Section 460.101  Nature and Scope of the Tax

 

a)         The Coin-Operated Amusement Device and Redemption Machine Tax Act (the Act) imposes an annual privilege tax on the privilege of operating, in this State:

 

1)         every coin-in-the-slot-operated amusement device in this State, including a device operated or operable by insertion of coins, tokens, chips or similar objects, or operated by the use of a debit or prepaid card or mobile device, that returns to the player no money or property or right to receive money or property; and

 

2)         every redemption machine, as defined in Section 460.105.

 

b)         The amount of the tax is $30 for each device or machine for which a privilege tax decal is issued for a period beginning on or after August 1 of any year through July 31 of the following year.  All privilege tax decals issued by the Department shall expire on July 31 following issuance [35 ILCS 510/3(l)].  Privilege tax decals are issued in one-year increments only.

 

c)         The tax payable with respect to any amusement device or redemption machine must be remitted to the Department of Revenue with a form containing information regarding that device or machine.  The remittance should be made payable to the Department of Revenue.

 

d)         If an amount of tax, penalty or interest has been paid in error to the Department, a taxpayer may file a claim for credit or refund with the Department in accordance with the provisions of Section 2 of the Act [35 ILCS 510/2(b)].

 

(Source:  Amended at 41 Ill. Reg. 3495, effective March 10, 2017)

 

Section 460.105  Illustrations of Taxable and Nontaxable Coin-Operated Amusement Devices and Redemption Machines

 

a)         Coin-operated Amusement Devices – Taxable Devices

 

1)         To be taxable, the device must be coin-operated, or operated by the insertion of tokens, chips or similar objects, or operated by the use of a debit or prepaid card or mobile device, and it must be an amusement device.  However, if an otherwise taxable amusement device is equipped to be operated by means of the insertion of coins, tokens, chips or similar objects, or operated by the use of a debit or prepaid card or mobile device, it is the Department's position that the device does not cease to be a taxable device because of the fact that the operator of the device has his or her customers pay for the use of the device at the bar or in some other way that avoids the use of a receptacle that accepts coins, tokens, chips or similar objects, or a debit or prepaid card or mobile device.

 

2)         The device cannot return money or property or the right to receive money or property to the player.  For example, a crane game that offers players the right to receive merchandise contained in the machine is not subject to the tax.

 

3)         An amusement device is a device that is played primarily for amusement or entertainment rather than for the purchase of some specific commodity or service.  Every kind of coin-operated amusement device, that does not return money or property or the right to receive money or property to the player, is subject to the tax.  Therefore, the tax applies not only to coin-operated pinball machines, gun-ray devices and shuffleboards (as it did prior to August 1, 1963), but also (commencing August 1, 1963) to coin-operated hockey games, baseball games, horse racing games, gun games of all kinds, pool games, mechanical pony rides and other similar devices, juke boxes, fortune-telling machines and anything else that comes within the foregoing definition of a coin-operated amusement device.

 

b)         Redemption Machines

Tax shall be imposed as required in Section 460.101 on the privilege of operating a redemption machine.  For purposes of this Part, a redemption machine is a single-player or multi-player amusement device involving a game, the object of which is throwing, rolling, bowling, shooting, placing, or propelling a ball or other object that is either physical or computer generated on a display or with lights into, upon, or against a hole or other target that is either physical or computer generated on a display or with lights, or stopping, by physical, mechanical, or electronic means, a moving object that is either physical or computer generated on a display or with lights into, upon, or against a hole or other target that is either physical or computer generated on a display or with lights, provided that all the following conditions are met:

 

1)         The outcome of the game is predominantly determined by the skill of the player;

 

2)         The award of the prize is based solely upon the player's achieving the object of the game or otherwise upon the player's score;

 

3)         Only merchandise prizes are awarded;

 

4)         The wholesale value of prizes awarded in lieu of tickets or tokens for single play of the device does not exceed $25 [720 ILCS 5/28-2(a)(4)]; and

 

5)         The redemption value of each individual ticket, token, or other representations of value from a single play of the device does not exceed $25.  The redemption value of tickets, tokens, and other representations of value may be accumulated by players to redeem prizes of greater value. [720 ILCS 5/28-2(a)(4)(E)]

 

c)         Nontaxable Devices and Redemption Machines

 

1)         The tax does not apply to a coin-operated device maintained by a public utility for furnishing public utility service (such as telephone service).  The tax does not apply to any coin-operated device designed and used strictly as a means of vending merchandise or service.  For example, this tax does not apply (among other things) to cigarette, soft drink and other merchandise vending machines, nor to coin-operated scales that merely provide information concerning a person's weight, nor to coin-operated machines that merely provide the customer with a photographing service, nor to coin-operated machines that merely provide a laundry or dry cleaning service.

 

2)         The tax does not apply to gambling devices, as defined in Section 28-2 of the Criminal Code [720 ILCS 5/28-2].

 

3)         The tax does not apply to a coin-operated amusement device or redemption machine that would otherwise be taxable when the person operating the device or machine is a private club or organization, and when the club or organization restricts the displaying of the amusement device or machine to its membership and the device or machine is not displayed in such a manner as to be accessible to the public.  The exemption described in the preceding sentence arises from the fact that the Act is worded so that it applies only to the displaying of coin-operated amusement devices or redemption machines that are "to be played or operated by the public".  However, a private club or organization cannot be established for the purpose of displaying amusement devices or redemption machines and thus evade the privilege tax decal requirements of the Act.

 

(Source:  Amended at 41 Ill. Reg. 3495, effective March 10, 2017)

 

Section 460.110  Privilege Tax Decals  

 

a)         Obtaining Privilege Tax Decals  

 

1)         Every person, firm, limited liability company, or corporation displaying any taxable amusement device or redemption machine to be played or operated by the public at any place owned or leased by such person, firm, limited liability company, or corporation shall, before displaying the device or machine, file with the Department of Revenue a form containing information regarding each such device or machine.  The form shall include the name and address of the person, firm, limited liability company, or corporation, a brief description of the device or machine to be displayed and the premises where such device or machine will be located.  The applicant should answer all questions and give all the information required on the form.  The information must be provided on a form prescribed by the Department.

 

2)         The information form must be accompanied by the tax.  A separate privilege tax decal must be obtained for each taxable unit.

 

b)         Who May Obtain Privilege Tax Decals

The person who is required to apply for the privilege tax decal is the person who displays the taxable device or machine to be played or operated by the public at a place owned or leased by that person, regardless of whether that person is the owner of the machine or device.  There is no exemption from the taxing requirements of the Act because of the fact that the operator of the coin-operated amusement device or redemption machine is a not-for-profit organization.

 

c)         Issuance of Privilege Tax Decals – Transferability

 

1)         Upon receipt of an information form in proper form, together with the applicable tax, the Department will issue a privilege tax decal to the applicant.  The privilege tax decal must be securely affixed to the device or machine for which it is issued and must be conspicuously displayed.  A privilege tax decal is transferable from one amusement device or redemption machine to another amusement device or redemption machine operated by the same privilege tax decal holder or from one address to another address of a privilege tax decal holder, provided that the Department is promptly notified of such transfer on a transfer form which the Department will make available on request for this purpose.

 

2)         However, no privilege tax decal is transferable from one person to another.  For example, a privilege tax decal  could not be transferred from one individual to another; from one partnership to another; from one corporation to another; from an individual to a partnership or to a corporation (even though the individual is one of the partners or owns the stock in the corporation); from a partnership to an individual or to a corporation (even though one of the partners is the individual or the partners own the stock in the corporation); or from a corporation to a partnership or to an individual.  Each of these entities (i.e., each individual, each partnership and each corporation) is a different legal person.  Similarly, a receiver, trustee in bankruptcy, administrator, executor, conservator or other legal representative appointed by a court is a different legal person from the person (or the person's estate) to whose assets such legal representative succeeds.

 

d)         Penalties

 

1)         On every device and machine found to have been displayed without the tax imposed by the Act having been paid, the tax otherwise payable shall be increased by 30% as a penalty [35 ILCS 510/5].  Persons operating or displaying devices or machines in such a manner that they could be played without the tax imposed by the Act having first been paid, shall be guilty of a Class C misdemeanor [35 ILCS 510/8].

 

2)         Also, any coin-operated amusement device or redemption machine operated in a manner that violates any provision of the Act is subject to seizure and confiscation and forfeiture in accordance with the provisions of Sections 13 and 14 of the Act.

 

(Source:  Amended at 28 Ill. Reg. 2284, effective January 22, 2004)