Public Act 096-1544
 
HB3659 EnrolledLRB096 09388 RCE 19545 b



    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 Section 2 
as follows:
 



    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)


    Sec. 2. "Use" means the exercise by any person of any right 
or power over
tangible personal property incident to the 
ownership of that property,
except that it does not include the 
sale of such property in any form as
tangible personal property 
in the regular course of business to the extent
that such 
property is not first subjected to a use for which it was

purchased, and does not include the use of such property by its 
owner for
demonstration purposes: Provided that the property 
purchased is deemed to
be purchased for the purpose of resale, 
despite first being used, to the
extent to which it is resold 
as an ingredient of an intentionally produced
product or 
by-product of manufacturing.  "Use" does not mean the 
demonstration
use or interim use of tangible personal property 
by a retailer before he sells
that tangible personal property.  
For watercraft or aircraft, if the period of
demonstration use 
or interim use by the retailer exceeds 18 months,
the retailer

shall pay on the retailers' original cost price the tax imposed 
by this Act,
and no credit for that tax is permitted if the 
watercraft or aircraft is
subsequently sold by the retailer.  
"Use" does not mean the physical
incorporation of tangible 
personal property, to the extent not first subjected
to a use 
for which it was purchased, as an ingredient or constituent, 
into
other tangible personal property (a) which is sold in the 
regular course of
business or (b) which the person 
incorporating such ingredient or constituent
therein has 
undertaken at the time of such purchase to cause to be 
transported
in interstate commerce to destinations outside the 
State of Illinois: Provided
that the property purchased is 
deemed to be purchased for the purpose of
resale, despite first 
being used, to the extent to which it is resold as an

ingredient of an intentionally produced product or by-product 
of manufacturing.

    "Watercraft" means a Class 2, Class 3, or Class 4 
watercraft as defined in
Section 3-2 of the Boat Registration 
and Safety Act, a personal watercraft, or
any boat equipped 
with an inboard motor.

    "Purchase at retail" means the acquisition of the ownership 
of or title
to tangible personal property through a sale at 
retail.

    "Purchaser" means anyone who, through a sale at retail, 
acquires the
ownership of tangible personal property for a 
valuable consideration.

    "Sale at retail" means any transfer of the ownership of or 
title to
tangible personal property to a purchaser, for the 
purpose of use, and not
for the purpose of resale in any form 
as tangible personal property to the
extent not first subjected 
to a use for which it was purchased, for a
valuable 
consideration: Provided that the property purchased is deemed 
to
be purchased for the purpose of resale, despite first being 
used, to the
extent to which it is resold as an ingredient of 
an intentionally produced
product or by-product of 
manufacturing.  For this purpose, slag produced as
an incident 
to manufacturing pig iron or steel and sold is considered to be

an intentionally produced by-product of manufacturing.  "Sale 
at retail"
includes any such transfer made for resale unless 
made in compliance with
Section 2c of the Retailers' Occupation 
Tax Act, as incorporated by
reference into Section 12 of this 
Act.  Transactions whereby the possession
of the property is 
transferred but the seller retains the title as security
for 
payment of the selling price are sales.

    "Sale at retail" shall also be construed to include any 
Illinois
florist's sales transaction in which the purchase 
order is received in
Illinois by a florist and the sale is for 
use or consumption, but the
Illinois florist has a florist in 
another state deliver the property to the
purchaser or the 
purchaser's donee in such other state.

    Nonreusable tangible personal property that is used by 
persons engaged in
the business of operating a restaurant, 
cafeteria, or drive-in is a sale for
resale when it is 
transferred to customers in the ordinary course of business
as 
part of the sale of food or beverages and is used to deliver, 
package, or
consume food or beverages, regardless of where 
consumption of the food or
beverages occurs.  Examples of those 
items include, but are not limited to
nonreusable, paper and 
plastic cups, plates, baskets, boxes, sleeves, buckets
or other 
containers, utensils, straws, placemats, napkins, doggie bags, 
and
wrapping or packaging
materials that are transferred to 
customers as part of the sale of food or
beverages in the 
ordinary course of business.

    The purchase, employment and transfer of such tangible 
personal property
as newsprint and ink for the primary purpose 
of conveying news (with or
without other information) is not a 
purchase, use or sale of tangible
personal property.

    "Selling price" means the consideration for a sale valued 
in money
whether received in money or otherwise, including 
cash, credits, property
other than as hereinafter provided, and 
services, but not including the
value of or credit given for 
traded-in tangible personal property where the
item that is 
traded-in is of like kind and character as that which is being

sold, and shall be determined without any deduction on account 
of the cost
of the property sold, the cost of materials used, 
labor or service cost or
any other expense whatsoever, but does 
not include interest or finance
charges which appear as 
separate items on the bill of sale or sales
contract nor 
charges that are added to prices by sellers on account of the

seller's tax liability under the "Retailers' Occupation Tax 
Act", or on
account of the seller's duty to collect, from the 
purchaser, the tax that
is imposed by this Act, or, except as 
otherwise provided with respect to any cigarette tax imposed by 
a home rule unit, on account of the seller's tax liability 
under any local occupation tax administered by the Department, 
or, except as otherwise provided with respect to any cigarette 
tax imposed by a home rule unit on account of the seller's duty 
to collect, from the purchasers, the tax that is imposed under 
any local use tax administered by the Department. Effective 
December 1, 1985, "selling price"
shall include charges that 
are added to prices by sellers on account of the
seller's tax 
liability under the Cigarette Tax Act, on account of the 
seller's
duty to collect, from the purchaser, the tax imposed 
under the Cigarette Use
Tax Act, and on account of the seller's 
duty to collect, from the purchaser,
any cigarette tax imposed 
by a home rule unit.

    The phrase "like kind and character" shall be liberally 
construed
(including but not limited to any form of motor 
vehicle for any form of
motor vehicle, or any kind of farm or 
agricultural implement for any other
kind of farm or 
agricultural implement), while not including a kind of item

which, if sold at retail by that retailer, would be exempt from 
retailers'
occupation tax and use tax as an isolated or 
occasional sale.

    "Department" means the Department of Revenue.

    "Person" means any natural individual, firm, partnership, 
association,
joint stock company, joint adventure, public or 
private corporation, limited
liability company, or a
receiver, 
executor, trustee, guardian or other representative appointed

by order of any court.

    "Retailer" means and includes every person engaged in the 
business of
making sales at retail as defined in this Section.

    A person who holds himself or herself out as being engaged 
(or who habitually
engages) in selling tangible personal 
property at retail is a retailer
hereunder with respect to such 
sales (and not primarily in a service
occupation) 
notwithstanding the fact that such person designs and produces

such tangible personal property on special order for the 
purchaser and in
such a way as to render the property of value 
only to such purchaser, if
such tangible personal property so 
produced on special order serves
substantially the same 
function as stock or standard items of tangible
personal 
property that are sold at retail.

    A person whose activities are organized and conducted 
primarily as a
not-for-profit service enterprise, and who 
engages in selling tangible
personal property at retail 
(whether to the public or merely to members and
their guests) 
is a retailer with respect to such transactions, excepting
only 
a person organized and operated exclusively for charitable, 
religious
or educational purposes either (1), to the extent of 
sales by such person
to its members, students, patients or 
inmates of tangible personal property
to be used primarily for 
the purposes of such person, or (2), to the extent
of sales by 
such person of tangible personal property which is not sold or

offered for sale by persons organized for profit.  The selling 
of school
books and school supplies by schools at retail to 
students is not
"primarily for the purposes of" the school 
which does such selling.  This
paragraph does not apply to nor 
subject to taxation occasional dinners,
social or similar 
activities of a person organized and operated exclusively
for 
charitable, religious or educational purposes, whether or not 
such
activities are open to the public.

    A person who is the recipient of a grant or contract under 
Title VII of
the Older Americans Act of 1965 (P.L. 92-258) and 
serves meals to
participants in the federal Nutrition Program 
for the Elderly in return for
contributions established in 
amount by the individual participant pursuant
to a schedule of 
suggested fees as provided for in the federal Act is not a

retailer under this Act with respect to such transactions.

    Persons who engage in the business of transferring tangible 
personal
property upon the redemption of trading stamps are 
retailers hereunder when
engaged in such business.

    The isolated or occasional sale of tangible personal 
property at retail
by a person who does not hold himself out as 
being engaged (or who does not
habitually engage) in selling 
such tangible personal property at retail or
a sale through a 
bulk vending machine does not make such person a retailer

hereunder.  However, any person who is engaged in a business 
which is not
subject to the tax imposed by the "Retailers' 
Occupation Tax Act" because
of involving the sale of or a 
contract to sell real estate or a
construction contract to 
improve real estate, but who, in the course of
conducting such 
business, transfers tangible personal property to users or

consumers in the finished form in which it was purchased, and 
which does
not become real estate, under any provision of a 
construction contract or
real estate sale or real estate sales 
agreement entered into with some
other person arising out of or 
because of such nontaxable business, is a
retailer to the 
extent of the value of the tangible personal property so

transferred.  If, in such transaction, a separate charge is made 
for the
tangible personal property so transferred, the value of 
such property, for
the purposes of this Act, is the amount so 
separately charged, but not less
than the cost of such property 
to the transferor; if no separate charge is
made, the value of 
such property, for the purposes of this Act, is the cost
to the 
transferor of such tangible personal property.

    "Retailer maintaining a place of business in this State", 
or any like
term, means and includes any of the following 
retailers:


        1. A retailer having or maintaining within this State, 
    directly or by
a subsidiary, an office, distribution house, 
    sales house, 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. However, the 
    ownership of property that is
located at the premises of a 
    printer with which the retailer has contracted for
printing 
    and that consists of the final printed product, property 
    that becomes
a part of the final printed product, or copy 
    from which the printed product is
produced shall not result 
    in the retailer being deemed to have or maintain an
office, 
    distribution house, sales house, warehouse, or other place 
    of business
within this State.
        1.1. Beginning July 1, 2011, a retailer having a 
    contract with a person located in this State under which 
    the person, for a commission or other consideration based 
    upon the sale of tangible personal property by the 
    retailer, directly or indirectly refers potential 
    customers to the retailer by a link on the person's 
    Internet website.  The provisions of this paragraph 1.1 
    shall apply only if the cumulative gross receipts from 
    sales of tangible personal property by the retailer to 
    customers who are referred to the retailer by all persons 
    in this State under such contracts exceed $10,000 during 
    the preceding 4 quarterly periods ending on the last day of 
    March, June, September, and December.
        1.2. Beginning July 1, 2011, a retailer having a 
    contract with a person located in this State under which:
            A. the retailer sells the same or substantially 
        similar line of products as the person located in this 
        State and does so using an identical or substantially 
        similar name, trade name, or trademark as the person 
        located in this State; and
            B. the retailer provides a commission or other 
        consideration to the person located in this State based 
        upon the sale of tangible personal property by the 
        retailer.
    The provisions of this paragraph 1.2 shall apply only if 
    the cumulative gross receipts from sales of tangible 
    personal property by the retailer to customers in this 
    State under all such contracts exceed $10,000 during the 
    preceding 4 quarterly periods ending on the last day of 
    March, June, September, and December. 


        2. A retailer soliciting orders for tangible personal 
    property by
means of a telecommunication or television 
    shopping system (which utilizes toll
free numbers) which is 
    intended by the retailer to be broadcast by cable

    television or other means of broadcasting, to consumers 
    located in this State.


        3. A retailer, pursuant to a contract with a 
    broadcaster or publisher
located in this State, soliciting 
    orders for tangible personal property by
means of 
    advertising which is disseminated primarily to consumers 
    located in
this State and only secondarily to bordering 
    jurisdictions.


        4. A retailer soliciting orders for tangible personal 
    property by mail
if the solicitations are substantial and 
    recurring and if the retailer benefits
from any banking, 
    financing, debt collection, telecommunication, or 
    marketing
activities occurring in this State or benefits 
    from the location in this State
of authorized installation, 
    servicing, or repair facilities.


        5. A retailer that is owned or controlled by the same 
    interests that own
or control any retailer engaging in 
    business in the same or similar line of
business in this 
    State.


        6. A retailer having a franchisee or licensee operating 
    under its trade
name if the franchisee or licensee is 
    required to collect the tax under this
Section.


        7. A retailer, pursuant to a contract with a cable 
    television operator
located in this State, soliciting 
    orders for tangible personal property by
means of 
    advertising which is transmitted or distributed over a 
    cable
television system in this State.


        8. A retailer engaging in activities in Illinois, which 
    activities in
the state in which the retail business 
    engaging in such activities is located
would constitute 
    maintaining a place of business in that state.

    "Bulk vending machine" means a vending machine,
containing 
unsorted confections, nuts, toys, or other items designed

primarily to be used or played with by children
which, when a 
coin or coins of a denomination not larger than $0.50 are 
inserted, are dispensed in equal portions, at random and

without selection by the customer.

(Source: P.A. 94-1074, eff. 12-26-06; 95-723, eff. 6-23-08.)

 
    Section 10. The Service Use Tax Act is amended  by changing 
Section 2 as follows:
 



    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)



    Sec. 2. "Use" means the exercise by any person of any right 
or power
over tangible personal property incident to the 
ownership of that
property, but does not include the sale or 
use for demonstration by him
of that property in any form as 
tangible personal property in the
regular course of business.

"Use" does not mean the interim
use of
tangible personal 
property nor the physical incorporation of tangible
personal 
property, as an ingredient or constituent, into other tangible

personal property, (a) which is sold in the regular course of 
business
or (b) which the person incorporating such ingredient 
or constituent
therein has undertaken at the time of such 
purchase to cause to be
transported in interstate commerce to 
destinations outside the State of
Illinois.

    "Purchased from a serviceman" means the acquisition of the 
ownership
of, or title to, tangible personal property through a 
sale of service.

    "Purchaser" means any person who, through a sale of 
service, acquires
the ownership of, or title to, any tangible 
personal property.

    "Cost price" means the consideration paid by the serviceman 
for a
purchase valued in money, whether paid in money or 
otherwise, including
cash, credits and services, and shall be 
determined without any
deduction on account of the supplier's 
cost of the property sold or on
account of any other expense 
incurred by the supplier. When a serviceman
contracts out part 
or all of the services required in his sale of service,
it 
shall be presumed that the cost price to the serviceman of the 
property
transferred to him or her by his or her subcontractor 
is equal to 50% of
the subcontractor's charges to the 
serviceman in the absence of proof of
the consideration paid by 
the subcontractor for the purchase of such property.

    "Selling price" means the consideration for a sale valued 
in money
whether received in money or otherwise, including 
cash, credits and
service, and shall be determined without any 
deduction on account of the
serviceman's cost of the property 
sold, the cost of materials used,
labor or service cost or any 
other expense whatsoever, but does not
include interest or 
finance charges which appear as separate items on
the bill of 
sale or sales contract nor charges that are added to prices
by 
sellers on account of the seller's duty to collect, from the

purchaser, the tax that is imposed by this Act.

    "Department" means the Department of Revenue.

    "Person" means any natural individual, firm, partnership,

association, joint stock company, joint venture, public or 
private
corporation, limited liability company, and any 
receiver, executor, trustee,
guardian or other representative 
appointed by order of any court.

    "Sale of service" means any transaction except:


        (1) a retail sale of tangible personal property taxable 
    under the
Retailers' Occupation Tax Act or under the Use 
    Tax Act.


        (2) a sale of tangible personal property for the 
    purpose of resale
made in compliance with Section 2c of the 
    Retailers' Occupation Tax Act.


        (3) except as hereinafter provided, a sale or transfer 
    of tangible
personal property as an incident to the 
    rendering of service for or by
any governmental body, or 
    for or by any corporation, society,
association, 
    foundation or institution organized and operated

    exclusively for charitable, religious or educational 
    purposes or any
not-for-profit corporation, society, 
    association, foundation,
institution or organization which 
    has no compensated officers or
employees and which is 
    organized and operated primarily for the
recreation of 
    persons 55 years of age or older. A limited liability 
    company
may qualify for the exemption under this paragraph 
    only if the limited
liability company is organized and 
    operated exclusively for educational
purposes.


        (4) a sale or transfer of tangible personal
property as 
    an incident to the
rendering of service for interstate 
    carriers for hire for use as rolling stock
moving in 
    interstate commerce or by lessors under a lease of one year 
    or
longer, executed or in effect at the time of purchase of 
    personal property, to
interstate carriers for hire for use 
    as rolling stock moving in interstate
commerce so long as 
    so used by such interstate carriers for hire, and equipment

    operated by a telecommunications provider, licensed as a 
    common carrier by the
Federal Communications Commission, 
    which is permanently installed in or affixed
to aircraft 
    moving in interstate commerce.


        (4a) a sale or transfer of tangible personal
property 
    as an incident
to the rendering of service for owners, 
    lessors, or shippers of tangible
personal property which is 
    utilized by interstate carriers for hire for
use as rolling 
    stock moving in interstate commerce so long as so used by

    interstate carriers for hire, and equipment operated by a

    telecommunications provider, licensed as a common carrier 
    by the Federal
Communications Commission, which is 
    permanently installed in or affixed to
aircraft moving in 
    interstate commerce.


        (4a-5) on and after July 1, 2003 and through June 30, 
    2004, a sale or transfer of a motor vehicle
of
the
second 
    division with a gross vehicle weight in excess of 8,000 
    pounds as an
incident to the rendering of service if that 
    motor
vehicle is subject
to the commercial distribution fee 
    imposed under Section 3-815.1 of the
Illinois Vehicle
Code.   
    Beginning on July 1, 2004 and through June 30, 2005, the 
    use in this State of motor vehicles of the second division: 
    (i) with a gross vehicle weight rating in excess of 8,000 
    pounds; (ii) that are subject to the commercial 
    distribution fee imposed under Section 3-815.1 of the 
    Illinois Vehicle Code; and (iii) that are primarily used 
    for commercial purposes. Through June 30, 2005, this


    exemption applies to repair and replacement parts added 
    after the
initial
purchase of such a motor vehicle if that 
    motor vehicle is used in a manner that
would
qualify for 
    the rolling stock exemption otherwise provided for in this 
    Act. For purposes of this paragraph, "used for commercial 
    purposes" means the transportation of persons or property 
    in furtherance of any commercial or industrial enterprise 
    whether for-hire or not.



        (5) a sale or transfer of machinery and equipment used 
    primarily in the
process of the manufacturing or 
    assembling, either in an existing, an expanded
or a new 
    manufacturing facility, of tangible personal property for 
    wholesale or
retail sale or lease, whether such sale or 
    lease is made directly by the
manufacturer or by some other 
    person, whether the materials used in the process
are owned 
    by the manufacturer or some other person, or whether such 
    sale or
lease is made apart from or as an incident to the 
    seller's engaging in a
service occupation and the 
    applicable tax is a Service Use Tax or Service
Occupation 
    Tax, rather than Use Tax or Retailers' Occupation Tax.


        (5a) the repairing, reconditioning or remodeling, for 
    a
common carrier by rail, of tangible personal property 
    which belongs to such
carrier for hire, and as to which 
    such carrier receives the physical possession
of the 
    repaired, reconditioned or remodeled item of tangible 
    personal property
in Illinois, and which such carrier 
    transports, or shares with another common
carrier in the 
    transportation of such property, out of Illinois on a 
    standard
uniform bill of lading showing the person who 
    repaired, reconditioned or
remodeled the property to a 
    destination outside Illinois, for use outside
Illinois.


        (5b) a sale or transfer of tangible personal property 
    which is produced by
the seller thereof on special order in 
    such a way as to have made the
applicable tax the Service 
    Occupation Tax or the Service Use Tax, rather than
the 
    Retailers' Occupation Tax or the Use Tax, for an interstate 
    carrier by rail
which receives the physical possession of 
    such property in Illinois, and which
transports such 
    property, or shares with another common carrier in the

    transportation of such property, out of Illinois on a 
    standard uniform bill of
lading showing the seller of the 
    property as the shipper or consignor of such
property to a 
    destination outside Illinois, for use outside Illinois.


        (6) until July 1, 2003, a sale or transfer of 
    distillation machinery
and equipment, sold
as a unit or kit 
    and assembled or installed by the retailer, which
machinery 
    and equipment is certified by the user to be used only for 
    the
production of ethyl alcohol that will be used for 
    consumption as motor fuel
or as a component of motor fuel 
    for the personal use of such user and not
subject to sale 
    or resale.


        (7) at the election of any serviceman not required to 
    be
otherwise registered as a retailer under Section 2a of 
    the Retailers'
Occupation Tax Act, made for each fiscal 
    year sales
of service in which the aggregate annual cost 
    price of tangible
personal property transferred as an 
    incident to the sales of service is
less than 35%, or 75% 
    in the case of servicemen transferring prescription
drugs 
    or servicemen engaged in graphic arts production, of the 
    aggregate
annual total gross receipts from all sales of 
    service. The purchase of
such tangible personal property by 
    the serviceman shall be subject to tax
under the Retailers' 
    Occupation Tax Act and the Use Tax Act.
However, if a

    primary serviceman who has made the election described in 
    this paragraph
subcontracts service work to a secondary 
    serviceman who has also made the
election described in this 
    paragraph, the primary serviceman does not
incur a Use Tax 
    liability if the secondary serviceman (i) has paid or will 
    pay
Use
Tax on his or her cost price of any tangible 
    personal property transferred
to the primary serviceman 
    and (ii) certifies that fact in writing to the
primary

    serviceman.

    Tangible personal property transferred incident to the 
completion of a
maintenance agreement is exempt from the tax 
imposed pursuant to this Act.

    Exemption (5) also includes machinery and equipment used in 
the general
maintenance or repair of such exempt machinery and 
equipment or for in-house
manufacture of exempt machinery and 
equipment. For the purposes of exemption
(5), each of these 
terms shall have the following meanings:  (1) "manufacturing

process" shall mean the production of any article of tangible 
personal
property, whether such article is a finished product 
or an article for use in
the process of manufacturing or 
assembling a different article of tangible
personal property, 
by procedures commonly regarded as manufacturing,
processing, 
fabricating, or refining which changes some existing
material 
or materials into a material with a different form, use or

name.  In relation to a recognized integrated business composed 
of a
series of operations which collectively constitute 
manufacturing, or
individually constitute manufacturing 
operations, the manufacturing
process shall be deemed to 
commence with the first operation or stage of
production in the 
series, and shall not be deemed to end until the
completion of 
the final product in the last operation or stage of
production 
in the series; and further, for purposes of exemption (5),

photoprocessing is deemed to be a manufacturing process of 
tangible
personal property for wholesale or retail sale; (2) 
"assembling process" shall
mean the production of any article 
of tangible personal property, whether such
article is a 
finished product or an article for use in the process of

manufacturing or assembling a different article of tangible 
personal
property, by the combination of existing materials in 
a manner commonly
regarded as assembling which results in a 
material of a different form,
use or name; (3) "machinery" 
shall mean major mechanical machines or
major components of 
such machines contributing to a manufacturing or
assembling 
process; and (4) "equipment" shall include any independent

device or tool separate from any machinery but essential to an

integrated manufacturing or assembly process; including 
computers
used primarily in a manufacturer's computer
assisted 
design, computer assisted manufacturing (CAD/CAM) system;
or 
any subunit or assembly comprising a component of any machinery 
or
auxiliary, adjunct or attachment parts of machinery, such as 
tools, dies,
jigs, fixtures, patterns and molds; or any parts 
which require periodic
replacement in the course of normal 
operation; but shall not include hand
tools.
Equipment includes 
chemicals or chemicals acting as catalysts but only if the

chemicals or chemicals acting as catalysts effect a direct and 
immediate change
upon a
product being manufactured or assembled 
for wholesale or retail sale or
lease.
The purchaser of such 
machinery and equipment who has an active
resale registration 
number shall furnish such number to the seller at the
time of 
purchase. The user of such machinery and equipment and tools

without an active resale registration number shall prepare a 
certificate of
exemption for each transaction stating facts 
establishing the exemption for
that transaction, which 
certificate shall be available to the Department
for inspection 
or audit.  The Department shall prescribe the form of the

certificate.

    Any informal rulings, opinions or letters issued by the 
Department in
response to an inquiry or request for any opinion 
from any person
regarding the coverage and applicability of 
exemption (5) to specific
devices shall be published, 
maintained as a public record, and made
available for public 
inspection and copying.  If the informal ruling,
opinion or 
letter contains trade secrets or other confidential

information, where possible the Department shall delete such 
information
prior to publication.  Whenever such informal 
rulings, opinions, or
letters contain any policy of general 
applicability, the Department
shall formulate and adopt such 
policy as a rule in accordance with the
provisions of the 
Illinois Administrative Procedure Act.

    On and after July 1, 1987, no entity otherwise eligible 
under exemption
(3) of this Section shall make tax free 
purchases unless it has an active
exemption identification 
number issued by the Department.

    The purchase, employment and transfer of such tangible 
personal
property as newsprint and ink for the primary purpose 
of conveying news
(with or without other information) is not a 
purchase, use or sale of
service or of tangible personal 
property within the meaning of this Act.

    "Serviceman" means any person who is engaged in the 
occupation of
making sales of service.

    "Sale at retail" means "sale at retail" as defined in the 
Retailers'
Occupation Tax Act.

    "Supplier" means any person who makes sales of tangible 
personal
property to servicemen for the purpose of resale as an 
incident to a
sale of service.

    "Serviceman maintaining a place of business in this State", 
or any
like term, means and includes any serviceman:


        1. having or maintaining within this State, directly or 
    by a
subsidiary, an office, distribution house, sales 
    house, warehouse or
other place of business, or any agent 
    or other representative operating
within this State under 
    the authority of the serviceman or its
subsidiary, 
    irrespective of whether such place of business or agent or

    other representative is located here permanently or 
    temporarily, or
whether such serviceman or subsidiary is 
    licensed to do business in this
State;
        1.1. beginning July 1, 2011, having a contract with a 
    person located in this State under which the person, for a 
    commission or other consideration based on the sale of 
    service by the serviceman, directly or indirectly refers 
    potential customers to the serviceman by a link on the 
    person's Internet website. The provisions of this 
    paragraph 1.1 shall apply only if the cumulative gross 
    receipts from sales of service by the serviceman to 
    customers who are referred to the serviceman by all persons 
    in this State under such contracts exceed $10,000 during 
    the preceding 4 quarterly periods ending on the last day of 
    March, June, September, and December;
        1.2. beginning July 1, 2011, having a contract with a 
    person located in this State under which:
            A. the serviceman sells the same or substantially 
        similar line of services as the person located in this 
        State and does so using an identical or substantially 
        similar name, trade name, or trademark as the person 
        located in this State; and
            B. the serviceman provides a commission or other 
        consideration to the person located in this State based 
        upon the sale of services by the serviceman.
    The provisions of this paragraph 1.2 shall apply only if 
    the cumulative gross receipts from sales of service by the 
    serviceman to customers in this State under all such 
    contracts exceed $10,000 during the preceding 4 quarterly 
    periods ending on the last day of March, June, September, 
    and December; 


        2. soliciting orders for tangible personal property by 
    means of a
telecommunication or television shopping system 
    (which utilizes toll free
numbers) which is intended by the 
    retailer to be broadcast by cable
television or other means 
    of broadcasting, to consumers located in this State;


        3. pursuant to a contract with a broadcaster or 
    publisher located in this
State, soliciting orders for 
    tangible personal property by means of advertising
which is 
    disseminated primarily to consumers located in this State 
    and only
secondarily to bordering jurisdictions;


        4. soliciting orders for tangible personal property by 
    mail if the
solicitations are substantial and recurring and 
    if the retailer benefits
from any banking, financing, debt 
    collection, telecommunication, or
marketing activities 
    occurring in this State or benefits from the location
in 
    this State of authorized installation, servicing, or 
    repair facilities;


        5. being owned or controlled by the same interests 
    which own or
control any retailer engaging in business in 
    the same or similar line of
business in this State;


        6. having a franchisee or licensee operating under its 
    trade name if
the franchisee or licensee is required to 
    collect the tax under this Section;


        7. pursuant to a contract with a cable television 
    operator located in
this State, soliciting orders for 
    tangible personal property by means of
advertising which is 
    transmitted or distributed over a cable television
system 
    in this State; or


        8. engaging in activities in Illinois, which 
    activities in the
state in which the supply business 
    engaging in such activities is located
would constitute 
    maintaining a place of business in that state.

(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24, 
eff. 6-20-03; 93-1033, eff. 9-3-04.)

 
    Section 97. Severability. The provisions of this Act are 
severable under Section 1.31 of the Statute on Statutes.
 

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