99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3694

 

Introduced , by Rep. Katherine Cloonen

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/2  from Ch. 120, par. 439.2
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 120/1  from Ch. 120, par. 440

    Amends the Use Tax Act, the Service Use Tax Act, and the Retailers' Occupation Tax Act. Provides that the term "selling price" does not include any fee charged by the retailer for the disposal of tires if that fee is a separately stated charge on the customer's invoice.


LRB099 10493 HLH 30720 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3694LRB099 10493 HLH 30720 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Section 2
5as follows:
 
6    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
7    Sec. 2. Definitions.
8    "Use" means the exercise by any person of any right or
9power over tangible personal property incident to the ownership
10of that property, except that it does not include the sale of
11such property in any form as tangible personal property in the
12regular course of business to the extent that such property is
13not first subjected to a use for which it was purchased, and
14does not include the use of such property by its owner for
15demonstration purposes: Provided that the property purchased
16is deemed to be purchased for the purpose of resale, despite
17first being used, to the extent to which it is resold as an
18ingredient of an intentionally produced product or by-product
19of manufacturing. "Use" does not mean the demonstration use or
20interim use of tangible personal property by a retailer before
21he sells that tangible personal property. For watercraft or
22aircraft, if the period of demonstration use or interim use by
23the retailer exceeds 18 months, the retailer shall pay on the

 

 

HB3694- 2 -LRB099 10493 HLH 30720 b

1retailers' original cost price the tax imposed by this Act, and
2no credit for that tax is permitted if the watercraft or
3aircraft is subsequently sold by the retailer. "Use" does not
4mean the physical incorporation of tangible personal property,
5to the extent not first subjected to a use for which it was
6purchased, as an ingredient or constituent, into other tangible
7personal property (a) which is sold in the regular course of
8business or (b) which the person incorporating such ingredient
9or constituent therein has undertaken at the time of such
10purchase to cause to be transported in interstate commerce to
11destinations outside the State of Illinois: Provided that the
12property purchased is deemed to be purchased for the purpose of
13resale, despite first being used, to the extent to which it is
14resold as an ingredient of an intentionally produced product or
15by-product of manufacturing.
16    "Watercraft" means a Class 2, Class 3, or Class 4
17watercraft as defined in Section 3-2 of the Boat Registration
18and Safety Act, a personal watercraft, or any boat equipped
19with an inboard motor.
20    "Purchase at retail" means the acquisition of the ownership
21of or title to tangible personal property through a sale at
22retail.
23    "Purchaser" means anyone who, through a sale at retail,
24acquires the ownership of tangible personal property for a
25valuable consideration.
26    "Sale at retail" means any transfer of the ownership of or

 

 

HB3694- 3 -LRB099 10493 HLH 30720 b

1title to tangible personal property to a purchaser, for the
2purpose of use, and not for the purpose of resale in any form
3as tangible personal property to the extent not first subjected
4to a use for which it was purchased, for a valuable
5consideration: Provided that the property purchased is deemed
6to be purchased for the purpose of resale, despite first being
7used, to the extent to which it is resold as an ingredient of
8an intentionally produced product or by-product of
9manufacturing. For this purpose, slag produced as an incident
10to manufacturing pig iron or steel and sold is considered to be
11an intentionally produced by-product of manufacturing. "Sale
12at retail" includes any such transfer made for resale unless
13made in compliance with Section 2c of the Retailers' Occupation
14Tax Act, as incorporated by reference into Section 12 of this
15Act. Transactions whereby the possession of the property is
16transferred but the seller retains the title as security for
17payment of the selling price are sales.
18    "Sale at retail" shall also be construed to include any
19Illinois florist's sales transaction in which the purchase
20order is received in Illinois by a florist and the sale is for
21use or consumption, but the Illinois florist has a florist in
22another state deliver the property to the purchaser or the
23purchaser's donee in such other state.
24    Nonreusable tangible personal property that is used by
25persons engaged in the business of operating a restaurant,
26cafeteria, or drive-in is a sale for resale when it is

 

 

HB3694- 4 -LRB099 10493 HLH 30720 b

1transferred to customers in the ordinary course of business as
2part of the sale of food or beverages and is used to deliver,
3package, or consume food or beverages, regardless of where
4consumption of the food or beverages occurs. Examples of those
5items include, but are not limited to nonreusable, paper and
6plastic cups, plates, baskets, boxes, sleeves, buckets or other
7containers, utensils, straws, placemats, napkins, doggie bags,
8and wrapping or packaging materials that are transferred to
9customers as part of the sale of food or beverages in the
10ordinary course of business.
11    The purchase, employment and transfer of such tangible
12personal property as newsprint and ink for the primary purpose
13of conveying news (with or without other information) is not a
14purchase, use or sale of tangible personal property.
15    "Selling price" means the consideration for a sale valued
16in money whether received in money or otherwise, including
17cash, credits, property other than as hereinafter provided, and
18services, but not including the value of or credit given for
19traded-in tangible personal property where the item that is
20traded-in is of like kind and character as that which is being
21sold, and shall be determined without any deduction on account
22of the cost of the property sold, the cost of materials used,
23labor or service cost or any other expense whatsoever, but does
24not include interest or finance charges which appear as
25separate items on the bill of sale or sales contract nor
26charges that are added to prices by sellers on account of the

 

 

HB3694- 5 -LRB099 10493 HLH 30720 b

1seller's tax liability under the "Retailers' Occupation Tax
2Act", or on account of the seller's duty to collect, from the
3purchaser, the tax that is imposed by this Act, or, except as
4otherwise provided with respect to any cigarette tax imposed by
5a home rule unit, on account of the seller's tax liability
6under any local occupation tax administered by the Department,
7or, except as otherwise provided with respect to any cigarette
8tax imposed by a home rule unit on account of the seller's duty
9to collect, from the purchasers, the tax that is imposed under
10any local use tax administered by the Department. Effective
11December 1, 1985, "selling price" shall include charges that
12are added to prices by sellers on account of the seller's tax
13liability under the Cigarette Tax Act, on account of the
14seller's duty to collect, from the purchaser, the tax imposed
15under the Cigarette Use Tax Act, and on account of the seller's
16duty to collect, from the purchaser, any cigarette tax imposed
17by a home rule unit.
18    Notwithstanding any other provision of law, "selling
19price" does not include any fee charged by the retailer for the
20disposal of tires if that fee is a separately stated charge on
21the customer's invoice.
22    Notwithstanding any law to the contrary, for any motor
23vehicle, as defined in Section 1-146 of the Vehicle Code, that
24is sold on or after January 1, 2015 for the purpose of leasing
25the vehicle for a defined period that is longer than one year
26and (1) is a motor vehicle of the second division that: (A) is

 

 

HB3694- 6 -LRB099 10493 HLH 30720 b

1a self-contained motor vehicle designed or permanently
2converted to provide living quarters for recreational,
3camping, or travel use, with direct walk through access to the
4living quarters from the driver's seat; (B) is of the van
5configuration designed for the transportation of not less than
67 nor more than 16 passengers; or (C) has a gross vehicle
7weight rating of 8,000 pounds or less or (2) is a motor vehicle
8of the first division, "selling price" or "amount of sale"
9means the consideration received by the lessor pursuant to the
10lease contract, including amounts due at lease signing and all
11monthly or other regular payments charged over the term of the
12lease. Also included in the selling price is any amount
13received by the lessor from the lessee for the leased vehicle
14that is not calculated at the time the lease is executed,
15including, but not limited to, excess mileage charges and
16charges for excess wear and tear. For sales that occur in
17Illinois, with respect to any amount received by the lessor
18from the lessee for the leased vehicle that is not calculated
19at the time the lease is executed, the lessor who purchased the
20motor vehicle does not incur the tax imposed by the Use Tax Act
21on those amounts, and the retailer who makes the retail sale of
22the motor vehicle to the lessor is not required to collect the
23tax imposed by this Act or to pay the tax imposed by the
24Retailers' Occupation Tax Act on those amounts. However, the
25lessor who purchased the motor vehicle assumes the liability
26for reporting and paying the tax on those amounts directly to

 

 

HB3694- 7 -LRB099 10493 HLH 30720 b

1the Department in the same form (Illinois Retailers' Occupation
2Tax, and local retailers' occupation taxes, if applicable) in
3which the retailer would have reported and paid such tax if the
4retailer had accounted for the tax to the Department. For
5amounts received by the lessor from the lessee that are not
6calculated at the time the lease is executed, the lessor must
7file the return and pay the tax to the Department by the due
8date otherwise required by this Act for returns other than
9transaction returns. If the retailer is entitled under this Act
10to a discount for collecting and remitting the tax imposed
11under this Act to the Department with respect to the sale of
12the motor vehicle to the lessor, then the right to the discount
13provided in this Act shall be transferred to the lessor with
14respect to the tax paid by the lessor for any amount received
15by the lessor from the lessee for the leased vehicle that is
16not calculated at the time the lease is executed; provided that
17the discount is only allowed if the return is timely filed and
18for amounts timely paid. The "selling price" of a motor vehicle
19that is sold on or after January 1, 2015 for the purpose of
20leasing for a defined period of longer than one year shall not
21be reduced by the value of or credit given for traded-in
22tangible personal property owned by the lessor, nor shall it be
23reduced by the value of or credit given for traded-in tangible
24personal property owned by the lessee, regardless of whether
25the trade-in value thereof is assigned by the lessee to the
26lessor. In the case of a motor vehicle that is sold for the

 

 

HB3694- 8 -LRB099 10493 HLH 30720 b

1purpose of leasing for a defined period of longer than one
2year, the sale occurs at the time of the delivery of the
3vehicle, regardless of the due date of any lease payments. A
4lessor who incurs a Retailers' Occupation Tax liability on the
5sale of a motor vehicle coming off lease may not take a credit
6against that liability for the Use Tax the lessor paid upon the
7purchase of the motor vehicle (or for any tax the lessor paid
8with respect to any amount received by the lessor from the
9lessee for the leased vehicle that was not calculated at the
10time the lease was executed) if the selling price of the motor
11vehicle at the time of purchase was calculated using the
12definition of "selling price" as defined in this paragraph.
13Notwithstanding any other provision of this Act to the
14contrary, lessors shall file all returns and make all payments
15required under this paragraph to the Department by electronic
16means in the manner and form as required by the Department.
17This paragraph does not apply to leases of motor vehicles for
18which, at the time the lease is entered into, the term of the
19lease is not a defined period, including leases with a defined
20initial period with the option to continue the lease on a
21month-to-month or other basis beyond the initial defined
22period.
23    The phrase "like kind and character" shall be liberally
24construed (including but not limited to any form of motor
25vehicle for any form of motor vehicle, or any kind of farm or
26agricultural implement for any other kind of farm or

 

 

HB3694- 9 -LRB099 10493 HLH 30720 b

1agricultural implement), while not including a kind of item
2which, if sold at retail by that retailer, would be exempt from
3retailers' occupation tax and use tax as an isolated or
4occasional sale.
5    "Department" means the Department of Revenue.
6    "Person" means any natural individual, firm, partnership,
7association, joint stock company, joint adventure, public or
8private corporation, limited liability company, or a receiver,
9executor, trustee, guardian or other representative appointed
10by order of any court.
11    "Retailer" means and includes every person engaged in the
12business of making sales at retail as defined in this Section.
13    A person who holds himself or herself out as being engaged
14(or who habitually engages) in selling tangible personal
15property at retail is a retailer hereunder with respect to such
16sales (and not primarily in a service occupation)
17notwithstanding the fact that such person designs and produces
18such tangible personal property on special order for the
19purchaser and in such a way as to render the property of value
20only to such purchaser, if such tangible personal property so
21produced on special order serves substantially the same
22function as stock or standard items of tangible personal
23property that are sold at retail.
24    A person whose activities are organized and conducted
25primarily as a not-for-profit service enterprise, and who
26engages in selling tangible personal property at retail

 

 

HB3694- 10 -LRB099 10493 HLH 30720 b

1(whether to the public or merely to members and their guests)
2is a retailer with respect to such transactions, excepting only
3a person organized and operated exclusively for charitable,
4religious or educational purposes either (1), to the extent of
5sales by such person to its members, students, patients or
6inmates of tangible personal property to be used primarily for
7the purposes of such person, or (2), to the extent of sales by
8such person of tangible personal property which is not sold or
9offered for sale by persons organized for profit. The selling
10of school books and school supplies by schools at retail to
11students is not "primarily for the purposes of" the school
12which does such selling. This paragraph does not apply to nor
13subject to taxation occasional dinners, social or similar
14activities of a person organized and operated exclusively for
15charitable, religious or educational purposes, whether or not
16such activities are open to the public.
17    A person who is the recipient of a grant or contract under
18Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
19serves meals to participants in the federal Nutrition Program
20for the Elderly in return for contributions established in
21amount by the individual participant pursuant to a schedule of
22suggested fees as provided for in the federal Act is not a
23retailer under this Act with respect to such transactions.
24    Persons who engage in the business of transferring tangible
25personal property upon the redemption of trading stamps are
26retailers hereunder when engaged in such business.

 

 

HB3694- 11 -LRB099 10493 HLH 30720 b

1    The isolated or occasional sale of tangible personal
2property at retail by a person who does not hold himself out as
3being engaged (or who does not habitually engage) in selling
4such tangible personal property at retail or a sale through a
5bulk vending machine does not make such person a retailer
6hereunder. However, any person who is engaged in a business
7which is not subject to the tax imposed by the "Retailers'
8Occupation Tax Act" because of involving the sale of or a
9contract to sell real estate or a construction contract to
10improve real estate, but who, in the course of conducting such
11business, transfers tangible personal property to users or
12consumers in the finished form in which it was purchased, and
13which does not become real estate, under any provision of a
14construction contract or real estate sale or real estate sales
15agreement entered into with some other person arising out of or
16because of such nontaxable business, is a retailer to the
17extent of the value of the tangible personal property so
18transferred. If, in such transaction, a separate charge is made
19for the tangible personal property so transferred, the value of
20such property, for the purposes of this Act, is the amount so
21separately charged, but not less than the cost of such property
22to the transferor; if no separate charge is made, the value of
23such property, for the purposes of this Act, is the cost to the
24transferor of such tangible personal property.
25    "Retailer maintaining a place of business in this State",
26or any like term, means and includes any of the following

 

 

HB3694- 12 -LRB099 10493 HLH 30720 b

1retailers:
2        1. A retailer having or maintaining within this State,
3    directly or by a subsidiary, an office, distribution house,
4    sales house, warehouse or other place of business, or any
5    agent or other representative operating within this State
6    under the authority of the retailer or its subsidiary,
7    irrespective of whether such place of business or agent or
8    other representative is located here permanently or
9    temporarily, or whether such retailer or subsidiary is
10    licensed to do business in this State. However, the
11    ownership of property that is located at the premises of a
12    printer with which the retailer has contracted for printing
13    and that consists of the final printed product, property
14    that becomes a part of the final printed product, or copy
15    from which the printed product is produced shall not result
16    in the retailer being deemed to have or maintain an office,
17    distribution house, sales house, warehouse, or other place
18    of business within this State.
19        1.1. A retailer having a contract with a person located
20    in this State under which the person, for a commission or
21    other consideration based upon the sale of tangible
22    personal property by the retailer, directly or indirectly
23    refers potential customers to the retailer by providing to
24    the potential customers a promotional code or other
25    mechanism that allows the retailer to track purchases
26    referred by such persons. Examples of mechanisms that allow

 

 

HB3694- 13 -LRB099 10493 HLH 30720 b

1    the retailer to track purchases referred by such persons
2    include but are not limited to the use of a link on the
3    person's Internet website, promotional codes distributed
4    through the person's hand-delivered or mailed material,
5    and promotional codes distributed by the person through
6    radio or other broadcast media. The provisions of this
7    paragraph 1.1 shall apply only if the cumulative gross
8    receipts from sales of tangible personal property by the
9    retailer to customers who are referred to the retailer by
10    all persons in this State under such contracts exceed
11    $10,000 during the preceding 4 quarterly periods ending on
12    the last day of March, June, September, and December. A
13    retailer meeting the requirements of this paragraph 1.1
14    shall be presumed to be maintaining a place of business in
15    this State but may rebut this presumption by submitting
16    proof that the referrals or other activities pursued within
17    this State by such persons were not sufficient to meet the
18    nexus standards of the United States Constitution during
19    the preceding 4 quarterly periods.
20        1.2. Beginning July 1, 2011, a retailer having a
21    contract with a person located in this State under which:
22            A. the retailer sells the same or substantially
23        similar line of products as the person located in this
24        State and does so using an identical or substantially
25        similar name, trade name, or trademark as the person
26        located in this State; and

 

 

HB3694- 14 -LRB099 10493 HLH 30720 b

1            B. the retailer provides a commission or other
2        consideration to the person located in this State based
3        upon the sale of tangible personal property by the
4        retailer.
5    The provisions of this paragraph 1.2 shall apply only if
6    the cumulative gross receipts from sales of tangible
7    personal property by the retailer to customers in this
8    State under all such contracts exceed $10,000 during the
9    preceding 4 quarterly periods ending on the last day of
10    March, June, September, and December.
11        2. A retailer soliciting orders for tangible personal
12    property by means of a telecommunication or television
13    shopping system (which utilizes toll free numbers) which is
14    intended by the retailer to be broadcast by cable
15    television or other means of broadcasting, to consumers
16    located in this State.
17        3. A retailer, pursuant to a contract with a
18    broadcaster or publisher located in this State, soliciting
19    orders for tangible personal property by means of
20    advertising which is disseminated primarily to consumers
21    located in this State and only secondarily to bordering
22    jurisdictions.
23        4. A retailer soliciting orders for tangible personal
24    property by mail if the solicitations are substantial and
25    recurring and if the retailer benefits from any banking,
26    financing, debt collection, telecommunication, or

 

 

HB3694- 15 -LRB099 10493 HLH 30720 b

1    marketing activities occurring in this State or benefits
2    from the location in this State of authorized installation,
3    servicing, or repair facilities.
4        5. A retailer that is owned or controlled by the same
5    interests that own or control any retailer engaging in
6    business in the same or similar line of business in this
7    State.
8        6. A retailer having a franchisee or licensee operating
9    under its trade name if the franchisee or licensee is
10    required to collect the tax under this Section.
11        7. A retailer, pursuant to a contract with a cable
12    television operator located in this State, soliciting
13    orders for tangible personal property by means of
14    advertising which is transmitted or distributed over a
15    cable television system in this State.
16        8. A retailer engaging in activities in Illinois, which
17    activities in the state in which the retail business
18    engaging in such activities is located would constitute
19    maintaining a place of business in that state.
20    "Bulk vending machine" means a vending machine, containing
21unsorted confections, nuts, toys, or other items designed
22primarily to be used or played with by children which, when a
23coin or coins of a denomination not larger than $0.50 are
24inserted, are dispensed in equal portions, at random and
25without selection by the customer.
26(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14;

 

 

HB3694- 16 -LRB099 10493 HLH 30720 b

198-1089, eff. 1-1-15; revised 10-1-14.)
 
2    Section 10. The Service Use Tax Act is amended by changing
3Section 2 as follows:
 
4    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
5    Sec. 2. Definitions.
6    "Use" means the exercise by any person of any right or
7power over tangible personal property incident to the ownership
8of that property, but does not include the sale or use for
9demonstration by him of that property in any form as tangible
10personal property in the regular course of business. "Use" does
11not mean the interim use of tangible personal property nor the
12physical incorporation of tangible personal property, as an
13ingredient or constituent, into other tangible personal
14property, (a) which is sold in the regular course of business
15or (b) which the person incorporating such ingredient or
16constituent therein has undertaken at the time of such purchase
17to cause to be transported in interstate commerce to
18destinations outside the State of Illinois.
19    "Purchased from a serviceman" means the acquisition of the
20ownership of, or title to, tangible personal property through a
21sale of service.
22    "Purchaser" means any person who, through a sale of
23service, acquires the ownership of, or title to, any tangible
24personal property.

 

 

HB3694- 17 -LRB099 10493 HLH 30720 b

1    "Cost price" means the consideration paid by the serviceman
2for a purchase valued in money, whether paid in money or
3otherwise, including cash, credits and services, and shall be
4determined without any deduction on account of the supplier's
5cost of the property sold or on account of any other expense
6incurred by the supplier. When a serviceman contracts out part
7or all of the services required in his sale of service, it
8shall be presumed that the cost price to the serviceman of the
9property transferred to him or her by his or her subcontractor
10is equal to 50% of the subcontractor's charges to the
11serviceman in the absence of proof of the consideration paid by
12the subcontractor for the purchase of such property.
13    "Selling price" means the consideration for a sale valued
14in money whether received in money or otherwise, including
15cash, credits and service, and shall be determined without any
16deduction on account of the serviceman's cost of the property
17sold, the cost of materials used, labor or service cost or any
18other expense whatsoever, but does not include interest or
19finance charges which appear as separate items on the bill of
20sale or sales contract nor charges that are added to prices by
21sellers on account of the seller's duty to collect, from the
22purchaser, the tax that is imposed by this Act.
23    Notwithstanding any other provision of law, "selling
24price" does not include any fee charged by the retailer for the
25disposal of tires if that fee is a separately stated charge on
26the customer's invoice.

 

 

HB3694- 18 -LRB099 10493 HLH 30720 b

1    "Department" means the Department of Revenue.
2    "Person" means any natural individual, firm, partnership,
3association, joint stock company, joint venture, public or
4private corporation, limited liability company, and any
5receiver, executor, trustee, guardian or other representative
6appointed by order of any court.
7    "Sale of service" means any transaction except:
8        (1) a retail sale of tangible personal property taxable
9    under the Retailers' Occupation Tax Act or under the Use
10    Tax Act.
11        (2) a sale of tangible personal property for the
12    purpose of resale made in compliance with Section 2c of the
13    Retailers' Occupation Tax Act.
14        (3) except as hereinafter provided, a sale or transfer
15    of tangible personal property as an incident to the
16    rendering of service for or by any governmental body, or
17    for or by any corporation, society, association,
18    foundation or institution organized and operated
19    exclusively for charitable, religious or educational
20    purposes or any not-for-profit corporation, society,
21    association, foundation, institution or organization which
22    has no compensated officers or employees and which is
23    organized and operated primarily for the recreation of
24    persons 55 years of age or older. A limited liability
25    company may qualify for the exemption under this paragraph
26    only if the limited liability company is organized and

 

 

HB3694- 19 -LRB099 10493 HLH 30720 b

1    operated exclusively for educational purposes.
2        (4) a sale or transfer of tangible personal property as
3    an incident to the rendering of service for interstate
4    carriers for hire for use as rolling stock moving in
5    interstate commerce or by lessors under a lease of one year
6    or longer, executed or in effect at the time of purchase of
7    personal property, to interstate carriers for hire for use
8    as rolling stock moving in interstate commerce so long as
9    so used by such interstate carriers for hire, and equipment
10    operated by a telecommunications provider, licensed as a
11    common carrier by the Federal Communications Commission,
12    which is permanently installed in or affixed to aircraft
13    moving in interstate commerce.
14        (4a) a sale or transfer of tangible personal property
15    as an incident to the rendering of service for owners,
16    lessors, or shippers of tangible personal property which is
17    utilized by interstate carriers for hire for use as rolling
18    stock moving in interstate commerce so long as so used by
19    interstate carriers for hire, and equipment operated by a
20    telecommunications provider, licensed as a common carrier
21    by the Federal Communications Commission, which is
22    permanently installed in or affixed to aircraft moving in
23    interstate commerce.
24        (4a-5) on and after July 1, 2003 and through June 30,
25    2004, a sale or transfer of a motor vehicle of the second
26    division with a gross vehicle weight in excess of 8,000

 

 

HB3694- 20 -LRB099 10493 HLH 30720 b

1    pounds as an incident to the rendering of service if that
2    motor vehicle is subject to the commercial distribution fee
3    imposed under Section 3-815.1 of the Illinois Vehicle Code.
4    Beginning on July 1, 2004 and through June 30, 2005, the
5    use in this State of motor vehicles of the second division:
6    (i) with a gross vehicle weight rating in excess of 8,000
7    pounds; (ii) that are subject to the commercial
8    distribution fee imposed under Section 3-815.1 of the
9    Illinois Vehicle Code; and (iii) that are primarily used
10    for commercial purposes. Through June 30, 2005, this
11    exemption applies to repair and replacement parts added
12    after the initial purchase of such a motor vehicle if that
13    motor vehicle is used in a manner that would qualify for
14    the rolling stock exemption otherwise provided for in this
15    Act. For purposes of this paragraph, "used for commercial
16    purposes" means the transportation of persons or property
17    in furtherance of any commercial or industrial enterprise
18    whether for-hire or not.
19        (5) a sale or transfer of machinery and equipment used
20    primarily in the process of the manufacturing or
21    assembling, either in an existing, an expanded or a new
22    manufacturing facility, of tangible personal property for
23    wholesale or retail sale or lease, whether such sale or
24    lease is made directly by the manufacturer or by some other
25    person, whether the materials used in the process are owned
26    by the manufacturer or some other person, or whether such

 

 

HB3694- 21 -LRB099 10493 HLH 30720 b

1    sale or lease is made apart from or as an incident to the
2    seller's engaging in a service occupation and the
3    applicable tax is a Service Use Tax or Service Occupation
4    Tax, rather than Use Tax or Retailers' Occupation Tax. The
5    exemption provided by this paragraph (5) does not include
6    machinery and equipment used in (i) the generation of
7    electricity for wholesale or retail sale; (ii) the
8    generation or treatment of natural or artificial gas for
9    wholesale or retail sale that is delivered to customers
10    through pipes, pipelines, or mains; or (iii) the treatment
11    of water for wholesale or retail sale that is delivered to
12    customers through pipes, pipelines, or mains. The
13    provisions of this amendatory Act of the 98th General
14    Assembly are declaratory of existing law as to the meaning
15    and scope of this exemption.
16        (5a) the repairing, reconditioning or remodeling, for
17    a common carrier by rail, of tangible personal property
18    which belongs to such carrier for hire, and as to which
19    such carrier receives the physical possession of the
20    repaired, reconditioned or remodeled item of tangible
21    personal property in Illinois, and which such carrier
22    transports, or shares with another common carrier in the
23    transportation of such property, out of Illinois on a
24    standard uniform bill of lading showing the person who
25    repaired, reconditioned or remodeled the property to a
26    destination outside Illinois, for use outside Illinois.

 

 

HB3694- 22 -LRB099 10493 HLH 30720 b

1        (5b) a sale or transfer of tangible personal property
2    which is produced by the seller thereof on special order in
3    such a way as to have made the applicable tax the Service
4    Occupation Tax or the Service Use Tax, rather than the
5    Retailers' Occupation Tax or the Use Tax, for an interstate
6    carrier by rail which receives the physical possession of
7    such property in Illinois, and which transports such
8    property, or shares with another common carrier in the
9    transportation of such property, out of Illinois on a
10    standard uniform bill of lading showing the seller of the
11    property as the shipper or consignor of such property to a
12    destination outside Illinois, for use outside Illinois.
13        (6) until July 1, 2003, a sale or transfer of
14    distillation machinery and equipment, sold as a unit or kit
15    and assembled or installed by the retailer, which machinery
16    and equipment is certified by the user to be used only for
17    the production of ethyl alcohol that will be used for
18    consumption as motor fuel or as a component of motor fuel
19    for the personal use of such user and not subject to sale
20    or resale.
21        (7) at the election of any serviceman not required to
22    be otherwise registered as a retailer under Section 2a of
23    the Retailers' Occupation Tax Act, made for each fiscal
24    year sales of service in which the aggregate annual cost
25    price of tangible personal property transferred as an
26    incident to the sales of service is less than 35%, or 75%

 

 

HB3694- 23 -LRB099 10493 HLH 30720 b

1    in the case of servicemen transferring prescription drugs
2    or servicemen engaged in graphic arts production, of the
3    aggregate annual total gross receipts from all sales of
4    service. The purchase of such tangible personal property by
5    the serviceman shall be subject to tax under the Retailers'
6    Occupation Tax Act and the Use Tax Act. However, if a
7    primary serviceman who has made the election described in
8    this paragraph subcontracts service work to a secondary
9    serviceman who has also made the election described in this
10    paragraph, the primary serviceman does not incur a Use Tax
11    liability if the secondary serviceman (i) has paid or will
12    pay Use Tax on his or her cost price of any tangible
13    personal property transferred to the primary serviceman
14    and (ii) certifies that fact in writing to the primary
15    serviceman.
16    Tangible personal property transferred incident to the
17completion of a maintenance agreement is exempt from the tax
18imposed pursuant to this Act.
19    Exemption (5) also includes machinery and equipment used in
20the general maintenance or repair of such exempt machinery and
21equipment or for in-house manufacture of exempt machinery and
22equipment. The machinery and equipment exemption does not
23include machinery and equipment used in (i) the generation of
24electricity for wholesale or retail sale; (ii) the generation
25or treatment of natural or artificial gas for wholesale or
26retail sale that is delivered to customers through pipes,

 

 

HB3694- 24 -LRB099 10493 HLH 30720 b

1pipelines, or mains; or (iii) the treatment of water for
2wholesale or retail sale that is delivered to customers through
3pipes, pipelines, or mains. The provisions of this amendatory
4Act of the 98th General Assembly are declaratory of existing
5law as to the meaning and scope of this exemption. For the
6purposes of exemption (5), each of these terms shall have the
7following meanings: (1) "manufacturing process" shall mean the
8production of any article of tangible personal property,
9whether such article is a finished product or an article for
10use in the process of manufacturing or assembling a different
11article of tangible personal property, by procedures commonly
12regarded as manufacturing, processing, fabricating, or
13refining which changes some existing material or materials into
14a material with a different form, use or name. In relation to a
15recognized integrated business composed of a series of
16operations which collectively constitute manufacturing, or
17individually constitute manufacturing operations, the
18manufacturing process shall be deemed to commence with the
19first operation or stage of production in the series, and shall
20not be deemed to end until the completion of the final product
21in the last operation or stage of production in the series; and
22further, for purposes of exemption (5), photoprocessing is
23deemed to be a manufacturing process of tangible personal
24property for wholesale or retail sale; (2) "assembling process"
25shall mean the production of any article of tangible personal
26property, whether such article is a finished product or an

 

 

HB3694- 25 -LRB099 10493 HLH 30720 b

1article for use in the process of manufacturing or assembling a
2different article of tangible personal property, by the
3combination of existing materials in a manner commonly regarded
4as assembling which results in a material of a different form,
5use or name; (3) "machinery" shall mean major mechanical
6machines or major components of such machines contributing to a
7manufacturing or assembling process; and (4) "equipment" shall
8include any independent device or tool separate from any
9machinery but essential to an integrated manufacturing or
10assembly process; including computers used primarily in a
11manufacturer's computer assisted design, computer assisted
12manufacturing (CAD/CAM) system; or any subunit or assembly
13comprising a component of any machinery or auxiliary, adjunct
14or attachment parts of machinery, such as tools, dies, jigs,
15fixtures, patterns and molds; or any parts which require
16periodic replacement in the course of normal operation; but
17shall not include hand tools. Equipment includes chemicals or
18chemicals acting as catalysts but only if the chemicals or
19chemicals acting as catalysts effect a direct and immediate
20change upon a product being manufactured or assembled for
21wholesale or retail sale or lease. The purchaser of such
22machinery and equipment who has an active resale registration
23number shall furnish such number to the seller at the time of
24purchase. The user of such machinery and equipment and tools
25without an active resale registration number shall prepare a
26certificate of exemption for each transaction stating facts

 

 

HB3694- 26 -LRB099 10493 HLH 30720 b

1establishing the exemption for that transaction, which
2certificate shall be available to the Department for inspection
3or audit. The Department shall prescribe the form of the
4certificate.
5    Any informal rulings, opinions or letters issued by the
6Department in response to an inquiry or request for any opinion
7from any person regarding the coverage and applicability of
8exemption (5) to specific devices shall be published,
9maintained as a public record, and made available for public
10inspection and copying. If the informal ruling, opinion or
11letter contains trade secrets or other confidential
12information, where possible the Department shall delete such
13information prior to publication. Whenever such informal
14rulings, opinions, or letters contain any policy of general
15applicability, the Department shall formulate and adopt such
16policy as a rule in accordance with the provisions of the
17Illinois Administrative Procedure Act.
18    On and after July 1, 1987, no entity otherwise eligible
19under exemption (3) of this Section shall make tax free
20purchases unless it has an active exemption identification
21number issued by the Department.
22    The purchase, employment and transfer of such tangible
23personal property as newsprint and ink for the primary purpose
24of conveying news (with or without other information) is not a
25purchase, use or sale of service or of tangible personal
26property within the meaning of this Act.

 

 

HB3694- 27 -LRB099 10493 HLH 30720 b

1    "Serviceman" means any person who is engaged in the
2occupation of making sales of service.
3    "Sale at retail" means "sale at retail" as defined in the
4Retailers' Occupation Tax Act.
5    "Supplier" means any person who makes sales of tangible
6personal property to servicemen for the purpose of resale as an
7incident to a sale of service.
8    "Serviceman maintaining a place of business in this State",
9or any like term, means and includes any serviceman:
10        1. having or maintaining within this State, directly or
11    by a subsidiary, an office, distribution house, sales
12    house, warehouse or other place of business, or any agent
13    or other representative operating within this State under
14    the authority of the serviceman or its subsidiary,
15    irrespective of whether such place of business or agent or
16    other representative is located here permanently or
17    temporarily, or whether such serviceman or subsidiary is
18    licensed to do business in this State;
19        1.1. having a contract with a person located in this
20    State under which the person, for a commission or other
21    consideration based on the sale of service by the
22    serviceman, directly or indirectly refers potential
23    customers to the serviceman by providing to the potential
24    customers a promotional code or other mechanism that allows
25    the serviceman to track purchases referred by such persons.
26    Examples of mechanisms that allow the serviceman to track

 

 

HB3694- 28 -LRB099 10493 HLH 30720 b

1    purchases referred by such persons include but are not
2    limited to the use of a link on the person's Internet
3    website, promotional codes distributed through the
4    person's hand-delivered or mailed material, and
5    promotional codes distributed by the person through radio
6    or other broadcast media. The provisions of this paragraph
7    1.1 shall apply only if the cumulative gross receipts from
8    sales of service by the serviceman to customers who are
9    referred to the serviceman by all persons in this State
10    under such contracts exceed $10,000 during the preceding 4
11    quarterly periods ending on the last day of March, June,
12    September, and December; a serviceman meeting the
13    requirements of this paragraph 1.1 shall be presumed to be
14    maintaining a place of business in this State but may rebut
15    this presumption by submitting proof that the referrals or
16    other activities pursued within this State by such persons
17    were not sufficient to meet the nexus standards of the
18    United States Constitution during the preceding 4
19    quarterly periods;
20        1.2. beginning July 1, 2011, having a contract with a
21    person located in this State under which:
22            A. the serviceman sells the same or substantially
23        similar line of services as the person located in this
24        State and does so using an identical or substantially
25        similar name, trade name, or trademark as the person
26        located in this State; and

 

 

HB3694- 29 -LRB099 10493 HLH 30720 b

1            B. the serviceman provides a commission or other
2        consideration to the person located in this State based
3        upon the sale of services by the serviceman.
4    The provisions of this paragraph 1.2 shall apply only if
5    the cumulative gross receipts from sales of service by the
6    serviceman to customers in this State under all such
7    contracts exceed $10,000 during the preceding 4 quarterly
8    periods ending on the last day of March, June, September,
9    and December;
10        2. soliciting orders for tangible personal property by
11    means of a telecommunication or television shopping system
12    (which utilizes toll free numbers) which is intended by the
13    retailer to be broadcast by cable television or other means
14    of broadcasting, to consumers located in this State;
15        3. pursuant to a contract with a broadcaster or
16    publisher located in this State, soliciting orders for
17    tangible personal property by means of advertising which is
18    disseminated primarily to consumers located in this State
19    and only secondarily to bordering jurisdictions;
20        4. soliciting orders for tangible personal property by
21    mail if the solicitations are substantial and recurring and
22    if the retailer benefits from any banking, financing, debt
23    collection, telecommunication, or marketing activities
24    occurring in this State or benefits from the location in
25    this State of authorized installation, servicing, or
26    repair facilities;

 

 

HB3694- 30 -LRB099 10493 HLH 30720 b

1        5. being owned or controlled by the same interests
2    which own or control any retailer engaging in business in
3    the same or similar line of business in this State;
4        6. having a franchisee or licensee operating under its
5    trade name if the franchisee or licensee is required to
6    collect the tax under this Section;
7        7. pursuant to a contract with a cable television
8    operator located in this State, soliciting orders for
9    tangible personal property by means of advertising which is
10    transmitted or distributed over a cable television system
11    in this State; or
12        8. engaging in activities in Illinois, which
13    activities in the state in which the supply business
14    engaging in such activities is located would constitute
15    maintaining a place of business in that state.
16(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
 
17    Section 15. The Retailers' Occupation Tax Act is amended by
18changing Section 1 as follows:
 
19    (35 ILCS 120/1)  (from Ch. 120, par. 440)
20    Sec. 1. Definitions. "Sale at retail" means any transfer of
21the ownership of or title to tangible personal property to a
22purchaser, for the purpose of use or consumption, and not for
23the purpose of resale in any form as tangible personal property
24to the extent not first subjected to a use for which it was

 

 

HB3694- 31 -LRB099 10493 HLH 30720 b

1purchased, for a valuable consideration: Provided that the
2property purchased is deemed to be purchased for the purpose of
3resale, despite first being used, to the extent to which it is
4resold as an ingredient of an intentionally produced product or
5byproduct of manufacturing. For this purpose, slag produced as
6an incident to manufacturing pig iron or steel and sold is
7considered to be an intentionally produced byproduct of
8manufacturing. Transactions whereby the possession of the
9property is transferred but the seller retains the title as
10security for payment of the selling price shall be deemed to be
11sales.
12    "Sale at retail" shall be construed to include any transfer
13of the ownership of or title to tangible personal property to a
14purchaser, for use or consumption by any other person to whom
15such purchaser may transfer the tangible personal property
16without a valuable consideration, and to include any transfer,
17whether made for or without a valuable consideration, for
18resale in any form as tangible personal property unless made in
19compliance with Section 2c of this Act.
20    Sales of tangible personal property, which property, to the
21extent not first subjected to a use for which it was purchased,
22as an ingredient or constituent, goes into and forms a part of
23tangible personal property subsequently the subject of a "Sale
24at retail", are not sales at retail as defined in this Act:
25Provided that the property purchased is deemed to be purchased
26for the purpose of resale, despite first being used, to the

 

 

HB3694- 32 -LRB099 10493 HLH 30720 b

1extent to which it is resold as an ingredient of an
2intentionally produced product or byproduct of manufacturing.
3    "Sale at retail" shall be construed to include any Illinois
4florist's sales transaction in which the purchase order is
5received in Illinois by a florist and the sale is for use or
6consumption, but the Illinois florist has a florist in another
7state deliver the property to the purchaser or the purchaser's
8donee in such other state.
9    Nonreusable tangible personal property that is used by
10persons engaged in the business of operating a restaurant,
11cafeteria, or drive-in is a sale for resale when it is
12transferred to customers in the ordinary course of business as
13part of the sale of food or beverages and is used to deliver,
14package, or consume food or beverages, regardless of where
15consumption of the food or beverages occurs. Examples of those
16items include, but are not limited to nonreusable, paper and
17plastic cups, plates, baskets, boxes, sleeves, buckets or other
18containers, utensils, straws, placemats, napkins, doggie bags,
19and wrapping or packaging materials that are transferred to
20customers as part of the sale of food or beverages in the
21ordinary course of business.
22    The purchase, employment and transfer of such tangible
23personal property as newsprint and ink for the primary purpose
24of conveying news (with or without other information) is not a
25purchase, use or sale of tangible personal property.
26    A person whose activities are organized and conducted

 

 

HB3694- 33 -LRB099 10493 HLH 30720 b

1primarily as a not-for-profit service enterprise, and who
2engages in selling tangible personal property at retail
3(whether to the public or merely to members and their guests)
4is engaged in the business of selling tangible personal
5property at retail with respect to such transactions, excepting
6only a person organized and operated exclusively for
7charitable, religious or educational purposes either (1), to
8the extent of sales by such person to its members, students,
9patients or inmates of tangible personal property to be used
10primarily for the purposes of such person, or (2), to the
11extent of sales by such person of tangible personal property
12which is not sold or offered for sale by persons organized for
13profit. The selling of school books and school supplies by
14schools at retail to students is not "primarily for the
15purposes of" the school which does such selling. The provisions
16of this paragraph shall not apply to nor subject to taxation
17occasional dinners, socials or similar activities of a person
18organized and operated exclusively for charitable, religious
19or educational purposes, whether or not such activities are
20open to the public.
21    A person who is the recipient of a grant or contract under
22Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
23serves meals to participants in the federal Nutrition Program
24for the Elderly in return for contributions established in
25amount by the individual participant pursuant to a schedule of
26suggested fees as provided for in the federal Act is not

 

 

HB3694- 34 -LRB099 10493 HLH 30720 b

1engaged in the business of selling tangible personal property
2at retail with respect to such transactions.
3    "Purchaser" means anyone who, through a sale at retail,
4acquires the ownership of or title to tangible personal
5property for a valuable consideration.
6    "Reseller of motor fuel" means any person engaged in the
7business of selling or delivering or transferring title of
8motor fuel to another person other than for use or consumption.
9No person shall act as a reseller of motor fuel within this
10State without first being registered as a reseller pursuant to
11Section 2c or a retailer pursuant to Section 2a.
12    "Selling price" or the "amount of sale" means the
13consideration for a sale valued in money whether received in
14money or otherwise, including cash, credits, property, other
15than as hereinafter provided, and services, but not including
16the value of or credit given for traded-in tangible personal
17property where the item that is traded-in is of like kind and
18character as that which is being sold, and shall be determined
19without any deduction on account of the cost of the property
20sold, the cost of materials used, labor or service cost or any
21other expense whatsoever, but does not include charges that are
22added to prices by sellers on account of the seller's tax
23liability under this Act, or on account of the seller's duty to
24collect, from the purchaser, the tax that is imposed by the Use
25Tax Act, or, except as otherwise provided with respect to any
26cigarette tax imposed by a home rule unit, on account of the

 

 

HB3694- 35 -LRB099 10493 HLH 30720 b

1seller's tax liability under any local occupation tax
2administered by the Department, or, except as otherwise
3provided with respect to any cigarette tax imposed by a home
4rule unit on account of the seller's duty to collect, from the
5purchasers, the tax that is imposed under any local use tax
6administered by the Department. Effective December 1, 1985,
7"selling price" shall include charges that are added to prices
8by sellers on account of the seller's tax liability under the
9Cigarette Tax Act, on account of the sellers' duty to collect,
10from the purchaser, the tax imposed under the Cigarette Use Tax
11Act, and on account of the seller's duty to collect, from the
12purchaser, any cigarette tax imposed by a home rule unit.
13    Notwithstanding any other provision of law, "selling
14price" does not include any fee charged by the retailer for the
15disposal of tires if that fee is a separately stated charge on
16the customer's invoice.
17    Notwithstanding any law to the contrary, for any motor
18vehicle, as defined in Section 1-146 of the Vehicle Code, that
19is sold on or after January 1, 2015 for the purpose of leasing
20the vehicle for a defined period that is longer than one year
21and (1) is a motor vehicle of the second division that: (A) is
22a self-contained motor vehicle designed or permanently
23converted to provide living quarters for recreational,
24camping, or travel use, with direct walk through access to the
25living quarters from the driver's seat; (B) is of the van
26configuration designed for the transportation of not less than

 

 

HB3694- 36 -LRB099 10493 HLH 30720 b

17 nor more than 16 passengers; or (C) has a gross vehicle
2weight rating of 8,000 pounds or less or (2) is a motor vehicle
3of the first division, "selling price" or "amount of sale"
4means the consideration received by the lessor pursuant to the
5lease contract, including amounts due at lease signing and all
6monthly or other regular payments charged over the term of the
7lease. Also included in the selling price is any amount
8received by the lessor from the lessee for the leased vehicle
9that is not calculated at the time the lease is executed,
10including, but not limited to, excess mileage charges and
11charges for excess wear and tear. For sales that occur in
12Illinois, with respect to any amount received by the lessor
13from the lessee for the leased vehicle that is not calculated
14at the time the lease is executed, the lessor who purchased the
15motor vehicle does not incur the tax imposed by the Use Tax Act
16on those amounts, and the retailer who makes the retail sale of
17the motor vehicle to the lessor is not required to collect the
18tax imposed by the Use Tax Act or to pay the tax imposed by this
19Act on those amounts. However, the lessor who purchased the
20motor vehicle assumes the liability for reporting and paying
21the tax on those amounts directly to the Department in the same
22form (Illinois Retailers' Occupation Tax, and local retailers'
23occupation taxes, if applicable) in which the retailer would
24have reported and paid such tax if the retailer had accounted
25for the tax to the Department. For amounts received by the
26lessor from the lessee that are not calculated at the time the

 

 

HB3694- 37 -LRB099 10493 HLH 30720 b

1lease is executed, the lessor must file the return and pay the
2tax to the Department by the due date otherwise required by
3this Act for returns other than transaction returns. If the
4retailer is entitled under this Act to a discount for
5collecting and remitting the tax imposed under this Act to the
6Department with respect to the sale of the motor vehicle to the
7lessor, then the right to the discount provided in this Act
8shall be transferred to the lessor with respect to the tax paid
9by the lessor for any amount received by the lessor from the
10lessee for the leased vehicle that is not calculated at the
11time the lease is executed; provided that the discount is only
12allowed if the return is timely filed and for amounts timely
13paid. The "selling price" of a motor vehicle that is sold on or
14after January 1, 2015 for the purpose of leasing for a defined
15period of longer than one year shall not be reduced by the
16value of or credit given for traded-in tangible personal
17property owned by the lessor, nor shall it be reduced by the
18value of or credit given for traded-in tangible personal
19property owned by the lessee, regardless of whether the
20trade-in value thereof is assigned by the lessee to the lessor.
21In the case of a motor vehicle that is sold for the purpose of
22leasing for a defined period of longer than one year, the sale
23occurs at the time of the delivery of the vehicle, regardless
24of the due date of any lease payments. A lessor who incurs a
25Retailers' Occupation Tax liability on the sale of a motor
26vehicle coming off lease may not take a credit against that

 

 

HB3694- 38 -LRB099 10493 HLH 30720 b

1liability for the Use Tax the lessor paid upon the purchase of
2the motor vehicle (or for any tax the lessor paid with respect
3to any amount received by the lessor from the lessee for the
4leased vehicle that was not calculated at the time the lease
5was executed) if the selling price of the motor vehicle at the
6time of purchase was calculated using the definition of
7"selling price" as defined in this paragraph. Notwithstanding
8any other provision of this Act to the contrary, lessors shall
9file all returns and make all payments required under this
10paragraph to the Department by electronic means in the manner
11and form as required by the Department. This paragraph does not
12apply to leases of motor vehicles for which, at the time the
13lease is entered into, the term of the lease is not a defined
14period, including leases with a defined initial period with the
15option to continue the lease on a month-to-month or other basis
16beyond the initial defined period.
17    The phrase "like kind and character" shall be liberally
18construed (including but not limited to any form of motor
19vehicle for any form of motor vehicle, or any kind of farm or
20agricultural implement for any other kind of farm or
21agricultural implement), while not including a kind of item
22which, if sold at retail by that retailer, would be exempt from
23retailers' occupation tax and use tax as an isolated or
24occasional sale.
25    "Gross receipts" from the sales of tangible personal
26property at retail means the total selling price or the amount

 

 

HB3694- 39 -LRB099 10493 HLH 30720 b

1of such sales, as hereinbefore defined. In the case of charge
2and time sales, the amount thereof shall be included only as
3and when payments are received by the seller. Receipts or other
4consideration derived by a seller from the sale, transfer or
5assignment of accounts receivable to a wholly owned subsidiary
6will not be deemed payments prior to the time the purchaser
7makes payment on such accounts.
8    "Department" means the Department of Revenue.
9    "Person" means any natural individual, firm, partnership,
10association, joint stock company, joint adventure, public or
11private corporation, limited liability company, or a receiver,
12executor, trustee, guardian or other representative appointed
13by order of any court.
14    The isolated or occasional sale of tangible personal
15property at retail by a person who does not hold himself out as
16being engaged (or who does not habitually engage) in selling
17such tangible personal property at retail, or a sale through a
18bulk vending machine, does not constitute engaging in a
19business of selling such tangible personal property at retail
20within the meaning of this Act; provided that any person who is
21engaged in a business which is not subject to the tax imposed
22by this Act because of involving the sale of or a contract to
23sell real estate or a construction contract to improve real
24estate or a construction contract to engineer, install, and
25maintain an integrated system of products, but who, in the
26course of conducting such business, transfers tangible

 

 

HB3694- 40 -LRB099 10493 HLH 30720 b

1personal property to users or consumers in the finished form in
2which it was purchased, and which does not become real estate
3or was not engineered and installed, under any provision of a
4construction contract or real estate sale or real estate sales
5agreement entered into with some other person arising out of or
6because of such nontaxable business, is engaged in the business
7of selling tangible personal property at retail to the extent
8of the value of the tangible personal property so transferred.
9If, in such a transaction, a separate charge is made for the
10tangible personal property so transferred, the value of such
11property, for the purpose of this Act, shall be the amount so
12separately charged, but not less than the cost of such property
13to the transferor; if no separate charge is made, the value of
14such property, for the purposes of this Act, is the cost to the
15transferor of such tangible personal property. Construction
16contracts for the improvement of real estate consisting of
17engineering, installation, and maintenance of voice, data,
18video, security, and all telecommunication systems do not
19constitute engaging in a business of selling tangible personal
20property at retail within the meaning of this Act if they are
21sold at one specified contract price.
22    A person who holds himself or herself out as being engaged
23(or who habitually engages) in selling tangible personal
24property at retail is a person engaged in the business of
25selling tangible personal property at retail hereunder with
26respect to such sales (and not primarily in a service

 

 

HB3694- 41 -LRB099 10493 HLH 30720 b

1occupation) notwithstanding the fact that such person designs
2and produces such tangible personal property on special order
3for the purchaser and in such a way as to render the property
4of value only to such purchaser, if such tangible personal
5property so produced on special order serves substantially the
6same function as stock or standard items of tangible personal
7property that are sold at retail.
8    Persons who engage in the business of transferring tangible
9personal property upon the redemption of trading stamps are
10engaged in the business of selling such property at retail and
11shall be liable for and shall pay the tax imposed by this Act
12on the basis of the retail value of the property transferred
13upon redemption of such stamps.
14    "Bulk vending machine" means a vending machine, containing
15unsorted confections, nuts, toys, or other items designed
16primarily to be used or played with by children which, when a
17coin or coins of a denomination not larger than $0.50 are
18inserted, are dispensed in equal portions, at random and
19without selection by the customer.
20(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)