97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3889

 

Introduced 11/29/2011, by Rep. La Shawn K. Ford

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-6
35 ILCS 105/3-10
35 ILCS 110/3-6 new
35 ILCS 110/3-10  from Ch. 120, par. 439.33-10
35 ILCS 110/9  from Ch. 120, par. 439.39
35 ILCS 115/3-6 new
35 ILCS 115/3-10  from Ch. 120, par. 439.103-10
35 ILCS 115/9  from Ch. 120, par. 439.109
35 ILCS 120/2-8
35 ILCS 120/2-10

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that, from December 19 through December 23, 2011, the tax imposed on items purchased from a small business shall be at the rate of 1.25% (instead of 6.25%). Defines "small business". Makes changes concerning the distribution of moneys collected from the reduced tax on items purchased from a small business. Effective immediately.


LRB097 14810 HLH 59839 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3889LRB097 14810 HLH 59839 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Sections
53-6 and 3-10 as follows:
 
6    (35 ILCS 105/3-6)
7    Sec. 3-6. Sales tax holiday items.
8    (a) The tangible personal property described in this
9subsection qualifies for the 1.25% reduced rate of tax for the
10period set forth in Section 3-10 of this Act (hereinafter
11referred to as the Sales Tax Holiday Period). The reduced rate
12on these items shall be administered under the provisions of
13subsection (b) of this Section. The following items are subject
14to the reduced rate:
15        (1) Clothing items that each have a retail selling
16    price of less than $100.
17        "Clothing" means, unless otherwise specified in this
18    Section, all human wearing apparel suitable for general
19    use. "Clothing" does not include clothing accessories,
20    protective equipment, or sport or recreational equipment.
21    "Clothing" includes, but is not limited to: household and
22    shop aprons; athletic supporters; bathing suits and caps;
23    belts and suspenders; boots; coats and jackets; ear muffs;

 

 

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1    footlets; gloves and mittens for general use; hats and
2    caps; hosiery; insoles for shoes; lab coats; neckties;
3    overshoes; pantyhose; rainwear; rubber pants; sandals;
4    scarves; shoes and shoelaces; slippers; sneakers; socks
5    and stockings; steel-toed shoes; underwear; and school
6    uniforms.
7        "Clothing accessories" means, but is not limited to:
8    briefcases; cosmetics; hair notions, including, but not
9    limited to barrettes, hair bows, and hair nets; handbags;
10    handkerchiefs; jewelry; non-prescription sunglasses;
11    umbrellas; wallets; watches; and wigs and hair pieces.
12        "Protective equipment" means, but is not limited to:
13    breathing masks; clean room apparel and equipment; ear and
14    hearing protectors; face shields; hard hats; helmets;
15    paint or dust respirators; protective gloves; safety
16    glasses and goggles; safety belts; tool belts; and welder's
17    gloves and masks.
18        "Sport or recreational equipment" means, but is not
19    limited to: ballet and tap shoes; cleated or spiked
20    athletic shoes; gloves, including, but not limited to,
21    baseball, bowling, boxing, hockey, and golf gloves;
22    goggles; hand and elbow guards; life preservers and vests;
23    mouth guards; roller and ice skates; shin guards; shoulder
24    pads; ski boots; waders; and wetsuits and fins.
25        (2) School supplies. "School supplies" means, unless
26    otherwise specified in this Section, items used by a

 

 

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1    student in a course of study. The purchase of school
2    supplies for use by persons other than students for use in
3    a course of study are not eligible for the reduced rate of
4    tax. "School supplies" do not include school art supplies;
5    school instructional materials; cameras; film and memory
6    cards; videocameras, tapes, and videotapes; computers;
7    cell phones; Personal Digital Assistants (PDAs); handheld
8    electronic schedulers; and school computer supplies.
9        "School supplies" includes, but is not limited to:
10    binders; book bags; calculators; cellophane tape;
11    blackboard chalk; compasses; composition books; crayons;
12    erasers; expandable, pocket, plastic, and manila folders;
13    glue, paste, and paste sticks; highlighters; index cards;
14    index card boxes; legal pads; lunch boxes; markers;
15    notebooks; paper, including loose leaf ruled notebook
16    paper, copy paper, graph paper, tracing paper, manila
17    paper, colored paper, poster board, and construction
18    paper; pencils; pencil leads; pens; ink and ink refills for
19    pens; pencil boxes and other school supply boxes; pencil
20    sharpeners; protractors; rulers; scissors; and writing
21    tablets.
22        "School art supply" means an item commonly used by a
23    student in a course of study for artwork and includes only
24    the following items: clay and glazes; acrylic, tempera, and
25    oil paint; paintbrushes for artwork; sketch and drawing
26    pads; and watercolors.

 

 

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1        "School instructional material" means written material
2    commonly used by a student in a course of study as a
3    reference and to learn the subject being taught and
4    includes only the following items: reference books;
5    reference maps and globes; textbooks; and workbooks.
6        "School computer supply" means an item commonly used by
7    a student in a course of study in which a computer is used
8    and applies only to the following items: flashdrives and
9    other computer data storage devices; data storage media,
10    such as diskettes and compact disks; boxes and cases for
11    disk storage; external ports or drives; computer cases;
12    computer cables; computer printers; and printer
13    cartridges, toner, and ink.
14    (a-5) From December 19 through December 23, 2011, items
15purchased from a small business (other than items that are
16otherwise subject to a 1% rate of tax under Section 3-10) are
17also subject to the reduced rate. For the purposes of this
18subsection (a-5), "small business" means a corporation or a
19concern, including its affiliates, that is independently owned
20and operated, not dominant in its field, and employs fewer than
2150 full-time employees or has gross annual sales of less than
22$4,000,000. However, for the purposes of this Section, the
23Department may, by rule, define "small business" to include
24employment of 50 or more persons if it finds that such a
25definition is necessary to address the needs and problems of
26small businesses and organizations. The reduced rate on these

 

 

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1items shall be administered under the provisions of subsection
2(b) of this Section.
3    (b) Administration. Notwithstanding any other provision of
4this Act, the reduced rate of tax under Section 3-10 of this
5Act for sales tax holiday items described in this Section
6clothing and school supplies shall be administered by the
7Department under the provisions of this subsection (b).
8        (1) Bundled sales. Items that qualify for the reduced
9    rate of tax that are bundled together with items that do
10    not qualify for the reduced rate of tax and that are sold
11    for one itemized price will be subject to the reduced rate
12    of tax only if the value of the items that qualify for the
13    reduced rate of tax exceeds the value of the items that do
14    not qualify for the reduced rate of tax.
15        (2) Coupons and discounts. An unreimbursed discount by
16    the seller reduces the sales price of the property so that
17    the discounted sales price determines whether the sales
18    price is within a sales tax holiday price threshold. A
19    coupon or other reduction in the sales price is treated as
20    a discount if the seller is not reimbursed for the coupon
21    or reduction amount by a third party.
22        (3) Splitting of items normally sold together.
23    Articles that are normally sold as a single unit must
24    continue to be sold in that manner. Such articles cannot be
25    priced separately and sold as individual items in order to
26    obtain the reduced rate of tax. For example, a pair of

 

 

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1    shoes cannot have each shoe sold separately so that the
2    sales price of each shoe is within a sales tax holiday
3    price threshold.
4        (4) Rain checks. A rain check is a procedure that
5    allows a customer to purchase an item at a certain price at
6    a later time because the particular item was out of stock.
7    Eligible property that customers purchase during the Sales
8    Tax Holiday Period with the use of a rain check will
9    qualify for the reduced rate of tax regardless of when the
10    rain check was issued. Issuance of a rain check during the
11    Sales Tax Holiday Period will not qualify eligible property
12    for the reduced rate of tax if the property is actually
13    purchased after the Sales Tax Holiday Period.
14        (5) Exchanges. The procedure for an exchange in regards
15    to a sales tax holiday is as follows:
16            (A) If a customer purchases an item of eligible
17        property during the Sales Tax Holiday Period, but later
18        exchanges the item for a similar eligible item, even if
19        a different size, different color, or other feature, no
20        additional tax is due even if the exchange is made
21        after the Sales Tax Holiday Period.
22            (B) If a customer purchases an item of eligible
23        property during the Sales Tax Holiday Period, but after
24        the Sales Tax Holiday Period has ended, the customer
25        returns the item and receives credit on the purchase of
26        a different item, the 6.25% general merchandise sales

 

 

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1        tax rate is due on the sale of the newly purchased
2        item.
3            (C) If a customer purchases an item of eligible
4        property before the Sales Tax Holiday Period, but
5        during the Sales Tax Holiday Period the customer
6        returns the item and receives credit on the purchase of
7        a different item of eligible property, the reduced rate
8        of tax is due on the sale of the new item if the new
9        item is purchased during the Sales Tax Holiday Period.
10        (6) Delivery charges. Delivery charges, including
11    shipping, handling and service charges, are part of the
12    sales price of eligible property.
13        (7) Order date and back orders. For the purpose of a
14    sales tax holiday, eligible property qualifies for the
15    reduced rate of tax if: (i) the item is both delivered to
16    and paid for by the customer during the Sales Tax Holiday
17    Period or (ii) the customer orders and pays for the item
18    and the seller accepts the order during the Sales Tax
19    Holiday Period for immediate shipment, even if delivery is
20    made after the Sales Tax Holiday Period. The seller accepts
21    an order when the seller has taken action to fill the order
22    for immediate shipment. Actions to fill an order include
23    placement of an "in date" stamp on an order or assignment
24    of an "order number" to an order within the Sales Tax
25    Holiday Period. An order is for immediate shipment when the
26    customer does not request delayed shipment. An order is for

 

 

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1    immediate shipment notwithstanding that the shipment may
2    be delayed because of a backlog of orders or because stock
3    is currently unavailable to, or on back order by, the
4    seller.
5        (8) Returns. For a 60-day period immediately after the
6    Sales Tax Holiday Period, if a customer returns an item
7    that would qualify for the reduced rate of tax, credit for
8    or refund of sales tax shall be given only at the reduced
9    rate unless the customer provides a receipt or invoice that
10    shows tax was paid at the 6.25% general merchandise rate,
11    or the seller has sufficient documentation to show that tax
12    was paid at the 6.25% general merchandise rate on the
13    specific item. This 60-day period is set solely for the
14    purpose of designating a time period during which the
15    customer must provide documentation that shows that the
16    appropriate sales tax rate was paid on returned
17    merchandise. The 60-day period is not intended to change a
18    seller's policy on the time period during which the seller
19    will accept returns.
20    (c) The Department may implement the provisions of this
21Section through the use of emergency rules, along with
22permanent rules filed concurrently with such emergency rules,
23in accordance with the provisions of Section 5-45 of the
24Illinois Administrative Procedure Act. For purposes of the
25Illinois Administrative Procedure Act, the adoption of rules to
26implement the provisions of this Section shall be deemed an

 

 

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1emergency and necessary for the public interest, safety, and
2welfare.
3(Source: P.A. 96-1012, eff. 7-7-10.)
 
4    (35 ILCS 105/3-10)
5    Sec. 3-10. Rate of tax. Unless otherwise provided in this
6Section, the tax imposed by this Act is at the rate of 6.25% of
7either the selling price or the fair market value, if any, of
8the tangible personal property. In all cases where property
9functionally used or consumed is the same as the property that
10was purchased at retail, then the tax is imposed on the selling
11price of the property. In all cases where property functionally
12used or consumed is a by-product or waste product that has been
13refined, manufactured, or produced from property purchased at
14retail, then the tax is imposed on the lower of the fair market
15value, if any, of the specific property so used in this State
16or on the selling price of the property purchased at retail.
17For purposes of this Section "fair market value" means the
18price at which property would change hands between a willing
19buyer and a willing seller, neither being under any compulsion
20to buy or sell and both having reasonable knowledge of the
21relevant facts. The fair market value shall be established by
22Illinois sales by the taxpayer of the same property as that
23functionally used or consumed, or if there are no such sales by
24the taxpayer, then comparable sales or purchases of property of
25like kind and character in Illinois.

 

 

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1    Beginning on July 1, 2000 and through December 31, 2000,
2with respect to motor fuel, as defined in Section 1.1 of the
3Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
4the Use Tax Act, the tax is imposed at the rate of 1.25%.
5    Beginning on August 6, 2010 through August 15, 2010, with
6respect to sales tax holiday items as defined in subsection (a)
7of Section 3-6 of this Act, the tax is imposed at the rate of
81.25%. From December 19 through December 23, 2011, with respect
9to items purchased from a small business, as defined in
10subsection (a-5) of Section 3-6 of this Act, the tax is imposed
11at the rate of 1.25%.
12    With respect to gasohol, the tax imposed by this Act
13applies to (i) 70% of the proceeds of sales made on or after
14January 1, 1990, and before July 1, 2003, (ii) 80% of the
15proceeds of sales made on or after July 1, 2003 and on or
16before December 31, 2013, and (iii) 100% of the proceeds of
17sales made thereafter. If, at any time, however, the tax under
18this Act on sales of gasohol is imposed at the rate of 1.25%,
19then the tax imposed by this Act applies to 100% of the
20proceeds of sales of gasohol made during that time.
21    With respect to majority blended ethanol fuel, the tax
22imposed by this Act does not apply to the proceeds of sales
23made on or after July 1, 2003 and on or before December 31,
242013 but applies to 100% of the proceeds of sales made
25thereafter.
26    With respect to biodiesel blends with no less than 1% and

 

 

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1no more than 10% biodiesel, the tax imposed by this Act applies
2to (i) 80% of the proceeds of sales made on or after July 1,
32003 and on or before December 31, 2013 and (ii) 100% of the
4proceeds of sales made thereafter. If, at any time, however,
5the tax under this Act on sales of biodiesel blends with no
6less than 1% and no more than 10% biodiesel is imposed at the
7rate of 1.25%, then the tax imposed by this Act applies to 100%
8of the proceeds of sales of biodiesel blends with no less than
91% and no more than 10% biodiesel made during that time.
10    With respect to 100% biodiesel and biodiesel blends with
11more than 10% but no more than 99% biodiesel, the tax imposed
12by this Act does not apply to the proceeds of sales made on or
13after July 1, 2003 and on or before December 31, 2013 but
14applies to 100% of the proceeds of sales made thereafter.
15    With respect to food for human consumption that is to be
16consumed off the premises where it is sold (other than
17alcoholic beverages, soft drinks, and food that has been
18prepared for immediate consumption) and prescription and
19nonprescription medicines, drugs, medical appliances,
20modifications to a motor vehicle for the purpose of rendering
21it usable by a disabled person, and insulin, urine testing
22materials, syringes, and needles used by diabetics, for human
23use, the tax is imposed at the rate of 1%. For the purposes of
24this Section, until September 1, 2009: the term "soft drinks"
25means any complete, finished, ready-to-use, non-alcoholic
26drink, whether carbonated or not, including but not limited to

 

 

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1soda water, cola, fruit juice, vegetable juice, carbonated
2water, and all other preparations commonly known as soft drinks
3of whatever kind or description that are contained in any
4closed or sealed bottle, can, carton, or container, regardless
5of size; but "soft drinks" does not include coffee, tea,
6non-carbonated water, infant formula, milk or milk products as
7defined in the Grade A Pasteurized Milk and Milk Products Act,
8or drinks containing 50% or more natural fruit or vegetable
9juice.
10    Notwithstanding any other provisions of this Act,
11beginning September 1, 2009, "soft drinks" means non-alcoholic
12beverages that contain natural or artificial sweeteners. "Soft
13drinks" do not include beverages that contain milk or milk
14products, soy, rice or similar milk substitutes, or greater
15than 50% of vegetable or fruit juice by volume.
16    Until August 1, 2009, and notwithstanding any other
17provisions of this Act, "food for human consumption that is to
18be consumed off the premises where it is sold" includes all
19food sold through a vending machine, except soft drinks and
20food products that are dispensed hot from a vending machine,
21regardless of the location of the vending machine. Beginning
22August 1, 2009, and notwithstanding any other provisions of
23this Act, "food for human consumption that is to be consumed
24off the premises where it is sold" includes all food sold
25through a vending machine, except soft drinks, candy, and food
26products that are dispensed hot from a vending machine,

 

 

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1regardless of the location of the vending machine.
2    Notwithstanding any other provisions of this Act,
3beginning September 1, 2009, "food for human consumption that
4is to be consumed off the premises where it is sold" does not
5include candy. For purposes of this Section, "candy" means a
6preparation of sugar, honey, or other natural or artificial
7sweeteners in combination with chocolate, fruits, nuts or other
8ingredients or flavorings in the form of bars, drops, or
9pieces. "Candy" does not include any preparation that contains
10flour or requires refrigeration.
11    Notwithstanding any other provisions of this Act,
12beginning September 1, 2009, "nonprescription medicines and
13drugs" does not include grooming and hygiene products. For
14purposes of this Section, "grooming and hygiene products"
15includes, but is not limited to, soaps and cleaning solutions,
16shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
17lotions and screens, unless those products are available by
18prescription only, regardless of whether the products meet the
19definition of "over-the-counter-drugs". For the purposes of
20this paragraph, "over-the-counter-drug" means a drug for human
21use that contains a label that identifies the product as a drug
22as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
23label includes:
24        (A) A "Drug Facts" panel; or
25        (B) A statement of the "active ingredient(s)" with a
26    list of those ingredients contained in the compound,

 

 

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1    substance or preparation.
2    If the property that is purchased at retail from a retailer
3is acquired outside Illinois and used outside Illinois before
4being brought to Illinois for use here and is taxable under
5this Act, the "selling price" on which the tax is computed
6shall be reduced by an amount that represents a reasonable
7allowance for depreciation for the period of prior out-of-state
8use.
9(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
10eff. 7-13-09; 96-1000, eff. 7-2-10; 96-1012, eff. 7-7-10.)
 
11    Section 10. The Service Use Tax Act is amended by changing
12Sections 3-10 and 9 and by adding Section 3-6 as follows:
 
13    (35 ILCS 110/3-6 new)
14    Sec. 3-6. Sales tax holiday items.
15    (a) From December 19 through December 23, 2011, items
16purchased from a small business (other than items that are
17otherwise subject to a 1% rate of tax under Section 3-10)
18qualify for a 1.25% reduced rate of tax as set forth in Section
193-10 of this Act. For the purposes of this subsection (a),
20"small business" means a corporation or a concern, including
21its affiliates, that is independently owned and operated, not
22dominant in its field, and employs fewer than 50 full-time
23employees or has gross annual sales of less than $4,000,000.
24However, for the purposes of this Section, the Department may,

 

 

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1by rule, define "small business" to include employment of 50 or
2more persons if it finds that such a definition is necessary to
3address the needs and problems of small businesses and
4organizations. The reduced rate on these items shall be
5administered under the provisions of subsection (b) of this
6Section.
7    (b) Notwithstanding any other provision of this Act, the
8reduced rate of tax under Section 3-10 of this Act for sales
9tax holiday items described in subsection (a) of this Section
10shall be administered by the Department in the same manner as
11provided in subsection (b) of Section 3-6 of the Use Tax Act.
 
12    (35 ILCS 110/3-10)  (from Ch. 120, par. 439.33-10)
13    Sec. 3-10. Rate of tax. Unless otherwise provided in this
14Section, the tax imposed by this Act is at the rate of 6.25% of
15the selling price of tangible personal property transferred as
16an incident to the sale of service, but, for the purpose of
17computing this tax, in no event shall the selling price be less
18than the cost price of the property to the serviceman.
19    Beginning on July 1, 2000 and through December 31, 2000,
20with respect to motor fuel, as defined in Section 1.1 of the
21Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
22the Use Tax Act, the tax is imposed at the rate of 1.25%.
23    With respect to gasohol, as defined in the Use Tax Act, the
24tax imposed by this Act applies to (i) 70% of the selling price
25of property transferred as an incident to the sale of service

 

 

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1on or after January 1, 1990, and before July 1, 2003, (ii) 80%
2of the selling price of property transferred as an incident to
3the sale of service on or after July 1, 2003 and on or before
4December 31, 2013, and (iii) 100% of the selling price
5thereafter. If, at any time, however, the tax under this Act on
6sales of gasohol, as defined in the Use Tax Act, is imposed at
7the rate of 1.25%, then the tax imposed by this Act applies to
8100% of the proceeds of sales of gasohol made during that time.
9    With respect to majority blended ethanol fuel, as defined
10in the Use Tax Act, the tax imposed by this Act does not apply
11to the selling price of property transferred as an incident to
12the sale of service on or after July 1, 2003 and on or before
13December 31, 2013 but applies to 100% of the selling price
14thereafter.
15    With respect to biodiesel blends, as defined in the Use Tax
16Act, with no less than 1% and no more than 10% biodiesel, the
17tax imposed by this Act applies to (i) 80% of the selling price
18of property transferred as an incident to the sale of service
19on or after July 1, 2003 and on or before December 31, 2013 and
20(ii) 100% of the proceeds of the selling price thereafter. If,
21at any time, however, the tax under this Act on sales of
22biodiesel blends, as defined in the Use Tax Act, with no less
23than 1% and no more than 10% biodiesel is imposed at the rate
24of 1.25%, then the tax imposed by this Act applies to 100% of
25the proceeds of sales of biodiesel blends with no less than 1%
26and no more than 10% biodiesel made during that time.

 

 

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1    With respect to 100% biodiesel, as defined in the Use Tax
2Act, and biodiesel blends, as defined in the Use Tax Act, with
3more than 10% but no more than 99% biodiesel, the tax imposed
4by this Act does not apply to the proceeds of the selling price
5of property transferred as an incident to the sale of service
6on or after July 1, 2003 and on or before December 31, 2013 but
7applies to 100% of the selling price thereafter.
8    From December 19 through December 23, 2011, with respect to
9items purchased from a small business, as defined in Section
103-6 of this Act, the tax is imposed at the rate of 1.25%.
11    At the election of any registered serviceman made for each
12fiscal year, sales of service in which the aggregate annual
13cost price of tangible personal property transferred as an
14incident to the sales of service is less than 35%, or 75% in
15the case of servicemen transferring prescription drugs or
16servicemen engaged in graphic arts production, of the aggregate
17annual total gross receipts from all sales of service, the tax
18imposed by this Act shall be based on the serviceman's cost
19price of the tangible personal property transferred as an
20incident to the sale of those services.
21    The tax shall be imposed at the rate of 1% on food prepared
22for immediate consumption and transferred incident to a sale of
23service subject to this Act or the Service Occupation Tax Act
24by an entity licensed under the Hospital Licensing Act, the
25Nursing Home Care Act, the ID/DD Community Care Act, the
26Specialized Mental Health Rehabilitation Act, or the Child Care

 

 

HB3889- 18 -LRB097 14810 HLH 59839 b

1Act of 1969. The tax shall also be imposed at the rate of 1% on
2food for human consumption that is to be consumed off the
3premises where it is sold (other than alcoholic beverages, soft
4drinks, and food that has been prepared for immediate
5consumption and is not otherwise included in this paragraph)
6and prescription and nonprescription medicines, drugs, medical
7appliances, modifications to a motor vehicle for the purpose of
8rendering it usable by a disabled person, and insulin, urine
9testing materials, syringes, and needles used by diabetics, for
10human use. For the purposes of this Section, until September 1,
112009: the term "soft drinks" means any complete, finished,
12ready-to-use, non-alcoholic drink, whether carbonated or not,
13including but not limited to soda water, cola, fruit juice,
14vegetable juice, carbonated water, and all other preparations
15commonly known as soft drinks of whatever kind or description
16that are contained in any closed or sealed bottle, can, carton,
17or container, regardless of size; but "soft drinks" does not
18include coffee, tea, non-carbonated water, infant formula,
19milk or milk products as defined in the Grade A Pasteurized
20Milk and Milk Products Act, or drinks containing 50% or more
21natural fruit or vegetable juice.
22    Notwithstanding any other provisions of this Act,
23beginning September 1, 2009, "soft drinks" means non-alcoholic
24beverages that contain natural or artificial sweeteners. "Soft
25drinks" do not include beverages that contain milk or milk
26products, soy, rice or similar milk substitutes, or greater

 

 

HB3889- 19 -LRB097 14810 HLH 59839 b

1than 50% of vegetable or fruit juice by volume.
2    Until August 1, 2009, and notwithstanding any other
3provisions of this Act, "food for human consumption that is to
4be consumed off the premises where it is sold" includes all
5food sold through a vending machine, except soft drinks and
6food products that are dispensed hot from a vending machine,
7regardless of the location of the vending machine. Beginning
8August 1, 2009, and notwithstanding any other provisions of
9this Act, "food for human consumption that is to be consumed
10off the premises where it is sold" includes all food sold
11through a vending machine, except soft drinks, candy, and food
12products that are dispensed hot from a vending machine,
13regardless of the location of the vending machine.
14    Notwithstanding any other provisions of this Act,
15beginning September 1, 2009, "food for human consumption that
16is to be consumed off the premises where it is sold" does not
17include candy. For purposes of this Section, "candy" means a
18preparation of sugar, honey, or other natural or artificial
19sweeteners in combination with chocolate, fruits, nuts or other
20ingredients or flavorings in the form of bars, drops, or
21pieces. "Candy" does not include any preparation that contains
22flour or requires refrigeration.
23    Notwithstanding any other provisions of this Act,
24beginning September 1, 2009, "nonprescription medicines and
25drugs" does not include grooming and hygiene products. For
26purposes of this Section, "grooming and hygiene products"

 

 

HB3889- 20 -LRB097 14810 HLH 59839 b

1includes, but is not limited to, soaps and cleaning solutions,
2shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
3lotions and screens, unless those products are available by
4prescription only, regardless of whether the products meet the
5definition of "over-the-counter-drugs". For the purposes of
6this paragraph, "over-the-counter-drug" means a drug for human
7use that contains a label that identifies the product as a drug
8as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
9label includes:
10        (A) A "Drug Facts" panel; or
11        (B) A statement of the "active ingredient(s)" with a
12    list of those ingredients contained in the compound,
13    substance or preparation.
14    If the property that is acquired from a serviceman is
15acquired outside Illinois and used outside Illinois before
16being brought to Illinois for use here and is taxable under
17this Act, the "selling price" on which the tax is computed
18shall be reduced by an amount that represents a reasonable
19allowance for depreciation for the period of prior out-of-state
20use.
21(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
22eff. 7-13-09; 96-339, eff. 7-1-10; 96-1000, eff. 7-2-10; 97-38,
23eff. 6-28-11; 97-227, eff. 1-1-12; revised 9-12-11.)
 
24    (35 ILCS 110/9)  (from Ch. 120, par. 439.39)
25    Sec. 9. Each serviceman required or authorized to collect

 

 

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1the tax herein imposed shall pay to the Department the amount
2of such tax (except as otherwise provided) at the time when he
3is required to file his return for the period during which such
4tax was collected, less a discount of 2.1% prior to January 1,
51990 and 1.75% on and after January 1, 1990, or $5 per calendar
6year, whichever is greater, which is allowed to reimburse the
7serviceman for expenses incurred in collecting the tax, keeping
8records, preparing and filing returns, remitting the tax and
9supplying data to the Department on request. A serviceman need
10not remit that part of any tax collected by him to the extent
11that he is required to pay and does pay the tax imposed by the
12Service Occupation Tax Act with respect to his sale of service
13involving the incidental transfer by him of the same property.
14    Except as provided hereinafter in this Section, on or
15before the twentieth day of each calendar month, such
16serviceman shall file a return for the preceding calendar month
17in accordance with reasonable Rules and Regulations to be
18promulgated by the Department. Such return shall be filed on a
19form prescribed by the Department and shall contain such
20information as the Department may reasonably require.
21    The Department may require returns to be filed on a
22quarterly basis. If so required, a return for each calendar
23quarter shall be filed on or before the twentieth day of the
24calendar month following the end of such calendar quarter. The
25taxpayer shall also file a return with the Department for each
26of the first two months of each calendar quarter, on or before

 

 

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1the twentieth day of the following calendar month, stating:
2        1. The name of the seller;
3        2. The address of the principal place of business from
4    which he engages in business as a serviceman in this State;
5        3. The total amount of taxable receipts received by him
6    during the preceding calendar month, including receipts
7    from charge and time sales, but less all deductions allowed
8    by law;
9        4. The amount of credit provided in Section 2d of this
10    Act;
11        5. The amount of tax due;
12        5-5. The signature of the taxpayer; and
13        6. Such other reasonable information as the Department
14    may require.
15    If a taxpayer fails to sign a return within 30 days after
16the proper notice and demand for signature by the Department,
17the return shall be considered valid and any amount shown to be
18due on the return shall be deemed assessed.
19    Beginning October 1, 1993, a taxpayer who has an average
20monthly tax liability of $150,000 or more shall make all
21payments required by rules of the Department by electronic
22funds transfer. Beginning October 1, 1994, a taxpayer who has
23an average monthly tax liability of $100,000 or more shall make
24all payments required by rules of the Department by electronic
25funds transfer. Beginning October 1, 1995, a taxpayer who has
26an average monthly tax liability of $50,000 or more shall make

 

 

HB3889- 23 -LRB097 14810 HLH 59839 b

1all payments required by rules of the Department by electronic
2funds transfer. Beginning October 1, 2000, a taxpayer who has
3an annual tax liability of $200,000 or more shall make all
4payments required by rules of the Department by electronic
5funds transfer. The term "annual tax liability" shall be the
6sum of the taxpayer's liabilities under this Act, and under all
7other State and local occupation and use tax laws administered
8by the Department, for the immediately preceding calendar year.
9The term "average monthly tax liability" means the sum of the
10taxpayer's liabilities under this Act, and under all other
11State and local occupation and use tax laws administered by the
12Department, for the immediately preceding calendar year
13divided by 12. Beginning on October 1, 2002, a taxpayer who has
14a tax liability in the amount set forth in subsection (b) of
15Section 2505-210 of the Department of Revenue Law shall make
16all payments required by rules of the Department by electronic
17funds transfer.
18    Before August 1 of each year beginning in 1993, the
19Department shall notify all taxpayers required to make payments
20by electronic funds transfer. All taxpayers required to make
21payments by electronic funds transfer shall make those payments
22for a minimum of one year beginning on October 1.
23    Any taxpayer not required to make payments by electronic
24funds transfer may make payments by electronic funds transfer
25with the permission of the Department.
26    All taxpayers required to make payment by electronic funds

 

 

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1transfer and any taxpayers authorized to voluntarily make
2payments by electronic funds transfer shall make those payments
3in the manner authorized by the Department.
4    The Department shall adopt such rules as are necessary to
5effectuate a program of electronic funds transfer and the
6requirements of this Section.
7    If the serviceman is otherwise required to file a monthly
8return and if the serviceman's average monthly tax liability to
9the Department does not exceed $200, the Department may
10authorize his returns to be filed on a quarter annual basis,
11with the return for January, February and March of a given year
12being due by April 20 of such year; with the return for April,
13May and June of a given year being due by July 20 of such year;
14with the return for July, August and September of a given year
15being due by October 20 of such year, and with the return for
16October, November and December of a given year being due by
17January 20 of the following year.
18    If the serviceman is otherwise required to file a monthly
19or quarterly return and if the serviceman's average monthly tax
20liability to the Department does not exceed $50, the Department
21may authorize his returns to be filed on an annual basis, with
22the return for a given year being due by January 20 of the
23following year.
24    Such quarter annual and annual returns, as to form and
25substance, shall be subject to the same requirements as monthly
26returns.

 

 

HB3889- 25 -LRB097 14810 HLH 59839 b

1    Notwithstanding any other provision in this Act concerning
2the time within which a serviceman may file his return, in the
3case of any serviceman who ceases to engage in a kind of
4business which makes him responsible for filing returns under
5this Act, such serviceman shall file a final return under this
6Act with the Department not more than 1 month after
7discontinuing such business.
8    Where a serviceman collects the tax with respect to the
9selling price of property which he sells and the purchaser
10thereafter returns such property and the serviceman refunds the
11selling price thereof to the purchaser, such serviceman shall
12also refund, to the purchaser, the tax so collected from the
13purchaser. When filing his return for the period in which he
14refunds such tax to the purchaser, the serviceman may deduct
15the amount of the tax so refunded by him to the purchaser from
16any other Service Use Tax, Service Occupation Tax, retailers'
17occupation tax or use tax which such serviceman may be required
18to pay or remit to the Department, as shown by such return,
19provided that the amount of the tax to be deducted shall
20previously have been remitted to the Department by such
21serviceman. If the serviceman shall not previously have
22remitted the amount of such tax to the Department, he shall be
23entitled to no deduction hereunder upon refunding such tax to
24the purchaser.
25    Any serviceman filing a return hereunder shall also include
26the total tax upon the selling price of tangible personal

 

 

HB3889- 26 -LRB097 14810 HLH 59839 b

1property purchased for use by him as an incident to a sale of
2service, and such serviceman shall remit the amount of such tax
3to the Department when filing such return.
4    If experience indicates such action to be practicable, the
5Department may prescribe and furnish a combination or joint
6return which will enable servicemen, who are required to file
7returns hereunder and also under the Service Occupation Tax
8Act, to furnish all the return information required by both
9Acts on the one form.
10    Where the serviceman has more than one business registered
11with the Department under separate registration hereunder,
12such serviceman shall not file each return that is due as a
13single return covering all such registered businesses, but
14shall file separate returns for each such registered business.
15    Beginning January 1, 1990, each month the Department shall
16pay into the State and Local Tax Reform Fund, a special fund in
17the State Treasury, the net revenue realized for the preceding
18month from the 1% tax on sales of food for human consumption
19which is to be consumed off the premises where it is sold
20(other than alcoholic beverages, soft drinks and food which has
21been prepared for immediate consumption) and prescription and
22nonprescription medicines, drugs, medical appliances and
23insulin, urine testing materials, syringes and needles used by
24diabetics.
25    Beginning January 1, 1990, each month the Department shall
26pay into the State and Local Sales Tax Reform Fund 20% of the

 

 

HB3889- 27 -LRB097 14810 HLH 59839 b

1net revenue realized for the preceding month from the 6.25%
2general rate on transfers of tangible personal property, other
3than tangible personal property which is purchased outside
4Illinois at retail from a retailer and which is titled or
5registered by an agency of this State's government.
6    Beginning August 1, 2000, each month the Department shall
7pay into the State and Local Sales Tax Reform Fund 100% of the
8net revenue realized for the preceding month from the 1.25%
9rate on the selling price of motor fuel and gasohol.
10    On January 1, 2012, the Department shall pay into the State
11and Local Sales Tax Reform Fund 100% of the net revenue
12realized for the preceding month from the 1.25% rate on the
13selling price of items purchased from a small business, as
14defined in Section 3-6, during the previous month.
15    Beginning October 1, 2009, each month the Department shall
16pay into the Capital Projects Fund an amount that is equal to
17an amount estimated by the Department to represent 80% of the
18net revenue realized for the preceding month from the sale of
19candy, grooming and hygiene products, and soft drinks that had
20been taxed at a rate of 1% prior to September 1, 2009 but that
21is now taxed at 6.25%.
22    Of the remainder of the moneys received by the Department
23pursuant to this Act, (a) 1.75% thereof shall be paid into the
24Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
25and after July 1, 1989, 3.8% thereof shall be paid into the
26Build Illinois Fund; provided, however, that if in any fiscal

 

 

HB3889- 28 -LRB097 14810 HLH 59839 b

1year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
2may be, of the moneys received by the Department and required
3to be paid into the Build Illinois Fund pursuant to Section 3
4of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
5Act, Section 9 of the Service Use Tax Act, and Section 9 of the
6Service Occupation Tax Act, such Acts being hereinafter called
7the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
8may be, of moneys being hereinafter called the "Tax Act
9Amount", and (2) the amount transferred to the Build Illinois
10Fund from the State and Local Sales Tax Reform Fund shall be
11less than the Annual Specified Amount (as defined in Section 3
12of the Retailers' Occupation Tax Act), an amount equal to the
13difference shall be immediately paid into the Build Illinois
14Fund from other moneys received by the Department pursuant to
15the Tax Acts; and further provided, that if on the last
16business day of any month the sum of (1) the Tax Act Amount
17required to be deposited into the Build Illinois Bond Account
18in the Build Illinois Fund during such month and (2) the amount
19transferred during such month to the Build Illinois Fund from
20the State and Local Sales Tax Reform Fund shall have been less
21than 1/12 of the Annual Specified Amount, an amount equal to
22the difference shall be immediately paid into the Build
23Illinois Fund from other moneys received by the Department
24pursuant to the Tax Acts; and, further provided, that in no
25event shall the payments required under the preceding proviso
26result in aggregate payments into the Build Illinois Fund

 

 

HB3889- 29 -LRB097 14810 HLH 59839 b

1pursuant to this clause (b) for any fiscal year in excess of
2the greater of (i) the Tax Act Amount or (ii) the Annual
3Specified Amount for such fiscal year; and, further provided,
4that the amounts payable into the Build Illinois Fund under
5this clause (b) shall be payable only until such time as the
6aggregate amount on deposit under each trust indenture securing
7Bonds issued and outstanding pursuant to the Build Illinois
8Bond Act is sufficient, taking into account any future
9investment income, to fully provide, in accordance with such
10indenture, for the defeasance of or the payment of the
11principal of, premium, if any, and interest on the Bonds
12secured by such indenture and on any Bonds expected to be
13issued thereafter and all fees and costs payable with respect
14thereto, all as certified by the Director of the Bureau of the
15Budget (now Governor's Office of Management and Budget). If on
16the last business day of any month in which Bonds are
17outstanding pursuant to the Build Illinois Bond Act, the
18aggregate of the moneys deposited in the Build Illinois Bond
19Account in the Build Illinois Fund in such month shall be less
20than the amount required to be transferred in such month from
21the Build Illinois Bond Account to the Build Illinois Bond
22Retirement and Interest Fund pursuant to Section 13 of the
23Build Illinois Bond Act, an amount equal to such deficiency
24shall be immediately paid from other moneys received by the
25Department pursuant to the Tax Acts to the Build Illinois Fund;
26provided, however, that any amounts paid to the Build Illinois

 

 

HB3889- 30 -LRB097 14810 HLH 59839 b

1Fund in any fiscal year pursuant to this sentence shall be
2deemed to constitute payments pursuant to clause (b) of the
3preceding sentence and shall reduce the amount otherwise
4payable for such fiscal year pursuant to clause (b) of the
5preceding sentence. The moneys received by the Department
6pursuant to this Act and required to be deposited into the
7Build Illinois Fund are subject to the pledge, claim and charge
8set forth in Section 12 of the Build Illinois Bond Act.
9    Subject to payment of amounts into the Build Illinois Fund
10as provided in the preceding paragraph or in any amendment
11thereto hereafter enacted, the following specified monthly
12installment of the amount requested in the certificate of the
13Chairman of the Metropolitan Pier and Exposition Authority
14provided under Section 8.25f of the State Finance Act, but not
15in excess of the sums designated as "Total Deposit", shall be
16deposited in the aggregate from collections under Section 9 of
17the Use Tax Act, Section 9 of the Service Use Tax Act, Section
189 of the Service Occupation Tax Act, and Section 3 of the
19Retailers' Occupation Tax Act into the McCormick Place
20Expansion Project Fund in the specified fiscal years.
21Fiscal YearTotal Deposit
221993         $0
231994 53,000,000
241995 58,000,000
251996 61,000,000

 

 

HB3889- 31 -LRB097 14810 HLH 59839 b

11997 64,000,000
21998 68,000,000
31999 71,000,000
42000 75,000,000
52001 80,000,000
62002 93,000,000
72003 99,000,000
82004103,000,000
92005108,000,000
102006113,000,000
112007119,000,000
122008126,000,000
132009132,000,000
142010139,000,000
152011146,000,000
162012153,000,000
172013161,000,000
182014170,000,000
192015179,000,000
202016189,000,000
212017199,000,000
222018210,000,000
232019221,000,000
242020233,000,000
252021246,000,000
262022260,000,000

 

 

HB3889- 32 -LRB097 14810 HLH 59839 b

12023275,000,000
22024 275,000,000
32025 275,000,000
42026 279,000,000
52027 292,000,000
62028 307,000,000
72029 322,000,000
82030 338,000,000
92031 350,000,000
102032 350,000,000
11and
12each fiscal year
13thereafter that bonds
14are outstanding under
15Section 13.2 of the
16Metropolitan Pier and
17Exposition Authority Act,
18but not after fiscal year 2060.
19    Beginning July 20, 1993 and in each month of each fiscal
20year thereafter, one-eighth of the amount requested in the
21certificate of the Chairman of the Metropolitan Pier and
22Exposition Authority for that fiscal year, less the amount
23deposited into the McCormick Place Expansion Project Fund by
24the State Treasurer in the respective month under subsection
25(g) of Section 13 of the Metropolitan Pier and Exposition
26Authority Act, plus cumulative deficiencies in the deposits

 

 

HB3889- 33 -LRB097 14810 HLH 59839 b

1required under this Section for previous months and years,
2shall be deposited into the McCormick Place Expansion Project
3Fund, until the full amount requested for the fiscal year, but
4not in excess of the amount specified above as "Total Deposit",
5has been deposited.
6    Subject to payment of amounts into the Build Illinois Fund
7and the McCormick Place Expansion Project Fund pursuant to the
8preceding paragraphs or in any amendments thereto hereafter
9enacted, beginning July 1, 1993, the Department shall each
10month pay into the Illinois Tax Increment Fund 0.27% of 80% of
11the net revenue realized for the preceding month from the 6.25%
12general rate on the selling price of tangible personal
13property.
14    Subject to payment of amounts into the Build Illinois Fund
15and the McCormick Place Expansion Project Fund pursuant to the
16preceding paragraphs or in any amendments thereto hereafter
17enacted, beginning with the receipt of the first report of
18taxes paid by an eligible business and continuing for a 25-year
19period, the Department shall each month pay into the Energy
20Infrastructure Fund 80% of the net revenue realized from the
216.25% general rate on the selling price of Illinois-mined coal
22that was sold to an eligible business. For purposes of this
23paragraph, the term "eligible business" means a new electric
24generating facility certified pursuant to Section 605-332 of
25the Department of Commerce and Economic Opportunity Law of the
26Civil Administrative Code of Illinois.

 

 

HB3889- 34 -LRB097 14810 HLH 59839 b

1    All remaining moneys received by the Department pursuant to
2this Act shall be paid into the General Revenue Fund of the
3State Treasury.
4    As soon as possible after the first day of each month, upon
5certification of the Department of Revenue, the Comptroller
6shall order transferred and the Treasurer shall transfer from
7the General Revenue Fund to the Motor Fuel Tax Fund an amount
8equal to 1.7% of 80% of the net revenue realized under this Act
9for the second preceding month. Beginning April 1, 2000, this
10transfer is no longer required and shall not be made.
11    Net revenue realized for a month shall be the revenue
12collected by the State pursuant to this Act, less the amount
13paid out during that month as refunds to taxpayers for
14overpayment of liability.
15(Source: P.A. 96-34, eff. 7-13-09; 96-38, eff. 7-13-09; 96-898,
16eff. 5-27-10.)
 
17    Section 15. The Service Occupation Tax Act is amended by
18changing Sections 3-10 and 9 and by adding Section 3-6 as
19follows:
 
20    (35 ILCS 115/3-6 new)
21    Sec. 3-6. Sales tax holiday items.
22    (a) From December 19 through December 23, 2011, items
23purchased from a small business (other than items that are
24otherwise subject to a 1% rate of tax under Section 3-10)

 

 

HB3889- 35 -LRB097 14810 HLH 59839 b

1qualify for a 1.25% reduced rate of tax as set forth in Section
23-10 of this Act. For the purposes of this subsection (a),
3"small business" means a corporation or a concern, including
4its affiliates, that is independently owned and operated, not
5dominant in its field, and employs fewer than 50 full-time
6employees or has gross annual sales of less than $4,000,000.
7However, for the purposes of this Section, the Department may,
8by rule, define "small business" to include employment of 50 or
9more persons if it finds that such a definition is necessary to
10address the needs and problems of small businesses and
11organizations. The reduced rate on these items shall be
12administered under the provisions of subsection (b) of this
13Section.
14    (b) Notwithstanding any other provision of this Act, the
15reduced rate of tax under Section 3-10 of this Act for sales
16tax holiday items described in subsection (a) of this Section
17shall be administered by the Department in the same manner as
18provided in subsection (b) of Section 3-6 of the Use Tax Act.
 
19    (35 ILCS 115/3-10)  (from Ch. 120, par. 439.103-10)
20    Sec. 3-10. Rate of tax. Unless otherwise provided in this
21Section, the tax imposed by this Act is at the rate of 6.25% of
22the "selling price", as defined in Section 2 of the Service Use
23Tax Act, of the tangible personal property. For the purpose of
24computing this tax, in no event shall the "selling price" be
25less than the cost price to the serviceman of the tangible

 

 

HB3889- 36 -LRB097 14810 HLH 59839 b

1personal property transferred. The selling price of each item
2of tangible personal property transferred as an incident of a
3sale of service may be shown as a distinct and separate item on
4the serviceman's billing to the service customer. If the
5selling price is not so shown, the selling price of the
6tangible personal property is deemed to be 50% of the
7serviceman's entire billing to the service customer. When,
8however, a serviceman contracts to design, develop, and produce
9special order machinery or equipment, the tax imposed by this
10Act shall be based on the serviceman's cost price of the
11tangible personal property transferred incident to the
12completion of the contract.
13    Beginning on July 1, 2000 and through December 31, 2000,
14with respect to motor fuel, as defined in Section 1.1 of the
15Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
16the Use Tax Act, the tax is imposed at the rate of 1.25%.
17    With respect to gasohol, as defined in the Use Tax Act, the
18tax imposed by this Act shall apply to (i) 70% of the cost
19price of property transferred as an incident to the sale of
20service on or after January 1, 1990, and before July 1, 2003,
21(ii) 80% of the selling price of property transferred as an
22incident to the sale of service on or after July 1, 2003 and on
23or before December 31, 2013, and (iii) 100% of the cost price
24thereafter. If, at any time, however, the tax under this Act on
25sales of gasohol, as defined in the Use Tax Act, is imposed at
26the rate of 1.25%, then the tax imposed by this Act applies to

 

 

HB3889- 37 -LRB097 14810 HLH 59839 b

1100% of the proceeds of sales of gasohol made during that time.
2    With respect to majority blended ethanol fuel, as defined
3in the Use Tax Act, the tax imposed by this Act does not apply
4to the selling price of property transferred as an incident to
5the sale of service on or after July 1, 2003 and on or before
6December 31, 2013 but applies to 100% of the selling price
7thereafter.
8    With respect to biodiesel blends, as defined in the Use Tax
9Act, with no less than 1% and no more than 10% biodiesel, the
10tax imposed by this Act applies to (i) 80% of the selling price
11of property transferred as an incident to the sale of service
12on or after July 1, 2003 and on or before December 31, 2013 and
13(ii) 100% of the proceeds of the selling price thereafter. If,
14at any time, however, the tax under this Act on sales of
15biodiesel blends, as defined in the Use Tax Act, with no less
16than 1% and no more than 10% biodiesel is imposed at the rate
17of 1.25%, then the tax imposed by this Act applies to 100% of
18the proceeds of sales of biodiesel blends with no less than 1%
19and no more than 10% biodiesel made during that time.
20    With respect to 100% biodiesel, as defined in the Use Tax
21Act, and biodiesel blends, as defined in the Use Tax Act, with
22more than 10% but no more than 99% biodiesel material, the tax
23imposed by this Act does not apply to the proceeds of the
24selling price of property transferred as an incident to the
25sale of service on or after July 1, 2003 and on or before
26December 31, 2013 but applies to 100% of the selling price

 

 

HB3889- 38 -LRB097 14810 HLH 59839 b

1thereafter.
2    From December 19 through December 23, 2011, with respect to
3items purchased from a small business, as defined in Section
43-6 of this Act, the tax is imposed at the rate of 1.25%.
5    At the election of any registered serviceman made for each
6fiscal year, sales of service in which the aggregate annual
7cost price of tangible personal property transferred as an
8incident to the sales of service is less than 35%, or 75% in
9the case of servicemen transferring prescription drugs or
10servicemen engaged in graphic arts production, of the aggregate
11annual total gross receipts from all sales of service, the tax
12imposed by this Act shall be based on the serviceman's cost
13price of the tangible personal property transferred incident to
14the sale of those services.
15    The tax shall be imposed at the rate of 1% on food prepared
16for immediate consumption and transferred incident to a sale of
17service subject to this Act or the Service Occupation Tax Act
18by an entity licensed under the Hospital Licensing Act, the
19Nursing Home Care Act, the ID/DD Community Care Act, the
20Specialized Mental Health Rehabilitation Act, or the Child Care
21Act of 1969. The tax shall also be imposed at the rate of 1% on
22food for human consumption that is to be consumed off the
23premises where it is sold (other than alcoholic beverages, soft
24drinks, and food that has been prepared for immediate
25consumption and is not otherwise included in this paragraph)
26and prescription and nonprescription medicines, drugs, medical

 

 

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1appliances, modifications to a motor vehicle for the purpose of
2rendering it usable by a disabled person, and insulin, urine
3testing materials, syringes, and needles used by diabetics, for
4human use. For the purposes of this Section, until September 1,
52009: the term "soft drinks" means any complete, finished,
6ready-to-use, non-alcoholic drink, whether carbonated or not,
7including but not limited to soda water, cola, fruit juice,
8vegetable juice, carbonated water, and all other preparations
9commonly known as soft drinks of whatever kind or description
10that are contained in any closed or sealed can, carton, or
11container, regardless of size; but "soft drinks" does not
12include coffee, tea, non-carbonated water, infant formula,
13milk or milk products as defined in the Grade A Pasteurized
14Milk and Milk Products Act, or drinks containing 50% or more
15natural fruit or vegetable juice.
16    Notwithstanding any other provisions of this Act,
17beginning September 1, 2009, "soft drinks" means non-alcoholic
18beverages that contain natural or artificial sweeteners. "Soft
19drinks" do not include beverages that contain milk or milk
20products, soy, rice or similar milk substitutes, or greater
21than 50% of vegetable or fruit juice by volume.
22    Until August 1, 2009, and notwithstanding any other
23provisions of this Act, "food for human consumption that is to
24be consumed off the premises where it is sold" includes all
25food sold through a vending machine, except soft drinks and
26food products that are dispensed hot from a vending machine,

 

 

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1regardless of the location of the vending machine. Beginning
2August 1, 2009, and notwithstanding any other provisions of
3this Act, "food for human consumption that is to be consumed
4off the premises where it is sold" includes all food sold
5through a vending machine, except soft drinks, candy, and food
6products that are dispensed hot from a vending machine,
7regardless of the location of the vending machine.
8    Notwithstanding any other provisions of this Act,
9beginning September 1, 2009, "food for human consumption that
10is to be consumed off the premises where it is sold" does not
11include candy. For purposes of this Section, "candy" means a
12preparation of sugar, honey, or other natural or artificial
13sweeteners in combination with chocolate, fruits, nuts or other
14ingredients or flavorings in the form of bars, drops, or
15pieces. "Candy" does not include any preparation that contains
16flour or requires refrigeration.
17    Notwithstanding any other provisions of this Act,
18beginning September 1, 2009, "nonprescription medicines and
19drugs" does not include grooming and hygiene products. For
20purposes of this Section, "grooming and hygiene products"
21includes, but is not limited to, soaps and cleaning solutions,
22shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
23lotions and screens, unless those products are available by
24prescription only, regardless of whether the products meet the
25definition of "over-the-counter-drugs". For the purposes of
26this paragraph, "over-the-counter-drug" means a drug for human

 

 

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1use that contains a label that identifies the product as a drug
2as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
3label includes:
4        (A) A "Drug Facts" panel; or
5        (B) A statement of the "active ingredient(s)" with a
6    list of those ingredients contained in the compound,
7    substance or preparation.
8(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
9eff. 7-13-09; 96-339, eff. 7-1-10; 96-1000, eff. 7-2-10; 97-38,
10eff. 6-28-11; 97-227, eff. 1-1-12; revised 9-12-11.)
 
11    (35 ILCS 115/9)  (from Ch. 120, par. 439.109)
12    Sec. 9. Each serviceman required or authorized to collect
13the tax herein imposed shall pay to the Department the amount
14of such tax at the time when he is required to file his return
15for the period during which such tax was collectible, less a
16discount of 2.1% prior to January 1, 1990, and 1.75% on and
17after January 1, 1990, or $5 per calendar year, whichever is
18greater, which is allowed to reimburse the serviceman for
19expenses incurred in collecting the tax, keeping records,
20preparing and filing returns, remitting the tax and supplying
21data to the Department on request.
22    Where such tangible personal property is sold under a
23conditional sales contract, or under any other form of sale
24wherein the payment of the principal sum, or a part thereof, is
25extended beyond the close of the period for which the return is

 

 

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

 

 

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1    Act;
2        5. The amount of tax due;
3        5-5. The signature of the taxpayer; and
4        6. Such other reasonable information as the Department
5    may require.
6    If a taxpayer fails to sign a return within 30 days after
7the proper notice and demand for signature by the Department,
8the return shall be considered valid and any amount shown to be
9due on the return shall be deemed assessed.
10    Prior to October 1, 2003, and on and after September 1,
112004 a serviceman may accept a Manufacturer's Purchase Credit
12certification from a purchaser in satisfaction of Service Use
13Tax as provided in Section 3-70 of the Service Use Tax Act if
14the purchaser provides the appropriate documentation as
15required by Section 3-70 of the Service Use Tax Act. A
16Manufacturer's Purchase Credit certification, accepted prior
17to October 1, 2003 or on or after September 1, 2004 by a
18serviceman as provided in Section 3-70 of the Service Use Tax
19Act, may be used by that serviceman to satisfy Service
20Occupation Tax liability in the amount claimed in the
21certification, not to exceed 6.25% of the receipts subject to
22tax from a qualifying purchase. A Manufacturer's Purchase
23Credit reported on any original or amended return filed under
24this Act after October 20, 2003 for reporting periods prior to
25September 1, 2004 shall be disallowed. Manufacturer's Purchase
26Credit reported on annual returns due on or after January 1,

 

 

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12005 will be disallowed for periods prior to September 1, 2004.
2No Manufacturer's Purchase Credit may be used after September
330, 2003 through August 31, 2004 to satisfy any tax liability
4imposed under this Act, including any audit liability.
5    If the serviceman's average monthly tax liability to the
6Department does not exceed $200, the Department may authorize
7his returns to be filed on a quarter annual basis, with the
8return for January, February and March of a given year being
9due by April 20 of such year; with the return for April, May
10and June of a given year being due by July 20 of such year; with
11the return for July, August and September of a given year being
12due by October 20 of such year, and with the return for
13October, November and December of a given year being due by
14January 20 of the following year.
15    If the serviceman's average monthly tax liability to the
16Department does not exceed $50, the Department may authorize
17his returns to be filed on an annual basis, with the return for
18a given year being due by January 20 of the following year.
19    Such quarter annual and annual returns, as to form and
20substance, shall be subject to the same requirements as monthly
21returns.
22    Notwithstanding any other provision in this Act concerning
23the time within which a serviceman may file his return, in the
24case of any serviceman who ceases to engage in a kind of
25business which makes him responsible for filing returns under
26this Act, such serviceman shall file a final return under this

 

 

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1Act with the Department not more than 1 month after
2discontinuing such business.
3    Beginning October 1, 1993, a taxpayer who has an average
4monthly tax liability of $150,000 or more shall make all
5payments required by rules of the Department by electronic
6funds transfer. Beginning October 1, 1994, a taxpayer who has
7an average monthly tax liability of $100,000 or more shall make
8all payments required by rules of the Department by electronic
9funds transfer. Beginning October 1, 1995, a taxpayer who has
10an average monthly tax liability of $50,000 or more shall make
11all payments required by rules of the Department by electronic
12funds transfer. Beginning October 1, 2000, a taxpayer who has
13an annual tax liability of $200,000 or more shall make all
14payments required by rules of the Department by electronic
15funds transfer. The term "annual tax liability" shall be the
16sum of the taxpayer's liabilities under this Act, and under all
17other State and local occupation and use tax laws administered
18by the Department, for the immediately preceding calendar year.
19The term "average monthly tax liability" means the sum of the
20taxpayer's liabilities under this Act, and under all other
21State and local occupation and use tax laws administered by the
22Department, for the immediately preceding calendar year
23divided by 12. Beginning on October 1, 2002, a taxpayer who has
24a tax liability in the amount set forth in subsection (b) of
25Section 2505-210 of the Department of Revenue Law shall make
26all payments required by rules of the Department by electronic

 

 

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1funds transfer.
2    Before August 1 of each year beginning in 1993, the
3Department shall notify all taxpayers required to make payments
4by electronic funds transfer. All taxpayers required to make
5payments by electronic funds transfer shall make those payments
6for a minimum of one year beginning on October 1.
7    Any taxpayer not required to make payments by electronic
8funds transfer may make payments by electronic funds transfer
9with the permission of the Department.
10    All taxpayers required to make payment by electronic funds
11transfer and any taxpayers authorized to voluntarily make
12payments by electronic funds transfer shall make those payments
13in the manner authorized by the Department.
14    The Department shall adopt such rules as are necessary to
15effectuate a program of electronic funds transfer and the
16requirements of this Section.
17    Where a serviceman collects the tax with respect to the
18selling price of tangible personal property which he sells and
19the purchaser thereafter returns such tangible personal
20property and the serviceman refunds the selling price thereof
21to the purchaser, such serviceman shall also refund, to the
22purchaser, the tax so collected from the purchaser. When filing
23his return for the period in which he refunds such tax to the
24purchaser, the serviceman may deduct the amount of the tax so
25refunded by him to the purchaser from any other Service
26Occupation Tax, Service Use Tax, Retailers' Occupation Tax or

 

 

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1Use Tax which such serviceman may be required to pay or remit
2to the Department, as shown by such return, provided that the
3amount of the tax to be deducted shall previously have been
4remitted to the Department by such serviceman. If the
5serviceman shall not previously have remitted the amount of
6such tax to the Department, he shall be entitled to no
7deduction hereunder upon refunding such tax to the purchaser.
8    If experience indicates such action to be practicable, the
9Department may prescribe and furnish a combination or joint
10return which will enable servicemen, who are required to file
11returns hereunder and also under the Retailers' Occupation Tax
12Act, the Use Tax Act or the Service Use Tax Act, to furnish all
13the return information required by all said Acts on the one
14form.
15    Where the serviceman has more than one business registered
16with the Department under separate registrations hereunder,
17such serviceman shall file separate returns for each registered
18business.
19    Beginning January 1, 1990, each month the Department shall
20pay into the Local Government Tax Fund the revenue realized for
21the preceding month from the 1% tax on sales of food for human
22consumption which is to be consumed off the premises where it
23is sold (other than alcoholic beverages, soft drinks and food
24which has been prepared for immediate consumption) and
25prescription and nonprescription medicines, drugs, medical
26appliances and insulin, urine testing materials, syringes and

 

 

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1needles used by diabetics.
2    Beginning January 1, 1990, each month the Department shall
3pay into the County and Mass Transit District Fund 4% of the
4revenue realized for the preceding month from the 6.25% general
5rate.
6    Beginning August 1, 2000, each month the Department shall
7pay into the County and Mass Transit District Fund 20% of the
8net revenue realized for the preceding month from the 1.25%
9rate on the selling price of motor fuel and gasohol.
10    On January 1, 2012, the Department shall pay into the
11County and Mass Transit District Fund 20% of the net revenue
12realized for the preceding month from the 1.25% rate on the
13selling price of items purchased from a small business, as
14defined in Section 3-6, during the previous month.
15    Beginning January 1, 1990, each month the Department shall
16pay into the Local Government Tax Fund 16% of the revenue
17realized for the preceding month from the 6.25% general rate on
18transfers of tangible personal property.
19    Beginning August 1, 2000, each month the Department shall
20pay into the Local Government Tax Fund 80% of the net revenue
21realized for the preceding month from the 1.25% rate on the
22selling price of motor fuel and gasohol.
23    On January 1, 2012, the Department shall pay into the Local
24Government Tax Fund 80% of the net revenue realized for the
25preceding month from the 1.25% rate on the selling price of
26items purchased from a small business, as defined in Section

 

 

HB3889- 49 -LRB097 14810 HLH 59839 b

13-6, during the previous month.
2    Beginning October 1, 2009, each month the Department shall
3pay into the Capital Projects Fund an amount that is equal to
4an amount estimated by the Department to represent 80% of the
5net revenue realized for the preceding month from the sale of
6candy, grooming and hygiene products, and soft drinks that had
7been taxed at a rate of 1% prior to September 1, 2009 but that
8is now taxed at 6.25%.
9    Of the remainder of the moneys received by the Department
10pursuant to this Act, (a) 1.75% thereof shall be paid into the
11Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
12and after July 1, 1989, 3.8% thereof shall be paid into the
13Build Illinois Fund; provided, however, that if in any fiscal
14year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
15may be, of the moneys received by the Department and required
16to be paid into the Build Illinois Fund pursuant to Section 3
17of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
18Act, Section 9 of the Service Use Tax Act, and Section 9 of the
19Service Occupation Tax Act, such Acts being hereinafter called
20the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
21may be, of moneys being hereinafter called the "Tax Act
22Amount", and (2) the amount transferred to the Build Illinois
23Fund from the State and Local Sales Tax Reform Fund shall be
24less than the Annual Specified Amount (as defined in Section 3
25of the Retailers' Occupation Tax Act), an amount equal to the
26difference shall be immediately paid into the Build Illinois

 

 

HB3889- 50 -LRB097 14810 HLH 59839 b

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

 

 

HB3889- 51 -LRB097 14810 HLH 59839 b

1thereto, all as certified by the Director of the Bureau of the
2Budget (now Governor's Office of Management and Budget). If on
3the last business day of any month in which Bonds are
4outstanding pursuant to the Build Illinois Bond Act, the
5aggregate of the moneys deposited in the Build Illinois Bond
6Account in the Build Illinois Fund in such month shall be less
7than the amount required to be transferred in such month from
8the Build Illinois Bond Account to the Build Illinois Bond
9Retirement and Interest Fund pursuant to Section 13 of the
10Build Illinois Bond Act, an amount equal to such deficiency
11shall be immediately paid from other moneys received by the
12Department pursuant to the Tax Acts to the Build Illinois Fund;
13provided, however, that any amounts paid to the Build Illinois
14Fund in any fiscal year pursuant to this sentence shall be
15deemed to constitute payments pursuant to clause (b) of the
16preceding sentence and shall reduce the amount otherwise
17payable for such fiscal year pursuant to clause (b) of the
18preceding sentence. The moneys received by the Department
19pursuant to this Act and required to be deposited into the
20Build Illinois Fund are subject to the pledge, claim and charge
21set forth in Section 12 of the Build Illinois Bond Act.
22    Subject to payment of amounts into the Build Illinois Fund
23as provided in the preceding paragraph or in any amendment
24thereto hereafter enacted, the following specified monthly
25installment of the amount requested in the certificate of the
26Chairman of the Metropolitan Pier and Exposition Authority

 

 

HB3889- 52 -LRB097 14810 HLH 59839 b

1provided under Section 8.25f of the State Finance Act, but not
2in excess of the sums designated as "Total Deposit", shall be
3deposited in the aggregate from collections under Section 9 of
4the Use Tax Act, Section 9 of the Service Use Tax Act, Section
59 of the Service Occupation Tax Act, and Section 3 of the
6Retailers' Occupation Tax Act into the McCormick Place
7Expansion Project Fund in the specified fiscal years.
8Fiscal YearTotal Deposit
91993         $0
101994 53,000,000
111995 58,000,000
121996 61,000,000
131997 64,000,000
141998 68,000,000
151999 71,000,000
162000 75,000,000
172001 80,000,000
182002 93,000,000
192003 99,000,000
202004103,000,000
212005108,000,000
222006113,000,000
232007119,000,000
242008126,000,000
252009132,000,000

 

 

HB3889- 53 -LRB097 14810 HLH 59839 b

12010139,000,000
22011146,000,000
32012153,000,000
42013161,000,000
52014170,000,000
62015179,000,000
72016189,000,000
82017199,000,000
92018210,000,000
102019221,000,000
112020233,000,000
122021246,000,000
132022260,000,000
142023275,000,000
152024 275,000,000
162025 275,000,000
172026 279,000,000
182027 292,000,000
192028 307,000,000
202029 322,000,000
212030 338,000,000
222031 350,000,000
232032 350,000,000
24and
25each fiscal year
26thereafter that bonds

 

 

HB3889- 54 -LRB097 14810 HLH 59839 b

1are outstanding under
2Section 13.2 of the
3Metropolitan Pier and
4Exposition Authority Act,
5but not after fiscal year 2060.
6    Beginning July 20, 1993 and in each month of each fiscal
7year thereafter, one-eighth of the amount requested in the
8certificate of the Chairman of the Metropolitan Pier and
9Exposition Authority for that fiscal year, less the amount
10deposited into the McCormick Place Expansion Project Fund by
11the State Treasurer in the respective month under subsection
12(g) of Section 13 of the Metropolitan Pier and Exposition
13Authority Act, plus cumulative deficiencies in the deposits
14required under this Section for previous months and years,
15shall be deposited into the McCormick Place Expansion Project
16Fund, until the full amount requested for the fiscal year, but
17not in excess of the amount specified above as "Total Deposit",
18has been deposited.
19    Subject to payment of amounts into the Build Illinois Fund
20and the McCormick Place Expansion Project Fund pursuant to the
21preceding paragraphs or in any amendments thereto hereafter
22enacted, beginning July 1, 1993, the Department shall each
23month pay into the Illinois Tax Increment Fund 0.27% of 80% of
24the net revenue realized for the preceding month from the 6.25%
25general rate on the selling price of tangible personal
26property.

 

 

HB3889- 55 -LRB097 14810 HLH 59839 b

1    Subject to payment of amounts into the Build Illinois Fund
2and the McCormick Place Expansion Project Fund pursuant to the
3preceding paragraphs or in any amendments thereto hereafter
4enacted, beginning with the receipt of the first report of
5taxes paid by an eligible business and continuing for a 25-year
6period, the Department shall each month pay into the Energy
7Infrastructure Fund 80% of the net revenue realized from the
86.25% general rate on the selling price of Illinois-mined coal
9that was sold to an eligible business. For purposes of this
10paragraph, the term "eligible business" means a new electric
11generating facility certified pursuant to Section 605-332 of
12the Department of Commerce and Economic Opportunity Law of the
13Civil Administrative Code of Illinois.
14    Remaining moneys received by the Department pursuant to
15this Act shall be paid into the General Revenue Fund of the
16State Treasury.
17    The Department may, upon separate written notice to a
18taxpayer, require the taxpayer to prepare and file with the
19Department on a form prescribed by the Department within not
20less than 60 days after receipt of the notice an annual
21information return for the tax year specified in the notice.
22Such annual return to the Department shall include a statement
23of gross receipts as shown by the taxpayer's last Federal
24income tax return. If the total receipts of the business as
25reported in the Federal income tax return do not agree with the
26gross receipts reported to the Department of Revenue for the

 

 

HB3889- 56 -LRB097 14810 HLH 59839 b

1same period, the taxpayer shall attach to his annual return a
2schedule showing a reconciliation of the 2 amounts and the
3reasons for the difference. The taxpayer's annual return to the
4Department shall also disclose the cost of goods sold by the
5taxpayer during the year covered by such return, opening and
6closing inventories of such goods for such year, cost of goods
7used from stock or taken from stock and given away by the
8taxpayer during such year, pay roll information of the
9taxpayer's business during such year and any additional
10reasonable information which the Department deems would be
11helpful in determining the accuracy of the monthly, quarterly
12or annual returns filed by such taxpayer as hereinbefore
13provided for in this Section.
14    If the annual information return required by this Section
15is not filed when and as required, the taxpayer shall be liable
16as follows:
17        (i) Until January 1, 1994, the taxpayer shall be liable
18    for a penalty equal to 1/6 of 1% of the tax due from such
19    taxpayer under this Act during the period to be covered by
20    the annual return for each month or fraction of a month
21    until such return is filed as required, the penalty to be
22    assessed and collected in the same manner as any other
23    penalty provided for in this Act.
24        (ii) On and after January 1, 1994, the taxpayer shall
25    be liable for a penalty as described in Section 3-4 of the
26    Uniform Penalty and Interest Act.

 

 

HB3889- 57 -LRB097 14810 HLH 59839 b

1    The chief executive officer, proprietor, owner or highest
2ranking manager shall sign the annual return to certify the
3accuracy of the information contained therein. Any person who
4willfully signs the annual return containing false or
5inaccurate information shall be guilty of perjury and punished
6accordingly. The annual return form prescribed by the
7Department shall include a warning that the person signing the
8return may be liable for perjury.
9    The foregoing portion of this Section concerning the filing
10of an annual information return shall not apply to a serviceman
11who is not required to file an income tax return with the
12United States Government.
13    As soon as possible after the first day of each month, upon
14certification of the Department of Revenue, the Comptroller
15shall order transferred and the Treasurer shall transfer from
16the General Revenue Fund to the Motor Fuel Tax Fund an amount
17equal to 1.7% of 80% of the net revenue realized under this Act
18for the second preceding month. Beginning April 1, 2000, this
19transfer is no longer required and shall not be made.
20    Net revenue realized for a month shall be the revenue
21collected by the State pursuant to this Act, less the amount
22paid out during that month as refunds to taxpayers for
23overpayment of liability.
24    For greater simplicity of administration, it shall be
25permissible for manufacturers, importers and wholesalers whose
26products are sold by numerous servicemen in Illinois, and who

 

 

HB3889- 58 -LRB097 14810 HLH 59839 b

1wish to do so, to assume the responsibility for accounting and
2paying to the Department all tax accruing under this Act with
3respect to such sales, if the servicemen who are affected do
4not make written objection to the Department to this
5arrangement.
6(Source: P.A. 96-34, eff. 7-13-09; 96-38, eff. 7-13-09; 96-898,
7eff. 5-27-10.)
 
8    Section 20. The Retailers' Occupation Tax Act is amended by
9changing Sections 2-8 and 2-10 as follows:
 
10    (35 ILCS 120/2-8)
11    Sec. 2-8. Sales tax holiday items.
12    (a) The tangible personal property described in this
13subsection qualifies for the 1.25% reduced rate of tax for the
14period set forth in Section 2-10 of this Act (hereinafter
15referred to as the Sales Tax Holiday Period). The reduced rate
16on these items shall be administered under the provisions of
17subsection (b) of this Section. The following items are subject
18to the reduced rate:
19        (1) Clothing items that each have a retail selling
20    price of less than $100.
21        "Clothing" means, unless otherwise specified in this
22    Section, all human wearing apparel suitable for general
23    use. "Clothing" does not include clothing accessories,
24    protective equipment, or sport or recreational equipment.

 

 

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1    "Clothing" includes, but is not limited to: household and
2    shop aprons; athletic supporters; bathing suits and caps;
3    belts and suspenders; boots; coats and jackets; ear muffs;
4    footlets; gloves and mittens for general use; hats and
5    caps; hosiery; insoles for shoes; lab coats; neckties;
6    overshoes; pantyhose; rainwear; rubber pants; sandals;
7    scarves; shoes and shoelaces; slippers; sneakers; socks
8    and stockings; steel-toed shoes; underwear; and school
9    uniforms.
10        "Clothing accessories" means, but is not limited to:
11    briefcases; cosmetics; hair notions, including, but not
12    limited to barrettes, hair bows, and hair nets; handbags;
13    handkerchiefs; jewelry; non-prescription sunglasses;
14    umbrellas; wallets; watches; and wigs and hair pieces.
15        "Protective equipment" means, but is not limited to:
16    breathing masks; clean room apparel and equipment; ear and
17    hearing protectors; face shields; hard hats; helmets;
18    paint or dust respirators; protective gloves; safety
19    glasses and goggles; safety belts; tool belts; and welder's
20    gloves and masks.
21        "Sport or recreational equipment" means, but is not
22    limited to: ballet and tap shoes; cleated or spiked
23    athletic shoes; gloves, including, but not limited to,
24    baseball, bowling, boxing, hockey, and golf gloves;
25    goggles; hand and elbow guards; life preservers and vests;
26    mouth guards; roller and ice skates; shin guards; shoulder

 

 

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1    pads; ski boots; waders; and wetsuits and fins.
2        (2) School supplies. "School supplies" means, unless
3    otherwise specified in this Section, items used by a
4    student in a course of study. The purchase of school
5    supplies for use by persons other than students for use in
6    a course of study are not eligible for the reduced rate of
7    tax. "School supplies" do not include school art supplies;
8    school instructional materials; cameras; film and memory
9    cards; videocameras, tapes, and videotapes; computers;
10    cell phones; Personal Digital Assistants (PDAs); handheld
11    electronic schedulers; and school computer supplies.
12        "School supplies" includes, but is not limited to:
13    binders; book bags; calculators; cellophane tape;
14    blackboard chalk; compasses; composition books; crayons;
15    erasers; expandable, pocket, plastic, and manila folders;
16    glue, paste, and paste sticks; highlighters; index cards;
17    index card boxes; legal pads; lunch boxes; markers;
18    notebooks; paper, including loose leaf ruled notebook
19    paper, copy paper, graph paper, tracing paper, manila
20    paper, colored paper, poster board, and construction
21    paper; pencils; pencil leads; pens; ink and ink refills for
22    pens; pencil boxes and other school supply boxes; pencil
23    sharpeners; protractors; rulers; scissors; and writing
24    tablets.
25        "School art supply" means an item commonly used by a
26    student in a course of study for artwork and includes only

 

 

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1    the following items: clay and glazes; acrylic, tempera, and
2    oil paint; paintbrushes for artwork; sketch and drawing
3    pads; and watercolors.
4        "School instructional material" means written material
5    commonly used by a student in a course of study as a
6    reference and to learn the subject being taught and
7    includes only the following items: reference books;
8    reference maps and globes; textbooks; and workbooks.
9        "School computer supply" means an item commonly used by
10    a student in a course of study in which a computer is used
11    and applies only to the following items: flashdrives and
12    other computer data storage devices; data storage media,
13    such as diskettes and compact disks; boxes and cases for
14    disk storage; external ports or drives; computer cases;
15    computer cables; computer printers; and printer
16    cartridges, toner, and ink.
17    (a-5) From December 19 through December 23, 2011, items
18purchased from a small business (other than items that are
19otherwise subject to a 1% rate of tax under Section 2-10) are
20also subject to the reduced rate. For the purposes of this
21subsection (a-5), "small business" means a corporation or a
22concern, including its affiliates, that is independently owned
23and operated, not dominant in its field, and employs fewer than
2450 full-time employees or has gross annual sales of less than
25$4,000,000. However, for the purposes of this Section, the
26Department may, by rule, define "small business" to include

 

 

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1employment of 50 or more persons if it finds that such a
2definition is necessary to address the needs and problems of
3small businesses and organizations. The reduced rate on these
4items shall be administered under the provisions of subsection
5(b) of this Section.
6    (b) Administration. Notwithstanding any other provision of
7this Act, the reduced rate of tax under Section 3-10 of this
8Act for sales tax holiday items described in this Section
9clothing and school supplies shall be administered by the
10Department under the provisions of this subsection (b).
11        (1) Bundled sales. Items that qualify for the reduced
12    rate of tax that are bundled together with items that do
13    not qualify for the reduced rate of tax and that are sold
14    for one itemized price will be subject to the reduced rate
15    of tax only if the value of the items that qualify for the
16    reduced rate of tax exceeds the value of the items that do
17    not qualify for the reduced rate of tax.
18        (2) Coupons and discounts. An unreimbursed discount by
19    the seller reduces the sales price of the property so that
20    the discounted sales price determines whether the sales
21    price is within a sales tax holiday price threshold. A
22    coupon or other reduction in the sales price is treated as
23    a discount if the seller is not reimbursed for the coupon
24    or reduction amount by a third party.
25        (3) Splitting of items normally sold together.
26    Articles that are normally sold as a single unit must

 

 

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1    continue to be sold in that manner. Such articles cannot be
2    priced separately and sold as individual items in order to
3    obtain the reduced rate of tax. For example, a pair of
4    shoes cannot have each shoe sold separately so that the
5    sales price of each shoe is within a sales tax holiday
6    price threshold.
7        (4) Rain checks. A rain check is a procedure that
8    allows a customer to purchase an item at a certain price at
9    a later time because the particular item was out of stock.
10    Eligible property that customers purchase during the Sales
11    Tax Holiday Period with the use of a rain check will
12    qualify for the reduced rate of tax regardless of when the
13    rain check was issued. Issuance of a rain check during the
14    Sales Tax Holiday Period will not qualify eligible property
15    for the reduced rate of tax if the property is actually
16    purchased after the Sales Tax Holiday Period.
17        (5) Exchanges. The procedure for an exchange in regards
18    to a sales tax holiday is as follows:
19            (A) If a customer purchases an item of eligible
20        property during the Sales Tax Holiday Period, but later
21        exchanges the item for a similar eligible item, even if
22        a different size, different color, or other feature, no
23        additional tax is due even if the exchange is made
24        after the Sales Tax Holiday Period.
25            (B) If a customer purchases an item of eligible
26        property during the Sales Tax Holiday Period, but after

 

 

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1        the Sales Tax Holiday Period has ended, the customer
2        returns the item and receives credit on the purchase of
3        a different item, the 6.25% general merchandise sales
4        tax rate is due on the sale of the newly purchased
5        item.
6            (C) If a customer purchases an item of eligible
7        property before the Sales Tax Holiday Period, but
8        during the Sales Tax Holiday Period the customer
9        returns the item and receives credit on the purchase of
10        a different item of eligible property, the reduced rate
11        of tax is due on the sale of the new item if the new
12        item is purchased during the Sales Tax Holiday Period.
13        (6) Delivery charges. Delivery charges, including
14    shipping, handling and service charges, are part of the
15    sales price of eligible property.
16        (7) Order date and back orders. For the purpose of a
17    sales tax holiday, eligible property qualifies for the
18    reduced rate of tax if: (i) the item is both delivered to
19    and paid for by the customer during the Sales Tax Holiday
20    Period or (ii) the customer orders and pays for the item
21    and the seller accepts the order during the Sales Tax
22    Holiday Period for immediate shipment, even if delivery is
23    made after the Sales Tax Holiday Period. The seller accepts
24    an order when the seller has taken action to fill the order
25    for immediate shipment. Actions to fill an order include
26    placement of an "in date" stamp on an order or assignment

 

 

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1    of an "order number" to an order within the Sales Tax
2    Holiday Period. An order is for immediate shipment when the
3    customer does not request delayed shipment. An order is for
4    immediate shipment notwithstanding that the shipment may
5    be delayed because of a backlog of orders or because stock
6    is currently unavailable to, or on back order by, the
7    seller.
8        (8) Returns. For a 60-day period immediately after the
9    Sales Tax Holiday Period, if a customer returns an item
10    that would qualify for the reduced rate of tax, credit for
11    or refund of sales tax shall be given only at the reduced
12    rate unless the customer provides a receipt or invoice that
13    shows tax was paid at the 6.25% general merchandise rate,
14    or the seller has sufficient documentation to show that tax
15    was paid at the 6.25% general merchandise rate on the
16    specific item. This 60-day period is set solely for the
17    purpose of designating a time period during which the
18    customer must provide documentation that shows that the
19    appropriate sales tax rate was paid on returned
20    merchandise. The 60-day period is not intended to change a
21    seller's policy on the time period during which the seller
22    will accept returns.
23    (c) The Department may implement the provisions of this
24Section through the use of emergency rules, along with
25permanent rules filed concurrently with such emergency rules,
26in accordance with the provisions of Section 5-45 of the

 

 

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1Illinois Administrative Procedure Act. For purposes of the
2Illinois Administrative Procedure Act, the adoption of rules to
3implement the provisions of this Section shall be deemed an
4emergency and necessary for the public interest, safety, and
5welfare.
6(Source: P.A. 96-1012, eff. 7-7-10.)
 
7    (35 ILCS 120/2-10)
8    Sec. 2-10. Rate of tax. Unless otherwise provided in this
9Section, the tax imposed by this Act is at the rate of 6.25% of
10gross receipts from sales of tangible personal property made in
11the course of business.
12    Beginning on July 1, 2000 and through December 31, 2000,
13with respect to motor fuel, as defined in Section 1.1 of the
14Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
15the Use Tax Act, the tax is imposed at the rate of 1.25%.
16    Beginning on August 6, 2010 through August 15, 2010, with
17respect to sales tax holiday items as defined in subsection (a)
18of Section 2-8 of this Act, the tax is imposed at the rate of
191.25%. From December 19 through December 23, 2011, with respect
20to items purchased from a small business, as defined in
21subsection (a-5) of Section 2-8 of this Act, the tax is imposed
22at the rate of 1.25%.
23    Within 14 days after the effective date of this amendatory
24Act of the 91st General Assembly, each retailer of motor fuel
25and gasohol shall cause the following notice to be posted in a

 

 

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1prominently visible place on each retail dispensing device that
2is used to dispense motor fuel or gasohol in the State of
3Illinois: "As of July 1, 2000, the State of Illinois has
4eliminated the State's share of sales tax on motor fuel and
5gasohol through December 31, 2000. The price on this pump
6should reflect the elimination of the tax." The notice shall be
7printed in bold print on a sign that is no smaller than 4
8inches by 8 inches. The sign shall be clearly visible to
9customers. Any retailer who fails to post or maintain a
10required sign through December 31, 2000 is guilty of a petty
11offense for which the fine shall be $500 per day per each
12retail premises where a violation occurs.
13    With respect to gasohol, as defined in the Use Tax Act, the
14tax imposed by this Act applies to (i) 70% of the proceeds of
15sales made on or after January 1, 1990, and before July 1,
162003, (ii) 80% of the proceeds of sales made on or after July
171, 2003 and on or before December 31, 2013, and (iii) 100% of
18the proceeds of sales made thereafter. If, at any time,
19however, the tax under this Act on sales of gasohol, as defined
20in the Use Tax Act, is imposed at the rate of 1.25%, then the
21tax imposed by this Act applies to 100% of the proceeds of
22sales of gasohol made during that time.
23    With respect to majority blended ethanol fuel, as defined
24in the Use Tax Act, the tax imposed by this Act does not apply
25to the proceeds of sales made on or after July 1, 2003 and on or
26before December 31, 2013 but applies to 100% of the proceeds of

 

 

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1sales made thereafter.
2    With respect to biodiesel blends, as defined in the Use Tax
3Act, with no less than 1% and no more than 10% biodiesel, the
4tax imposed by this Act applies to (i) 80% of the proceeds of
5sales made on or after July 1, 2003 and on or before December
631, 2013 and (ii) 100% of the proceeds of sales made
7thereafter. If, at any time, however, the tax under this Act on
8sales of biodiesel blends, as defined in the Use Tax Act, with
9no less than 1% and no more than 10% biodiesel is imposed at
10the rate of 1.25%, then the tax imposed by this Act applies to
11100% of the proceeds of sales of biodiesel blends with no less
12than 1% and no more than 10% biodiesel made during that time.
13    With respect to 100% biodiesel, as defined in the Use Tax
14Act, and biodiesel blends, as defined in the Use Tax Act, with
15more than 10% but no more than 99% biodiesel, the tax imposed
16by this Act does not apply to the proceeds of sales made on or
17after July 1, 2003 and on or before December 31, 2013 but
18applies to 100% of the proceeds of sales made thereafter.
19    With respect to food for human consumption that is to be
20consumed off the premises where it is sold (other than
21alcoholic beverages, soft drinks, and food that has been
22prepared for immediate consumption) and prescription and
23nonprescription medicines, drugs, medical appliances,
24modifications to a motor vehicle for the purpose of rendering
25it usable by a disabled person, and insulin, urine testing
26materials, syringes, and needles used by diabetics, for human

 

 

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1use, the tax is imposed at the rate of 1%. For the purposes of
2this Section, until September 1, 2009: the term "soft drinks"
3means any complete, finished, ready-to-use, non-alcoholic
4drink, whether carbonated or not, including but not limited to
5soda water, cola, fruit juice, vegetable juice, carbonated
6water, and all other preparations commonly known as soft drinks
7of whatever kind or description that are contained in any
8closed or sealed bottle, can, carton, or container, regardless
9of size; but "soft drinks" does not include coffee, tea,
10non-carbonated water, infant formula, milk or milk products as
11defined in the Grade A Pasteurized Milk and Milk Products Act,
12or drinks containing 50% or more natural fruit or vegetable
13juice.
14    Notwithstanding any other provisions of this Act,
15beginning September 1, 2009, "soft drinks" means non-alcoholic
16beverages that contain natural or artificial sweeteners. "Soft
17drinks" do not include beverages that contain milk or milk
18products, soy, rice or similar milk substitutes, or greater
19than 50% of vegetable or fruit juice by volume.
20    Until August 1, 2009, and notwithstanding any other
21provisions of this Act, "food for human consumption that is to
22be consumed off the premises where it is sold" includes all
23food sold through a vending machine, except soft drinks and
24food products that are dispensed hot from a vending machine,
25regardless of the location of the vending machine. Beginning
26August 1, 2009, and notwithstanding any other provisions of

 

 

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1this Act, "food for human consumption that is to be consumed
2off the premises where it is sold" includes all food sold
3through a vending machine, except soft drinks, candy, and food
4products that are dispensed hot from a vending machine,
5regardless of the location of the vending machine.
6    Notwithstanding any other provisions of this Act,
7beginning September 1, 2009, "food for human consumption that
8is to be consumed off the premises where it is sold" does not
9include candy. For purposes of this Section, "candy" means a
10preparation of sugar, honey, or other natural or artificial
11sweeteners in combination with chocolate, fruits, nuts or other
12ingredients or flavorings in the form of bars, drops, or
13pieces. "Candy" does not include any preparation that contains
14flour or requires refrigeration.
15    Notwithstanding any other provisions of this Act,
16beginning September 1, 2009, "nonprescription medicines and
17drugs" does not include grooming and hygiene products. For
18purposes of this Section, "grooming and hygiene products"
19includes, but is not limited to, soaps and cleaning solutions,
20shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
21lotions and screens, unless those products are available by
22prescription only, regardless of whether the products meet the
23definition of "over-the-counter-drugs". For the purposes of
24this paragraph, "over-the-counter-drug" means a drug for human
25use that contains a label that identifies the product as a drug
26as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"

 

 

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1label includes:
2        (A) A "Drug Facts" panel; or
3        (B) A statement of the "active ingredient(s)" with a
4    list of those ingredients contained in the compound,
5    substance or preparation.
6(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
7eff. 7-13-09; 96-1000, eff. 7-2-10; 96-1012, eff. 7-7-10.)
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.