Illinois General Assembly - Full Text of SB0346
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Full Text of SB0346  98th General Assembly

SB0346ham001 98TH GENERAL ASSEMBLY

Rep. John E. Bradley

Filed: 5/30/2014

 

 


 

 


 
09800SB0346ham001LRB098 04644 HLH 60486 a

1
AMENDMENT TO SENATE BILL 346

2    AMENDMENT NO. ______. Amend Senate Bill 346 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Economic Development for a Growing Economy
5Tax Credit Act is amended by changing Sections 5-5, 5-15, 5-20,
6and 5-50 and by adding Section 5-37 as follows:
 
7    (35 ILCS 10/5-5)
8    Sec. 5-5. Definitions. As used in this Act:
9    "Agreement" means the Agreement between a Taxpayer and the
10Department under the provisions of Section 5-50 of this Act.
11    "Applicant" means a Taxpayer that is operating a business
12located or that the Taxpayer plans to locate within the State
13of Illinois and that is engaged in interstate or intrastate
14commerce for the purpose of manufacturing, processing,
15assembling, warehousing, or distributing products, conducting
16research and development, providing tourism services, or

 

 

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1providing services in interstate commerce, office industries,
2or agricultural processing, but excluding retail, retail food,
3health, or professional services. "Applicant" does not include
4a Taxpayer who closes or substantially reduces an operation at
5one location in the State and relocates substantially the same
6operation to another location in the State. This does not
7prohibit a Taxpayer from expanding its operations at another
8location in the State, provided that existing operations of a
9similar nature located within the State are not closed or
10substantially reduced. This also does not prohibit a Taxpayer
11from moving its operations from one location in the State to
12another location in the State for the purpose of expanding the
13operation provided that the Department determines that
14expansion cannot reasonably be accommodated within the
15municipality in which the business is located, or in the case
16of a business located in an incorporated area of the county,
17within the county in which the business is located, after
18conferring with the chief elected official of the municipality
19or county and taking into consideration any evidence offered by
20the municipality or county regarding the ability to accommodate
21expansion within the municipality or county.
22    "Committee" means the Illinois Business Investment
23Committee created under Section 5-25 of this Act within the
24Illinois Economic Development Board.
25    "Credit" means the amount agreed to between the Department
26and Applicant under this Act, but not to exceed the Incremental

 

 

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1Income Tax attributable to the Applicant's project. However,
2for agreements entered into on or after the effective date of
3this amendatory Act of the 98th General Assembly, if the
4Applicant's project includes retained employees, then the
5amount of the Credit may also include an amount agreed to
6between the Department and the Applicant based on the severity
7of the poverty or unemployment in the geographic area in which
8the Applicant's project is located or the retained employees
9reside. That amount may not be more than 40% of the total
10amount withheld during the taxable year under Article 7 of the
11Illinois Income Tax Act from the compensation of retained
12employees. For the purposes of this definition, "retained
13employee" means a full-time employee of the Applicant who is
14employed at the project location and whose job is identified in
15the application as being at risk of being relocated outside of
16Illinois if the Applicant does not receive a credit under this
17Act.
18    "Department" means the Department of Commerce and Economic
19Opportunity.
20    "Director" means the Director of Commerce and Economic
21Opportunity.
22    "Full-time Employee" means an individual who is employed
23for consideration for at least 35 hours each week or who
24renders any other standard of service generally accepted by
25industry custom or practice as full-time employment. An
26individual for whom a W-2 is issued by a Professional Employer

 

 

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1Organization (PEO) is a full-time employee if employed in the
2service of the Applicant for consideration for at least 35
3hours each week or who renders any other standard of service
4generally accepted by industry custom or practice as full-time
5employment to Applicant.
6    "Geographic area of high poverty or high unemployment"
7means a census tract in which more than 20% of the residents
8live below the poverty level, as determined by the most recent
9data from the United States Census Bureau, or the average
10unemployment rate for that census tract exceeds the average
11unemployment rate for the State by 3% or more.
12    "Incremental Income Tax" means the total amount withheld
13during the taxable year from the compensation of New Employees
14under Article 7 of the Illinois Income Tax Act arising from
15employment at a project that is the subject of an Agreement.
16    "New Employee" means:
17        (a) A Full-time Employee first employed by a Taxpayer
18    in the project that is the subject of an Agreement and who
19    is hired after the Taxpayer enters into the tax credit
20    Agreement.
21        (b) The term "New Employee" does not include:
22            (1) an employee of the Taxpayer who performs a job
23        that was previously performed by another employee, if
24        that job existed for at least 6 months before hiring
25        the employee;
26            (2) an employee of the Taxpayer who was previously

 

 

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1        employed in Illinois by a Related Member of the
2        Taxpayer and whose employment was shifted to the
3        Taxpayer after the Taxpayer entered into the tax credit
4        Agreement; or
5            (3) a child, grandchild, parent, or spouse, other
6        than a spouse who is legally separated from the
7        individual, of any individual who has a direct or an
8        indirect ownership interest of at least 5% in the
9        profits, capital, or value of the Taxpayer.
10        (c) Notwithstanding paragraph (1) of subsection (b),
11    an employee may be considered a New Employee under the
12    Agreement if the employee performs a job that was
13    previously performed by an employee who was:
14            (1) treated under the Agreement as a New Employee;
15        and
16            (2) promoted by the Taxpayer to another job.
17        (d) Notwithstanding subsection (a), the Department may
18    award Credit to an Applicant with respect to an employee
19    hired prior to the date of the Agreement if:
20            (1) the Applicant is in receipt of a letter from
21        the Department stating an intent to enter into a credit
22        Agreement;
23            (2) the letter described in paragraph (1) is issued
24        by the Department not later than 15 days after the
25        effective date of this Act; and
26            (3) the employee was hired after the date the

 

 

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1        letter described in paragraph (1) was issued.
2    "Noncompliance Date" means, in the case of a Taxpayer that
3is not complying with the requirements of the Agreement or the
4provisions of this Act, the day following the last date upon
5which the Taxpayer was in compliance with the requirements of
6the Agreement and the provisions of this Act, as determined by
7the Director, pursuant to Section 5-65.
8    "Pass Through Entity" means an entity that is exempt from
9the tax under subsection (b) or (c) of Section 205 of the
10Illinois Income Tax Act.
11    "Professional Employer Organization" (PEO) means an
12employee leasing company, as defined in Section 206.1(A)(2) of
13the Illinois Unemployment Insurance Act.
14    "Related Member" means a person that, with respect to the
15Taxpayer during any portion of the taxable year, is any one of
16the following:
17        (1) An individual stockholder, if the stockholder and
18    the members of the stockholder's family (as defined in
19    Section 318 of the Internal Revenue Code) own directly,
20    indirectly, beneficially, or constructively, in the
21    aggregate, at least 50% of the value of the Taxpayer's
22    outstanding stock.
23        (2) A partnership, estate, or trust and any partner or
24    beneficiary, if the partnership, estate, or trust, and its
25    partners or beneficiaries own directly, indirectly,
26    beneficially, or constructively, in the aggregate, at

 

 

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1    least 50% of the profits, capital, stock, or value of the
2    Taxpayer.
3        (3) A corporation, and any party related to the
4    corporation in a manner that would require an attribution
5    of stock from the corporation to the party or from the
6    party to the corporation under the attribution rules of
7    Section 318 of the Internal Revenue Code, if the Taxpayer
8    owns directly, indirectly, beneficially, or constructively
9    at least 50% of the value of the corporation's outstanding
10    stock.
11        (4) A corporation and any party related to that
12    corporation in a manner that would require an attribution
13    of stock from the corporation to the party or from the
14    party to the corporation under the attribution rules of
15    Section 318 of the Internal Revenue Code, if the
16    corporation and all such related parties own in the
17    aggregate at least 50% of the profits, capital, stock, or
18    value of the Taxpayer.
19        (5) A person to or from whom there is attribution of
20    stock ownership in accordance with Section 1563(e) of the
21    Internal Revenue Code, except, for purposes of determining
22    whether a person is a Related Member under this paragraph,
23    20% shall be substituted for 5% wherever 5% appears in
24    Section 1563(e) of the Internal Revenue Code.
25    "Taxpayer" means an individual, corporation, partnership,
26or other entity that has any Illinois Income Tax liability.

 

 

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1(Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
 
2    (35 ILCS 10/5-15)
3    Sec. 5-15. Tax Credit Awards. Subject to the conditions set
4forth in this Act, a Taxpayer is entitled to a Credit against
5or, as described in subsection (g) of this Section, a payment
6towards taxes imposed pursuant to subsections (a) and (b) of
7Section 201 of the Illinois Income Tax Act that may be imposed
8on the Taxpayer for a taxable year beginning on or after
9January 1, 1999, if the Taxpayer is awarded a Credit by the
10Department under this Act for that taxable year.
11    (a) The Department shall make Credit awards under this Act
12to foster job creation and retention in Illinois.
13    (b) A person that proposes a project to create new jobs in
14Illinois must enter into an Agreement with the Department for
15the Credit under this Act.
16    (c) The Credit shall be claimed for the taxable years
17specified in the Agreement.
18    (d) The Credit shall not exceed the Incremental Income Tax
19attributable to the project that is the subject of the
20Agreement.
21    (e) Nothing herein shall prohibit a Tax Credit Award to an
22Applicant that uses a PEO if all other award criteria are
23satisfied.
24    (f) Subject to the requirements of paragraph (5) of this
25subsection (f), in In lieu of the Credit allowed under this Act

 

 

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1against the taxes imposed pursuant to subsections (a) and (b)
2of Section 201 of the Illinois Income Tax Act for any taxable
3year ending on or after December 31, 2009, the Taxpayer may
4elect to claim the Credit against its obligation to pay over
5withholding under Section 704A of the Illinois Income Tax Act.
6        (1) The election under this subsection (f) may be made
7    only by a Taxpayer that (i) is primarily engaged in one of
8    the following business activities: water purification and
9    treatment, motor vehicle metal stamping, automobile
10    manufacturing, automobile and light duty motor vehicle
11    manufacturing, motor vehicle manufacturing, light truck
12    and utility vehicle manufacturing, heavy duty truck
13    manufacturing, motor vehicle body manufacturing, cable
14    television infrastructure design or manufacturing, or
15    wireless telecommunication or computing terminal device
16    design or manufacturing for use on public networks and (ii)
17    meets the following criteria:
18            (A) the Taxpayer (i) had an Illinois net loss or an
19        Illinois net loss deduction under Section 207 of the
20        Illinois Income Tax Act for the taxable year in which
21        the Credit is awarded, (ii) employed a minimum of 1,000
22        full-time employees in this State during the taxable
23        year in which the Credit is awarded, (iii) has an
24        Agreement under this Act on December 14, 2009 (the
25        effective date of Public Act 96-834), and (iv) is in
26        compliance with all provisions of that Agreement;

 

 

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1            (B) the Taxpayer (i) had an Illinois net loss or an
2        Illinois net loss deduction under Section 207 of the
3        Illinois Income Tax Act for the taxable year in which
4        the Credit is awarded, (ii) employed a minimum of 1,000
5        full-time employees in this State during the taxable
6        year in which the Credit is awarded, and (iii) has
7        applied for an Agreement within 365 days after December
8        14, 2009 (the effective date of Public Act 96-834);
9            (C) the Taxpayer (i) had an Illinois net operating
10        loss carryforward under Section 207 of the Illinois
11        Income Tax Act in a taxable year ending during calendar
12        year 2008, (ii) has applied for an Agreement within 150
13        days after the effective date of this amendatory Act of
14        the 96th General Assembly, (iii) creates at least 400
15        new jobs in Illinois, (iv) retains at least 2,000 jobs
16        in Illinois that would have been at risk of relocation
17        out of Illinois over a 10-year period, and (v) makes a
18        capital investment of at least $75,000,000;
19            (D) the Taxpayer (i) had an Illinois net operating
20        loss carryforward under Section 207 of the Illinois
21        Income Tax Act in a taxable year ending during calendar
22        year 2009, (ii) has applied for an Agreement within 150
23        days after the effective date of this amendatory Act of
24        the 96th General Assembly, (iii) creates at least 150
25        new jobs, (iv) retains at least 1,000 jobs in Illinois
26        that would have been at risk of relocation out of

 

 

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1        Illinois over a 10-year period, and (v) makes a capital
2        investment of at least $57,000,000; or
3            (E) the Taxpayer (i) employed at least 2,500
4        full-time employees in the State during the year in
5        which the Credit is awarded, (ii) commits to make at
6        least $500,000,000 in combined capital improvements
7        and project costs under the Agreement, (iii) applies
8        for an Agreement between January 1, 2011 and June 30,
9        2011, (iv) executes an Agreement for the Credit during
10        calendar year 2011, and (v) was incorporated no more
11        than 5 years before the filing of an application for an
12        Agreement.
13        (1.5) The election under this subsection (f) may also
14    be made by a Taxpayer for any Credit awarded pursuant to an
15    agreement that was executed between January 1, 2011 and
16    June 30, 2011, if the Taxpayer (i) is primarily engaged in
17    the manufacture of inner tubes or tires, or both, from
18    natural and synthetic rubber, (ii) employs a minimum of
19    2,400 full-time employees in Illinois at the time of
20    application, (iii) creates at least 350 full-time jobs and
21    retains at least 250 full-time jobs in Illinois that would
22    have been at risk of being created or retained outside of
23    Illinois, and (iv) makes a capital investment of at least
24    $200,000,000 at the project location.
25        (1.6) The election under this subsection (f) may also
26    be made by a Taxpayer for any Credit awarded pursuant to an

 

 

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1    agreement that was executed within 150 days after the
2    effective date of this amendatory Act of the 97th General
3    Assembly, if the Taxpayer (i) is primarily engaged in the
4    operation of a discount department store, (ii) maintains
5    its corporate headquarters in Illinois, (iii) employs a
6    minimum of 4,250 full-time employees at its corporate
7    headquarters in Illinois at the time of application, (iv)
8    retains at least 4,250 full-time jobs in Illinois that
9    would have been at risk of being relocated outside of
10    Illinois, (v) had a minimum of $40,000,000,000 in total
11    revenue in 2010, and (vi) makes a capital investment of at
12    least $300,000,000 at the project location.
13        (1.7) Notwithstanding any other provision of law, the
14    election under this subsection (f) may also be made by a
15    Taxpayer for any Credit awarded pursuant to an agreement
16    that was executed or applied for on or after July 1, 2011
17    and on or before March 31, 2012, if the Taxpayer is
18    primarily engaged in the manufacture of original and
19    aftermarket filtration parts and products for automobiles,
20    motor vehicles, light duty motor vehicles, light trucks and
21    utility vehicles, and heavy duty trucks, (ii) employs a
22    minimum of 1,000 full-time employees in Illinois at the
23    time of application, (iii) creates at least 250 full-time
24    jobs in Illinois, (iv) relocates its corporate
25    headquarters to Illinois from another state, and (v) makes
26    a capital investment of at least $4,000,000 at the project

 

 

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1    location.
2        (2) An election under this subsection shall allow the
3    credit to be taken against payments otherwise due under
4    Section 704A of the Illinois Income Tax Act during the
5    first calendar year beginning after the end of the taxable
6    year in which the credit is awarded under this Act.
7        (3) The election shall be made in the form and manner
8    required by the Illinois Department of Revenue and, once
9    made, shall be irrevocable.
10        (4) If a Taxpayer who meets the requirements of
11    subparagraph (A) of paragraph (1) of this subsection (f)
12    elects to claim the Credit against its withholdings as
13    provided in this subsection (f), then, on and after the
14    date of the election, the terms of the Agreement between
15    the Taxpayer and the Department may not be further amended
16    during the term of the Agreement.
17        (5) With respect to Agreements entered into on or after
18    the effective date of this amendatory Act of the 98th
19    General Assembly, no Taxpayer may make an election under
20    this subsection (f) unless all of the following conditions
21    are met:
22            (A) The General Assembly authorizes that election
23        by law.
24            (B) The Taxpayer applies with the Department for a
25        Credit prior to the date the General Assembly
26        authorizes the election.

 

 

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1            (C) The Taxpayer (i) agrees to hire a specified
2        number of New Employees at a project location in a
3        geographic area of high poverty or high unemployment or
4        (ii) agrees to hire a specified number of New Employees
5        at least 65% of whom reside in a geographic area of
6        high poverty or high unemployment; the number of New
7        Employees hired under item (ii) shall be verified
8        annually by the Department through payroll information
9        submitted by the Taxpayer; for the purposes of this
10        subparagraph (C), an employee who is retained by the
11        Taxpayer is not considered a New Employee.
12            (D) The Taxpayer files a statement with the
13        Department at the time of the application for the
14        Credit containing the following information from the
15        Taxpayer's Illinois income tax return for the 2 years
16        immediately preceding the date of the application; in
17        addition, the Taxpayer shall file an additional
18        statement with the Department containing the same
19        information for the first taxable year with respect to
20        which an election is made under this subsection (f) and
21        for each subsequent tax year covered by the Agreement:
22                (i) the Taxpayer's base income, as calculated
23            under Section 203 of the Illinois Income Tax Act;
24                (ii) the apportionment factor to the State for
25            the Taxpayer;
26                (iii) the total business income of the

 

 

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1            Taxpayer apportioned to the State;
2                (iv) the Illinois net operating loss deduction
3            for the Taxpayer, if any;
4                (v) the total non-business income of the
5            Taxpayer and the amount of the Taxpayer's
6            non-business income allocated to the State;
7                (vi) the net income of the Taxpayer;
8                (vii) the Taxpayer's total State income tax
9            liability before credits;
10                (viii) the Taxpayer's net income tax
11            liability;
12                (ix) the Taxpayer's total personal property
13            tax replacement tax liability before credits;
14                (x) the Taxpayer's net personal property tax
15            replacement tax liability; and
16                (xi) tax credits claimed by the Taxpayer, with
17            each credit individually enumerated.
18            Each additional statement required under this
19        subparagraph (D) for a taxable year shall be filed no
20        later than the earlier of 30 days after (i) the
21        Taxpayer files its Illinois income tax return for that
22        taxable year, (ii) the due date (including extensions)
23        for the filing of that return, or (iii) in the case of
24        the additional statement covering the taxable year in
25        which an election is made, the date the election is
26        made under this subsection (f).

 

 

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1            (E) The Taxpayer files a statement with the
2        Department reporting any changes to the information
3        required to be reported under subparagraph (D) that
4        were reported by the Taxpayer on an amended return for
5        the taxable year or that were made by the Department of
6        Revenue; the report required under this subparagraph
7        (E) must be filed within 30 days after the Taxpayer
8        files the amended return or within 30 days after the
9        date on which all proceedings in court for review of
10        the changes made by the Department of Revenue have
11        terminated or the time for taking thereof has expired
12        without such proceedings being instituted.
13            (F) The Agreement includes a consent by the
14        Taxpayer to allow the Department to confirm with the
15        Department of Revenue the accuracy of the information
16        required to be reported under subparagraphs (D) and
17        (E).
18    (g) A pass-through entity that has been awarded a credit
19under this Act, its shareholders, or its partners may treat
20some or all of the credit awarded pursuant to this Act as a tax
21payment for purposes of the Illinois Income Tax Act. The term
22"tax payment" means a payment as described in Article 6 or
23Article 8 of the Illinois Income Tax Act or a composite payment
24made by a pass-through entity on behalf of any of its
25shareholders or partners to satisfy such shareholders' or
26partners' taxes imposed pursuant to subsections (a) and (b) of

 

 

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1Section 201 of the Illinois Income Tax Act. In no event shall
2the amount of the award credited pursuant to this Act exceed
3the Illinois income tax liability of the pass-through entity or
4its shareholders or partners for the taxable year.
5(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;
696-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
73-4-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
8    (35 ILCS 10/5-20)
9    Sec. 5-20. Application for a project to create and retain
10new jobs.
11    (a) Any Taxpayer proposing a project located or planned to
12be located in Illinois may request consideration for
13designation of its project, by formal written letter of request
14or by formal application to the Department, in which the
15Applicant states its intent to make at least a specified level
16of investment and intends to hire or retain a specified number
17of full-time employees at a designated location in Illinois. As
18circumstances require, the Department may require a formal
19application from an Applicant and a formal letter of request
20for assistance. Each application must contain an affidavit
21signed by the Taxpayer's chief executive officer or chief
22financial officer, or an individual holding an equivalent
23position in the organization, stating that, but for the Credit,
24the Taxpayer would not locate the project in the State.
25    (b) In order to qualify for Credits under this Act, an

 

 

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1Applicant's project must:
2        (1) except as provided in paragraphs (2) and (3),
3    involve an investment of at least $5,000,000 in capital
4    improvements to be placed in service and to employ at least
5    25 New Employees within the State as a direct result of the
6    project;
7        (2) involve an investment of at least an amount (to be
8    expressly specified by the Department and the Committee) in
9    capital improvements to be placed in service and will
10    employ at least an amount (to be expressly specified by the
11    Department and the Committee) of New Employees within the
12    State, provided that the Department and the Committee have
13    determined that the project will provide a substantial
14    economic benefit to the State; or
15        (3) if the applicant has 100 or fewer employees, then
16    the applicant is not subject to the capital improvement
17    requirements set forth in paragraph (1) of this subsection,
18    but the applicant's project must involve an investment of
19    at least $1,000,000 in capital improvements to be placed in
20    service and to employ at least 5 New Employees within the
21    State as a direct result of the project.
22    (c) After receipt of an application, the Department may
23enter into an Agreement with the Applicant if the application
24is accepted in accordance with Section 5-25.
25(Source: P.A. 93-882, eff. 1-1-05.)
 

 

 

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1    (35 ILCS 10/5-37 new)
2    Sec. 5-37. Chief Executive Officer; Board of Directors;
3fiduciary duty. Notwithstanding any provision of law to the
4contrary, neither the Taxpayer's Chief Executive Officer nor
5any member of the Taxpayer's Board of Directors may be deemed
6to have breached any fiduciary or other duty and are immune
7from any liability for breach of fiduciary duty related to the
8Taxpayer's actions in (i) keeping its corporate headquarters or
9any office, plant, factory, or worksite of the corporation in
10Illinois pursuant to an agreement under this Act or (ii)
11relocating the Taxpayer's corporate headquarters or any
12office, plant, factory, or worksite of the corporation to
13Illinois pursuant to an agreement under this Act, if the Chief
14Executive Officer or member acts in good faith and is under the
15belief that he or she is serving the best interests of the
16corporation and is considering the welfare and interests of the
17corporation and its workforce in taking those actions.
 
18    (35 ILCS 10/5-50)
19    Sec. 5-50. Contents of Agreements with Applicants. The
20Department shall enter into an Agreement with an Applicant that
21is awarded a Credit under this Act. The Agreement must include
22all of the following:
23        (1) A detailed description of the project that is the
24    subject of the Agreement, including the location and amount
25    of the investment and jobs created or retained.

 

 

09800SB0346ham001- 20 -LRB098 04644 HLH 60486 a

1        (2) The duration of the Credit and the first taxable
2    year for which the Credit may be claimed.
3        (3) The Credit amount that will be allowed for each
4    taxable year.
5        (4) A requirement that the Taxpayer shall maintain
6    operations at the project location that shall be stated as
7    a minimum number of years not to exceed 10.
8        (5) A specific method for determining the number of New
9    Employees employed during a taxable year.
10        (6) A requirement that the Taxpayer shall annually
11    report to the Department the number of New Employees, the
12    home addresses of any retained employees, the Incremental
13    Income Tax withheld in connection with the New Employees
14    and retained employees, and any other information the
15    Director needs to perform the Director's duties under this
16    Act.
17        (7) A requirement that the Director is authorized to
18    verify with the appropriate State agencies the amounts
19    reported under paragraph (6), and after doing so shall
20    issue a certificate to the Taxpayer stating that the
21    amounts have been verified.
22        (8) A requirement that the Taxpayer shall provide
23    written notification to the Director not more than 30 days
24    after the Taxpayer makes or receives a proposal that would
25    transfer the Taxpayer's State tax liability obligations to
26    a successor Taxpayer.

 

 

09800SB0346ham001- 21 -LRB098 04644 HLH 60486 a

1        (9) A detailed description of the number of New
2    Employees to be hired, and the occupation and payroll of
3    the full-time jobs to be created or retained as a result of
4    the project.
5        (10) The minimum investment the business enterprise
6    will make in capital improvements, the time period for
7    placing the property in service, and the designated
8    location in Illinois for the investment.
9        (11) A requirement that the Taxpayer shall provide
10    written notification to the Director and the Committee not
11    more than 30 days after the Taxpayer determines that the
12    minimum job creation or retention, employment payroll, or
13    investment no longer is being or will be achieved or
14    maintained as set forth in the terms and conditions of the
15    Agreement.
16        (12) A provision that, if the total number of New
17    Employees falls below a specified level, the allowance of
18    Credit shall be suspended until the number of New Employees
19    equals or exceeds the Agreement amount.
20        (13) A detailed description of the items for which the
21    costs incurred by the Taxpayer will be included in the
22    limitation on the Credit provided in Section 5-30.
23        (13.5) A provision that, if the Taxpayer never meets
24    either the investment or job creation and retention
25    requirements specified in the Agreement during the entire
26    5-year period beginning on the first day of the first

 

 

09800SB0346ham001- 22 -LRB098 04644 HLH 60486 a

1    taxable year in which the Agreement is executed and ending
2    on the last day of the fifth taxable year after the
3    Agreement is executed, then the Agreement is automatically
4    terminated on the last day of the fifth taxable year after
5    the Agreement is executed and the Taxpayer is not entitled
6    to the award of any credits for any of that 5-year period.
7        (14) Any other performance conditions or contract
8    provisions as the Department determines are appropriate.
9    The Department shall post on its website (i) the terms of
10each Agreement entered into under this Act on or after the
11effective date of this amendatory Act of the 97th General
12Assembly and (ii) the tax information provided to the
13Department under subparagraphs (D) and (E) of paragraph (5) of
14subsection (f).
15(Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)
 
16    Section 10. The Illinois Income Tax Act is amended by
17changing Section 917 as follows:
 
18    (35 ILCS 5/917)  (from Ch. 120, par. 9-917)
19    Sec. 917. Confidentiality and information sharing.
20    (a) Confidentiality. Except as provided in this Section,
21all information received by the Department from returns filed
22under this Act, or from any investigation conducted under the
23provisions of this Act, shall be confidential, except for
24official purposes within the Department or pursuant to official

 

 

09800SB0346ham001- 23 -LRB098 04644 HLH 60486 a

1procedures for collection of any State tax or pursuant to an
2investigation or audit by the Illinois State Scholarship
3Commission of a delinquent student loan or monetary award or
4enforcement of any civil or criminal penalty or sanction
5imposed by this Act or by another statute imposing a State tax,
6and any person who divulges any such information in any manner,
7except for such purposes and pursuant to order of the Director
8or in accordance with a proper judicial order, shall be guilty
9of a Class A misdemeanor. However, the provisions of this
10paragraph are not applicable to information furnished to (i)
11the Department of Healthcare and Family Services (formerly
12Department of Public Aid), State's Attorneys, and the Attorney
13General for child support enforcement purposes and (ii) a
14licensed attorney representing the taxpayer where an appeal or
15a protest has been filed on behalf of the taxpayer. If it is
16necessary to file information obtained pursuant to this Act in
17a child support enforcement proceeding, the information shall
18be filed under seal.
19    (b) Public information. Nothing contained in this Act shall
20prevent the Director from publishing or making available to the
21public the names and addresses of persons filing returns under
22this Act, or from publishing or making available reasonable
23statistics concerning the operation of the tax wherein the
24contents of returns are grouped into aggregates in such a way
25that the information contained in any individual return shall
26not be disclosed.

 

 

09800SB0346ham001- 24 -LRB098 04644 HLH 60486 a

1    (c) Governmental agencies. The Director may make available
2to the Secretary of the Treasury of the United States or his
3delegate, or the proper officer or his delegate of any other
4state imposing a tax upon or measured by income, for
5exclusively official purposes, information received by the
6Department in the administration of this Act, but such
7permission shall be granted only if the United States or such
8other state, as the case may be, grants the Department
9substantially similar privileges. The Director may exchange
10information with the Department of Healthcare and Family
11Services and the Department of Human Services (acting as
12successor to the Department of Public Aid under the Department
13of Human Services Act) for the purpose of verifying sources and
14amounts of income and for other purposes directly connected
15with the administration of this Act, the Illinois Public Aid
16Code, and any other health benefit program administered by the
17State. The Director may exchange information with the Director
18of the Department of Employment Security for the purpose of
19verifying sources and amounts of income and for other purposes
20directly connected with the administration of this Act and Acts
21administered by the Department of Employment Security. The
22Director may make available to the Illinois Workers'
23Compensation Commission information regarding employers for
24the purpose of verifying the insurance coverage required under
25the Workers' Compensation Act and Workers' Occupational
26Diseases Act. The Director may exchange information with the

 

 

09800SB0346ham001- 25 -LRB098 04644 HLH 60486 a

1Illinois Department on Aging for the purpose of verifying
2sources and amounts of income for purposes directly related to
3confirming eligibility for participation in the programs of
4benefits authorized by the Senior Citizens and Disabled Persons
5Property Tax Relief and Pharmaceutical Assistance Act.
6    The Director may make available to any State agency,
7including the Illinois Supreme Court, which licenses persons to
8engage in any occupation, information that a person licensed by
9such agency has failed to file returns under this Act or pay
10the tax, penalty and interest shown therein, or has failed to
11pay any final assessment of tax, penalty or interest due under
12this Act. The Director may make available to any State agency,
13including the Illinois Supreme Court, information regarding
14whether a bidder, contractor, or an affiliate of a bidder or
15contractor has failed to file returns under this Act or pay the
16tax, penalty, and interest shown therein, or has failed to pay
17any final assessment of tax, penalty, or interest due under
18this Act, for the limited purpose of enforcing bidder and
19contractor certifications. For purposes of this Section, the
20term "affiliate" means any entity that (1) directly,
21indirectly, or constructively controls another entity, (2) is
22directly, indirectly, or constructively controlled by another
23entity, or (3) is subject to the control of a common entity.
24For purposes of this subsection (a), an entity controls another
25entity if it owns, directly or individually, more than 10% of
26the voting securities of that entity. As used in this

 

 

09800SB0346ham001- 26 -LRB098 04644 HLH 60486 a

1subsection (a), the term "voting security" means a security
2that (1) confers upon the holder the right to vote for the
3election of members of the board of directors or similar
4governing body of the business or (2) is convertible into, or
5entitles the holder to receive upon its exercise, a security
6that confers such a right to vote. A general partnership
7interest is a voting security.
8    The Director may make available to any State agency,
9including the Illinois Supreme Court, units of local
10government, and school districts, information regarding
11whether a bidder or contractor is an affiliate of a person who
12is not collecting and remitting Illinois Use taxes, for the
13limited purpose of enforcing bidder and contractor
14certifications.
15    The Director may also make available to the Secretary of
16State information that a corporation which has been issued a
17certificate of incorporation by the Secretary of State has
18failed to file returns under this Act or pay the tax, penalty
19and interest shown therein, or has failed to pay any final
20assessment of tax, penalty or interest due under this Act. An
21assessment is final when all proceedings in court for review of
22such assessment have terminated or the time for the taking
23thereof has expired without such proceedings being instituted.
24For taxable years ending on or after December 31, 1987, the
25Director may make available to the Director or principal
26officer of any Department of the State of Illinois, information

 

 

09800SB0346ham001- 27 -LRB098 04644 HLH 60486 a

1that a person employed by such Department has failed to file
2returns under this Act or pay the tax, penalty and interest
3shown therein. For purposes of this paragraph, the word
4"Department" shall have the same meaning as provided in Section
53 of the State Employees Group Insurance Act of 1971.
6    The Director may provide information to the Department of
7Commerce and Economic Opportunity for the purpose of confirming
8information provided by a taxpayer under subparagraphs (D) and
9(E) of item (5) of subsection (f) of Section 5-15 of the
10Economic Development for a Growing Economy Tax Credit Act if
11the taxpayer consents to that disclosure in the Agreement under
12that Act.
13    (d) The Director shall make available for public inspection
14in the Department's principal office and for publication, at
15cost, administrative decisions issued on or after January 1,
161995. These decisions are to be made available in a manner so
17that the following taxpayer information is not disclosed:
18        (1) The names, addresses, and identification numbers
19    of the taxpayer, related entities, and employees.
20        (2) At the sole discretion of the Director, trade
21    secrets or other confidential information identified as
22    such by the taxpayer, no later than 30 days after receipt
23    of an administrative decision, by such means as the
24    Department shall provide by rule.
25    The Director shall determine the appropriate extent of the
26deletions allowed in paragraph (2). In the event the taxpayer

 

 

09800SB0346ham001- 28 -LRB098 04644 HLH 60486 a

1does not submit deletions, the Director shall make only the
2deletions specified in paragraph (1).
3    The Director shall make available for public inspection and
4publication an administrative decision within 180 days after
5the issuance of the administrative decision. The term
6"administrative decision" has the same meaning as defined in
7Section 3-101 of Article III of the Code of Civil Procedure.
8Costs collected under this Section shall be paid into the Tax
9Compliance and Administration Fund.
10    (e) Nothing contained in this Act shall prevent the
11Director from divulging information to any person pursuant to a
12request or authorization made by the taxpayer, by an authorized
13representative of the taxpayer, or, in the case of information
14related to a joint return, by the spouse filing the joint
15return with the taxpayer.
16(Source: P.A. 95-331, eff. 8-21-07; 96-1501, eff. 1-25-11.)
 
17    Section 15. The Use Tax Act is amended by changing Section
183-85 as follows:
 
19    (35 ILCS 105/3-85)
20    Sec. 3-85. Manufacturer's Purchase Credit. For purchases
21of machinery and equipment made on and after January 1, 1995
22through June 30, 2003, and on and after September 1, 2004
23through February 28, 2015 August 30, 2014, a purchaser of
24manufacturing machinery and equipment that qualifies for the

 

 

09800SB0346ham001- 29 -LRB098 04644 HLH 60486 a

1exemption provided by paragraph (18) of Section 3-5 of this Act
2earns a credit in an amount equal to a fixed percentage of the
3tax which would have been incurred under this Act on those
4purchases. For purchases of graphic arts machinery and
5equipment made on or after July 1, 1996 and through June 30,
62003, and on and after September 1, 2004 through February 28,
72015 August 30, 2014, a purchaser of graphic arts machinery and
8equipment that qualifies for the exemption provided by
9paragraph (6) of Section 3-5 of this Act earns a credit in an
10amount equal to a fixed percentage of the tax that would have
11been incurred under this Act on those purchases. The credit
12earned for purchases of manufacturing machinery and equipment
13or graphic arts machinery and equipment shall be referred to as
14the Manufacturer's Purchase Credit. A graphic arts producer is
15a person engaged in graphic arts production as defined in
16Section 2-30 of the Retailers' Occupation Tax Act. Beginning
17July 1, 1996, all references in this Section to manufacturers
18or manufacturing shall also be deemed to refer to graphic arts
19producers or graphic arts production.
20    The amount of credit shall be a percentage of the tax that
21would have been incurred on the purchase of manufacturing
22machinery and equipment or graphic arts machinery and equipment
23if the exemptions provided by paragraph (6) or paragraph (18)
24of Section 3-5 of this Act had not been applicable. The
25percentage shall be as follows:
26        (1) 15% for purchases made on or before June 30, 1995.

 

 

09800SB0346ham001- 30 -LRB098 04644 HLH 60486 a

1        (2) 25% for purchases made after June 30, 1995, and on
2    or before June 30, 1996.
3        (3) 40% for purchases made after June 30, 1996, and on
4    or before June 30, 1997.
5        (4) 50% for purchases made on or after July 1, 1997.
6    (a) Manufacturer's Purchase Credit earned prior to July 1,
72003. This subsection (a) applies to Manufacturer's Purchase
8Credit earned prior to July 1, 2003. A purchaser of production
9related tangible personal property desiring to use the
10Manufacturer's Purchase Credit shall certify to the seller
11prior to October 1, 2003 that the purchaser is satisfying all
12or part of the liability under the Use Tax Act or the Service
13Use Tax Act that is due on the purchase of the production
14related tangible personal property by use of Manufacturer's
15Purchase Credit. The Manufacturer's Purchase Credit
16certification must be dated and shall include the name and
17address of the purchaser, the purchaser's registration number,
18if registered, the credit being applied, and a statement that
19the State Use Tax or Service Use Tax liability is being
20satisfied with the manufacturer's or graphic arts producer's
21accumulated purchase credit. Certification may be incorporated
22into the manufacturer's or graphic arts producer's purchase
23order. Manufacturer's Purchase Credit certification provided
24by the manufacturer or graphic arts producer prior to October
251, 2003 may be used to satisfy the retailer's or serviceman's
26liability under the Retailers' Occupation Tax Act or Service

 

 

09800SB0346ham001- 31 -LRB098 04644 HLH 60486 a

1Occupation Tax Act for the credit claimed, not to exceed 6.25%
2of the receipts subject to tax from a qualifying purchase, but
3only if the retailer or serviceman reports the Manufacturer's
4Purchase Credit claimed as required by the Department. A
5Manufacturer's Purchase Credit reported on any original or
6amended return filed under this Act after October 20, 2003
7shall be disallowed. The Manufacturer's Purchase Credit earned
8by purchase of exempt manufacturing machinery and equipment or
9graphic arts machinery and equipment is a non-transferable
10credit. A manufacturer or graphic arts producer that enters
11into a contract involving the installation of tangible personal
12property into real estate within a manufacturing or graphic
13arts production facility may, prior to October 1, 2003,
14authorize a construction contractor to utilize credit
15accumulated by the manufacturer or graphic arts producer to
16purchase the tangible personal property. A manufacturer or
17graphic arts producer intending to use accumulated credit to
18purchase such tangible personal property shall execute a
19written contract authorizing the contractor to utilize a
20specified dollar amount of credit. The contractor shall
21furnish, prior to October 1, 2003, the supplier with the
22manufacturer's or graphic arts producer's name, registration
23or resale number, and a statement that a specific amount of the
24Use Tax or Service Use Tax liability, not to exceed 6.25% of
25the selling price, is being satisfied with the credit. The
26manufacturer or graphic arts producer shall remain liable to

 

 

09800SB0346ham001- 32 -LRB098 04644 HLH 60486 a

1timely report all information required by the annual Report of
2Manufacturer's Purchase Credit Used for all credit utilized by
3a construction contractor.
4    No Manufacturer's Purchase Credit earned prior to July 1,
52003 may be used after October 1, 2003. The Manufacturer's
6Purchase Credit may be used to satisfy liability under the Use
7Tax Act or the Service Use Tax Act due on the purchase of
8production related tangible personal property (including
9purchases by a manufacturer, by a graphic arts producer, or by
10a lessor who rents or leases the use of the property to a
11manufacturer or graphic arts producer) that does not otherwise
12qualify for the manufacturing machinery and equipment
13exemption or the graphic arts machinery and equipment
14exemption. "Production related tangible personal property"
15means (i) all tangible personal property used or consumed by
16the purchaser in a manufacturing facility in which a
17manufacturing process described in Section 2-45 of the
18Retailers' Occupation Tax Act takes place, including tangible
19personal property purchased for incorporation into real estate
20within a manufacturing facility and including, but not limited
21to, tangible personal property used or consumed in activities
22such as preproduction material handling, receiving, quality
23control, inventory control, storage, staging, and packaging
24for shipping and transportation purposes; (ii) all tangible
25personal property used or consumed by the purchaser in a
26graphic arts facility in which graphic arts production as

 

 

09800SB0346ham001- 33 -LRB098 04644 HLH 60486 a

1described in Section 2-30 of the Retailers' Occupation Tax Act
2takes place, including tangible personal property purchased
3for incorporation into real estate within a graphic arts
4facility and including, but not limited to, all tangible
5personal property used or consumed in activities such as
6graphic arts preliminary or pre-press production,
7pre-production material handling, receiving, quality control,
8inventory control, storage, staging, sorting, labeling,
9mailing, tying, wrapping, and packaging; and (iii) all tangible
10personal property used or consumed by the purchaser for
11research and development. "Production related tangible
12personal property" does not include (i) tangible personal
13property used, within or without a manufacturing facility, in
14sales, purchasing, accounting, fiscal management, marketing,
15personnel recruitment or selection, or landscaping or (ii)
16tangible personal property required to be titled or registered
17with a department, agency, or unit of federal, state, or local
18government. The Manufacturer's Purchase Credit may be used,
19prior to October 1, 2003, to satisfy the tax arising either
20from the purchase of machinery and equipment on or after
21January 1, 1995 for which the exemption provided by paragraph
22(18) of Section 3-5 of this Act was erroneously claimed, or the
23purchase of machinery and equipment on or after July 1, 1996
24for which the exemption provided by paragraph (6) of Section
253-5 of this Act was erroneously claimed, but not in
26satisfaction of penalty, if any, and interest for failure to

 

 

09800SB0346ham001- 34 -LRB098 04644 HLH 60486 a

1pay the tax when due. A purchaser of production related
2tangible personal property who is required to pay Illinois Use
3Tax or Service Use Tax on the purchase directly to the
4Department may, prior to October 1, 2003, utilize the
5Manufacturer's Purchase Credit in satisfaction of the tax
6arising from that purchase, but not in satisfaction of penalty
7and interest. A purchaser who uses the Manufacturer's Purchase
8Credit to purchase property which is later determined not to be
9production related tangible personal property may be liable for
10tax, penalty, and interest on the purchase of that property as
11of the date of purchase but shall be entitled to use the
12disallowed Manufacturer's Purchase Credit, so long as it has
13not expired and is used prior to October 1, 2003, on qualifying
14purchases of production related tangible personal property not
15previously subject to credit usage. The Manufacturer's
16Purchase Credit earned by a manufacturer or graphic arts
17producer expires the last day of the second calendar year
18following the calendar year in which the credit arose. No
19Manufacturer's Purchase Credit may be used after September 30,
202003 regardless of when that credit was earned.
21    A purchaser earning Manufacturer's Purchase Credit shall
22sign and file an annual Report of Manufacturer's Purchase
23Credit Earned for each calendar year no later than the last day
24of the sixth month following the calendar year in which a
25Manufacturer's Purchase Credit is earned. A Report of
26Manufacturer's Purchase Credit Earned shall be filed on forms

 

 

09800SB0346ham001- 35 -LRB098 04644 HLH 60486 a

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

 

 

09800SB0346ham001- 36 -LRB098 04644 HLH 60486 a

1production related tangible personal property purchased from
2out-of-state suppliers; (iii) the total amount of credit used
3during such month; and (iv) such other information as the
4Department may reasonably require. A purchaser using
5Manufacturer's Purchase Credit shall maintain records that
6identify, as to each purchase of production related tangible
7personal property on which the purchaser used Manufacturer's
8Purchase Credit, the vendor (including, if applicable, either
9the vendor's registration number or Federal Employer
10Identification Number), the purchase price, and the amount of
11Manufacturer's Purchase Credit used on each purchase.
12    No annual report shall be filed before May 1, 1996 or after
13June 30, 2004. A purchaser that fails to file an annual Report
14of Manufacturer's Purchase Credit Earned or an annual Report of
15Manufacturer's Purchase Credit Used by the last day of the
16sixth month following the end of the calendar year shall
17forfeit all Manufacturer's Purchase Credit for that calendar
18year unless it establishes that its failure to file was due to
19reasonable cause. Manufacturer's Purchase Credit reports may
20be amended to report and claim credit on qualifying purchases
21not previously reported at any time before the credit would
22have expired, unless both the Department and the purchaser have
23agreed to an extension of the statute of limitations for the
24issuance of a notice of tax liability as provided in Section 4
25of the Retailers' Occupation Tax Act. If the time for
26assessment or refund has been extended, then amended reports

 

 

09800SB0346ham001- 37 -LRB098 04644 HLH 60486 a

1for a calendar year may be filed at any time prior to the date
2to which the statute of limitations for the calendar year or
3portion thereof has been extended. No Manufacturer's Purchase
4Credit report filed with the Department for periods prior to
5January 1, 1995 shall be approved. Manufacturer's Purchase
6Credit claimed on an amended report may be used, until October
71, 2003, to satisfy tax liability under the Use Tax Act or the
8Service Use Tax Act (i) on qualifying purchases of production
9related tangible personal property made after the date the
10amended report is filed or (ii) assessed by the Department on
11qualifying purchases of production related tangible personal
12property made in the case of manufacturers on or after January
131, 1995, or in the case of graphic arts producers on or after
14July 1, 1996.
15    If the purchaser is not the manufacturer or a graphic arts
16producer, but rents or leases the use of the property to a
17manufacturer or graphic arts producer, the purchaser may earn,
18report, and use Manufacturer's Purchase Credit in the same
19manner as a manufacturer or graphic arts producer.
20    A purchaser shall not be entitled to any Manufacturer's
21Purchase Credit for a purchase that is required to be reported
22and is not timely reported as provided in this Section. A
23purchaser remains liable for (i) any tax that was satisfied by
24use of a Manufacturer's Purchase Credit, as of the date of
25purchase, if that use is not timely reported as required in
26this Section and (ii) for any applicable penalties and interest

 

 

09800SB0346ham001- 38 -LRB098 04644 HLH 60486 a

1for failing to pay the tax when due. No Manufacturer's Purchase
2Credit may be used after September 30, 2003 to satisfy any tax
3liability imposed under this Act, including any audit
4liability.
5    (b) Manufacturer's Purchase Credit earned on and after
6September 1, 2004. This subsection (b) applies to
7Manufacturer's Purchase Credit earned on and after September 1,
82004. Manufacturer's Purchase Credit earned on or after
9September 1, 2004 may only be used to satisfy the Use Tax or
10Service Use Tax liability incurred on production related
11tangible personal property purchased on or after September 1,
122004. A purchaser of production related tangible personal
13property desiring to use the Manufacturer's Purchase Credit
14shall certify to the seller that the purchaser is satisfying
15all or part of the liability under the Use Tax Act or the
16Service Use Tax Act that is due on the purchase of the
17production related tangible personal property by use of
18Manufacturer's Purchase Credit. The Manufacturer's Purchase
19Credit certification must be dated and shall include the name
20and address of the purchaser, the purchaser's registration
21number, if registered, the credit being applied, and a
22statement that the State Use Tax or Service Use Tax liability
23is being satisfied with the manufacturer's or graphic arts
24producer's accumulated purchase credit. Certification may be
25incorporated into the manufacturer's or graphic arts
26producer's purchase order. Manufacturer's Purchase Credit

 

 

09800SB0346ham001- 39 -LRB098 04644 HLH 60486 a

1certification provided by the manufacturer or graphic arts
2producer may be used to satisfy the retailer's or serviceman's
3liability under the Retailers' Occupation Tax Act or Service
4Occupation Tax Act for the credit claimed, not to exceed 6.25%
5of the receipts subject to tax from a qualifying purchase, but
6only if the retailer or serviceman reports the Manufacturer's
7Purchase Credit claimed as required by the Department. The
8Manufacturer's Purchase Credit earned by purchase of exempt
9manufacturing machinery and equipment or graphic arts
10machinery and equipment is a non-transferable credit. A
11manufacturer or graphic arts producer that enters into a
12contract involving the installation of tangible personal
13property into real estate within a manufacturing or graphic
14arts production facility may, on or after September 1, 2004,
15authorize a construction contractor to utilize credit
16accumulated by the manufacturer or graphic arts producer to
17purchase the tangible personal property. A manufacturer or
18graphic arts producer intending to use accumulated credit to
19purchase such tangible personal property shall execute a
20written contract authorizing the contractor to utilize a
21specified dollar amount of credit. The contractor shall furnish
22the supplier with the manufacturer's or graphic arts producer's
23name, registration or resale number, and a statement that a
24specific amount of the Use Tax or Service Use Tax liability,
25not to exceed 6.25% of the selling price, is being satisfied
26with the credit. The manufacturer or graphic arts producer

 

 

09800SB0346ham001- 40 -LRB098 04644 HLH 60486 a

1shall remain liable to timely report all information required
2by the annual Report of Manufacturer's Purchase Credit Used for
3all credit utilized by a construction contractor.
4    The Manufacturer's Purchase Credit may be used to satisfy
5liability under the Use Tax Act or the Service Use Tax Act due
6on the purchase, made on or after September 1, 2004, of
7production related tangible personal property (including
8purchases by a manufacturer, by a graphic arts producer, or by
9a lessor who rents or leases the use of the property to a
10manufacturer or graphic arts producer) that does not otherwise
11qualify for the manufacturing machinery and equipment
12exemption or the graphic arts machinery and equipment
13exemption. "Production related tangible personal property"
14means (i) all tangible personal property used or consumed by
15the purchaser in a manufacturing facility in which a
16manufacturing process described in Section 2-45 of the
17Retailers' Occupation Tax Act takes place, including tangible
18personal property purchased for incorporation into real estate
19within a manufacturing facility and including, but not limited
20to, tangible personal property used or consumed in activities
21such as preproduction material handling, receiving, quality
22control, inventory control, storage, staging, and packaging
23for shipping and transportation purposes; (ii) all tangible
24personal property used or consumed by the purchaser in a
25graphic arts facility in which graphic arts production as
26described in Section 2-30 of the Retailers' Occupation Tax Act

 

 

09800SB0346ham001- 41 -LRB098 04644 HLH 60486 a

1takes place, including tangible personal property purchased
2for incorporation into real estate within a graphic arts
3facility and including, but not limited to, all tangible
4personal property used or consumed in activities such as
5graphic arts preliminary or pre-press production,
6pre-production material handling, receiving, quality control,
7inventory control, storage, staging, sorting, labeling,
8mailing, tying, wrapping, and packaging; and (iii) all tangible
9personal property used or consumed by the purchaser for
10research and development. "Production related tangible
11personal property" does not include (i) tangible personal
12property used, within or without a manufacturing facility, in
13sales, purchasing, accounting, fiscal management, marketing,
14personnel recruitment or selection, or landscaping or (ii)
15tangible personal property required to be titled or registered
16with a department, agency, or unit of federal, state, or local
17government. The Manufacturer's Purchase Credit may be used to
18satisfy the tax arising either from the purchase of machinery
19and equipment on or after September 1, 2004 for which the
20exemption provided by paragraph (18) of Section 3-5 of this Act
21was erroneously claimed, or the purchase of machinery and
22equipment on or after September 1, 2004 for which the exemption
23provided by paragraph (6) of Section 3-5 of this Act was
24erroneously claimed, but not in satisfaction of penalty, if
25any, and interest for failure to pay the tax when due. A
26purchaser of production related tangible personal property

 

 

09800SB0346ham001- 42 -LRB098 04644 HLH 60486 a

1that is purchased on or after September 1, 2004 who is required
2to pay Illinois Use Tax or Service Use Tax on the purchase
3directly to the Department may utilize the Manufacturer's
4Purchase Credit in satisfaction of the tax arising from that
5purchase, but not in satisfaction of penalty and interest. A
6purchaser who uses the Manufacturer's Purchase Credit to
7purchase property on and after September 1, 2004 which is later
8determined not to be production related tangible personal
9property may be liable for tax, penalty, and interest on the
10purchase of that property as of the date of purchase but shall
11be entitled to use the disallowed Manufacturer's Purchase
12Credit, so long as it has not expired and is used on qualifying
13purchases of production related tangible personal property not
14previously subject to credit usage. The Manufacturer's
15Purchase Credit earned by a manufacturer or graphic arts
16producer expires the last day of the second calendar year
17following the calendar year in which the credit arose. A
18purchaser earning Manufacturer's Purchase Credit shall sign
19and file an annual Report of Manufacturer's Purchase Credit
20Earned for each calendar year no later than the last day of the
21sixth month following the calendar year in which a
22Manufacturer's Purchase Credit is earned. A Report of
23Manufacturer's Purchase Credit Earned shall be filed on forms
24as prescribed or approved by the Department and shall state,
25for each month of the calendar year: (i) the total purchase
26price of all purchases of exempt manufacturing or graphic arts

 

 

09800SB0346ham001- 43 -LRB098 04644 HLH 60486 a

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

 

 

09800SB0346ham001- 44 -LRB098 04644 HLH 60486 a

1purchaser using Manufacturer's Purchase Credit shall maintain
2records that identify, as to each purchase of production
3related tangible personal property on which the purchaser used
4Manufacturer's Purchase Credit, the vendor (including, if
5applicable, either the vendor's registration number or Federal
6Employer Identification Number), the purchase price, and the
7amount of Manufacturer's Purchase Credit used on each purchase.
8    A purchaser that fails to file an annual Report of
9Manufacturer's Purchase Credit Earned or an annual Report of
10Manufacturer's Purchase Credit Used by the last day of the
11sixth month following the end of the calendar year shall
12forfeit all Manufacturer's Purchase Credit for that calendar
13year unless it establishes that its failure to file was due to
14reasonable cause. Manufacturer's Purchase Credit reports may
15be amended to report and claim credit on qualifying purchases
16not previously reported at any time before the credit would
17have expired, unless both the Department and the purchaser have
18agreed to an extension of the statute of limitations for the
19issuance of a notice of tax liability as provided in Section 4
20of the Retailers' Occupation Tax Act. If the time for
21assessment or refund has been extended, then amended reports
22for a calendar year may be filed at any time prior to the date
23to which the statute of limitations for the calendar year or
24portion thereof has been extended. Manufacturer's Purchase
25Credit claimed on an amended report may be used to satisfy tax
26liability under the Use Tax Act or the Service Use Tax Act (i)

 

 

09800SB0346ham001- 45 -LRB098 04644 HLH 60486 a

1on qualifying purchases of production related tangible
2personal property made after the date the amended report is
3filed or (ii) assessed by the Department on qualifying
4production related tangible personal property purchased on or
5after September 1, 2004. If the purchaser is not the
6manufacturer or a graphic arts producer, but rents or leases
7the use of the property to a manufacturer or graphic arts
8producer, the purchaser may earn, report, and use
9Manufacturer's Purchase Credit in the same manner as a
10manufacturer or graphic arts producer. A purchaser shall not be
11entitled to any Manufacturer's Purchase Credit for a purchase
12that is required to be reported and is not timely reported as
13provided in this Section. A purchaser remains liable for (i)
14any tax that was satisfied by use of a Manufacturer's Purchase
15Credit, as of the date of purchase, if that use is not timely
16reported as required in this Section and (ii) for any
17applicable penalties and interest for failing to pay the tax
18when due.
19(Source: P.A. 96-116, eff. 7-31-09.)
 
20    Section 20. The Service Use Tax Act is amended by changing
21Section 3-70 as follows:
 
22    (35 ILCS 110/3-70)
23    Sec. 3-70. Manufacturer's Purchase Credit. For purchases
24of machinery and equipment made on and after January 1, 1995

 

 

09800SB0346ham001- 46 -LRB098 04644 HLH 60486 a

1and through June 30, 2003, and on and after September 1, 2004
2through February 28, 2015 August 30, 2014, a purchaser of
3manufacturing machinery and equipment that qualifies for the
4exemption provided by Section 2 of this Act earns a credit in
5an amount equal to a fixed percentage of the tax which would
6have been incurred under this Act on those purchases. For
7purchases of graphic arts machinery and equipment made on or
8after July 1, 1996 through June 30, 2003, and on and after
9September 1, 2004 through February 28, 2015 August 30, 2014, a
10purchase of graphic arts machinery and equipment that qualifies
11for the exemption provided by paragraph (5) of Section 3-5 of
12this Act earns a credit in an amount equal to a fixed
13percentage of the tax that would have been incurred under this
14Act on those purchases. The credit earned for the purchase of
15manufacturing machinery and equipment and graphic arts
16machinery and equipment shall be referred to as the
17Manufacturer's Purchase Credit. A graphic arts producer is a
18person engaged in graphic arts production as defined in Section
193-30 of the Service Occupation Tax Act. Beginning July 1, 1996,
20all references in this Section to manufacturers or
21manufacturing shall also refer to graphic arts producers or
22graphic arts production.
23    The amount of credit shall be a percentage of the tax that
24would have been incurred on the purchase of the manufacturing
25machinery and equipment or graphic arts machinery and equipment
26if the exemptions provided by Section 2 or paragraph (5) of

 

 

09800SB0346ham001- 47 -LRB098 04644 HLH 60486 a

1Section 3-5 of this Act had not been applicable.
2    All purchases prior to October 1, 2003 and on and after
3September 1, 2004 and through February 28, 2015, of
4manufacturing machinery and equipment and graphic arts
5machinery and equipment that qualify for the exemptions
6provided by paragraph (5) of Section 2 or paragraph (5) of
7Section 3-5 of this Act qualify for the credit without regard
8to whether the serviceman elected, or could have elected, under
9paragraph (7) of Section 2 of this Act to exclude the
10transaction from this Act. If the serviceman's billing to the
11service customer separately states a selling price for the
12exempt manufacturing machinery or equipment or the exempt
13graphic arts machinery and equipment, the credit shall be
14calculated, as otherwise provided herein, based on that selling
15price. If the serviceman's billing does not separately state a
16selling price for the exempt manufacturing machinery and
17equipment or the exempt graphic arts machinery and equipment,
18the credit shall be calculated, as otherwise provided herein,
19based on 50% of the entire billing. If the serviceman contracts
20to design, develop, and produce special order manufacturing
21machinery and equipment or special order graphic arts machinery
22and equipment, and the billing does not separately state a
23selling price for such special order machinery and equipment,
24the credit shall be calculated, as otherwise provided herein,
25based on 50% of the entire billing. The provisions of this
26paragraph are effective for purchases made on or after January

 

 

09800SB0346ham001- 48 -LRB098 04644 HLH 60486 a

11, 1995.
2    The percentage shall be as follows:
3        (1) 15% for purchases made on or before June 30, 1995.
4        (2) 25% for purchases made after June 30, 1995, and on
5    or before June 30, 1996.
6        (3) 40% for purchases made after June 30, 1996, and on
7    or before June 30, 1997.
8        (4) 50% for purchases made on or after July 1, 1997.
9    (a) Manufacturer's Purchase Credit earned prior to July 1,
102003. This subsection (a) applies to Manufacturer's Purchase
11Credit earned prior to July 1, 2003. A purchaser of production
12related tangible personal property desiring to use the
13Manufacturer's Purchase Credit shall certify to the seller
14prior to October 1, 2003 that the purchaser is satisfying all
15or part of the liability under the Use Tax Act or the Service
16Use Tax Act that is due on the purchase of the production
17related tangible personal property by use of a Manufacturer's
18Purchase Credit. The Manufacturer's Purchase Credit
19certification must be dated and shall include the name and
20address of the purchaser, the purchaser's registration number,
21if registered, the credit being applied, and a statement that
22the State Use Tax or Service Use Tax liability is being
23satisfied with the manufacturer's or graphic arts producer's
24accumulated purchase credit. Certification may be incorporated
25into the manufacturer's or graphic arts producer's purchase
26order. Manufacturer's Purchase Credit certification provided

 

 

09800SB0346ham001- 49 -LRB098 04644 HLH 60486 a

1by the manufacturer or graphic arts producer prior to October
21, 2003 may be used to satisfy the retailer's or serviceman's
3liability under the Retailers' Occupation Tax Act or Service
4Occupation Tax Act for the credit claimed, not to exceed 6.25%
5of the receipts subject to tax from a qualifying purchase, but
6only if the retailer or serviceman reports the Manufacturer's
7Purchase Credit claimed as required by the Department. A
8Manufacturer's Purchase Credit reported on any original or
9amended return filed under this Act after October 20, 2003
10shall be disallowed. The Manufacturer's Purchase Credit earned
11by purchase of exempt manufacturing machinery and equipment or
12graphic arts machinery and equipment is a non-transferable
13credit. A manufacturer or graphic arts producer that enters
14into a contract involving the installation of tangible personal
15property into real estate within a manufacturing or graphic
16arts production facility, prior to October 1, 2003, may
17authorize a construction contractor to utilize credit
18accumulated by the manufacturer or graphic arts producer to
19purchase the tangible personal property. A manufacturer or
20graphic arts producer intending to use accumulated credit to
21purchase such tangible personal property shall execute a
22written contract authorizing the contractor to utilize a
23specified dollar amount of credit. The contractor shall
24furnish, prior to October 1, 2003, the supplier with the
25manufacturer's or graphic arts producer's name, registration
26or resale number, and a statement that a specific amount of the

 

 

09800SB0346ham001- 50 -LRB098 04644 HLH 60486 a

1Use Tax or Service Use Tax liability, not to exceed 6.25% of
2the selling price, is being satisfied with the credit. The
3manufacturer or graphic arts producer shall remain liable to
4timely report all information required by the annual Report of
5Manufacturer's Purchase Credit Used for credit utilized by a
6construction contractor.
7    No Manufacturer's Purchase Credit earned prior to July 1,
82003 may be used after October 1, 2003. The Manufacturer's
9Purchase Credit may be used to satisfy liability under the Use
10Tax Act or the Service Use Tax Act due on the purchase of
11production related tangible personal property (including
12purchases by a manufacturer, by a graphic arts producer, or a
13lessor who rents or leases the use of the property to a
14manufacturer or graphic arts producer) that does not otherwise
15qualify for the manufacturing machinery and equipment
16exemption or the graphic arts machinery and equipment
17exemption. "Production related tangible personal property"
18means (i) all tangible personal property used or consumed by
19the purchaser in a manufacturing facility in which a
20manufacturing process described in Section 2-45 of the
21Retailers' Occupation Tax Act takes place, including tangible
22personal property purchased for incorporation into real estate
23within a manufacturing facility and including, but not limited
24to, tangible personal property used or consumed in activities
25such as pre-production material handling, receiving, quality
26control, inventory control, storage, staging, and packaging

 

 

09800SB0346ham001- 51 -LRB098 04644 HLH 60486 a

1for shipping and transportation purposes; (ii) all tangible
2personal property used or consumed by the purchaser in a
3graphic arts facility in which graphic arts production as
4described in Section 2-30 of the Retailers' Occupation Tax Act
5takes place, including tangible personal property purchased
6for incorporation into real estate within a graphic arts
7facility and including, but not limited to, all tangible
8personal property used or consumed in activities such as
9graphic arts preliminary or pre-press production,
10pre-production material handling, receiving, quality control,
11inventory control, storage, staging, sorting, labeling,
12mailing, tying, wrapping, and packaging; and (iii) all tangible
13personal property used or consumed by the purchaser for
14research and development. "Production related tangible
15personal property" does not include (i) tangible personal
16property used, within or without a manufacturing or graphic
17arts facility, in sales, purchasing, accounting, fiscal
18management, marketing, personnel recruitment or selection, or
19landscaping or (ii) tangible personal property required to be
20titled or registered with a department, agency, or unit of
21federal, state, or local government. The Manufacturer's
22Purchase Credit may be used, prior to October 1, 2003, to
23satisfy the tax arising either from the purchase of machinery
24and equipment on or after January 1, 1995 for which the
25manufacturing machinery and equipment exemption provided by
26Section 2 of this Act was erroneously claimed, or the purchase

 

 

09800SB0346ham001- 52 -LRB098 04644 HLH 60486 a

1of machinery and equipment on or after July 1, 1996 for which
2the exemption provided by paragraph (5) of Section 3-5 of this
3Act was erroneously claimed, but not in satisfaction of
4penalty, if any, and interest for failure to pay the tax when
5due. A purchaser of production related tangible personal
6property who is required to pay Illinois Use Tax or Service Use
7Tax on the purchase directly to the Department may, prior to
8October 1, 2003, utilize the Manufacturer's Purchase Credit in
9satisfaction of the tax arising from that purchase, but not in
10satisfaction of penalty and interest. A purchaser who uses the
11Manufacturer's Purchase Credit to purchase property which is
12later determined not to be production related tangible personal
13property may be liable for tax, penalty, and interest on the
14purchase of that property as of the date of purchase but shall
15be entitled to use the disallowed Manufacturer's Purchase
16Credit, so long as it has not expired and is used prior to
17October 1, 2003, on qualifying purchases of production related
18tangible personal property not previously subject to credit
19usage. The Manufacturer's Purchase Credit earned by a
20manufacturer or graphic arts producer expires the last day of
21the second calendar year following the calendar year in which
22the credit arose. No Manufacturer's Purchase Credit may be used
23after September 30, 2003 regardless of when that credit was
24earned.
25    A purchaser earning Manufacturer's Purchase Credit shall
26sign and file an annual Report of Manufacturer's Purchase

 

 

09800SB0346ham001- 53 -LRB098 04644 HLH 60486 a

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

 

 

09800SB0346ham001- 54 -LRB098 04644 HLH 60486 a

1prescribed or approved by the Department and shall state, for
2each month of the calendar year: (i) the total purchase price
3of production related tangible personal property purchased
4from Illinois suppliers; (ii) the total purchase price of
5production related tangible personal property purchased from
6out-of-state suppliers; (iii) the total amount of credit used
7during such month; and (iv) such other information as the
8Department may reasonably require. A purchaser using
9Manufacturer's Purchase Credit shall maintain records that
10identify, as to each purchase of production related tangible
11personal property on which the purchaser used Manufacturer's
12Purchase Credit, the vendor (including, if applicable, either
13the vendor's registration number or Federal Employer
14Identification Number), the purchase price, and the amount of
15Manufacturer's Purchase Credit used on each purchase.
16    No annual report shall be filed before May 1, 1996 or after
17June 30, 2004. A purchaser that fails to file an annual Report
18of Manufacturer's Purchase Credit Earned or an annual Report of
19Manufacturer's Purchase Credit Used by the last day of the
20sixth month following the end of the calendar year shall
21forfeit all Manufacturer's Purchase Credit for that calendar
22year unless it establishes that its failure to file was due to
23reasonable cause. Manufacturer's Purchase Credit reports may
24be amended to report and claim credit on qualifying purchases
25not previously reported at any time before the credit would
26have expired, unless both the Department and the purchaser have

 

 

09800SB0346ham001- 55 -LRB098 04644 HLH 60486 a

1agreed to an extension of the statute of limitations for the
2issuance of a notice of tax liability as provided in Section 4
3of the Retailers' Occupation Tax Act. If the time for
4assessment or refund has been extended, then amended reports
5for a calendar year may be filed at any time prior to the date
6to which the statute of limitations for the calendar year or
7portion thereof has been extended. No Manufacturer's Purchase
8Credit report filed with the Department for periods prior to
9January 1, 1995 shall be approved. Manufacturer's Purchase
10Credit claimed on an amended report may be used, prior to
11October 1, 2003, to satisfy tax liability under the Use Tax Act
12or the Service Use Tax Act (i) on qualifying purchases of
13production related tangible personal property made after the
14date the amended report is filed or (ii) assessed by the
15Department on qualifying purchases of production related
16tangible personal property made in the case of manufacturers on
17or after January 1, 1995, or in the case of graphic arts
18producers on or after July 1, 1996.
19    If the purchaser is not the manufacturer or a graphic arts
20producer, but rents or leases the use of the property to a
21manufacturer or a graphic arts producer, the purchaser may
22earn, report, and use Manufacturer's Purchase Credit in the
23same manner as a manufacturer or graphic arts producer.
24    A purchaser shall not be entitled to any Manufacturer's
25Purchase Credit for a purchase that is required to be reported
26and is not timely reported as provided in this Section. A

 

 

09800SB0346ham001- 56 -LRB098 04644 HLH 60486 a

1purchaser remains liable for (i) any tax that was satisfied by
2use of a Manufacturer's Purchase Credit, as of the date of
3purchase, if that use is not timely reported as required in
4this Section and (ii) for any applicable penalties and interest
5for failing to pay the tax when due. No Manufacturer's Purchase
6Credit may be used after September 30, 2003 to satisfy any tax
7liability imposed under this Act, including any audit
8liability.
9    (b) Manufacturer's Purchase Credit earned on and after
10September 1, 2004. This subsection (b) applies to
11Manufacturer's Purchase Credit earned on or after September 1,
122004. Manufacturer's Purchase Credit earned on or after
13September 1, 2004 may only be used to satisfy the Use Tax or
14Service Use Tax liability incurred on production related
15tangible personal property purchased on or after September 1,
162004. A purchaser of production related tangible personal
17property desiring to use the Manufacturer's Purchase Credit
18shall certify to the seller that the purchaser is satisfying
19all or part of the liability under the Use Tax Act or the
20Service Use Tax Act that is due on the purchase of the
21production related tangible personal property by use of a
22Manufacturer's Purchase Credit. The Manufacturer's Purchase
23Credit certification must be dated and shall include the name
24and address of the purchaser, the purchaser's registration
25number, if registered, the credit being applied, and a
26statement that the State Use Tax or Service Use Tax liability

 

 

09800SB0346ham001- 57 -LRB098 04644 HLH 60486 a

1is being satisfied with the manufacturer's or graphic arts
2producer's accumulated purchase credit. Certification may be
3incorporated into the manufacturer's or graphic arts
4producer's purchase order. Manufacturer's Purchase Credit
5certification provided by the manufacturer or graphic arts
6producer may be used to satisfy the retailer's or serviceman's
7liability under the Retailers' Occupation Tax Act or Service
8Occupation Tax Act for the credit claimed, not to exceed 6.25%
9of the receipts subject to tax from a qualifying purchase, but
10only if the retailer or serviceman reports the Manufacturer's
11Purchase Credit claimed as required by the Department. The
12Manufacturer's Purchase Credit earned by purchase of exempt
13manufacturing machinery and equipment or graphic arts
14machinery and equipment is a non-transferable credit. A
15manufacturer or graphic arts producer that enters into a
16contract involving the installation of tangible personal
17property into real estate within a manufacturing or graphic
18arts production facility may, on or after September 1, 2004,
19authorize a construction contractor to utilize credit
20accumulated by the manufacturer or graphic arts producer to
21purchase the tangible personal property. A manufacturer or
22graphic arts producer intending to use accumulated credit to
23purchase such tangible personal property shall execute a
24written contract authorizing the contractor to utilize a
25specified dollar amount of credit. The contractor shall furnish
26the supplier with the manufacturer's or graphic arts producer's

 

 

09800SB0346ham001- 58 -LRB098 04644 HLH 60486 a

1name, registration or resale number, and a statement that a
2specific amount of the Use Tax or Service Use Tax liability,
3not to exceed 6.25% of the selling price, is being satisfied
4with the credit. The manufacturer or graphic arts producer
5shall remain liable to timely report all information required
6by the annual Report of Manufacturer's Purchase Credit Used for
7credit utilized by a construction contractor.
8    The Manufacturer's Purchase Credit may be used to satisfy
9liability under the Use Tax Act or the Service Use Tax Act due
10on the purchase, made on or after September 1, 2004, of
11production related tangible personal property (including
12purchases by a manufacturer, by a graphic arts producer, or a
13lessor who rents or leases the use of the property to a
14manufacturer or graphic arts producer) that does not otherwise
15qualify for the manufacturing machinery and equipment
16exemption or the graphic arts machinery and equipment
17exemption. "Production related tangible personal property"
18means (i) all tangible personal property used or consumed by
19the purchaser in a manufacturing facility in which a
20manufacturing process described in Section 2-45 of the
21Retailers' Occupation Tax Act takes place, including tangible
22personal property purchased for incorporation into real estate
23within a manufacturing facility and including, but not limited
24to, tangible personal property used or consumed in activities
25such as pre-production material handling, receiving, quality
26control, inventory control, storage, staging, and packaging

 

 

09800SB0346ham001- 59 -LRB098 04644 HLH 60486 a

1for shipping and transportation purposes; (ii) all tangible
2personal property used or consumed by the purchaser in a
3graphic arts facility in which graphic arts production as
4described in Section 2-30 of the Retailers' Occupation Tax Act
5takes place, including tangible personal property purchased
6for incorporation into real estate within a graphic arts
7facility and including, but not limited to, all tangible
8personal property used or consumed in activities such as
9graphic arts preliminary or pre-press production,
10pre-production material handling, receiving, quality control,
11inventory control, storage, staging, sorting, labeling,
12mailing, tying, wrapping, and packaging; and (iii) all tangible
13personal property used or consumed by the purchaser for
14research and development. "Production related tangible
15personal property" does not include (i) tangible personal
16property used, within or without a manufacturing or graphic
17arts facility, in sales, purchasing, accounting, fiscal
18management, marketing, personnel recruitment or selection, or
19landscaping or (ii) tangible personal property required to be
20titled or registered with a department, agency, or unit of
21federal, state, or local government. The Manufacturer's
22Purchase Credit may be used to satisfy the tax arising either
23from the purchase of machinery and equipment on or after
24September 1, 2004 for which the manufacturing machinery and
25equipment exemption provided by Section 2 of this Act was
26erroneously claimed, or the purchase of machinery and equipment

 

 

09800SB0346ham001- 60 -LRB098 04644 HLH 60486 a

1on or after September 1, 2004 for which the exemption provided
2by paragraph (5) of Section 3-5 of this Act was erroneously
3claimed, but not in satisfaction of penalty, if any, and
4interest for failure to pay the tax when due. A purchaser of
5production related tangible personal property that is
6purchased on or after September 1, 2004 who is required to pay
7Illinois Use Tax or Service Use Tax on the purchase directly to
8the Department may utilize the Manufacturer's Purchase Credit
9in satisfaction of the tax arising from that purchase, but not
10in satisfaction of penalty and interest. A purchaser who uses
11the Manufacturer's Purchase Credit to purchase property on and
12after September 1, 2004 which is later determined not to be
13production related tangible personal property may be liable for
14tax, penalty, and interest on the purchase of that property as
15of the date of purchase but shall be entitled to use the
16disallowed Manufacturer's Purchase Credit, so long as it has
17not expired, on qualifying purchases of production related
18tangible personal property not previously subject to credit
19usage. The Manufacturer's Purchase Credit earned by a
20manufacturer or graphic arts producer expires the last day of
21the second calendar year following the calendar year in which
22the credit arose.
23    A purchaser earning Manufacturer's Purchase Credit shall
24sign and file an annual Report of Manufacturer's Purchase
25Credit Earned for each calendar year no later than the last day
26of the sixth month following the calendar year in which a

 

 

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

 

 

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1of production related tangible personal property purchased
2from Illinois suppliers; (ii) the total purchase price of
3production related tangible personal property purchased from
4out-of-state suppliers; (iii) the total amount of credit used
5during such month; and (iv) such other information as the
6Department may reasonably require. A purchaser using
7Manufacturer's Purchase Credit shall maintain records that
8identify, as to each purchase of production related tangible
9personal property on which the purchaser used Manufacturer's
10Purchase Credit, the vendor (including, if applicable, either
11the vendor's registration number or Federal Employer
12Identification Number), the purchase price, and the amount of
13Manufacturer's Purchase Credit used on each purchase.
14    A purchaser that fails to file an annual Report of
15Manufacturer's Purchase Credit Earned or an annual Report of
16Manufacturer's Purchase Credit Used by the last day of the
17sixth month following the end of the calendar year shall
18forfeit all Manufacturer's Purchase Credit for that calendar
19year unless it establishes that its failure to file was due to
20reasonable cause. Manufacturer's Purchase Credit reports may
21be amended to report and claim credit on qualifying purchases
22not previously reported at any time before the credit would
23have expired, unless both the Department and the purchaser have
24agreed to an extension of the statute of limitations for the
25issuance of a notice of tax liability as provided in Section 4
26of the Retailers' Occupation Tax Act. If the time for

 

 

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1assessment or refund has been extended, then amended reports
2for a calendar year may be filed at any time prior to the date
3to which the statute of limitations for the calendar year or
4portion thereof has been extended. Manufacturer's Purchase
5Credit claimed on an amended report may be used to satisfy tax
6liability under the Use Tax Act or the Service Use Tax Act (i)
7on qualifying purchases of production related tangible
8personal property made after the date the amended report is
9filed or (ii) assessed by the Department on qualifying
10production related tangible personal property purchased on or
11after September 1, 2004.
12    If the purchaser is not the manufacturer or a graphic arts
13producer, but rents or leases the use of the property to a
14manufacturer or a graphic arts producer, the purchaser may
15earn, report, and use Manufacturer's Purchase Credit in the
16same manner as a manufacturer or graphic arts producer. A
17purchaser shall not be entitled to any Manufacturer's Purchase
18Credit for a purchase that is required to be reported and is
19not timely reported as provided in this Section. A purchaser
20remains liable for (i) any tax that was satisfied by use of a
21Manufacturer's Purchase Credit, as of the date of purchase, if
22that use is not timely reported as required in this Section and
23(ii) for any applicable penalties and interest for failing to
24pay the tax when due.
25(Source: P.A. 96-116, eff. 7-31-09.)
 

 

 

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