100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB4696

 

Introduced , by Rep. David S. Olsen

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-5
35 ILCS 105/3-10
35 ILCS 110/3-5
35 ILCS 110/3-10  from Ch. 120, par. 439.33-10
35 ILCS 115/3-5
35 ILCS 115/3-10  from Ch. 120, par. 439.103-10
35 ILCS 120/2-5
35 ILCS 120/2-10

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that, beginning on January 1, 2019, the tax is not imposed on prescription medicines or prescription drugs. Effective immediately.


LRB100 17148 HLH 32302 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4696LRB100 17148 HLH 32302 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Sections
53-5 and 3-10 as follows:
 
6    (35 ILCS 105/3-5)
7    Sec. 3-5. Exemptions. Use of the following tangible
8personal property is exempt from the tax imposed by this Act:
9    (1) Personal property purchased from a corporation,
10society, association, foundation, institution, or
11organization, other than a limited liability company, that is
12organized and operated as a not-for-profit service enterprise
13for the benefit of persons 65 years of age or older if the
14personal property was not purchased by the enterprise for the
15purpose of resale by the enterprise.
16    (2) Personal property purchased by a not-for-profit
17Illinois county fair association for use in conducting,
18operating, or promoting the county fair.
19    (3) Personal property purchased by a not-for-profit arts or
20cultural organization that establishes, by proof required by
21the Department by rule, that it has received an exemption under
22Section 501(c)(3) of the Internal Revenue Code and that is
23organized and operated primarily for the presentation or

 

 

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1support of arts or cultural programming, activities, or
2services. These organizations include, but are not limited to,
3music and dramatic arts organizations such as symphony
4orchestras and theatrical groups, arts and cultural service
5organizations, local arts councils, visual arts organizations,
6and media arts organizations. On and after July 1, 2001 (the
7effective date of Public Act 92-35) this amendatory Act of the
892nd General Assembly, however, an entity otherwise eligible
9for this exemption shall not make tax-free purchases unless it
10has an active identification number issued by the Department.
11    (4) Personal property purchased by a governmental body, by
12a corporation, society, association, foundation, or
13institution organized and operated exclusively for charitable,
14religious, or educational purposes, or by a not-for-profit
15corporation, society, association, foundation, institution, or
16organization that has no compensated officers or employees and
17that is organized and operated primarily for the recreation of
18persons 55 years of age or older. A limited liability company
19may qualify for the exemption under this paragraph only if the
20limited liability company is organized and operated
21exclusively for educational purposes. On and after July 1,
221987, however, no entity otherwise eligible for this exemption
23shall make tax-free purchases unless it has an active exemption
24identification number issued by the Department.
25    (5) Until July 1, 2003, a passenger car that is a
26replacement vehicle to the extent that the purchase price of

 

 

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1the car is subject to the Replacement Vehicle Tax.
2    (6) Until July 1, 2003 and beginning again on September 1,
32004 through August 30, 2014, graphic arts machinery and
4equipment, including repair and replacement parts, both new and
5used, and including that manufactured on special order,
6certified by the purchaser to be used primarily for graphic
7arts production, and including machinery and equipment
8purchased for lease. Equipment includes chemicals or chemicals
9acting as catalysts but only if the chemicals or chemicals
10acting as catalysts effect a direct and immediate change upon a
11graphic arts product. Beginning on July 1, 2017, graphic arts
12machinery and equipment is included in the manufacturing and
13assembling machinery and equipment exemption under paragraph
14(18).
15    (7) Farm chemicals.
16    (8) Legal tender, currency, medallions, or gold or silver
17coinage issued by the State of Illinois, the government of the
18United States of America, or the government of any foreign
19country, and bullion.
20    (9) Personal property purchased from a teacher-sponsored
21student organization affiliated with an elementary or
22secondary school located in Illinois.
23    (10) A motor vehicle that is used for automobile renting,
24as defined in the Automobile Renting Occupation and Use Tax
25Act.
26    (11) Farm machinery and equipment, both new and used,

 

 

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1including that manufactured on special order, certified by the
2purchaser to be used primarily for production agriculture or
3State or federal agricultural programs, including individual
4replacement parts for the machinery and equipment, including
5machinery and equipment purchased for lease, and including
6implements of husbandry defined in Section 1-130 of the
7Illinois Vehicle Code, farm machinery and agricultural
8chemical and fertilizer spreaders, and nurse wagons required to
9be registered under Section 3-809 of the Illinois Vehicle Code,
10but excluding other motor vehicles required to be registered
11under the Illinois Vehicle Code. Horticultural polyhouses or
12hoop houses used for propagating, growing, or overwintering
13plants shall be considered farm machinery and equipment under
14this item (11). Agricultural chemical tender tanks and dry
15boxes shall include units sold separately from a motor vehicle
16required to be licensed and units sold mounted on a motor
17vehicle required to be licensed if the selling price of the
18tender is separately stated.
19    Farm machinery and equipment shall include precision
20farming equipment that is installed or purchased to be
21installed on farm machinery and equipment including, but not
22limited to, tractors, harvesters, sprayers, planters, seeders,
23or spreaders. Precision farming equipment includes, but is not
24limited to, soil testing sensors, computers, monitors,
25software, global positioning and mapping systems, and other
26such equipment.

 

 

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1    Farm machinery and equipment also includes computers,
2sensors, software, and related equipment used primarily in the
3computer-assisted operation of production agriculture
4facilities, equipment, and activities such as, but not limited
5to, the collection, monitoring, and correlation of animal and
6crop data for the purpose of formulating animal diets and
7agricultural chemicals. This item (11) is exempt from the
8provisions of Section 3-90.
9    (12) Until June 30, 2013, fuel and petroleum products sold
10to or used by an air common carrier, certified by the carrier
11to be used for consumption, shipment, or storage in the conduct
12of its business as an air common carrier, for a flight destined
13for or returning from a location or locations outside the
14United States without regard to previous or subsequent domestic
15stopovers.
16    Beginning July 1, 2013, fuel and petroleum products sold to
17or used by an air carrier, certified by the carrier to be used
18for consumption, shipment, or storage in the conduct of its
19business as an air common carrier, for a flight that (i) is
20engaged in foreign trade or is engaged in trade between the
21United States and any of its possessions and (ii) transports at
22least one individual or package for hire from the city of
23origination to the city of final destination on the same
24aircraft, without regard to a change in the flight number of
25that aircraft.
26    (13) Proceeds of mandatory service charges separately

 

 

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1stated on customers' bills for the purchase and consumption of
2food and beverages purchased at retail from a retailer, to the
3extent that the proceeds of the service charge are in fact
4turned over as tips or as a substitute for tips to the
5employees who participate directly in preparing, serving,
6hosting or cleaning up the food or beverage function with
7respect to which the service charge is imposed.
8    (14) Until July 1, 2003, oil field exploration, drilling,
9and production equipment, including (i) rigs and parts of rigs,
10rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
11tubular goods, including casing and drill strings, (iii) pumps
12and pump-jack units, (iv) storage tanks and flow lines, (v) any
13individual replacement part for oil field exploration,
14drilling, and production equipment, and (vi) machinery and
15equipment purchased for lease; but excluding motor vehicles
16required to be registered under the Illinois Vehicle Code.
17    (15) Photoprocessing machinery and equipment, including
18repair and replacement parts, both new and used, including that
19manufactured on special order, certified by the purchaser to be
20used primarily for photoprocessing, and including
21photoprocessing machinery and equipment purchased for lease.
22    (16) Coal and aggregate exploration, mining, off-highway
23hauling, processing, maintenance, and reclamation equipment,
24including replacement parts and equipment, and including
25equipment purchased for lease, but excluding motor vehicles
26required to be registered under the Illinois Vehicle Code. The

 

 

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1changes made to this Section by Public Act 97-767 apply on and
2after July 1, 2003, but no claim for credit or refund is
3allowed on or after August 16, 2013 (the effective date of
4Public Act 98-456) for such taxes paid during the period
5beginning July 1, 2003 and ending on August 16, 2013 (the
6effective date of Public Act 98-456).
7    (17) Until July 1, 2003, distillation machinery and
8equipment, sold as a unit or kit, assembled or installed by the
9retailer, certified by the user to be used only for the
10production of ethyl alcohol that will be used for consumption
11as motor fuel or as a component of motor fuel for the personal
12use of the user, and not subject to sale or resale.
13    (18) Manufacturing and assembling machinery and equipment
14used primarily in the process of manufacturing or assembling
15tangible personal property for wholesale or retail sale or
16lease, whether that sale or lease is made directly by the
17manufacturer or by some other person, whether the materials
18used in the process are owned by the manufacturer or some other
19person, or whether that sale or lease is made apart from or as
20an incident to the seller's engaging in the service occupation
21of producing machines, tools, dies, jigs, patterns, gauges, or
22other similar items of no commercial value on special order for
23a particular purchaser. The exemption provided by this
24paragraph (18) does not include machinery and equipment used in
25(i) the generation of electricity for wholesale or retail sale;
26(ii) the generation or treatment of natural or artificial gas

 

 

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1for wholesale or retail sale that is delivered to customers
2through pipes, pipelines, or mains; or (iii) the treatment of
3water for wholesale or retail sale that is delivered to
4customers through pipes, pipelines, or mains. The provisions of
5Public Act 98-583 are declaratory of existing law as to the
6meaning and scope of this exemption. Beginning on July 1, 2017,
7the exemption provided by this paragraph (18) includes, but is
8not limited to, graphic arts machinery and equipment, as
9defined in paragraph (6) of this Section.
10    (19) Personal property delivered to a purchaser or
11purchaser's donee inside Illinois when the purchase order for
12that personal property was received by a florist located
13outside Illinois who has a florist located inside Illinois
14deliver the personal property.
15    (20) Semen used for artificial insemination of livestock
16for direct agricultural production.
17    (21) Horses, or interests in horses, registered with and
18meeting the requirements of any of the Arabian Horse Club
19Registry of America, Appaloosa Horse Club, American Quarter
20Horse Association, United States Trotting Association, or
21Jockey Club, as appropriate, used for purposes of breeding or
22racing for prizes. This item (21) is exempt from the provisions
23of Section 3-90, and the exemption provided for under this item
24(21) applies for all periods beginning May 30, 1995, but no
25claim for credit or refund is allowed on or after January 1,
262008 for such taxes paid during the period beginning May 30,

 

 

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12000 and ending on January 1, 2008.
2    (22) Computers and communications equipment utilized for
3any hospital purpose and equipment used in the diagnosis,
4analysis, or treatment of hospital patients purchased by a
5lessor who leases the equipment, under a lease of one year or
6longer executed or in effect at the time the lessor would
7otherwise be subject to the tax imposed by this Act, to a
8hospital that has been issued an active tax exemption
9identification number by the Department under Section 1g of the
10Retailers' Occupation Tax Act. If the equipment is leased in a
11manner that does not qualify for this exemption or is used in
12any other non-exempt manner, the lessor shall be liable for the
13tax imposed under this Act or the Service Use Tax Act, as the
14case may be, based on the fair market value of the property at
15the time the non-qualifying use occurs. No lessor shall collect
16or attempt to collect an amount (however designated) that
17purports to reimburse that lessor for the tax imposed by this
18Act or the Service Use Tax Act, as the case may be, if the tax
19has not been paid by the lessor. If a lessor improperly
20collects any such amount from the lessee, the lessee shall have
21a legal right to claim a refund of that amount from the lessor.
22If, however, that amount is not refunded to the lessee for any
23reason, the lessor is liable to pay that amount to the
24Department.
25    (23) Personal property purchased by a lessor who leases the
26property, under a lease of one year or longer executed or in

 

 

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1effect at the time the lessor would otherwise be subject to the
2tax imposed by this Act, to a governmental body that has been
3issued an active sales tax exemption identification number by
4the Department under Section 1g of the Retailers' Occupation
5Tax Act. If the property is leased in a manner that does not
6qualify for this exemption or used in any other non-exempt
7manner, the lessor shall be liable for the tax imposed under
8this Act or the Service Use Tax Act, as the case may be, based
9on the fair market value of the property at the time the
10non-qualifying use occurs. No lessor shall collect or attempt
11to collect an amount (however designated) that purports to
12reimburse that lessor for the tax imposed by this Act or the
13Service Use Tax Act, as the case may be, if the tax has not been
14paid by the lessor. If a lessor improperly collects any such
15amount from the lessee, the lessee shall have a legal right to
16claim a refund of that amount from the lessor. If, however,
17that amount is not refunded to the lessee for any reason, the
18lessor is liable to pay that amount to the Department.
19    (24) Beginning with taxable years ending on or after
20December 31, 1995 and ending with taxable years ending on or
21before December 31, 2004, personal property that is donated for
22disaster relief to be used in a State or federally declared
23disaster area in Illinois or bordering Illinois by a
24manufacturer or retailer that is registered in this State to a
25corporation, society, association, foundation, or institution
26that has been issued a sales tax exemption identification

 

 

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1number by the Department that assists victims of the disaster
2who reside within the declared disaster area.
3    (25) Beginning with taxable years ending on or after
4December 31, 1995 and ending with taxable years ending on or
5before December 31, 2004, personal property that is used in the
6performance of infrastructure repairs in this State, including
7but not limited to municipal roads and streets, access roads,
8bridges, sidewalks, waste disposal systems, water and sewer
9line extensions, water distribution and purification
10facilities, storm water drainage and retention facilities, and
11sewage treatment facilities, resulting from a State or
12federally declared disaster in Illinois or bordering Illinois
13when such repairs are initiated on facilities located in the
14declared disaster area within 6 months after the disaster.
15    (26) Beginning July 1, 1999, game or game birds purchased
16at a "game breeding and hunting preserve area" as that term is
17used in the Wildlife Code. This paragraph is exempt from the
18provisions of Section 3-90.
19    (27) A motor vehicle, as that term is defined in Section
201-146 of the Illinois Vehicle Code, that is donated to a
21corporation, limited liability company, society, association,
22foundation, or institution that is determined by the Department
23to be organized and operated exclusively for educational
24purposes. For purposes of this exemption, "a corporation,
25limited liability company, society, association, foundation,
26or institution organized and operated exclusively for

 

 

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1educational purposes" means all tax-supported public schools,
2private schools that offer systematic instruction in useful
3branches of learning by methods common to public schools and
4that compare favorably in their scope and intensity with the
5course of study presented in tax-supported schools, and
6vocational or technical schools or institutes organized and
7operated exclusively to provide a course of study of not less
8than 6 weeks duration and designed to prepare individuals to
9follow a trade or to pursue a manual, technical, mechanical,
10industrial, business, or commercial occupation.
11    (28) Beginning January 1, 2000, personal property,
12including food, purchased through fundraising events for the
13benefit of a public or private elementary or secondary school,
14a group of those schools, or one or more school districts if
15the events are sponsored by an entity recognized by the school
16district that consists primarily of volunteers and includes
17parents and teachers of the school children. This paragraph
18does not apply to fundraising events (i) for the benefit of
19private home instruction or (ii) for which the fundraising
20entity purchases the personal property sold at the events from
21another individual or entity that sold the property for the
22purpose of resale by the fundraising entity and that profits
23from the sale to the fundraising entity. This paragraph is
24exempt from the provisions of Section 3-90.
25    (29) Beginning January 1, 2000 and through December 31,
262001, new or used automatic vending machines that prepare and

 

 

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1serve hot food and beverages, including coffee, soup, and other
2items, and replacement parts for these machines. Beginning
3January 1, 2002 and through June 30, 2003, machines and parts
4for machines used in commercial, coin-operated amusement and
5vending business if a use or occupation tax is paid on the
6gross receipts derived from the use of the commercial,
7coin-operated amusement and vending machines. This paragraph
8is exempt from the provisions of Section 3-90.
9    (30) Beginning January 1, 2001 and through June 30, 2016,
10food for human consumption that is to be consumed off the
11premises where it is sold (other than alcoholic beverages, soft
12drinks, and food that has been prepared for immediate
13consumption) and prescription and nonprescription medicines,
14drugs, medical appliances, and insulin, urine testing
15materials, syringes, and needles used by diabetics, for human
16use, when purchased for use by a person receiving medical
17assistance under Article V of the Illinois Public Aid Code who
18resides in a licensed long-term care facility, as defined in
19the Nursing Home Care Act, or in a licensed facility as defined
20in the ID/DD Community Care Act, the MC/DD Act, or the
21Specialized Mental Health Rehabilitation Act of 2013.
22    (31) Beginning on August 2, 2001 (the effective date of
23Public Act 92-227) this amendatory Act of the 92nd General
24Assembly, computers and communications equipment utilized for
25any hospital purpose and equipment used in the diagnosis,
26analysis, or treatment of hospital patients purchased by a

 

 

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1lessor who leases the equipment, under a lease of one year or
2longer executed or in effect at the time the lessor would
3otherwise be subject to the tax imposed by this Act, to a
4hospital that has been issued an active tax exemption
5identification number by the Department under Section 1g of the
6Retailers' Occupation Tax Act. If the equipment is leased in a
7manner that does not qualify for this exemption or is used in
8any other nonexempt manner, the lessor shall be liable for the
9tax imposed under this Act or the Service Use Tax Act, as the
10case may be, based on the fair market value of the property at
11the time the nonqualifying use occurs. No lessor shall collect
12or attempt to collect an amount (however designated) that
13purports to reimburse that lessor for the tax imposed by this
14Act or the Service Use Tax Act, as the case may be, if the tax
15has not been paid by the lessor. If a lessor improperly
16collects any such amount from the lessee, the lessee shall have
17a legal right to claim a refund of that amount from the lessor.
18If, however, that amount is not refunded to the lessee for any
19reason, the lessor is liable to pay that amount to the
20Department. This paragraph is exempt from the provisions of
21Section 3-90.
22    (32) Beginning on August 2, 2001 (the effective date of
23Public Act 92-227) this amendatory Act of the 92nd General
24Assembly, personal property purchased by a lessor who leases
25the property, under a lease of one year or longer executed or
26in effect at the time the lessor would otherwise be subject to

 

 

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1the tax imposed by this Act, to a governmental body that has
2been issued an active sales tax exemption identification number
3by the Department under Section 1g of the Retailers' Occupation
4Tax Act. If the property is leased in a manner that does not
5qualify for this exemption or used in any other nonexempt
6manner, the lessor shall be liable for the tax imposed under
7this Act or the Service Use Tax Act, as the case may be, based
8on the fair market value of the property at the time the
9nonqualifying use occurs. No lessor shall collect or attempt to
10collect an amount (however designated) that purports to
11reimburse that lessor for the tax imposed by this Act or the
12Service Use Tax Act, as the case may be, if the tax has not been
13paid by the lessor. If a lessor improperly collects any such
14amount from the lessee, the lessee shall have a legal right to
15claim a refund of that amount from the lessor. If, however,
16that amount is not refunded to the lessee for any reason, the
17lessor is liable to pay that amount to the Department. This
18paragraph is exempt from the provisions of Section 3-90.
19    (33) On and after July 1, 2003 and through June 30, 2004,
20the use in this State of motor vehicles of the second division
21with a gross vehicle weight in excess of 8,000 pounds and that
22are subject to the commercial distribution fee imposed under
23Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
241, 2004 and through June 30, 2005, the use in this State of
25motor vehicles of the second division: (i) with a gross vehicle
26weight rating in excess of 8,000 pounds; (ii) that are subject

 

 

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1to the commercial distribution fee imposed under Section
23-815.1 of the Illinois Vehicle Code; and (iii) that are
3primarily used for commercial purposes. Through June 30, 2005,
4this exemption applies to repair and replacement parts added
5after the initial purchase of such a motor vehicle if that
6motor vehicle is used in a manner that would qualify for the
7rolling stock exemption otherwise provided for in this Act. For
8purposes of this paragraph, the term "used for commercial
9purposes" means the transportation of persons or property in
10furtherance of any commercial or industrial enterprise,
11whether for-hire or not.
12    (34) Beginning January 1, 2008, tangible personal property
13used in the construction or maintenance of a community water
14supply, as defined under Section 3.145 of the Environmental
15Protection Act, that is operated by a not-for-profit
16corporation that holds a valid water supply permit issued under
17Title IV of the Environmental Protection Act. This paragraph is
18exempt from the provisions of Section 3-90.
19    (35) Beginning January 1, 2010, materials, parts,
20equipment, components, and furnishings incorporated into or
21upon an aircraft as part of the modification, refurbishment,
22completion, replacement, repair, or maintenance of the
23aircraft. This exemption includes consumable supplies used in
24the modification, refurbishment, completion, replacement,
25repair, and maintenance of aircraft, but excludes any
26materials, parts, equipment, components, and consumable

 

 

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1supplies used in the modification, replacement, repair, and
2maintenance of aircraft engines or power plants, whether such
3engines or power plants are installed or uninstalled upon any
4such aircraft. "Consumable supplies" include, but are not
5limited to, adhesive, tape, sandpaper, general purpose
6lubricants, cleaning solution, latex gloves, and protective
7films. This exemption applies only to the use of qualifying
8tangible personal property by persons who modify, refurbish,
9complete, repair, replace, or maintain aircraft and who (i)
10hold an Air Agency Certificate and are empowered to operate an
11approved repair station by the Federal Aviation
12Administration, (ii) have a Class IV Rating, and (iii) conduct
13operations in accordance with Part 145 of the Federal Aviation
14Regulations. The exemption does not include aircraft operated
15by a commercial air carrier providing scheduled passenger air
16service pursuant to authority issued under Part 121 or Part 129
17of the Federal Aviation Regulations. The changes made to this
18paragraph (35) by Public Act 98-534 are declarative of existing
19law.
20    (36) Tangible personal property purchased by a
21public-facilities corporation, as described in Section
2211-65-10 of the Illinois Municipal Code, for purposes of
23constructing or furnishing a municipal convention hall, but
24only if the legal title to the municipal convention hall is
25transferred to the municipality without any further
26consideration by or on behalf of the municipality at the time

 

 

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1of the completion of the municipal convention hall or upon the
2retirement or redemption of any bonds or other debt instruments
3issued by the public-facilities corporation in connection with
4the development of the municipal convention hall. This
5exemption includes existing public-facilities corporations as
6provided in Section 11-65-25 of the Illinois Municipal Code.
7This paragraph is exempt from the provisions of Section 3-90.
8    (37) Beginning January 1, 2017, menstrual pads, tampons,
9and menstrual cups.
10    (38) Merchandise that is subject to the Rental Purchase
11Agreement Occupation and Use Tax. The purchaser must certify
12that the item is purchased to be rented subject to a rental
13purchase agreement, as defined in the Rental Purchase Agreement
14Act, and provide proof of registration under the Rental
15Purchase Agreement Occupation and Use Tax Act. This paragraph
16is exempt from the provisions of Section 3-90.
17    (39) Beginning January 1, 2019, prescription medicines and
18prescription drugs. This paragraph is exempt from the
19provisions of Section 3-90.
20(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
21100-22, eff. 7-6-17; 100-437, eff. 1-1-18; revised 9-27-17.)
 
22    (35 ILCS 105/3-10)
23    Sec. 3-10. Rate of tax. Unless otherwise provided in this
24Section, the tax imposed by this Act is at the rate of 6.25% of
25either the selling price or the fair market value, if any, of

 

 

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1the tangible personal property. In all cases where property
2functionally used or consumed is the same as the property that
3was purchased at retail, then the tax is imposed on the selling
4price of the property. In all cases where property functionally
5used or consumed is a by-product or waste product that has been
6refined, manufactured, or produced from property purchased at
7retail, then the tax is imposed on the lower of the fair market
8value, if any, of the specific property so used in this State
9or on the selling price of the property purchased at retail.
10For purposes of this Section "fair market value" means the
11price at which property would change hands between a willing
12buyer and a willing seller, neither being under any compulsion
13to buy or sell and both having reasonable knowledge of the
14relevant facts. The fair market value shall be established by
15Illinois sales by the taxpayer of the same property as that
16functionally used or consumed, or if there are no such sales by
17the taxpayer, then comparable sales or purchases of property of
18like kind and character in Illinois.
19    Beginning on July 1, 2000 and through December 31, 2000,
20with respect to motor fuel, as defined in Section 1.1 of the
21Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
22the Use Tax Act, the tax is imposed at the rate of 1.25%.
23    Beginning on August 6, 2010 through August 15, 2010, with
24respect to sales tax holiday items as defined in Section 3-6 of
25this Act, the tax is imposed at the rate of 1.25%.
26    With respect to gasohol, the tax imposed by this Act

 

 

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1applies to (i) 70% of the proceeds of sales made on or after
2January 1, 1990, and before July 1, 2003, (ii) 80% of the
3proceeds of sales made on or after July 1, 2003 and on or
4before July 1, 2017, and (iii) 100% of the proceeds of sales
5made thereafter. If, at any time, however, the tax under this
6Act on sales of gasohol is imposed at the rate of 1.25%, then
7the tax imposed by this Act applies to 100% of the proceeds of
8sales of gasohol made during that time.
9    With respect to majority blended ethanol fuel, the tax
10imposed by this Act does not apply to the proceeds of sales
11made on or after July 1, 2003 and on or before December 31,
122023 but applies to 100% of the proceeds of sales made
13thereafter.
14    With respect to biodiesel blends with no less than 1% and
15no more than 10% biodiesel, the tax imposed by this Act applies
16to (i) 80% of the proceeds of sales made on or after July 1,
172003 and on or before December 31, 2018 and (ii) 100% of the
18proceeds of sales made thereafter. If, at any time, however,
19the tax under this Act on sales of biodiesel blends with no
20less than 1% and no more than 10% biodiesel is imposed at the
21rate of 1.25%, then the tax imposed by this Act applies to 100%
22of the proceeds of sales of biodiesel blends with no less than
231% and no more than 10% biodiesel made during that time.
24    With respect to 100% biodiesel and biodiesel blends with
25more than 10% but no more than 99% biodiesel, the tax imposed
26by this Act does not apply to the proceeds of sales made on or

 

 

HB4696- 21 -LRB100 17148 HLH 32302 b

1after July 1, 2003 and on or before December 31, 2023 but
2applies to 100% of the proceeds of sales made thereafter.
3    With respect to food for human consumption that is to be
4consumed off the premises where it is sold (other than
5alcoholic beverages, soft drinks, and food that has been
6prepared for immediate consumption) and prescription and
7nonprescription medicines, drugs, medical appliances, products
8classified as Class III medical devices by the United States
9Food and Drug Administration that are used for cancer treatment
10pursuant to a prescription, as well as any accessories and
11components related to those devices, modifications to a motor
12vehicle for the purpose of rendering it usable by a person with
13a disability, and insulin, urine testing materials, syringes,
14and needles used by diabetics, for human use, the tax is
15imposed at the rate of 1%; provided that, beginning on January
161, 2019, no tax shall be imposed on prescription medicines or
17prescription drugs. For the purposes of this Section, until
18September 1, 2009: the term "soft drinks" means any complete,
19finished, ready-to-use, non-alcoholic drink, whether
20carbonated or not, including but not limited to soda water,
21cola, fruit juice, vegetable juice, carbonated water, and all
22other preparations commonly known as soft drinks of whatever
23kind or description that are contained in any closed or sealed
24bottle, can, carton, or container, regardless of size; but
25"soft drinks" does not include coffee, tea, non-carbonated
26water, infant formula, milk or milk products as defined in the

 

 

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1Grade A Pasteurized Milk and Milk Products Act, or drinks
2containing 50% or more natural fruit or vegetable juice.
3    Notwithstanding any other provisions of this Act,
4beginning September 1, 2009, "soft drinks" means non-alcoholic
5beverages that contain natural or artificial sweeteners. "Soft
6drinks" do not include beverages that contain milk or milk
7products, soy, rice or similar milk substitutes, or greater
8than 50% of vegetable or fruit juice by volume.
9    Until August 1, 2009, and notwithstanding any other
10provisions of this Act, "food for human consumption that is to
11be consumed off the premises where it is sold" includes all
12food sold through a vending machine, except soft drinks and
13food products that are dispensed hot from a vending machine,
14regardless of the location of the vending machine. Beginning
15August 1, 2009, and notwithstanding any other provisions of
16this Act, "food for human consumption that is to be consumed
17off the premises where it is sold" includes all food sold
18through a vending machine, except soft drinks, candy, and food
19products that are dispensed hot from a vending machine,
20regardless of the location of the vending machine.
21    Notwithstanding any other provisions of this Act,
22beginning September 1, 2009, "food for human consumption that
23is to be consumed off the premises where it is sold" does not
24include candy. For purposes of this Section, "candy" means a
25preparation of sugar, honey, or other natural or artificial
26sweeteners in combination with chocolate, fruits, nuts or other

 

 

HB4696- 23 -LRB100 17148 HLH 32302 b

1ingredients or flavorings in the form of bars, drops, or
2pieces. "Candy" does not include any preparation that contains
3flour or requires refrigeration.
4    Notwithstanding any other provisions of this Act,
5beginning September 1, 2009, "nonprescription medicines and
6drugs" does not include grooming and hygiene products. For
7purposes of this Section, "grooming and hygiene products"
8includes, but is not limited to, soaps and cleaning solutions,
9shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
10lotions and screens, unless those products are available by
11prescription only, regardless of whether the products meet the
12definition of "over-the-counter-drugs". For the purposes of
13this paragraph, "over-the-counter-drug" means a drug for human
14use that contains a label that identifies the product as a drug
15as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
16label includes:
17        (A) A "Drug Facts" panel; or
18        (B) A statement of the "active ingredient(s)" with a
19    list of those ingredients contained in the compound,
20    substance or preparation.
21    Beginning on the effective date of this amendatory Act of
22the 98th General Assembly, "prescription and nonprescription
23medicines and drugs" includes medical cannabis purchased from a
24registered dispensing organization under the Compassionate Use
25of Medical Cannabis Pilot Program Act.
26    If the property that is purchased at retail from a retailer

 

 

HB4696- 24 -LRB100 17148 HLH 32302 b

1is acquired outside Illinois and used outside Illinois before
2being brought to Illinois for use here and is taxable under
3this Act, the "selling price" on which the tax is computed
4shall be reduced by an amount that represents a reasonable
5allowance for depreciation for the period of prior out-of-state
6use.
7(Source: P.A. 99-143, eff. 7-27-15; 99-858, eff. 8-19-16;
8100-22, eff. 7-6-17.)
 
9    Section 10. The Service Use Tax Act is amended by changing
10Sections 3-5 and 3-10 as follows:
 
11    (35 ILCS 110/3-5)
12    Sec. 3-5. Exemptions. Use of the following tangible
13personal property is exempt from the tax imposed by this Act:
14    (1) Personal property purchased from a corporation,
15society, association, foundation, institution, or
16organization, other than a limited liability company, that is
17organized and operated as a not-for-profit service enterprise
18for the benefit of persons 65 years of age or older if the
19personal property was not purchased by the enterprise for the
20purpose of resale by the enterprise.
21    (2) Personal property purchased by a non-profit Illinois
22county fair association for use in conducting, operating, or
23promoting the county fair.
24    (3) Personal property purchased by a not-for-profit arts or

 

 

HB4696- 25 -LRB100 17148 HLH 32302 b

1cultural organization that establishes, by proof required by
2the Department by rule, that it has received an exemption under
3Section 501(c)(3) of the Internal Revenue Code and that is
4organized and operated primarily for the presentation or
5support of arts or cultural programming, activities, or
6services. These organizations include, but are not limited to,
7music and dramatic arts organizations such as symphony
8orchestras and theatrical groups, arts and cultural service
9organizations, local arts councils, visual arts organizations,
10and media arts organizations. On and after the effective date
11of this amendatory Act of the 92nd General Assembly, however,
12an entity otherwise eligible for this exemption shall not make
13tax-free purchases unless it has an active identification
14number issued by the Department.
15    (4) Legal tender, currency, medallions, or gold or silver
16coinage issued by the State of Illinois, the government of the
17United States of America, or the government of any foreign
18country, and bullion.
19    (5) Until July 1, 2003 and beginning again on September 1,
202004 through August 30, 2014, graphic arts machinery and
21equipment, including repair and replacement parts, both new and
22used, and including that manufactured on special order or
23purchased for lease, certified by the purchaser to be used
24primarily for graphic arts production. Equipment includes
25chemicals or chemicals acting as catalysts but only if the
26chemicals or chemicals acting as catalysts effect a direct and

 

 

HB4696- 26 -LRB100 17148 HLH 32302 b

1immediate change upon a graphic arts product. Beginning on July
21, 2017, graphic arts machinery and equipment is included in
3the manufacturing and assembling machinery and equipment
4exemption under Section 2 of this Act.
5    (6) Personal property purchased from a teacher-sponsored
6student organization affiliated with an elementary or
7secondary school located in Illinois.
8    (7) Farm machinery and equipment, both new and used,
9including that manufactured on special order, certified by the
10purchaser to be used primarily for production agriculture or
11State or federal agricultural programs, including individual
12replacement parts for the machinery and equipment, including
13machinery and equipment purchased for lease, and including
14implements of husbandry defined in Section 1-130 of the
15Illinois Vehicle Code, farm machinery and agricultural
16chemical and fertilizer spreaders, and nurse wagons required to
17be registered under Section 3-809 of the Illinois Vehicle Code,
18but excluding other motor vehicles required to be registered
19under the Illinois Vehicle Code. Horticultural polyhouses or
20hoop houses used for propagating, growing, or overwintering
21plants shall be considered farm machinery and equipment under
22this item (7). Agricultural chemical tender tanks and dry boxes
23shall include units sold separately from a motor vehicle
24required to be licensed and units sold mounted on a motor
25vehicle required to be licensed if the selling price of the
26tender is separately stated.

 

 

HB4696- 27 -LRB100 17148 HLH 32302 b

1    Farm machinery and equipment shall include precision
2farming equipment that is installed or purchased to be
3installed on farm machinery and equipment including, but not
4limited to, tractors, harvesters, sprayers, planters, seeders,
5or spreaders. Precision farming equipment includes, but is not
6limited to, soil testing sensors, computers, monitors,
7software, global positioning and mapping systems, and other
8such equipment.
9    Farm machinery and equipment also includes computers,
10sensors, software, and related equipment used primarily in the
11computer-assisted operation of production agriculture
12facilities, equipment, and activities such as, but not limited
13to, the collection, monitoring, and correlation of animal and
14crop data for the purpose of formulating animal diets and
15agricultural chemicals. This item (7) is exempt from the
16provisions of Section 3-75.
17    (8) Until June 30, 2013, fuel and petroleum products sold
18to or used by an air common carrier, certified by the carrier
19to be used for consumption, shipment, or storage in the conduct
20of its business as an air common carrier, for a flight destined
21for or returning from a location or locations outside the
22United States without regard to previous or subsequent domestic
23stopovers.
24    Beginning July 1, 2013, fuel and petroleum products sold to
25or used by an air carrier, certified by the carrier to be used
26for consumption, shipment, or storage in the conduct of its

 

 

HB4696- 28 -LRB100 17148 HLH 32302 b

1business as an air common carrier, for a flight that (i) is
2engaged in foreign trade or is engaged in trade between the
3United States and any of its possessions and (ii) transports at
4least one individual or package for hire from the city of
5origination to the city of final destination on the same
6aircraft, without regard to a change in the flight number of
7that aircraft.
8    (9) Proceeds of mandatory service charges separately
9stated on customers' bills for the purchase and consumption of
10food and beverages acquired as an incident to the purchase of a
11service from a serviceman, to the extent that the proceeds of
12the service charge are in fact turned over as tips or as a
13substitute for tips to the employees who participate directly
14in preparing, serving, hosting or cleaning up the food or
15beverage function with respect to which the service charge is
16imposed.
17    (10) Until July 1, 2003, oil field exploration, drilling,
18and production equipment, including (i) rigs and parts of rigs,
19rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
20tubular goods, including casing and drill strings, (iii) pumps
21and pump-jack units, (iv) storage tanks and flow lines, (v) any
22individual replacement part for oil field exploration,
23drilling, and production equipment, and (vi) machinery and
24equipment purchased for lease; but excluding motor vehicles
25required to be registered under the Illinois Vehicle Code.
26    (11) Proceeds from the sale of photoprocessing machinery

 

 

HB4696- 29 -LRB100 17148 HLH 32302 b

1and equipment, including repair and replacement parts, both new
2and used, including that manufactured on special order,
3certified by the purchaser to be used primarily for
4photoprocessing, and including photoprocessing machinery and
5equipment purchased for lease.
6    (12) Coal and aggregate exploration, mining, off-highway
7hauling, processing, maintenance, and reclamation equipment,
8including replacement parts and equipment, and including
9equipment purchased for lease, but excluding motor vehicles
10required to be registered under the Illinois Vehicle Code. The
11changes made to this Section by Public Act 97-767 apply on and
12after July 1, 2003, but no claim for credit or refund is
13allowed on or after August 16, 2013 (the effective date of
14Public Act 98-456) for such taxes paid during the period
15beginning July 1, 2003 and ending on August 16, 2013 (the
16effective date of Public Act 98-456).
17    (13) Semen used for artificial insemination of livestock
18for direct agricultural production.
19    (14) Horses, or interests in horses, registered with and
20meeting the requirements of any of the Arabian Horse Club
21Registry of America, Appaloosa Horse Club, American Quarter
22Horse Association, United States Trotting Association, or
23Jockey Club, as appropriate, used for purposes of breeding or
24racing for prizes. This item (14) is exempt from the provisions
25of Section 3-75, and the exemption provided for under this item
26(14) applies for all periods beginning May 30, 1995, but no

 

 

HB4696- 30 -LRB100 17148 HLH 32302 b

1claim for credit or refund is allowed on or after the effective
2date of this amendatory Act of the 95th General Assembly for
3such taxes paid during the period beginning May 30, 2000 and
4ending on the effective date of this amendatory Act of the 95th
5General Assembly.
6    (15) Computers and communications equipment utilized for
7any hospital purpose and equipment used in the diagnosis,
8analysis, or treatment of hospital patients purchased by a
9lessor who leases the equipment, under a lease of one year or
10longer executed or in effect at the time the lessor would
11otherwise be subject to the tax imposed by this Act, to a
12hospital that has been issued an active tax exemption
13identification number by the Department under Section 1g of the
14Retailers' Occupation Tax Act. If the equipment is leased in a
15manner that does not qualify for this exemption or is used in
16any other non-exempt manner, the lessor shall be liable for the
17tax imposed under this Act or the Use Tax Act, as the case may
18be, based on the fair market value of the property at the time
19the non-qualifying use occurs. No lessor shall collect or
20attempt to collect an amount (however designated) that purports
21to reimburse that lessor for the tax imposed by this Act or the
22Use Tax Act, as the case may be, if the tax has not been paid by
23the lessor. If a lessor improperly collects any such amount
24from the lessee, the lessee shall have a legal right to claim a
25refund of that amount from the lessor. If, however, that amount
26is not refunded to the lessee for any reason, the lessor is

 

 

HB4696- 31 -LRB100 17148 HLH 32302 b

1liable to pay that amount to the Department.
2    (16) Personal property purchased by a lessor who leases the
3property, under a lease of one year or longer executed or in
4effect at the time the lessor would otherwise be subject to the
5tax imposed by this Act, to a governmental body that has been
6issued an active tax exemption identification number by the
7Department under Section 1g of the Retailers' Occupation Tax
8Act. If the property is leased in a manner that does not
9qualify for this exemption or is used in any other non-exempt
10manner, the lessor shall be liable for the tax imposed under
11this Act or the Use Tax Act, as the case may be, based on the
12fair market value of the property at the time the
13non-qualifying use occurs. No lessor shall collect or attempt
14to collect an amount (however designated) that purports to
15reimburse that lessor for the tax imposed by this Act or the
16Use Tax Act, as the case may be, if the tax has not been paid by
17the lessor. If a lessor improperly collects any such amount
18from the lessee, the lessee shall have a legal right to claim a
19refund of that amount from the lessor. If, however, that amount
20is not refunded to the lessee for any reason, the lessor is
21liable to pay that amount to the Department.
22    (17) Beginning with taxable years ending on or after
23December 31, 1995 and ending with taxable years ending on or
24before December 31, 2004, personal property that is donated for
25disaster relief to be used in a State or federally declared
26disaster area in Illinois or bordering Illinois by a

 

 

HB4696- 32 -LRB100 17148 HLH 32302 b

1manufacturer or retailer that is registered in this State to a
2corporation, society, association, foundation, or institution
3that has been issued a sales tax exemption identification
4number by the Department that assists victims of the disaster
5who reside within the declared disaster area.
6    (18) Beginning with taxable years ending on or after
7December 31, 1995 and ending with taxable years ending on or
8before December 31, 2004, personal property that is used in the
9performance of infrastructure repairs in this State, including
10but not limited to municipal roads and streets, access roads,
11bridges, sidewalks, waste disposal systems, water and sewer
12line extensions, water distribution and purification
13facilities, storm water drainage and retention facilities, and
14sewage treatment facilities, resulting from a State or
15federally declared disaster in Illinois or bordering Illinois
16when such repairs are initiated on facilities located in the
17declared disaster area within 6 months after the disaster.
18    (19) Beginning July 1, 1999, game or game birds purchased
19at a "game breeding and hunting preserve area" as that term is
20used in the Wildlife Code. This paragraph is exempt from the
21provisions of Section 3-75.
22    (20) A motor vehicle, as that term is defined in Section
231-146 of the Illinois Vehicle Code, that is donated to a
24corporation, limited liability company, society, association,
25foundation, or institution that is determined by the Department
26to be organized and operated exclusively for educational

 

 

HB4696- 33 -LRB100 17148 HLH 32302 b

1purposes. For purposes of this exemption, "a corporation,
2limited liability company, society, association, foundation,
3or institution organized and operated exclusively for
4educational purposes" means all tax-supported public schools,
5private schools that offer systematic instruction in useful
6branches of learning by methods common to public schools and
7that compare favorably in their scope and intensity with the
8course of study presented in tax-supported schools, and
9vocational or technical schools or institutes organized and
10operated exclusively to provide a course of study of not less
11than 6 weeks duration and designed to prepare individuals to
12follow a trade or to pursue a manual, technical, mechanical,
13industrial, business, or commercial occupation.
14    (21) Beginning January 1, 2000, personal property,
15including food, purchased through fundraising events for the
16benefit of a public or private elementary or secondary school,
17a group of those schools, or one or more school districts if
18the events are sponsored by an entity recognized by the school
19district that consists primarily of volunteers and includes
20parents and teachers of the school children. This paragraph
21does not apply to fundraising events (i) for the benefit of
22private home instruction or (ii) for which the fundraising
23entity purchases the personal property sold at the events from
24another individual or entity that sold the property for the
25purpose of resale by the fundraising entity and that profits
26from the sale to the fundraising entity. This paragraph is

 

 

HB4696- 34 -LRB100 17148 HLH 32302 b

1exempt from the provisions of Section 3-75.
2    (22) Beginning January 1, 2000 and through December 31,
32001, new or used automatic vending machines that prepare and
4serve hot food and beverages, including coffee, soup, and other
5items, and replacement parts for these machines. Beginning
6January 1, 2002 and through June 30, 2003, machines and parts
7for machines used in commercial, coin-operated amusement and
8vending business if a use or occupation tax is paid on the
9gross receipts derived from the use of the commercial,
10coin-operated amusement and vending machines. This paragraph
11is exempt from the provisions of Section 3-75.
12    (23) Beginning August 23, 2001 and through June 30, 2016,
13food for human consumption that is to be consumed off the
14premises where it is sold (other than alcoholic beverages, soft
15drinks, and food that has been prepared for immediate
16consumption) and prescription and nonprescription medicines,
17drugs, medical appliances, and insulin, urine testing
18materials, syringes, and needles used by diabetics, for human
19use, when purchased for use by a person receiving medical
20assistance under Article V of the Illinois Public Aid Code who
21resides in a licensed long-term care facility, as defined in
22the Nursing Home Care Act, or in a licensed facility as defined
23in the ID/DD Community Care Act, the MC/DD Act, or the
24Specialized Mental Health Rehabilitation Act of 2013.
25    (24) Beginning on the effective date of this amendatory Act
26of the 92nd General Assembly, computers and communications

 

 

HB4696- 35 -LRB100 17148 HLH 32302 b

1equipment utilized for any hospital purpose and equipment used
2in the diagnosis, analysis, or treatment of hospital patients
3purchased by a lessor who leases the equipment, under a lease
4of one year or longer executed or in effect at the time the
5lessor would otherwise be subject to the tax imposed by this
6Act, to a hospital that has been issued an active tax exemption
7identification number by the Department under Section 1g of the
8Retailers' Occupation Tax Act. If the equipment is leased in a
9manner that does not qualify for this exemption or is used in
10any other nonexempt manner, the lessor shall be liable for the
11tax imposed under this Act or the Use Tax Act, as the case may
12be, based on the fair market value of the property at the time
13the nonqualifying use occurs. No lessor shall collect or
14attempt to collect an amount (however designated) that purports
15to reimburse that lessor for the tax imposed by this Act or the
16Use Tax Act, as the case may be, if the tax has not been paid by
17the lessor. If a lessor improperly collects any such amount
18from the lessee, the lessee shall have a legal right to claim a
19refund of that amount from the lessor. If, however, that amount
20is not refunded to the lessee for any reason, the lessor is
21liable to pay that amount to the Department. This paragraph is
22exempt from the provisions of Section 3-75.
23    (25) Beginning on the effective date of this amendatory Act
24of the 92nd General Assembly, personal property purchased by a
25lessor who leases the property, under a lease of one year or
26longer executed or in effect at the time the lessor would

 

 

HB4696- 36 -LRB100 17148 HLH 32302 b

1otherwise be subject to the tax imposed by this Act, to a
2governmental body that has been issued an active tax exemption
3identification number by the Department under Section 1g of the
4Retailers' Occupation Tax Act. If the property is leased in a
5manner that does not qualify for this exemption or is used in
6any other nonexempt manner, the lessor shall be liable for the
7tax imposed under this Act or the Use Tax Act, as the case may
8be, based on the fair market value of the property at the time
9the nonqualifying use occurs. No lessor shall collect or
10attempt to collect an amount (however designated) that purports
11to reimburse that lessor for the tax imposed by this Act or the
12Use Tax Act, as the case may be, if the tax has not been paid by
13the lessor. If a lessor improperly collects any such amount
14from the lessee, the lessee shall have a legal right to claim a
15refund of that amount from the lessor. If, however, that amount
16is not refunded to the lessee for any reason, the lessor is
17liable to pay that amount to the Department. This paragraph is
18exempt from the provisions of Section 3-75.
19    (26) Beginning January 1, 2008, tangible personal property
20used in the construction or maintenance of a community water
21supply, as defined under Section 3.145 of the Environmental
22Protection Act, that is operated by a not-for-profit
23corporation that holds a valid water supply permit issued under
24Title IV of the Environmental Protection Act. This paragraph is
25exempt from the provisions of Section 3-75.
26    (27) Beginning January 1, 2010, materials, parts,

 

 

HB4696- 37 -LRB100 17148 HLH 32302 b

1equipment, components, and furnishings incorporated into or
2upon an aircraft as part of the modification, refurbishment,
3completion, replacement, repair, or maintenance of the
4aircraft. This exemption includes consumable supplies used in
5the modification, refurbishment, completion, replacement,
6repair, and maintenance of aircraft, but excludes any
7materials, parts, equipment, components, and consumable
8supplies used in the modification, replacement, repair, and
9maintenance of aircraft engines or power plants, whether such
10engines or power plants are installed or uninstalled upon any
11such aircraft. "Consumable supplies" include, but are not
12limited to, adhesive, tape, sandpaper, general purpose
13lubricants, cleaning solution, latex gloves, and protective
14films. This exemption applies only to the use of qualifying
15tangible personal property transferred incident to the
16modification, refurbishment, completion, replacement, repair,
17or maintenance of aircraft by persons who (i) hold an Air
18Agency Certificate and are empowered to operate an approved
19repair station by the Federal Aviation Administration, (ii)
20have a Class IV Rating, and (iii) conduct operations in
21accordance with Part 145 of the Federal Aviation Regulations.
22The exemption does not include aircraft operated by a
23commercial air carrier providing scheduled passenger air
24service pursuant to authority issued under Part 121 or Part 129
25of the Federal Aviation Regulations. The changes made to this
26paragraph (27) by Public Act 98-534 are declarative of existing

 

 

HB4696- 38 -LRB100 17148 HLH 32302 b

1law.
2    (28) Tangible personal property purchased by a
3public-facilities corporation, as described in Section
411-65-10 of the Illinois Municipal Code, for purposes of
5constructing or furnishing a municipal convention hall, but
6only if the legal title to the municipal convention hall is
7transferred to the municipality without any further
8consideration by or on behalf of the municipality at the time
9of the completion of the municipal convention hall or upon the
10retirement or redemption of any bonds or other debt instruments
11issued by the public-facilities corporation in connection with
12the development of the municipal convention hall. This
13exemption includes existing public-facilities corporations as
14provided in Section 11-65-25 of the Illinois Municipal Code.
15This paragraph is exempt from the provisions of Section 3-75.
16    (29) Beginning January 1, 2017, menstrual pads, tampons,
17and menstrual cups.
18    (30) Beginning January 1, 2019, prescription medicines and
19prescription drugs. This paragraph is exempt from the
20provisions of Section 3-75.
21(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
22100-22, eff. 7-6-17.)
 
23    (35 ILCS 110/3-10)  (from Ch. 120, par. 439.33-10)
24    Sec. 3-10. Rate of tax. Unless otherwise provided in this
25Section, the tax imposed by this Act is at the rate of 6.25% of

 

 

HB4696- 39 -LRB100 17148 HLH 32302 b

1the selling price of tangible personal property transferred as
2an incident to the sale of service, but, for the purpose of
3computing this tax, in no event shall the selling price be less
4than the cost price of the property to the serviceman.
5    Beginning on July 1, 2000 and through December 31, 2000,
6with respect to motor fuel, as defined in Section 1.1 of the
7Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
8the Use Tax Act, the tax is imposed at the rate of 1.25%.
9    With respect to gasohol, as defined in the Use Tax Act, the
10tax imposed by this Act applies to (i) 70% of the selling price
11of property transferred as an incident to the sale of service
12on or after January 1, 1990, and before July 1, 2003, (ii) 80%
13of the selling price of property transferred as an incident to
14the sale of service on or after July 1, 2003 and on or before
15July 1, 2017, and (iii) 100% of the selling price thereafter.
16If, at any time, however, the tax under this Act on sales of
17gasohol, as defined in the Use Tax Act, is imposed at the rate
18of 1.25%, then the tax imposed by this Act applies to 100% of
19the proceeds of sales of gasohol made during that time.
20    With respect to majority blended ethanol fuel, as defined
21in the Use Tax Act, the tax imposed by this Act does not apply
22to the selling price of property transferred as an incident to
23the sale of service on or after July 1, 2003 and on or before
24December 31, 2023 but applies to 100% of the selling price
25thereafter.
26    With respect to biodiesel blends, as defined in the Use Tax

 

 

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1Act, with no less than 1% and no more than 10% biodiesel, the
2tax imposed by this Act applies to (i) 80% of the selling price
3of property transferred as an incident to the sale of service
4on or after July 1, 2003 and on or before December 31, 2018 and
5(ii) 100% of the proceeds of the selling price thereafter. If,
6at any time, however, the tax under this Act on sales of
7biodiesel blends, as defined in the Use Tax Act, with no less
8than 1% and no more than 10% biodiesel is imposed at the rate
9of 1.25%, then the tax imposed by this Act applies to 100% of
10the proceeds of sales of biodiesel blends with no less than 1%
11and no more than 10% biodiesel made during that time.
12    With respect to 100% biodiesel, as defined in the Use Tax
13Act, and biodiesel blends, as defined in the Use Tax Act, with
14more than 10% but no more than 99% biodiesel, the tax imposed
15by this Act does not apply to the proceeds of the selling price
16of property transferred as an incident to the sale of service
17on or after July 1, 2003 and on or before December 31, 2023 but
18applies to 100% of the selling price thereafter.
19    At the election of any registered serviceman made for each
20fiscal year, sales of service in which the aggregate annual
21cost price of tangible personal property transferred as an
22incident to the sales of service is less than 35%, or 75% in
23the case of servicemen transferring prescription drugs or
24servicemen engaged in graphic arts production, of the aggregate
25annual total gross receipts from all sales of service, the tax
26imposed by this Act shall be based on the serviceman's cost

 

 

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1price of the tangible personal property transferred as an
2incident to the sale of those services.
3    The tax shall be imposed at the rate of 1% on food prepared
4for immediate consumption and transferred incident to a sale of
5service subject to this Act or the Service Occupation Tax Act
6by an entity licensed under the Hospital Licensing Act, the
7Nursing Home Care Act, the ID/DD Community Care Act, the MC/DD
8Act, the Specialized Mental Health Rehabilitation Act of 2013,
9or the Child Care Act of 1969. The tax shall also be imposed at
10the rate of 1% on food for human consumption that is to be
11consumed off the premises where it is sold (other than
12alcoholic beverages, soft drinks, and food that has been
13prepared for immediate consumption and is not otherwise
14included in this paragraph) and prescription and
15nonprescription medicines, drugs, medical appliances, products
16classified as Class III medical devices by the United States
17Food and Drug Administration that are used for cancer treatment
18pursuant to a prescription, as well as any accessories and
19components related to those devices, modifications to a motor
20vehicle for the purpose of rendering it usable by a person with
21a disability, and insulin, urine testing materials, syringes,
22and needles used by diabetics, for human use; provided that,
23beginning on January 1, 2019, no tax shall be imposed on
24prescription medicines or prescription drugs. For the purposes
25of this Section, until September 1, 2009: the term "soft
26drinks" means any complete, finished, ready-to-use,

 

 

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1non-alcoholic drink, whether carbonated or not, including but
2not limited to soda water, cola, fruit juice, vegetable juice,
3carbonated water, and all other preparations commonly known as
4soft drinks of whatever kind or description that are contained
5in any closed or sealed bottle, can, carton, or container,
6regardless of size; but "soft drinks" does not include coffee,
7tea, non-carbonated water, infant formula, milk or milk
8products as defined in the Grade A Pasteurized Milk and Milk
9Products Act, or drinks containing 50% or more natural fruit or
10vegetable juice.
11    Notwithstanding any other provisions of this Act,
12beginning September 1, 2009, "soft drinks" means non-alcoholic
13beverages that contain natural or artificial sweeteners. "Soft
14drinks" do not include beverages that contain milk or milk
15products, soy, rice or similar milk substitutes, or greater
16than 50% of vegetable or fruit juice by volume.
17    Until August 1, 2009, and notwithstanding any other
18provisions of this Act, "food for human consumption that is to
19be consumed off the premises where it is sold" includes all
20food sold through a vending machine, except soft drinks and
21food products that are dispensed hot from a vending machine,
22regardless of the location of the vending machine. Beginning
23August 1, 2009, and notwithstanding any other provisions of
24this Act, "food for human consumption that is to be consumed
25off the premises where it is sold" includes all food sold
26through a vending machine, except soft drinks, candy, and food

 

 

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1products that are dispensed hot from a vending machine,
2regardless of the location of the vending machine.
3    Notwithstanding any other provisions of this Act,
4beginning September 1, 2009, "food for human consumption that
5is to be consumed off the premises where it is sold" does not
6include candy. For purposes of this Section, "candy" means a
7preparation of sugar, honey, or other natural or artificial
8sweeteners in combination with chocolate, fruits, nuts or other
9ingredients or flavorings in the form of bars, drops, or
10pieces. "Candy" does not include any preparation that contains
11flour or requires refrigeration.
12    Notwithstanding any other provisions of this Act,
13beginning September 1, 2009, "nonprescription medicines and
14drugs" does not include grooming and hygiene products. For
15purposes of this Section, "grooming and hygiene products"
16includes, but is not limited to, soaps and cleaning solutions,
17shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
18lotions and screens, unless those products are available by
19prescription only, regardless of whether the products meet the
20definition of "over-the-counter-drugs". For the purposes of
21this paragraph, "over-the-counter-drug" means a drug for human
22use that contains a label that identifies the product as a drug
23as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
24label includes:
25        (A) A "Drug Facts" panel; or
26        (B) A statement of the "active ingredient(s)" with a

 

 

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1    list of those ingredients contained in the compound,
2    substance or preparation.
3    Beginning on January 1, 2014 (the effective date of Public
4Act 98-122), "prescription and nonprescription medicines and
5drugs" includes medical cannabis purchased from a registered
6dispensing organization under the Compassionate Use of Medical
7Cannabis Pilot Program Act.
8    If the property that is acquired from a serviceman is
9acquired outside Illinois and used outside Illinois before
10being brought to Illinois for use here and is taxable under
11this Act, the "selling price" on which the tax is computed
12shall be reduced by an amount that represents a reasonable
13allowance for depreciation for the period of prior out-of-state
14use.
15(Source: P.A. 99-143, eff. 7-27-15; 99-180, eff. 7-29-15;
1699-642, eff. 7-28-16; 99-858, eff. 8-19-16; 100-22, eff.
177-6-17.)
 
18    Section 15. The Service Occupation Tax Act is amended by
19changing Sections 3-5 and 3-10 as follows:
 
20    (35 ILCS 115/3-5)
21    Sec. 3-5. Exemptions. The following tangible personal
22property is exempt from the tax imposed by this Act:
23    (1) Personal property sold by a corporation, society,
24association, foundation, institution, or organization, other

 

 

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1than a limited liability company, that is organized and
2operated as a not-for-profit service enterprise for the benefit
3of persons 65 years of age or older if the personal property
4was not purchased by the enterprise for the purpose of resale
5by the enterprise.
6    (2) Personal property purchased by a not-for-profit
7Illinois county fair association for use in conducting,
8operating, or promoting the county fair.
9    (3) Personal property purchased by any not-for-profit arts
10or cultural organization that establishes, by proof required by
11the Department by rule, that it has received an exemption under
12Section 501(c)(3) of the Internal Revenue Code and that is
13organized and operated primarily for the presentation or
14support of arts or cultural programming, activities, or
15services. These organizations include, but are not limited to,
16music and dramatic arts organizations such as symphony
17orchestras and theatrical groups, arts and cultural service
18organizations, local arts councils, visual arts organizations,
19and media arts organizations. On and after the effective date
20of this amendatory Act of the 92nd General Assembly, however,
21an entity otherwise eligible for this exemption shall not make
22tax-free purchases unless it has an active identification
23number issued by the Department.
24    (4) Legal tender, currency, medallions, or gold or silver
25coinage issued by the State of Illinois, the government of the
26United States of America, or the government of any foreign

 

 

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1country, and bullion.
2    (5) Until July 1, 2003 and beginning again on September 1,
32004 through August 30, 2014, graphic arts machinery and
4equipment, including repair and replacement parts, both new and
5used, and including that manufactured on special order or
6purchased for lease, certified by the purchaser to be used
7primarily for graphic arts production. Equipment includes
8chemicals or chemicals acting as catalysts but only if the
9chemicals or chemicals acting as catalysts effect a direct and
10immediate change upon a graphic arts product. Beginning on July
111, 2017, graphic arts machinery and equipment is included in
12the manufacturing and assembling machinery and equipment
13exemption under Section 2 of this Act.
14    (6) Personal property sold by a teacher-sponsored student
15organization affiliated with an elementary or secondary school
16located in Illinois.
17    (7) Farm machinery and equipment, both new and used,
18including that manufactured on special order, certified by the
19purchaser to be used primarily for production agriculture or
20State or federal agricultural programs, including individual
21replacement parts for the machinery and equipment, including
22machinery and equipment purchased for lease, and including
23implements of husbandry defined in Section 1-130 of the
24Illinois Vehicle Code, farm machinery and agricultural
25chemical and fertilizer spreaders, and nurse wagons required to
26be registered under Section 3-809 of the Illinois Vehicle Code,

 

 

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1but excluding other motor vehicles required to be registered
2under the Illinois Vehicle Code. Horticultural polyhouses or
3hoop houses used for propagating, growing, or overwintering
4plants shall be considered farm machinery and equipment under
5this item (7). Agricultural chemical tender tanks and dry boxes
6shall include units sold separately from a motor vehicle
7required to be licensed and units sold mounted on a motor
8vehicle required to be licensed if the selling price of the
9tender is separately stated.
10    Farm machinery and equipment shall include precision
11farming equipment that is installed or purchased to be
12installed on farm machinery and equipment including, but not
13limited to, tractors, harvesters, sprayers, planters, seeders,
14or spreaders. Precision farming equipment includes, but is not
15limited to, soil testing sensors, computers, monitors,
16software, global positioning and mapping systems, and other
17such equipment.
18    Farm machinery and equipment also includes computers,
19sensors, software, and related equipment used primarily in the
20computer-assisted operation of production agriculture
21facilities, equipment, and activities such as, but not limited
22to, the collection, monitoring, and correlation of animal and
23crop data for the purpose of formulating animal diets and
24agricultural chemicals. This item (7) is exempt from the
25provisions of Section 3-55.
26    (8) Until June 30, 2013, fuel and petroleum products sold

 

 

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1to or used by an air common carrier, certified by the carrier
2to be used for consumption, shipment, or storage in the conduct
3of its business as an air common carrier, for a flight destined
4for or returning from a location or locations outside the
5United States without regard to previous or subsequent domestic
6stopovers.
7    Beginning July 1, 2013, fuel and petroleum products sold to
8or used by an air carrier, certified by the carrier to be used
9for consumption, shipment, or storage in the conduct of its
10business as an air common carrier, for a flight that (i) is
11engaged in foreign trade or is engaged in trade between the
12United States and any of its possessions and (ii) transports at
13least one individual or package for hire from the city of
14origination to the city of final destination on the same
15aircraft, without regard to a change in the flight number of
16that aircraft.
17    (9) Proceeds of mandatory service charges separately
18stated on customers' bills for the purchase and consumption of
19food and beverages, to the extent that the proceeds of the
20service charge are in fact turned over as tips or as a
21substitute for tips to the employees who participate directly
22in preparing, serving, hosting or cleaning up the food or
23beverage function with respect to which the service charge is
24imposed.
25    (10) Until July 1, 2003, oil field exploration, drilling,
26and production equipment, including (i) rigs and parts of rigs,

 

 

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1rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
2tubular goods, including casing and drill strings, (iii) pumps
3and pump-jack units, (iv) storage tanks and flow lines, (v) any
4individual replacement part for oil field exploration,
5drilling, and production equipment, and (vi) machinery and
6equipment purchased for lease; but excluding motor vehicles
7required to be registered under the Illinois Vehicle Code.
8    (11) Photoprocessing machinery and equipment, including
9repair and replacement parts, both new and used, including that
10manufactured on special order, certified by the purchaser to be
11used primarily for photoprocessing, and including
12photoprocessing machinery and equipment purchased for lease.
13    (12) Coal and aggregate exploration, mining, off-highway
14hauling, processing, maintenance, and reclamation equipment,
15including replacement parts and equipment, and including
16equipment purchased for lease, but excluding motor vehicles
17required to be registered under the Illinois Vehicle Code. The
18changes made to this Section by Public Act 97-767 apply on and
19after July 1, 2003, but no claim for credit or refund is
20allowed on or after August 16, 2013 (the effective date of
21Public Act 98-456) for such taxes paid during the period
22beginning July 1, 2003 and ending on August 16, 2013 (the
23effective date of Public Act 98-456).
24    (13) Beginning January 1, 1992 and through June 30, 2016,
25food for human consumption that is to be consumed off the
26premises where it is sold (other than alcoholic beverages, soft

 

 

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1drinks and food that has been prepared for immediate
2consumption) and prescription and non-prescription medicines,
3drugs, medical appliances, and insulin, urine testing
4materials, syringes, and needles used by diabetics, for human
5use, when purchased for use by a person receiving medical
6assistance under Article V of the Illinois Public Aid Code who
7resides in a licensed long-term care facility, as defined in
8the Nursing Home Care Act, or in a licensed facility as defined
9in the ID/DD Community Care Act, the MC/DD Act, or the
10Specialized Mental Health Rehabilitation Act of 2013.
11    (14) Semen used for artificial insemination of livestock
12for direct agricultural production.
13    (15) Horses, or interests in horses, registered with and
14meeting the requirements of any of the Arabian Horse Club
15Registry of America, Appaloosa Horse Club, American Quarter
16Horse Association, United States Trotting Association, or
17Jockey Club, as appropriate, used for purposes of breeding or
18racing for prizes. This item (15) is exempt from the provisions
19of Section 3-55, and the exemption provided for under this item
20(15) applies for all periods beginning May 30, 1995, but no
21claim for credit or refund is allowed on or after January 1,
222008 (the effective date of Public Act 95-88) for such taxes
23paid during the period beginning May 30, 2000 and ending on
24January 1, 2008 (the effective date of Public Act 95-88).
25    (16) Computers and communications equipment utilized for
26any hospital purpose and equipment used in the diagnosis,

 

 

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1analysis, or treatment of hospital patients sold to a lessor
2who leases the equipment, under a lease of one year or longer
3executed or in effect at the time of the purchase, to a
4hospital that has been issued an active tax exemption
5identification number by the Department under Section 1g of the
6Retailers' Occupation Tax Act.
7    (17) Personal property sold to a lessor who leases the
8property, under a lease of one year or longer executed or in
9effect at the time of the purchase, to a governmental body that
10has been issued an active tax exemption identification number
11by the Department under Section 1g of the Retailers' Occupation
12Tax Act.
13    (18) Beginning with taxable years ending on or after
14December 31, 1995 and ending with taxable years ending on or
15before December 31, 2004, personal property that is donated for
16disaster relief to be used in a State or federally declared
17disaster area in Illinois or bordering Illinois by a
18manufacturer or retailer that is registered in this State to a
19corporation, society, association, foundation, or institution
20that has been issued a sales tax exemption identification
21number by the Department that assists victims of the disaster
22who reside within the declared disaster area.
23    (19) Beginning with taxable years ending on or after
24December 31, 1995 and ending with taxable years ending on or
25before December 31, 2004, personal property that is used in the
26performance of infrastructure repairs in this State, including

 

 

HB4696- 52 -LRB100 17148 HLH 32302 b

1but not limited to municipal roads and streets, access roads,
2bridges, sidewalks, waste disposal systems, water and sewer
3line extensions, water distribution and purification
4facilities, storm water drainage and retention facilities, and
5sewage treatment facilities, resulting from a State or
6federally declared disaster in Illinois or bordering Illinois
7when such repairs are initiated on facilities located in the
8declared disaster area within 6 months after the disaster.
9    (20) Beginning July 1, 1999, game or game birds sold at a
10"game breeding and hunting preserve area" as that term is used
11in the Wildlife Code. This paragraph is exempt from the
12provisions of Section 3-55.
13    (21) A motor vehicle, as that term is defined in Section
141-146 of the Illinois Vehicle Code, that is donated to a
15corporation, limited liability company, society, association,
16foundation, or institution that is determined by the Department
17to be organized and operated exclusively for educational
18purposes. For purposes of this exemption, "a corporation,
19limited liability company, society, association, foundation,
20or institution organized and operated exclusively for
21educational purposes" means all tax-supported public schools,
22private schools that offer systematic instruction in useful
23branches of learning by methods common to public schools and
24that compare favorably in their scope and intensity with the
25course of study presented in tax-supported schools, and
26vocational or technical schools or institutes organized and

 

 

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1operated exclusively to provide a course of study of not less
2than 6 weeks duration and designed to prepare individuals to
3follow a trade or to pursue a manual, technical, mechanical,
4industrial, business, or commercial occupation.
5    (22) Beginning January 1, 2000, personal property,
6including food, purchased through fundraising events for the
7benefit of a public or private elementary or secondary school,
8a group of those schools, or one or more school districts if
9the events are sponsored by an entity recognized by the school
10district that consists primarily of volunteers and includes
11parents and teachers of the school children. This paragraph
12does not apply to fundraising events (i) for the benefit of
13private home instruction or (ii) for which the fundraising
14entity purchases the personal property sold at the events from
15another individual or entity that sold the property for the
16purpose of resale by the fundraising entity and that profits
17from the sale to the fundraising entity. This paragraph is
18exempt from the provisions of Section 3-55.
19    (23) Beginning January 1, 2000 and through December 31,
202001, new or used automatic vending machines that prepare and
21serve hot food and beverages, including coffee, soup, and other
22items, and replacement parts for these machines. Beginning
23January 1, 2002 and through June 30, 2003, machines and parts
24for machines used in commercial, coin-operated amusement and
25vending business if a use or occupation tax is paid on the
26gross receipts derived from the use of the commercial,

 

 

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1coin-operated amusement and vending machines. This paragraph
2is exempt from the provisions of Section 3-55.
3    (24) Beginning on the effective date of this amendatory Act
4of the 92nd General Assembly, computers and communications
5equipment utilized for any hospital purpose and equipment used
6in the diagnosis, analysis, or treatment of hospital patients
7sold to a lessor who leases the equipment, under a lease of one
8year or longer executed or in effect at the time of the
9purchase, to a hospital that has been issued an active tax
10exemption identification number by the Department under
11Section 1g of the Retailers' Occupation Tax Act. This paragraph
12is exempt from the provisions of Section 3-55.
13    (25) Beginning on the effective date of this amendatory Act
14of the 92nd General Assembly, personal property sold to a
15lessor who leases the property, under a lease of one year or
16longer executed or in effect at the time of the purchase, to a
17governmental body that has been issued an active tax exemption
18identification number by the Department under Section 1g of the
19Retailers' Occupation Tax Act. This paragraph is exempt from
20the provisions of Section 3-55.
21    (26) Beginning on January 1, 2002 and through June 30,
222016, tangible personal property purchased from an Illinois
23retailer by a taxpayer engaged in centralized purchasing
24activities in Illinois who will, upon receipt of the property
25in Illinois, temporarily store the property in Illinois (i) for
26the purpose of subsequently transporting it outside this State

 

 

HB4696- 55 -LRB100 17148 HLH 32302 b

1for use or consumption thereafter solely outside this State or
2(ii) for the purpose of being processed, fabricated, or
3manufactured into, attached to, or incorporated into other
4tangible personal property to be transported outside this State
5and thereafter used or consumed solely outside this State. The
6Director of Revenue shall, pursuant to rules adopted in
7accordance with the Illinois Administrative Procedure Act,
8issue a permit to any taxpayer in good standing with the
9Department who is eligible for the exemption under this
10paragraph (26). The permit issued under this paragraph (26)
11shall authorize the holder, to the extent and in the manner
12specified in the rules adopted under this Act, to purchase
13tangible personal property from a retailer exempt from the
14taxes imposed by this Act. Taxpayers shall maintain all
15necessary books and records to substantiate the use and
16consumption of all such tangible personal property outside of
17the State of Illinois.
18    (27) Beginning January 1, 2008, tangible personal property
19used in the construction or maintenance of a community water
20supply, as defined under Section 3.145 of the Environmental
21Protection Act, that is operated by a not-for-profit
22corporation that holds a valid water supply permit issued under
23Title IV of the Environmental Protection Act. This paragraph is
24exempt from the provisions of Section 3-55.
25    (28) Tangible personal property sold to a
26public-facilities corporation, as described in Section

 

 

HB4696- 56 -LRB100 17148 HLH 32302 b

111-65-10 of the Illinois Municipal Code, for purposes of
2constructing or furnishing a municipal convention hall, but
3only if the legal title to the municipal convention hall is
4transferred to the municipality without any further
5consideration by or on behalf of the municipality at the time
6of the completion of the municipal convention hall or upon the
7retirement or redemption of any bonds or other debt instruments
8issued by the public-facilities corporation in connection with
9the development of the municipal convention hall. This
10exemption includes existing public-facilities corporations as
11provided in Section 11-65-25 of the Illinois Municipal Code.
12This paragraph is exempt from the provisions of Section 3-55.
13    (29) Beginning January 1, 2010, materials, parts,
14equipment, components, and furnishings incorporated into or
15upon an aircraft as part of the modification, refurbishment,
16completion, replacement, repair, or maintenance of the
17aircraft. This exemption includes consumable supplies used in
18the modification, refurbishment, completion, replacement,
19repair, and maintenance of aircraft, but excludes any
20materials, parts, equipment, components, and consumable
21supplies used in the modification, replacement, repair, and
22maintenance of aircraft engines or power plants, whether such
23engines or power plants are installed or uninstalled upon any
24such aircraft. "Consumable supplies" include, but are not
25limited to, adhesive, tape, sandpaper, general purpose
26lubricants, cleaning solution, latex gloves, and protective

 

 

HB4696- 57 -LRB100 17148 HLH 32302 b

1films. This exemption applies only to the transfer of
2qualifying tangible personal property incident to the
3modification, refurbishment, completion, replacement, repair,
4or maintenance of an aircraft by persons who (i) hold an Air
5Agency Certificate and are empowered to operate an approved
6repair station by the Federal Aviation Administration, (ii)
7have a Class IV Rating, and (iii) conduct operations in
8accordance with Part 145 of the Federal Aviation Regulations.
9The exemption does not include aircraft operated by a
10commercial air carrier providing scheduled passenger air
11service pursuant to authority issued under Part 121 or Part 129
12of the Federal Aviation Regulations. The changes made to this
13paragraph (29) by Public Act 98-534 are declarative of existing
14law.
15    (30) Beginning January 1, 2017, menstrual pads, tampons,
16and menstrual cups.
17    (31) Beginning January 1, 2019, prescription medicines and
18prescription drugs. This paragraph is exempt from the
19provisions of Section 3-55.
20(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
21100-22, eff. 7-6-17.)
 
22    (35 ILCS 115/3-10)  (from Ch. 120, par. 439.103-10)
23    Sec. 3-10. Rate of tax. Unless otherwise provided in this
24Section, the tax imposed by this Act is at the rate of 6.25% of
25the "selling price", as defined in Section 2 of the Service Use

 

 

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1Tax Act, of the tangible personal property. For the purpose of
2computing this tax, in no event shall the "selling price" be
3less than the cost price to the serviceman of the tangible
4personal property transferred. The selling price of each item
5of tangible personal property transferred as an incident of a
6sale of service may be shown as a distinct and separate item on
7the serviceman's billing to the service customer. If the
8selling price is not so shown, the selling price of the
9tangible personal property is deemed to be 50% of the
10serviceman's entire billing to the service customer. When,
11however, a serviceman contracts to design, develop, and produce
12special order machinery or equipment, the tax imposed by this
13Act shall be based on the serviceman's cost price of the
14tangible personal property transferred incident to the
15completion of the contract.
16    Beginning on July 1, 2000 and through December 31, 2000,
17with respect to motor fuel, as defined in Section 1.1 of the
18Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
19the Use Tax Act, the tax is imposed at the rate of 1.25%.
20    With respect to gasohol, as defined in the Use Tax Act, the
21tax imposed by this Act shall apply to (i) 70% of the cost
22price of property transferred as an incident to the sale of
23service on or after January 1, 1990, and before July 1, 2003,
24(ii) 80% of the selling price of property transferred as an
25incident to the sale of service on or after July 1, 2003 and on
26or before July 1, 2017, and (iii) 100% of the cost price

 

 

HB4696- 59 -LRB100 17148 HLH 32302 b

1thereafter. If, at any time, however, the tax under this Act on
2sales of gasohol, as defined in the Use Tax Act, is imposed at
3the rate of 1.25%, then the tax imposed by this Act applies to
4100% of the proceeds of sales of gasohol made during that time.
5    With respect to majority blended ethanol fuel, as defined
6in the Use Tax Act, the tax imposed by this Act does not apply
7to the selling price of property transferred as an incident to
8the sale of service on or after July 1, 2003 and on or before
9December 31, 2023 but applies to 100% of the selling price
10thereafter.
11    With respect to biodiesel blends, as defined in the Use Tax
12Act, with no less than 1% and no more than 10% biodiesel, the
13tax imposed by this Act applies to (i) 80% of the selling price
14of property transferred as an incident to the sale of service
15on or after July 1, 2003 and on or before December 31, 2018 and
16(ii) 100% of the proceeds of the selling price thereafter. If,
17at any time, however, the tax under this Act on sales of
18biodiesel blends, as defined in the Use Tax Act, with no less
19than 1% and no more than 10% biodiesel is imposed at the rate
20of 1.25%, then the tax imposed by this Act applies to 100% of
21the proceeds of sales of biodiesel blends with no less than 1%
22and no more than 10% biodiesel made during that time.
23    With respect to 100% biodiesel, as defined in the Use Tax
24Act, and biodiesel blends, as defined in the Use Tax Act, with
25more than 10% but no more than 99% biodiesel material, the tax
26imposed by this Act does not apply to the proceeds of the

 

 

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1selling price of property transferred as an incident to the
2sale of service on or after July 1, 2003 and on or before
3December 31, 2023 but applies to 100% of the selling price
4thereafter.
5    At the election of any registered serviceman made for each
6fiscal year, sales of service in which the aggregate annual
7cost price of tangible personal property transferred as an
8incident to the sales of service is less than 35%, or 75% in
9the case of servicemen transferring prescription drugs or
10servicemen engaged in graphic arts production, of the aggregate
11annual total gross receipts from all sales of service, the tax
12imposed by this Act shall be based on the serviceman's cost
13price of the tangible personal property transferred incident to
14the sale of those services.
15    The tax shall be imposed at the rate of 1% on food prepared
16for immediate consumption and transferred incident to a sale of
17service subject to this Act or the Service Occupation Tax Act
18by an entity licensed under the Hospital Licensing Act, the
19Nursing Home Care Act, the ID/DD Community Care Act, the MC/DD
20Act, the Specialized Mental Health Rehabilitation Act of 2013,
21or the Child Care Act of 1969. The tax shall also be imposed at
22the rate of 1% on food for human consumption that is to be
23consumed off the premises where it is sold (other than
24alcoholic beverages, soft drinks, and food that has been
25prepared for immediate consumption and is not otherwise
26included in this paragraph) and prescription and

 

 

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1nonprescription medicines, drugs, medical appliances, products
2classified as Class III medical devices by the United States
3Food and Drug Administration that are used for cancer treatment
4pursuant to a prescription, as well as any accessories and
5components related to those devices, modifications to a motor
6vehicle for the purpose of rendering it usable by a person with
7a disability, and insulin, urine testing materials, syringes,
8and needles used by diabetics, for human use; provided that,
9beginning on January 1, 2019, no tax shall be imposed on
10prescription medicines or prescription drugs. For the purposes
11of this Section, until September 1, 2009: the term "soft
12drinks" means any complete, finished, ready-to-use,
13non-alcoholic drink, whether carbonated or not, including but
14not limited to soda water, cola, fruit juice, vegetable juice,
15carbonated water, and all other preparations commonly known as
16soft drinks of whatever kind or description that are contained
17in any closed or sealed can, carton, or container, regardless
18of size; but "soft drinks" does not include coffee, tea,
19non-carbonated water, infant formula, milk or milk products as
20defined in the Grade A Pasteurized Milk and Milk Products Act,
21or drinks containing 50% or more natural fruit or vegetable
22juice.
23    Notwithstanding any other provisions of this Act,
24beginning September 1, 2009, "soft drinks" means non-alcoholic
25beverages that contain natural or artificial sweeteners. "Soft
26drinks" do not include beverages that contain milk or milk

 

 

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1products, soy, rice or similar milk substitutes, or greater
2than 50% of vegetable or fruit juice by volume.
3    Until August 1, 2009, and notwithstanding any other
4provisions of this Act, "food for human consumption that is to
5be consumed off the premises where it is sold" includes all
6food sold through a vending machine, except soft drinks and
7food products that are dispensed hot from a vending machine,
8regardless of the location of the vending machine. Beginning
9August 1, 2009, and notwithstanding any other provisions of
10this Act, "food for human consumption that is to be consumed
11off the premises where it is sold" includes all food sold
12through a vending machine, except soft drinks, candy, and food
13products that are dispensed hot from a vending machine,
14regardless of the location of the vending machine.
15    Notwithstanding any other provisions of this Act,
16beginning September 1, 2009, "food for human consumption that
17is to be consumed off the premises where it is sold" does not
18include candy. For purposes of this Section, "candy" means a
19preparation of sugar, honey, or other natural or artificial
20sweeteners in combination with chocolate, fruits, nuts or other
21ingredients or flavorings in the form of bars, drops, or
22pieces. "Candy" does not include any preparation that contains
23flour or requires refrigeration.
24    Notwithstanding any other provisions of this Act,
25beginning September 1, 2009, "nonprescription medicines and
26drugs" does not include grooming and hygiene products. For

 

 

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1purposes of this Section, "grooming and hygiene products"
2includes, but is not limited to, soaps and cleaning solutions,
3shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
4lotions and screens, unless those products are available by
5prescription only, regardless of whether the products meet the
6definition of "over-the-counter-drugs". For the purposes of
7this paragraph, "over-the-counter-drug" means a drug for human
8use that contains a label that identifies the product as a drug
9as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
10label includes:
11        (A) A "Drug Facts" panel; or
12        (B) A statement of the "active ingredient(s)" with a
13    list of those ingredients contained in the compound,
14    substance or preparation.
15    Beginning on January 1, 2014 (the effective date of Public
16Act 98-122), "prescription and nonprescription medicines and
17drugs" includes medical cannabis purchased from a registered
18dispensing organization under the Compassionate Use of Medical
19Cannabis Pilot Program Act.
20(Source: P.A. 99-143, eff. 7-27-15; 99-180, eff. 7-29-15;
2199-642, eff. 7-28-16; 99-858, eff. 8-19-16; 100-22, eff.
227-6-17.)
 
23    Section 20. The Retailers' Occupation Tax Act is amended by
24changing Sections 2-5 and 2-10 as follows:
 

 

 

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1    (35 ILCS 120/2-5)
2    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
3sale of the following tangible personal property are exempt
4from the tax imposed by this Act:
5        (1) Farm chemicals.
6        (2) Farm machinery and equipment, both new and used,
7    including that manufactured on special order, certified by
8    the purchaser to be used primarily for production
9    agriculture or State or federal agricultural programs,
10    including individual replacement parts for the machinery
11    and equipment, including machinery and equipment purchased
12    for lease, and including implements of husbandry defined in
13    Section 1-130 of the Illinois Vehicle Code, farm machinery
14    and agricultural chemical and fertilizer spreaders, and
15    nurse wagons required to be registered under Section 3-809
16    of the Illinois Vehicle Code, but excluding other motor
17    vehicles required to be registered under the Illinois
18    Vehicle Code. Horticultural polyhouses or hoop houses used
19    for propagating, growing, or overwintering plants shall be
20    considered farm machinery and equipment under this item
21    (2). Agricultural chemical tender tanks and dry boxes shall
22    include units sold separately from a motor vehicle required
23    to be licensed and units sold mounted on a motor vehicle
24    required to be licensed, if the selling price of the tender
25    is separately stated.
26        Farm machinery and equipment shall include precision

 

 

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1    farming equipment that is installed or purchased to be
2    installed on farm machinery and equipment including, but
3    not limited to, tractors, harvesters, sprayers, planters,
4    seeders, or spreaders. Precision farming equipment
5    includes, but is not limited to, soil testing sensors,
6    computers, monitors, software, global positioning and
7    mapping systems, and other such equipment.
8        Farm machinery and equipment also includes computers,
9    sensors, software, and related equipment used primarily in
10    the computer-assisted operation of production agriculture
11    facilities, equipment, and activities such as, but not
12    limited to, the collection, monitoring, and correlation of
13    animal and crop data for the purpose of formulating animal
14    diets and agricultural chemicals. This item (2) is exempt
15    from the provisions of Section 2-70.
16        (3) Until July 1, 2003, distillation machinery and
17    equipment, sold as a unit or kit, assembled or installed by
18    the retailer, certified by the user to be used only for the
19    production of ethyl alcohol that will be used for
20    consumption as motor fuel or as a component of motor fuel
21    for the personal use of the user, and not subject to sale
22    or resale.
23        (4) Until July 1, 2003 and beginning again September 1,
24    2004 through August 30, 2014, graphic arts machinery and
25    equipment, including repair and replacement parts, both
26    new and used, and including that manufactured on special

 

 

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1    order or purchased for lease, certified by the purchaser to
2    be used primarily for graphic arts production. Equipment
3    includes chemicals or chemicals acting as catalysts but
4    only if the chemicals or chemicals acting as catalysts
5    effect a direct and immediate change upon a graphic arts
6    product. Beginning on July 1, 2017, graphic arts machinery
7    and equipment is included in the manufacturing and
8    assembling machinery and equipment exemption under
9    paragraph (14).
10        (5) A motor vehicle that is used for automobile
11    renting, as defined in the Automobile Renting Occupation
12    and Use Tax Act. This paragraph is exempt from the
13    provisions of Section 2-70.
14        (6) Personal property sold by a teacher-sponsored
15    student organization affiliated with an elementary or
16    secondary school located in Illinois.
17        (7) Until July 1, 2003, proceeds of that portion of the
18    selling price of a passenger car the sale of which is
19    subject to the Replacement Vehicle Tax.
20        (8) Personal property sold to an Illinois county fair
21    association for use in conducting, operating, or promoting
22    the county fair.
23        (9) Personal property sold to a not-for-profit arts or
24    cultural organization that establishes, by proof required
25    by the Department by rule, that it has received an
26    exemption under Section 501(c)(3) of the Internal Revenue

 

 

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1    Code and that is organized and operated primarily for the
2    presentation or support of arts or cultural programming,
3    activities, or services. These organizations include, but
4    are not limited to, music and dramatic arts organizations
5    such as symphony orchestras and theatrical groups, arts and
6    cultural service organizations, local arts councils,
7    visual arts organizations, and media arts organizations.
8    On and after July 1, 2001 (the effective date of Public Act
9    92-35) this amendatory Act of the 92nd General Assembly,
10    however, an entity otherwise eligible for this exemption
11    shall not make tax-free purchases unless it has an active
12    identification number issued by the Department.
13        (10) Personal property sold by a corporation, society,
14    association, foundation, institution, or organization,
15    other than a limited liability company, that is organized
16    and operated as a not-for-profit service enterprise for the
17    benefit of persons 65 years of age or older if the personal
18    property was not purchased by the enterprise for the
19    purpose of resale by the enterprise.
20        (11) Personal property sold to a governmental body, to
21    a corporation, society, association, foundation, or
22    institution organized and operated exclusively for
23    charitable, religious, or educational purposes, or to a
24    not-for-profit corporation, society, association,
25    foundation, institution, or organization that has no
26    compensated officers or employees and that is organized and

 

 

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1    operated primarily for the recreation of persons 55 years
2    of age or older. A limited liability company may qualify
3    for the exemption under this paragraph only if the limited
4    liability company is organized and operated exclusively
5    for educational purposes. On and after July 1, 1987,
6    however, no entity otherwise eligible for this exemption
7    shall make tax-free purchases unless it has an active
8    identification number issued by the Department.
9        (12) (Blank).
10        (12-5) On and after July 1, 2003 and through June 30,
11    2004, motor vehicles of the second division with a gross
12    vehicle weight in excess of 8,000 pounds that are subject
13    to the commercial distribution fee imposed under Section
14    3-815.1 of the Illinois Vehicle Code. Beginning on July 1,
15    2004 and through June 30, 2005, the use in this State of
16    motor vehicles of the second division: (i) with a gross
17    vehicle weight rating in excess of 8,000 pounds; (ii) that
18    are subject to the commercial distribution fee imposed
19    under Section 3-815.1 of the Illinois Vehicle Code; and
20    (iii) that are primarily used for commercial purposes.
21    Through June 30, 2005, this exemption applies to repair and
22    replacement parts added after the initial purchase of such
23    a motor vehicle if that motor vehicle is used in a manner
24    that would qualify for the rolling stock exemption
25    otherwise provided for in this Act. For purposes of this
26    paragraph, "used for commercial purposes" means the

 

 

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1    transportation of persons or property in furtherance of any
2    commercial or industrial enterprise whether for-hire or
3    not.
4        (13) Proceeds from sales to owners, lessors, or
5    shippers of tangible personal property that is utilized by
6    interstate carriers for hire for use as rolling stock
7    moving in interstate commerce and equipment operated by a
8    telecommunications provider, licensed as a common carrier
9    by the Federal Communications Commission, which is
10    permanently installed in or affixed to aircraft moving in
11    interstate commerce.
12        (14) Machinery and equipment that will be used by the
13    purchaser, or a lessee of the purchaser, primarily in the
14    process of manufacturing or assembling tangible personal
15    property for wholesale or retail sale or lease, whether the
16    sale or lease is made directly by the manufacturer or by
17    some other person, whether the materials used in the
18    process are owned by the manufacturer or some other person,
19    or whether the sale or lease is made apart from or as an
20    incident to the seller's engaging in the service occupation
21    of producing machines, tools, dies, jigs, patterns,
22    gauges, or other similar items of no commercial value on
23    special order for a particular purchaser. The exemption
24    provided by this paragraph (14) does not include machinery
25    and equipment used in (i) the generation of electricity for
26    wholesale or retail sale; (ii) the generation or treatment

 

 

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1    of natural or artificial gas for wholesale or retail sale
2    that is delivered to customers through pipes, pipelines, or
3    mains; or (iii) the treatment of water for wholesale or
4    retail sale that is delivered to customers through pipes,
5    pipelines, or mains. The provisions of Public Act 98-583
6    are declaratory of existing law as to the meaning and scope
7    of this exemption. Beginning on July 1, 2017, the exemption
8    provided by this paragraph (14) includes, but is not
9    limited to, graphic arts machinery and equipment, as
10    defined in paragraph (4) of this Section.
11        (15) Proceeds of mandatory service charges separately
12    stated on customers' bills for purchase and consumption of
13    food and beverages, to the extent that the proceeds of the
14    service charge are in fact turned over as tips or as a
15    substitute for tips to the employees who participate
16    directly in preparing, serving, hosting or cleaning up the
17    food or beverage function with respect to which the service
18    charge is imposed.
19        (16) Petroleum products sold to a purchaser if the
20    seller is prohibited by federal law from charging tax to
21    the purchaser.
22        (17) Tangible personal property sold to a common
23    carrier by rail or motor that receives the physical
24    possession of the property in Illinois and that transports
25    the property, or shares with another common carrier in the
26    transportation of the property, out of Illinois on a

 

 

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1    standard uniform bill of lading showing the seller of the
2    property as the shipper or consignor of the property to a
3    destination outside Illinois, for use outside Illinois.
4        (18) Legal tender, currency, medallions, or gold or
5    silver coinage issued by the State of Illinois, the
6    government of the United States of America, or the
7    government of any foreign country, and bullion.
8        (19) Until July 1, 2003, oil field exploration,
9    drilling, and production equipment, including (i) rigs and
10    parts of rigs, rotary rigs, cable tool rigs, and workover
11    rigs, (ii) pipe and tubular goods, including casing and
12    drill strings, (iii) pumps and pump-jack units, (iv)
13    storage tanks and flow lines, (v) any individual
14    replacement part for oil field exploration, drilling, and
15    production equipment, and (vi) machinery and equipment
16    purchased for lease; but excluding motor vehicles required
17    to be registered under the Illinois Vehicle Code.
18        (20) Photoprocessing machinery and equipment,
19    including repair and replacement parts, both new and used,
20    including that manufactured on special order, certified by
21    the purchaser to be used primarily for photoprocessing, and
22    including photoprocessing machinery and equipment
23    purchased for lease.
24        (21) Coal and aggregate exploration, mining,
25    off-highway hauling, processing, maintenance, and
26    reclamation equipment, including replacement parts and

 

 

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1    equipment, and including equipment purchased for lease,
2    but excluding motor vehicles required to be registered
3    under the Illinois Vehicle Code. The changes made to this
4    Section by Public Act 97-767 apply on and after July 1,
5    2003, but no claim for credit or refund is allowed on or
6    after August 16, 2013 (the effective date of Public Act
7    98-456) for such taxes paid during the period beginning
8    July 1, 2003 and ending on August 16, 2013 (the effective
9    date of Public Act 98-456).
10        (22) Until June 30, 2013, fuel and petroleum products
11    sold to or used by an air carrier, certified by the carrier
12    to be used for consumption, shipment, or storage in the
13    conduct of its business as an air common carrier, for a
14    flight destined for or returning from a location or
15    locations outside the United States without regard to
16    previous or subsequent domestic stopovers.
17        Beginning July 1, 2013, fuel and petroleum products
18    sold to or used by an air carrier, certified by the carrier
19    to be used for consumption, shipment, or storage in the
20    conduct of its business as an air common carrier, for a
21    flight that (i) is engaged in foreign trade or is engaged
22    in trade between the United States and any of its
23    possessions and (ii) transports at least one individual or
24    package for hire from the city of origination to the city
25    of final destination on the same aircraft, without regard
26    to a change in the flight number of that aircraft.

 

 

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1        (23) A transaction in which the purchase order is
2    received by a florist who is located outside Illinois, but
3    who has a florist located in Illinois deliver the property
4    to the purchaser or the purchaser's donee in Illinois.
5        (24) Fuel consumed or used in the operation of ships,
6    barges, or vessels that are used primarily in or for the
7    transportation of property or the conveyance of persons for
8    hire on rivers bordering on this State if the fuel is
9    delivered by the seller to the purchaser's barge, ship, or
10    vessel while it is afloat upon that bordering river.
11        (25) Except as provided in item (25-5) of this Section,
12    a motor vehicle sold in this State to a nonresident even
13    though the motor vehicle is delivered to the nonresident in
14    this State, if the motor vehicle is not to be titled in
15    this State, and if a drive-away permit is issued to the
16    motor vehicle as provided in Section 3-603 of the Illinois
17    Vehicle Code or if the nonresident purchaser has vehicle
18    registration plates to transfer to the motor vehicle upon
19    returning to his or her home state. The issuance of the
20    drive-away permit or having the out-of-state registration
21    plates to be transferred is prima facie evidence that the
22    motor vehicle will not be titled in this State.
23        (25-5) The exemption under item (25) does not apply if
24    the state in which the motor vehicle will be titled does
25    not allow a reciprocal exemption for a motor vehicle sold
26    and delivered in that state to an Illinois resident but

 

 

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1    titled in Illinois. The tax collected under this Act on the
2    sale of a motor vehicle in this State to a resident of
3    another state that does not allow a reciprocal exemption
4    shall be imposed at a rate equal to the state's rate of tax
5    on taxable property in the state in which the purchaser is
6    a resident, except that the tax shall not exceed the tax
7    that would otherwise be imposed under this Act. At the time
8    of the sale, the purchaser shall execute a statement,
9    signed under penalty of perjury, of his or her intent to
10    title the vehicle in the state in which the purchaser is a
11    resident within 30 days after the sale and of the fact of
12    the payment to the State of Illinois of tax in an amount
13    equivalent to the state's rate of tax on taxable property
14    in his or her state of residence and shall submit the
15    statement to the appropriate tax collection agency in his
16    or her state of residence. In addition, the retailer must
17    retain a signed copy of the statement in his or her
18    records. Nothing in this item shall be construed to require
19    the removal of the vehicle from this state following the
20    filing of an intent to title the vehicle in the purchaser's
21    state of residence if the purchaser titles the vehicle in
22    his or her state of residence within 30 days after the date
23    of sale. The tax collected under this Act in accordance
24    with this item (25-5) shall be proportionately distributed
25    as if the tax were collected at the 6.25% general rate
26    imposed under this Act.

 

 

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1        (25-7) Beginning on July 1, 2007, no tax is imposed
2    under this Act on the sale of an aircraft, as defined in
3    Section 3 of the Illinois Aeronautics Act, if all of the
4    following conditions are met:
5            (1) the aircraft leaves this State within 15 days
6        after the later of either the issuance of the final
7        billing for the sale of the aircraft, or the authorized
8        approval for return to service, completion of the
9        maintenance record entry, and completion of the test
10        flight and ground test for inspection, as required by
11        14 C.F.R. 91.407;
12            (2) the aircraft is not based or registered in this
13        State after the sale of the aircraft; and
14            (3) the seller retains in his or her books and
15        records and provides to the Department a signed and
16        dated certification from the purchaser, on a form
17        prescribed by the Department, certifying that the
18        requirements of this item (25-7) are met. The
19        certificate must also include the name and address of
20        the purchaser, the address of the location where the
21        aircraft is to be titled or registered, the address of
22        the primary physical location of the aircraft, and
23        other information that the Department may reasonably
24        require.
25        For purposes of this item (25-7):
26        "Based in this State" means hangared, stored, or

 

 

HB4696- 76 -LRB100 17148 HLH 32302 b

1    otherwise used, excluding post-sale customizations as
2    defined in this Section, for 10 or more days in each
3    12-month period immediately following the date of the sale
4    of the aircraft.
5        "Registered in this State" means an aircraft
6    registered with the Department of Transportation,
7    Aeronautics Division, or titled or registered with the
8    Federal Aviation Administration to an address located in
9    this State.
10        This paragraph (25-7) is exempt from the provisions of
11    Section 2-70.
12        (26) Semen used for artificial insemination of
13    livestock for direct agricultural production.
14        (27) Horses, or interests in horses, registered with
15    and meeting the requirements of any of the Arabian Horse
16    Club Registry of America, Appaloosa Horse Club, American
17    Quarter Horse Association, United States Trotting
18    Association, or Jockey Club, as appropriate, used for
19    purposes of breeding or racing for prizes. This item (27)
20    is exempt from the provisions of Section 2-70, and the
21    exemption provided for under this item (27) applies for all
22    periods beginning May 30, 1995, but no claim for credit or
23    refund is allowed on or after January 1, 2008 (the
24    effective date of Public Act 95-88) for such taxes paid
25    during the period beginning May 30, 2000 and ending on
26    January 1, 2008 (the effective date of Public Act 95-88).

 

 

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1        (28) Computers and communications equipment utilized
2    for any hospital purpose and equipment used in the
3    diagnosis, analysis, or treatment of hospital patients
4    sold to a lessor who leases the equipment, under a lease of
5    one year or longer executed or in effect at the time of the
6    purchase, to a hospital that has been issued an active tax
7    exemption identification number by the Department under
8    Section 1g of this Act.
9        (29) Personal property sold to a lessor who leases the
10    property, under a lease of one year or longer executed or
11    in effect at the time of the purchase, to a governmental
12    body that has been issued an active tax exemption
13    identification number by the Department under Section 1g of
14    this Act.
15        (30) Beginning with taxable years ending on or after
16    December 31, 1995 and ending with taxable years ending on
17    or before December 31, 2004, personal property that is
18    donated for disaster relief to be used in a State or
19    federally declared disaster area in Illinois or bordering
20    Illinois by a manufacturer or retailer that is registered
21    in this State to a corporation, society, association,
22    foundation, or institution that has been issued a sales tax
23    exemption identification number by the Department that
24    assists victims of the disaster who reside within the
25    declared disaster area.
26        (31) Beginning with taxable years ending on or after

 

 

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1    December 31, 1995 and ending with taxable years ending on
2    or before December 31, 2004, personal property that is used
3    in the performance of infrastructure repairs in this State,
4    including but not limited to municipal roads and streets,
5    access roads, bridges, sidewalks, waste disposal systems,
6    water and sewer line extensions, water distribution and
7    purification facilities, storm water drainage and
8    retention facilities, and sewage treatment facilities,
9    resulting from a State or federally declared disaster in
10    Illinois or bordering Illinois when such repairs are
11    initiated on facilities located in the declared disaster
12    area within 6 months after the disaster.
13        (32) Beginning July 1, 1999, game or game birds sold at
14    a "game breeding and hunting preserve area" as that term is
15    used in the Wildlife Code. This paragraph is exempt from
16    the provisions of Section 2-70.
17        (33) A motor vehicle, as that term is defined in
18    Section 1-146 of the Illinois Vehicle Code, that is donated
19    to a corporation, limited liability company, society,
20    association, foundation, or institution that is determined
21    by the Department to be organized and operated exclusively
22    for educational purposes. For purposes of this exemption,
23    "a corporation, limited liability company, society,
24    association, foundation, or institution organized and
25    operated exclusively for educational purposes" means all
26    tax-supported public schools, private schools that offer

 

 

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1    systematic instruction in useful branches of learning by
2    methods common to public schools and that compare favorably
3    in their scope and intensity with the course of study
4    presented in tax-supported schools, and vocational or
5    technical schools or institutes organized and operated
6    exclusively to provide a course of study of not less than 6
7    weeks duration and designed to prepare individuals to
8    follow a trade or to pursue a manual, technical,
9    mechanical, industrial, business, or commercial
10    occupation.
11        (34) Beginning January 1, 2000, personal property,
12    including food, purchased through fundraising events for
13    the benefit of a public or private elementary or secondary
14    school, a group of those schools, or one or more school
15    districts if the events are sponsored by an entity
16    recognized by the school district that consists primarily
17    of volunteers and includes parents and teachers of the
18    school children. This paragraph does not apply to
19    fundraising events (i) for the benefit of private home
20    instruction or (ii) for which the fundraising entity
21    purchases the personal property sold at the events from
22    another individual or entity that sold the property for the
23    purpose of resale by the fundraising entity and that
24    profits from the sale to the fundraising entity. This
25    paragraph is exempt from the provisions of Section 2-70.
26        (35) Beginning January 1, 2000 and through December 31,

 

 

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1    2001, new or used automatic vending machines that prepare
2    and serve hot food and beverages, including coffee, soup,
3    and other items, and replacement parts for these machines.
4    Beginning January 1, 2002 and through June 30, 2003,
5    machines and parts for machines used in commercial,
6    coin-operated amusement and vending business if a use or
7    occupation tax is paid on the gross receipts derived from
8    the use of the commercial, coin-operated amusement and
9    vending machines. This paragraph is exempt from the
10    provisions of Section 2-70.
11        (35-5) Beginning August 23, 2001 and through June 30,
12    2016, food for human consumption that is to be consumed off
13    the premises where it is sold (other than alcoholic
14    beverages, soft drinks, and food that has been prepared for
15    immediate consumption) and prescription and
16    nonprescription medicines, drugs, medical appliances, and
17    insulin, urine testing materials, syringes, and needles
18    used by diabetics, for human use, when purchased for use by
19    a person receiving medical assistance under Article V of
20    the Illinois Public Aid Code who resides in a licensed
21    long-term care facility, as defined in the Nursing Home
22    Care Act, or a licensed facility as defined in the ID/DD
23    Community Care Act, the MC/DD Act, or the Specialized
24    Mental Health Rehabilitation Act of 2013.
25        (36) Beginning August 2, 2001, computers and
26    communications equipment utilized for any hospital purpose

 

 

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1    and equipment used in the diagnosis, analysis, or treatment
2    of hospital patients sold to a lessor who leases the
3    equipment, under a lease of one year or longer executed or
4    in effect at the time of the purchase, to a hospital that
5    has been issued an active tax exemption identification
6    number by the Department under Section 1g of this Act. This
7    paragraph is exempt from the provisions of Section 2-70.
8        (37) Beginning August 2, 2001, personal property sold
9    to a lessor who leases the property, under a lease of one
10    year or longer executed or in effect at the time of the
11    purchase, to a governmental body that has been issued an
12    active tax exemption identification number by the
13    Department under Section 1g of this Act. This paragraph is
14    exempt from the provisions of Section 2-70.
15        (38) Beginning on January 1, 2002 and through June 30,
16    2016, tangible personal property purchased from an
17    Illinois retailer by a taxpayer engaged in centralized
18    purchasing activities in Illinois who will, upon receipt of
19    the property in Illinois, temporarily store the property in
20    Illinois (i) for the purpose of subsequently transporting
21    it outside this State for use or consumption thereafter
22    solely outside this State or (ii) for the purpose of being
23    processed, fabricated, or manufactured into, attached to,
24    or incorporated into other tangible personal property to be
25    transported outside this State and thereafter used or
26    consumed solely outside this State. The Director of Revenue

 

 

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1    shall, pursuant to rules adopted in accordance with the
2    Illinois Administrative Procedure Act, issue a permit to
3    any taxpayer in good standing with the Department who is
4    eligible for the exemption under this paragraph (38). The
5    permit issued under this paragraph (38) shall authorize the
6    holder, to the extent and in the manner specified in the
7    rules adopted under this Act, to purchase tangible personal
8    property from a retailer exempt from the taxes imposed by
9    this Act. Taxpayers shall maintain all necessary books and
10    records to substantiate the use and consumption of all such
11    tangible personal property outside of the State of
12    Illinois.
13        (39) Beginning January 1, 2008, tangible personal
14    property used in the construction or maintenance of a
15    community water supply, as defined under Section 3.145 of
16    the Environmental Protection Act, that is operated by a
17    not-for-profit corporation that holds a valid water supply
18    permit issued under Title IV of the Environmental
19    Protection Act. This paragraph is exempt from the
20    provisions of Section 2-70.
21        (40) Beginning January 1, 2010, materials, parts,
22    equipment, components, and furnishings incorporated into
23    or upon an aircraft as part of the modification,
24    refurbishment, completion, replacement, repair, or
25    maintenance of the aircraft. This exemption includes
26    consumable supplies used in the modification,

 

 

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1    refurbishment, completion, replacement, repair, and
2    maintenance of aircraft, but excludes any materials,
3    parts, equipment, components, and consumable supplies used
4    in the modification, replacement, repair, and maintenance
5    of aircraft engines or power plants, whether such engines
6    or power plants are installed or uninstalled upon any such
7    aircraft. "Consumable supplies" include, but are not
8    limited to, adhesive, tape, sandpaper, general purpose
9    lubricants, cleaning solution, latex gloves, and
10    protective films. This exemption applies only to the sale
11    of qualifying tangible personal property to persons who
12    modify, refurbish, complete, replace, or maintain an
13    aircraft and who (i) hold an Air Agency Certificate and are
14    empowered to operate an approved repair station by the
15    Federal Aviation Administration, (ii) have a Class IV
16    Rating, and (iii) conduct operations in accordance with
17    Part 145 of the Federal Aviation Regulations. The exemption
18    does not include aircraft operated by a commercial air
19    carrier providing scheduled passenger air service pursuant
20    to authority issued under Part 121 or Part 129 of the
21    Federal Aviation Regulations. The changes made to this
22    paragraph (40) by Public Act 98-534 are declarative of
23    existing law.
24        (41) Tangible personal property sold to a
25    public-facilities corporation, as described in Section
26    11-65-10 of the Illinois Municipal Code, for purposes of

 

 

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1    constructing or furnishing a municipal convention hall,
2    but only if the legal title to the municipal convention
3    hall is transferred to the municipality without any further
4    consideration by or on behalf of the municipality at the
5    time of the completion of the municipal convention hall or
6    upon the retirement or redemption of any bonds or other
7    debt instruments issued by the public-facilities
8    corporation in connection with the development of the
9    municipal convention hall. This exemption includes
10    existing public-facilities corporations as provided in
11    Section 11-65-25 of the Illinois Municipal Code. This
12    paragraph is exempt from the provisions of Section 2-70.
13        (42) Beginning January 1, 2017, menstrual pads,
14    tampons, and menstrual cups.
15        (43) Merchandise that is subject to the Rental Purchase
16    Agreement Occupation and Use Tax. The purchaser must
17    certify that the item is purchased to be rented subject to
18    a rental purchase agreement, as defined in the Rental
19    Purchase Agreement Act, and provide proof of registration
20    under the Rental Purchase Agreement Occupation and Use Tax
21    Act. This paragraph is exempt from the provisions of
22    Section 2-70.
23        (44) Beginning January 1, 2019, prescription medicines
24    and prescription drugs. This paragraph is exempt from the
25    provisions of Section 2-70.
26(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;

 

 

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1100-22, eff. 7-6-17; 100-321, eff. 8-24-17; 100-437, eff.
21-1-18; revised 9-26-17.)
 
3    (35 ILCS 120/2-10)
4    Sec. 2-10. Rate of tax. Unless otherwise provided in this
5Section, the tax imposed by this Act is at the rate of 6.25% of
6gross receipts from sales of tangible personal property made in
7the course of business.
8    Beginning on July 1, 2000 and through December 31, 2000,
9with respect to motor fuel, as defined in Section 1.1 of the
10Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
11the Use Tax Act, the tax is imposed at the rate of 1.25%.
12    Beginning on August 6, 2010 through August 15, 2010, with
13respect to sales tax holiday items as defined in Section 2-8 of
14this Act, the tax is imposed at the rate of 1.25%.
15    Within 14 days after the effective date of this amendatory
16Act of the 91st General Assembly, each retailer of motor fuel
17and gasohol shall cause the following notice to be posted in a
18prominently visible place on each retail dispensing device that
19is used to dispense motor fuel or gasohol in the State of
20Illinois: "As of July 1, 2000, the State of Illinois has
21eliminated the State's share of sales tax on motor fuel and
22gasohol through December 31, 2000. The price on this pump
23should reflect the elimination of the tax." The notice shall be
24printed in bold print on a sign that is no smaller than 4
25inches by 8 inches. The sign shall be clearly visible to

 

 

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1customers. Any retailer who fails to post or maintain a
2required sign through December 31, 2000 is guilty of a petty
3offense for which the fine shall be $500 per day per each
4retail premises where a violation occurs.
5    With respect to gasohol, as defined in the Use Tax Act, the
6tax imposed by this Act applies to (i) 70% of the proceeds of
7sales made on or after January 1, 1990, and before July 1,
82003, (ii) 80% of the proceeds of sales made on or after July
91, 2003 and on or before July 1, 2017, and (iii) 100% of the
10proceeds of sales made thereafter. If, at any time, however,
11the tax under this Act on sales of gasohol, as defined in the
12Use Tax Act, is imposed at the rate of 1.25%, then the tax
13imposed by this Act applies to 100% of the proceeds of sales of
14gasohol made during that time.
15    With respect to majority blended ethanol fuel, as defined
16in the Use Tax Act, the tax imposed by this Act does not apply
17to the proceeds of sales made on or after July 1, 2003 and on or
18before December 31, 2023 but applies to 100% of the proceeds of
19sales made thereafter.
20    With respect to biodiesel blends, as defined in the Use Tax
21Act, with no less than 1% and no more than 10% biodiesel, the
22tax imposed by this Act applies to (i) 80% of the proceeds of
23sales made on or after July 1, 2003 and on or before December
2431, 2018 and (ii) 100% of the proceeds of sales made
25thereafter. If, at any time, however, the tax under this Act on
26sales of biodiesel blends, as defined in the Use Tax Act, with

 

 

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1no less than 1% and no more than 10% biodiesel is imposed at
2the rate of 1.25%, then the tax imposed by this Act applies to
3100% of the proceeds of sales of biodiesel blends with no less
4than 1% and no more than 10% biodiesel made during that time.
5    With respect to 100% biodiesel, as defined in the Use Tax
6Act, and biodiesel blends, as defined in the Use Tax Act, with
7more than 10% but no more than 99% biodiesel, the tax imposed
8by this Act does not apply to the proceeds of sales made on or
9after July 1, 2003 and on or before December 31, 2023 but
10applies to 100% of the proceeds of sales made thereafter.
11    With respect to food for human consumption that is to be
12consumed off the premises where it is sold (other than
13alcoholic beverages, soft drinks, and food that has been
14prepared for immediate consumption) and prescription and
15nonprescription medicines, drugs, medical appliances, products
16classified as Class III medical devices by the United States
17Food and Drug Administration that are used for cancer treatment
18pursuant to a prescription, as well as any accessories and
19components related to those devices, modifications to a motor
20vehicle for the purpose of rendering it usable by a person with
21a disability, and insulin, urine testing materials, syringes,
22and needles used by diabetics, for human use, the tax is
23imposed at the rate of 1%; provided that, beginning on January
241, 2019, no tax shall be imposed on prescription medicines or
25prescription drugs. For the purposes of this Section, until
26September 1, 2009: the term "soft drinks" means any complete,

 

 

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1finished, ready-to-use, non-alcoholic drink, whether
2carbonated or not, including but not limited to soda water,
3cola, fruit juice, vegetable juice, carbonated water, and all
4other preparations commonly known as soft drinks of whatever
5kind or description that are contained in any closed or sealed
6bottle, can, carton, or container, regardless of size; but
7"soft drinks" does not include coffee, tea, non-carbonated
8water, infant formula, milk or milk products as defined in the
9Grade A Pasteurized Milk and Milk Products Act, or drinks
10containing 50% or more natural fruit or vegetable juice.
11    Notwithstanding any other provisions of this Act,
12beginning September 1, 2009, "soft drinks" means non-alcoholic
13beverages that contain natural or artificial sweeteners. "Soft
14drinks" do not include beverages that contain milk or milk
15products, soy, rice or similar milk substitutes, or greater
16than 50% of vegetable or fruit juice by volume.
17    Until August 1, 2009, and notwithstanding any other
18provisions of this Act, "food for human consumption that is to
19be consumed off the premises where it is sold" includes all
20food sold through a vending machine, except soft drinks and
21food products that are dispensed hot from a vending machine,
22regardless of the location of the vending machine. Beginning
23August 1, 2009, and notwithstanding any other provisions of
24this Act, "food for human consumption that is to be consumed
25off the premises where it is sold" includes all food sold
26through a vending machine, except soft drinks, candy, and food

 

 

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1products that are dispensed hot from a vending machine,
2regardless of the location of the vending machine.
3    Notwithstanding any other provisions of this Act,
4beginning September 1, 2009, "food for human consumption that
5is to be consumed off the premises where it is sold" does not
6include candy. For purposes of this Section, "candy" means a
7preparation of sugar, honey, or other natural or artificial
8sweeteners in combination with chocolate, fruits, nuts or other
9ingredients or flavorings in the form of bars, drops, or
10pieces. "Candy" does not include any preparation that contains
11flour or requires refrigeration.
12    Notwithstanding any other provisions of this Act,
13beginning September 1, 2009, "nonprescription medicines and
14drugs" does not include grooming and hygiene products. For
15purposes of this Section, "grooming and hygiene products"
16includes, but is not limited to, soaps and cleaning solutions,
17shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
18lotions and screens, unless those products are available by
19prescription only, regardless of whether the products meet the
20definition of "over-the-counter-drugs". For the purposes of
21this paragraph, "over-the-counter-drug" means a drug for human
22use that contains a label that identifies the product as a drug
23as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
24label includes:
25        (A) A "Drug Facts" panel; or
26        (B) A statement of the "active ingredient(s)" with a

 

 

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1    list of those ingredients contained in the compound,
2    substance or preparation.
3    Beginning on the effective date of this amendatory Act of
4the 98th General Assembly, "prescription and nonprescription
5medicines and drugs" includes medical cannabis purchased from a
6registered dispensing organization under the Compassionate Use
7of Medical Cannabis Pilot Program Act.
8(Source: P.A. 99-143, eff. 7-27-15; 99-858, eff. 8-19-16;
9100-22, eff. 7-6-17.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.