which has no compensated officers or employees and which is
26organized and operated primarily for the recreation of persons

 

 

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155 years of age or older. A limited liability company may
2qualify for the exemption under this paragraph only if the
3limited liability company is organized and operated
4exclusively for educational purposes.
5    (d) A sale or transfer of tangible personal property as an
6incident to the rendering of service for interstate carriers
7for hire for use as rolling stock moving in interstate commerce
8or lessors under leases of one year or longer, executed or in
9effect at the time of purchase, to interstate carriers for hire
10for use as rolling stock moving in interstate commerce, and
11equipment operated by a telecommunications provider, licensed
12as a common carrier by the Federal Communications Commission,
13which is permanently installed in or affixed to aircraft moving
14in interstate commerce.
15    (d-1) A sale or transfer of tangible personal property as
16an incident to the rendering of service for owners, lessors or
17shippers of tangible personal property which is utilized by
18interstate carriers for hire for use as rolling stock moving in
19interstate commerce, and equipment operated by a
20telecommunications provider, licensed as a common carrier by
21the Federal Communications Commission, which is permanently
22installed in or affixed to aircraft moving in interstate
23commerce.
24    (d-1.1) On and after July 1, 2003 and through June 30,
252004, a sale or transfer of a motor vehicle of the second
26division with a gross vehicle weight in excess of 8,000 pounds

 

 

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1as an incident to the rendering of service if that motor
2vehicle is subject to the commercial distribution fee imposed
3under Section 3-815.1 of the Illinois Vehicle Code. Beginning
4on July 1, 2004 and through June 30, 2005, the use in this
5State of motor vehicles of the second division: (i) with a
6gross vehicle weight rating in excess of 8,000 pounds; (ii)
7that are subject to the commercial distribution fee imposed
8under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
9that are primarily used for commercial purposes. Through June
1030, 2005, this exemption applies to repair and replacement
11parts added after the initial purchase of such a motor vehicle
12if that motor vehicle is used in a manner that would qualify
13for the rolling stock exemption otherwise provided for in this
14Act. For purposes of this paragraph, "used for commercial
15purposes" means the transportation of persons or property in
16furtherance of any commercial or industrial enterprise whether
17for-hire or not.
18    (d-2) The repairing, reconditioning or remodeling, for a
19common carrier by rail, of tangible personal property which
20belongs to such carrier for hire, and as to which such carrier
21receives the physical possession of the repaired,
22reconditioned or remodeled item of tangible personal property
23in Illinois, and which such carrier transports, or shares with
24another common carrier in the transportation of such property,
25out of Illinois on a standard uniform bill of lading showing
26the person who repaired, reconditioned or remodeled the

 

 

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1property as the shipper or consignor of such property to a
2destination outside Illinois, for use outside Illinois.
3    (d-3) A sale or transfer of tangible personal property
4which is produced by the seller thereof on special order in
5such a way as to have made the applicable tax the Service
6Occupation Tax or the Service Use Tax, rather than the
7Retailers' Occupation Tax or the Use Tax, for an interstate
8carrier by rail which receives the physical possession of such
9property in Illinois, and which transports such property, or
10shares with another common carrier in the transportation of
11such property, out of Illinois on a standard uniform bill of
12lading showing the seller of the property as the shipper or
13consignor of such property to a destination outside Illinois,
14for use outside Illinois.
15    (d-4) Until January 1, 1997, a sale, by a registered
16serviceman paying tax under this Act to the Department, of
17special order printed materials delivered outside Illinois and
18which are not returned to this State, if delivery is made by
19the seller or agent of the seller, including an agent who
20causes the product to be delivered outside Illinois by a common
21carrier or the U.S. postal service.
22    (e) A sale or transfer of machinery and equipment used
23primarily in the process of the manufacturing or assembling,
24either in an existing, an expanded or a new manufacturing
25facility, of tangible personal property for wholesale or retail
26sale or lease, whether such sale or lease is made directly by

 

 

SB1669- 130 -LRB100 06197 HLH 16231 b

1the manufacturer or by some other person, whether the materials
2used in the process are owned by the manufacturer or some other
3person, or whether such sale or lease is made apart from or as
4an incident to the seller's engaging in a service occupation
5and the applicable tax is a Service Occupation Tax or Service
6Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
7exemption provided by this paragraph (e) does not include
8machinery and equipment used in (i) the generation of
9electricity for wholesale or retail sale; (ii) the generation
10or treatment of natural or artificial gas for wholesale or
11retail sale that is delivered to customers through pipes,
12pipelines, or mains; or (iii) the treatment of water for
13wholesale or retail sale that is delivered to customers through
14pipes, pipelines, or mains. The provisions of this amendatory
15Act of the 98th General Assembly are declaratory of existing
16law as to the meaning and scope of this exemption. The
17exemption under this subsection (e) is exempt from the
18provisions of Section 3-75.
19    (f) Until July 1, 2003, the sale or transfer of
20distillation machinery and equipment, sold as a unit or kit and
21assembled or installed by the retailer, which machinery and
22equipment is certified by the user to be used only for the
23production of ethyl alcohol that will be used for consumption
24as motor fuel or as a component of motor fuel for the personal
25use of such user and not subject to sale or resale.
26    (g) At the election of any serviceman not required to be

 

 

SB1669- 131 -LRB100 06197 HLH 16231 b

1otherwise registered as a retailer under Section 2a of the
2Retailers' Occupation Tax Act, made for each fiscal year sales
3of service in which the aggregate annual cost price of tangible
4personal property transferred as an incident to the sales of
5service is less than 35% (75% in the case of servicemen
6transferring prescription drugs or servicemen engaged in
7graphic arts production) of the aggregate annual total gross
8receipts from all sales of service. The purchase of such
9tangible personal property by the serviceman shall be subject
10to tax under the Retailers' Occupation Tax Act and the Use Tax
11Act. However, if a primary serviceman who has made the election
12described in this paragraph subcontracts service work to a
13secondary serviceman who has also made the election described
14in this paragraph, the primary serviceman does not incur a Use
15Tax liability if the secondary serviceman (i) has paid or will
16pay Use Tax on his or her cost price of any tangible personal
17property transferred to the primary serviceman and (ii)
18certifies that fact in writing to the primary serviceman.
19    Tangible personal property transferred incident to the
20completion of a maintenance agreement is exempt from the tax
21imposed pursuant to this Act.
22    Exemption (e) also includes machinery and equipment used in
23the general maintenance or repair of such exempt machinery and
24equipment or for in-house manufacture of exempt machinery and
25equipment. On and after August 31, 2014, exemption (e) also
26includes graphic arts machinery and equipment, as defined in

 

 

SB1669- 132 -LRB100 06197 HLH 16231 b

1paragraph (5) of Section 3-5, and production related tangible
2personal property, as defined in this Section. The machinery
3and equipment exemption does not include machinery and
4equipment used in (i) the generation of electricity for
5wholesale or retail sale; (ii) the generation or treatment of
6natural or artificial gas for wholesale or retail sale that is
7delivered to customers through pipes, pipelines, or mains; or
8(iii) the treatment of water for wholesale or retail sale that
9is delivered to customers through pipes, pipelines, or mains.
10The provisions of this amendatory Act of the 98th General
11Assembly are declaratory of existing law as to the meaning and
12scope of this exemption. For the purposes of exemption (e),
13each of these terms shall have the following meanings: (1)
14"manufacturing process" shall mean the production of any
15article of tangible personal property, whether such article is
16a finished product or an article for use in the process of
17manufacturing or assembling a different article of tangible
18personal property, by procedures commonly regarded as
19manufacturing, processing, fabricating, or refining which
20changes some existing material or materials into a material
21with a different form, use or name. In relation to a recognized
22integrated business composed of a series of operations which
23collectively constitute manufacturing, or individually
24constitute manufacturing operations, the manufacturing process
25shall be deemed to commence with the first operation or stage
26of production in the series, and shall not be deemed to end

 

 

SB1669- 133 -LRB100 06197 HLH 16231 b

1until the completion of the final product in the last operation
2or stage of production in the series; and further for purposes
3of exemption (e), photoprocessing is deemed to be a
4manufacturing process of tangible personal property for
5wholesale or retail sale; (2) "assembling process" shall mean
6the production of any article of tangible personal property,
7whether such article is a finished product or an article for
8use in the process of manufacturing or assembling a different
9article of tangible personal property, by the combination of
10existing materials in a manner commonly regarded as assembling
11which results in a material of a different form, use or name;
12(3) "machinery" shall mean major mechanical machines or major
13components of such machines contributing to a manufacturing or
14assembling process; and (4) "equipment" shall include any
15independent device or tool separate from any machinery but
16essential to an integrated manufacturing or assembly process;
17including computers used primarily in a manufacturer's
18computer assisted design, computer assisted manufacturing
19(CAD/CAM) system; or any subunit or assembly comprising a
20component of any machinery or auxiliary, adjunct or attachment
21parts of machinery, such as tools, dies, jigs, fixtures,
22patterns and molds; or any parts which require periodic
23replacement in the course of normal operation; but shall not
24include hand tools; "equipment" . Equipment includes chemicals
25or chemicals acting as catalysts but only if the chemicals or
26chemicals acting as catalysts effect a direct and immediate

 

 

SB1669- 134 -LRB100 06197 HLH 16231 b

1change upon a product being manufactured or assembled for
2wholesale or retail sale or lease; and (5) "production related
3tangible personal property" means all tangible personal
4property that is used or consumed by the purchaser in a
5manufacturing facility in which a manufacturing process
6described in Section 2-45 of the Retailers' Occupation Tax Act
7takes place, including tangible personal property that is
8purchased for incorporation into real estate within a
9manufacturing facility, and including, but not limited to,
10tangible personal property that is used or consumed in
11activities such as preproduction material handling, receiving,
12quality control, inventory control, storage, staging,
13packaging for shipping and transportation purposes, and all
14tangible personal property used or consumed by the purchaser
15for research and development; "production related tangible
16personal property" does not include (i) tangible personal
17property that is used, within or without a manufacturing
18facility, in sales, purchasing, accounting, fiscal management,
19marketing, personnel recruitment or selection, or landscaping,
20or (ii) tangible personal property that is required to be
21titled or registered with a department, agency, or unit of
22federal, State, or local government. The purchaser of such
23machinery and equipment who has an active resale registration
24number shall furnish such number to the seller at the time of
25purchase. The purchaser of such machinery and equipment and
26tools without an active resale registration number shall

 

 

SB1669- 135 -LRB100 06197 HLH 16231 b

1furnish to the seller a certificate of exemption for each
2transaction stating facts establishing the exemption for that
3transaction, which certificate shall be available to the
4Department for inspection or audit.
5    Except as provided in Section 2d of this Act, the rolling
6stock exemption applies to rolling stock used by an interstate
7carrier for hire, even just between points in Illinois, if such
8rolling stock transports, for hire, persons whose journeys or
9property whose shipments originate or terminate outside
10Illinois.
11    Any informal rulings, opinions or letters issued by the
12Department in response to an inquiry or request for any opinion
13from any person regarding the coverage and applicability of
14exemption (e) to specific devices shall be published,
15maintained as a public record, and made available for public
16inspection and copying. If the informal ruling, opinion or
17letter contains trade secrets or other confidential
18information, where possible the Department shall delete such
19information prior to publication. Whenever such informal
20rulings, opinions, or letters contain any policy of general
21applicability, the Department shall formulate and adopt such
22policy as a rule in accordance with the provisions of the
23Illinois Administrative Procedure Act.
24    On and after July 1, 1987, no entity otherwise eligible
25under exemption (c) of this Section shall make tax free
26purchases unless it has an active exemption identification

 

 

SB1669- 136 -LRB100 06197 HLH 16231 b

1number issued by the Department.
2    "Serviceman" means any person who is engaged in the
3occupation of making sales of service.
4    "Sale at Retail" means "sale at retail" as defined in the
5Retailers' Occupation Tax Act.
6    "Supplier" means any person who makes sales of tangible
7personal property to servicemen for the purpose of resale as an
8incident to a sale of service.
9(Source: P.A. 98-583, eff. 1-1-14.)
 
10    (35 ILCS 115/3-5)
11    Sec. 3-5. Exemptions. The following tangible personal
12property is exempt from the tax imposed by this Act:
13    (1) Personal property sold by a corporation, society,
14association, foundation, institution, or organization, other
15than a limited liability company, that is organized and
16operated as a not-for-profit service enterprise for the benefit
17of persons 65 years of age or older if the personal property
18was not purchased by the enterprise for the purpose of resale
19by the enterprise.
20    (2) Personal property purchased by a not-for-profit
21Illinois county fair association for use in conducting,
22operating, or promoting the county fair.
23    (3) Personal property purchased by any not-for-profit arts
24or cultural organization that establishes, by proof required by
25the Department by rule, that it has received an exemption under

 

 

SB1669- 137 -LRB100 06197 HLH 16231 b

1Section 501(c)(3) of the Internal Revenue Code and that is
2organized and operated primarily for the presentation or
3support of arts or cultural programming, activities, or
4services. These organizations include, but are not limited to,
5music and dramatic arts organizations such as symphony
6orchestras and theatrical groups, arts and cultural service
7organizations, local arts councils, visual arts organizations,
8and media arts organizations. On and after the effective date
9of this amendatory Act of the 92nd General Assembly, however,
10an entity otherwise eligible for this exemption shall not make
11tax-free purchases unless it has an active identification
12number issued by the Department.
13    (4) Legal tender, currency, medallions, or gold or silver
14coinage issued by the State of Illinois, the government of the
15United States of America, or the government of any foreign
16country, and bullion.
17    (5) Until July 1, 2003 and beginning again on September 1,
182004 through August 30, 2014, graphic arts machinery and
19equipment, including repair and replacement parts, both new and
20used, and including that manufactured on special order or
21purchased for lease, certified by the purchaser to be used
22primarily for graphic arts production. Equipment includes
23chemicals or chemicals acting as catalysts but only if the
24chemicals or chemicals acting as catalysts effect a direct and
25immediate change upon a graphic arts product. Beginning on
26August 31, 2014, graphic arts machinery and equipment is

 

 

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1included in the manufacturing and assembling machinery and
2equipment exemption under Section 2 of this Act.
3    (6) Personal property sold by a teacher-sponsored student
4organization affiliated with an elementary or secondary school
5located in Illinois.
6    (7) Farm machinery and equipment, both new and used,
7including that manufactured on special order, certified by the
8purchaser to be used primarily for production agriculture or
9State or federal agricultural programs, including individual
10replacement parts for the machinery and equipment, including
11machinery and equipment purchased for lease, and including
12implements of husbandry defined in Section 1-130 of the
13Illinois Vehicle Code, farm machinery and agricultural
14chemical and fertilizer spreaders, and nurse wagons required to
15be registered under Section 3-809 of the Illinois Vehicle Code,
16but excluding other motor vehicles required to be registered
17under the Illinois Vehicle Code. Horticultural polyhouses or
18hoop houses used for propagating, growing, or overwintering
19plants shall be considered farm machinery and equipment under
20this item (7). Agricultural chemical tender tanks and dry boxes
21shall include units sold separately from a motor vehicle
22required to be licensed and units sold mounted on a motor
23vehicle required to be licensed if the selling price of the
24tender is separately stated.
25    Farm machinery and equipment shall include precision
26farming equipment that is installed or purchased to be

 

 

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1installed on farm machinery and equipment including, but not
2limited to, tractors, harvesters, sprayers, planters, seeders,
3or spreaders. Precision farming equipment includes, but is not
4limited to, soil testing sensors, computers, monitors,
5software, global positioning and mapping systems, and other
6such equipment.
7    Farm machinery and equipment also includes computers,
8sensors, software, and related equipment used primarily in the
9computer-assisted operation of production agriculture
10facilities, equipment, and activities such as, but not limited
11to, the collection, monitoring, and correlation of animal and
12crop data for the purpose of formulating animal diets and
13agricultural chemicals. This item (7) is exempt from the
14provisions of Section 3-55.
15    (8) Until June 30, 2013, fuel and petroleum products sold
16to or used by an air common carrier, certified by the carrier
17to be used for consumption, shipment, or storage in the conduct
18of its business as an air common carrier, for a flight destined
19for or returning from a location or locations outside the
20United States without regard to previous or subsequent domestic
21stopovers.
22    Beginning July 1, 2013, fuel and petroleum products sold to
23or used by an air carrier, certified by the carrier to be used
24for consumption, shipment, or storage in the conduct of its
25business as an air common carrier, for a flight that (i) is
26engaged in foreign trade or is engaged in trade between the

 

 

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1United States and any of its possessions and (ii) transports at
2least one individual or package for hire from the city of
3origination to the city of final destination on the same
4aircraft, without regard to a change in the flight number of
5that aircraft.
6    (9) Proceeds of mandatory service charges separately
7stated on customers' bills for the purchase and consumption of
8food and beverages, to the extent that the proceeds of the
9service charge are in fact turned over as tips or as a
10substitute for tips to the employees who participate directly
11in preparing, serving, hosting or cleaning up the food or
12beverage function with respect to which the service charge is
13imposed.
14    (10) Until July 1, 2003, oil field exploration, drilling,
15and production equipment, including (i) rigs and parts of rigs,
16rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
17tubular goods, including casing and drill strings, (iii) pumps
18and pump-jack units, (iv) storage tanks and flow lines, (v) any
19individual replacement part for oil field exploration,
20drilling, and production equipment, and (vi) machinery and
21equipment purchased for lease; but excluding motor vehicles
22required to be registered under the Illinois Vehicle Code.
23    (11) Photoprocessing machinery and equipment, including
24repair and replacement parts, both new and used, including that
25manufactured on special order, certified by the purchaser to be
26used primarily for photoprocessing, and including

 

 

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1photoprocessing machinery and equipment purchased for lease.
2    (12) Coal and aggregate exploration, mining, off-highway
3hauling, processing, maintenance, and reclamation equipment,
4including replacement parts and equipment, and including
5equipment purchased for lease, but excluding motor vehicles
6required to be registered under the Illinois Vehicle Code. The
7changes made to this Section by Public Act 97-767 apply on and
8after July 1, 2003, but no claim for credit or refund is
9allowed on or after August 16, 2013 (the effective date of
10Public Act 98-456) for such taxes paid during the period
11beginning July 1, 2003 and ending on August 16, 2013 (the
12effective date of Public Act 98-456). This item (12) is exempt
13from the provisions of Section 3-55.
14    (13) Beginning January 1, 1992 and through June 30, 2016,
15food for human consumption that is to be consumed off the
16premises where it is sold (other than alcoholic beverages, soft
17drinks and food that has been prepared for immediate
18consumption) and prescription and non-prescription medicines,
19drugs, medical appliances, and insulin, urine testing
20materials, syringes, and needles used by diabetics, for human
21use, when purchased for use by a person receiving medical
22assistance under Article V of the Illinois Public Aid Code who
23resides in a licensed long-term care facility, as defined in
24the Nursing Home Care Act, or in a licensed facility as defined
25in the ID/DD Community Care Act, the MC/DD Act, or the
26Specialized Mental Health Rehabilitation Act of 2013.

 

 

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1    (14) Semen used for artificial insemination of livestock
2for direct agricultural production.
3    (15) Horses, or interests in horses, registered with and
4meeting the requirements of any of the Arabian Horse Club
5Registry of America, Appaloosa Horse Club, American Quarter
6Horse Association, United States Trotting Association, or
7Jockey Club, as appropriate, used for purposes of breeding or
8racing for prizes. This item (15) is exempt from the provisions
9of Section 3-55, and the exemption provided for under this item
10(15) applies for all periods beginning May 30, 1995, but no
11claim for credit or refund is allowed on or after January 1,
122008 (the effective date of Public Act 95-88) for such taxes
13paid during the period beginning May 30, 2000 and ending on
14January 1, 2008 (the effective date of Public Act 95-88).
15    (16) Computers and communications equipment utilized for
16any hospital purpose and equipment used in the diagnosis,
17analysis, or treatment of hospital patients sold to a lessor
18who leases the equipment, under a lease of one year or longer
19executed or in effect at the time of the purchase, to a
20hospital that has been issued an active tax exemption
21identification number by the Department under Section 1g of the
22Retailers' Occupation Tax Act.
23    (17) Personal property sold to a lessor who leases the
24property, under a lease of one year or longer executed or in
25effect at the time of the purchase, to a governmental body that
26has been issued an active tax exemption identification number

 

 

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1by the Department under Section 1g of the Retailers' Occupation
2Tax Act.
3    (18) Beginning with taxable years ending on or after
4December 31, 1995 and ending with taxable years ending on or
5before December 31, 2004, personal property that is donated for
6disaster relief to be used in a State or federally declared
7disaster area in Illinois or bordering Illinois by a
8manufacturer or retailer that is registered in this State to a
9corporation, society, association, foundation, or institution
10that has been issued a sales tax exemption identification
11number by the Department that assists victims of the disaster
12who reside within the declared disaster area.
13    (19) Beginning with taxable years ending on or after
14December 31, 1995 and ending with taxable years ending on or
15before December 31, 2004, personal property that is used in the
16performance of infrastructure repairs in this State, including
17but not limited to municipal roads and streets, access roads,
18bridges, sidewalks, waste disposal systems, water and sewer
19line extensions, water distribution and purification
20facilities, storm water drainage and retention facilities, and
21sewage treatment facilities, resulting from a State or
22federally declared disaster in Illinois or bordering Illinois
23when such repairs are initiated on facilities located in the
24declared disaster area within 6 months after the disaster.
25    (20) Beginning July 1, 1999, game or game birds sold at a
26"game breeding and hunting preserve area" as that term is used

 

 

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1in the Wildlife Code. This paragraph is exempt from the
2provisions of Section 3-55.
3    (21) A motor vehicle, as that term is defined in Section
41-146 of the Illinois Vehicle Code, that is donated to a
5corporation, limited liability company, society, association,
6foundation, or institution that is determined by the Department
7to be organized and operated exclusively for educational
8purposes. For purposes of this exemption, "a corporation,
9limited liability company, society, association, foundation,
10or institution organized and operated exclusively for
11educational purposes" means all tax-supported public schools,
12private schools that offer systematic instruction in useful
13branches of learning by methods common to public schools and
14that compare favorably in their scope and intensity with the
15course of study presented in tax-supported schools, and
16vocational or technical schools or institutes organized and
17operated exclusively to provide a course of study of not less
18than 6 weeks duration and designed to prepare individuals to
19follow a trade or to pursue a manual, technical, mechanical,
20industrial, business, or commercial occupation.
21    (22) Beginning January 1, 2000, personal property,
22including food, purchased through fundraising events for the
23benefit of a public or private elementary or secondary school,
24a group of those schools, or one or more school districts if
25the events are sponsored by an entity recognized by the school
26district that consists primarily of volunteers and includes

 

 

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1parents and teachers of the school children. This paragraph
2does not apply to fundraising events (i) for the benefit of
3private home instruction or (ii) for which the fundraising
4entity purchases the personal property sold at the events from
5another individual or entity that sold the property for the
6purpose of resale by the fundraising entity and that profits
7from the sale to the fundraising entity. This paragraph is
8exempt from the provisions of Section 3-55.
9    (23) Beginning January 1, 2000 and through December 31,
102001, new or used automatic vending machines that prepare and
11serve hot food and beverages, including coffee, soup, and other
12items, and replacement parts for these machines. Beginning
13January 1, 2002 and through June 30, 2003, machines and parts
14for machines used in commercial, coin-operated amusement and
15vending business if a use or occupation tax is paid on the
16gross receipts derived from the use of the commercial,
17coin-operated amusement and vending machines. This paragraph
18is exempt from the provisions of Section 3-55.
19    (24) Beginning on the effective date of this amendatory Act
20of the 92nd General Assembly, computers and communications
21equipment utilized for any hospital purpose and equipment used
22in the diagnosis, analysis, or treatment of hospital patients
23sold to a lessor who leases the equipment, under a lease of one
24year or longer executed or in effect at the time of the
25purchase, to a hospital that has been issued an active tax
26exemption identification number by the Department under

 

 

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1Section 1g of the Retailers' Occupation Tax Act. This paragraph
2is exempt from the provisions of Section 3-55.
3    (25) Beginning on the effective date of this amendatory Act
4of the 92nd General Assembly, personal property sold to a
5lessor who leases the property, under a lease of one year or
6longer executed or in effect at the time of the purchase, to a
7governmental body that has been issued an active tax exemption
8identification number by the Department under Section 1g of the
9Retailers' Occupation Tax Act. This paragraph is exempt from
10the provisions of Section 3-55.
11    (26) Beginning on January 1, 2002 and through June 30,
122016, tangible personal property purchased from an Illinois
13retailer by a taxpayer engaged in centralized purchasing
14activities in Illinois who will, upon receipt of the property
15in Illinois, temporarily store the property in Illinois (i) for
16the purpose of subsequently transporting it outside this State
17for use or consumption thereafter solely outside this State or
18(ii) for the purpose of being processed, fabricated, or
19manufactured into, attached to, or incorporated into other
20tangible personal property to be transported outside this State
21and thereafter used or consumed solely outside this State. The
22Director of Revenue shall, pursuant to rules adopted in
23accordance with the Illinois Administrative Procedure Act,
24issue a permit to any taxpayer in good standing with the
25Department who is eligible for the exemption under this
26paragraph (26). The permit issued under this paragraph (26)

 

 

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1shall authorize the holder, to the extent and in the manner
2specified in the rules adopted under this Act, to purchase
3tangible personal property from a retailer exempt from the
4taxes imposed by this Act. Taxpayers shall maintain all
5necessary books and records to substantiate the use and
6consumption of all such tangible personal property outside of
7the State of Illinois.
8    (27) Beginning January 1, 2008, tangible personal property
9used in the construction or maintenance of a community water
10supply, as defined under Section 3.145 of the Environmental
11Protection Act, that is operated by a not-for-profit
12corporation that holds a valid water supply permit issued under
13Title IV of the Environmental Protection Act. This paragraph is
14exempt from the provisions of Section 3-55.
15    (28) Tangible personal property sold to a
16public-facilities corporation, as described in Section
1711-65-10 of the Illinois Municipal Code, for purposes of
18constructing or furnishing a municipal convention hall, but
19only if the legal title to the municipal convention hall is
20transferred to the municipality without any further
21consideration by or on behalf of the municipality at the time
22of the completion of the municipal convention hall or upon the
23retirement or redemption of any bonds or other debt instruments
24issued by the public-facilities corporation in connection with
25the development of the municipal convention hall. This
26exemption includes existing public-facilities corporations as

 

 

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1provided in Section 11-65-25 of the Illinois Municipal Code.
2This paragraph is exempt from the provisions of Section 3-55.
3    (29) Beginning January 1, 2010, materials, parts,
4equipment, components, and furnishings incorporated into or
5upon an aircraft as part of the modification, refurbishment,
6completion, replacement, repair, or maintenance of the
7aircraft. This exemption includes consumable supplies used in
8the modification, refurbishment, completion, replacement,
9repair, and maintenance of aircraft, but excludes any
10materials, parts, equipment, components, and consumable
11supplies used in the modification, replacement, repair, and
12maintenance of aircraft engines or power plants, whether such
13engines or power plants are installed or uninstalled upon any
14such aircraft. "Consumable supplies" include, but are not
15limited to, adhesive, tape, sandpaper, general purpose
16lubricants, cleaning solution, latex gloves, and protective
17films. This exemption applies only to the transfer of
18qualifying tangible personal property incident to the
19modification, refurbishment, completion, replacement, repair,
20or maintenance of an aircraft by persons who (i) hold an Air
21Agency Certificate and are empowered to operate an approved
22repair station by the Federal Aviation Administration, (ii)
23have a Class IV Rating, and (iii) conduct operations in
24accordance with Part 145 of the Federal Aviation Regulations.
25The exemption does not include aircraft operated by a
26commercial air carrier providing scheduled passenger air

 

 

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1service pursuant to authority issued under Part 121 or Part 129
2of the Federal Aviation Regulations. The changes made to this
3paragraph (29) by Public Act 98-534 are declarative of existing
4law.
5    (30) Beginning January 1, 2017, menstrual pads, tampons,
6and menstrual cups.
7(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
898-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
97-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
 
10    (35 ILCS 115/9)  (from Ch. 120, par. 439.109)
11    Sec. 9. Each serviceman required or authorized to collect
12the tax herein imposed shall pay to the Department the amount
13of such tax at the time when he is required to file his return
14for the period during which such tax was collectible, less a
15discount of 2.1% prior to January 1, 1990, and 1.75% on and
16after January 1, 1990, or $5 per calendar year, whichever is
17greater, which is allowed to reimburse the serviceman for
18expenses incurred in collecting the tax, keeping records,
19preparing and filing returns, remitting the tax and supplying
20data to the Department on request. The Department may disallow
21the discount for servicemen whose certificate of registration
22is revoked at the time the return is filed, but only if the
23Department's decision to revoke the certificate of
24registration has become final.
25    Where such tangible personal property is sold under a

 

 

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1conditional sales contract, or under any other form of sale
2wherein the payment of the principal sum, or a part thereof, is
3extended beyond the close of the period for which the return is
4filed, the serviceman, in collecting the tax may collect, for
5each tax return period, only the tax applicable to the part of
6the selling price actually received during such tax return
7period.
8    Except as provided hereinafter in this Section, on or
9before the twentieth day of each calendar month, such
10serviceman shall file a return for the preceding calendar month
11in accordance with reasonable rules and regulations to be
12promulgated by the Department of Revenue. Such return shall be
13filed on a form prescribed by the Department and shall contain
14such information as the Department may reasonably require.
15    The Department may require returns to be filed on a
16quarterly basis. If so required, a return for each calendar
17quarter shall be filed on or before the twentieth day of the
18calendar month following the end of such calendar quarter. The
19taxpayer shall also file a return with the Department for each
20of the first two months of each calendar quarter, on or before
21the twentieth day of the following calendar month, stating:
22        1. The name of the seller;
23        2. The address of the principal place of business from
24    which he engages in business as a serviceman in this State;
25        3. The total amount of taxable receipts received by him
26    during the preceding calendar month, including receipts

 

 

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1    from charge and time sales, but less all deductions allowed
2    by law;
3        4. The amount of credit provided in Section 2d of this
4    Act;
5        5. The amount of tax due;
6        5-5. The signature of the taxpayer; and
7        6. Such other reasonable information as the Department
8    may require.
9    If a taxpayer fails to sign a return within 30 days after
10the proper notice and demand for signature by the Department,
11the return shall be considered valid and any amount shown to be
12due on the return shall be deemed assessed.
13    Prior to October 1, 2003, and on and after September 1,
142004 and through August 30, 2014, a serviceman may accept a
15Manufacturer's Purchase Credit certification from a purchaser
16in satisfaction of Service Use Tax as provided in Section 3-70
17of the Service Use Tax Act if the purchaser provides the
18appropriate documentation as required by Section 3-70 of the
19Service Use Tax Act. A Manufacturer's Purchase Credit
20certification, accepted prior to October 1, 2003 or on or after
21September 1, 2004 and through August 30, 2014 by a serviceman
22as provided in Section 3-70 of the Service Use Tax Act, may be
23used by that serviceman through September 20, 2014 to satisfy
24Service Occupation Tax liability in the amount claimed in the
25certification, not to exceed 6.25% of the receipts subject to
26tax from a qualifying purchase. A Manufacturer's Purchase

 

 

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1Credit reported on any original or amended return filed under
2this Act after October 20, 2003 for reporting periods prior to
3September 1, 2004 shall be disallowed. A Manufacturer's
4Purchase Credit reported on any original or amended return
5filed under this Act after September 20, 2014 shall be
6disallowed. Manufacturer's Purchase Credit reported on annual
7returns due on or after January 1, 2005 will be disallowed for
8periods prior to September 1, 2004. A Manufacturer's Purchase
9Credit reported on an annual return due on or after January 1,
102015 shall be disallowed for periods on and after August 31,
112014. No Manufacturer's Purchase Credit may be used after
12September 30, 2003 through August 31, 2004 or after September
1320, 2014 to satisfy any tax liability imposed under this Act,
14including any audit liability.
15    If the serviceman's average monthly tax liability to the
16Department does not exceed $200, the Department may authorize
17his returns to be filed on a quarter annual basis, with the
18return for January, February and March of a given year being
19due by April 20 of such year; with the return for April, May
20and June of a given year being due by July 20 of such year; with
21the return for July, August and September of a given year being
22due by October 20 of such year, and with the return for
23October, November and December of a given year being due by
24January 20 of the following year.
25    If the serviceman's average monthly tax liability to the
26Department does not exceed $50, the Department may authorize

 

 

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1his returns to be filed on an annual basis, with the return for
2a given year being due by January 20 of the following year.
3    Such quarter annual and annual returns, as to form and
4substance, shall be subject to the same requirements as monthly
5returns.
6    Notwithstanding any other provision in this Act concerning
7the time within which a serviceman may file his return, in the
8case of any serviceman who ceases to engage in a kind of
9business which makes him responsible for filing returns under
10this Act, such serviceman shall file a final return under this
11Act with the Department not more than 1 month after
12discontinuing such business.
13    Beginning October 1, 1993, a taxpayer who has an average
14monthly tax liability of $150,000 or more shall make all
15payments required by rules of the Department by electronic
16funds transfer. Beginning October 1, 1994, a taxpayer who has
17an average monthly tax liability of $100,000 or more shall make
18all payments required by rules of the Department by electronic
19funds transfer. Beginning October 1, 1995, a taxpayer who has
20an average monthly tax liability of $50,000 or more shall make
21all payments required by rules of the Department by electronic
22funds transfer. Beginning October 1, 2000, a taxpayer who has
23an annual tax liability of $200,000 or more shall make all
24payments required by rules of the Department by electronic
25funds transfer. The term "annual tax liability" shall be the
26sum of the taxpayer's liabilities under this Act, and under all

 

 

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1other State and local occupation and use tax laws administered
2by the Department, for the immediately preceding calendar year.
3The term "average monthly tax liability" means the sum of the
4taxpayer's liabilities under this Act, and under all other
5State and local occupation and use tax laws administered by the
6Department, for the immediately preceding calendar year
7divided by 12. Beginning on October 1, 2002, a taxpayer who has
8a tax liability in the amount set forth in subsection (b) of
9Section 2505-210 of the Department of Revenue Law shall make
10all payments required by rules of the Department by electronic
11funds transfer.
12    Before August 1 of each year beginning in 1993, the
13Department shall notify all taxpayers required to make payments
14by electronic funds transfer. All taxpayers required to make
15payments by electronic funds transfer shall make those payments
16for a minimum of one year beginning on October 1.
17    Any taxpayer not required to make payments by electronic
18funds transfer may make payments by electronic funds transfer
19with the permission of the Department.
20    All taxpayers required to make payment by electronic funds
21transfer and any taxpayers authorized to voluntarily make
22payments by electronic funds transfer shall make those payments
23in the manner authorized by the Department.
24    The Department shall adopt such rules as are necessary to
25effectuate a program of electronic funds transfer and the
26requirements of this Section.

 

 

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1    Where a serviceman collects the tax with respect to the
2selling price of tangible personal property which he sells and
3the purchaser thereafter returns such tangible personal
4property and the serviceman refunds the selling price thereof
5to the purchaser, such serviceman shall also refund, to the
6purchaser, the tax so collected from the purchaser. When filing
7his return for the period in which he refunds such tax to the
8purchaser, the serviceman may deduct the amount of the tax so
9refunded by him to the purchaser from any other Service
10Occupation Tax, Service Use Tax, Retailers' Occupation Tax or
11Use Tax which such serviceman may be required to pay or remit
12to the Department, as shown by such return, provided that the
13amount of the tax to be deducted shall previously have been
14remitted to the Department by such serviceman. If the
15serviceman shall not previously have remitted the amount of
16such tax to the Department, he shall be entitled to no
17deduction hereunder upon refunding such tax to the purchaser.
18    If experience indicates such action to be practicable, the
19Department may prescribe and furnish a combination or joint
20return which will enable servicemen, who are required to file
21returns hereunder and also under the Retailers' Occupation Tax
22Act, the Use Tax Act or the Service Use Tax Act, to furnish all
23the return information required by all said Acts on the one
24form.
25    Where the serviceman has more than one business registered
26with the Department under separate registrations hereunder,

 

 

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1such serviceman shall file separate returns for each registered
2business.
3    Beginning January 1, 1990, each month the Department shall
4pay into the Local Government Tax Fund the revenue realized for
5the preceding month from the 1% tax on sales of food for human
6consumption which is to be consumed off the premises where it
7is sold (other than alcoholic beverages, soft drinks and food
8which has been prepared for immediate consumption) and
9prescription and nonprescription medicines, drugs, medical
10appliances, products classified as Class III medical devices by
11the United States Food and Drug Administration that are used
12for cancer treatment pursuant to a prescription, as well as any
13accessories and components related to those devices, and
14insulin, urine testing materials, syringes and needles used by
15diabetics.
16    Beginning January 1, 1990, each month the Department shall
17pay into the County and Mass Transit District Fund 4% of the
18revenue realized for the preceding month from the 6.25% general
19rate.
20    Beginning August 1, 2000, each month the Department shall
21pay into the County and Mass Transit District Fund 20% of the
22net revenue realized for the preceding month from the 1.25%
23rate on the selling price of motor fuel and gasohol.
24    Beginning January 1, 1990, each month the Department shall
25pay into the Local Government Tax Fund 16% of the revenue
26realized for the preceding month from the 6.25% general rate on

 

 

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1transfers of tangible personal property.
2    Beginning August 1, 2000, each month the Department shall
3pay into the Local Government Tax Fund 80% of the net revenue
4realized for the preceding month from the 1.25% rate on the
5selling price of motor fuel and gasohol.
6    Beginning October 1, 2009, each month the Department shall
7pay into the Capital Projects Fund an amount that is equal to
8an amount estimated by the Department to represent 80% of the
9net revenue realized for the preceding month from the sale of
10candy, grooming and hygiene products, and soft drinks that had
11been taxed at a rate of 1% prior to September 1, 2009 but that
12are now taxed at 6.25%.
13    Beginning July 1, 2013, each month the Department shall pay
14into the Underground Storage Tank Fund from the proceeds
15collected under this Act, the Use Tax Act, the Service Use Tax
16Act, and the Retailers' Occupation Tax Act an amount equal to
17the average monthly deficit in the Underground Storage Tank
18Fund during the prior year, as certified annually by the
19Illinois Environmental Protection Agency, but the total
20payment into the Underground Storage Tank Fund under this Act,
21the Use Tax Act, the Service Use Tax Act, and the Retailers'
22Occupation Tax Act shall not exceed $18,000,000 in any State
23fiscal year. As used in this paragraph, the "average monthly
24deficit" shall be equal to the difference between the average
25monthly claims for payment by the fund and the average monthly
26revenues deposited into the fund, excluding payments made

 

 

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1pursuant to this paragraph.
2    Beginning July 1, 2015, of the remainder of the moneys
3received by the Department under the Use Tax Act, the Service
4Use Tax Act, this Act, and the Retailers' Occupation Tax Act,
5each month the Department shall deposit $500,000 into the State
6Crime Laboratory Fund.
7    Of the remainder of the moneys received by the Department
8pursuant to this Act, (a) 1.75% thereof shall be paid into the
9Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
10and after July 1, 1989, 3.8% thereof shall be paid into the
11Build Illinois Fund; provided, however, that if in any fiscal
12year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
13may be, of the moneys received by the Department and required
14to be paid into the Build Illinois Fund pursuant to Section 3
15of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
16Act, Section 9 of the Service Use Tax Act, and Section 9 of the
17Service Occupation Tax Act, such Acts being hereinafter called
18the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
19may be, of moneys being hereinafter called the "Tax Act
20Amount", and (2) the amount transferred to the Build Illinois
21Fund from the State and Local Sales Tax Reform Fund shall be
22less than the Annual Specified Amount (as defined in Section 3
23of the Retailers' Occupation Tax Act), an amount equal to the
24difference shall be immediately paid into the Build Illinois
25Fund from other moneys received by the Department pursuant to
26the Tax Acts; and further provided, that if on the last

 

 

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1business day of any month the sum of (1) the Tax Act Amount
2required to be deposited into the Build Illinois Account in the
3Build Illinois Fund during such month and (2) the amount
4transferred during such month to the Build Illinois Fund from
5the State and Local Sales Tax Reform Fund shall have been less
6than 1/12 of the Annual Specified Amount, an amount equal to
7the difference shall be immediately paid into the Build
8Illinois Fund from other moneys received by the Department
9pursuant to the Tax Acts; and, further provided, that in no
10event shall the payments required under the preceding proviso
11result in aggregate payments into the Build Illinois Fund
12pursuant to this clause (b) for any fiscal year in excess of
13the greater of (i) the Tax Act Amount or (ii) the Annual
14Specified Amount for such fiscal year; and, further provided,
15that the amounts payable into the Build Illinois Fund under
16this clause (b) shall be payable only until such time as the
17aggregate amount on deposit under each trust indenture securing
18Bonds issued and outstanding pursuant to the Build Illinois
19Bond Act is sufficient, taking into account any future
20investment income, to fully provide, in accordance with such
21indenture, for the defeasance of or the payment of the
22principal of, premium, if any, and interest on the Bonds
23secured by such indenture and on any Bonds expected to be
24issued thereafter and all fees and costs payable with respect
25thereto, all as certified by the Director of the Bureau of the
26Budget (now Governor's Office of Management and Budget). If on

 

 

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1the last business day of any month in which Bonds are
2outstanding pursuant to the Build Illinois Bond Act, the
3aggregate of the moneys deposited in the Build Illinois Bond
4Account in the Build Illinois Fund in such month shall be less
5than the amount required to be transferred in such month from
6the Build Illinois Bond Account to the Build Illinois Bond
7Retirement and Interest Fund pursuant to Section 13 of the
8Build Illinois Bond Act, an amount equal to such deficiency
9shall be immediately paid from other moneys received by the
10Department pursuant to the Tax Acts to the Build Illinois Fund;
11provided, however, that any amounts paid to the Build Illinois
12Fund in any fiscal year pursuant to this sentence shall be
13deemed to constitute payments pursuant to clause (b) of the
14preceding sentence and shall reduce the amount otherwise
15payable for such fiscal year pursuant to clause (b) of the
16preceding sentence. The moneys received by the Department
17pursuant to this Act and required to be deposited into the
18Build Illinois Fund are subject to the pledge, claim and charge
19set forth in Section 12 of the Build Illinois Bond Act.
20    Subject to payment of amounts into the Build Illinois Fund
21as provided in the preceding paragraph or in any amendment
22thereto hereafter enacted, the following specified monthly
23installment of the amount requested in the certificate of the
24Chairman of the Metropolitan Pier and Exposition Authority
25provided under Section 8.25f of the State Finance Act, but not
26in excess of the sums designated as "Total Deposit", shall be

 

 

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1deposited in the aggregate from collections under Section 9 of
2the Use Tax Act, Section 9 of the Service Use Tax Act, Section
39 of the Service Occupation Tax Act, and Section 3 of the
4Retailers' Occupation Tax Act into the McCormick Place
5Expansion Project Fund in the specified fiscal years.
6Fiscal YearTotal Deposit
71993         $0
81994 53,000,000
91995 58,000,000
101996 61,000,000
111997 64,000,000
121998 68,000,000
131999 71,000,000
142000 75,000,000
152001 80,000,000
162002 93,000,000
172003 99,000,000
182004103,000,000
192005108,000,000
202006113,000,000
212007119,000,000
222008126,000,000
232009132,000,000
242010139,000,000
252011146,000,000

 

 

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12012153,000,000
22013161,000,000
32014170,000,000
42015179,000,000
52016189,000,000
62017199,000,000
72018210,000,000
82019221,000,000
92020233,000,000
102021246,000,000
112022260,000,000
122023275,000,000
132024 275,000,000
142025 275,000,000
152026 279,000,000
162027 292,000,000
172028 307,000,000
182029 322,000,000
192030 338,000,000
202031 350,000,000
212032 350,000,000
22and
23each fiscal year
24thereafter that bonds
25are outstanding under
26Section 13.2 of the

 

 

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1Metropolitan Pier and
2Exposition Authority Act,
3but not after fiscal year 2060.
4    Beginning July 20, 1993 and in each month of each fiscal
5year thereafter, one-eighth of the amount requested in the
6certificate of the Chairman of the Metropolitan Pier and
7Exposition Authority for that fiscal year, less the amount
8deposited into the McCormick Place Expansion Project Fund by
9the State Treasurer in the respective month under subsection
10(g) of Section 13 of the Metropolitan Pier and Exposition
11Authority Act, plus cumulative deficiencies in the deposits
12required under this Section for previous months and years,
13shall be deposited into the McCormick Place Expansion Project
14Fund, until the full amount requested for the fiscal year, but
15not in excess of the amount specified above as "Total Deposit",
16has been deposited.
17    Subject to payment of amounts into the Build Illinois Fund
18and the McCormick Place Expansion Project Fund pursuant to the
19preceding paragraphs or in any amendments thereto hereafter
20enacted, beginning July 1, 1993 and ending on September 30,
212013, the Department shall each month pay into the Illinois Tax
22Increment Fund 0.27% of 80% of the net revenue realized for the
23preceding month from the 6.25% general rate on the selling
24price of tangible personal property.
25    Subject to payment of amounts into the Build Illinois Fund
26and the McCormick Place Expansion Project Fund pursuant to the

 

 

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1preceding paragraphs or in any amendments thereto hereafter
2enacted, beginning with the receipt of the first report of
3taxes paid by an eligible business and continuing for a 25-year
4period, the Department shall each month pay into the Energy
5Infrastructure Fund 80% of the net revenue realized from the
66.25% general rate on the selling price of Illinois-mined coal
7that was sold to an eligible business. For purposes of this
8paragraph, the term "eligible business" means a new electric
9generating facility certified pursuant to Section 605-332 of
10the Department of Commerce and Economic Opportunity Law of the
11Civil Administrative Code of Illinois.
12    Subject to payment of amounts into the Build Illinois Fund,
13the McCormick Place Expansion Project Fund, the Illinois Tax
14Increment Fund, and the Energy Infrastructure Fund pursuant to
15the preceding paragraphs or in any amendments to this Section
16hereafter enacted, beginning on the first day of the first
17calendar month to occur on or after the effective date of this
18amendatory Act of the 98th General Assembly, each month, from
19the collections made under Section 9 of the Use Tax Act,
20Section 9 of the Service Use Tax Act, Section 9 of the Service
21Occupation Tax Act, and Section 3 of the Retailers' Occupation
22Tax Act, the Department shall pay into the Tax Compliance and
23Administration Fund, to be used, subject to appropriation, to
24fund additional auditors and compliance personnel at the
25Department of Revenue, an amount equal to 1/12 of 5% of 80% of
26the cash receipts collected during the preceding fiscal year by

 

 

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1the Audit Bureau of the Department under the Use Tax Act, the
2Service Use Tax Act, the Service Occupation Tax Act, the
3Retailers' Occupation Tax Act, and associated local occupation
4and use taxes administered by the Department.
5    Of the remainder of the moneys received by the Department
6pursuant to this Act, 75% shall be paid into the General
7Revenue Fund of the State Treasury and 25% shall be reserved in
8a special account and used only for the transfer to the Common
9School Fund as part of the monthly transfer from the General
10Revenue Fund in accordance with Section 8a of the State Finance
11Act.
12    The Department may, upon separate written notice to a
13taxpayer, require the taxpayer to prepare and file with the
14Department on a form prescribed by the Department within not
15less than 60 days after receipt of the notice an annual
16information return for the tax year specified in the notice.
17Such annual return to the Department shall include a statement
18of gross receipts as shown by the taxpayer's last Federal
19income tax return. If the total receipts of the business as
20reported in the Federal income tax return do not agree with the
21gross receipts reported to the Department of Revenue for the
22same period, the taxpayer shall attach to his annual return a
23schedule showing a reconciliation of the 2 amounts and the
24reasons for the difference. The taxpayer's annual return to the
25Department shall also disclose the cost of goods sold by the
26taxpayer during the year covered by such return, opening and

 

 

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1closing inventories of such goods for such year, cost of goods
2used from stock or taken from stock and given away by the
3taxpayer during such year, pay roll information of the
4taxpayer's business during such year and any additional
5reasonable information which the Department deems would be
6helpful in determining the accuracy of the monthly, quarterly
7or annual returns filed by such taxpayer as hereinbefore
8provided for in this Section.
9    If the annual information return required by this Section
10is not filed when and as required, the taxpayer shall be liable
11as follows:
12        (i) Until January 1, 1994, the taxpayer shall be liable
13    for a penalty equal to 1/6 of 1% of the tax due from such
14    taxpayer under this Act during the period to be covered by
15    the annual return for each month or fraction of a month
16    until such return is filed as required, the penalty to be
17    assessed and collected in the same manner as any other
18    penalty provided for in this Act.
19        (ii) On and after January 1, 1994, the taxpayer shall
20    be liable for a penalty as described in Section 3-4 of the
21    Uniform Penalty and Interest Act.
22    The chief executive officer, proprietor, owner or highest
23ranking manager shall sign the annual return to certify the
24accuracy of the information contained therein. Any person who
25willfully signs the annual return containing false or
26inaccurate information shall be guilty of perjury and punished

 

 

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1accordingly. The annual return form prescribed by the
2Department shall include a warning that the person signing the
3return may be liable for perjury.
4    The foregoing portion of this Section concerning the filing
5of an annual information return shall not apply to a serviceman
6who is not required to file an income tax return with the
7United States Government.
8    As soon as possible after the first day of each month, upon
9certification of the Department of Revenue, the Comptroller
10shall order transferred and the Treasurer shall transfer from
11the General Revenue Fund to the Motor Fuel Tax Fund an amount
12equal to 1.7% of 80% of the net revenue realized under this Act
13for the second preceding month. Beginning April 1, 2000, this
14transfer is no longer required and shall not be made.
15    Net revenue realized for a month shall be the revenue
16collected by the State pursuant to this Act, less the amount
17paid out during that month as refunds to taxpayers for
18overpayment of liability.
19    For greater simplicity of administration, it shall be
20permissible for manufacturers, importers and wholesalers whose
21products are sold by numerous servicemen in Illinois, and who
22wish to do so, to assume the responsibility for accounting and
23paying to the Department all tax accruing under this Act with
24respect to such sales, if the servicemen who are affected do
25not make written objection to the Department to this
26arrangement.

 

 

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1(Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;
298-298, eff. 8-9-13; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14;
398-1098, eff. 8-26-14; 99-352, eff. 8-12-15; 99-858, eff.
48-19-16.)
 
5    Section 25. The Retailers' Occupation Tax Act is amended by
6changing Sections 2-5, 2-45, and 3 as follows:
 
7    (35 ILCS 120/2-5)
8    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
9sale of the following tangible personal property are exempt
10from the tax imposed by this Act:
11    (1) Farm chemicals.
12    (2) Farm machinery and equipment, both new and used,
13including that manufactured on special order, certified by the
14purchaser to be used primarily for production agriculture or
15State or federal agricultural programs, including individual
16replacement parts for the machinery and equipment, including
17machinery and equipment purchased for lease, and including
18implements of husbandry defined in Section 1-130 of the
19Illinois Vehicle Code, farm machinery and agricultural
20chemical and fertilizer spreaders, and nurse wagons required to
21be registered under Section 3-809 of the Illinois Vehicle Code,
22but excluding other motor vehicles required to be registered
23under the Illinois Vehicle Code. Horticultural polyhouses or
24hoop houses used for propagating, growing, or overwintering

 

 

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1plants shall be considered farm machinery and equipment under
2this item (2). Agricultural chemical tender tanks and dry boxes
3shall include units sold separately from a motor vehicle
4required to be licensed and units sold mounted on a motor
5vehicle required to be licensed, if the selling price of the
6tender is separately stated.
7    Farm machinery and equipment shall include precision
8farming equipment that is installed or purchased to be
9installed on farm machinery and equipment including, but not
10limited to, tractors, harvesters, sprayers, planters, seeders,
11or spreaders. Precision farming equipment includes, but is not
12limited to, soil testing sensors, computers, monitors,
13software, global positioning and mapping systems, and other
14such equipment.
15    Farm machinery and equipment also includes computers,
16sensors, software, and related equipment used primarily in the
17computer-assisted operation of production agriculture
18facilities, equipment, and activities such as, but not limited
19to, the collection, monitoring, and correlation of animal and
20crop data for the purpose of formulating animal diets and
21agricultural chemicals. This item (2) is exempt from the
22provisions of Section 2-70.
23    (3) Until July 1, 2003, distillation machinery and
24equipment, sold as a unit or kit, assembled or installed by the
25retailer, certified by the user to be used only for the
26production of ethyl alcohol that will be used for consumption

 

 

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1as motor fuel or as a component of motor fuel for the personal
2use of the user, and not subject to sale or resale.
3    (4) Until July 1, 2003 and beginning again September 1,
42004 through August 30, 2014, graphic arts machinery and
5equipment, including repair and replacement parts, both new and
6used, and including that manufactured on special order or
7purchased for lease, certified by the purchaser to be used
8primarily for graphic arts production. Equipment includes
9chemicals or chemicals acting as catalysts but only if the
10chemicals or chemicals acting as catalysts effect a direct and
11immediate change upon a graphic arts product. Beginning on
12August 31, 2014, graphic arts machinery and equipment is
13included in the manufacturing and assembling machinery and
14equipment exemption under paragraph (14).
15    (5) A motor vehicle that is used for automobile renting, as
16defined in the Automobile Renting Occupation and Use Tax Act.
17This paragraph is exempt from the provisions of Section 2-70.
18    (6) Personal property sold by a teacher-sponsored student
19organization affiliated with an elementary or secondary school
20located in Illinois.
21    (7) Until July 1, 2003, proceeds of that portion of the
22selling price of a passenger car the sale of which is subject
23to the Replacement Vehicle Tax.
24    (8) Personal property sold to an Illinois county fair
25association for use in conducting, operating, or promoting the
26county fair.

 

 

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1    (9) Personal property sold to a not-for-profit arts or
2cultural organization that establishes, by proof required by
3the Department by rule, that it has received an exemption under
4Section 501(c)(3) of the Internal Revenue Code and that is
5organized and operated primarily for the presentation or
6support of arts or cultural programming, activities, or
7services. These organizations include, but are not limited to,
8music and dramatic arts organizations such as symphony
9orchestras and theatrical groups, arts and cultural service
10organizations, local arts councils, visual arts organizations,
11and media arts organizations. On and after the effective date
12of this amendatory Act of the 92nd General Assembly, however,
13an entity otherwise eligible for this exemption shall not make
14tax-free purchases unless it has an active identification
15number issued by the Department.
16    (10) Personal property sold by a corporation, society,
17association, foundation, institution, or organization, other
18than a limited liability company, that is organized and
19operated as a not-for-profit service enterprise for the benefit
20of persons 65 years of age or older if the personal property
21was not purchased by the enterprise for the purpose of resale
22by the enterprise.
23    (11) Personal property sold to a governmental body, to a
24corporation, society, association, foundation, or institution
25organized and operated exclusively for charitable, religious,
26or educational purposes, or to a not-for-profit corporation,

 

 

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1society, association, foundation, institution, or organization
2that has no compensated officers or employees and that is
3organized and operated primarily for the recreation of persons
455 years of age or older. A limited liability company may
5qualify for the exemption under this paragraph only if the
6limited liability company is organized and operated
7exclusively for educational purposes. On and after July 1,
81987, however, no entity otherwise eligible for this exemption
9shall make tax-free purchases unless it has an active
10identification number issued by the Department.
11    (12) Tangible personal property sold to interstate
12carriers for hire for use as rolling stock moving in interstate
13commerce or to lessors under leases of one year or longer
14executed or in effect at the time of purchase by interstate
15carriers for hire for use as rolling stock moving in interstate
16commerce and equipment operated by a telecommunications
17provider, licensed as a common carrier by the Federal
18Communications Commission, which is permanently installed in
19or affixed to aircraft moving in interstate commerce.
20    (12-5) On and after July 1, 2003 and through June 30, 2004,
21motor vehicles of the second division with a gross vehicle
22weight in excess of 8,000 pounds that are subject to the
23commercial distribution fee imposed under Section 3-815.1 of
24the Illinois Vehicle Code. Beginning on July 1, 2004 and
25through June 30, 2005, the use in this State of motor vehicles
26of the second division: (i) with a gross vehicle weight rating

 

 

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1in excess of 8,000 pounds; (ii) that are subject to the
2commercial distribution fee imposed under Section 3-815.1 of
3the Illinois Vehicle Code; and (iii) that are primarily used
4for commercial purposes. Through June 30, 2005, this exemption
5applies to repair and replacement parts added after the initial
6purchase of such a motor vehicle if that motor vehicle is used
7in a manner that would qualify for the rolling stock exemption
8otherwise provided for in this Act. For purposes of this
9paragraph, "used for commercial purposes" means the
10transportation of persons or property in furtherance of any
11commercial or industrial enterprise whether for-hire or not.
12    (13) Proceeds from sales to owners, lessors, or shippers of
13tangible personal property that is utilized by interstate
14carriers for hire for use as rolling stock moving in interstate
15commerce and equipment operated by a telecommunications
16provider, licensed as a common carrier by the Federal
17Communications Commission, which is permanently installed in
18or affixed to aircraft moving in interstate commerce.
19    (14) Machinery and equipment that will be used by the
20purchaser, or a lessee of the purchaser, primarily in the
21process of manufacturing or assembling tangible personal
22property for wholesale or retail sale or lease, whether the
23sale or lease is made directly by the manufacturer or by some
24other person, whether the materials used in the process are
25owned by the manufacturer or some other person, or whether the
26sale or lease is made apart from or as an incident to the

 

 

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1seller's engaging in the service occupation of producing
2machines, tools, dies, jigs, patterns, gauges, or other similar
3items of no commercial value on special order for a particular
4purchaser. The exemption provided by this paragraph (14) does
5not include machinery and equipment used in (i) the generation
6of electricity for wholesale or retail sale; (ii) the
7generation or treatment of natural or artificial gas for
8wholesale or retail sale that is delivered to customers through
9pipes, pipelines, or mains; or (iii) the treatment of water for
10wholesale or retail sale that is delivered to customers through
11pipes, pipelines, or mains. The provisions of Public Act 98-583
12are declaratory of existing law as to the meaning and scope of
13this exemption. Beginning on August 31, 2014, manufacturing and
14assembling machinery and equipment includes graphic arts
15machinery and equipment, as defined in paragraph (4) of this
16Section, and production related tangible personal property, as
17defined in Section 2-45 of this Act. The exemption provided by
18this paragraph (14) is exempt from the provisions of Section
192-70.
20    (15) Proceeds of mandatory service charges separately
21stated on customers' bills for purchase and consumption of food
22and beverages, to the extent that the proceeds of the service
23charge are in fact turned over as tips or as a substitute for
24tips to the employees who participate directly in preparing,
25serving, hosting or cleaning up the food or beverage function
26with respect to which the service charge is imposed.

 

 

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1    (16) Petroleum products sold to a purchaser if the seller
2is prohibited by federal law from charging tax to the
3purchaser.
4    (17) Tangible personal property sold to a common carrier by
5rail or motor that receives the physical possession of the
6property in Illinois and that transports the property, or
7shares with another common carrier in the transportation of the
8property, out of Illinois on a standard uniform bill of lading
9showing the seller of the property as the shipper or consignor
10of the property to a destination outside Illinois, for use
11outside Illinois.
12    (18) Legal tender, currency, medallions, or gold or silver
13coinage issued by the State of Illinois, the government of the
14United States of America, or the government of any foreign
15country, and bullion.
16    (19) Until July 1 2003, oil field exploration, drilling,
17and production equipment, including (i) rigs and parts of rigs,
18rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
19tubular goods, including casing and drill strings, (iii) pumps
20and pump-jack units, (iv) storage tanks and flow lines, (v) any
21individual replacement part for oil field exploration,
22drilling, and production equipment, and (vi) machinery and
23equipment purchased for lease; but excluding motor vehicles
24required to be registered under the Illinois Vehicle Code.
25    (20) Photoprocessing machinery and equipment, including
26repair and replacement parts, both new and used, including that

 

 

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1manufactured on special order, certified by the purchaser to be
2used primarily for photoprocessing, and including
3photoprocessing machinery and equipment purchased for lease.
4    (21) Coal and aggregate exploration, mining, off-highway
5hauling, processing, maintenance, and reclamation equipment,
6including replacement parts and equipment, and including
7equipment purchased for lease, but excluding motor vehicles
8required to be registered under the Illinois Vehicle Code. The
9changes made to this Section by Public Act 97-767 apply on and
10after July 1, 2003, but no claim for credit or refund is
11allowed on or after August 16, 2013 (the effective date of
12Public Act 98-456) for such taxes paid during the period
13beginning July 1, 2003 and ending on August 16, 2013 (the
14effective date of Public Act 98-456). This paragraph (21) is
15exempt from the provisions of Section 2-70.
16    (22) Until June 30, 2013, fuel and petroleum products sold
17to or used by an air carrier, certified by the carrier to be
18used for consumption, shipment, or storage in the conduct of
19its business as an air common carrier, for a flight destined
20for or returning from a location or locations outside the
21United States without regard to previous or subsequent domestic
22stopovers.
23    Beginning July 1, 2013, fuel and petroleum products sold to
24or used by an air carrier, certified by the carrier to be used
25for consumption, shipment, or storage in the conduct of its
26business as an air common carrier, for a flight that (i) is

 

 

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1engaged in foreign trade or is engaged in trade between the
2United States and any of its possessions and (ii) transports at
3least one individual or package for hire from the city of
4origination to the city of final destination on the same
5aircraft, without regard to a change in the flight number of
6that aircraft.
7    (23) A transaction in which the purchase order is received
8by a florist who is located outside Illinois, but who has a
9florist located in Illinois deliver the property to the
10purchaser or the purchaser's donee in Illinois.
11    (24) Fuel consumed or used in the operation of ships,
12barges, or vessels that are used primarily in or for the
13transportation of property or the conveyance of persons for
14hire on rivers bordering on this State if the fuel is delivered
15by the seller to the purchaser's barge, ship, or vessel while
16it is afloat upon that bordering river.
17    (25) Except as provided in item (25-5) of this Section, a
18motor vehicle sold in this State to a nonresident even though
19the motor vehicle is delivered to the nonresident in this
20State, if the motor vehicle is not to be titled in this State,
21and if a drive-away permit is issued to the motor vehicle as
22provided in Section 3-603 of the Illinois Vehicle Code or if
23the nonresident purchaser has vehicle registration plates to
24transfer to the motor vehicle upon returning to his or her home
25state. The issuance of the drive-away permit or having the
26out-of-state registration plates to be transferred is prima

 

 

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1facie evidence that the motor vehicle will not be titled in
2this State.
3    (25-5) The exemption under item (25) does not apply if the
4state in which the motor vehicle will be titled does not allow
5a reciprocal exemption for a motor vehicle sold and delivered
6in that state to an Illinois resident but titled in Illinois.
7The tax collected under this Act on the sale of a motor vehicle
8in this State to a resident of another state that does not
9allow a reciprocal exemption shall be imposed at a rate equal
10to the state's rate of tax on taxable property in the state in
11which the purchaser is a resident, except that the tax shall
12not exceed the tax that would otherwise be imposed under this
13Act. At the time of the sale, the purchaser shall execute a
14statement, signed under penalty of perjury, of his or her
15intent to title the vehicle in the state in which the purchaser
16is a resident within 30 days after the sale and of the fact of
17the payment to the State of Illinois of tax in an amount
18equivalent to the state's rate of tax on taxable property in
19his or her state of residence and shall submit the statement to
20the appropriate tax collection agency in his or her state of
21residence. In addition, the retailer must retain a signed copy
22of the statement in his or her records. Nothing in this item
23shall be construed to require the removal of the vehicle from
24this state following the filing of an intent to title the
25vehicle in the purchaser's state of residence if the purchaser
26titles the vehicle in his or her state of residence within 30

 

 

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1days after the date of sale. The tax collected under this Act
2in accordance with this item (25-5) shall be proportionately
3distributed as if the tax were collected at the 6.25% general
4rate imposed under this Act.
5    (25-7) Beginning on July 1, 2007, no tax is imposed under
6this Act on the sale of an aircraft, as defined in Section 3 of
7the Illinois Aeronautics Act, if all of the following
8conditions are met:
9        (1) the aircraft leaves this State within 15 days after
10    the later of either the issuance of the final billing for
11    the sale of the aircraft, or the authorized approval for
12    return to service, completion of the maintenance record
13    entry, and completion of the test flight and ground test
14    for inspection, as required by 14 C.F.R. 91.407;
15        (2) the aircraft is not based or registered in this
16    State after the sale of the aircraft; and
17        (3) the seller retains in his or her books and records
18    and provides to the Department a signed and dated
19    certification from the purchaser, on a form prescribed by
20    the Department, certifying that the requirements of this
21    item (25-7) are met. The certificate must also include the
22    name and address of the purchaser, the address of the
23    location where the aircraft is to be titled or registered,
24    the address of the primary physical location of the
25    aircraft, and other information that the Department may
26    reasonably require.

 

 

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1    For purposes of this item (25-7):
2    "Based in this State" means hangared, stored, or otherwise
3used, excluding post-sale customizations as defined in this
4Section, for 10 or more days in each 12-month period
5immediately following the date of the sale of the aircraft.
6    "Registered in this State" means an aircraft registered
7with the Department of Transportation, Aeronautics Division,
8or titled or registered with the Federal Aviation
9Administration to an address located in this State.
10    This paragraph (25-7) is exempt from the provisions of
11Section 2-70.
12    (26) Semen used for artificial insemination of livestock
13for direct agricultural production.
14    (27) Horses, or interests in horses, registered with and
15meeting the requirements of any of the Arabian Horse Club
16Registry of America, Appaloosa Horse Club, American Quarter
17Horse Association, United States Trotting Association, or
18Jockey Club, as appropriate, used for purposes of breeding or
19racing for prizes. This item (27) is exempt from the provisions
20of Section 2-70, and the exemption provided for under this item
21(27) applies for all periods beginning May 30, 1995, but no
22claim for credit or refund is allowed on or after January 1,
232008 (the effective date of Public Act 95-88) for such taxes
24paid during the period beginning May 30, 2000 and ending on
25January 1, 2008 (the effective date of Public Act 95-88).
26    (28) Computers and communications equipment utilized for

 

 

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1any hospital purpose and equipment used in the diagnosis,
2analysis, or treatment of hospital patients sold to a lessor
3who leases the equipment, under a lease of one year or longer
4executed or in effect at the time of the purchase, to a
5hospital that has been issued an active tax exemption
6identification number by the Department under Section 1g of
7this Act.
8    (29) Personal property sold to a lessor who leases the
9property, under a lease of one year or longer executed or in
10effect at the time of the purchase, to a governmental body that
11has been issued an active tax exemption identification number
12by the Department under Section 1g of this Act.
13    (30) Beginning with taxable years ending on or after
14December 31, 1995 and ending with taxable years ending on or
15before December 31, 2004, personal property that is donated for
16disaster relief to be used in a State or federally declared
17disaster area in Illinois or bordering Illinois by a
18manufacturer or retailer that is registered in this State to a
19corporation, society, association, foundation, or institution
20that has been issued a sales tax exemption identification
21number by the Department that assists victims of the disaster
22who reside within the declared disaster area.
23    (31) Beginning with taxable years ending on or after
24December 31, 1995 and ending with taxable years ending on or
25before December 31, 2004, personal property that is used in the
26performance of infrastructure repairs in this State, including

 

 

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1but not limited to municipal roads and streets, access roads,
2bridges, sidewalks, waste disposal systems, water and sewer
3line extensions, water distribution and purification
4facilities, storm water drainage and retention facilities, and
5sewage treatment facilities, resulting from a State or
6federally declared disaster in Illinois or bordering Illinois
7when such repairs are initiated on facilities located in the
8declared disaster area within 6 months after the disaster.
9    (32) Beginning July 1, 1999, game or game birds sold at a
10"game breeding and hunting preserve area" as that term is used
11in the Wildlife Code. This paragraph is exempt from the
12provisions of Section 2-70.
13    (33) A motor vehicle, as that term is defined in Section
141-146 of the Illinois Vehicle Code, that is donated to a
15corporation, limited liability company, society, association,
16foundation, or institution that is determined by the Department
17to be organized and operated exclusively for educational
18purposes. For purposes of this exemption, "a corporation,
19limited liability company, society, association, foundation,
20or institution organized and operated exclusively for
21educational purposes" means all tax-supported public schools,
22private schools that offer systematic instruction in useful
23branches of learning by methods common to public schools and
24that compare favorably in their scope and intensity with the
25course of study presented in tax-supported schools, and
26vocational or technical schools or institutes organized and

 

 

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1operated exclusively to provide a course of study of not less
2than 6 weeks duration and designed to prepare individuals to
3follow a trade or to pursue a manual, technical, mechanical,
4industrial, business, or commercial occupation.
5    (34) Beginning January 1, 2000, personal property,
6including food, purchased through fundraising events for the
7benefit of a public or private elementary or secondary school,
8a group of those schools, or one or more school districts if
9the events are sponsored by an entity recognized by the school
10district that consists primarily of volunteers and includes
11parents and teachers of the school children. This paragraph
12does not apply to fundraising events (i) for the benefit of
13private home instruction or (ii) for which the fundraising
14entity purchases the personal property sold at the events from
15another individual or entity that sold the property for the
16purpose of resale by the fundraising entity and that profits
17from the sale to the fundraising entity. This paragraph is
18exempt from the provisions of Section 2-70.
19    (35) Beginning January 1, 2000 and through December 31,
202001, new or used automatic vending machines that prepare and
21serve hot food and beverages, including coffee, soup, and other
22items, and replacement parts for these machines. Beginning
23January 1, 2002 and through June 30, 2003, machines and parts
24for machines used in commercial, coin-operated amusement and
25vending business if a use or occupation tax is paid on the
26gross receipts derived from the use of the commercial,

 

 

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1coin-operated amusement and vending machines. This paragraph
2is exempt from the provisions of Section 2-70.
3    (35-5) Beginning August 23, 2001 and through June 30, 2016,
4food for human consumption that is to be consumed off the
5premises where it is sold (other than alcoholic beverages, soft
6drinks, and food that has been prepared for immediate
7consumption) and prescription and nonprescription medicines,
8drugs, medical appliances, and insulin, urine testing
9materials, syringes, and needles used by diabetics, for human
10use, when purchased for use by a person receiving medical
11assistance under Article V of the Illinois Public Aid Code who
12resides in a licensed long-term care facility, as defined in
13the Nursing Home Care Act, or a licensed facility as defined in
14the ID/DD Community Care Act, the MC/DD Act, or the Specialized
15Mental Health Rehabilitation Act of 2013.
16    (36) Beginning August 2, 2001, computers and
17communications equipment utilized for any hospital purpose and
18equipment used in the diagnosis, analysis, or treatment of
19hospital patients sold to a lessor who leases the equipment,
20under a lease of one year or longer executed or in effect at
21the time of the purchase, to a hospital that has been issued an
22active tax exemption identification number by the Department
23under Section 1g of this Act. This paragraph is exempt from the
24provisions of Section 2-70.
25    (37) Beginning August 2, 2001, personal property sold to a
26lessor who leases the property, under a lease of one year or

 

 

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1longer executed or in effect at the time of the purchase, to a
2governmental body that has been issued an active tax exemption
3identification number by the Department under Section 1g of
4this Act. This paragraph is exempt from the provisions of
5Section 2-70.
6    (38) Beginning on January 1, 2002 and through June 30,
72016, tangible personal property purchased from an Illinois
8retailer by a taxpayer engaged in centralized purchasing
9activities in Illinois who will, upon receipt of the property
10in Illinois, temporarily store the property in Illinois (i) for
11the purpose of subsequently transporting it outside this State
12for use or consumption thereafter solely outside this State or
13(ii) for the purpose of being processed, fabricated, or
14manufactured into, attached to, or incorporated into other
15tangible personal property to be transported outside this State
16and thereafter used or consumed solely outside this State. The
17Director of Revenue shall, pursuant to rules adopted in
18accordance with the Illinois Administrative Procedure Act,
19issue a permit to any taxpayer in good standing with the
20Department who is eligible for the exemption under this
21paragraph (38). The permit issued under this paragraph (38)
22shall authorize the holder, to the extent and in the manner
23specified in the rules adopted under this Act, to purchase
24tangible personal property from a retailer exempt from the
25taxes imposed by this Act. Taxpayers shall maintain all
26necessary books and records to substantiate the use and

 

 

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1consumption of all such tangible personal property outside of
2the State of Illinois.
3    (39) Beginning January 1, 2008, tangible personal property
4used in the construction or maintenance of a community water
5supply, as defined under Section 3.145 of the Environmental
6Protection Act, that is operated by a not-for-profit
7corporation that holds a valid water supply permit issued under
8Title IV of the Environmental Protection Act. This paragraph is
9exempt from the provisions of Section 2-70.
10    (40) Beginning January 1, 2010, materials, parts,
11equipment, components, and furnishings incorporated into or
12upon an aircraft as part of the modification, refurbishment,
13completion, replacement, repair, or maintenance of the
14aircraft. This exemption includes consumable supplies used in
15the modification, refurbishment, completion, replacement,
16repair, and maintenance of aircraft, but excludes any
17materials, parts, equipment, components, and consumable
18supplies used in the modification, replacement, repair, and
19maintenance of aircraft engines or power plants, whether such
20engines or power plants are installed or uninstalled upon any
21such aircraft. "Consumable supplies" include, but are not
22limited to, adhesive, tape, sandpaper, general purpose
23lubricants, cleaning solution, latex gloves, and protective
24films. This exemption applies only to the sale of qualifying
25tangible personal property to persons who modify, refurbish,
26complete, replace, or maintain an aircraft and who (i) hold an

 

 

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1Air Agency Certificate and are empowered to operate an approved
2repair station by the Federal Aviation Administration, (ii)
3have a Class IV Rating, and (iii) conduct operations in
4accordance with Part 145 of the Federal Aviation Regulations.
5The exemption does not include aircraft operated by a
6commercial air carrier providing scheduled passenger air
7service pursuant to authority issued under Part 121 or Part 129
8of the Federal Aviation Regulations. The changes made to this
9paragraph (40) by Public Act 98-534 are declarative of existing
10law.
11    (41) Tangible personal property sold to a
12public-facilities corporation, as described in Section
1311-65-10 of the Illinois Municipal Code, for purposes of
14constructing or furnishing a municipal convention hall, but
15only if the legal title to the municipal convention hall is
16transferred to the municipality without any further
17consideration by or on behalf of the municipality at the time
18of the completion of the municipal convention hall or upon the
19retirement or redemption of any bonds or other debt instruments
20issued by the public-facilities corporation in connection with
21the development of the municipal convention hall. This
22exemption includes existing public-facilities corporations as
23provided in Section 11-65-25 of the Illinois Municipal Code.
24This paragraph is exempt from the provisions of Section 2-70.
25    (42) Beginning January 1, 2017, menstrual pads, tampons,
26and menstrual cups.

 

 

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1(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
298-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
31-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
47-29-15; 99-855, eff. 8-19-16.)
 
5    (35 ILCS 120/2-45)  (from Ch. 120, par. 441-45)
6    Sec. 2-45. Manufacturing and assembly exemption. The
7manufacturing and assembly machinery and equipment exemption
8includes machinery and equipment that replaces machinery and
9equipment in an existing manufacturing facility as well as
10machinery and equipment that are for use in an expanded or new
11manufacturing facility.
12    The machinery and equipment exemption also includes
13machinery and equipment used in the general maintenance or
14repair of exempt machinery and equipment or for in-house
15manufacture of exempt machinery and equipment. Beginning on
16August 31, 2014, the manufacturing and assembling machinery and
17equipment exemption also includes graphic arts machinery and
18equipment, as defined in paragraph (4) of Section 2-5, and
19production related tangible personal property, as defined in
20this Section. The machinery and equipment exemption does not
21include machinery and equipment used in (i) the generation of
22electricity for wholesale or retail sale; (ii) the generation
23or treatment of natural or artificial gas for wholesale or
24retail sale that is delivered to customers through pipes,
25pipelines, or mains; or (iii) the treatment of water for

 

 

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1wholesale or retail sale that is delivered to customers through
2pipes, pipelines, or mains. The provisions of this amendatory
3Act of the 98th General Assembly are declaratory of existing
4law as to the meaning and scope of this exemption. For the
5purposes of this exemption, terms have the following meanings:
6        (1) "Manufacturing process" means the production of an
7    article of tangible personal property, whether the article
8    is a finished product or an article for use in the process
9    of manufacturing or assembling a different article of
10    tangible personal property, by a procedure commonly
11    regarded as manufacturing, processing, fabricating, or
12    refining that changes some existing material or materials
13    into a material with a different form, use, or name. In
14    relation to a recognized integrated business composed of a
15    series of operations that collectively constitute
16    manufacturing, or individually constitute manufacturing
17    operations, the manufacturing process commences with the
18    first operation or stage of production in the series and
19    does not end until the completion of the final product in
20    the last operation or stage of production in the series.
21    For purposes of this exemption, photoprocessing is a
22    manufacturing process of tangible personal property for
23    wholesale or retail sale.
24        (2) "Assembling process" means the production of an
25    article of tangible personal property, whether the article
26    is a finished product or an article for use in the process

 

 

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1    of manufacturing or assembling a different article of
2    tangible personal property, by the combination of existing
3    materials in a manner commonly regarded as assembling that
4    results in a material of a different form, use, or name.
5        (3) "Machinery" means major mechanical machines or
6    major components of those machines contributing to a
7    manufacturing or assembling process.
8        (4) "Equipment" includes an independent device or tool
9    separate from machinery but essential to an integrated
10    manufacturing or assembly process; including computers
11    used primarily in a manufacturer's computer assisted
12    design, computer assisted manufacturing (CAD/CAM) system;
13    any subunit or assembly comprising a component of any
14    machinery or auxiliary, adjunct, or attachment parts of
15    machinery, such as tools, dies, jigs, fixtures, patterns,
16    and molds; and any parts that require periodic replacement
17    in the course of normal operation; but does not include
18    hand tools. Equipment includes chemicals or chemicals
19    acting as catalysts but only if the chemicals or chemicals
20    acting as catalysts effect a direct and immediate change
21    upon a product being manufactured or assembled for
22    wholesale or retail sale or lease.
23        (5) "Production related tangible personal property"
24    means all tangible personal property that is used or
25    consumed by the purchaser in a manufacturing facility in
26    which a manufacturing process takes place, including and

 

 

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1    includes, without limitation, tangible personal property
2    that is purchased for incorporation into real estate within
3    a manufacturing facility and including, but not limited to,
4    tangible personal property that is used or consumed in
5    activities such as research and development, preproduction
6    material handling, receiving, quality control, inventory
7    control, storage, staging, and packaging for shipping and
8    transportation purposes. Tangible personal property used
9    or consumed by the purchaser for research and development
10    is considered "production related tangible personal
11    property" regardless of use within or without a
12    manufacturing facility. "Production related tangible
13    personal property" does not include (i) tangible personal
14    property that is used, within or without a manufacturing
15    facility, in sales, purchasing, accounting, fiscal
16    management, marketing, personnel recruitment or selection,
17    or landscaping or (ii) tangible personal property that is
18    required to be titled or registered with a department,
19    agency, or unit of federal, State, or local government.
20    The manufacturing and assembling machinery and equipment
21exemption includes production related tangible personal
22property that is purchased on or after July 1, 2007 and on or
23before June 30, 2008. The exemption for production related
24tangible personal property is subject to both of the following
25limitations:
26        (1) The maximum amount of the exemption for any one

 

 

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1    taxpayer may not exceed 5% of the purchase price of
2    production related tangible personal property that is
3    purchased on or after July 1, 2007 and on or before June
4    30, 2008. A credit under Section 3-85 of this Act may not
5    be earned by the purchase of production related tangible
6    personal property for which an exemption is received under
7    this Section.
8        (2) The maximum aggregate amount of the exemptions for
9    production related tangible personal property awarded
10    under this Act and the Use Tax Act to all taxpayers may not
11    exceed $10,000,000. If the claims for the exemption exceed
12    $10,000,000, then the Department shall reduce the amount of
13    the exemption to each taxpayer on a pro rata basis.
14The Department may adopt rules to implement and administer the
15exemption for production related tangible personal property.
16    The manufacturing and assembling machinery and equipment
17exemption includes the sale of materials to a purchaser who
18produces exempted types of machinery, equipment, or tools and
19who rents or leases that machinery, equipment, or tools to a
20manufacturer of tangible personal property. This exemption
21also includes the sale of materials to a purchaser who
22manufactures those materials into an exempted type of
23machinery, equipment, or tools that the purchaser uses himself
24or herself in the manufacturing of tangible personal property.
25The purchaser of the machinery and equipment who has an active
26resale registration number shall furnish that number to the

 

 

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1seller at the time of purchase. A purchaser of the machinery,
2equipment, and tools without an active resale registration
3number shall furnish to the seller a certificate of exemption
4for each transaction stating facts establishing the exemption
5for that transaction, and that certificate shall be available
6to the Department for inspection or audit. Informal rulings,
7opinions, or letters issued by the Department in response to an
8inquiry or request for an opinion from any person regarding the
9coverage and applicability of this exemption to specific
10devices shall be published, maintained as a public record, and
11made available for public inspection and copying. If the
12informal ruling, opinion, or letter contains trade secrets or
13other confidential information, where possible, the Department
14shall delete that information before publication. Whenever
15informal rulings, opinions, or letters contain a policy of
16general applicability, the Department shall formulate and
17adopt that policy as a rule in accordance with the Illinois
18Administrative Procedure Act.
19    The exemption under this Section is exempt from the
20provisions of Section 2-70.
21(Source: P.A. 98-583, eff. 1-1-14.)
 
22    (35 ILCS 120/3)  (from Ch. 120, par. 442)
23    Sec. 3. Except as provided in this Section, on or before
24the twentieth day of each calendar month, every person engaged
25in the business of selling tangible personal property at retail

 

 

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1in this State during the preceding calendar month shall file a
2return with the Department, stating:
3        1. The name of the seller;
4        2. His residence address and the address of his
5    principal place of business and the address of the
6    principal place of business (if that is a different
7    address) from which he engages in the business of selling
8    tangible personal property at retail in this State;
9        3. Total amount of receipts received by him during the
10    preceding calendar month or quarter, as the case may be,
11    from sales of tangible personal property, and from services
12    furnished, by him during such preceding calendar month or
13    quarter;
14        4. Total amount received by him during the preceding
15    calendar month or quarter on charge and time sales of
16    tangible personal property, and from services furnished,
17    by him prior to the month or quarter for which the return
18    is filed;
19        5. Deductions allowed by law;
20        6. Gross receipts which were received by him during the
21    preceding calendar month or quarter and upon the basis of
22    which the tax is imposed;
23        7. The amount of credit provided in Section 2d of this
24    Act;
25        8. The amount of tax due;
26        9. The signature of the taxpayer; and

 

 

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1        10. Such other reasonable information as the
2    Department may require.
3    If a taxpayer fails to sign a return within 30 days after
4the proper notice and demand for signature by the Department,
5the return shall be considered valid and any amount shown to be
6due on the return shall be deemed assessed.
7    Each return shall be accompanied by the statement of
8prepaid tax issued pursuant to Section 2e for which credit is
9claimed.
10    Prior to October 1, 2003, and on and after September 1,
112004 and through August 30, 2014, a retailer may accept a
12Manufacturer's Purchase Credit certification from a purchaser
13in satisfaction of Use Tax as provided in Section 3-85 of the
14Use Tax Act if the purchaser provides the appropriate
15documentation as required by Section 3-85 of the Use Tax Act. A
16Manufacturer's Purchase Credit certification, accepted by a
17retailer prior to October 1, 2003 and on and after September 1,
182004 and through August 30, 2014, as provided in Section 3-85
19of the Use Tax Act, may be used through September 20, 2014 by
20that retailer to satisfy Retailers' Occupation Tax liability in
21the amount claimed in the certification, not to exceed 6.25% of
22the receipts subject to tax from a qualifying purchase. A
23Manufacturer's Purchase Credit reported on any original or
24amended return filed under this Act after October 20, 2003 for
25reporting periods prior to September 1, 2004 shall be
26disallowed. A Manufacturer's Purchaser Credit reported on any

 

 

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1original or amended return filed under this Act after September
220, 2014 shall be disallowed. Manufacturer's Purchaser Credit
3reported on annual returns due on or after January 1, 2005 will
4be disallowed for periods prior to September 1, 2004. A
5Manufacturer's Purchase Credit reported on an annual return due
6on or after January 1, 2015 shall be disallowed for periods on
7and after August 31, 2014. No Manufacturer's Purchase Credit
8may be used after September 30, 2003 through August 31, 2004,
9or after September 20, 2014, to satisfy any tax liability
10imposed under this Act, including any audit liability.
11    The Department may require returns to be filed on a
12quarterly basis. If so required, a return for each calendar
13quarter shall be filed on or before the twentieth day of the
14calendar month following the end of such calendar quarter. The
15taxpayer shall also file a return with the Department for each
16of the first two months of each calendar quarter, on or before
17the twentieth day of the following calendar month, stating:
18        1. The name of the seller;
19        2. The address of the principal place of business from
20    which he engages in the business of selling tangible
21    personal property at retail in this State;
22        3. The total amount of taxable receipts received by him
23    during the preceding calendar month from sales of tangible
24    personal property by him during such preceding calendar
25    month, including receipts from charge and time sales, but
26    less all deductions allowed by law;

 

 

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1        4. The amount of credit provided in Section 2d of this
2    Act;
3        5. The amount of tax due; and
4        6. Such other reasonable information as the Department
5    may require.
6    Beginning on October 1, 2003, any person who is not a
7licensed distributor, importing distributor, or manufacturer,
8as defined in the Liquor Control Act of 1934, but is engaged in
9the business of selling, at retail, alcoholic liquor shall file
10a statement with the Department of Revenue, in a format and at
11a time prescribed by the Department, showing the total amount
12paid for alcoholic liquor purchased during the preceding month
13and such other information as is reasonably required by the
14Department. The Department may adopt rules to require that this
15statement be filed in an electronic or telephonic format. Such
16rules may provide for exceptions from the filing requirements
17of this paragraph. For the purposes of this paragraph, the term
18"alcoholic liquor" shall have the meaning prescribed in the
19Liquor Control Act of 1934.
20    Beginning on October 1, 2003, every distributor, importing
21distributor, and manufacturer of alcoholic liquor as defined in
22the Liquor Control Act of 1934, shall file a statement with the
23Department of Revenue, no later than the 10th day of the month
24for the preceding month during which transactions occurred, by
25electronic means, showing the total amount of gross receipts
26from the sale of alcoholic liquor sold or distributed during

 

 

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1the preceding month to purchasers; identifying the purchaser to
2whom it was sold or distributed; the purchaser's tax
3registration number; and such other information reasonably
4required by the Department. A distributor, importing
5distributor, or manufacturer of alcoholic liquor must
6personally deliver, mail, or provide by electronic means to
7each retailer listed on the monthly statement a report
8containing a cumulative total of that distributor's, importing
9distributor's, or manufacturer's total sales of alcoholic
10liquor to that retailer no later than the 10th day of the month
11for the preceding month during which the transaction occurred.
12The distributor, importing distributor, or manufacturer shall
13notify the retailer as to the method by which the distributor,
14importing distributor, or manufacturer will provide the sales
15information. If the retailer is unable to receive the sales
16information by electronic means, the distributor, importing
17distributor, or manufacturer shall furnish the sales
18information by personal delivery or by mail. For purposes of
19this paragraph, the term "electronic means" includes, but is
20not limited to, the use of a secure Internet website, e-mail,
21or facsimile.
22    If a total amount of less than $1 is payable, refundable or
23creditable, such amount shall be disregarded if it is less than
2450 cents and shall be increased to $1 if it is 50 cents or more.
25    Beginning October 1, 1993, a taxpayer who has an average
26monthly tax liability of $150,000 or more shall make all

 

 

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1payments required by rules of the Department by electronic
2funds transfer. Beginning October 1, 1994, a taxpayer who has
3an average monthly tax liability of $100,000 or more shall make
4all payments required by rules of the Department by electronic
5funds transfer. Beginning October 1, 1995, a taxpayer who has
6an average monthly tax liability of $50,000 or more shall make
7all payments required by rules of the Department by electronic
8funds transfer. Beginning October 1, 2000, a taxpayer who has
9an annual tax liability of $200,000 or more shall make all
10payments required by rules of the Department by electronic
11funds transfer. The term "annual tax liability" shall be the
12sum of the taxpayer's liabilities under this Act, and under all
13other State and local occupation and use tax laws administered
14by the Department, for the immediately preceding calendar year.
15The term "average monthly tax liability" shall be the sum of
16the taxpayer's liabilities under this Act, and under all other
17State and local occupation and use tax laws administered by the
18Department, for the immediately preceding calendar year
19divided by 12. Beginning on October 1, 2002, a taxpayer who has
20a tax liability in the amount set forth in subsection (b) of
21Section 2505-210 of the Department of Revenue Law shall make
22all payments required by rules of the Department by electronic
23funds transfer.
24    Before August 1 of each year beginning in 1993, the
25Department shall notify all taxpayers required to make payments
26by electronic funds transfer. All taxpayers required to make

 

 

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1payments by electronic funds transfer shall make those payments
2for a minimum of one year beginning on October 1.
3    Any taxpayer not required to make payments by electronic
4funds transfer may make payments by electronic funds transfer
5with the permission of the Department.
6    All taxpayers required to make payment by electronic funds
7transfer and any taxpayers authorized to voluntarily make
8payments by electronic funds transfer shall make those payments
9in the manner authorized by the Department.
10    The Department shall adopt such rules as are necessary to
11effectuate a program of electronic funds transfer and the
12requirements of this Section.
13    Any amount which is required to be shown or reported on any
14return or other document under this Act shall, if such amount
15is not a whole-dollar amount, be increased to the nearest
16whole-dollar amount in any case where the fractional part of a
17dollar is 50 cents or more, and decreased to the nearest
18whole-dollar amount where the fractional part of a dollar is
19less than 50 cents.
20    If the retailer is otherwise required to file a monthly
21return and if the retailer's average monthly tax liability to
22the Department does not exceed $200, the Department may
23authorize his returns to be filed on a quarter annual basis,
24with the return for January, February and March of a given year
25being due by April 20 of such year; with the return for April,
26May and June of a given year being due by July 20 of such year;

 

 

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1with the return for July, August and September of a given year
2being due by October 20 of such year, and with the return for
3October, November and December of a given year being due by
4January 20 of the following year.
5    If the retailer is otherwise required to file a monthly or
6quarterly return and if the retailer's average monthly tax
7liability with the Department does not exceed $50, the
8Department may authorize his returns to be filed on an annual
9basis, with the return for a given year being due by January 20
10of the following year.
11    Such quarter annual and annual returns, as to form and
12substance, shall be subject to the same requirements as monthly
13returns.
14    Notwithstanding any other provision in this Act concerning
15the time within which a retailer may file his return, in the
16case of any retailer who ceases to engage in a kind of business
17which makes him responsible for filing returns under this Act,
18such retailer shall file a final return under this Act with the
19Department not more than one month after discontinuing such
20business.
21    Where the same person has more than one business registered
22with the Department under separate registrations under this
23Act, such person may not file each return that is due as a
24single return covering all such registered businesses, but
25shall file separate returns for each such registered business.
26    In addition, with respect to motor vehicles, watercraft,

 

 

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1aircraft, and trailers that are required to be registered with
2an agency of this State, every retailer selling this kind of
3tangible personal property shall file, with the Department,
4upon a form to be prescribed and supplied by the Department, a
5separate return for each such item of tangible personal
6property which the retailer sells, except that if, in the same
7transaction, (i) a retailer of aircraft, watercraft, motor
8vehicles or trailers transfers more than one aircraft,
9watercraft, motor vehicle or trailer to another aircraft,
10watercraft, motor vehicle retailer or trailer retailer for the
11purpose of resale or (ii) a retailer of aircraft, watercraft,
12motor vehicles, or trailers transfers more than one aircraft,
13watercraft, motor vehicle, or trailer to a purchaser for use as
14a qualifying rolling stock as provided in Section 2-5 of this
15Act, then that seller may report the transfer of all aircraft,
16watercraft, motor vehicles or trailers involved in that
17transaction to the Department on the same uniform
18invoice-transaction reporting return form. For purposes of
19this Section, "watercraft" means a Class 2, Class 3, or Class 4
20watercraft as defined in Section 3-2 of the Boat Registration
21and Safety Act, a personal watercraft, or any boat equipped
22with an inboard motor.
23    Any retailer who sells only motor vehicles, watercraft,
24aircraft, or trailers that are required to be registered with
25an agency of this State, so that all retailers' occupation tax
26liability is required to be reported, and is reported, on such

 

 

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1transaction reporting returns and who is not otherwise required
2to file monthly or quarterly returns, need not file monthly or
3quarterly returns. However, those retailers shall be required
4to file returns on an annual basis.
5    The transaction reporting return, in the case of motor
6vehicles or trailers that are required to be registered with an
7agency of this State, shall be the same document as the Uniform
8Invoice referred to in Section 5-402 of The Illinois Vehicle
9Code and must show the name and address of the seller; the name
10and address of the purchaser; the amount of the selling price
11including the amount allowed by the retailer for traded-in
12property, if any; the amount allowed by the retailer for the
13traded-in tangible personal property, if any, to the extent to
14which Section 1 of this Act allows an exemption for the value
15of traded-in property; the balance payable after deducting such
16trade-in allowance from the total selling price; the amount of
17tax due from the retailer with respect to such transaction; the
18amount of tax collected from the purchaser by the retailer on
19such transaction (or satisfactory evidence that such tax is not
20due in that particular instance, if that is claimed to be the
21fact); the place and date of the sale; a sufficient
22identification of the property sold; such other information as
23is required in Section 5-402 of The Illinois Vehicle Code, and
24such other information as the Department may reasonably
25require.
26    The transaction reporting return in the case of watercraft

 

 

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1or aircraft must show the name and address of the seller; the
2name and address of the purchaser; the amount of the selling
3price including the amount allowed by the retailer for
4traded-in property, if any; the amount allowed by the retailer
5for the traded-in tangible personal property, if any, to the
6extent to which Section 1 of this Act allows an exemption for
7the value of traded-in property; the balance payable after
8deducting such trade-in allowance from the total selling price;
9the amount of tax due from the retailer with respect to such
10transaction; the amount of tax collected from the purchaser by
11the retailer on such transaction (or satisfactory evidence that
12such tax is not due in that particular instance, if that is
13claimed to be the fact); the place and date of the sale, a
14sufficient identification of the property sold, and such other
15information as the Department may reasonably require.
16    Such transaction reporting return shall be filed not later
17than 20 days after the day of delivery of the item that is
18being sold, but may be filed by the retailer at any time sooner
19than that if he chooses to do so. The transaction reporting
20return and tax remittance or proof of exemption from the
21Illinois use tax may be transmitted to the Department by way of
22the State agency with which, or State officer with whom the
23tangible personal property must be titled or registered (if
24titling or registration is required) if the Department and such
25agency or State officer determine that this procedure will
26expedite the processing of applications for title or

 

 

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1registration.
2    With each such transaction reporting return, the retailer
3shall remit the proper amount of tax due (or shall submit
4satisfactory evidence that the sale is not taxable if that is
5the case), to the Department or its agents, whereupon the
6Department shall issue, in the purchaser's name, a use tax
7receipt (or a certificate of exemption if the Department is
8satisfied that the particular sale is tax exempt) which such
9purchaser may submit to the agency with which, or State officer
10with whom, he must title or register the tangible personal
11property that is involved (if titling or registration is
12required) in support of such purchaser's application for an
13Illinois certificate or other evidence of title or registration
14to such tangible personal property.
15    No retailer's failure or refusal to remit tax under this
16Act precludes a user, who has paid the proper tax to the
17retailer, from obtaining his certificate of title or other
18evidence of title or registration (if titling or registration
19is required) upon satisfying the Department that such user has
20paid the proper tax (if tax is due) to the retailer. The
21Department shall adopt appropriate rules to carry out the
22mandate of this paragraph.
23    If the user who would otherwise pay tax to the retailer
24wants the transaction reporting return filed and the payment of
25the tax or proof of exemption made to the Department before the
26retailer is willing to take these actions and such user has not

 

 

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1paid the tax to the retailer, such user may certify to the fact
2of such delay by the retailer and may (upon the Department
3being satisfied of the truth of such certification) transmit
4the information required by the transaction reporting return
5and the remittance for tax or proof of exemption directly to
6the Department and obtain his tax receipt or exemption
7determination, in which event the transaction reporting return
8and tax remittance (if a tax payment was required) shall be
9credited by the Department to the proper retailer's account
10with the Department, but without the 2.1% or 1.75% discount
11provided for in this Section being allowed. When the user pays
12the tax directly to the Department, he shall pay the tax in the
13same amount and in the same form in which it would be remitted
14if the tax had been remitted to the Department by the retailer.
15    Refunds made by the seller during the preceding return
16period to purchasers, on account of tangible personal property
17returned to the seller, shall be allowed as a deduction under
18subdivision 5 of his monthly or quarterly return, as the case
19may be, in case the seller had theretofore included the
20receipts from the sale of such tangible personal property in a
21return filed by him and had paid the tax imposed by this Act
22with respect to such receipts.
23    Where the seller is a corporation, the return filed on
24behalf of such corporation shall be signed by the president,
25vice-president, secretary or treasurer or by the properly
26accredited agent of such corporation.

 

 

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1    Where the seller is a limited liability company, the return
2filed on behalf of the limited liability company shall be
3signed by a manager, member, or properly accredited agent of
4the limited liability company.
5    Except as provided in this Section, the retailer filing the
6return under this Section shall, at the time of filing such
7return, pay to the Department the amount of tax imposed by this
8Act less a discount of 2.1% prior to January 1, 1990 and 1.75%
9on and after January 1, 1990, or $5 per calendar year,
10whichever is greater, which is allowed to reimburse the
11retailer for the expenses incurred in keeping records,
12preparing and filing returns, remitting the tax and supplying
13data to the Department on request. Any prepayment made pursuant
14to Section 2d of this Act shall be included in the amount on
15which such 2.1% or 1.75% discount is computed. In the case of
16retailers who report and pay the tax on a transaction by
17transaction basis, as provided in this Section, such discount
18shall be taken with each such tax remittance instead of when
19such retailer files his periodic return. The Department may
20disallow the discount for retailers whose certificate of
21registration is revoked at the time the return is filed, but
22only if the Department's decision to revoke the certificate of
23registration has become final.
24    Before October 1, 2000, if the taxpayer's average monthly
25tax liability to the Department under this Act, the Use Tax
26Act, the Service Occupation Tax Act, and the Service Use Tax

 

 

SB1669- 208 -LRB100 06197 HLH 16231 b

1Act, excluding any liability for prepaid sales tax to be
2remitted in accordance with Section 2d of this Act, was $10,000
3or more during the preceding 4 complete calendar quarters, he
4shall file a return with the Department each month by the 20th
5day of the month next following the month during which such tax
6liability is incurred and shall make payments to the Department
7on or before the 7th, 15th, 22nd and last day of the month
8during which such liability is incurred. On and after October
91, 2000, if the taxpayer's average monthly tax liability to the
10Department under this Act, the Use Tax Act, the Service
11Occupation Tax Act, and the Service Use Tax Act, excluding any
12liability for prepaid sales tax to be remitted in accordance
13with Section 2d of this Act, was $20,000 or more during the
14preceding 4 complete calendar quarters, he shall file a return
15with the Department each month by the 20th day of the month
16next following the month during which such tax liability is
17incurred and shall make payment to the Department on or before
18the 7th, 15th, 22nd and last day of the month during which such
19liability is incurred. If the month during which such tax
20liability is incurred began prior to January 1, 1985, each
21payment shall be in an amount equal to 1/4 of the taxpayer's
22actual liability for the month or an amount set by the
23Department not to exceed 1/4 of the average monthly liability
24of the taxpayer to the Department for the preceding 4 complete
25calendar quarters (excluding the month of highest liability and
26the month of lowest liability in such 4 quarter period). If the

 

 

SB1669- 209 -LRB100 06197 HLH 16231 b

1month during which such tax liability is incurred begins on or
2after January 1, 1985 and prior to January 1, 1987, each
3payment shall be in an amount equal to 22.5% of the taxpayer's
4actual liability for the month or 27.5% of the taxpayer's
5liability for the same calendar month of the preceding year. If
6the month during which such tax liability is incurred begins on
7or after January 1, 1987 and prior to January 1, 1988, each
8payment shall be in an amount equal to 22.5% of the taxpayer's
9actual liability for the month or 26.25% of the taxpayer's
10liability for the same calendar month of the preceding year. If
11the month during which such tax liability is incurred begins on
12or after January 1, 1988, and prior to January 1, 1989, or
13begins on or after January 1, 1996, each payment shall be in an
14amount equal to 22.5% of the taxpayer's actual liability for
15the month or 25% of the taxpayer's liability for the same
16calendar month of the preceding year. If the month during which
17such tax liability is incurred begins on or after January 1,
181989, and prior to January 1, 1996, each payment shall be in an
19amount equal to 22.5% of the taxpayer's actual liability for
20the month or 25% of the taxpayer's liability for the same
21calendar month of the preceding year or 100% of the taxpayer's
22actual liability for the quarter monthly reporting period. The
23amount of such quarter monthly payments shall be credited
24against the final tax liability of the taxpayer's return for
25that month. Before October 1, 2000, once applicable, the
26requirement of the making of quarter monthly payments to the

 

 

SB1669- 210 -LRB100 06197 HLH 16231 b

1Department by taxpayers having an average monthly tax liability
2of $10,000 or more as determined in the manner provided above
3shall continue until such taxpayer's average monthly liability
4to the Department during the preceding 4 complete calendar
5quarters (excluding the month of highest liability and the
6month of lowest liability) is less than $9,000, or until such
7taxpayer's average monthly liability to the Department as
8computed for each calendar quarter of the 4 preceding complete
9calendar quarter period is less than $10,000. However, if a
10taxpayer can show the Department that a substantial change in
11the taxpayer's business has occurred which causes the taxpayer
12to anticipate that his average monthly tax liability for the
13reasonably foreseeable future will fall below the $10,000
14threshold stated above, then such taxpayer may petition the
15Department for a change in such taxpayer's reporting status. On
16and after October 1, 2000, once applicable, the requirement of
17the making of quarter monthly payments to the Department by
18taxpayers having an average monthly tax liability of $20,000 or
19more as determined in the manner provided above shall continue
20until such taxpayer's average monthly liability to the
21Department during the preceding 4 complete calendar quarters
22(excluding the month of highest liability and the month of
23lowest liability) is less than $19,000 or until such taxpayer's
24average monthly liability to the Department as computed for
25each calendar quarter of the 4 preceding complete calendar
26quarter period is less than $20,000. However, if a taxpayer can

 

 

SB1669- 211 -LRB100 06197 HLH 16231 b

1show the Department that a substantial change in the taxpayer's
2business has occurred which causes the taxpayer to anticipate
3that his average monthly tax liability for the reasonably
4foreseeable future will fall below the $20,000 threshold stated
5above, then such taxpayer may petition the Department for a
6change in such taxpayer's reporting status. The Department
7shall change such taxpayer's reporting status unless it finds
8that such change is seasonal in nature and not likely to be
9long term. If any such quarter monthly payment is not paid at
10the time or in the amount required by this Section, then the
11taxpayer shall be liable for penalties and interest on the
12difference between the minimum amount due as a payment and the
13amount of such quarter monthly payment actually and timely
14paid, except insofar as the taxpayer has previously made
15payments for that month to the Department in excess of the
16minimum payments previously due as provided in this Section.
17The Department shall make reasonable rules and regulations to
18govern the quarter monthly payment amount and quarter monthly
19payment dates for taxpayers who file on other than a calendar
20monthly basis.
21    The provisions of this paragraph apply before October 1,
222001. Without regard to whether a taxpayer is required to make
23quarter monthly payments as specified above, any taxpayer who
24is required by Section 2d of this Act to collect and remit
25prepaid taxes and has collected prepaid taxes which average in
26excess of $25,000 per month during the preceding 2 complete

 

 

SB1669- 212 -LRB100 06197 HLH 16231 b

1calendar quarters, shall file a return with the Department as
2required by Section 2f and shall make payments to the
3Department on or before the 7th, 15th, 22nd and last day of the
4month during which such liability is incurred. If the month
5during which such tax liability is incurred began prior to
6September 1, 1985 (the effective date of Public Act 84-221)
7this amendatory Act of 1985, each payment shall be in an amount
8not less than 22.5% of the taxpayer's actual liability under
9Section 2d. If the month during which such tax liability is
10incurred begins on or after January 1, 1986, each payment shall
11be in an amount equal to 22.5% of the taxpayer's actual
12liability for the month or 27.5% of the taxpayer's liability
13for the same calendar month of the preceding calendar year. If
14the month during which such tax liability is incurred begins on
15or after January 1, 1987, each payment shall be in an amount
16equal to 22.5% of the taxpayer's actual liability for the month
17or 26.25% of the taxpayer's liability for the same calendar
18month of the preceding year. The amount of such quarter monthly
19payments shall be credited against the final tax liability of
20the taxpayer's return for that month filed under this Section
21or Section 2f, as the case may be. Once applicable, the
22requirement of the making of quarter monthly payments to the
23Department pursuant to this paragraph shall continue until such
24taxpayer's average monthly prepaid tax collections during the
25preceding 2 complete calendar quarters is $25,000 or less. If
26any such quarter monthly payment is not paid at the time or in

 

 

SB1669- 213 -LRB100 06197 HLH 16231 b

1the amount required, the taxpayer shall be liable for penalties
2and interest on such difference, except insofar as the taxpayer
3has previously made payments for that month in excess of the
4minimum payments previously due.
5    The provisions of this paragraph apply on and after October
61, 2001. Without regard to whether a taxpayer is required to
7make quarter monthly payments as specified above, any taxpayer
8who is required by Section 2d of this Act to collect and remit
9prepaid taxes and has collected prepaid taxes that average in
10excess of $20,000 per month during the preceding 4 complete
11calendar quarters shall file a return with the Department as
12required by Section 2f and shall make payments to the
13Department on or before the 7th, 15th, 22nd and last day of the
14month during which the liability is incurred. Each payment
15shall be in an amount equal to 22.5% of the taxpayer's actual
16liability for the month or 25% of the taxpayer's liability for
17the same calendar month of the preceding year. The amount of
18the quarter monthly payments shall be credited against the
19final tax liability of the taxpayer's return for that month
20filed under this Section or Section 2f, as the case may be.
21Once applicable, the requirement of the making of quarter
22monthly payments to the Department pursuant to this paragraph
23shall continue until the taxpayer's average monthly prepaid tax
24collections during the preceding 4 complete calendar quarters
25(excluding the month of highest liability and the month of
26lowest liability) is less than $19,000 or until such taxpayer's

 

 

SB1669- 214 -LRB100 06197 HLH 16231 b

1average monthly liability to the Department as computed for
2each calendar quarter of the 4 preceding complete calendar
3quarters is less than $20,000. If any such quarter monthly
4payment is not paid at the time or in the amount required, the
5taxpayer shall be liable for penalties and interest on such
6difference, except insofar as the taxpayer has previously made
7payments for that month in excess of the minimum payments
8previously due.
9    If any payment provided for in this Section exceeds the
10taxpayer's liabilities under this Act, the Use Tax Act, the
11Service Occupation Tax Act and the Service Use Tax Act, as
12shown on an original monthly return, the Department shall, if
13requested by the taxpayer, issue to the taxpayer a credit
14memorandum no later than 30 days after the date of payment. The
15credit evidenced by such credit memorandum may be assigned by
16the taxpayer to a similar taxpayer under this Act, the Use Tax
17Act, the Service Occupation Tax Act or the Service Use Tax Act,
18in accordance with reasonable rules and regulations to be
19prescribed by the Department. If no such request is made, the
20taxpayer may credit such excess payment against tax liability
21subsequently to be remitted to the Department under this Act,
22the Use Tax Act, the Service Occupation Tax Act or the Service
23Use Tax Act, in accordance with reasonable rules and
24regulations prescribed by the Department. If the Department
25subsequently determined that all or any part of the credit
26taken was not actually due to the taxpayer, the taxpayer's 2.1%

 

 

SB1669- 215 -LRB100 06197 HLH 16231 b

1and 1.75% vendor's discount shall be reduced by 2.1% or 1.75%
2of the difference between the credit taken and that actually
3due, and that taxpayer shall be liable for penalties and
4interest on such difference.
5    If a retailer of motor fuel is entitled to a credit under
6Section 2d of this Act which exceeds the taxpayer's liability
7to the Department under this Act for the month which the
8taxpayer is filing a return, the Department shall issue the
9taxpayer a credit memorandum for the excess.
10    Beginning January 1, 1990, each month the Department shall
11pay into the Local Government Tax Fund, a special fund in the
12State treasury which is hereby created, the net revenue
13realized for the preceding month from the 1% tax on sales of
14food for human consumption which is to be consumed off the
15premises where it is sold (other than alcoholic beverages, soft
16drinks and food which has been prepared for immediate
17consumption) and prescription and nonprescription medicines,
18drugs, medical appliances, products classified as Class III
19medical devices by the United States Food and Drug
20Administration that are used for cancer treatment pursuant to a
21prescription, as well as any accessories and components related
22to those devices, and insulin, urine testing materials,
23syringes and needles used by diabetics.
24    Beginning January 1, 1990, each month the Department shall
25pay into the County and Mass Transit District Fund, a special
26fund in the State treasury which is hereby created, 4% of the

 

 

SB1669- 216 -LRB100 06197 HLH 16231 b

1net revenue realized for the preceding month from the 6.25%
2general rate.
3    Beginning August 1, 2000, each month the Department shall
4pay into the County and Mass Transit District Fund 20% of the
5net revenue realized for the preceding month from the 1.25%
6rate on the selling price of motor fuel and gasohol. Beginning
7September 1, 2010, each month the Department shall pay into the
8County and Mass Transit District Fund 20% of the net revenue
9realized for the preceding month from the 1.25% rate on the
10selling price of sales tax holiday items.
11    Beginning January 1, 1990, each month the Department shall
12pay into the Local Government Tax Fund 16% of the net revenue
13realized for the preceding month from the 6.25% general rate on
14the selling price of tangible personal property.
15    Beginning August 1, 2000, each month the Department shall
16pay into the Local Government Tax Fund 80% of the net revenue
17realized for the preceding month from the 1.25% rate on the
18selling price of motor fuel and gasohol. Beginning September 1,
192010, each month the Department shall pay into the Local
20Government Tax Fund 80% of the net revenue realized for the
21preceding month from the 1.25% rate on the selling price of
22sales tax holiday items.
23    Beginning October 1, 2009, each month the Department shall
24pay into the Capital Projects Fund an amount that is equal to
25an amount estimated by the Department to represent 80% of the
26net revenue realized for the preceding month from the sale of

 

 

SB1669- 217 -LRB100 06197 HLH 16231 b

1candy, grooming and hygiene products, and soft drinks that had
2been taxed at a rate of 1% prior to September 1, 2009 but that
3are now taxed at 6.25%.
4    Beginning July 1, 2011, each month the Department shall pay
5into the Clean Air Act Permit Fund 80% of the net revenue
6realized for the preceding month from the 6.25% general rate on
7the selling price of sorbents used in Illinois in the process
8of sorbent injection as used to comply with the Environmental
9Protection Act or the federal Clean Air Act, but the total
10payment into the Clean Air Act Permit Fund under this Act and
11the Use Tax Act shall not exceed $2,000,000 in any fiscal year.
12    Beginning July 1, 2013, each month the Department shall pay
13into the Underground Storage Tank Fund from the proceeds
14collected under this Act, the Use Tax Act, the Service Use Tax
15Act, and the Service Occupation Tax Act an amount equal to the
16average monthly deficit in the Underground Storage Tank Fund
17during the prior year, as certified annually by the Illinois
18Environmental Protection Agency, but the total payment into the
19Underground Storage Tank Fund under this Act, the Use Tax Act,
20the Service Use Tax Act, and the Service Occupation Tax Act
21shall not exceed $18,000,000 in any State fiscal year. As used
22in this paragraph, the "average monthly deficit" shall be equal
23to the difference between the average monthly claims for
24payment by the fund and the average monthly revenues deposited
25into the fund, excluding payments made pursuant to this
26paragraph.

 

 

SB1669- 218 -LRB100 06197 HLH 16231 b

1    Beginning July 1, 2015, of the remainder of the moneys
2received by the Department under the Use Tax Act, the Service
3Use Tax Act, the Service Occupation Tax Act, and this Act, each
4month the Department shall deposit $500,000 into the State
5Crime Laboratory Fund.
6    Of the remainder of the moneys received by the Department
7pursuant to this Act, (a) 1.75% thereof shall be paid into the
8Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
9and after July 1, 1989, 3.8% thereof shall be paid into the
10Build Illinois Fund; provided, however, that if in any fiscal
11year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
12may be, of the moneys received by the Department and required
13to be paid into the Build Illinois Fund pursuant to this Act,
14Section 9 of the Use Tax Act, Section 9 of the Service Use Tax
15Act, and Section 9 of the Service Occupation Tax Act, such Acts
16being hereinafter called the "Tax Acts" and such aggregate of
172.2% or 3.8%, as the case may be, of moneys being hereinafter
18called the "Tax Act Amount", and (2) the amount transferred to
19the Build Illinois Fund from the State and Local Sales Tax
20Reform Fund shall be less than the Annual Specified Amount (as
21hereinafter defined), an amount equal to the difference shall
22be immediately paid into the Build Illinois Fund from other
23moneys received by the Department pursuant to the Tax Acts; the
24"Annual Specified Amount" means the amounts specified below for
25fiscal years 1986 through 1993:
26Fiscal YearAnnual Specified Amount

 

 

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11986$54,800,000
21987$76,650,000
31988$80,480,000
41989$88,510,000
51990$115,330,000
61991$145,470,000
71992$182,730,000
81993$206,520,000;
9and means the Certified Annual Debt Service Requirement (as
10defined in Section 13 of the Build Illinois Bond Act) or the
11Tax Act Amount, whichever is greater, for fiscal year 1994 and
12each fiscal year thereafter; and further provided, that if on
13the last business day of any month the sum of (1) the Tax Act
14Amount required to be deposited into the Build Illinois Bond
15Account in the Build Illinois Fund during such month and (2)
16the amount transferred to the Build Illinois Fund from the
17State and Local Sales Tax Reform Fund shall have been less than
181/12 of the Annual Specified Amount, an amount equal to the
19difference shall be immediately paid into the Build Illinois
20Fund from other moneys received by the Department pursuant to
21the Tax Acts; and, further provided, that in no event shall the
22payments required under the preceding proviso result in
23aggregate payments into the Build Illinois Fund pursuant to
24this clause (b) for any fiscal year in excess of the greater of
25(i) the Tax Act Amount or (ii) the Annual Specified Amount for
26such fiscal year. The amounts payable into the Build Illinois

 

 

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1Fund under clause (b) of the first sentence in this paragraph
2shall be payable only until such time as the aggregate amount
3on deposit under each trust indenture securing Bonds issued and
4outstanding pursuant to the Build Illinois Bond Act is
5sufficient, taking into account any future investment income,
6to fully provide, in accordance with such indenture, for the
7defeasance of or the payment of the principal of, premium, if
8any, and interest on the Bonds secured by such indenture and on
9any Bonds expected to be issued thereafter and all fees and
10costs payable with respect thereto, all as certified by the
11Director of the Bureau of the Budget (now Governor's Office of
12Management and Budget). If on the last business day of any
13month in which Bonds are outstanding pursuant to the Build
14Illinois Bond Act, the aggregate of moneys deposited in the
15Build Illinois Bond Account in the Build Illinois Fund in such
16month shall be less than the amount required to be transferred
17in such month from the Build Illinois Bond Account to the Build
18Illinois Bond Retirement and Interest Fund pursuant to Section
1913 of the Build Illinois Bond Act, an amount equal to such
20deficiency shall be immediately paid from other moneys received
21by the Department pursuant to the Tax Acts to the Build
22Illinois Fund; provided, however, that any amounts paid to the
23Build Illinois Fund in any fiscal year pursuant to this
24sentence shall be deemed to constitute payments pursuant to
25clause (b) of the first sentence of this paragraph and shall
26reduce the amount otherwise payable for such fiscal year

 

 

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1pursuant to that clause (b). The moneys received by the
2Department pursuant to this Act and required to be deposited
3into the Build Illinois Fund are subject to the pledge, claim
4and charge set forth in Section 12 of the Build Illinois Bond
5Act.
6    Subject to payment of amounts into the Build Illinois Fund
7as provided in the preceding paragraph or in any amendment
8thereto hereafter enacted, the following specified monthly
9installment of the amount requested in the certificate of the
10Chairman of the Metropolitan Pier and Exposition Authority
11provided under Section 8.25f of the State Finance Act, but not
12in excess of sums designated as "Total Deposit", shall be
13deposited in the aggregate from collections under Section 9 of
14the Use Tax Act, Section 9 of the Service Use Tax Act, Section
159 of the Service Occupation Tax Act, and Section 3 of the
16Retailers' Occupation Tax Act into the McCormick Place
17Expansion Project Fund in the specified fiscal years.
18Fiscal YearTotal Deposit
191993         $0
201994 53,000,000
211995 58,000,000
221996 61,000,000
231997 64,000,000
241998 68,000,000
251999 71,000,000

 

 

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12000 75,000,000
22001 80,000,000
32002 93,000,000
42003 99,000,000
52004103,000,000
62005108,000,000
72006113,000,000
82007119,000,000
92008126,000,000
102009132,000,000
112010139,000,000
122011146,000,000
132012153,000,000
142013161,000,000
152014170,000,000
162015179,000,000
172016189,000,000
182017199,000,000
192018210,000,000
202019221,000,000
212020233,000,000
222021246,000,000
232022260,000,000
242023275,000,000
252024 275,000,000
262025 275,000,000

 

 

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12026 279,000,000
22027 292,000,000
32028 307,000,000
42029 322,000,000
52030 338,000,000
62031 350,000,000
72032 350,000,000
8and
9each fiscal year
10thereafter that bonds
11are outstanding under
12Section 13.2 of the
13Metropolitan Pier and
14Exposition Authority Act,
15but not after fiscal year 2060.
16    Beginning July 20, 1993 and in each month of each fiscal
17year thereafter, one-eighth of the amount requested in the
18certificate of the Chairman of the Metropolitan Pier and
19Exposition Authority for that fiscal year, less the amount
20deposited into the McCormick Place Expansion Project Fund by
21the State Treasurer in the respective month under subsection
22(g) of Section 13 of the Metropolitan Pier and Exposition
23Authority Act, plus cumulative deficiencies in the deposits
24required under this Section for previous months and years,
25shall be deposited into the McCormick Place Expansion Project
26Fund, until the full amount requested for the fiscal year, but

 

 

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1not in excess of the amount specified above as "Total Deposit",
2has been deposited.
3    Subject to payment of amounts into the Build Illinois Fund
4and the McCormick Place Expansion Project Fund pursuant to the
5preceding paragraphs or in any amendments thereto hereafter
6enacted, beginning July 1, 1993 and ending on September 30,
72013, the Department shall each month pay into the Illinois Tax
8Increment Fund 0.27% of 80% of the net revenue realized for the
9preceding month from the 6.25% general rate on the selling
10price of tangible personal property.
11    Subject to payment of amounts into the Build Illinois Fund
12and the McCormick Place Expansion Project Fund pursuant to the
13preceding paragraphs or in any amendments thereto hereafter
14enacted, beginning with the receipt of the first report of
15taxes paid by an eligible business and continuing for a 25-year
16period, the Department shall each month pay into the Energy
17Infrastructure Fund 80% of the net revenue realized from the
186.25% general rate on the selling price of Illinois-mined coal
19that was sold to an eligible business. For purposes of this
20paragraph, the term "eligible business" means a new electric
21generating facility certified pursuant to Section 605-332 of
22the Department of Commerce and Economic Opportunity Law of the
23Civil Administrative Code of Illinois.
24    Subject to payment of amounts into the Build Illinois Fund,
25the McCormick Place Expansion Project Fund, the Illinois Tax
26Increment Fund, and the Energy Infrastructure Fund pursuant to

 

 

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1the preceding paragraphs or in any amendments to this Section
2hereafter enacted, beginning on the first day of the first
3calendar month to occur on or after August 26, 2014 (the
4effective date of Public Act 98-1098) this amendatory Act of
5the 98th General Assembly, each month, from the collections
6made under Section 9 of the Use Tax Act, Section 9 of the
7Service Use Tax Act, Section 9 of the Service Occupation Tax
8Act, and Section 3 of the Retailers' Occupation Tax Act, the
9Department shall pay into the Tax Compliance and Administration
10Fund, to be used, subject to appropriation, to fund additional
11auditors and compliance personnel at the Department of Revenue,
12an amount equal to 1/12 of 5% of 80% of the cash receipts
13collected during the preceding fiscal year by the Audit Bureau
14of the Department under the Use Tax Act, the Service Use Tax
15Act, the Service Occupation Tax Act, the Retailers' Occupation
16Tax Act, and associated local occupation and use taxes
17administered by the Department.
18    Of the remainder of the moneys received by the Department
19pursuant to this Act, 75% thereof shall be paid into the State
20Treasury and 25% shall be reserved in a special account and
21used only for the transfer to the Common School Fund as part of
22the monthly transfer from the General Revenue Fund in
23accordance with Section 8a of the State Finance Act.
24    The Department may, upon separate written notice to a
25taxpayer, require the taxpayer to prepare and file with the
26Department on a form prescribed by the Department within not

 

 

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1less than 60 days after receipt of the notice an annual
2information return for the tax year specified in the notice.
3Such annual return to the Department shall include a statement
4of gross receipts as shown by the retailer's last Federal
5income tax return. If the total receipts of the business as
6reported in the Federal income tax return do not agree with the
7gross receipts reported to the Department of Revenue for the
8same period, the retailer shall attach to his annual return a
9schedule showing a reconciliation of the 2 amounts and the
10reasons for the difference. The retailer's annual return to the
11Department shall also disclose the cost of goods sold by the
12retailer during the year covered by such return, opening and
13closing inventories of such goods for such year, costs of goods
14used from stock or taken from stock and given away by the
15retailer during such year, payroll information of the
16retailer's business during such year and any additional
17reasonable information which the Department deems would be
18helpful in determining the accuracy of the monthly, quarterly
19or annual returns filed by such retailer as provided for in
20this Section.
21    If the annual information return required by this Section
22is not filed when and as required, the taxpayer shall be liable
23as follows:
24        (i) Until January 1, 1994, the taxpayer shall be liable
25    for a penalty equal to 1/6 of 1% of the tax due from such
26    taxpayer under this Act during the period to be covered by

 

 

SB1669- 227 -LRB100 06197 HLH 16231 b

1    the annual return for each month or fraction of a month
2    until such return is filed as required, the penalty to be
3    assessed and collected in the same manner as any other
4    penalty provided for in this Act.
5        (ii) On and after January 1, 1994, the taxpayer shall
6    be liable for a penalty as described in Section 3-4 of the
7    Uniform Penalty and Interest Act.
8    The chief executive officer, proprietor, owner or highest
9ranking manager shall sign the annual return to certify the
10accuracy of the information contained therein. Any person who
11willfully signs the annual return containing false or
12inaccurate information shall be guilty of perjury and punished
13accordingly. The annual return form prescribed by the
14Department shall include a warning that the person signing the
15return may be liable for perjury.
16    The provisions of this Section concerning the filing of an
17annual information return do not apply to a retailer who is not
18required to file an income tax return with the United States
19Government.
20    As soon as possible after the first day of each month, upon
21certification of the Department of Revenue, the Comptroller
22shall order transferred and the Treasurer shall transfer from
23the General Revenue Fund to the Motor Fuel Tax Fund an amount
24equal to 1.7% of 80% of the net revenue realized under this Act
25for the second preceding month. Beginning April 1, 2000, this
26transfer is no longer required and shall not be made.

 

 

SB1669- 228 -LRB100 06197 HLH 16231 b

1    Net revenue realized for a month shall be the revenue
2collected by the State pursuant to this Act, less the amount
3paid out during that month as refunds to taxpayers for
4overpayment of liability.
5    For greater simplicity of administration, manufacturers,
6importers and wholesalers whose products are sold at retail in
7Illinois by numerous retailers, and who wish to do so, may
8assume the responsibility for accounting and paying to the
9Department all tax accruing under this Act with respect to such
10sales, if the retailers who are affected do not make written
11objection to the Department to this arrangement.
12    Any person who promotes, organizes, provides retail
13selling space for concessionaires or other types of sellers at
14the Illinois State Fair, DuQuoin State Fair, county fairs,
15local fairs, art shows, flea markets and similar exhibitions or
16events, including any transient merchant as defined by Section
172 of the Transient Merchant Act of 1987, is required to file a
18report with the Department providing the name of the merchant's
19business, the name of the person or persons engaged in
20merchant's business, the permanent address and Illinois
21Retailers Occupation Tax Registration Number of the merchant,
22the dates and location of the event and other reasonable
23information that the Department may require. The report must be
24filed not later than the 20th day of the month next following
25the month during which the event with retail sales was held.
26Any person who fails to file a report required by this Section

 

 

SB1669- 229 -LRB100 06197 HLH 16231 b

1commits a business offense and is subject to a fine not to
2exceed $250.
3    Any person engaged in the business of selling tangible
4personal property at retail as a concessionaire or other type
5of seller at the Illinois State Fair, county fairs, art shows,
6flea markets and similar exhibitions or events, or any
7transient merchants, as defined by Section 2 of the Transient
8Merchant Act of 1987, may be required to make a daily report of
9the amount of such sales to the Department and to make a daily
10payment of the full amount of tax due. The Department shall
11impose this requirement when it finds that there is a
12significant risk of loss of revenue to the State at such an
13exhibition or event. Such a finding shall be based on evidence
14that a substantial number of concessionaires or other sellers
15who are not residents of Illinois will be engaging in the
16business of selling tangible personal property at retail at the
17exhibition or event, or other evidence of a significant risk of
18loss of revenue to the State. The Department shall notify
19concessionaires and other sellers affected by the imposition of
20this requirement. In the absence of notification by the
21Department, the concessionaires and other sellers shall file
22their returns as otherwise required in this Section.
23(Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;
2498-496, eff. 1-1-14; 98-756, eff. 7-16-14; 98-1098, eff.
258-26-14; 99-352, eff. 8-12-15; 99-858, eff. 8-19-16; 99-933,
26eff. 1-27-17; revised 2-3-17.)
 

 

 

SB1669- 230 -LRB100 06197 HLH 16231 b

1    Section 99. Effective date. This Act takes effect upon
2becoming law.