Illinois General Assembly - Full Text of HB3480

LRB104 11072 HLH 21154 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB3480

Introduced 2/18/2025, by Rep. Will Guzzardi

SYNOPSIS AS INTRODUCED:

35 ILCS 105/3	from Ch. 120, par. 439.3
35 ILCS 105/3-27
35 ILCS 110/3	from Ch. 120, par. 439.33
35 ILCS 110/3-27
35 ILCS 115/3	from Ch. 120, par. 439.103
35 ILCS 115/3-27
35 ILCS 120/2
35 ILCS 120/2-27
35 ILCS 630/2	from Ch. 120, par. 2002

Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, the Retailers' Occupation Tax Act, and the Telecommunications Excise Tax Act. Provides that prepaid telephone calling arrangements shall be subject to the tax imposed under those Acts only if the telephone or telecommunications services and the recharge of such services are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Provides that, on and after January 1, 2026, "prepaid telephone calling arrangements" do not include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Provides that "prepaid telephone calling arrangements" include the recharge of a prepaid calling arrangement if and only if, on and after January 1, 2026, the additional telephone or telecommunications services included in the recharge are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

A BILL FOR

AN ACT concerning revenue.

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

Section 5. The Use Tax Act is amended by changing Sections 3 and 3-27 as follows:

(35 ILCS 105/3) (from Ch. 120, par. 439.3)

Sec. 3. Tax imposed. A tax is imposed upon the privilege of using in this State tangible personal property purchased, which, on and after January 1, 2025, includes leased, at retail from a retailer, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for commercial exhibition. Beginning January 1, 2001 and through December 31, 2025, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. On and after January 1, 2026, prepaid telephone calling arrangements shall be subject to the tax imposed under this Act only if the telephone or telecommunications services and the recharge of such services are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Purchases of (1) electricity delivered to customers by wire; (2) natural or artificial gas that is delivered to customers through pipes, pipelines, or mains; and (3) water that is delivered to customers through pipes, pipelines, or mains are not subject to tax under this Act. The provisions of Public Act 98-583 this amendatory Act of the 98th General Assembly are declaratory of existing law as to the meaning and scope of this Act.

The imposition of the tax under this Act on the privilege of using tangible personal property leased at retail applies to leases of tangible personal property in effect, entered into, or renewed on or after January 1, 2025. In the case of leases, except as otherwise provided in this Act, the lessor, in collecting the tax, may collect for each tax return period, only the tax applicable to that part of the selling price actually received during such tax return period.

The inclusion of leases in the tax imposed under this Act by this amendatory Act of the 103rd General Assembly does not, however, extend to motor vehicles, watercraft, aircraft, and semitrailers, as defined in Section 1-187 of the Illinois Vehicle Code, that are required to be registered with an agency of this State. The taxation of these items shall continue in effect as prior to the effective date of the changes made to this Section by this amendatory Act of the 103rd General Assembly (i.e. dealers owe retailers' occupation tax, lessors owe use tax, and lessees are not subject to retailers' occupation or use tax).

(Source: P.A. 103-592, eff. 1-1-25.)

(35 ILCS 105/3-27)

Sec. 3-27. Prepaid telephone calling arrangements. "Prepaid telephone calling arrangements" mean the right to exclusively purchase telephone or telecommunications services that must be paid for in advance and enable the origination of one or more intrastate, interstate, or international telephone calls or other telecommunications using an access number, an authorization code, or both, whether manually or electronically dialed, for which payment to a retailer must be made in advance, provided that, unless recharged, no further service is provided once that prepaid amount of service has been consumed, and provided further that, on and after December 31, 2025, the telephone or telecommunications services included in such arrangement are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangement if and only if, on and after January 1, 2026, the telephone or telecommunications services included in such arrangement are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. For purposes of this Section, "recharge" means the purchase of additional prepaid telephone or telecommunications services whether or not the purchaser acquires a different access number or authorization code. For purposes of this Section, "telecommunications" means that term as defined in Section 2 of the Telecommunications Excise Tax Act. "Prepaid telephone calling arrangement" does not include an arrangement whereby the service provider reflects the amount of a purchase as a credit on an account for a customer under an existing subscription plan, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

(Source: P.A. 91-870, eff. 6-22-00.)

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

(35 ILCS 110/3) (from Ch. 120, par. 439.33)

Sec. 3. Tax imposed. A tax is imposed upon the privilege of using in this State real or tangible personal property acquired, which, on and after January 1, 2025, includes tangible personal property acquired through a lease, as an incident to the purchase of a service from a serviceman, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for public commercial exhibition. Beginning January 1, 2001 and through December 31, 2025, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. On and after January 1, 2026, prepaid telephone calling arrangements shall be subject to the tax imposed under this Act only if the telephone or telecommunications services and the recharge of such services are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Purchases of (1) electricity delivered to customers by wire; (2) natural or artificial gas that is delivered to customers through pipes, pipelines, or mains; and (3) water that is delivered to customers through pipes, pipelines, or mains are not subject to tax under this Act. The provisions of Public Act 98-583 this amendatory Act of the 98th General Assembly are declaratory of existing law as to the meaning and scope of this Act.

The imposition of the tax under this Act on leases applies to leases of tangible personal property in effect, entered into, or renewed on or after January 1, 2025. In the case of leases, except as otherwise provided in this Act, the serviceman who is a lessor, in collecting the tax, may collect for each tax return period only the tax applicable to that part of the selling price actually received during such tax return period.

(Source: P.A. 103-592, eff. 1-1-25.)

(35 ILCS 110/3-27)

Sec. 3-27. Prepaid telephone calling arrangements. "Prepaid telephone calling arrangements" mean the right to exclusively purchase telephone or telecommunications services that must be paid for in advance and enable the origination of one or more intrastate, interstate, or international telephone calls or other telecommunications using an access number, an authorization code, or both, whether manually or electronically dialed, for which payment to a retailer must be made in advance, provided that, unless recharged, no further service is provided once that prepaid amount of service has been consumed, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangement if and only if, on and after January 1, 2026, the additional telephone or telecommunications services included in the recharge are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. For purposes of this Section, "recharge" means the purchase of additional prepaid telephone or telecommunications services whether or not the purchaser acquires a different access number or authorization code. For purposes of this Section, "telecommunications" means that term as defined in Section 2 of the Telecommunications Excise Tax Act. "Prepaid telephone calling arrangement" does not include an arrangement whereby the service provider reflects the amount of the purchase as a credit on an account for a customer under an existing subscription plan, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

(Source: P.A. 91-870, eff. 6-22-00.)

Section 15. The Service Occupation Tax Act is amended by changing Sections 3 and 3-27 as follows:

(35 ILCS 115/3) (from Ch. 120, par. 439.103)

Sec. 3. Tax imposed. A tax is imposed upon all persons engaged in the business of making sales of service (referred to as "servicemen") on all tangible personal property transferred, including, on and after January 1, 2025, transferred by lease, as an incident of a sale of service, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for public commercial exhibition. Beginning January 1, 2001 and through December 31, 2025, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. On and after January 1, 2026, prepaid telephone calling arrangements shall be subject to the tax imposed under this Act only if the telephone or telecommunications services and the recharge of such services are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Sales of (1) electricity delivered to customers by wire; (2) natural or artificial gas that is delivered to customers through pipes, pipelines, or mains; and (3) water that is delivered to customers through pipes, pipelines, or mains are not subject to tax under this Act. The provisions of Public Act 98-583 this amendatory Act of the 98th General Assembly are declaratory of existing law as to the meaning and scope of this Act.

The imposition of the tax under this Act on tangible personal property transferred by lease by persons engaged in the business of making sales of service applies to leases in effect, entered into, or renewed on or after January 1, 2025. In the case of leases, except as otherwise provided in this Act, the serviceman who is a lessor must remit for each tax return period only the tax applicable to that part of the selling price actually received during such tax return period.

(Source: P.A. 103-592, eff. 1-1-25.)

(35 ILCS 115/3-27)

Sec. 3-27. Prepaid telephone calling arrangements. "Prepaid telephone calling arrangements" mean the right to exclusively purchase telephone or telecommunications services that must be paid for in advance and enable the origination of one or more intrastate, interstate, or international telephone calls or other telecommunications using an access number, an authorization code, or both, whether manually or electronically dialed, for which payment to a retailer must be made in advance, provided that, unless recharged, no further service is provided once that prepaid amount of service has been consumed, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangement if and only if, on and after January 1, 2026, the additional telephone or telecommunications services included in the recharge are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. For purposes of this Section, "recharge" means the purchase of additional prepaid telephone or telecommunications services whether or not the purchaser acquires a different access number or authorization code. For purposes of this Section, "telecommunications" means that term as defined in Section 2 of the Telecommunications Excise Tax Act. "Prepaid telephone calling arrangement" does not include an arrangement whereby the service provider reflects the amount of the purchase as a credit on an account for a customer under an existing subscription plan, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

(Source: P.A. 91-870, eff. 6-22-00.)

Section 20. The Retailers' Occupation Tax Act is amended by changing Sections 2 and 2-27 as follows:

(35 ILCS 120/2)

Sec. 2. Tax imposed.

(a) A tax is imposed upon persons engaged in the business of selling at retail, which, on and after January 1, 2025, includes leasing, tangible personal property, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for public commercial exhibition. Beginning January 1, 2001 and through December 31, 2025, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. On and after January 1, 2026, prepaid telephone calling arrangements shall be subject to the tax imposed under this Act only if the telephone or telecommunications services and the recharge of such services are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

The imposition of the tax under this Act on persons engaged in the business of leasing tangible personal property applies to leases in effect, entered into, or renewed on or after January 1, 2025. In the case of leases, except as otherwise provided in this Act, the lessor must remit, for each tax return period, only the tax applicable to that part of the selling price actually received during such tax return period.

The inclusion of leases in the tax imposed under this Act by Public Act 103-592 this amendatory Act of the 103rd General Assembly does not, however, extend to motor vehicles, watercraft, aircraft, and semitrailers, as defined in Section 1-187 of the Illinois Vehicle Code, that are required to be registered with an agency of this State. The taxation of these items shall continue in effect as prior to the effective date of the changes made to this Section by Public Act 103-592 this amendatory Act of the 103rd General Assembly (i.e., dealers owe retailers' occupation tax, lessors owe use tax, and lessees are not subject to retailers' occupation or use tax).

Sales of (1) electricity delivered to customers by wire; (2) natural or artificial gas that is delivered to customers through pipes, pipelines, or mains; and (3) water that is delivered to customers through pipes, pipelines, or mains are not subject to tax under this Act. The provisions of Public Act 98-583 this amendatory Act of the 98th General Assembly are declaratory of existing law as to the meaning and scope of this Act.

(b) Beginning on January 1, 2021, a remote retailer is engaged in the occupation of selling at retail in Illinois for purposes of this Act, if:

(1) the cumulative gross receipts from sales of tangible personal property to purchasers in Illinois are $100,000 or more; or

(2) the retailer enters into 200 or more separate transactions for the sale of tangible personal property to purchasers in Illinois.

Remote retailers that meet or exceed the threshold in either paragraph (1) or (2) above shall be liable for all applicable State retailers' and locally imposed retailers' occupation taxes administered by the Department on all retail sales to Illinois purchasers.

The remote retailer shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets the criteria of either paragraph (1) or (2) of this subsection for the preceding 12-month period. If the retailer meets the criteria of either paragraph (1) or (2) for a 12-month period, he or she is considered a retailer maintaining a place of business in this State and is required to collect and remit the tax imposed under this Act and all retailers' occupation tax imposed by local taxing jurisdictions in Illinois, provided such local taxes are administered by the Department, and to file all applicable returns for one year. At the end of that one-year period, the retailer shall determine whether the retailer met the criteria of either paragraph (1) or (2) for the preceding 12-month period. If the retailer met the criteria in either paragraph (1) or (2) for the preceding 12-month period, he or she is considered a retailer maintaining a place of business in this State and is required to collect and remit all applicable State and local retailers' occupation taxes and file returns for the subsequent year. If, at the end of a one-year period, a retailer that was required to collect and remit the tax imposed under this Act determines that he or she did not meet the criteria in either paragraph (1) or (2) during the preceding 12-month period, then the retailer shall subsequently determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets the criteria of either paragraph (1) or (2) for the preceding 12-month period.

(b-2) Beginning on January 1, 2025, a retailer maintaining a place of business in this State that makes retail sales of tangible personal property to Illinois customers from a location or locations outside of Illinois is engaged in the occupation of selling at retail in Illinois for the purposes of this Act. Those retailers are liable for all applicable State and locally imposed retailers' occupation taxes administered by the Department on retail sales made by those retailers to Illinois customers from locations outside of Illinois.

(b-5) For the purposes of this Section, neither the gross receipts from nor the number of separate transactions for sales of tangible personal property to purchasers in Illinois that a remote retailer makes through a marketplace facilitator shall be included for the purposes of determining whether he or she has met the thresholds of subsection (b) of this Section so long as the remote retailer has received certification from the marketplace facilitator that the marketplace facilitator is legally responsible for payment of tax on such sales.

(b-10) A remote retailer that is required to collect taxes imposed under the Use Tax Act on retail sales made to Illinois purchasers or a retailer maintaining a place of business in this State that is required to collect taxes imposed under the Use Tax Act on retail sales made to Illinois purchasers shall be liable to the Department for such taxes, except when the remote retailer or retailer maintaining a place of business in this State is relieved of the duty to remit such taxes by virtue of having paid to the Department taxes imposed by this Act in accordance with this Section upon his or her gross receipts from such sales.

(c) Marketplace facilitators engaged in the business of selling at retail tangible personal property in Illinois. Beginning January 1, 2021, a marketplace facilitator is engaged in the occupation of selling at retail tangible personal property in Illinois for purposes of this Act if, during the previous 12-month period:

(1) the cumulative gross receipts from sales of tangible personal property on its own behalf or on behalf of marketplace sellers to purchasers in Illinois equals $100,000 or more; or

(2) the marketplace facilitator enters into 200 or more separate transactions on its own behalf or on behalf of marketplace sellers for the sale of tangible personal property to purchasers in Illinois, regardless of whether the marketplace facilitator or marketplace sellers for whom such sales are facilitated are registered as retailers in this State.

A marketplace facilitator who meets either paragraph (1) or (2) of this subsection is required to remit the applicable State retailers' occupation taxes under this Act and local retailers' occupation taxes administered by the Department on all taxable sales of tangible personal property made by the marketplace facilitator or facilitated for marketplace sellers to customers in this State. A marketplace facilitator selling or facilitating the sale of tangible personal property to customers in this State is subject to all applicable procedures and requirements of this Act.

The marketplace facilitator shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets the criteria of either paragraph (1) or (2) of this subsection for the preceding 12-month period. If the marketplace facilitator meets the criteria of either paragraph (1) or (2) for a 12-month period, he or she is considered a retailer maintaining a place of business in this State and is required to remit the tax imposed under this Act and all retailers' occupation tax imposed by local taxing jurisdictions in Illinois, provided such local taxes are administered by the Department, and to file all applicable returns for one year. At the end of that one-year period, the marketplace facilitator shall determine whether it met the criteria of either paragraph (1) or (2) for the preceding 12-month period. If the marketplace facilitator met the criteria in either paragraph (1) or (2) for the preceding 12-month period, it is considered a retailer maintaining a place of business in this State and is required to collect and remit all applicable State and local retailers' occupation taxes and file returns for the subsequent year. If at the end of a one-year period a marketplace facilitator that was required to collect and remit the tax imposed under this Act determines that he or she did not meet the criteria in either paragraph (1) or (2) during the preceding 12-month period, the marketplace facilitator shall subsequently determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets the criteria of either paragraph (1) or (2) for the preceding 12-month period.

A marketplace facilitator shall be entitled to any credits, deductions, or adjustments to the sales price otherwise provided to the marketplace seller, in addition to any such adjustments provided directly to the marketplace facilitator. This Section pertains to, but is not limited to, adjustments such as discounts, coupons, and rebates. In addition, a marketplace facilitator shall be entitled to the retailers' discount provided in Section 3 of the Retailers' Occupation Tax Act on all marketplace sales, and the marketplace seller shall not include sales made through a marketplace facilitator when computing any retailers' discount on remaining sales. Marketplace facilitators shall report and remit the applicable State and local retailers' occupation taxes on sales facilitated for marketplace sellers separately from any sales or use tax collected on taxable retail sales made directly by the marketplace facilitator or its affiliates.

The marketplace facilitator is liable for the remittance of all applicable State retailers' occupation taxes under this Act and local retailers' occupation taxes administered by the Department on sales through the marketplace and is subject to audit on all such sales. The Department shall not audit marketplace sellers for their marketplace sales where a marketplace facilitator remitted the applicable State and local retailers' occupation taxes unless the marketplace facilitator seeks relief as a result of incorrect information provided to the marketplace facilitator by a marketplace seller as set forth in this Section. The marketplace facilitator shall not be held liable for tax on any sales made by a marketplace seller that take place outside of the marketplace and which are not a part of any agreement between a marketplace facilitator and a marketplace seller. In addition, marketplace facilitators shall not be held liable to State and local governments of Illinois for having charged and remitted an incorrect amount of State and local retailers' occupation tax if, at the time of the sale, the tax is computed based on erroneous data provided by the State in database files on tax rates, boundaries, or taxing jurisdictions or incorrect information provided to the marketplace facilitator by the marketplace seller.

(d) A marketplace facilitator shall:

(1) certify to each marketplace seller that the marketplace facilitator assumes the rights and duties of a retailer under this Act with respect to sales made by the marketplace seller through the marketplace; and

(2) remit taxes imposed by this Act as required by this Act for sales made through the marketplace.

(e) A marketplace seller shall retain books and records for all sales made through a marketplace in accordance with the requirements of this Act.

(f) A marketplace facilitator is subject to audit on all marketplace sales for which it is considered to be the retailer, but shall not be liable for tax or subject to audit on sales made by marketplace sellers outside of the marketplace.

(g) A marketplace facilitator required to collect taxes imposed under the Use Tax Act on marketplace sales made to Illinois purchasers shall be liable to the Department for such taxes, except when the marketplace facilitator is relieved of the duty to remit such taxes by virtue of having paid to the Department taxes imposed by this Act in accordance with this Section upon his or her gross receipts from such sales.

(h) Nothing in this Section shall allow the Department to collect retailers' occupation taxes from both the marketplace facilitator and marketplace seller on the same transaction.

(i) If, for any reason, the Department is prohibited from enforcing the marketplace facilitator's duty under this Act to remit taxes pursuant to this Section, the duty to remit such taxes remains with the marketplace seller.

(j) Nothing in this Section affects the obligation of any consumer to remit use tax for any taxable transaction for which a certified service provider acting on behalf of a remote retailer or a marketplace facilitator does not collect and remit the appropriate tax.

(k) Nothing in this Section shall allow the Department to collect the retailers' occupation tax from both the marketplace facilitator and the marketplace seller.

(Source: P.A. 103-592, eff. 1-1-25; 103-983, eff. 1-1-25; revised 11-26-24.)

(35 ILCS 120/2-27)

Sec. 2-27. Prepaid telephone calling arrangements. "Prepaid telephone calling arrangements" mean the right to exclusively purchase telephone or telecommunications services that must be paid for in advance and enable the origination of one or more intrastate, interstate, or international telephone calls or other telecommunications using an access number, an authorization code, or both, whether manually or electronically dialed, for which payment to a retailer must be made in advance, provided that, unless recharged, no further service is provided once that prepaid amount of service has been consumed, and provided further that, on and after January 1, 2026, the telephone or telecommunications services included in such arrangement are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangement if and only if, on and after January 1, 2026, the additional telephone or telecommunications services included in the recharge are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. For purposes of this Section, "recharge" means the purchase of additional prepaid telephone or telecommunications services whether or not the purchaser acquires a different access number or authorization code. For purposes of this Section, "telecommunications" means that term as defined in Section 2 of the Telecommunications Excise Tax Act. "Prepaid telephone calling arrangement" does not include an arrangement whereby the service provider reflects the amount of the purchase as a credit on an account for a customer under an existing subscription plan, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

(Source: P.A. 103-781, eff. 8-5-24; 103-1055, eff. 12-20-24.)

Section 25. The Telecommunications Excise Tax Act is amended by changing Section 2 as follows:

(35 ILCS 630/2) (from Ch. 120, par. 2002)

Sec. 2. As used in this Article, unless the context clearly requires otherwise:

(a) "Gross charge" means the amount paid for the act or privilege of originating or receiving telecommunications in this State and for all services and equipment provided in connection therewith by a retailer, valued in money whether paid in money or otherwise, including cash, credits, services, and property of every kind or nature, and shall be determined without any deduction on account of the cost of such telecommunications, the cost of materials used, labor or service costs, or any other expense whatsoever. In case credit is extended, the amount thereof shall be included only as and when paid. "Gross charges" for private line service shall include charges imposed at each channel termination point within this State, charges for the channel mileage between each channel termination point within this State, and charges for that portion of the interstate inter-office channel provided within Illinois. Charges for that portion of the interstate inter-office channel provided in Illinois shall be determined by the retailer as follows: (i) for interstate inter-office channels having 2 channel termination points, only one of which is in Illinois, 50% of the total charge imposed; or (ii) for interstate inter-office channels having more than 2 channel termination points, one or more of which are in Illinois, an amount equal to the total charge multiplied by a fraction, the numerator of which is the number of channel termination points within Illinois and the denominator of which is the total number of channel termination points. Prior to January 1, 2004, any method consistent with this paragraph or other method that reasonably apportions the total charges for interstate inter-office channels among the states in which channel terminations points are located shall be accepted as a reasonable method to determine the charges for that portion of the interstate inter-office channel provided within Illinois for that period. However, "gross charges" shall not include any of the following:

(1) Any amounts added to a purchaser's bill because of a charge made pursuant to (i) the tax imposed by this Article; (ii) charges added to customers' bills pursuant to the provisions of Section Sections 9-221 or 9-222 of the Public Utilities Act, as amended, or any similar charges added to customers' bills by retailers who are not subject to rate regulation by the Illinois Commerce Commission for the purpose of recovering any of the tax liabilities or other amounts specified in such provisions of such Act; (iii) the tax imposed by Section 4251 of the Internal Revenue Code; (iv) 911 surcharges; or (v) the tax imposed by the Simplified Municipal Telecommunications Tax Act.

(2) Charges for a sent collect telecommunication received outside of the State.

(3) Charges for leased time on equipment or charges for the storage of data or information for subsequent retrieval or the processing of data or information intended to change its form or content. Such equipment includes, but is not limited to, the use of calculators, computers, data processing equipment, tabulating equipment, or accounting equipment and also includes the usage of computers under a time-sharing agreement.

(4) Charges for customer equipment, including such equipment that is leased or rented by the customer from any source, wherein such charges are disaggregated and separately identified from other charges.

(5) Charges to business enterprises certified under Section 9-222.1 of the Public Utilities Act, as amended, or under Section 95 of the Reimagining Energy and Vehicles in Illinois Act, to the extent of such exemption and during the period of time specified by the Department of Commerce and Economic Opportunity.

(5.1) Charges to business enterprises certified under the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act, to the extent of the exemption and during the period of time specified by the Department of Commerce and Economic Opportunity.

(5.2) Charges to entities certified under Section 605-1115 of the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois to the extent of the exemption and during the period of time specified by the Department of Commerce and Economic Opportunity.

(6) Charges for telecommunications and all services and equipment provided in connection therewith between a parent corporation and its wholly owned subsidiaries or between wholly owned subsidiaries when the tax imposed under this Article has already been paid to a retailer and only to the extent that the charges between the parent corporation and wholly owned subsidiaries or between wholly owned subsidiaries represent expense allocation between the corporations and not the generation of profit for the corporation rendering such service.

(7) Bad debts. Bad debt means any portion of a debt that is related to a sale at retail for which gross charges are not otherwise deductible or excludable that has become worthless or uncollectable, as determined under applicable federal income tax standards. If the portion of the debt deemed to be bad is subsequently paid, the retailer shall report and pay the tax on that portion during the reporting period in which the payment is made.

(8) Charges paid by inserting coins in coin-operated telecommunication devices.

(9) Amounts paid by telecommunications retailers under the Telecommunications Municipal Infrastructure Maintenance Fee Act.

(10) Charges for nontaxable services or telecommunications if (i) those charges are aggregated with other charges for telecommunications that are taxable, (ii) those charges are not separately stated on the customer bill or invoice, and (iii) the retailer can reasonably identify the nontaxable charges on the retailer's books and records kept in the regular course of business. If the nontaxable charges cannot reasonably be identified, the gross charge from the sale of both taxable and nontaxable services or telecommunications billed on a combined basis shall be attributed to the taxable services or telecommunications. The burden of proving nontaxable charges shall be on the retailer of the telecommunications.

(b) "Amount paid" means the amount charged to the taxpayer's service address in this State regardless of where such amount is billed or paid.

(c) "Telecommunications", in addition to the meaning ordinarily and popularly ascribed to it, includes, without limitation, messages or information transmitted through use of local, toll, and wide area telephone service; private line services; channel services; telegraph services; teletypewriter; computer exchange services; cellular mobile telecommunications service; specialized mobile radio; stationary 2-way two way radio; paging service; or any other form of mobile and portable one-way or 2-way two-way communications; or any other transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber optics fiber-optics, laser, microwave, radio, satellite, or similar facilities. As used in this Act, "private line" means a dedicated non-traffic sensitive service for a single customer, that entitles the customer to exclusive or priority use of a communications channel or group of channels, from one or more specified locations to one or more other specified locations. The definition of "telecommunications" shall not include value added services in which computer processing applications are used to act on the form, content, code, and protocol of the information for purposes other than transmission. "Telecommunications" shall not include purchases of telecommunications by a telecommunications service provider for use as a component part of the service provided by him to the ultimate retail consumer who originates or terminates the taxable end-to-end communications. Carrier access charges, right of access charges, charges for use of inter-company facilities, and all telecommunications resold in the subsequent provision of, used as a component of, or integrated into end-to-end telecommunications service shall be non-taxable as sales for resale.

(d) "Interstate telecommunications" means all telecommunications that either originate or terminate outside this State.

(e) "Intrastate telecommunications" means all telecommunications that originate and terminate within this State.

(f) "Department" means the Department of Revenue of the State of Illinois.

(g) "Director" means the Director of Revenue for the Department of Revenue of the State of Illinois.

(h) "Taxpayer" means a person who individually or through his agents, employees, or permittees engages in the act or privilege of originating or receiving telecommunications in this State and who incurs a tax liability under this Article.

(i) "Person" means any natural individual, firm, trust, estate, partnership, association, joint stock company, joint venture, corporation, limited liability company, or a receiver, trustee, guardian or other representative appointed by order of any court, the federal Federal and State governments, including State universities created by statute or any city, town, county, or other political subdivision of this State.

(j) "Purchase at retail" means the acquisition, consumption, or use of telecommunication through a sale at retail.

(k) "Sale at retail" means the transmitting, supplying, or furnishing of telecommunications and all services and equipment provided in connection therewith for a consideration to persons other than the federal Federal and State governments, and State universities created by statute and other than between a parent corporation and its wholly owned subsidiaries or between wholly owned subsidiaries for their use or consumption and not for resale.

(l) "Retailer" means and includes every person engaged in the business of making sales at retail as defined in this Article. The Department may, in its discretion, upon application, authorize the collection of the tax hereby imposed by any retailer not maintaining a place of business within this State, who, to the satisfaction of the Department, furnishes adequate security to insure collection and payment of the tax. Such retailer shall be issued, without charge, a permit to collect such tax. When so authorized, it shall be the duty of such retailer to collect the tax upon all of the gross charges for telecommunications in this State in the same manner and subject to the same requirements as a retailer maintaining a place of business within this State. The permit may be revoked by the Department at its discretion.

(m) "Retailer maintaining a place of business in this State", or any like term, means and includes any retailer having or maintaining within this State, directly or by a subsidiary, an office, distribution facilities, transmission facilities, sales office, warehouse or other place of business, or any agent or other representative operating within this State under the authority of the retailer or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such retailer or subsidiary is licensed to do business in this State.

(n) "Service address" means the location of telecommunications equipment from which the telecommunications services are originated or at which telecommunications services are received by a taxpayer. In the event this may not be a defined location, as in the case of mobile phones, paging systems, maritime systems, "service address" means the customer's place of primary use as defined in the Mobile Telecommunications Sourcing Conformity Act. For air-to-ground systems and the like, "service address" shall mean the location of a taxpayer's primary use of the telecommunications equipment as defined by telephone number, authorization code, or location in Illinois where bills are sent.

(o) "Prepaid telephone calling arrangements" mean the right to exclusively purchase telephone or telecommunications services that must be paid for in advance and enable the origination of one or more intrastate, interstate, or international telephone calls or other telecommunications using an access number, an authorization code, or both, whether manually or electronically dialed, for which payment to a retailer must be made in advance, provided that, unless recharged, no further service is provided once that prepaid amount of service has been consumed, and provided further that, on and after January 1, 2026, the telephone or telecommunications services included in such arrangement are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangement if and only if, on and after January 1, 2026, the additional telephone or telecommunications services included in the recharge are obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property. For purposes of this subsection, "recharge" means the purchase of additional prepaid telephone or telecommunications services whether or not the purchaser acquires a different access number or authorization code. "Prepaid telephone calling arrangement" does not include an arrangement whereby a customer purchases a payment card and pursuant to which the service provider reflects the amount of such purchase as a credit on an invoice issued to that customer under an existing subscription plan, nor, on and after January 1, 2026, does it include a recharge that is not obtained through the purchase of a preloaded phone, calling card, or other item of tangible personal property.

(Source: P.A. 102-669, eff. 11-16-21; 102-700, eff. 4-19-22; 102-1125, eff. 2-3-23; 103-595, eff. 6-26-24; revised 10-21-24.)