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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Use Tax Act is amended by changing Sections | ||||||||||||||||||||||||||||||||
5 | 3-5 and 3-50 as follows:
| ||||||||||||||||||||||||||||||||
6 | (35 ILCS 105/3-5)
| ||||||||||||||||||||||||||||||||
7 | Sec. 3-5. Exemptions. Use of the following tangible | ||||||||||||||||||||||||||||||||
8 | personal property
is exempt from the tax imposed by this Act:
| ||||||||||||||||||||||||||||||||
9 | (1) Personal property purchased from a corporation, | ||||||||||||||||||||||||||||||||
10 | society, association,
foundation, institution, or | ||||||||||||||||||||||||||||||||
11 | organization, other than a limited liability
company, that is | ||||||||||||||||||||||||||||||||
12 | organized and operated as a not-for-profit service enterprise
| ||||||||||||||||||||||||||||||||
13 | for the benefit of persons 65 years of age or older if the | ||||||||||||||||||||||||||||||||
14 | personal property
was not purchased by the enterprise for the | ||||||||||||||||||||||||||||||||
15 | purpose of resale by the
enterprise.
| ||||||||||||||||||||||||||||||||
16 | (2) Personal property purchased by a not-for-profit | ||||||||||||||||||||||||||||||||
17 | Illinois county
fair association for use in conducting, | ||||||||||||||||||||||||||||||||
18 | operating, or promoting the
county fair.
| ||||||||||||||||||||||||||||||||
19 | (3) Personal property purchased by a not-for-profit
arts or | ||||||||||||||||||||||||||||||||
20 | cultural organization that establishes, by proof required by | ||||||||||||||||||||||||||||||||
21 | the
Department by
rule, that it has received an exemption under | ||||||||||||||||||||||||||||||||
22 | Section 501(c)(3) of the Internal
Revenue Code and that is | ||||||||||||||||||||||||||||||||
23 | organized and operated primarily for the
presentation
or |
| |||||||
| |||||||
1 | support of arts or cultural programming, activities, or | ||||||
2 | services. These
organizations include, but are not limited to, | ||||||
3 | music and dramatic arts
organizations such as symphony | ||||||
4 | orchestras and theatrical groups, arts and
cultural service | ||||||
5 | organizations, local arts councils, visual arts organizations,
| ||||||
6 | and media arts organizations.
On and after the effective date | ||||||
7 | of this amendatory Act of the 92nd General
Assembly, however, | ||||||
8 | an entity otherwise eligible for this exemption shall not
make | ||||||
9 | tax-free purchases unless it has an active identification | ||||||
10 | number issued by
the Department.
| ||||||
11 | (4) Personal property purchased by a governmental body, by | ||||||
12 | a
corporation, society, association, foundation, or | ||||||
13 | institution organized and
operated exclusively for charitable, | ||||||
14 | religious, or educational purposes, or
by a not-for-profit | ||||||
15 | corporation, society, association, foundation,
institution, or | ||||||
16 | organization that has no compensated officers or employees
and | ||||||
17 | that is organized and operated primarily for the recreation of | ||||||
18 | persons
55 years of age or older. A limited liability company | ||||||
19 | may qualify for the
exemption under this paragraph only if the | ||||||
20 | limited liability company is
organized and operated | ||||||
21 | exclusively for educational purposes. On and after July
1, | ||||||
22 | 1987, however, no entity otherwise eligible for this exemption | ||||||
23 | shall make
tax-free purchases unless it has an active exemption | ||||||
24 | identification number
issued by the Department.
| ||||||
25 | (5) Until July 1, 2003, a passenger car that is a | ||||||
26 | replacement vehicle to
the extent that the
purchase price of |
| |||||||
| |||||||
1 | the car is subject to the Replacement Vehicle Tax.
| ||||||
2 | (6) Until July 1, 2003 and beginning again on September 1, | ||||||
3 | 2004 through August 30, 2014, graphic arts machinery and | ||||||
4 | equipment, including
repair and replacement
parts, both new and | ||||||
5 | used, and including that manufactured on special order,
| ||||||
6 | certified by the purchaser to be used primarily for graphic | ||||||
7 | arts production,
and including machinery and equipment | ||||||
8 | purchased for lease.
Equipment includes chemicals or chemicals | ||||||
9 | acting as catalysts but only if
the
chemicals or chemicals | ||||||
10 | acting as catalysts effect a direct and immediate change
upon a | ||||||
11 | graphic arts product.
| ||||||
12 | (7) Farm chemicals.
| ||||||
13 | (8) Legal tender, currency, medallions, or gold or silver | ||||||
14 | coinage issued by
the State of Illinois, the government of the | ||||||
15 | United States of America, or the
government of any foreign | ||||||
16 | country, and bullion.
| ||||||
17 | (9) Personal property purchased from a teacher-sponsored | ||||||
18 | student
organization affiliated with an elementary or | ||||||
19 | secondary school located in
Illinois.
| ||||||
20 | (10) A motor vehicle that is used for automobile renting, | ||||||
21 | as defined in the
Automobile Renting Occupation and Use Tax | ||||||
22 | Act.
| ||||||
23 | (11) Farm machinery and equipment, both new and used,
| ||||||
24 | including that manufactured on special order, certified by the | ||||||
25 | purchaser
to be used primarily for production agriculture or | ||||||
26 | State or federal
agricultural programs, including individual |
| |||||||
| |||||||
1 | replacement parts for
the machinery and equipment, including | ||||||
2 | machinery and equipment
purchased
for lease,
and including | ||||||
3 | implements of husbandry defined in Section 1-130 of
the | ||||||
4 | Illinois Vehicle Code, farm machinery and agricultural | ||||||
5 | chemical and
fertilizer spreaders, and nurse wagons required to | ||||||
6 | be registered
under Section 3-809 of the Illinois Vehicle Code,
| ||||||
7 | but excluding other motor
vehicles required to be
registered | ||||||
8 | under the Illinois Vehicle Code.
Horticultural polyhouses or | ||||||
9 | hoop houses used for propagating, growing, or
overwintering | ||||||
10 | plants shall be considered farm machinery and equipment under
| ||||||
11 | this item (11).
Agricultural chemical tender tanks and dry | ||||||
12 | boxes shall include units sold
separately from a motor vehicle | ||||||
13 | required to be licensed and units sold mounted
on a motor | ||||||
14 | vehicle required to be licensed if the selling price of the | ||||||
15 | tender
is separately stated.
| ||||||
16 | Farm machinery and equipment shall include precision | ||||||
17 | farming equipment
that is
installed or purchased to be | ||||||
18 | installed on farm machinery and equipment
including, but not | ||||||
19 | limited to, tractors, harvesters, sprayers, planters,
seeders, | ||||||
20 | or spreaders.
Precision farming equipment includes, but is not | ||||||
21 | limited to, soil testing
sensors, computers, monitors, | ||||||
22 | software, global positioning
and mapping systems, and other | ||||||
23 | such equipment.
| ||||||
24 | Farm machinery and equipment also includes computers, | ||||||
25 | sensors, software, and
related equipment used primarily in the
| ||||||
26 | computer-assisted operation of production agriculture |
| |||||||
| |||||||
1 | facilities, equipment,
and
activities such as, but not limited | ||||||
2 | to,
the collection, monitoring, and correlation of
animal and | ||||||
3 | crop data for the purpose of
formulating animal diets and | ||||||
4 | agricultural chemicals. This item (11) is exempt
from the | ||||||
5 | provisions of
Section 3-90.
| ||||||
6 | (12) Until June 30, 2013, fuel and petroleum products sold | ||||||
7 | to or used by an air common
carrier, certified by the carrier | ||||||
8 | to be used for consumption, shipment, or
storage in the conduct | ||||||
9 | of its business as an air common carrier, for a
flight destined | ||||||
10 | for or returning from a location or locations
outside the | ||||||
11 | United States without regard to previous or subsequent domestic
| ||||||
12 | stopovers.
| ||||||
13 | Beginning July 1, 2013, fuel and petroleum products sold to | ||||||
14 | or used by an air carrier, certified by the carrier to be used | ||||||
15 | for consumption, shipment, or storage in the conduct of its | ||||||
16 | business as an air common carrier, for a flight that (i) is | ||||||
17 | engaged in foreign trade or is engaged in trade between the | ||||||
18 | United States and any of its possessions and (ii) transports at | ||||||
19 | least one individual or package for hire from the city of | ||||||
20 | origination to the city of final destination on the same | ||||||
21 | aircraft, without regard to a change in the flight number of | ||||||
22 | that aircraft. | ||||||
23 | (13) Proceeds of mandatory service charges separately
| ||||||
24 | stated on customers' bills for the purchase and consumption of | ||||||
25 | food and
beverages purchased at retail from a retailer, to the | ||||||
26 | extent that the proceeds
of the service charge are in fact |
| |||||||
| |||||||
1 | turned over as tips or as a substitute
for tips to the | ||||||
2 | employees who participate directly in preparing, serving,
| ||||||
3 | hosting or cleaning up the food or beverage function with | ||||||
4 | respect to which
the service charge is imposed.
| ||||||
5 | (14) Until July 1, 2003, oil field exploration, drilling, | ||||||
6 | and production
equipment,
including (i) rigs and parts of rigs, | ||||||
7 | rotary
rigs, cable tool rigs, and workover rigs, (ii) pipe and | ||||||
8 | tubular goods,
including casing and drill strings, (iii) pumps | ||||||
9 | and pump-jack units, (iv)
storage tanks and flow lines, (v) any | ||||||
10 | individual replacement part for oil
field exploration, | ||||||
11 | drilling, and production equipment, and (vi) machinery and
| ||||||
12 | equipment purchased
for lease; but excluding motor vehicles | ||||||
13 | required to be registered under the
Illinois Vehicle Code.
| ||||||
14 | (15) Photoprocessing machinery and equipment, including | ||||||
15 | repair and
replacement parts, both new and used, including that
| ||||||
16 | manufactured on special order, certified by the purchaser to be | ||||||
17 | used
primarily for photoprocessing, and including
| ||||||
18 | photoprocessing machinery and equipment purchased for lease.
| ||||||
19 | (16) Coal and aggregate exploration, mining, off-highway | ||||||
20 | hauling,
processing, maintenance, and reclamation equipment,
| ||||||
21 | including replacement parts and equipment, and
including | ||||||
22 | equipment purchased for lease, but excluding motor
vehicles | ||||||
23 | required to be registered under the Illinois Vehicle Code. The | ||||||
24 | changes made to this Section by Public Act 97-767 apply on and | ||||||
25 | after July 1, 2003, but no claim for credit or refund is | ||||||
26 | allowed on or after August 16, 2013 (the effective date of |
| |||||||
| |||||||
1 | Public Act 98-456)
for such taxes paid during the period | ||||||
2 | beginning July 1, 2003 and ending on August 16, 2013 (the | ||||||
3 | effective date of Public Act 98-456).
| ||||||
4 | (17) Until July 1, 2003, distillation machinery and | ||||||
5 | equipment, sold as a
unit or kit,
assembled or installed by the | ||||||
6 | retailer, certified by the user to be used
only for the | ||||||
7 | production of ethyl alcohol that will be used for consumption
| ||||||
8 | as motor fuel or as a component of motor fuel for the personal | ||||||
9 | use of the
user, and not subject to sale or resale.
| ||||||
10 | (18) Manufacturing and assembling machinery and equipment | ||||||
11 | used
primarily in the process of manufacturing or assembling | ||||||
12 | tangible
personal property for wholesale or retail sale or | ||||||
13 | lease, whether that sale
or lease is made directly by the | ||||||
14 | manufacturer or by some other person,
whether the materials | ||||||
15 | used in the process are
owned by the manufacturer or some other | ||||||
16 | person, or whether that sale or
lease is made apart from or as | ||||||
17 | an incident to the seller's engaging in
the service occupation | ||||||
18 | of producing machines, tools, dies, jigs,
patterns, gauges, or | ||||||
19 | other similar items of no commercial value on
special order for | ||||||
20 | a particular purchaser. The exemption provided by this | ||||||
21 | paragraph (18) includes production related tangible personal | ||||||
22 | property, as defined in Section 3-50, purchased on or after | ||||||
23 | July 1, 2015. The exemption provided by this paragraph (18) | ||||||
24 | does not include machinery and equipment used in (i) the | ||||||
25 | generation of electricity for wholesale or retail sale; (ii) | ||||||
26 | the generation or treatment of natural or artificial gas for |
| |||||||
| |||||||
1 | wholesale or retail sale that is delivered to customers through | ||||||
2 | pipes, pipelines, or mains; or (iii) the treatment of water for | ||||||
3 | wholesale or retail sale that is delivered to customers through | ||||||
4 | pipes, pipelines, or mains. The provisions of Public Act 98-583 | ||||||
5 | are declaratory of existing law as to the meaning and scope of | ||||||
6 | this exemption.
| ||||||
7 | (19) Personal property delivered to a purchaser or | ||||||
8 | purchaser's donee
inside Illinois when the purchase order for | ||||||
9 | that personal property was
received by a florist located | ||||||
10 | outside Illinois who has a florist located
inside Illinois | ||||||
11 | deliver the personal property.
| ||||||
12 | (20) Semen used for artificial insemination of livestock | ||||||
13 | for direct
agricultural production.
| ||||||
14 | (21) Horses, or interests in horses, registered with and | ||||||
15 | meeting the
requirements of any of the
Arabian Horse Club | ||||||
16 | Registry of America, Appaloosa Horse Club, American Quarter
| ||||||
17 | Horse Association, United States
Trotting Association, or | ||||||
18 | Jockey Club, as appropriate, used for
purposes of breeding or | ||||||
19 | racing for prizes. This item (21) is exempt from the provisions | ||||||
20 | of Section 3-90, and the exemption provided for under this item | ||||||
21 | (21) applies for all periods beginning May 30, 1995, but no | ||||||
22 | claim for credit or refund is allowed on or after January 1, | ||||||
23 | 2008
for such taxes paid during the period beginning May 30, | ||||||
24 | 2000 and ending on January 1, 2008.
| ||||||
25 | (22) Computers and communications equipment utilized for | ||||||
26 | any
hospital
purpose
and equipment used in the diagnosis,
|
| |||||||
| |||||||
1 | analysis, or treatment of hospital patients purchased by a | ||||||
2 | lessor who leases
the
equipment, under a lease of one year or | ||||||
3 | longer executed or in effect at the
time the lessor would | ||||||
4 | otherwise be subject to the tax imposed by this Act, to a
| ||||||
5 | hospital
that has been issued an active tax exemption | ||||||
6 | identification number by
the
Department under Section 1g of the | ||||||
7 | Retailers' Occupation Tax Act. If the
equipment is leased in a | ||||||
8 | manner that does not qualify for
this exemption or is used in | ||||||
9 | any other non-exempt manner, the lessor
shall be liable for the
| ||||||
10 | tax imposed under this Act or the Service Use Tax Act, as the | ||||||
11 | case may
be, based on the fair market value of the property at | ||||||
12 | the time the
non-qualifying use occurs. No lessor shall collect | ||||||
13 | or attempt to collect an
amount (however
designated) that | ||||||
14 | purports to reimburse that lessor for the tax imposed by this
| ||||||
15 | Act or the Service Use Tax Act, as the case may be, if the tax | ||||||
16 | has not been
paid by the lessor. If a lessor improperly | ||||||
17 | collects any such amount from the
lessee, the lessee shall have | ||||||
18 | a legal right to claim a refund of that amount
from the lessor. | ||||||
19 | If, however, that amount is not refunded to the lessee for
any | ||||||
20 | reason, the lessor is liable to pay that amount to the | ||||||
21 | Department.
| ||||||
22 | (23) Personal property purchased by a lessor who leases the
| ||||||
23 | property, under
a
lease of
one year or longer executed or in | ||||||
24 | effect at the time
the lessor would otherwise be subject to the | ||||||
25 | tax imposed by this Act,
to a governmental body
that has been | ||||||
26 | issued an active sales tax exemption identification number by |
| |||||||
| |||||||
1 | the
Department under Section 1g of the Retailers' Occupation | ||||||
2 | Tax Act.
If the
property is leased in a manner that does not | ||||||
3 | qualify for
this exemption
or used in any other non-exempt | ||||||
4 | manner, the lessor shall be liable for the
tax imposed under | ||||||
5 | this Act or the Service Use Tax Act, as the case may
be, based | ||||||
6 | on the fair market value of the property at the time the
| ||||||
7 | non-qualifying use occurs. No lessor shall collect or attempt | ||||||
8 | to collect an
amount (however
designated) that purports to | ||||||
9 | reimburse that lessor for the tax imposed by this
Act or the | ||||||
10 | Service Use Tax Act, as the case may be, if the tax has not been
| ||||||
11 | paid by the lessor. If a lessor improperly collects any such | ||||||
12 | amount from the
lessee, the lessee shall have a legal right to | ||||||
13 | claim a refund of that amount
from the lessor. If, however, | ||||||
14 | that amount is not refunded to the lessee for
any reason, the | ||||||
15 | lessor is liable to pay that amount to the Department.
| ||||||
16 | (24) Beginning with taxable years ending on or after | ||||||
17 | December
31, 1995
and
ending with taxable years ending on or | ||||||
18 | before December 31, 2004,
personal property that is
donated for | ||||||
19 | disaster relief to be used in a State or federally declared
| ||||||
20 | disaster area in Illinois or bordering Illinois by a | ||||||
21 | manufacturer or retailer
that is registered in this State to a | ||||||
22 | corporation, society, association,
foundation, or institution | ||||||
23 | that has been issued a sales tax exemption
identification | ||||||
24 | number by the Department that assists victims of the disaster
| ||||||
25 | who reside within the declared disaster area.
| ||||||
26 | (25) Beginning with taxable years ending on or after |
| |||||||
| |||||||
1 | December
31, 1995 and
ending with taxable years ending on or | ||||||
2 | before December 31, 2004, personal
property that is used in the | ||||||
3 | performance of infrastructure repairs in this
State, including | ||||||
4 | but not limited to municipal roads and streets, access roads,
| ||||||
5 | bridges, sidewalks, waste disposal systems, water and sewer | ||||||
6 | line extensions,
water distribution and purification | ||||||
7 | facilities, storm water drainage and
retention facilities, and | ||||||
8 | sewage treatment facilities, resulting from a State
or | ||||||
9 | federally declared disaster in Illinois or bordering Illinois | ||||||
10 | when such
repairs are initiated on facilities located in the | ||||||
11 | declared disaster area
within 6 months after the disaster.
| ||||||
12 | (26) Beginning July 1, 1999, game or game birds purchased | ||||||
13 | at a "game
breeding
and hunting preserve area" as that term is
| ||||||
14 | used in
the Wildlife Code. This paragraph is exempt from the | ||||||
15 | provisions
of
Section 3-90.
| ||||||
16 | (27) A motor vehicle, as that term is defined in Section | ||||||
17 | 1-146
of the
Illinois
Vehicle Code, that is donated to a | ||||||
18 | corporation, limited liability company,
society, association, | ||||||
19 | foundation, or institution that is determined by the
Department | ||||||
20 | to be organized and operated exclusively for educational | ||||||
21 | purposes.
For purposes of this exemption, "a corporation, | ||||||
22 | limited liability company,
society, association, foundation, | ||||||
23 | or institution organized and operated
exclusively for | ||||||
24 | educational purposes" means all tax-supported public schools,
| ||||||
25 | private schools that offer systematic instruction in useful | ||||||
26 | branches of
learning by methods common to public schools and |
| |||||||
| |||||||
1 | that compare favorably in
their scope and intensity with the | ||||||
2 | course of study presented in tax-supported
schools, and | ||||||
3 | vocational or technical schools or institutes organized and
| ||||||
4 | operated exclusively to provide a course of study of not less | ||||||
5 | than 6 weeks
duration and designed to prepare individuals to | ||||||
6 | follow a trade or to pursue a
manual, technical, mechanical, | ||||||
7 | industrial, business, or commercial
occupation.
| ||||||
8 | (28) Beginning January 1, 2000, personal property, | ||||||
9 | including
food,
purchased through fundraising
events for the | ||||||
10 | benefit of
a public or private elementary or
secondary school, | ||||||
11 | a group of those schools, or one or more school
districts if | ||||||
12 | the events are
sponsored by an entity recognized by the school | ||||||
13 | district that consists
primarily of volunteers and includes
| ||||||
14 | parents and teachers of the school children. This paragraph | ||||||
15 | does not apply
to fundraising
events (i) for the benefit of | ||||||
16 | private home instruction or (ii)
for which the fundraising | ||||||
17 | entity purchases the personal property sold at
the events from | ||||||
18 | another individual or entity that sold the property for the
| ||||||
19 | purpose of resale by the fundraising entity and that
profits | ||||||
20 | from the sale to the
fundraising entity. This paragraph is | ||||||
21 | exempt
from the provisions
of Section 3-90.
| ||||||
22 | (29) Beginning January 1, 2000 and through December 31, | ||||||
23 | 2001, new or
used automatic vending
machines that prepare and | ||||||
24 | serve hot food and beverages, including coffee, soup,
and
other | ||||||
25 | items, and replacement parts for these machines.
Beginning | ||||||
26 | January 1,
2002 and through June 30, 2003, machines and parts |
| |||||||
| |||||||
1 | for machines used in
commercial, coin-operated amusement and | ||||||
2 | vending business if a use or occupation
tax is paid on the | ||||||
3 | gross receipts derived from the use of the commercial,
| ||||||
4 | coin-operated amusement and vending machines.
This
paragraph
| ||||||
5 | is exempt from the provisions of Section 3-90.
| ||||||
6 | (30) Beginning January 1, 2001 and through June 30, 2016, | ||||||
7 | food for human consumption that is to be consumed off the | ||||||
8 | premises
where it is sold (other than alcoholic beverages, soft | ||||||
9 | drinks, and food that
has been prepared for immediate | ||||||
10 | consumption) and prescription and
nonprescription medicines, | ||||||
11 | drugs, medical appliances, and insulin, urine
testing | ||||||
12 | materials, syringes, and needles used by diabetics, for human | ||||||
13 | use, when
purchased for use by a person receiving medical | ||||||
14 | assistance under Article V of
the Illinois Public Aid Code who | ||||||
15 | resides in a licensed long-term care facility,
as defined in | ||||||
16 | the Nursing Home Care Act, or in a licensed facility as defined | ||||||
17 | in the ID/DD Community Care Act or the Specialized Mental | ||||||
18 | Health Rehabilitation Act of 2013.
| ||||||
19 | (31) Beginning on
the effective date of this amendatory Act | ||||||
20 | of the 92nd General Assembly,
computers and communications | ||||||
21 | equipment
utilized for any hospital purpose and equipment used | ||||||
22 | in the diagnosis,
analysis, or treatment of hospital patients | ||||||
23 | purchased by a lessor who leases
the equipment, under a lease | ||||||
24 | of one year or longer executed or in effect at the
time the | ||||||
25 | lessor would otherwise be subject to the tax imposed by this | ||||||
26 | Act, to a
hospital that has been issued an active tax exemption |
| |||||||
| |||||||
1 | identification number by
the Department under Section 1g of the | ||||||
2 | Retailers' Occupation Tax Act. If the
equipment is leased in a | ||||||
3 | manner that does not qualify for this exemption or is
used in | ||||||
4 | any other nonexempt manner, the lessor shall be liable for the | ||||||
5 | tax
imposed under this Act or the Service Use Tax Act, as the | ||||||
6 | case may be, based on
the fair market value of the property at | ||||||
7 | the time the nonqualifying use
occurs. No lessor shall collect | ||||||
8 | or attempt to collect an amount (however
designated) that | ||||||
9 | purports to reimburse that lessor for the tax imposed by this
| ||||||
10 | Act or the Service Use Tax Act, as the case may be, if the tax | ||||||
11 | has not been
paid by the lessor. If a lessor improperly | ||||||
12 | collects any such amount from the
lessee, the lessee shall have | ||||||
13 | a legal right to claim a refund of that amount
from the lessor. | ||||||
14 | If, however, that amount is not refunded to the lessee for
any | ||||||
15 | reason, the lessor is liable to pay that amount to the | ||||||
16 | Department.
This paragraph is exempt from the provisions of | ||||||
17 | Section 3-90.
| ||||||
18 | (32) Beginning on
the effective date of this amendatory Act | ||||||
19 | of the 92nd General Assembly,
personal property purchased by a | ||||||
20 | lessor who leases the property,
under a lease of one year or | ||||||
21 | longer executed or in effect at the time the
lessor would | ||||||
22 | otherwise be subject to the tax imposed by this Act, to a
| ||||||
23 | governmental body that has been issued an active sales tax | ||||||
24 | exemption
identification number by the Department under | ||||||
25 | Section 1g of the Retailers'
Occupation Tax Act. If the | ||||||
26 | property is leased in a manner that does not
qualify for this |
| |||||||
| |||||||
1 | exemption or used in any other nonexempt manner, the lessor
| ||||||
2 | shall be liable for the tax imposed under this Act or the | ||||||
3 | Service Use Tax Act,
as the case may be, based on the fair | ||||||
4 | market value of the property at the time
the nonqualifying use | ||||||
5 | occurs. No lessor shall collect or attempt to collect
an amount | ||||||
6 | (however designated) that purports to reimburse that lessor for | ||||||
7 | the
tax imposed by this Act or the Service Use Tax Act, as the | ||||||
8 | case may be, if the
tax has not been paid by the lessor. If a | ||||||
9 | lessor improperly collects any such
amount from the lessee, the | ||||||
10 | lessee shall have a legal right to claim a refund
of that | ||||||
11 | amount from the lessor. If, however, that amount is not | ||||||
12 | refunded to
the lessee for any reason, the lessor is liable to | ||||||
13 | pay that amount to the
Department. This paragraph is exempt | ||||||
14 | from the provisions of Section 3-90.
| ||||||
15 | (33) On and after July 1, 2003 and through June 30, 2004, | ||||||
16 | the use in this State of motor vehicles of
the second division | ||||||
17 | with a gross vehicle weight in excess of 8,000 pounds and
that | ||||||
18 | are subject to the commercial distribution fee imposed under | ||||||
19 | Section
3-815.1 of the Illinois Vehicle Code. Beginning on July | ||||||
20 | 1, 2004 and through June 30, 2005, the use in this State of | ||||||
21 | motor vehicles of the second division: (i) with a gross vehicle | ||||||
22 | weight rating in excess of 8,000 pounds; (ii) that are subject | ||||||
23 | to the commercial distribution fee imposed under Section | ||||||
24 | 3-815.1 of the Illinois Vehicle Code; and (iii) that are | ||||||
25 | primarily used for commercial purposes. Through June 30, 2005, | ||||||
26 | this exemption applies to repair and
replacement parts added |
| |||||||
| |||||||
1 | after the initial purchase of such a motor vehicle if
that | ||||||
2 | motor
vehicle is used in a manner that would qualify for the | ||||||
3 | rolling stock exemption
otherwise provided for in this Act. For | ||||||
4 | purposes of this paragraph, the term "used for commercial | ||||||
5 | purposes" means the transportation of persons or property in | ||||||
6 | furtherance of any commercial or industrial enterprise, | ||||||
7 | whether for-hire or not.
| ||||||
8 | (34) Beginning January 1, 2008, tangible personal property | ||||||
9 | used in the construction or maintenance of a community water | ||||||
10 | supply, as defined under Section 3.145 of the Environmental | ||||||
11 | Protection Act, that is operated by a not-for-profit | ||||||
12 | corporation that holds a valid water supply permit issued under | ||||||
13 | Title IV of the Environmental Protection Act. This paragraph is | ||||||
14 | exempt from the provisions of Section 3-90. | ||||||
15 | (35) Beginning January 1, 2010, materials, parts, | ||||||
16 | equipment, components, and furnishings incorporated into or | ||||||
17 | upon an aircraft as part of the modification, refurbishment, | ||||||
18 | completion, replacement, repair, or maintenance of the | ||||||
19 | aircraft. This exemption includes consumable supplies used in | ||||||
20 | the modification, refurbishment, completion, replacement, | ||||||
21 | repair, and maintenance of aircraft, but excludes any | ||||||
22 | materials, parts, equipment, components, and consumable | ||||||
23 | supplies used in the modification, replacement, repair, and | ||||||
24 | maintenance of aircraft engines or power plants, whether such | ||||||
25 | engines or power plants are installed or uninstalled upon any | ||||||
26 | such aircraft. "Consumable supplies" include, but are not |
| |||||||
| |||||||
1 | limited to, adhesive, tape, sandpaper, general purpose | ||||||
2 | lubricants, cleaning solution, latex gloves, and protective | ||||||
3 | films. This exemption applies only to the use of qualifying | ||||||
4 | tangible personal property by persons who modify, refurbish, | ||||||
5 | complete, repair, replace, or maintain aircraft and who (i) | ||||||
6 | hold an Air Agency Certificate and are empowered to operate an | ||||||
7 | approved repair station by the Federal Aviation | ||||||
8 | Administration, (ii) have a Class IV Rating, and (iii) conduct | ||||||
9 | operations in accordance with Part 145 of the Federal Aviation | ||||||
10 | Regulations. The exemption does not include aircraft operated | ||||||
11 | by a commercial air carrier providing scheduled passenger air | ||||||
12 | service pursuant to authority issued under Part 121 or Part 129 | ||||||
13 | of the Federal Aviation Regulations. The changes made to this | ||||||
14 | paragraph (35) by Public Act 98-534 are declarative of existing | ||||||
15 | law. | ||||||
16 | (36) Tangible personal property purchased by a | ||||||
17 | public-facilities corporation, as described in Section | ||||||
18 | 11-65-10 of the Illinois Municipal Code, for purposes of | ||||||
19 | constructing or furnishing a municipal convention hall, but | ||||||
20 | only if the legal title to the municipal convention hall is | ||||||
21 | transferred to the municipality without any further | ||||||
22 | consideration by or on behalf of the municipality at the time | ||||||
23 | of the completion of the municipal convention hall or upon the | ||||||
24 | retirement or redemption of any bonds or other debt instruments | ||||||
25 | issued by the public-facilities corporation in connection with | ||||||
26 | the development of the municipal convention hall. This |
| |||||||
| |||||||
1 | exemption includes existing public-facilities corporations as | ||||||
2 | provided in Section 11-65-25 of the Illinois Municipal Code. | ||||||
3 | This paragraph is exempt from the provisions of Section 3-90. | ||||||
4 | (Source: P.A. 97-38, eff. 6-28-11; 97-227, eff. 1-1-12; 97-431, | ||||||
5 | eff. 8-16-11; 97-636, eff. 6-1-12; 97-767, eff. 7-9-12; 98-104, | ||||||
6 | eff. 7-22-13; 98-422, eff. 8-16-13; 98-456, eff. 8-16-13; | ||||||
7 | 98-534, eff. 8-23-13; 98-574, eff. 1-1-14; 98-583, eff. 1-1-14; | ||||||
8 | 98-756, eff. 7-16-14.)
| ||||||
9 | (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
| ||||||
10 | Sec. 3-50. Manufacturing and assembly exemption. The | ||||||
11 | manufacturing
and assembling machinery and equipment exemption | ||||||
12 | includes
machinery and equipment that replaces machinery and | ||||||
13 | equipment in an
existing manufacturing facility as well as | ||||||
14 | machinery and equipment that
are for use in an expanded or new | ||||||
15 | manufacturing facility. The machinery and
equipment exemption | ||||||
16 | also includes machinery and equipment used in the
general | ||||||
17 | maintenance or repair of exempt machinery and equipment or for
| ||||||
18 | in-house manufacture of exempt machinery and equipment. The | ||||||
19 | machinery and equipment exemption does not include machinery | ||||||
20 | and equipment used in (i) the generation of electricity for | ||||||
21 | wholesale or retail sale; (ii) the generation or treatment of | ||||||
22 | natural or artificial gas for wholesale or retail sale that is | ||||||
23 | delivered to customers through pipes, pipelines, or mains; or | ||||||
24 | (iii) the treatment of water for wholesale or retail sale that | ||||||
25 | is delivered to customers through pipes, pipelines, or mains. |
| |||||||
| |||||||
1 | The provisions of this amendatory Act of the 98th General | ||||||
2 | Assembly are declaratory of existing law as to the meaning and | ||||||
3 | scope of this exemption. For the
purposes of this exemption, | ||||||
4 | terms have the following
meanings:
| ||||||
5 | (1) "Manufacturing process" means the production of
an | ||||||
6 | article of tangible personal property, whether the article
| ||||||
7 | is a finished product or an article for use in the process | ||||||
8 | of manufacturing
or assembling a different article of | ||||||
9 | tangible personal property, by
a procedure commonly | ||||||
10 | regarded as manufacturing, processing, fabricating, or
| ||||||
11 | refining that changes some existing material into a | ||||||
12 | material
with a different form, use, or name. In relation | ||||||
13 | to a recognized integrated
business composed of a series of | ||||||
14 | operations that collectively constitute
manufacturing, or | ||||||
15 | individually constitute
manufacturing operations, the | ||||||
16 | manufacturing process commences with the
first operation | ||||||
17 | or stage of production in the series
and does not end until | ||||||
18 | the completion of the final product
in the last operation | ||||||
19 | or stage of production in the series. For purposes
of this | ||||||
20 | exemption, photoprocessing is a
manufacturing process of | ||||||
21 | tangible personal property for wholesale or retail
sale.
| ||||||
22 | (2) "Assembling process" means the production of
an | ||||||
23 | article of tangible personal property, whether the article
| ||||||
24 | is a finished product or an article for use in the process | ||||||
25 | of manufacturing
or assembling a different article of | ||||||
26 | tangible personal property, by the
combination of existing |
| |||||||
| |||||||
1 | materials in a manner commonly regarded as
assembling that | ||||||
2 | results in an article or material of a different
form, use, | ||||||
3 | or name.
| ||||||
4 | (3) "Machinery" means major
mechanical machines or | ||||||
5 | major components of those machines contributing to a
| ||||||
6 | manufacturing or assembling process.
| ||||||
7 | (4) "Equipment" includes an independent device
or tool | ||||||
8 | separate from machinery but essential to an integrated
| ||||||
9 | manufacturing or assembly process; including computers | ||||||
10 | used primarily in
a manufacturer's computer assisted | ||||||
11 | design,
computer assisted manufacturing (CAD/CAM) system; | ||||||
12 | any
subunit or assembly comprising a component of any | ||||||
13 | machinery or auxiliary,
adjunct, or attachment parts of | ||||||
14 | machinery, such as tools, dies, jigs,
fixtures, patterns, | ||||||
15 | and molds; and any parts that require
periodic replacement | ||||||
16 | in the course of normal operation; but does not
include | ||||||
17 | hand tools. Equipment includes chemicals or chemicals | ||||||
18 | acting as
catalysts but only if
the chemicals or chemicals | ||||||
19 | acting as catalysts effect a direct and
immediate change | ||||||
20 | upon a
product being manufactured or assembled for | ||||||
21 | wholesale or retail sale or
lease. | ||||||
22 | (5) "Production related tangible personal property" | ||||||
23 | means all tangible personal property that is used or | ||||||
24 | consumed by the purchaser in a manufacturing facility in | ||||||
25 | which a manufacturing process takes place and includes, | ||||||
26 | without limitation, tangible personal property that is |
| |||||||
| |||||||
1 | purchased for incorporation into real estate within a | ||||||
2 | manufacturing facility , supplies and consumables used in a | ||||||
3 | manufacturing facility including fuels, coolants, | ||||||
4 | solvents, oils, lubricants, and adhesives, hand tools, | ||||||
5 | protective apparel, and fire and safety equipment used or | ||||||
6 | consumed within a manufacturing facility, and tangible | ||||||
7 | personal property that is used or consumed in activities | ||||||
8 | such as research and development, preproduction material | ||||||
9 | handling, receiving, quality control, inventory control, | ||||||
10 | storage, staging, and packaging for shipping and | ||||||
11 | transportation purposes. "Production related tangible | ||||||
12 | personal property" does not include (i) tangible personal | ||||||
13 | property that is used, within or without a manufacturing | ||||||
14 | facility, in sales, purchasing, accounting, fiscal | ||||||
15 | management, marketing, personnel recruitment or selection, | ||||||
16 | or landscaping or (ii) tangible personal property that is | ||||||
17 | required to be titled or registered with a department, | ||||||
18 | agency, or unit of federal, State, or local government.
| ||||||
19 | The manufacturing and assembling machinery and equipment | ||||||
20 | exemption includes production related tangible personal | ||||||
21 | property that is purchased on or after July 1, 2007 and on or | ||||||
22 | before June 30, 2008 and on or after July 1, 2015 . The | ||||||
23 | exemption for production related tangible personal property | ||||||
24 | purchased on or after July 1, 2007 and on or before June 30, | ||||||
25 | 2008 is subject to both of the following limitations: | ||||||
26 | (1) The maximum amount of the exemption for any one |
| |||||||
| |||||||
1 | taxpayer may not exceed 5% of the purchase price of | ||||||
2 | production related tangible personal property that is | ||||||
3 | purchased on or after July 1, 2007 and on or before June | ||||||
4 | 30, 2008. A credit under Section 3-85 of this Act may not | ||||||
5 | be earned by the purchase of production related tangible | ||||||
6 | personal property for which an exemption is received under | ||||||
7 | this Section. | ||||||
8 | (2) The maximum aggregate amount of the exemptions for | ||||||
9 | production related tangible personal property awarded | ||||||
10 | under this Act and the Retailers' Occupation Tax Act to all | ||||||
11 | taxpayers purchased on or after July 1, 2007 and before | ||||||
12 | June 30, 2008 may not exceed $10,000,000. If the claims for | ||||||
13 | the exemption exceed $10,000,000, then the Department | ||||||
14 | shall reduce the amount of the exemption to each taxpayer | ||||||
15 | on a pro rata basis. | ||||||
16 | The Department shall may adopt rules to implement and | ||||||
17 | administer the exemption for production related tangible | ||||||
18 | personal property. | ||||||
19 | The manufacturing and assembling machinery and equipment
| ||||||
20 | exemption includes the sale of materials to a purchaser who
| ||||||
21 | produces exempted types of machinery, equipment, or tools and | ||||||
22 | who rents or
leases that machinery, equipment, or tools to a
| ||||||
23 | manufacturer of tangible
personal property. This exemption | ||||||
24 | also includes the sale of materials to a
purchaser who | ||||||
25 | manufactures those materials into an exempted type of
| ||||||
26 | machinery, equipment, or tools that the purchaser uses
himself |
| |||||||
| |||||||
1 | or herself in the
manufacturing of tangible personal property. | ||||||
2 | This exemption includes the
sale of exempted types of machinery | ||||||
3 | or equipment to a
purchaser who is not the manufacturer, but | ||||||
4 | who rents or leases the use of
the property to a manufacturer. | ||||||
5 | The purchaser of the machinery and
equipment who has an active | ||||||
6 | resale registration number shall
furnish that number to the | ||||||
7 | seller at the time of purchase.
A user of the machinery, | ||||||
8 | equipment, or tools without an
active resale registration | ||||||
9 | number shall prepare a certificate of exemption
for each | ||||||
10 | transaction stating facts establishing the exemption for that
| ||||||
11 | transaction, and that certificate shall be
available to the | ||||||
12 | Department for inspection or audit. The Department shall
| ||||||
13 | prescribe the form of the certificate. Informal rulings, | ||||||
14 | opinions, or
letters issued by the Department in
response to an | ||||||
15 | inquiry or request for an opinion from any person
regarding the | ||||||
16 | coverage and applicability of this exemption to specific
| ||||||
17 | devices shall be published, maintained as a public record, and | ||||||
18 | made
available for public inspection and copying. If the | ||||||
19 | informal ruling,
opinion, or letter contains trade secrets or | ||||||
20 | other confidential
information, where possible, the Department | ||||||
21 | shall delete that information
before publication. Whenever | ||||||
22 | informal rulings, opinions, or
letters contain a policy of | ||||||
23 | general applicability, the Department
shall formulate and | ||||||
24 | adopt that policy as a rule in accordance with the
Illinois | ||||||
25 | Administrative Procedure Act.
| ||||||
26 | (Source: P.A. 98-583, eff. 1-1-14.)
|
| |||||||
| |||||||
1 | Section 10. The Service Use Tax Act is amended by changing | ||||||
2 | Section 2 as follows:
| ||||||
3 | (35 ILCS 110/2) (from Ch. 120, par. 439.32)
| ||||||
4 | Sec. 2. Definitions. | ||||||
5 | "Use" means the exercise by any person of any right or | ||||||
6 | power
over tangible personal property incident to the ownership | ||||||
7 | of that
property, but does not include the sale or use for | ||||||
8 | demonstration by him
of that property in any form as tangible | ||||||
9 | personal property in the
regular course of business.
"Use" does | ||||||
10 | not mean the interim
use of
tangible personal property nor the | ||||||
11 | physical incorporation of tangible
personal property, as an | ||||||
12 | ingredient or constituent, into other tangible
personal | ||||||
13 | property, (a) which is sold in the regular course of business
| ||||||
14 | or (b) which the person incorporating such ingredient or | ||||||
15 | constituent
therein has undertaken at the time of such purchase | ||||||
16 | to cause to be
transported in interstate commerce to | ||||||
17 | destinations outside the State of
Illinois.
| ||||||
18 | "Purchased from a serviceman" means the acquisition of the | ||||||
19 | ownership
of, or title to, tangible personal property through a | ||||||
20 | sale of service.
| ||||||
21 | "Purchaser" means any person who, through a sale of | ||||||
22 | service, acquires
the ownership of, or title to, any tangible | ||||||
23 | personal property.
| ||||||
24 | "Cost price" means the consideration paid by the serviceman |
| |||||||
| |||||||
1 | for a
purchase valued in money, whether paid in money or | ||||||
2 | otherwise, including
cash, credits and services, and shall be | ||||||
3 | determined without any
deduction on account of the supplier's | ||||||
4 | cost of the property sold or on
account of any other expense | ||||||
5 | incurred by the supplier. When a serviceman
contracts out part | ||||||
6 | or all of the services required in his sale of service,
it | ||||||
7 | shall be presumed that the cost price to the serviceman of the | ||||||
8 | property
transferred to him or her by his or her subcontractor | ||||||
9 | is equal to 50% of
the subcontractor's charges to the | ||||||
10 | serviceman in the absence of proof of
the consideration paid by | ||||||
11 | the subcontractor for the purchase of such property.
| ||||||
12 | "Selling price" means the consideration for a sale valued | ||||||
13 | in money
whether received in money or otherwise, including | ||||||
14 | cash, credits and
service, and shall be determined without any | ||||||
15 | deduction on account of the
serviceman's cost of the property | ||||||
16 | sold, the cost of materials used,
labor or service cost or any | ||||||
17 | other expense whatsoever, but does not
include interest or | ||||||
18 | finance charges which appear as separate items on
the bill of | ||||||
19 | sale or sales contract nor charges that are added to prices
by | ||||||
20 | sellers on account of the seller's duty to collect, from the
| ||||||
21 | purchaser, the tax that is imposed by this Act.
| ||||||
22 | "Department" means the Department of Revenue.
| ||||||
23 | "Person" means any natural individual, firm, partnership,
| ||||||
24 | association, joint stock company, joint venture, public or | ||||||
25 | private
corporation, limited liability company, and any | ||||||
26 | receiver, executor, trustee,
guardian or other representative |
| |||||||
| |||||||
1 | appointed by order of any court.
| ||||||
2 | "Sale of service" means any transaction except:
| ||||||
3 | (1) a retail sale of tangible personal property taxable | ||||||
4 | under the
Retailers' Occupation Tax Act or under the Use | ||||||
5 | Tax Act.
| ||||||
6 | (2) a sale of tangible personal property for the | ||||||
7 | purpose of resale
made in compliance with Section 2c of the | ||||||
8 | Retailers' Occupation Tax Act.
| ||||||
9 | (3) except as hereinafter provided, a sale or transfer | ||||||
10 | of tangible
personal property as an incident to the | ||||||
11 | rendering of service for or by
any governmental body, or | ||||||
12 | for or by any corporation, society,
association, | ||||||
13 | foundation or institution organized and operated
| ||||||
14 | exclusively for charitable, religious or educational | ||||||
15 | purposes or any
not-for-profit corporation, society, | ||||||
16 | association, foundation,
institution or organization which | ||||||
17 | has no compensated officers or
employees and which is | ||||||
18 | organized and operated primarily for the
recreation of | ||||||
19 | persons 55 years of age or older. A limited liability | ||||||
20 | company
may qualify for the exemption under this paragraph | ||||||
21 | only if the limited
liability company is organized and | ||||||
22 | operated exclusively for educational
purposes.
| ||||||
23 | (4) a sale or transfer of tangible personal
property as | ||||||
24 | an incident to the
rendering of service for interstate | ||||||
25 | carriers for hire for use as rolling stock
moving in | ||||||
26 | interstate commerce or by lessors under a lease of one year |
| |||||||
| |||||||
1 | or
longer, executed or in effect at the time of purchase of | ||||||
2 | personal property, to
interstate carriers for hire for use | ||||||
3 | as rolling stock moving in interstate
commerce so long as | ||||||
4 | so used by such interstate carriers for hire, and equipment
| ||||||
5 | operated by a telecommunications provider, licensed as a | ||||||
6 | common carrier by the
Federal Communications Commission, | ||||||
7 | which is permanently installed in or affixed
to aircraft | ||||||
8 | moving in interstate commerce.
| ||||||
9 | (4a) a sale or transfer of tangible personal
property | ||||||
10 | as an incident
to the rendering of service for owners, | ||||||
11 | lessors, or shippers of tangible
personal property which is | ||||||
12 | utilized by interstate carriers for hire for
use as rolling | ||||||
13 | stock moving in interstate commerce so long as so used by
| ||||||
14 | interstate carriers for hire, and equipment operated by a
| ||||||
15 | telecommunications provider, licensed as a common carrier | ||||||
16 | by the Federal
Communications Commission, which is | ||||||
17 | permanently installed in or affixed to
aircraft moving in | ||||||
18 | interstate commerce.
| ||||||
19 | (4a-5) on and after July 1, 2003 and through June 30, | ||||||
20 | 2004, a sale or transfer of a motor vehicle
of
the
second | ||||||
21 | division with a gross vehicle weight in excess of 8,000 | ||||||
22 | pounds as an
incident to the rendering of service if that | ||||||
23 | motor
vehicle is subject
to the commercial distribution fee | ||||||
24 | imposed under Section 3-815.1 of the
Illinois Vehicle
Code. | ||||||
25 | Beginning on July 1, 2004 and through June 30, 2005, the | ||||||
26 | use in this State of motor vehicles of the second division: |
| |||||||
| |||||||
1 | (i) with a gross vehicle weight rating in excess of 8,000 | ||||||
2 | pounds; (ii) that are subject to the commercial | ||||||
3 | distribution fee imposed under Section 3-815.1 of the | ||||||
4 | Illinois Vehicle Code; and (iii) that are primarily used | ||||||
5 | for commercial purposes. Through June 30, 2005, this
| ||||||
6 | exemption applies to repair and replacement parts added | ||||||
7 | after the
initial
purchase of such a motor vehicle if that | ||||||
8 | motor vehicle is used in a manner that
would
qualify for | ||||||
9 | the rolling stock exemption otherwise provided for in this | ||||||
10 | Act. For purposes of this paragraph, "used for commercial | ||||||
11 | purposes" means the transportation of persons or property | ||||||
12 | in furtherance of any commercial or industrial enterprise | ||||||
13 | whether for-hire or not.
| ||||||
14 | (5) a sale or transfer of machinery and equipment used | ||||||
15 | primarily in the
process of the manufacturing or | ||||||
16 | assembling, either in an existing, an expanded
or a new | ||||||
17 | manufacturing facility, of tangible personal property for | ||||||
18 | wholesale or
retail sale or lease, whether such sale or | ||||||
19 | lease is made directly by the
manufacturer or by some other | ||||||
20 | person, whether the materials used in the process
are owned | ||||||
21 | by the manufacturer or some other person, or whether such | ||||||
22 | sale or
lease is made apart from or as an incident to the | ||||||
23 | seller's engaging in a
service occupation and the | ||||||
24 | applicable tax is a Service Use Tax or Service
Occupation | ||||||
25 | Tax, rather than Use Tax or Retailers' Occupation Tax. The | ||||||
26 | exemption provided by this paragraph (5) includes |
| |||||||
| |||||||
1 | production related tangible personal property, as defined | ||||||
2 | in Section 3-50 of the Use Tax Act, purchased on or after | ||||||
3 | July 1, 2015. The exemption provided by this paragraph (5) | ||||||
4 | does not include machinery and equipment used in (i) the | ||||||
5 | generation of electricity for wholesale or retail sale; | ||||||
6 | (ii) the generation or treatment of natural or artificial | ||||||
7 | gas for wholesale or retail sale that is delivered to | ||||||
8 | customers through pipes, pipelines, or mains; or (iii) the | ||||||
9 | treatment of water for wholesale or retail sale that is | ||||||
10 | delivered to customers through pipes, pipelines, or mains. | ||||||
11 | The provisions of this amendatory Act of the 98th General | ||||||
12 | Assembly are declaratory of existing law as to the meaning | ||||||
13 | and scope of this exemption.
| ||||||
14 | (5a) the repairing, reconditioning or remodeling, for | ||||||
15 | a
common carrier by rail, of tangible personal property | ||||||
16 | which belongs to such
carrier for hire, and as to which | ||||||
17 | such carrier receives the physical possession
of the | ||||||
18 | repaired, reconditioned or remodeled item of tangible | ||||||
19 | personal property
in Illinois, and which such carrier | ||||||
20 | transports, or shares with another common
carrier in the | ||||||
21 | transportation of such property, out of Illinois on a | ||||||
22 | standard
uniform bill of lading showing the person who | ||||||
23 | repaired, reconditioned or
remodeled the property to a | ||||||
24 | destination outside Illinois, for use outside
Illinois.
| ||||||
25 | (5b) a sale or transfer of tangible personal property | ||||||
26 | which is produced by
the seller thereof on special order in |
| |||||||
| |||||||
1 | such a way as to have made the
applicable tax the Service | ||||||
2 | Occupation Tax or the Service Use Tax, rather than
the | ||||||
3 | Retailers' Occupation Tax or the Use Tax, for an interstate | ||||||
4 | carrier by rail
which receives the physical possession of | ||||||
5 | such property in Illinois, and which
transports such | ||||||
6 | property, or shares with another common carrier in the
| ||||||
7 | transportation of such property, out of Illinois on a | ||||||
8 | standard uniform bill of
lading showing the seller of the | ||||||
9 | property as the shipper or consignor of such
property to a | ||||||
10 | destination outside Illinois, for use outside Illinois.
| ||||||
11 | (6) until July 1, 2003, a sale or transfer of | ||||||
12 | distillation machinery
and equipment, sold
as a unit or kit | ||||||
13 | and assembled or installed by the retailer, which
machinery | ||||||
14 | and equipment is certified by the user to be used only for | ||||||
15 | the
production of ethyl alcohol that will be used for | ||||||
16 | consumption as motor fuel
or as a component of motor fuel | ||||||
17 | for the personal use of such user and not
subject to sale | ||||||
18 | or resale.
| ||||||
19 | (7) at the election of any serviceman not required to | ||||||
20 | be
otherwise registered as a retailer under Section 2a of | ||||||
21 | the Retailers'
Occupation Tax Act, made for each fiscal | ||||||
22 | year sales
of service in which the aggregate annual cost | ||||||
23 | price of tangible
personal property transferred as an | ||||||
24 | incident to the sales of service is
less than 35%, or 75% | ||||||
25 | in the case of servicemen transferring prescription
drugs | ||||||
26 | or servicemen engaged in graphic arts production, of the |
| |||||||
| |||||||
1 | aggregate
annual total gross receipts from all sales of | ||||||
2 | service. The purchase of
such tangible personal property by | ||||||
3 | the serviceman shall be subject to tax
under the Retailers' | ||||||
4 | Occupation Tax Act and the Use Tax Act.
However, if a
| ||||||
5 | primary serviceman who has made the election described in | ||||||
6 | this paragraph
subcontracts service work to a secondary | ||||||
7 | serviceman who has also made the
election described in this | ||||||
8 | paragraph, the primary serviceman does not
incur a Use Tax | ||||||
9 | liability if the secondary serviceman (i) has paid or will | ||||||
10 | pay
Use
Tax on his or her cost price of any tangible | ||||||
11 | personal property transferred
to the primary serviceman | ||||||
12 | and (ii) certifies that fact in writing to the
primary
| ||||||
13 | serviceman.
| ||||||
14 | Tangible personal property transferred incident to the | ||||||
15 | completion of a
maintenance agreement is exempt from the tax | ||||||
16 | imposed pursuant to this Act.
| ||||||
17 | Exemption (5) also includes machinery and equipment used in | ||||||
18 | the general
maintenance or repair of such exempt machinery and | ||||||
19 | equipment or for in-house
manufacture of exempt machinery and | ||||||
20 | equipment. The machinery and equipment exemption does not | ||||||
21 | include machinery and equipment used in (i) the generation of | ||||||
22 | electricity for wholesale or retail sale; (ii) the generation | ||||||
23 | or treatment of natural or artificial gas for wholesale or | ||||||
24 | retail sale that is delivered to customers through pipes, | ||||||
25 | pipelines, or mains; or (iii) the treatment of water for | ||||||
26 | wholesale or retail sale that is delivered to customers through |
| |||||||
| |||||||
1 | pipes, pipelines, or mains. The provisions of this amendatory | ||||||
2 | Act of the 98th General Assembly are declaratory of existing | ||||||
3 | law as to the meaning and scope of this exemption. For the | ||||||
4 | purposes of exemption
(5), each of these terms shall have the | ||||||
5 | following meanings: (1) "manufacturing
process" shall mean the | ||||||
6 | production of any article of tangible personal
property, | ||||||
7 | whether such article is a finished product or an article for | ||||||
8 | use in
the process of manufacturing or assembling a different | ||||||
9 | article of tangible
personal property, by procedures commonly | ||||||
10 | regarded as manufacturing,
processing, fabricating, or | ||||||
11 | refining which changes some existing
material or materials into | ||||||
12 | a material with a different form, use or
name. In relation to a | ||||||
13 | recognized integrated business composed of a
series of | ||||||
14 | operations which collectively constitute manufacturing, or
| ||||||
15 | individually constitute manufacturing operations, the | ||||||
16 | manufacturing
process shall be deemed to commence with the | ||||||
17 | first operation or stage of
production in the series, and shall | ||||||
18 | not be deemed to end until the
completion of the final product | ||||||
19 | in the last operation or stage of
production in the series; and | ||||||
20 | further, for purposes of exemption (5),
photoprocessing is | ||||||
21 | deemed to be a manufacturing process of tangible
personal | ||||||
22 | property for wholesale or retail sale; (2) "assembling process" | ||||||
23 | shall
mean the production of any article of tangible personal | ||||||
24 | property, whether such
article is a finished product or an | ||||||
25 | article for use in the process of
manufacturing or assembling a | ||||||
26 | different article of tangible personal
property, by the |
| |||||||
| |||||||
1 | combination of existing materials in a manner commonly
regarded | ||||||
2 | as assembling which results in a material of a different form,
| ||||||
3 | use or name; (3) "machinery" shall mean major mechanical | ||||||
4 | machines or
major components of such machines contributing to a | ||||||
5 | manufacturing or
assembling process; and (4) "equipment" shall | ||||||
6 | include any independent
device or tool separate from any | ||||||
7 | machinery but essential to an
integrated manufacturing or | ||||||
8 | assembly process; including computers
used primarily in a | ||||||
9 | manufacturer's computer
assisted design, computer assisted | ||||||
10 | manufacturing (CAD/CAM) system;
or any subunit or assembly | ||||||
11 | comprising a component of any machinery or
auxiliary, adjunct | ||||||
12 | or attachment parts of machinery, such as tools, dies,
jigs, | ||||||
13 | fixtures, patterns and molds; or any parts which require | ||||||
14 | periodic
replacement in the course of normal operation; but | ||||||
15 | shall not include hand
tools.
Equipment includes chemicals or | ||||||
16 | chemicals acting as catalysts but only if the
chemicals or | ||||||
17 | chemicals acting as catalysts effect a direct and immediate | ||||||
18 | change
upon a
product being manufactured or assembled for | ||||||
19 | wholesale or retail sale or
lease.
The purchaser of such | ||||||
20 | machinery and equipment who has an active
resale registration | ||||||
21 | number shall furnish such number to the seller at the
time of | ||||||
22 | purchase. The user of such machinery and equipment and tools
| ||||||
23 | without an active resale registration number shall prepare a | ||||||
24 | certificate of
exemption for each transaction stating facts | ||||||
25 | establishing the exemption for
that transaction, which | ||||||
26 | certificate shall be available to the Department
for inspection |
| |||||||
| |||||||
1 | or audit. The Department shall prescribe the form of the
| ||||||
2 | certificate.
| ||||||
3 | Any informal rulings, opinions or letters issued by the | ||||||
4 | Department in
response to an inquiry or request for any opinion | ||||||
5 | from any person
regarding the coverage and applicability of | ||||||
6 | exemption (5) to specific
devices shall be published, | ||||||
7 | maintained as a public record, and made
available for public | ||||||
8 | inspection and copying. If the informal ruling,
opinion or | ||||||
9 | letter contains trade secrets or other confidential
| ||||||
10 | information, where possible the Department shall delete such | ||||||
11 | information
prior to publication. Whenever such informal | ||||||
12 | rulings, opinions, or
letters contain any policy of general | ||||||
13 | applicability, the Department
shall formulate and adopt such | ||||||
14 | policy as a rule in accordance with the
provisions of the | ||||||
15 | Illinois Administrative Procedure Act.
| ||||||
16 | On and after July 1, 1987, no entity otherwise eligible | ||||||
17 | under exemption
(3) of this Section shall make tax free | ||||||
18 | purchases unless it has an active
exemption identification | ||||||
19 | number issued by the Department.
| ||||||
20 | The purchase, employment and transfer of such tangible | ||||||
21 | personal
property as newsprint and ink for the primary purpose | ||||||
22 | of conveying news
(with or without other information) is not a | ||||||
23 | purchase, use or sale of
service or of tangible personal | ||||||
24 | property within the meaning of this Act.
| ||||||
25 | "Serviceman" means any person who is engaged in the | ||||||
26 | occupation of
making sales of service.
|
| |||||||
| |||||||
1 | "Sale at retail" means "sale at retail" as defined in the | ||||||
2 | Retailers'
Occupation Tax Act.
| ||||||
3 | "Supplier" means any person who makes sales of tangible | ||||||
4 | personal
property to servicemen for the purpose of resale as an | ||||||
5 | incident to a
sale of service.
| ||||||
6 | "Serviceman maintaining a place of business in this State", | ||||||
7 | or any
like term, means and includes any serviceman:
| ||||||
8 | 1. having or maintaining within this State, directly or | ||||||
9 | by a
subsidiary, an office, distribution house, sales | ||||||
10 | house, warehouse or
other place of business, or any agent | ||||||
11 | or other representative operating
within this State under | ||||||
12 | the authority of the serviceman or its
subsidiary, | ||||||
13 | irrespective of whether such place of business or agent or
| ||||||
14 | other representative is located here permanently or | ||||||
15 | temporarily, or
whether such serviceman or subsidiary is | ||||||
16 | licensed to do business in this
State; | ||||||
17 | 1.1. having a contract with a person located in this | ||||||
18 | State under which the person, for a commission or other | ||||||
19 | consideration based on the sale of service by the | ||||||
20 | serviceman, directly or indirectly refers potential | ||||||
21 | customers to the serviceman by providing to the potential | ||||||
22 | customers a promotional code or other mechanism that allows | ||||||
23 | the serviceman to track purchases referred by such persons. | ||||||
24 | Examples of mechanisms that allow the serviceman to track | ||||||
25 | purchases referred by such persons include but are not | ||||||
26 | limited to the use of a link on the person's Internet |
| |||||||
| |||||||
1 | website, promotional codes distributed through the | ||||||
2 | person's hand-delivered or mailed material, and | ||||||
3 | promotional codes distributed by the person through radio | ||||||
4 | or other broadcast media. The provisions of this paragraph | ||||||
5 | 1.1 shall apply only if the cumulative gross receipts from | ||||||
6 | sales of service by the serviceman to customers who are | ||||||
7 | referred to the serviceman by all persons in this State | ||||||
8 | under such contracts exceed $10,000 during the preceding 4 | ||||||
9 | quarterly periods ending on the last day of March, June, | ||||||
10 | September, and December; a serviceman meeting the | ||||||
11 | requirements of this paragraph 1.1 shall be presumed to be | ||||||
12 | maintaining a place of business in this State but may rebut | ||||||
13 | this presumption by submitting proof that the referrals or | ||||||
14 | other activities pursued within this State by such persons | ||||||
15 | were not sufficient to meet the nexus standards of the | ||||||
16 | United States Constitution during the preceding 4 | ||||||
17 | quarterly periods; | ||||||
18 | 1.2. beginning July 1, 2011, having a contract with a | ||||||
19 | person located in this State under which: | ||||||
20 | A. the serviceman sells the same or substantially | ||||||
21 | similar line of services as the person located in this | ||||||
22 | State and does so using an identical or substantially | ||||||
23 | similar name, trade name, or trademark as the person | ||||||
24 | located in this State; and | ||||||
25 | B. the serviceman provides a commission or other | ||||||
26 | consideration to the person located in this State based |
| |||||||
| |||||||
1 | upon the sale of services by the serviceman. | ||||||
2 | The provisions of this paragraph 1.2 shall apply only if | ||||||
3 | the cumulative gross receipts from sales of service by the | ||||||
4 | serviceman to customers in this State under all such | ||||||
5 | contracts exceed $10,000 during the preceding 4 quarterly | ||||||
6 | periods ending on the last day of March, June, September, | ||||||
7 | and December;
| ||||||
8 | 2. soliciting orders for tangible personal property by | ||||||
9 | means of a
telecommunication or television shopping system | ||||||
10 | (which utilizes toll free
numbers) which is intended by the | ||||||
11 | retailer to be broadcast by cable
television or other means | ||||||
12 | of broadcasting, to consumers located in this State;
| ||||||
13 | 3. pursuant to a contract with a broadcaster or | ||||||
14 | publisher located in this
State, soliciting orders for | ||||||
15 | tangible personal property by means of advertising
which is | ||||||
16 | disseminated primarily to consumers located in this State | ||||||
17 | and only
secondarily to bordering jurisdictions;
| ||||||
18 | 4. soliciting orders for tangible personal property by | ||||||
19 | mail if the
solicitations are substantial and recurring and | ||||||
20 | if the retailer benefits
from any banking, financing, debt | ||||||
21 | collection, telecommunication, or
marketing activities | ||||||
22 | occurring in this State or benefits from the location
in | ||||||
23 | this State of authorized installation, servicing, or | ||||||
24 | repair facilities;
| ||||||
25 | 5. being owned or controlled by the same interests | ||||||
26 | which own or
control any retailer engaging in business in |
| |||||||
| |||||||
1 | the same or similar line of
business in this State;
| ||||||
2 | 6. having a franchisee or licensee operating under its | ||||||
3 | trade name if
the franchisee or licensee is required to | ||||||
4 | collect the tax under this Section;
| ||||||
5 | 7. pursuant to a contract with a cable television | ||||||
6 | operator located in
this State, soliciting orders for | ||||||
7 | tangible personal property by means of
advertising which is | ||||||
8 | transmitted or distributed over a cable television
system | ||||||
9 | in this State; or
| ||||||
10 | 8. engaging in activities in Illinois, which | ||||||
11 | activities in the
state in which the supply business | ||||||
12 | engaging in such activities is located
would constitute | ||||||
13 | maintaining a place of business in that state.
| ||||||
14 | (Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
| ||||||
15 | Section 15. The Service Occupation Tax Act is amended by | ||||||
16 | changing Section 2 as follows:
| ||||||
17 | (35 ILCS 115/2) (from Ch. 120, par. 439.102)
| ||||||
18 | Sec. 2. "Transfer" means any transfer of the title to | ||||||
19 | property or of
the ownership of property whether or not the | ||||||
20 | transferor retains title as
security for the payment of amounts | ||||||
21 | due him from the transferee.
| ||||||
22 | "Cost Price" means the consideration paid by the serviceman | ||||||
23 | for a
purchase valued in money, whether paid in money or | ||||||
24 | otherwise, including
cash, credits and services, and shall be |
| |||||||
| |||||||
1 | determined without any deduction
on account of the supplier's | ||||||
2 | cost of the property sold or on account of any
other expense | ||||||
3 | incurred by the supplier. When a serviceman contracts out
part | ||||||
4 | or all of the services required in his sale of service, it | ||||||
5 | shall be
presumed that the cost price to the serviceman of the | ||||||
6 | property
transferred to him by his or her subcontractor is | ||||||
7 | equal to 50% of the
subcontractor's charges to the serviceman | ||||||
8 | in the absence of proof of the
consideration paid by the | ||||||
9 | subcontractor for the purchase of such
property.
| ||||||
10 | "Department" means the Department of Revenue.
| ||||||
11 | "Person" means any natural individual, firm, partnership, | ||||||
12 | association, joint
stock company, joint venture, public or | ||||||
13 | private corporation, limited liability
company, and any | ||||||
14 | receiver, executor, trustee, guardian or other representative
| ||||||
15 | appointed by order of any court.
| ||||||
16 | "Sale of Service" means any transaction except:
| ||||||
17 | (a) A retail sale of tangible personal property taxable | ||||||
18 | under the Retailers'
Occupation Tax Act or under the Use Tax | ||||||
19 | Act.
| ||||||
20 | (b) A sale of tangible personal property for the purpose of | ||||||
21 | resale made in
compliance with Section 2c of the Retailers' | ||||||
22 | Occupation Tax Act.
| ||||||
23 | (c) Except as hereinafter provided, a sale or transfer of | ||||||
24 | tangible personal
property as an incident to the rendering of | ||||||
25 | service for or by any governmental
body or for or by any | ||||||
26 | corporation, society, association, foundation or
institution |
| |||||||
| |||||||
1 | organized and operated exclusively for charitable, religious | ||||||
2 | or
educational purposes or any not-for-profit corporation, | ||||||
3 | society, association,
foundation, institution or organization | ||||||
4 | which has no compensated officers or
employees and which is | ||||||
5 | organized and operated primarily for the recreation of
persons | ||||||
6 | 55 years of age or older. A limited liability company may | ||||||
7 | qualify for
the exemption under this paragraph only if the | ||||||
8 | limited liability company is
organized and operated | ||||||
9 | exclusively for educational purposes.
| ||||||
10 | (d) A sale or transfer of tangible personal
property
as an | ||||||
11 | incident to the
rendering of service for interstate carriers | ||||||
12 | for hire for use as rolling stock
moving in interstate commerce | ||||||
13 | or lessors under leases of one year or longer,
executed or in | ||||||
14 | effect at the time of purchase, to interstate carriers for hire
| ||||||
15 | for use as rolling stock moving in interstate commerce, and | ||||||
16 | equipment operated
by a telecommunications provider, licensed | ||||||
17 | as a common
carrier by the Federal Communications Commission, | ||||||
18 | which is permanently
installed in or affixed to aircraft moving | ||||||
19 | in interstate commerce.
| ||||||
20 | (d-1) A sale or transfer of tangible personal
property as | ||||||
21 | an incident to
the rendering of service for owners, lessors or | ||||||
22 | shippers of tangible personal
property which is utilized by | ||||||
23 | interstate carriers for hire for use as rolling
stock moving in | ||||||
24 | interstate commerce, and equipment operated
by a | ||||||
25 | telecommunications provider, licensed as a common carrier by | ||||||
26 | the
Federal Communications Commission, which is permanently |
| |||||||
| |||||||
1 | installed in or
affixed to aircraft moving in interstate | ||||||
2 | commerce.
| ||||||
3 | (d-1.1) On and after July 1, 2003 and through June 30, | ||||||
4 | 2004, a sale or transfer of a motor vehicle
of the
second | ||||||
5 | division with a gross vehicle weight in excess of 8,000 pounds | ||||||
6 | as an
incident to the rendering of service if that motor
| ||||||
7 | vehicle is subject
to the commercial distribution fee imposed | ||||||
8 | under Section 3-815.1 of the
Illinois Vehicle
Code. Beginning | ||||||
9 | on July 1, 2004 and through June 30, 2005, the use in this | ||||||
10 | State of motor vehicles of the second division: (i) with a | ||||||
11 | gross vehicle weight rating in excess of 8,000 pounds; (ii) | ||||||
12 | that are subject to the commercial distribution fee imposed | ||||||
13 | under Section 3-815.1 of the Illinois Vehicle Code; and (iii) | ||||||
14 | that are primarily used for commercial purposes. Through June | ||||||
15 | 30, 2005, this exemption applies to repair and replacement | ||||||
16 | parts added after the
initial
purchase of such a motor vehicle | ||||||
17 | if that motor vehicle is used in a manner that
would
qualify | ||||||
18 | for the rolling stock exemption otherwise provided for in this | ||||||
19 | Act. For purposes of this paragraph, "used for commercial | ||||||
20 | purposes" means the transportation of persons or property in | ||||||
21 | furtherance of any commercial or industrial enterprise whether | ||||||
22 | for-hire or not.
| ||||||
23 | (d-2) The repairing, reconditioning or remodeling, for a | ||||||
24 | common carrier by
rail, of tangible personal property which | ||||||
25 | belongs to such carrier for hire, and
as to which such carrier | ||||||
26 | receives the physical possession of the repaired,
|
| |||||||
| |||||||
1 | reconditioned or remodeled item of tangible personal property | ||||||
2 | in Illinois, and
which such carrier transports, or shares with | ||||||
3 | another common carrier in the
transportation of such property, | ||||||
4 | out of Illinois on a standard uniform bill of
lading showing | ||||||
5 | the person who repaired, reconditioned or remodeled the | ||||||
6 | property
as the shipper or consignor of such property to a | ||||||
7 | destination outside Illinois,
for use outside Illinois.
| ||||||
8 | (d-3) A sale or transfer of tangible personal property | ||||||
9 | which
is produced by the seller thereof on special order in | ||||||
10 | such a way as to have
made the applicable tax the Service | ||||||
11 | Occupation Tax or the Service Use Tax,
rather than the | ||||||
12 | Retailers' Occupation Tax or the Use Tax, for an interstate
| ||||||
13 | carrier by rail which receives the physical possession of such | ||||||
14 | property in
Illinois, and which transports such property, or | ||||||
15 | shares with another common
carrier in the transportation of | ||||||
16 | such property, out of Illinois on a standard
uniform bill of | ||||||
17 | lading showing the seller of the property as the shipper or
| ||||||
18 | consignor of such property to a destination outside Illinois, | ||||||
19 | for use outside
Illinois.
| ||||||
20 | (d-4) Until January 1, 1997, a sale, by a registered | ||||||
21 | serviceman paying tax
under this Act to the Department, of | ||||||
22 | special order printed materials delivered
outside Illinois and | ||||||
23 | which are not returned to this State, if delivery is made
by | ||||||
24 | the seller or agent of the seller, including an agent who | ||||||
25 | causes the product
to be delivered outside Illinois by a common | ||||||
26 | carrier or the U.S.
postal service.
|
| |||||||
| |||||||
1 | (e) A sale or transfer of machinery and equipment used | ||||||
2 | primarily in
the process of the manufacturing or assembling, | ||||||
3 | either in an existing, an
expanded or a new manufacturing | ||||||
4 | facility, of tangible personal property for
wholesale or retail | ||||||
5 | sale or lease, whether such sale or lease is made directly
by | ||||||
6 | the manufacturer or by some other person, whether the materials | ||||||
7 | used in the
process are owned by the manufacturer or some other | ||||||
8 | person, or whether such
sale or lease is made apart from or as | ||||||
9 | an incident to the seller's engaging in
a service occupation | ||||||
10 | and the applicable tax is a Service Occupation Tax or
Service | ||||||
11 | Use Tax, rather than Retailers' Occupation Tax or Use Tax. The | ||||||
12 | exemption provided by this paragraph (e) includes production | ||||||
13 | related tangible personal property, as defined in Section 3-50 | ||||||
14 | of the Use Tax Act, purchased on or after July 1, 2015. The | ||||||
15 | exemption provided by this paragraph (e) does not include | ||||||
16 | machinery and equipment used in (i) the generation of | ||||||
17 | electricity for wholesale or retail sale; (ii) the generation | ||||||
18 | or treatment of natural or artificial gas for wholesale or | ||||||
19 | retail sale that is delivered to customers through pipes, | ||||||
20 | pipelines, or mains; or (iii) the treatment of water for | ||||||
21 | wholesale or retail sale that is delivered to customers through | ||||||
22 | pipes, pipelines, or mains. The provisions of this amendatory | ||||||
23 | Act of the 98th General Assembly are declaratory of existing | ||||||
24 | law as to the meaning and scope of this exemption.
| ||||||
25 | (f) Until July 1, 2003, the sale or transfer of | ||||||
26 | distillation
machinery
and equipment, sold as a
unit or kit and |
| |||||||
| |||||||
1 | assembled or installed by the retailer, which machinery
and | ||||||
2 | equipment is certified by the user to be used only for the | ||||||
3 | production
of ethyl alcohol that will be used for consumption | ||||||
4 | as motor fuel or as a
component of motor fuel for the personal | ||||||
5 | use of such user and not subject
to sale or resale.
| ||||||
6 | (g) At the election of any serviceman not required to be | ||||||
7 | otherwise
registered as a retailer under Section 2a of the | ||||||
8 | Retailers' Occupation Tax Act,
made for each fiscal year sales | ||||||
9 | of service in which the aggregate annual cost
price of tangible | ||||||
10 | personal property transferred as an incident to the sales of
| ||||||
11 | service is less than 35% (75% in the case of servicemen | ||||||
12 | transferring
prescription drugs or servicemen engaged in | ||||||
13 | graphic arts production) of the
aggregate annual total gross | ||||||
14 | receipts from all sales of service. The purchase
of such | ||||||
15 | tangible personal property by the serviceman shall be subject | ||||||
16 | to tax
under the Retailers' Occupation Tax Act and the Use Tax | ||||||
17 | Act.
However, if a
primary serviceman who has made the election | ||||||
18 | described in this paragraph
subcontracts service work to a | ||||||
19 | secondary serviceman who has also made the
election described | ||||||
20 | in this paragraph, the primary serviceman does not
incur a Use | ||||||
21 | Tax liability if the secondary serviceman (i) has paid or will | ||||||
22 | pay
Use
Tax on his or her cost price of any tangible personal | ||||||
23 | property transferred
to the primary serviceman and (ii) | ||||||
24 | certifies that fact in writing to the
primary serviceman.
| ||||||
25 | Tangible personal property transferred incident to the | ||||||
26 | completion of a
maintenance agreement is exempt from the tax |
| |||||||
| |||||||
1 | imposed pursuant to this Act.
| ||||||
2 | Exemption (e) also includes machinery and equipment used in | ||||||
3 | the
general maintenance or repair of such exempt machinery and | ||||||
4 | equipment or for
in-house manufacture of exempt machinery and | ||||||
5 | equipment.
The machinery and equipment exemption does not | ||||||
6 | include machinery and equipment used in (i) the generation of | ||||||
7 | electricity for wholesale or retail sale; (ii) the generation | ||||||
8 | or treatment of natural or artificial gas for wholesale or | ||||||
9 | retail sale that is delivered to customers through pipes, | ||||||
10 | pipelines, or mains; or (iii) the treatment of water for | ||||||
11 | wholesale or retail sale that is delivered to customers through | ||||||
12 | pipes, pipelines, or mains. The provisions of this amendatory | ||||||
13 | Act of the 98th General Assembly are declaratory of existing | ||||||
14 | law as to the meaning and scope of this exemption. For the | ||||||
15 | purposes of exemption (e), each of these terms shall have the | ||||||
16 | following
meanings: (1) "manufacturing process" shall mean the | ||||||
17 | production of any
article of tangible personal property, | ||||||
18 | whether such article is a
finished product or an article for | ||||||
19 | use in the process of manufacturing
or assembling a different | ||||||
20 | article of tangible personal property, by
procedures commonly | ||||||
21 | regarded as manufacturing, processing, fabricating,
or | ||||||
22 | refining which changes some existing material or materials into | ||||||
23 | a
material with a different form, use or name. In relation to a
| ||||||
24 | recognized integrated business composed of a series of | ||||||
25 | operations which
collectively constitute manufacturing, or | ||||||
26 | individually constitute
manufacturing operations, the |
| |||||||
| |||||||
1 | manufacturing process shall be deemed to
commence with the | ||||||
2 | first operation or stage of production in the series,
and shall | ||||||
3 | not be deemed to end until the completion of the final product
| ||||||
4 | in the last operation or stage of production in the series; and | ||||||
5 | further for
purposes of exemption (e), photoprocessing is | ||||||
6 | deemed to be a manufacturing
process of tangible personal | ||||||
7 | property for wholesale or retail sale;
(2) "assembling process" | ||||||
8 | shall mean the production of any article of
tangible personal | ||||||
9 | property, whether such article is a finished product
or an | ||||||
10 | article for use in the process of manufacturing or assembling a
| ||||||
11 | different article of tangible personal property, by the | ||||||
12 | combination of
existing materials in a manner commonly regarded | ||||||
13 | as assembling which
results in a material of a different form, | ||||||
14 | use or name; (3) "machinery"
shall mean major mechanical | ||||||
15 | machines or major components of such machines
contributing to a | ||||||
16 | manufacturing or assembling process; and (4) "equipment"
shall | ||||||
17 | include any independent device or tool separate from any | ||||||
18 | machinery but
essential to an integrated manufacturing or | ||||||
19 | assembly process; including
computers used primarily in a | ||||||
20 | manufacturer's computer
assisted design, computer assisted | ||||||
21 | manufacturing (CAD/CAM) system; or any
subunit or assembly | ||||||
22 | comprising a component of any machinery or auxiliary,
adjunct | ||||||
23 | or attachment parts of machinery, such as tools, dies, jigs, | ||||||
24 | fixtures,
patterns and molds; or any parts which require | ||||||
25 | periodic replacement in the
course of normal operation; but | ||||||
26 | shall not include hand tools. Equipment
includes chemicals or |
| |||||||
| |||||||
1 | chemicals acting as catalysts but only if the chemicals
or | ||||||
2 | chemicals acting as catalysts effect a direct and immediate | ||||||
3 | change upon a
product being manufactured or assembled for | ||||||
4 | wholesale or retail sale or lease.
The purchaser of such | ||||||
5 | machinery and equipment
who has an active resale registration | ||||||
6 | number shall furnish such number to
the seller at the time of | ||||||
7 | purchase. The purchaser of such machinery and
equipment and | ||||||
8 | tools without an active resale registration number shall | ||||||
9 | furnish
to the seller a certificate of exemption for each | ||||||
10 | transaction stating facts
establishing the exemption for that | ||||||
11 | transaction, which certificate shall
be available to the | ||||||
12 | Department for inspection or audit.
| ||||||
13 | Except as provided in Section 2d of this Act, the rolling | ||||||
14 | stock exemption
applies to rolling
stock
used by an interstate
| ||||||
15 | carrier for hire, even just between points in Illinois, if such | ||||||
16 | rolling
stock transports, for hire, persons whose journeys or | ||||||
17 | property whose
shipments originate or terminate outside | ||||||
18 | Illinois.
| ||||||
19 | Any informal rulings, opinions or letters issued by the | ||||||
20 | Department in
response to an inquiry or request for any opinion | ||||||
21 | from any person
regarding the coverage and applicability of | ||||||
22 | exemption (e) to specific
devices shall be published, | ||||||
23 | maintained as a public record, and made
available for public | ||||||
24 | inspection and copying. If the informal ruling,
opinion or | ||||||
25 | letter contains trade secrets or other confidential
| ||||||
26 | information, where possible the Department shall delete such |
| |||||||
| |||||||
1 | information
prior to publication. Whenever such informal | ||||||
2 | rulings, opinions, or
letters contain any policy of general | ||||||
3 | applicability, the Department
shall formulate and adopt such | ||||||
4 | policy as a rule in accordance with the
provisions of the | ||||||
5 | Illinois Administrative Procedure Act.
| ||||||
6 | On and after July 1, 1987, no entity otherwise eligible | ||||||
7 | under exemption
(c) of this Section shall make tax free | ||||||
8 | purchases unless it has an active
exemption identification | ||||||
9 | number issued by the Department.
| ||||||
10 | "Serviceman" means any person who is engaged in the | ||||||
11 | occupation of
making sales of service.
| ||||||
12 | "Sale at Retail" means "sale at retail" as defined in the | ||||||
13 | Retailers'
Occupation Tax Act.
| ||||||
14 | "Supplier" means any person who makes sales of tangible | ||||||
15 | personal
property to servicemen for the purpose of resale as an | ||||||
16 | incident to a
sale of service.
| ||||||
17 | (Source: P.A. 98-583, eff. 1-1-14.)
| ||||||
18 | Section 20. The Retailers' Occupation Tax Act is amended by | ||||||
19 | changing Section 2-45 as follows:
| ||||||
20 | (35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
| ||||||
21 | Sec. 2-45. Manufacturing and assembly exemption. The | ||||||
22 | manufacturing
and assembly machinery and equipment exemption | ||||||
23 | includes machinery
and equipment that replaces machinery
and | ||||||
24 | equipment in an existing manufacturing facility as well as |
| |||||||
| |||||||
1 | machinery
and equipment that are for use in an expanded or new
| ||||||
2 | manufacturing facility.
| ||||||
3 | The machinery and equipment exemption also includes | ||||||
4 | machinery
and equipment used in the
general maintenance or | ||||||
5 | repair of exempt machinery and equipment or for
in-house | ||||||
6 | manufacture of exempt machinery and equipment.
The machinery | ||||||
7 | and equipment exemption does not include machinery and | ||||||
8 | equipment used in (i) the generation of electricity for | ||||||
9 | wholesale or retail sale; (ii) the generation or treatment of | ||||||
10 | natural or artificial gas for wholesale or retail sale that is | ||||||
11 | delivered to customers through pipes, pipelines, or mains; or | ||||||
12 | (iii) the treatment of water for wholesale or retail sale that | ||||||
13 | is delivered to customers through pipes, pipelines, or mains. | ||||||
14 | The provisions of this amendatory Act of the 98th General | ||||||
15 | Assembly are declaratory of existing law as to the meaning and | ||||||
16 | scope of this exemption. For the purposes of this exemption, | ||||||
17 | terms have the following meanings:
| ||||||
18 | (1) "Manufacturing process" means the production of an | ||||||
19 | article of
tangible personal property, whether the article | ||||||
20 | is a finished product or an
article for use in the process | ||||||
21 | of manufacturing or assembling a different
article of | ||||||
22 | tangible personal property, by a procedure commonly | ||||||
23 | regarded as
manufacturing, processing, fabricating, or | ||||||
24 | refining that changes some
existing material or materials | ||||||
25 | into a material with a different form, use,
or name. In | ||||||
26 | relation to a recognized integrated business composed of a
|
| |||||||
| |||||||
1 | series of operations that collectively constitute | ||||||
2 | manufacturing, or
individually constitute manufacturing | ||||||
3 | operations, the manufacturing process
commences with the | ||||||
4 | first operation or stage of production in the series and
| ||||||
5 | does not end until the completion of the final product in | ||||||
6 | the last
operation or stage of production in the series. | ||||||
7 | For purposes of this
exemption, photoprocessing is a | ||||||
8 | manufacturing process of tangible personal
property for | ||||||
9 | wholesale or retail sale.
| ||||||
10 | (2) "Assembling process" means the production of an | ||||||
11 | article of
tangible personal property, whether the article | ||||||
12 | is a finished product or an
article for use in the process | ||||||
13 | of manufacturing or assembling a different
article of | ||||||
14 | tangible personal property, by the combination of existing
| ||||||
15 | materials in a manner commonly regarded as assembling that | ||||||
16 | results in a
material of a different form, use, or name.
| ||||||
17 | (3) "Machinery" means major mechanical machines or | ||||||
18 | major components of
those machines contributing to a | ||||||
19 | manufacturing or assembling process.
| ||||||
20 | (4) "Equipment" includes an independent device or tool | ||||||
21 | separate from
machinery but essential to an integrated | ||||||
22 | manufacturing or assembly process;
including computers | ||||||
23 | used primarily in a manufacturer's computer assisted | ||||||
24 | design, computer assisted manufacturing
(CAD/CAM) system; | ||||||
25 | any subunit or assembly comprising a component of any
| ||||||
26 | machinery or auxiliary, adjunct, or attachment parts of |
| |||||||
| |||||||
1 | machinery, such as
tools, dies, jigs, fixtures, patterns, | ||||||
2 | and molds; and any parts that
require periodic replacement | ||||||
3 | in the course of normal operation; but does
not include | ||||||
4 | hand tools. Equipment includes chemicals or chemicals | ||||||
5 | acting as
catalysts but only if
the chemicals or chemicals | ||||||
6 | acting as catalysts effect a direct and
immediate change | ||||||
7 | upon a
product being manufactured or assembled for | ||||||
8 | wholesale or retail sale or
lease.
| ||||||
9 | (5) "Production related tangible personal property" | ||||||
10 | means all tangible personal property that is used or | ||||||
11 | consumed by the purchaser in a manufacturing facility in | ||||||
12 | which a manufacturing process takes place and includes, | ||||||
13 | without limitation, tangible personal property that is | ||||||
14 | purchased for incorporation into real estate within a | ||||||
15 | manufacturing facility , supplies and consumables used in a | ||||||
16 | manufacturing facility including fuels, coolants, | ||||||
17 | solvents, oils, lubricants, and adhesives, hand tools, | ||||||
18 | protective apparel, and fire and safety equipment used or | ||||||
19 | consumed within a manufacturing facility, and tangible | ||||||
20 | personal property that is used or consumed in activities | ||||||
21 | such as research and development, preproduction material | ||||||
22 | handling, receiving, quality control, inventory control, | ||||||
23 | storage, staging, and packaging for shipping and | ||||||
24 | transportation purposes. "Production related tangible | ||||||
25 | personal property" does not include (i) tangible personal | ||||||
26 | property that is used, within or without a manufacturing |
| |||||||
| |||||||
1 | facility, in sales, purchasing, accounting, fiscal | ||||||
2 | management, marketing, personnel recruitment or selection, | ||||||
3 | or landscaping or (ii) tangible personal property that is | ||||||
4 | required to be titled or registered with a department, | ||||||
5 | agency, or unit of federal, State, or local government.
| ||||||
6 | The manufacturing and assembling machinery and equipment | ||||||
7 | exemption includes production related tangible personal | ||||||
8 | property that is purchased on or after July 1, 2007 and on or | ||||||
9 | before June 30, 2008 and on or after July 1, 2015 . The | ||||||
10 | exemption for production related tangible personal property | ||||||
11 | purchased on or after July 1, 2007 and before June 30, 2008 is | ||||||
12 | subject to both of the following limitations: | ||||||
13 | (1) The maximum amount of the exemption for any one | ||||||
14 | taxpayer may not exceed 5% of the purchase price of | ||||||
15 | production related tangible personal property that is | ||||||
16 | purchased on or after July 1, 2007 and on or before June | ||||||
17 | 30, 2008. A credit under Section 3-85 of this Act may not | ||||||
18 | be earned by the purchase of production related tangible | ||||||
19 | personal property for which an exemption is received under | ||||||
20 | this Section. | ||||||
21 | (2) The maximum aggregate amount of the exemptions for | ||||||
22 | production related tangible personal property awarded | ||||||
23 | under this Act and the Use
Tax Act to all taxpayers may not | ||||||
24 | exceed $10,000,000. If the claims for the exemption exceed | ||||||
25 | $10,000,000, then the Department shall reduce the amount of | ||||||
26 | the exemption to each taxpayer on a pro rata basis. |
| |||||||
| |||||||
1 | The Department shall may adopt rules to implement and | ||||||
2 | administer the exemption for production related tangible | ||||||
3 | personal property. | ||||||
4 | The manufacturing and assembling machinery and equipment | ||||||
5 | exemption
includes the sale of materials to a purchaser who | ||||||
6 | produces exempted types
of machinery, equipment, or tools and | ||||||
7 | who rents or leases that machinery,
equipment, or tools to a | ||||||
8 | manufacturer of tangible personal property. This
exemption | ||||||
9 | also includes the sale of materials to a purchaser who | ||||||
10 | manufactures
those materials into an exempted type of | ||||||
11 | machinery, equipment, or tools
that the purchaser uses himself | ||||||
12 | or herself in the manufacturing of tangible
personal property. | ||||||
13 | The purchaser of the machinery and equipment who has an
active | ||||||
14 | resale registration number shall furnish that number to the | ||||||
15 | seller
at the time of purchase. A purchaser of the machinery, | ||||||
16 | equipment, and
tools without an active resale registration | ||||||
17 | number shall furnish to the
seller a certificate of exemption | ||||||
18 | for each transaction stating facts
establishing the exemption | ||||||
19 | for that transaction, and that certificate shall
be available | ||||||
20 | to the Department for inspection or audit. Informal
rulings, | ||||||
21 | opinions, or letters issued by the Department in response to an
| ||||||
22 | inquiry or request for an opinion from any person regarding the | ||||||
23 | coverage and
applicability of this exemption to specific | ||||||
24 | devices shall be published,
maintained as a public record,
and | ||||||
25 | made available for public inspection and copying. If the | ||||||
26 | informal
ruling, opinion, or letter contains trade secrets or |
| |||||||
| |||||||
1 | other confidential
information, where possible, the Department | ||||||
2 | shall delete that information
before publication. Whenever | ||||||
3 | informal rulings, opinions, or letters
contain a policy of | ||||||
4 | general applicability, the Department shall
formulate and | ||||||
5 | adopt that policy as a rule in accordance with the Illinois
| ||||||
6 | Administrative Procedure Act.
| ||||||
7 | (Source: P.A. 98-583, eff. 1-1-14.)
| ||||||
8 | Section 99. Effective date. This Act takes effect upon | ||||||
9 | becoming law.
|