093_HB2868

 
                                     LRB093 07194 SJM 07349 b

 1        AN ACT concerning taxes.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  Use  Tax  Act  is  amended by changing
 5    Section 3-5 as follows:

 6        (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
 7        Sec. 3-5.  Exemptions.  Use  of  the  following  tangible
 8    personal property is exempt from the tax imposed by this Act:
 9        (1)  Personal  property  purchased  from  a  corporation,
10    society,    association,    foundation,    institution,    or
11    organization, other than a limited liability company, that is
12    organized and operated as a not-for-profit service enterprise
13    for  the  benefit  of persons 65 years of age or older if the
14    personal property was not purchased by the enterprise for the
15    purpose of resale by the enterprise.
16        (2)  Personal  property  purchased  by  a  not-for-profit
17    Illinois county  fair  association  for  use  in  conducting,
18    operating, or promoting the county fair.
19        (3)  Personal property purchased by a not-for-profit arts
20    or  cultural organization that establishes, by proof required
21    by the Department by rule, that it has received an  exemption
22    under Section 501(c)(3) of the Internal Revenue Code and that
23    is  organized  and operated primarily for the presentation or
24    support of  arts  or  cultural  programming,  activities,  or
25    services.   These  organizations include, but are not limited
26    to, music and dramatic arts organizations  such  as  symphony
27    orchestras  and  theatrical groups, arts and cultural service
28    organizations,   local    arts    councils,    visual    arts
29    organizations, and media arts organizations. On and after the
30    effective  date  of  this  amendatory Act of the 92nd General
31    Assembly, however, an  entity  otherwise  eligible  for  this
 
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 1    exemption  shall not make tax-free purchases unless it has an
 2    active identification number issued by the Department.
 3        (4)  Personal property purchased by a governmental  body,
 4    by   a  corporation,  society,  association,  foundation,  or
 5    institution   organized   and   operated   exclusively    for
 6    charitable,  religious,  or  educational  purposes,  or  by a
 7    not-for-profit corporation, society, association, foundation,
 8    institution, or organization that has no compensated officers
 9    or employees and that is organized and operated primarily for
10    the recreation of persons 55 years of age or older. A limited
11    liability company may qualify for the  exemption  under  this
12    paragraph  only if the limited liability company is organized
13    and operated exclusively for  educational  purposes.  On  and
14    after July 1, 1987, however, no entity otherwise eligible for
15    this exemption shall make tax-free purchases unless it has an
16    active   exemption   identification   number  issued  by  the
17    Department.
18        (5)  A passenger car that is a replacement vehicle to the
19    extent that the purchase price of the car is subject  to  the
20    Replacement Vehicle Tax.
21        (6)  Graphic  arts  machinery  and  equipment,  including
22    repair   and  replacement  parts,  both  new  and  used,  and
23    including that manufactured on special  order,  certified  by
24    the   purchaser   to  be  used  primarily  for  graphic  arts
25    production, and including machinery and  equipment  purchased
26    for  lease.  Equipment includes chemicals or chemicals acting
27    as catalysts but only if the chemicals or chemicals acting as
28    catalysts effect a direct and immediate change upon a graphic
29    arts product.
30        (7)  Farm chemicals.
31        (8)  Legal  tender,  currency,  medallions,  or  gold  or
32    silver  coinage  issued  by  the  State  of   Illinois,   the
33    government of the United States of America, or the government
34    of any foreign country, and bullion.
 
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 1        (9)  Personal property purchased from a teacher-sponsored
 2    student   organization   affiliated  with  an  elementary  or
 3    secondary school located in Illinois.
 4        (10)  A motor vehicle of  the  first  division,  a  motor
 5    vehicle of the second division that is a self-contained motor
 6    vehicle  designed  or permanently converted to provide living
 7    quarters for  recreational,  camping,  or  travel  use,  with
 8    direct  walk through to the living quarters from the driver's
 9    seat, or a motor vehicle of the second division  that  is  of
10    the  van configuration designed for the transportation of not
11    less than 7 nor  more  than  16  passengers,  as  defined  in
12    Section  1-146 of the Illinois Vehicle Code, that is used for
13    automobile renting, as  defined  in  the  Automobile  Renting
14    Occupation and Use Tax Act.
15        (11)  Farm  machinery  and  equipment, both new and used,
16    including that manufactured on special  order,  certified  by
17    the purchaser to be used primarily for production agriculture
18    or   State   or   federal  agricultural  programs,  including
19    individual replacement parts for the machinery and equipment,
20    including machinery and equipment purchased  for  lease,  and
21    including implements of husbandry defined in Section 1-130 of
22    the  Illinois  Vehicle  Code, farm machinery and agricultural
23    chemical and fertilizer spreaders, and nurse wagons  required
24    to  be registered under Section 3-809 of the Illinois Vehicle
25    Code, but excluding  other  motor  vehicles  required  to  be
26    registered  under  the  Illinois  Vehicle Code. Horticultural
27    polyhouses or hoop houses used for propagating,  growing,  or
28    overwintering  plants  shall be considered farm machinery and
29    equipment under this item (11). Agricultural chemical  tender
30    tanks  and dry boxes shall include units sold separately from
31    a motor vehicle  required  to  be  licensed  and  units  sold
32    mounted  on  a  motor  vehicle required to be licensed if the
33    selling price of the tender is separately stated.
34        Farm machinery  and  equipment  shall  include  precision
 
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 1    farming  equipment  that  is  installed  or  purchased  to be
 2    installed on farm machinery and equipment including, but  not
 3    limited   to,   tractors,   harvesters,  sprayers,  planters,
 4    seeders, or spreaders. Precision farming equipment  includes,
 5    but  is  not  limited  to,  soil  testing sensors, computers,
 6    monitors, software, global positioning and  mapping  systems,
 7    and other such equipment.
 8        Farm  machinery  and  equipment  also includes computers,
 9    sensors, software, and related equipment  used  primarily  in
10    the  computer-assisted  operation  of  production agriculture
11    facilities,  equipment,  and  activities  such  as,  but  not
12    limited to, the collection, monitoring,  and  correlation  of
13    animal  and  crop  data for the purpose of formulating animal
14    diets and agricultural chemicals.  This item (11)  is  exempt
15    from the provisions of Section 3-90.
16        (12)  Fuel  and  petroleum products sold to or used by an
17    air common carrier, certified by the carrier to be  used  for
18    consumption,  shipment,  or  storage  in  the  conduct of its
19    business as an air common carrier, for a flight destined  for
20    or  returning from a location or locations outside the United
21    States without regard  to  previous  or  subsequent  domestic
22    stopovers.
23        (13)  Proceeds  of  mandatory  service charges separately
24    stated on customers' bills for the purchase  and  consumption
25    of food and beverages purchased at retail from a retailer, to
26    the  extent  that  the  proceeds of the service charge are in
27    fact turned over as tips or as a substitute for tips  to  the
28    employees  who  participate  directly  in preparing, serving,
29    hosting or cleaning up the food  or  beverage  function  with
30    respect to which the service charge is imposed.
31        (14)  Oil  field  exploration,  drilling,  and production
32    equipment, including (i) rigs and parts of rigs, rotary rigs,
33    cable tool rigs, and workover rigs,  (ii)  pipe  and  tubular
34    goods,  including  casing  and drill strings, (iii) pumps and
 
                            -5-      LRB093 07194 SJM 07349 b
 1    pump-jack units, (iv) storage tanks and flow lines,  (v)  any
 2    individual   replacement  part  for  oil  field  exploration,
 3    drilling, and production equipment, and  (vi)  machinery  and
 4    equipment  purchased  for lease; but excluding motor vehicles
 5    required to be registered under the Illinois Vehicle Code.
 6        (15)  Photoprocessing machinery and equipment,  including
 7    repair  and  replacement  parts, both new and used, including
 8    that  manufactured  on  special  order,  certified   by   the
 9    purchaser  to  be  used  primarily  for  photoprocessing, and
10    including photoprocessing machinery and  equipment  purchased
11    for lease.
12        (16)  Coal   exploration,   mining,  offhighway  hauling,
13    processing, maintenance, and reclamation equipment, including
14    replacement parts  and  equipment,  and  including  equipment
15    purchased for lease, but excluding motor vehicles required to
16    be registered under the Illinois Vehicle Code.
17        (17)  Distillation  machinery  and  equipment,  sold as a
18    unit  or  kit,  assembled  or  installed  by  the   retailer,
19    certified  by  the user to be used only for the production of
20    ethyl alcohol that will be used for consumption as motor fuel
21    or as a component of motor fuel for the personal use  of  the
22    user, and not subject to sale or resale.
23        (18)  Manufacturing    and   assembling   machinery   and
24    equipment used primarily in the process of  manufacturing  or
25    assembling tangible personal property for wholesale or retail
26    sale or lease, whether that sale or lease is made directly by
27    the  manufacturer  or  by  some  other  person,  whether  the
28    materials  used  in the process are owned by the manufacturer
29    or some other person, or whether that sale or lease  is  made
30    apart  from or as an incident to the seller's engaging in the
31    service occupation of producing machines, tools, dies,  jigs,
32    patterns,  gauges,  or  other  similar items of no commercial
33    value on special order for a particular purchaser.
34        (19)  Personal  property  delivered  to  a  purchaser  or
 
                            -6-      LRB093 07194 SJM 07349 b
 1    purchaser's donee inside Illinois when the purchase order for
 2    that personal property was  received  by  a  florist  located
 3    outside  Illinois  who  has a florist located inside Illinois
 4    deliver the personal property.
 5        (20)  Semen used for artificial insemination of livestock
 6    for direct agricultural production.
 7        (21)  Horses, or interests in horses, registered with and
 8    meeting the requirements of any of  the  Arabian  Horse  Club
 9    Registry  of  America, Appaloosa Horse Club, American Quarter
10    Horse Association, United  States  Trotting  Association,  or
11    Jockey Club, as appropriate, used for purposes of breeding or
12    racing for prizes.
13        (22)  Computers and communications equipment utilized for
14    any  hospital  purpose  and  equipment used in the diagnosis,
15    analysis, or treatment of hospital patients  purchased  by  a
16    lessor who leases the equipment, under a lease of one year or
17    longer  executed  or  in  effect at the time the lessor would
18    otherwise be subject to the tax imposed by  this  Act,  to  a
19    hospital    that  has  been  issued  an  active tax exemption
20    identification number by the Department under Section  1g  of
21    the  Retailers'  Occupation  Tax  Act.   If  the equipment is
22    leased in a manner that does not qualify for  this  exemption
23    or  is  used in any other non-exempt manner, the lessor shall
24    be liable for the tax imposed under this Act or  the  Service
25    Use  Tax  Act,  as  the case may be, based on the fair market
26    value of the property at  the  time  the  non-qualifying  use
27    occurs.   No  lessor  shall  collect or attempt to collect an
28    amount (however designated) that purports to  reimburse  that
29    lessor for the tax imposed by this Act or the Service Use Tax
30    Act,  as the case may be, if the tax has not been paid by the
31    lessor.  If a lessor improperly collects any such amount from
32    the lessee, the lessee shall have a legal right  to  claim  a
33    refund  of  that  amount  from the lessor.  If, however, that
34    amount is not refunded to the  lessee  for  any  reason,  the
 
                            -7-      LRB093 07194 SJM 07349 b
 1    lessor is liable to pay that amount to the Department.
 2        (23)  Personal  property purchased by a lessor who leases
 3    the property, under a lease of  one year or  longer  executed
 4    or  in  effect  at  the  time  the  lessor would otherwise be
 5    subject to the tax imposed by this  Act,  to  a  governmental
 6    body  that  has  been  issued  an  active sales tax exemption
 7    identification number by the Department under Section  1g  of
 8    the  Retailers' Occupation Tax Act. If the property is leased
 9    in a manner that does not qualify for this exemption or  used
10    in  any  other  non-exempt manner, the lessor shall be liable
11    for the tax imposed under this Act or  the  Service  Use  Tax
12    Act,  as  the  case may be, based on the fair market value of
13    the property at the time the non-qualifying use  occurs.   No
14    lessor shall collect or attempt to collect an amount (however
15    designated)  that  purports  to reimburse that lessor for the
16    tax imposed by this Act or the Service Use Tax  Act,  as  the
17    case  may be, if the tax has not been paid by the lessor.  If
18    a lessor improperly collects any such amount from the lessee,
19    the lessee shall have a legal right to claim a refund of that
20    amount from the lessor.  If,  however,  that  amount  is  not
21    refunded  to  the lessee for any reason, the lessor is liable
22    to pay that amount to the Department.
23        (24)  Beginning with taxable years  ending  on  or  after
24    December  31, 1995 and ending with taxable years ending on or
25    before December 31, 2004, personal property that  is  donated
26    for  disaster  relief  to  be  used  in  a State or federally
27    declared disaster area in Illinois or bordering Illinois by a
28    manufacturer or retailer that is registered in this State  to
29    a   corporation,   society,   association,   foundation,   or
30    institution  that  has  been  issued  a  sales  tax exemption
31    identification number by the Department that assists  victims
32    of the disaster who reside within the declared disaster area.
33        (25)  Beginning  with  taxable  years  ending on or after
34    December 31, 1995 and ending with taxable years ending on  or
 
                            -8-      LRB093 07194 SJM 07349 b
 1    before  December  31, 2004, personal property that is used in
 2    the performance of  infrastructure  repairs  in  this  State,
 3    including  but  not  limited  to municipal roads and streets,
 4    access roads, bridges,  sidewalks,  waste  disposal  systems,
 5    water  and  sewer  line  extensions,  water  distribution and
 6    purification facilities, storm water drainage  and  retention
 7    facilities, and sewage treatment facilities, resulting from a
 8    State or federally declared disaster in Illinois or bordering
 9    Illinois  when  such  repairs  are  initiated  on  facilities
10    located  in  the declared disaster area within 6 months after
11    the disaster.
12        (26)  Beginning  July  1,  1999,  game  or   game   birds
13    purchased  at  a "game breeding and hunting preserve area" or
14    an "exotic game hunting area" as those terms are used in  the
15    Wildlife  Code  or  at  a  hunting enclosure approved through
16    rules adopted by the Department of Natural  Resources.   This
17    paragraph is exempt from the provisions of Section 3-90.
18        (27)  A motor vehicle, as that term is defined in Section
19    1-146  of  the  Illinois  Vehicle  Code, that is donated to a
20    corporation, limited liability company, society, association,
21    foundation,  or  institution  that  is  determined   by   the
22    Department  to  be  organized  and  operated  exclusively for
23    educational purposes.  For purposes  of  this  exemption,  "a
24    corporation, limited liability company, society, association,
25    foundation, or institution organized and operated exclusively
26    for  educational  purposes"  means  all  tax-supported public
27    schools, private schools that offer systematic instruction in
28    useful branches of  learning  by  methods  common  to  public
29    schools  and  that  compare  favorably  in  their  scope  and
30    intensity with the course of study presented in tax-supported
31    schools,  and  vocational  or technical schools or institutes
32    organized and operated exclusively to  provide  a  course  of
33    study  of  not  less  than  6  weeks duration and designed to
34    prepare individuals to follow a trade or to pursue a  manual,
 
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 1    technical,  mechanical,  industrial,  business, or commercial
 2    occupation.
 3        (28)  Beginning  January  1,  2000,   personal  property,
 4    including food, purchased through fundraising events for  the
 5    benefit  of  a  public  or  private  elementary  or secondary
 6    school, a group of those  schools,  or  one  or  more  school
 7    districts if the events are sponsored by an entity recognized
 8    by  the school district that consists primarily of volunteers
 9    and includes parents and teachers  of  the  school  children.
10    This  paragraph  does not apply to fundraising events (i) for
11    the benefit of private home instruction or (ii) for which the
12    fundraising entity purchases the personal  property  sold  at
13    the  events  from  another individual or entity that sold the
14    property for the purpose of resale by the fundraising  entity
15    and  that  profits  from  the sale to the fundraising entity.
16    This paragraph is exempt from the provisions of Section 3-90.
17        (29)  Beginning January 1, 2000 and through December  31,
18    2001, new or used automatic vending machines that prepare and
19    serve  hot  food  and  beverages, including coffee, soup, and
20    other  items,  and  replacement  parts  for  these  machines.
21    Beginning January 1, 2002, machines and  parts  for  machines
22    used  in  commercial,  coin-operated  amusement  and  vending
23    business  if  a  use  or  occupation tax is paid on the gross
24    receipts  derived   from   the   use   of   the   commercial,
25    coin-operated  amusement and vending machines. This paragraph
26    is exempt from the provisions of Section 3-90.
27        (30)  Food for human consumption that is to  be  consumed
28    off  the  premises  where  it  is  sold (other than alcoholic
29    beverages, soft drinks, and food that has been  prepared  for
30    immediate  consumption)  and prescription and nonprescription
31    medicines, drugs,  medical  appliances,  and  insulin,  urine
32    testing  materials,  syringes, and needles used by diabetics,
33    for human use, when purchased for use by a  person  receiving
34    medical assistance under Article 5 of the Illinois Public Aid
 
                            -10-     LRB093 07194 SJM 07349 b
 1    Code  who  resides  in a licensed long-term care facility, as
 2    defined in the Nursing Home Care Act.
 3        (31)  Beginning on the effective date of this  amendatory
 4    Act   of   the   92nd   General   Assembly,   computers   and
 5    communications  equipment  utilized  for any hospital purpose
 6    and equipment used in the diagnosis, analysis,  or  treatment
 7    of  hospital  patients  purchased  by a lessor who leases the
 8    equipment, under a lease of one year or longer executed or in
 9    effect at the time the lessor would otherwise be  subject  to
10    the  tax  imposed  by  this  Act, to a hospital that has been
11    issued an active tax exemption identification number  by  the
12    Department  under Section 1g of the Retailers' Occupation Tax
13    Act.  If the equipment is leased in a manner  that  does  not
14    qualify  for this exemption or is used in any other nonexempt
15    manner, the lessor shall be liable for the tax imposed  under
16    this  Act  or  the  Service  Use Tax Act, as the case may be,
17    based on the fair market value of the property  at  the  time
18    the  nonqualifying  use  occurs.   No lessor shall collect or
19    attempt  to  collect  an  amount  (however  designated)  that
20    purports to reimburse that lessor for the tax imposed by this
21    Act or the Service Use Tax Act, as the case may  be,  if  the
22    tax  has not been paid by the lessor.  If a lessor improperly
23    collects any such amount from the lessee,  the  lessee  shall
24    have  a legal right to claim a refund of that amount from the
25    lessor.  If, however, that amount  is  not  refunded  to  the
26    lessee  for  any  reason,  the  lessor  is liable to pay that
27    amount to the Department. This paragraph is exempt  from  the
28    provisions of Section 3-90.
29        (32)  Beginning  on the effective date of this amendatory
30    Act of the 92nd General Assembly, personal property purchased
31    by a lessor who leases the property, under  a  lease  of  one
32    year  or  longer executed or in effect at the time the lessor
33    would otherwise be subject to the tax imposed by this Act, to
34    a governmental body that has been issued an active sales  tax
 
                            -11-     LRB093 07194 SJM 07349 b
 1    exemption  identification  number  by  the  Department  under
 2    Section  1g  of  the  Retailers'  Occupation Tax Act.  If the
 3    property is leased in a manner that does not qualify for this
 4    exemption or used in any other nonexempt manner,  the  lessor
 5    shall  be  liable  for  the tax imposed under this Act or the
 6    Service Use Tax Act, as the case may be, based  on  the  fair
 7    market  value  of  the property at the time the nonqualifying
 8    use occurs.  No lessor shall collect or attempt to collect an
 9    amount (however designated) that purports to  reimburse  that
10    lessor for the tax imposed by this Act or the Service Use Tax
11    Act,  as the case may be, if the tax has not been paid by the
12    lessor.  If a lessor improperly collects any such amount from
13    the lessee, the lessee shall have a legal right  to  claim  a
14    refund  of  that  amount  from the lessor.  If, however, that
15    amount is not refunded to the  lessee  for  any  reason,  the
16    lessor  is liable to pay that amount to the Department.  This
17    paragraph is exempt from the provisions of Section 3-90.
18        (33)  Beginning on January 1, 2004, American flags, poles
19    intended to serve  as  flagstaffs  for  American  flags,  and
20    American  flag  sets  or kits.  This paragraph is exempt from
21    the provisions of Section 3-90.
22    (Source: P.A. 91-51,  eff.  6-30-99;  91-200,  eff.  7-20-99;
23    91-439,  eff.  8-6-99;  91-637,  eff.  8-20-99;  91-644, eff.
24    8-20-99; 91-901, eff. 1-1-01;  92-35,  eff.  7-1-01;  92-227,
25    eff.  8-2-01;  92-337,  eff.  8-10-01;  92-484, eff. 8-23-01;
26    92-651, eff. 7-11-02.)

27        Section 10.  The  Service  Use  Tax  Act  is  amended  by
28    changing Section 3-5 as follows:

29        (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
30        Sec.  3-5.   Exemptions.   Use  of the following tangible
31    personal property is exempt from the tax imposed by this Act:
32        (1)  Personal  property  purchased  from  a  corporation,
 
                            -12-     LRB093 07194 SJM 07349 b
 1    society,    association,    foundation,    institution,    or
 2    organization, other than a limited liability company, that is
 3    organized and operated as a not-for-profit service enterprise
 4    for the benefit of persons 65 years of age or  older  if  the
 5    personal property was not purchased by the enterprise for the
 6    purpose of resale by the enterprise.
 7        (2)  Personal property purchased by a non-profit Illinois
 8    county  fair association for use in conducting, operating, or
 9    promoting the county fair.
10        (3)  Personal property purchased by a not-for-profit arts
11    or cultural organization that establishes, by proof  required
12    by  the Department by rule, that it has received an exemption
13    under Section 501(c)(3) of the Internal Revenue Code and that
14    is organized and operated primarily for the  presentation  or
15    support  of  arts  or  cultural  programming,  activities, or
16    services.  These organizations include, but are  not  limited
17    to,  music  and  dramatic arts organizations such as symphony
18    orchestras and theatrical groups, arts and  cultural  service
19    organizations,    local    arts    councils,    visual   arts
20    organizations, and media arts organizations. On and after the
21    effective date of this amendatory Act  of  the  92nd  General
22    Assembly,  however,  an  entity  otherwise  eligible for this
23    exemption shall not make tax-free purchases unless it has  an
24    active identification number issued by the Department.
25        (4)  Legal  tender,  currency,  medallions,  or  gold  or
26    silver   coinage   issued  by  the  State  of  Illinois,  the
27    government of the United States of America, or the government
28    of any foreign country, and bullion.
29        (5)  Graphic  arts  machinery  and  equipment,  including
30    repair  and  replacement  parts,  both  new  and  used,   and
31    including that manufactured on special order or purchased for
32    lease,  certified  by  the purchaser to be used primarily for
33    graphic arts  production.  Equipment  includes  chemicals  or
34    chemicals  acting  as  catalysts but only if the chemicals or
 
                            -13-     LRB093 07194 SJM 07349 b
 1    chemicals acting as catalysts effect a direct  and  immediate
 2    change upon a graphic arts product.
 3        (6)  Personal property purchased from a teacher-sponsored
 4    student   organization   affiliated  with  an  elementary  or
 5    secondary school located in Illinois.
 6        (7)  Farm machinery and equipment,  both  new  and  used,
 7    including  that  manufactured  on special order, certified by
 8    the purchaser to be used primarily for production agriculture
 9    or  State  or  federal   agricultural   programs,   including
10    individual replacement parts for the machinery and equipment,
11    including  machinery  and  equipment purchased for lease, and
12    including implements of husbandry defined in Section 1-130 of
13    the Illinois Vehicle Code, farm  machinery  and  agricultural
14    chemical  and fertilizer spreaders, and nurse wagons required
15    to be registered under Section 3-809 of the Illinois  Vehicle
16    Code,  but  excluding  other  motor  vehicles  required to be
17    registered under the  Illinois  Vehicle  Code.  Horticultural
18    polyhouses  or  hoop houses used for propagating, growing, or
19    overwintering plants shall be considered farm  machinery  and
20    equipment  under  this item (7). Agricultural chemical tender
21    tanks and dry boxes shall include units sold separately  from
22    a  motor  vehicle  required  to  be  licensed  and units sold
23    mounted on a motor vehicle required to  be  licensed  if  the
24    selling price of the tender is separately stated.
25        Farm  machinery  and  equipment  shall  include precision
26    farming equipment  that  is  installed  or  purchased  to  be
27    installed  on farm machinery and equipment including, but not
28    limited  to,  tractors,   harvesters,   sprayers,   planters,
29    seeders,  or spreaders. Precision farming equipment includes,
30    but is not  limited  to,  soil  testing  sensors,  computers,
31    monitors,  software,  global positioning and mapping systems,
32    and other such equipment.
33        Farm machinery and  equipment  also  includes  computers,
34    sensors,  software,  and  related equipment used primarily in
 
                            -14-     LRB093 07194 SJM 07349 b
 1    the computer-assisted  operation  of  production  agriculture
 2    facilities,  equipment,  and  activities  such  as,  but  not
 3    limited  to,  the  collection, monitoring, and correlation of
 4    animal and crop data for the purpose  of  formulating  animal
 5    diets  and  agricultural  chemicals.  This item (7) is exempt
 6    from the provisions of Section 3-75.
 7        (8)  Fuel and petroleum products sold to or  used  by  an
 8    air  common  carrier, certified by the carrier to be used for
 9    consumption, shipment, or  storage  in  the  conduct  of  its
10    business  as an air common carrier, for a flight destined for
11    or returning from a location or locations outside the  United
12    States  without  regard  to  previous  or subsequent domestic
13    stopovers.
14        (9)  Proceeds of  mandatory  service  charges  separately
15    stated  on  customers' bills for the purchase and consumption
16    of food and beverages acquired as an incident to the purchase
17    of a service from  a  serviceman,  to  the  extent  that  the
18    proceeds  of  the  service  charge are in fact turned over as
19    tips or as  a  substitute  for  tips  to  the  employees  who
20    participate   directly  in  preparing,  serving,  hosting  or
21    cleaning up the food or beverage  function  with  respect  to
22    which the service charge is imposed.
23        (10)  Oil  field  exploration,  drilling,  and production
24    equipment, including (i) rigs and parts of rigs, rotary rigs,
25    cable tool rigs, and workover rigs,  (ii)  pipe  and  tubular
26    goods,  including  casing  and drill strings, (iii) pumps and
27    pump-jack units, (iv) storage tanks and flow lines,  (v)  any
28    individual   replacement  part  for  oil  field  exploration,
29    drilling, and production equipment, and  (vi)  machinery  and
30    equipment  purchased  for lease; but excluding motor vehicles
31    required to be registered under the Illinois Vehicle Code.
32        (11)  Proceeds from the sale of photoprocessing machinery
33    and equipment, including repair and replacement  parts,  both
34    new  and  used, including that manufactured on special order,
 
                            -15-     LRB093 07194 SJM 07349 b
 1    certified  by  the  purchaser  to  be  used   primarily   for
 2    photoprocessing,  and including photoprocessing machinery and
 3    equipment purchased for lease.
 4        (12)  Coal  exploration,  mining,   offhighway   hauling,
 5    processing, maintenance, and reclamation equipment, including
 6    replacement  parts  and  equipment,  and  including equipment
 7    purchased for lease, but excluding motor vehicles required to
 8    be registered under the Illinois Vehicle Code.
 9        (13)  Semen used for artificial insemination of livestock
10    for direct agricultural production.
11        (14)  Horses, or interests in horses, registered with and
12    meeting the requirements of any of  the  Arabian  Horse  Club
13    Registry  of  America, Appaloosa Horse Club, American Quarter
14    Horse Association, United  States  Trotting  Association,  or
15    Jockey Club, as appropriate, used for purposes of breeding or
16    racing for prizes.
17        (15)  Computers and communications equipment utilized for
18    any  hospital  purpose  and  equipment used in the diagnosis,
19    analysis, or treatment of hospital patients  purchased  by  a
20    lessor who leases the equipment, under a lease of one year or
21    longer  executed  or  in  effect at the time the lessor would
22    otherwise be subject to the tax imposed by  this  Act,  to  a
23    hospital  that  has  been  issued  an  active  tax  exemption
24    identification  number  by the Department under Section 1g of
25    the Retailers' Occupation Tax Act. If the equipment is leased
26    in a manner that does not qualify for this  exemption  or  is
27    used  in  any  other  non-exempt  manner, the lessor shall be
28    liable for the tax imposed under this Act or the Use Tax Act,
29    as the case may be, based on the fair  market  value  of  the
30    property  at  the  time  the  non-qualifying  use occurs.  No
31    lessor shall collect or attempt to collect an amount (however
32    designated) that purports to reimburse that  lessor  for  the
33    tax  imposed  by this Act or the Use Tax Act, as the case may
34    be, if the tax has not been paid by the lessor.  If a  lessor
 
                            -16-     LRB093 07194 SJM 07349 b
 1    improperly  collects  any  such  amount  from the lessee, the
 2    lessee shall have a legal right to claim  a  refund  of  that
 3    amount  from  the  lessor.   If,  however, that amount is not
 4    refunded to the lessee for any reason, the lessor  is  liable
 5    to pay that amount to the Department.
 6        (16)  Personal  property purchased by a lessor who leases
 7    the property, under a lease of one year or longer executed or
 8    in effect at the time the lessor would otherwise  be  subject
 9    to  the  tax imposed by this Act, to a governmental body that
10    has been issued an active tax exemption identification number
11    by  the  Department  under  Section  1g  of  the   Retailers'
12    Occupation  Tax  Act.   If the property is leased in a manner
13    that does not qualify for this exemption or is  used  in  any
14    other  non-exempt  manner, the lessor shall be liable for the
15    tax imposed under this Act or the Use Tax Act,  as  the  case
16    may be, based on the fair market value of the property at the
17    time  the non-qualifying use occurs.  No lessor shall collect
18    or attempt to collect an  amount  (however  designated)  that
19    purports to reimburse that lessor for the tax imposed by this
20    Act  or  the  Use Tax Act, as the case may be, if the tax has
21    not been paid by the lessor.  If a lessor improperly collects
22    any such amount from the lessee,  the  lessee  shall  have  a
23    legal right to claim a refund of that amount from the lessor.
24    If,  however,  that  amount is not refunded to the lessee for
25    any reason, the lessor is liable to pay that  amount  to  the
26    Department.
27        (17)  Beginning  with  taxable  years  ending on or after
28    December 31, 1995 and ending with taxable years ending on  or
29    before  December  31, 2004, personal property that is donated
30    for disaster relief to  be  used  in  a  State  or  federally
31    declared disaster area in Illinois or bordering Illinois by a
32    manufacturer  or retailer that is registered in this State to
33    a   corporation,   society,   association,   foundation,   or
34    institution that  has  been  issued  a  sales  tax  exemption
 
                            -17-     LRB093 07194 SJM 07349 b
 1    identification  number by the Department that assists victims
 2    of the disaster who reside within the declared disaster area.
 3        (18)  Beginning with taxable years  ending  on  or  after
 4    December  31, 1995 and ending with taxable years ending on or
 5    before December 31, 2004, personal property that is  used  in
 6    the  performance  of  infrastructure  repairs  in this State,
 7    including but not limited to  municipal  roads  and  streets,
 8    access  roads,  bridges,  sidewalks,  waste disposal systems,
 9    water and  sewer  line  extensions,  water  distribution  and
10    purification  facilities,  storm water drainage and retention
11    facilities, and sewage treatment facilities, resulting from a
12    State or federally declared disaster in Illinois or bordering
13    Illinois  when  such  repairs  are  initiated  on  facilities
14    located in the declared disaster area within 6  months  after
15    the disaster.
16        (19)  Beginning   July   1,  1999,  game  or  game  birds
17    purchased at a "game breeding and hunting preserve  area"  or
18    an  "exotic game hunting area" as those terms are used in the
19    Wildlife Code or at  a  hunting  enclosure  approved  through
20    rules  adopted  by the Department of Natural Resources.  This
21    paragraph is exempt from the provisions of Section 3-75.
22        (20)  A motor vehicle, as that term is defined in Section
23    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
24    corporation, limited liability company, society, association,
25    foundation,   or   institution  that  is  determined  by  the
26    Department to  be  organized  and  operated  exclusively  for
27    educational  purposes.   For  purposes  of this exemption, "a
28    corporation, limited liability company, society, association,
29    foundation, or institution organized and operated exclusively
30    for educational  purposes"  means  all  tax-supported  public
31    schools, private schools that offer systematic instruction in
32    useful  branches  of  learning  by  methods  common to public
33    schools  and  that  compare  favorably  in  their  scope  and
34    intensity with the course of study presented in tax-supported
 
                            -18-     LRB093 07194 SJM 07349 b
 1    schools, and vocational or technical  schools  or  institutes
 2    organized  and  operated  exclusively  to provide a course of
 3    study of not less than  6  weeks  duration  and  designed  to
 4    prepare  individuals to follow a trade or to pursue a manual,
 5    technical, mechanical, industrial,  business,  or  commercial
 6    occupation.
 7        (21)  Beginning  January  1,  2000,   personal  property,
 8    including  food, purchased through fundraising events for the
 9    benefit of  a  public  or  private  elementary  or  secondary
10    school,  a  group  of  those  schools,  or one or more school
11    districts if the events are sponsored by an entity recognized
12    by the school district that consists primarily of  volunteers
13    and  includes  parents  and  teachers of the school children.
14    This paragraph does not apply to fundraising events  (i)  for
15    the benefit of private home instruction or (ii) for which the
16    fundraising  entity  purchases  the personal property sold at
17    the events from another individual or entity  that  sold  the
18    property  for the purpose of resale by the fundraising entity
19    and that profits from the sale  to  the  fundraising  entity.
20    This paragraph is exempt from the provisions of Section 3-75.
21        (22)  Beginning  January 1, 2000 and through December 31,
22    2001, new or used automatic vending machines that prepare and
23    serve hot food and beverages,  including  coffee,  soup,  and
24    other  items,  and  replacement  parts  for  these  machines.
25    Beginning  January  1,  2002, machines and parts for machines
26    used  in  commercial,  coin-operated  amusement  and  vending
27    business if a use or occupation tax  is  paid  on  the  gross
28    receipts   derived   from   the   use   of   the  commercial,
29    coin-operated amusement and vending machines. This  paragraph
30    is exempt from the provisions of Section 3-75.
31        (23)  Food  for  human consumption that is to be consumed
32    off the premises where  it  is  sold  (other  than  alcoholic
33    beverages,  soft  drinks, and food that has been prepared for
34    immediate consumption) and prescription  and  nonprescription
 
                            -19-     LRB093 07194 SJM 07349 b
 1    medicines,  drugs,  medical  appliances,  and  insulin, urine
 2    testing materials, syringes, and needles used  by  diabetics,
 3    for  human  use, when purchased for use by a person receiving
 4    medical assistance under Article 5 of the Illinois Public Aid
 5    Code who resides in a licensed long-term  care  facility,  as
 6    defined in the Nursing Home Care Act.
 7        (24)    Beginning   on   the   effective   date  of  this
 8    amendatory Act of the 92nd General  Assembly,  computers  and
 9    communications  equipment  utilized  for any hospital purpose
10    and equipment used in the diagnosis, analysis,  or  treatment
11    of  hospital  patients  purchased  by a lessor who leases the
12    equipment, under a lease of one year or longer executed or in
13    effect at the time the lessor would otherwise be  subject  to
14    the  tax  imposed  by  this  Act, to a hospital that has been
15    issued an active tax exemption identification number  by  the
16    Department  under Section 1g of the Retailers' Occupation Tax
17    Act.  If the equipment is leased in a manner  that  does  not
18    qualify  for this exemption or is used in any other nonexempt
19    manner, the lessor shall be liable for the tax imposed  under
20    this Act or the Use Tax Act, as the case may be, based on the
21    fair   market   value   of  the  property  at  the  time  the
22    nonqualifying use occurs. No lessor shall collect or  attempt
23    to  collect  an  amount (however designated) that purports to
24    reimburse that lessor for the tax imposed by this Act or  the
25    Use Tax Act, as the case may be, if the tax has not been paid
26    by  the  lessor.   If  a  lessor improperly collects any such
27    amount from the lessee, the lessee shall have a  legal  right
28    to  claim  a  refund  of  that  amount  from the lessor.  If,
29    however, that amount is not refunded to the  lessee  for  any
30    reason,  the  lessor  is  liable  to  pay  that amount to the
31    Department. This paragraph is exempt from the  provisions  of
32    Section 3-75.
33        (25)  Beginning  on the effective date of this amendatory
34    Act of the 92nd General Assembly, personal property purchased
 
                            -20-     LRB093 07194 SJM 07349 b
 1    by a lessor who leases the property, under  a  lease  of  one
 2    year  or  longer executed or in effect at the time the lessor
 3    would otherwise be subject to the tax imposed by this Act, to
 4    a governmental body  that  has  been  issued  an  active  tax
 5    exemption  identification  number  by  the  Department  under
 6    Section  1g  of  the  Retailers'  Occupation Tax Act.  If the
 7    property is leased in a manner that does not qualify for this
 8    exemption or is used  in  any  other  nonexempt  manner,  the
 9    lessor  shall be liable for the tax imposed under this Act or
10    the Use Tax Act, as the case may be, based on the fair market
11    value of the property  at  the  time  the  nonqualifying  use
12    occurs.   No  lessor  shall  collect or attempt to collect an
13    amount (however designated) that purports to  reimburse  that
14    lessor for the tax imposed by this Act or the Use Tax Act, as
15    the  case may be, if the tax has not been paid by the lessor.
16    If a lessor improperly collects  any  such  amount  from  the
17    lessee, the lessee shall have a legal right to claim a refund
18    of  that amount from the lessor.  If, however, that amount is
19    not refunded to the lessee for  any  reason,  the  lessor  is
20    liable  to  pay that amount to the Department. This paragraph
21    is exempt from the provisions of Section 3-75.
22        (26)  Beginning on January 1, 2004, American flags, poles
23    intended to serve  as  flagstaffs  for  American  flags,  and
24    American  flag  sets  or kits.  This paragraph is exempt from
25    the provisions of Section 3-75.
26    (Source: P.A. 91-51,  eff.  6-30-99;  91-200,  eff.  7-20-99;
27    91-439,  eff.  8-6-99;  91-637,  eff.  8-20-99;  91-644, eff.
28    8-20-99; 92-16, eff. 6-28-01;  92-35,  eff.  7-1-01;  92-227,
29    eff.  8-2-01;  92-337,  eff.  8-10-01;  92-484, eff. 8-23-01;
30    92-651, eff. 7-11-02.)

31        Section 15.  The Service Occupation Tax Act is amended by
32    changing Section 3-5 as follows:
 
                            -21-     LRB093 07194 SJM 07349 b
 1        (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
 2        Sec. 3-5.  Exemptions.  The following  tangible  personal
 3    property is exempt from the tax imposed by this Act:
 4        (1)  Personal  property  sold  by a corporation, society,
 5    association, foundation, institution, or organization,  other
 6    than  a  limited  liability  company,  that  is organized and
 7    operated as  a  not-for-profit  service  enterprise  for  the
 8    benefit  of  persons 65 years of age or older if the personal
 9    property was not purchased by the enterprise for the  purpose
10    of resale by the enterprise.
11        (2)  Personal  property  purchased  by  a  not-for-profit
12    Illinois  county  fair  association  for  use  in conducting,
13    operating, or promoting the county fair.
14        (3)  Personal property purchased  by  any  not-for-profit
15    arts  or  cultural  organization  that  establishes, by proof
16    required by the Department by rule, that it has  received  an
17    exemption   under  Section  501(c)(3) of the Internal Revenue
18    Code and that is organized and  operated  primarily  for  the
19    presentation  or  support  of  arts  or cultural programming,
20    activities, or services.  These  organizations  include,  but
21    are  not  limited  to,  music and dramatic arts organizations
22    such as symphony orchestras and theatrical groups,  arts  and
23    cultural  service  organizations, local arts councils, visual
24    arts organizations, and  media  arts  organizations.  On  and
25    after  the  effective date of this amendatory Act of the 92nd
26    General Assembly, however, an entity otherwise  eligible  for
27    this  exemption  shall  not make tax-free purchases unless it
28    has an active identification number issued by the Department.
29        (4)  Legal  tender,  currency,  medallions,  or  gold  or
30    silver  coinage  issued  by  the  State  of   Illinois,   the
31    government of the United States of America, or the government
32    of any foreign country, and bullion.
33        (5)  Graphic  arts  machinery  and  equipment,  including
34    repair   and  replacement  parts,  both  new  and  used,  and
 
                            -22-     LRB093 07194 SJM 07349 b
 1    including that manufactured on special order or purchased for
 2    lease, certified by the purchaser to be  used  primarily  for
 3    graphic  arts  production.  Equipment  includes  chemicals or
 4    chemicals acting as catalysts but only if  the  chemicals  or
 5    chemicals  acting  as catalysts effect a direct and immediate
 6    change upon a graphic arts product.
 7        (6)  Personal  property  sold  by   a   teacher-sponsored
 8    student   organization   affiliated  with  an  elementary  or
 9    secondary school located in Illinois.
10        (7)  Farm machinery and equipment,  both  new  and  used,
11    including  that  manufactured  on special order, certified by
12    the purchaser to be used primarily for production agriculture
13    or  State  or  federal   agricultural   programs,   including
14    individual replacement parts for the machinery and equipment,
15    including  machinery  and  equipment purchased for lease, and
16    including implements of husbandry defined in Section 1-130 of
17    the Illinois Vehicle Code, farm  machinery  and  agricultural
18    chemical  and fertilizer spreaders, and nurse wagons required
19    to be registered under Section 3-809 of the Illinois  Vehicle
20    Code,  but  excluding  other  motor  vehicles  required to be
21    registered under the  Illinois  Vehicle  Code.  Horticultural
22    polyhouses  or  hoop houses used for propagating, growing, or
23    overwintering plants shall be considered farm  machinery  and
24    equipment  under  this item (7). Agricultural chemical tender
25    tanks and dry boxes shall include units sold separately  from
26    a  motor  vehicle  required  to  be  licensed  and units sold
27    mounted on a motor vehicle required to  be  licensed  if  the
28    selling price of the tender is separately stated.
29        Farm  machinery  and  equipment  shall  include precision
30    farming equipment  that  is  installed  or  purchased  to  be
31    installed  on farm machinery and equipment including, but not
32    limited  to,  tractors,   harvesters,   sprayers,   planters,
33    seeders,  or spreaders. Precision farming equipment includes,
34    but is not  limited  to,  soil  testing  sensors,  computers,
 
                            -23-     LRB093 07194 SJM 07349 b
 1    monitors,  software,  global positioning and mapping systems,
 2    and other such equipment.
 3        Farm machinery and  equipment  also  includes  computers,
 4    sensors,  software,  and  related equipment used primarily in
 5    the computer-assisted  operation  of  production  agriculture
 6    facilities,  equipment,  and  activities  such  as,  but  not
 7    limited  to,  the  collection, monitoring, and correlation of
 8    animal and crop data for the purpose  of  formulating  animal
 9    diets  and  agricultural  chemicals.  This item (7) is exempt
10    from the provisions of Section 3-55.
11        (8)  Fuel and petroleum products sold to or  used  by  an
12    air  common  carrier, certified by the carrier to be used for
13    consumption, shipment, or  storage  in  the  conduct  of  its
14    business  as an air common carrier, for a flight destined for
15    or returning from a location or locations outside the  United
16    States  without  regard  to  previous  or subsequent domestic
17    stopovers.
18        (9)  Proceeds of  mandatory  service  charges  separately
19    stated  on  customers' bills for the purchase and consumption
20    of food and beverages, to the extent that the proceeds of the
21    service charge are in fact  turned  over  as  tips  or  as  a
22    substitute for tips to the employees who participate directly
23    in  preparing,  serving,  hosting  or cleaning up the food or
24    beverage function with respect to which the service charge is
25    imposed.
26        (10)  Oil field  exploration,  drilling,  and  production
27    equipment, including (i) rigs and parts of rigs, rotary rigs,
28    cable  tool  rigs,  and  workover rigs, (ii) pipe and tubular
29    goods, including casing and drill strings,  (iii)  pumps  and
30    pump-jack  units,  (iv) storage tanks and flow lines, (v) any
31    individual  replacement  part  for  oil  field   exploration,
32    drilling,  and  production  equipment, and (vi) machinery and
33    equipment purchased for lease; but excluding  motor  vehicles
34    required to be registered under the Illinois Vehicle Code.
 
                            -24-     LRB093 07194 SJM 07349 b
 1        (11)  Photoprocessing  machinery and equipment, including
 2    repair and replacement parts, both new  and  used,  including
 3    that   manufactured   on  special  order,  certified  by  the
 4    purchaser to  be  used  primarily  for  photoprocessing,  and
 5    including  photoprocessing  machinery and equipment purchased
 6    for lease.
 7        (12)  Coal  exploration,  mining,   offhighway   hauling,
 8    processing, maintenance, and reclamation equipment, including
 9    replacement  parts  and  equipment,  and  including equipment
10    purchased for lease, but excluding motor vehicles required to
11    be registered under the Illinois Vehicle Code.
12        (13)  Food for human consumption that is to  be  consumed
13    off  the  premises  where  it  is  sold (other than alcoholic
14    beverages, soft drinks and food that has  been  prepared  for
15    immediate  consumption) and prescription and non-prescription
16    medicines, drugs,  medical  appliances,  and  insulin,  urine
17    testing  materials,  syringes, and needles used by diabetics,
18    for human use, when purchased for use by a  person  receiving
19    medical assistance under Article 5 of the Illinois Public Aid
20    Code  who  resides  in a licensed long-term care facility, as
21    defined in the Nursing Home Care Act.
22        (14)  Semen used for artificial insemination of livestock
23    for direct agricultural production.
24        (15)  Horses, or interests in horses, registered with and
25    meeting the requirements of any of  the  Arabian  Horse  Club
26    Registry  of  America, Appaloosa Horse Club, American Quarter
27    Horse Association, United  States  Trotting  Association,  or
28    Jockey Club, as appropriate, used for purposes of breeding or
29    racing for prizes.
30        (16)  Computers and communications equipment utilized for
31    any  hospital  purpose  and  equipment used in the diagnosis,
32    analysis, or treatment of hospital patients sold to a  lessor
33    who leases the equipment, under a lease of one year or longer
34    executed  or  in  effect  at  the  time of the purchase, to a
 
                            -25-     LRB093 07194 SJM 07349 b
 1    hospital  that  has  been  issued  an  active  tax  exemption
 2    identification number by the Department under Section  1g  of
 3    the Retailers' Occupation Tax Act.
 4        (17)  Personal  property  sold to a lessor who leases the
 5    property, under a lease of one year or longer executed or  in
 6    effect  at  the  time of the purchase, to a governmental body
 7    that has been issued an active tax  exemption  identification
 8    number  by  the Department under Section 1g of the Retailers'
 9    Occupation Tax Act.
10        (18)  Beginning with taxable years  ending  on  or  after
11    December  31, 1995 and ending with taxable years ending on or
12    before December 31, 2004, personal property that  is  donated
13    for  disaster  relief  to  be  used  in  a State or federally
14    declared disaster area in Illinois or bordering Illinois by a
15    manufacturer or retailer that is registered in this State  to
16    a   corporation,   society,   association,   foundation,   or
17    institution  that  has  been  issued  a  sales  tax exemption
18    identification number by the Department that assists  victims
19    of the disaster who reside within the declared disaster area.
20        (19)  Beginning  with  taxable  years  ending on or after
21    December 31, 1995 and ending with taxable years ending on  or
22    before  December  31, 2004, personal property that is used in
23    the performance of  infrastructure  repairs  in  this  State,
24    including  but  not  limited  to municipal roads and streets,
25    access roads, bridges,  sidewalks,  waste  disposal  systems,
26    water  and  sewer  line  extensions,  water  distribution and
27    purification facilities, storm water drainage  and  retention
28    facilities, and sewage treatment facilities, resulting from a
29    State or federally declared disaster in Illinois or bordering
30    Illinois  when  such  repairs  are  initiated  on  facilities
31    located  in  the declared disaster area within 6 months after
32    the disaster.
33        (20)  Beginning July 1, 1999, game or game birds sold  at
34    a  "game  breeding  and  hunting preserve area" or an "exotic
 
                            -26-     LRB093 07194 SJM 07349 b
 1    game hunting area" as those terms are used  in  the  Wildlife
 2    Code or at a hunting enclosure approved through rules adopted
 3    by  the  Department  of Natural Resources.  This paragraph is
 4    exempt from the provisions of Section 3-55.
 5        (21)  A motor vehicle, as that term is defined in Section
 6    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
 7    corporation, limited liability company, society, association,
 8    foundation,   or   institution  that  is  determined  by  the
 9    Department to  be  organized  and  operated  exclusively  for
10    educational  purposes.   For  purposes  of this exemption, "a
11    corporation, limited liability company, society, association,
12    foundation, or institution organized and operated exclusively
13    for educational  purposes"  means  all  tax-supported  public
14    schools, private schools that offer systematic instruction in
15    useful  branches  of  learning  by  methods  common to public
16    schools  and  that  compare  favorably  in  their  scope  and
17    intensity with the course of study presented in tax-supported
18    schools, and vocational or technical  schools  or  institutes
19    organized  and  operated  exclusively  to provide a course of
20    study of not less than  6  weeks  duration  and  designed  to
21    prepare  individuals to follow a trade or to pursue a manual,
22    technical, mechanical, industrial,  business,  or  commercial
23    occupation.
24        (22)  Beginning  January  1,  2000,   personal  property,
25    including  food, purchased through fundraising events for the
26    benefit of  a  public  or  private  elementary  or  secondary
27    school,  a  group  of  those  schools,  or one or more school
28    districts if the events are sponsored by an entity recognized
29    by the school district that consists primarily of  volunteers
30    and  includes  parents  and  teachers of the school children.
31    This paragraph does not apply to fundraising events  (i)  for
32    the benefit of private home instruction or (ii) for which the
33    fundraising  entity  purchases  the personal property sold at
34    the events from another individual or entity  that  sold  the
 
                            -27-     LRB093 07194 SJM 07349 b
 1    property  for the purpose of resale by the fundraising entity
 2    and that profits from the sale  to  the  fundraising  entity.
 3    This paragraph is exempt from the provisions of Section 3-55.
 4        (23)  Beginning  January 1, 2000 and through December 31,
 5    2001, new or used automatic vending machines that prepare and
 6    serve hot food and beverages,  including  coffee,  soup,  and
 7    other  items,  and  replacement  parts  for  these  machines.
 8    Beginning  January  1,  2002, machines and parts for machines
 9    used  in  commercial,  coin-operated  amusement  and  vending
10    business if a use or occupation tax  is  paid  on  the  gross
11    receipts   derived   from   the   use   of   the  commercial,
12    coin-operated amusement and vending machines.  This paragraph
13    is exempt from the provisions of Section 3-55.
14        (24)  Beginning on the effective date of this  amendatory
15    Act   of   the   92nd   General   Assembly,   computers   and
16    communications  equipment  utilized  for any hospital purpose
17    and equipment used in the diagnosis, analysis,  or  treatment
18    of  hospital  patients  sold  to  a  lessor  who  leases  the
19    equipment, under a lease of one year or longer executed or in
20    effect  at  the  time of the purchase, to a hospital that has
21    been issued an active tax exemption identification number  by
22    the  Department under Section 1g of the Retailers' Occupation
23    Tax Act.  This paragraph is exempt  from  the  provisions  of
24    Section 3-55.
25        (25)  Beginning  on the effective date of this amendatory
26    Act of the 92nd General Assembly, personal property sold to a
27    lessor who leases the property, under a lease of one year  or
28    longer  executed or in effect at the time of the purchase, to
29    a governmental body  that  has  been  issued  an  active  tax
30    exemption  identification  number  by  the  Department  under
31    Section  1g  of  the  Retailers'  Occupation  Tax  Act.  This
32    paragraph is exempt from the provisions of Section 3-55.
33        (26)  Beginning on January  1,  2002,  tangible  personal
34    property  purchased  from  an Illinois retailer by a taxpayer
 
                            -28-     LRB093 07194 SJM 07349 b
 1    engaged in centralized purchasing activities in Illinois  who
 2    will,  upon  receipt of the property in Illinois, temporarily
 3    store the  property  in  Illinois  (i)  for  the  purpose  of
 4    subsequently  transporting  it  outside this State for use or
 5    consumption thereafter solely outside this State or (ii)  for
 6    the  purpose  of being processed, fabricated, or manufactured
 7    into,  attached  to,  or  incorporated  into  other  tangible
 8    personal property to be transported outside  this  State  and
 9    thereafter  used  or consumed solely outside this State.  The
10    Director of Revenue  shall,  pursuant  to  rules  adopted  in
11    accordance  with  the  Illinois Administrative Procedure Act,
12    issue a permit to any taxpayer  in  good  standing  with  the
13    Department  who  is  eligible  for  the  exemption under this
14    paragraph (26).  The permit issued under this paragraph  (26)
15    shall  authorize  the holder, to the extent and in the manner
16    specified in the rules adopted under this  Act,  to  purchase
17    tangible  personal  property  from a retailer exempt from the
18    taxes imposed by this  Act.   Taxpayers  shall  maintain  all
19    necessary  books  and  records  to  substantiate  the use and
20    consumption of all such tangible personal property outside of
21    the State of Illinois.
22        (27)  Beginning on January 1, 2004, American flags, poles
23    intended to serve  as  flagstaffs  for  American  flags,  and
24    American  flag  sets  or kits.  This paragraph is exempt from
25    the provisions of Section 3-55.
26    (Source: P.A. 91-51,  eff.  6-30-99;  91-200,  eff.  7-20-99;
27    91-439,  eff.  8-6-99;  91-533,  eff.  8-13-99;  91-637, eff.
28    8-20-99; 91-644, eff. 8-20-99; 92-16,  eff.  6-28-01;  92-35,
29    eff.  7-1-01;  92-227,  eff.  8-2-01;  92-337,  eff. 8-10-01;
30    92-484, eff. 8-23-01;  92-488,  eff.  8-23-01;  92-651,  eff.
31    7-11-02.)

32        Section  20. The Retailers' Occupation Tax Act is amended
33    by changing Section 2-5 as follows:
 
                            -29-     LRB093 07194 SJM 07349 b
 1        (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
 2        Sec. 2-5.  Exemptions.  Gross receipts from proceeds from
 3    the sale of the  following  tangible  personal  property  are
 4    exempt from the tax imposed by this Act:
 5        (1)  Farm chemicals.
 6        (2)  Farm  machinery  and  equipment,  both new and used,
 7    including that manufactured on special  order,  certified  by
 8    the purchaser to be used primarily for production agriculture
 9    or   State   or   federal  agricultural  programs,  including
10    individual replacement parts for the machinery and equipment,
11    including machinery and equipment purchased  for  lease,  and
12    including implements of husbandry defined in Section 1-130 of
13    the  Illinois  Vehicle  Code, farm machinery and agricultural
14    chemical and fertilizer spreaders, and nurse wagons  required
15    to  be registered under Section 3-809 of the Illinois Vehicle
16    Code, but excluding  other  motor  vehicles  required  to  be
17    registered  under  the  Illinois  Vehicle Code. Horticultural
18    polyhouses or hoop houses used for propagating,  growing,  or
19    overwintering  plants  shall be considered farm machinery and
20    equipment under this item (2). Agricultural  chemical  tender
21    tanks  and dry boxes shall include units sold separately from
22    a motor vehicle  required  to  be  licensed  and  units  sold
23    mounted  on  a  motor vehicle required to be licensed, if the
24    selling price of the tender is separately stated.
25        Farm machinery  and  equipment  shall  include  precision
26    farming  equipment  that  is  installed  or  purchased  to be
27    installed on farm machinery and equipment including, but  not
28    limited   to,   tractors,   harvesters,  sprayers,  planters,
29    seeders, or spreaders. Precision farming equipment  includes,
30    but  is  not  limited  to,  soil  testing sensors, computers,
31    monitors, software, global positioning and  mapping  systems,
32    and other such equipment.
33        Farm  machinery  and  equipment  also includes computers,
34    sensors, software, and related equipment  used  primarily  in
 
                            -30-     LRB093 07194 SJM 07349 b
 1    the  computer-assisted  operation  of  production agriculture
 2    facilities,  equipment,  and  activities  such  as,  but  not
 3    limited to, the collection, monitoring,  and  correlation  of
 4    animal  and  crop  data for the purpose of formulating animal
 5    diets and agricultural chemicals.  This item  (7)  is  exempt
 6    from the provisions of Section 2-70.
 7        (3)  Distillation machinery and equipment, sold as a unit
 8    or  kit, assembled or installed by the retailer, certified by
 9    the user to be used only for the production of ethyl  alcohol
10    that  will  be  used  for  consumption  as motor fuel or as a
11    component of motor fuel for the personal use of the user, and
12    not subject to sale or resale.
13        (4)  Graphic  arts  machinery  and  equipment,  including
14    repair  and  replacement  parts,  both  new  and  used,   and
15    including that manufactured on special order or purchased for
16    lease,  certified  by  the purchaser to be used primarily for
17    graphic arts  production.  Equipment  includes  chemicals  or
18    chemicals  acting  as  catalysts but only if the chemicals or
19    chemicals acting as catalysts effect a direct  and  immediate
20    change upon a graphic arts product.
21        (5)  A  motor  vehicle  of  the  first  division, a motor
22    vehicle of the second division that is a self-contained motor
23    vehicle designed or permanently converted to  provide  living
24    quarters  for  recreational,  camping,  or  travel  use, with
25    direct walk through access to the living  quarters  from  the
26    driver's seat, or a motor vehicle of the second division that
27    is  of  the van configuration designed for the transportation
28    of not less than 7 nor more than 16 passengers, as defined in
29    Section 1-146 of the Illinois Vehicle Code, that is used  for
30    automobile  renting,  as  defined  in  the Automobile Renting
31    Occupation and Use Tax Act.
32        (6)  Personal  property  sold  by   a   teacher-sponsored
33    student   organization   affiliated  with  an  elementary  or
34    secondary school located in Illinois.
 
                            -31-     LRB093 07194 SJM 07349 b
 1        (7)  Proceeds of that portion of the selling price  of  a
 2    passenger car the sale of which is subject to the Replacement
 3    Vehicle Tax.
 4        (8)  Personal  property  sold  to an Illinois county fair
 5    association for use in conducting,  operating,  or  promoting
 6    the county fair.
 7        (9)  Personal  property  sold to a not-for-profit arts or
 8    cultural organization that establishes, by proof required  by
 9    the  Department  by  rule,  that it has received an exemption
10    under Section 501(c)(3) of the Internal Revenue Code and that
11    is organized and operated primarily for the  presentation  or
12    support  of  arts  or  cultural  programming,  activities, or
13    services.  These organizations include, but are  not  limited
14    to,  music  and  dramatic arts organizations such as symphony
15    orchestras and theatrical groups, arts and  cultural  service
16    organizations,    local    arts    councils,    visual   arts
17    organizations, and media arts organizations. On and after the
18    effective date of this amendatory Act  of  the  92nd  General
19    Assembly,  however,  an  entity  otherwise  eligible for this
20    exemption shall not make tax-free purchases unless it has  an
21    active identification number issued by the Department.
22        (10)  Personal  property  sold by a corporation, society,
23    association, foundation, institution, or organization,  other
24    than  a  limited  liability  company,  that  is organized and
25    operated as  a  not-for-profit  service  enterprise  for  the
26    benefit  of  persons 65 years of age or older if the personal
27    property was not purchased by the enterprise for the  purpose
28    of resale by the enterprise.
29        (11)  Personal property sold to a governmental body, to a
30    corporation, society, association, foundation, or institution
31    organized and operated exclusively for charitable, religious,
32    or  educational purposes, or to a not-for-profit corporation,
33    society,    association,    foundation,    institution,    or
34    organization that has no compensated  officers  or  employees
 
                            -32-     LRB093 07194 SJM 07349 b
 1    and   that  is  organized  and  operated  primarily  for  the
 2    recreation of persons 55 years of age  or  older.  A  limited
 3    liability  company  may  qualify for the exemption under this
 4    paragraph only if the limited liability company is  organized
 5    and  operated  exclusively  for  educational purposes. On and
 6    after July 1, 1987, however, no entity otherwise eligible for
 7    this exemption shall make tax-free purchases unless it has an
 8    active identification number issued by the Department.
 9        (12)  Personal property sold to interstate  carriers  for
10    hire  for  use as rolling stock moving in interstate commerce
11    or to lessors under leases of one year or longer executed  or
12    in  effect at the time of purchase by interstate carriers for
13    hire for use as rolling stock moving in  interstate  commerce
14    and  equipment  operated  by  a  telecommunications provider,
15    licensed as a common carrier by  the  Federal  Communications
16    Commission,  which  is permanently installed in or affixed to
17    aircraft moving in interstate commerce.
18        (13)  Proceeds from sales to owners, lessors, or shippers
19    of tangible personal property that is utilized by  interstate
20    carriers  for  hire  for  use  as  rolling  stock  moving  in
21    interstate    commerce    and   equipment   operated   by   a
22    telecommunications provider, licensed as a common carrier  by
23    the  Federal  Communications Commission, which is permanently
24    installed in or affixed  to  aircraft  moving  in  interstate
25    commerce.
26        (14)  Machinery  and  equipment  that will be used by the
27    purchaser, or a lessee of the  purchaser,  primarily  in  the
28    process  of  manufacturing  or  assembling  tangible personal
29    property for wholesale or retail sale or lease,  whether  the
30    sale or lease is made directly by the manufacturer or by some
31    other  person,  whether the materials used in the process are
32    owned by the manufacturer or some other  person,  or  whether
33    the sale or lease is made apart from or as an incident to the
34    seller's  engaging  in  the  service  occupation of producing
 
                            -33-     LRB093 07194 SJM 07349 b
 1    machines, tools,  dies,  jigs,  patterns,  gauges,  or  other
 2    similar  items  of no commercial value on special order for a
 3    particular purchaser.
 4        (15)  Proceeds of mandatory  service  charges  separately
 5    stated  on  customers'  bills for purchase and consumption of
 6    food and beverages, to the extent that the  proceeds  of  the
 7    service  charge  are  in  fact  turned  over  as tips or as a
 8    substitute for tips to the employees who participate directly
 9    in preparing, serving, hosting or cleaning  up  the  food  or
10    beverage function with respect to which the service charge is
11    imposed.
12        (16)  Petroleum  products  sold  to  a  purchaser  if the
13    seller is prohibited by federal law from charging tax to  the
14    purchaser.
15        (17)  Tangible personal property sold to a common carrier
16    by rail or motor that receives the physical possession of the
17    property  in  Illinois  and  that transports the property, or
18    shares with another common carrier in the  transportation  of
19    the  property,  out of Illinois on a standard uniform bill of
20    lading showing the seller of the property as the  shipper  or
21    consignor  of the property to a destination outside Illinois,
22    for use outside Illinois.
23        (18)  Legal tender,  currency,  medallions,  or  gold  or
24    silver   coinage   issued  by  the  State  of  Illinois,  the
25    government of the United States of America, or the government
26    of any foreign country, and bullion.
27        (19)  Oil field  exploration,  drilling,  and  production
28    equipment, including (i) rigs and parts of rigs, rotary rigs,
29    cable  tool  rigs,  and  workover rigs, (ii) pipe and tubular
30    goods, including casing and drill strings,  (iii)  pumps  and
31    pump-jack  units,  (iv) storage tanks and flow lines, (v) any
32    individual  replacement  part  for  oil  field   exploration,
33    drilling,  and  production  equipment, and (vi) machinery and
34    equipment purchased for lease; but excluding  motor  vehicles
 
                            -34-     LRB093 07194 SJM 07349 b
 1    required to be registered under the Illinois Vehicle Code.
 2        (20)  Photoprocessing  machinery and equipment, including
 3    repair and replacement parts, both new  and  used,  including
 4    that   manufactured   on  special  order,  certified  by  the
 5    purchaser to  be  used  primarily  for  photoprocessing,  and
 6    including  photoprocessing  machinery and equipment purchased
 7    for lease.
 8        (21)  Coal  exploration,  mining,   offhighway   hauling,
 9    processing, maintenance, and reclamation equipment, including
10    replacement  parts  and  equipment,  and  including equipment
11    purchased for lease, but excluding motor vehicles required to
12    be registered under the Illinois Vehicle Code.
13        (22)  Fuel and petroleum products sold to or used  by  an
14    air  carrier,  certified  by  the  carrier  to  be  used  for
15    consumption,  shipment,  or  storage  in  the  conduct of its
16    business as an air common carrier, for a flight destined  for
17    or  returning from a location or locations outside the United
18    States without regard  to  previous  or  subsequent  domestic
19    stopovers.
20        (23)  A  transaction  in  which  the  purchase  order  is
21    received  by  a  florist who is located outside Illinois, but
22    who has a florist located in Illinois deliver the property to
23    the purchaser or the purchaser's donee in Illinois.
24        (24)  Fuel consumed or used in the  operation  of  ships,
25    barges,  or  vessels  that  are  used primarily in or for the
26    transportation of property or the conveyance of  persons  for
27    hire  on  rivers  bordering  on  this  State  if  the fuel is
28    delivered by the seller to the purchaser's  barge,  ship,  or
29    vessel while it is afloat upon that bordering river.
30        (25)  A motor vehicle sold in this State to a nonresident
31    even though the motor vehicle is delivered to the nonresident
32    in  this  State,  if the motor vehicle is not to be titled in
33    this State, and if a drive-away permit is issued to the motor
34    vehicle as provided in Section 3-603 of the Illinois  Vehicle
 
                            -35-     LRB093 07194 SJM 07349 b
 1    Code or if the nonresident purchaser has vehicle registration
 2    plates to transfer to the motor vehicle upon returning to his
 3    or  her home state.  The issuance of the drive-away permit or
 4    having the out-of-state registration plates to be transferred
 5    is prima facie evidence that the motor vehicle  will  not  be
 6    titled in this State.
 7        (26)  Semen used for artificial insemination of livestock
 8    for direct agricultural production.
 9        (27)  Horses, or interests in horses, registered with and
10    meeting  the  requirements  of  any of the Arabian Horse Club
11    Registry of America, Appaloosa Horse Club,  American  Quarter
12    Horse  Association,  United  States  Trotting Association, or
13    Jockey Club, as appropriate, used for purposes of breeding or
14    racing for prizes.
15        (28)  Computers and communications equipment utilized for
16    any hospital purpose and equipment  used  in  the  diagnosis,
17    analysis,  or treatment of hospital patients sold to a lessor
18    who leases the equipment, under a lease of one year or longer
19    executed or in effect at the  time  of  the  purchase,  to  a
20    hospital  that  has  been  issued  an  active  tax  exemption
21    identification  number  by the Department under Section 1g of
22    this Act.
23        (29)  Personal property sold to a lessor who  leases  the
24    property,  under a lease of one year or longer executed or in
25    effect at the time of the purchase, to  a  governmental  body
26    that  has  been issued an active tax exemption identification
27    number by the Department under Section 1g of this Act.
28        (30)  Beginning with taxable years  ending  on  or  after
29    December  31, 1995 and ending with taxable years ending on or
30    before December 31, 2004, personal property that  is  donated
31    for  disaster  relief  to  be  used  in  a State or federally
32    declared disaster area in Illinois or bordering Illinois by a
33    manufacturer or retailer that is registered in this State  to
34    a   corporation,   society,   association,   foundation,   or
 
                            -36-     LRB093 07194 SJM 07349 b
 1    institution  that  has  been  issued  a  sales  tax exemption
 2    identification number by the Department that assists  victims
 3    of the disaster who reside within the declared disaster area.
 4        (31)  Beginning  with  taxable  years  ending on or after
 5    December 31, 1995 and ending with taxable years ending on  or
 6    before  December  31, 2004, personal property that is used in
 7    the performance of  infrastructure  repairs  in  this  State,
 8    including  but  not  limited  to municipal roads and streets,
 9    access roads, bridges,  sidewalks,  waste  disposal  systems,
10    water  and  sewer  line  extensions,  water  distribution and
11    purification facilities, storm water drainage  and  retention
12    facilities, and sewage treatment facilities, resulting from a
13    State or federally declared disaster in Illinois or bordering
14    Illinois  when  such  repairs  are  initiated  on  facilities
15    located  in  the declared disaster area within 6 months after
16    the disaster.
17        (32)  Beginning July 1, 1999, game or game birds sold  at
18    a  "game  breeding  and  hunting preserve area" or an "exotic
19    game hunting area" as those terms are used  in  the  Wildlife
20    Code or at a hunting enclosure approved through rules adopted
21    by  the  Department  of Natural Resources.  This paragraph is
22    exempt from the provisions of Section 2-70.
23        (33)  A motor vehicle, as that term is defined in Section
24    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
25    corporation, limited liability company, society, association,
26    foundation,   or   institution  that  is  determined  by  the
27    Department to  be  organized  and  operated  exclusively  for
28    educational  purposes.   For  purposes  of this exemption, "a
29    corporation, limited liability company, society, association,
30    foundation, or institution organized and operated exclusively
31    for educational  purposes"  means  all  tax-supported  public
32    schools, private schools that offer systematic instruction in
33    useful  branches  of  learning  by  methods  common to public
34    schools  and  that  compare  favorably  in  their  scope  and
 
                            -37-     LRB093 07194 SJM 07349 b
 1    intensity with the course of study presented in tax-supported
 2    schools, and vocational or technical  schools  or  institutes
 3    organized  and  operated  exclusively  to provide a course of
 4    study of not less than  6  weeks  duration  and  designed  to
 5    prepare  individuals to follow a trade or to pursue a manual,
 6    technical, mechanical, industrial,  business,  or  commercial
 7    occupation.
 8        (34)  Beginning   January  1,  2000,  personal  property,
 9    including food, purchased through fundraising events for  the
10    benefit  of  a  public  or  private  elementary  or secondary
11    school, a group of those  schools,  or  one  or  more  school
12    districts if the events are sponsored by an entity recognized
13    by  the school district that consists primarily of volunteers
14    and includes parents and teachers  of  the  school  children.
15    This  paragraph  does not apply to fundraising events (i) for
16    the benefit of private home instruction or (ii) for which the
17    fundraising entity purchases the personal  property  sold  at
18    the  events  from  another individual or entity that sold the
19    property for the purpose of resale by the fundraising  entity
20    and  that  profits  from  the sale to the fundraising entity.
21    This paragraph is exempt from the provisions of Section 2-70.
22        (35)  Beginning January 1, 2000 and through December  31,
23    2001, new or used automatic vending machines that prepare and
24    serve  hot  food  and  beverages, including coffee, soup, and
25    other  items,  and  replacement  parts  for  these  machines.
26    Beginning January 1, 2002, machines and  parts  for  machines
27    used  in  commercial,  coin-operated  amusement  and  vending
28    business  if  a  use  or  occupation tax is paid on the gross
29    receipts  derived   from   the   use   of   the   commercial,
30    coin-operated amusement and vending machines.  This paragraph
31    is exempt from the provisions of Section 2-70.
32        (35-5)  (36)  Food  for  human  consumption that is to be
33    consumed off the  premises  where  it  is  sold  (other  than
34    alcoholic  beverages,  soft  drinks,  and  food that has been
 
                            -38-     LRB093 07194 SJM 07349 b
 1    prepared for  immediate  consumption)  and  prescription  and
 2    nonprescription  medicines,  drugs,  medical  appliances, and
 3    insulin, urine testing materials, syringes, and needles  used
 4    by  diabetics,  for  human  use,  when purchased for use by a
 5    person receiving medical assistance under Article  5  of  the
 6    Illinois  Public Aid Code who resides in a licensed long-term
 7    care facility, as defined in the Nursing Home Care Act.
 8        (36)  Beginning August 2, 2001 on the effective  date  of
 9    this  amendatory  Act of the 92nd General Assembly, computers
10    and  communications  equipment  utilized  for  any   hospital
11    purpose  and  equipment  used  in the diagnosis, analysis, or
12    treatment of hospital patients sold to a  lessor  who  leases
13    the  equipment,  under a lease of one year or longer executed
14    or in effect at the time of the purchase, to a hospital  that
15    has been issued an active tax exemption identification number
16    by  the  Department  under  Section  1g  of  this  Act.  This
17    paragraph is exempt from the provisions of Section 2-70.
18        (37)  Beginning August 2, 2001 on the effective  date  of
19    this  amendatory  Act  of the 92nd General Assembly, personal
20    property sold to a lessor who leases the  property,  under  a
21    lease of one year or longer executed or in effect at the time
22    of  the purchase, to a governmental body that has been issued
23    an  active  tax  exemption  identification  number   by   the
24    Department  under  Section 1g of this Act.  This paragraph is
25    exempt from the provisions of Section 2-70.
26        (38)  Beginning on January  1,  2002,  tangible  personal
27    property  purchased  from  an Illinois retailer by a taxpayer
28    engaged in centralized purchasing activities in Illinois  who
29    will,  upon  receipt of the property in Illinois, temporarily
30    store the  property  in  Illinois  (i)  for  the  purpose  of
31    subsequently  transporting  it  outside this State for use or
32    consumption thereafter solely outside this State or (ii)  for
33    the  purpose  of being processed, fabricated, or manufactured
34    into,  attached  to,  or  incorporated  into  other  tangible
 
                            -39-     LRB093 07194 SJM 07349 b
 1    personal property to be transported outside  this  State  and
 2    thereafter  used  or consumed solely outside this State.  The
 3    Director of Revenue  shall,  pursuant  to  rules  adopted  in
 4    accordance  with  the  Illinois Administrative Procedure Act,
 5    issue a permit to any taxpayer  in  good  standing  with  the
 6    Department  who  is  eligible  for  the  exemption under this
 7    paragraph (38).  The permit issued under this paragraph  (38)
 8    shall  authorize  the holder, to the extent and in the manner
 9    specified in the rules adopted under this  Act,  to  purchase
10    tangible  personal  property  from a retailer exempt from the
11    taxes imposed by this  Act.   Taxpayers  shall  maintain  all
12    necessary  books  and  records  to  substantiate  the use and
13    consumption of all such tangible personal property outside of
14    the State of Illinois.
15        (39)  Beginning on January 1, 2004, American flags, poles
16    intended to serve  as  flagstaffs  for  American  flags,  and
17    American  flag  sets  or kits.  This paragraph is exempt from
18    the provisions of Section 2-70.
19    (Source: P.A. 91-51,  eff.  6-30-99;  91-200,  eff.  7-20-99;
20    91-439,  eff.  8-6-99;  91-533,  eff.  8-13-99;  91-637, eff.
21    8-20-99; 91-644, eff. 8-20-99;  92-16, eff.  6-28-01;  92-35,
22    eff.  7-1-01;  92-227,  eff.  8-2-01;  92-337,  eff. 8-10-01;
23    92-484, eff. 8-23-01;  92-488,  eff.  8-23-01;  92-651,  eff.
24    7-11-02; 92-680, eff. 7-16-02; revised 1-26-03.)

25        Section  99.   Effective  date.   This  Act  takes effect
26    January 1, 2004.