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| [ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
90_HB2201enr
35 ILCS 115/2c from Ch. 120, par. 439.102c
Amends the Service Occupation Tax Act. Makes technical
changes in the Section concerning corporations, limited
liability companies, societies, associations, foundations, or
institutions organized and operated exclusively for
educational purposes.
LRB9000111KRpk
HB2201 Enrolled LRB9000111KRpk
1 AN ACT to amend the Service Use Tax Act by changing
2 Section 3-70.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Service Use Tax Act is amended by
6 changing Section 3-70 as follows:
7 (35 ILCS 110/3-70)
8 Sec. 3-70. Manufacturer's Purchase Credit. For purchases
9 of machinery and equipment made on and after January 1, 1995,
10 a purchaser of manufacturing machinery and equipment that
11 qualifies for the exemption provided by Section 2 of this Act
12 earns a credit in an amount equal to a fixed percentage of
13 the tax which would have been incurred under this Act on
14 those purchases. For purchases of graphic arts machinery and
15 equipment made on or after July 1, 1996, a purchase of
16 graphic arts machinery and equipment that qualifies for the
17 exemption provided by paragraph (5) of Section 3-5 of this
18 Act earns a credit in an amount equal to a fixed percentage
19 of the tax that would have been incurred under this Act on
20 those purchases. The credit earned for the purchase of
21 manufacturing machinery and equipment and graphic arts
22 machinery and equipment shall be referred to as the
23 Manufacturer's Purchase Credit. A graphic arts producer is a
24 person engaged in graphic arts production as defined in
25 Section 3-30 of the Service Occupation Tax Act. Beginning
26 July 1, 1996, all references in this Section to manufacturers
27 or manufacturing shall also refer to graphic arts producers
28 or graphic arts production.
29 The amount of credit shall be a percentage of the tax
30 that would have been incurred on the purchase of the
31 manufacturing machinery and equipment or graphic arts
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1 machinery and equipment if the exemptions provided by Section
2 2 or paragraph (5) of Section 3-5 of this Act had not been
3 applicable.
4 All purchases of manufacturing machinery and equipment
5 and graphic arts machinery and equipment that qualify for the
6 exemptions provided by paragraph (5) of Section 2 or
7 paragraph (5) of Section 3-5 of this Act qualify for the
8 credit without regard to whether the serviceman elected, or
9 could have elected, under paragraph (7) of Section 2 of this
10 Act to exclude the transaction from this Act. If the
11 serviceman's billing to the service customer separately
12 states a selling price for the exempt manufacturing machinery
13 or equipment or the exempt graphic arts machinery and
14 equipment, the credit shall be calculated, as otherwise
15 provided herein, based on that selling price. If the
16 serviceman's billing does not separately state a selling
17 price for the exempt manufacturing machinery and equipment or
18 the exempt graphic arts machinery and equipment, the credit
19 shall be calculated, as otherwise provided herein, based on
20 50% of the entire billing. If the serviceman contracts to
21 design, develop, and produce special order manufacturing
22 machinery and equipment or special order graphic arts
23 machinery and equipment, and the billing does not separately
24 state a selling price for such special order machinery and
25 equipment, the credit shall be calculated, as otherwise
26 provided herein, based on 50% of the entire billing. The
27 provisions of this paragraph are effective for purchases made
28 on or after January 1, 1995.
29 The percentage shall be as follows:
30 (1) 15% for purchases made on or before June 30,
31 1995.
32 (2) 25% for purchases made after June 30, 1995, and
33 on or before June 30, 1996.
34 (3) 40% for purchases made after June 30, 1996, and
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1 on or before June 30, 1997.
2 (4) 50% for purchases made on or after July 1,
3 1997.
4 A purchaser of production related tangible personal
5 property desiring to use the Manufacturer's Purchase Credit
6 shall certify to the seller that the purchaser is satisfying
7 all or part of the liability under the Use Tax Act or the
8 Service Use Tax Act that is due on the purchase of the
9 production related tangible personal property by use of a
10 Manufacturer's Purchase Credit. The Manufacturer's Purchase
11 Credit certification must be dated and shall include the name
12 and address of the purchaser, the purchaser's registration
13 number, if registered, the credit being applied, and a
14 statement that the State Use Tax or Service Use Tax liability
15 is being satisfied with the manufacturer's or graphic arts
16 producer's accumulated purchase credit. Certification may be
17 incorporated into the manufacturer's or graphic arts
18 producer's purchase order. Manufacturer's Purchase Credit
19 certification by the manufacturer or graphic arts producer
20 may be used to satisfy the retailer's or serviceman's
21 liability under the Retailers' Occupation Tax Act or Service
22 Occupation Tax Act for the credit claimed, not to exceed
23 6.25% of the receipts subject to tax from a qualifying
24 purchase, but only if the retailer or serviceman reports the
25 Manufacturer's Purchase Credit claimed as required by the
26 Department. The Manufacturer's Purchase Credit earned by
27 purchase of exempt manufacturing machinery and equipment or
28 graphic arts machinery and equipment is a non-transferable
29 credit. A manufacturer or graphic arts producer that enters
30 into a contract involving the installation of tangible
31 personal property into real estate within a manufacturing or
32 graphic arts production facility may authorize a construction
33 contractor to utilize credit accumulated by the manufacturer
34 or graphic arts producer to purchase the tangible personal
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1 property. A manufacturer or graphic arts producer intending
2 to use accumulated credit to purchase such tangible personal
3 property shall execute a written contract authorizing the
4 contractor to utilize a specified dollar amount of credit.
5 The contractor shall furnish the supplier with the
6 manufacturer's or graphic arts producer's name, registration
7 or resale number, and a statement that a specific amount of
8 the Use Tax or Service Use Tax liability, not to exceed 6.25%
9 of the selling price, is being satisfied with the credit. The
10 manufacturer or graphic arts producer shall remain liable to
11 timely report all information required by the annual Report
12 of Manufacturer's Purchase Credit Used for credit utilized by
13 a construction contractor.
14 The Manufacturer's Purchase Credit may be used to satisfy
15 liability under the Use Tax Act or the Service Use Tax Act
16 due on the purchase of production related tangible personal
17 property (including purchases by a manufacturer, by a graphic
18 arts producer, or a lessor who rents or leases the use of the
19 property to a manufacturer or graphic arts producer) that
20 does not otherwise qualify for the manufacturing machinery
21 and equipment exemption or the graphic arts machinery and
22 equipment exemption. "Production related tangible personal
23 property" means (i) all tangible personal property used or
24 consumed by the purchaser in a manufacturing facility in
25 which a manufacturing process described in Section 2-45 of
26 the Retailers' Occupation Tax Act takes place, including
27 tangible personal property purchased for incorporation into
28 real estate within a manufacturing facility and including,
29 but not limited to, tangible personal property used or
30 consumed in activities such as pre-production material
31 handling, receiving, quality control, inventory control,
32 storage, staging, and packaging for shipping and
33 transportation purposes; (ii) all tangible personal property
34 used or consumed by the purchaser in a graphic arts facility
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1 in which graphic arts production as described in Section 2-30
2 of the Retailers' Occupation Tax Act takes place, including
3 tangible personal property purchased for incorporation into
4 real estate within a graphic arts facility and including, but
5 not limited to, all tangible personal property used or
6 consumed in activities such as graphic arts preliminary or
7 pre-press production, pre-production material handling,
8 receiving, quality control, inventory control, storage,
9 staging, sorting, labeling, mailing, tying, wrapping, and
10 packaging; and (iii) all tangible personal property used or
11 consumed by the purchaser for research and development.
12 "Production related tangible personal property" does not
13 include (i) tangible personal property used, within or
14 without a manufacturing or graphic arts facility, in sales,
15 purchasing, accounting, fiscal management, marketing,
16 personnel recruitment or selection, or landscaping or (ii)
17 tangible personal property required to be titled or
18 registered with a department, agency, or unit of federal,
19 state, or local government. The Manufacturer's Purchase
20 Credit may be used to satisfy the tax arising either from the
21 purchase of machinery and equipment on or after January 1,
22 1995 for which the manufacturing machinery and equipment
23 exemption provided by Section 2 of this Act was erroneously
24 claimed, or the purchase of machinery and equipment on or
25 after July 1, 1996 for which the exemption provided by
26 paragraph (5) of Section 3-5 of this Act was erroneously
27 claimed, but not in satisfaction of penalty, if any, and
28 interest for failure to pay the tax when due. A purchaser of
29 production related tangible personal property who is required
30 to pay Illinois Use Tax or Service Use Tax on the purchase
31 directly to the Department may utilize the Manufacturer's
32 Purchase Credit in satisfaction of the tax arising from that
33 purchase, but not in satisfaction of penalty and interest. A
34 purchaser who uses the Manufacturer's Purchase Credit to
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1 purchase property which is later determined not to be
2 production related tangible personal property may be liable
3 for tax, penalty, and interest on the purchase of that
4 property as of the date of purchase but shall be entitled to
5 use the disallowed Manufacturer's Purchase Credit, so long as
6 it has not expired, on qualifying purchases of production
7 related tangible personal property not previously subject to
8 credit usage. The Manufacturer's Purchase Credit earned by a
9 manufacturer or graphic arts producer expires the last day of
10 the second calendar year following the calendar year in which
11 the credit arose.
12 A purchaser earning Manufacturer's Purchase Credit shall
13 sign and file an annual Report of Manufacturer's Purchase
14 Credit Earned for each calendar year no later than the last
15 day of the sixth month following the calendar year in which a
16 Manufacturer's Purchase Credit is earned. A Report of
17 Manufacturer's Purchase Credit Earned shall be filed on forms
18 as prescribed or approved by the Department and shall state,
19 for each month of the calendar year: (i) the total purchase
20 price of all purchases of exempt manufacturing or graphic
21 arts machinery on which the credit was earned; (ii) the total
22 State Use Tax or Service Use Tax which would have been due on
23 those items; (iii) the percentage used to calculate the
24 amount of credit earned; (iv) the amount of credit earned;
25 and (v) such other information as the Department may
26 reasonably require. A purchaser earning Manufacturer's
27 Purchase Credit shall maintain records which identify, as to
28 each purchase of manufacturing or graphic arts machinery and
29 equipment on which the purchaser earned Manufacturer's
30 Purchase Credit, the vendor (including, if applicable, either
31 the vendor's registration number or Federal Employer
32 Identification Number), the purchase price, and the amount of
33 Manufacturer's Purchase Credit earned on each purchase.
34 A purchaser using Manufacturer's Purchase Credit shall
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1 sign and file an annual Report of Manufacturer's Purchase
2 Credit Used for each calendar year no later than the last day
3 of the sixth month following the calendar year in which a
4 Manufacturer's Purchase Credit is used. A Report of
5 Manufacturer's Purchase Credit Used shall be filed on forms
6 as prescribed or approved by the Department and shall state,
7 for each month of the calendar year: (i) the total purchase
8 price of production related tangible personal property
9 purchased from Illinois suppliers; (ii) the total purchase
10 price of production related tangible personal property
11 purchased from out-of-state suppliers; (iii) the total amount
12 of credit used during such month; and (iv) such other
13 information as the Department may reasonably require. A
14 purchaser using Manufacturer's Purchase Credit shall maintain
15 records that identify, as to each purchase of production
16 related tangible personal property on which the purchaser
17 used Manufacturer's Purchase Credit, the vendor (including,
18 if applicable, either the vendor's registration number or
19 Federal Employer Identification Number), the purchase price,
20 and the amount of Manufacturer's Purchase Credit used on each
21 purchase.
22 No annual report shall be filed before May 1, 1996. A
23 purchaser that fails to file an annual Report of
24 Manufacturer's Purchase Credit Earned or an annual Report of
25 Manufacturer's Purchase Credit Used by the last day of the
26 sixth month following the end of the calendar year shall
27 forfeit all Manufacturer's Purchase Credit for that calendar
28 year unless it establishes that its failure to file was due
29 to reasonable cause. Manufacturer's Purchase Credit reports
30 may be amended to report and claim credit on qualifying
31 purchases not previously reported at any time before the
32 credit would have expired, unless both the Department and the
33 purchaser have agreed to an extension of the statute of
34 limitations for the issuance of a notice of tax liability as
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1 provided in Section 4 of the Retailers' Occupation Tax Act.
2 If the time for assessment or refund has been extended, then
3 amended reports for a calendar year may be filed at any time
4 prior to the date to which the statute of limitations for the
5 calendar year or portion thereof has been extended. No
6 Manufacturer's Purchase Credit report filed with the
7 Department for periods prior to January 1, 1995 shall be
8 approved. Manufacturer's Purchase Credit claimed on an
9 amended report may be used to satisfy tax liability under the
10 Use Tax Act or the Service Use Tax Act (i) on qualifying
11 purchases of production related tangible personal property
12 made after the date the amended report is filed or (ii)
13 assessed by the Department on qualifying purchases of
14 production related tangible personal property made in the
15 case of manufacturers on or after January 1, 1995, or in the
16 case of graphic arts producers on or after July 1, 1996.
17 If the purchaser is not the manufacturer or a graphic
18 arts producer, but rents or leases the use of the property to
19 a manufacturer or a graphic arts producer, the purchaser may
20 earn, report, and use Manufacturer's Purchase Credit in the
21 same manner as a manufacturer or graphic arts producer.
22 A purchaser shall not be entitled to any Manufacturer's
23 Purchase Credit for a purchase that is required to be
24 reported and is not timely reported as provided in this
25 Section. A purchaser remains liable for (i) any tax that was
26 satisfied by use of a Manufacturer's Purchase Credit, as of
27 the date of purchase, if that use is not timely reported as
28 required in this Section and (ii) for any applicable
29 penalties and interest for failing to pay the tax when due.
30 (Source: P.A. 88-547, eff. 6-30-94; 89-89, eff. 6-30-95;
31 89-235, eff. 8-4-95; 89-531, eff. 7-19-96.)
32 Section 99. Effective date. This Act takes effect upon
33 becoming law.