Sen. Sue Rezin
Adopted in Senate on Oct 29, 2019
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1 | AMENDMENT TO HOUSE BILL 3608
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2 | AMENDMENT NO. ______. Amend House Bill 3608 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The Use Tax Act is amended by changing Section | ||||||
5 | 3-50 as follows:
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6 | (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
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7 | Sec. 3-50. Manufacturing and assembly exemption. The | ||||||
8 | manufacturing
and assembling machinery and equipment exemption | ||||||
9 | includes
machinery and equipment that replaces machinery and | ||||||
10 | equipment in an
existing manufacturing facility as well as | ||||||
11 | machinery and equipment that
are for use in an expanded or new | ||||||
12 | manufacturing facility. The machinery and
equipment exemption | ||||||
13 | also includes machinery and equipment used in the
general | ||||||
14 | maintenance or repair of exempt machinery and equipment or for
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15 | in-house manufacture of exempt machinery and equipment. | ||||||
16 | Beginning on July 1, 2017, the manufacturing and assembling |
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1 | machinery and equipment exemption also includes graphic arts | ||||||
2 | machinery and equipment, as defined in paragraph (6) of Section | ||||||
3 | 3-5. The machinery and equipment exemption does not include | ||||||
4 | machinery and equipment used in (i) the generation of | ||||||
5 | electricity for wholesale or retail sale; (ii) the generation | ||||||
6 | or treatment of natural or artificial gas for wholesale or | ||||||
7 | retail sale that is delivered to customers through pipes, | ||||||
8 | pipelines, or mains; or (iii) the treatment of water for | ||||||
9 | wholesale or retail sale that is delivered to customers through | ||||||
10 | pipes, pipelines, or mains. The provisions of this amendatory | ||||||
11 | Act of the 98th General Assembly are declaratory of existing | ||||||
12 | law as to the meaning and scope of this exemption. For the
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13 | purposes of this exemption, terms have the following
meanings:
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14 | (1) "Manufacturing process" means the production of
an | ||||||
15 | article of tangible personal property, whether the article
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16 | is a finished product or an article for use in the process | ||||||
17 | of manufacturing
or assembling a different article of | ||||||
18 | tangible personal property, by
a procedure commonly | ||||||
19 | regarded as manufacturing, processing, fabricating, or
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20 | refining that changes some existing material into a | ||||||
21 | material
with a different form, use, or name. In relation | ||||||
22 | to a recognized integrated
business composed of a series of | ||||||
23 | operations that collectively constitute
manufacturing, or | ||||||
24 | individually constitute
manufacturing operations, the | ||||||
25 | manufacturing process commences with the
first operation | ||||||
26 | or stage of production in the series
and does not end until |
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1 | the completion of the final product
in the last operation | ||||||
2 | or stage of production in the series. For purposes
of this | ||||||
3 | exemption, photoprocessing is a
manufacturing process of | ||||||
4 | tangible personal property for wholesale or retail
sale.
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5 | (2) "Assembling process" means the production of
an | ||||||
6 | article of tangible personal property, whether the article
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7 | is a finished product or an article for use in the process | ||||||
8 | of manufacturing
or assembling a different article of | ||||||
9 | tangible personal property, by the
combination of existing | ||||||
10 | materials in a manner commonly regarded as
assembling that | ||||||
11 | results in an article or material of a different
form, use, | ||||||
12 | or name.
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13 | (3) "Machinery" means major
mechanical machines or | ||||||
14 | major components of those machines contributing to a
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15 | manufacturing or assembling process.
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16 | (4) "Equipment" includes an independent device
or tool | ||||||
17 | separate from machinery but essential to an integrated
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18 | manufacturing or assembly process; including computers | ||||||
19 | used primarily in
a manufacturer's computer assisted | ||||||
20 | design,
computer assisted manufacturing (CAD/CAM) system; | ||||||
21 | any
subunit or assembly comprising a component of any | ||||||
22 | machinery or auxiliary,
adjunct, or attachment parts of | ||||||
23 | machinery, such as tools, dies, jigs,
fixtures, patterns, | ||||||
24 | and molds; and any parts that require
periodic replacement | ||||||
25 | in the course of normal operation; but does not
include | ||||||
26 | hand tools. Equipment includes chemicals or chemicals |
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1 | acting as
catalysts but only if
the chemicals or chemicals | ||||||
2 | acting as catalysts effect a direct and
immediate change | ||||||
3 | upon a
product being manufactured or assembled for | ||||||
4 | wholesale or retail sale or
lease. | ||||||
5 | (5) "Production related tangible personal property" | ||||||
6 | means all tangible personal property that is used or | ||||||
7 | consumed by the purchaser in a manufacturing facility in | ||||||
8 | which a manufacturing process takes place and includes, | ||||||
9 | without limitation, tangible personal property that is | ||||||
10 | purchased for incorporation into real estate within a | ||||||
11 | manufacturing facility, supplies and consumables used in a | ||||||
12 | manufacturing facility including fuels, coolants, | ||||||
13 | solvents, oils, lubricants, and adhesives, hand tools, | ||||||
14 | protective apparel, and fire and safety equipment used or | ||||||
15 | consumed within a manufacturing facility, and tangible | ||||||
16 | personal property that is used or consumed in activities | ||||||
17 | such as research and development, preproduction material | ||||||
18 | handling, receiving, quality control, inventory control, | ||||||
19 | storage, staging, and packaging for shipping and | ||||||
20 | transportation purposes. "Production related tangible | ||||||
21 | personal property" does not include (i) tangible personal | ||||||
22 | property that is used, within or without a manufacturing | ||||||
23 | facility, in sales, purchasing, accounting, fiscal | ||||||
24 | management, marketing, personnel recruitment or selection, | ||||||
25 | or landscaping or (ii) tangible personal property that is | ||||||
26 | required to be titled or registered with a department, |
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1 | agency, or unit of federal, State, or local government.
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2 | The manufacturing and assembling machinery and equipment | ||||||
3 | exemption includes production related tangible personal | ||||||
4 | property that is purchased on or after July 1, 2007 and on or | ||||||
5 | before June 30, 2008 and on or after July 1, 2019. The | ||||||
6 | exemption for production related tangible personal property | ||||||
7 | purchased on or after July 1, 2007 and on or before June 30, | ||||||
8 | 2008 is subject to both of the following limitations: | ||||||
9 | (1) The maximum amount of the exemption for any one | ||||||
10 | taxpayer may not exceed 5% of the purchase price of | ||||||
11 | production related tangible personal property that is | ||||||
12 | purchased on or after July 1, 2007 and on or before June | ||||||
13 | 30, 2008. A credit under Section 3-85 of this Act may not | ||||||
14 | be earned by the purchase of production related tangible | ||||||
15 | personal property for which an exemption is received under | ||||||
16 | this Section. | ||||||
17 | (2) The maximum aggregate amount of the exemptions for | ||||||
18 | production related tangible personal property purchased on | ||||||
19 | or after July 1, 2007 and on or before June 30, 2008 | ||||||
20 | awarded under this Act and the Retailers' Occupation Tax | ||||||
21 | Act to all taxpayers may not exceed $10,000,000. If the | ||||||
22 | claims for the exemption exceed $10,000,000, then the | ||||||
23 | Department shall reduce the amount of the exemption to each | ||||||
24 | taxpayer on a pro rata basis. | ||||||
25 | The Department shall adopt rules to implement and administer | ||||||
26 | the exemption for production related tangible personal |
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1 | property. | ||||||
2 | The manufacturing and assembling machinery and equipment
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3 | exemption includes the sale of materials to a purchaser who
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4 | produces exempted types of machinery, equipment, or tools and | ||||||
5 | who rents or
leases that machinery, equipment, or tools to a
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6 | manufacturer of tangible
personal property. This exemption | ||||||
7 | also includes the sale of materials to a
purchaser who | ||||||
8 | manufactures those materials into an exempted type of
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9 | machinery, equipment, or tools that the purchaser uses
himself | ||||||
10 | or herself in the
manufacturing of tangible personal property. | ||||||
11 | This exemption includes the
sale of exempted types of machinery | ||||||
12 | or equipment to a
purchaser who is not the manufacturer, but | ||||||
13 | who rents or leases the use of
the property to a manufacturer. | ||||||
14 | The purchaser of the machinery and
equipment who has an active | ||||||
15 | resale registration number shall
furnish that number to the | ||||||
16 | seller at the time of purchase.
A purchaser user of the | ||||||
17 | machinery, equipment, or tools without an
active resale | ||||||
18 | registration number shall prepare a certificate of exemption
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19 | for each transaction stating facts establishing the exemption | ||||||
20 | for that
transaction , and that certificate shall be
available | ||||||
21 | to the Department for inspection or audit. The Department shall
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22 | prescribe the form of the certificate. Informal rulings, | ||||||
23 | opinions, or
letters issued by the Department in
response to an | ||||||
24 | inquiry or request for an opinion from any person
regarding the | ||||||
25 | coverage and applicability of this exemption to specific
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26 | devices shall be published, maintained as a public record, and |
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1 | made
available for public inspection and copying. If the | ||||||
2 | informal ruling,
opinion, or letter contains trade secrets or | ||||||
3 | other confidential
information, where possible, the Department | ||||||
4 | shall delete that information
before publication. Whenever | ||||||
5 | informal rulings, opinions, or
letters contain a policy of | ||||||
6 | general applicability, the Department
shall formulate and | ||||||
7 | adopt that policy as a rule in accordance with the
Illinois | ||||||
8 | Administrative Procedure Act.
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9 | The manufacturing and assembling machinery and equipment
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10 | exemption is exempt from the provisions of Section 3-90. | ||||||
11 | (Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19.)
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12 | Section 10. The Service Use Tax Act is amended by changing | ||||||
13 | Section 2 as follows:
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14 | (35 ILCS 110/2) (from Ch. 120, par. 439.32)
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15 | Sec. 2. Definitions. In this Act: | ||||||
16 | "Use" means the exercise by any person of any right or | ||||||
17 | power
over tangible personal property incident to the ownership | ||||||
18 | of that
property, but does not include the sale or use for | ||||||
19 | demonstration by him
of that property in any form as tangible | ||||||
20 | personal property in the
regular course of business.
"Use" does | ||||||
21 | not mean the interim
use of
tangible personal property nor the | ||||||
22 | physical incorporation of tangible
personal property, as an | ||||||
23 | ingredient or constituent, into other tangible
personal | ||||||
24 | property, (a) which is sold in the regular course of business
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1 | or (b) which the person incorporating such ingredient or | ||||||
2 | constituent
therein has undertaken at the time of such purchase | ||||||
3 | to cause to be
transported in interstate commerce to | ||||||
4 | destinations outside the State of
Illinois.
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5 | "Purchased from a serviceman" means the acquisition of the | ||||||
6 | ownership
of, or title to, tangible personal property through a | ||||||
7 | sale of service.
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8 | "Purchaser" means any person who, through a sale of | ||||||
9 | service, acquires
the ownership of, or title to, any tangible | ||||||
10 | personal property.
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11 | "Cost price" means the consideration paid by the serviceman | ||||||
12 | for a
purchase valued in money, whether paid in money or | ||||||
13 | otherwise, including
cash, credits and services, and shall be | ||||||
14 | determined without any
deduction on account of the supplier's | ||||||
15 | cost of the property sold or on
account of any other expense | ||||||
16 | incurred by the supplier. When a serviceman
contracts out part | ||||||
17 | or all of the services required in his sale of service,
it | ||||||
18 | shall be presumed that the cost price to the serviceman of the | ||||||
19 | property
transferred to him or her by his or her subcontractor | ||||||
20 | is equal to 50% of
the subcontractor's charges to the | ||||||
21 | serviceman in the absence of proof of
the consideration paid by | ||||||
22 | the subcontractor for the purchase of such property.
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23 | "Selling price" means the consideration for a sale valued | ||||||
24 | in money
whether received in money or otherwise, including | ||||||
25 | cash, credits and
service, and shall be determined without any | ||||||
26 | deduction on account of the
serviceman's cost of the property |
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1 | sold, the cost of materials used,
labor or service cost or any | ||||||
2 | other expense whatsoever, but does not
include interest or | ||||||
3 | finance charges which appear as separate items on
the bill of | ||||||
4 | sale or sales contract nor charges that are added to prices
by | ||||||
5 | sellers on account of the seller's duty to collect, from the
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6 | purchaser, the tax that is imposed by this Act.
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7 | "Department" means the Department of Revenue.
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8 | "Person" means any natural individual, firm, partnership,
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9 | association, joint stock company, joint venture, public or | ||||||
10 | private
corporation, limited liability company, and any | ||||||
11 | receiver, executor, trustee,
guardian or other representative | ||||||
12 | appointed by order of any court.
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13 | "Sale of service" means any transaction except:
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14 | (1) a retail sale of tangible personal property taxable | ||||||
15 | under the
Retailers' Occupation Tax Act or under the Use | ||||||
16 | Tax Act.
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17 | (2) a sale of tangible personal property for the | ||||||
18 | purpose of resale
made in compliance with Section 2c of the | ||||||
19 | Retailers' Occupation Tax Act.
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20 | (3) except as hereinafter provided, a sale or transfer | ||||||
21 | of tangible
personal property as an incident to the | ||||||
22 | rendering of service for or by
any governmental body, or | ||||||
23 | for or by any corporation, society,
association, | ||||||
24 | foundation or institution organized and operated
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25 | exclusively for charitable, religious or educational | ||||||
26 | purposes or any
not-for-profit corporation, society, |
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1 | association, foundation,
institution or organization which | ||||||
2 | has no compensated officers or
employees and which is | ||||||
3 | organized and operated primarily for the
recreation of | ||||||
4 | persons 55 years of age or older. A limited liability | ||||||
5 | company
may qualify for the exemption under this paragraph | ||||||
6 | only if the limited
liability company is organized and | ||||||
7 | operated exclusively for educational
purposes.
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8 | (4) (blank).
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9 | (4a) a sale or transfer of tangible personal
property | ||||||
10 | as an incident
to the rendering of service for owners, | ||||||
11 | lessors, or shippers of tangible
personal property which is | ||||||
12 | utilized by interstate carriers for hire for
use as rolling | ||||||
13 | stock moving in interstate commerce so long as so used by
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14 | interstate carriers for hire, and equipment operated by a
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15 | telecommunications provider, licensed as a common carrier | ||||||
16 | by the Federal
Communications Commission, which is | ||||||
17 | permanently installed in or affixed to
aircraft moving in | ||||||
18 | interstate commerce.
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19 | (4a-5) on and after July 1, 2003 and through June 30, | ||||||
20 | 2004, a sale or transfer of a motor vehicle
of
the
second | ||||||
21 | division with a gross vehicle weight in excess of 8,000 | ||||||
22 | pounds as an
incident to the rendering of service if that | ||||||
23 | motor
vehicle is subject
to the commercial distribution fee | ||||||
24 | imposed under Section 3-815.1 of the
Illinois Vehicle
Code. | ||||||
25 | Beginning on July 1, 2004 and through June 30, 2005, the | ||||||
26 | use in this State of motor vehicles of the second division: |
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1 | (i) with a gross vehicle weight rating in excess of 8,000 | ||||||
2 | pounds; (ii) that are subject to the commercial | ||||||
3 | distribution fee imposed under Section 3-815.1 of the | ||||||
4 | Illinois Vehicle Code; and (iii) that are primarily used | ||||||
5 | for commercial purposes. Through June 30, 2005, this
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6 | exemption applies to repair and replacement parts added | ||||||
7 | after the
initial
purchase of such a motor vehicle if that | ||||||
8 | motor vehicle is used in a manner that
would
qualify for | ||||||
9 | the rolling stock exemption otherwise provided for in this | ||||||
10 | Act. For purposes of this paragraph, "used for commercial | ||||||
11 | purposes" means the transportation of persons or property | ||||||
12 | in furtherance of any commercial or industrial enterprise | ||||||
13 | whether for-hire or not.
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14 | (5) a sale or transfer of machinery and equipment used | ||||||
15 | primarily in the
process of the manufacturing or | ||||||
16 | assembling, either in an existing, an expanded
or a new | ||||||
17 | manufacturing facility, of tangible personal property for | ||||||
18 | wholesale or
retail sale or lease, whether such sale or | ||||||
19 | lease is made directly by the
manufacturer or by some other | ||||||
20 | person, whether the materials used in the process
are owned | ||||||
21 | by the manufacturer or some other person, or whether such | ||||||
22 | sale or
lease is made apart from or as an incident to the | ||||||
23 | seller's engaging in a
service occupation and the | ||||||
24 | applicable tax is a Service Use Tax or Service
Occupation | ||||||
25 | Tax, rather than Use Tax or Retailers' Occupation Tax. The | ||||||
26 | exemption provided by this paragraph (5) includes |
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1 | production related tangible personal property, as defined | ||||||
2 | in Section 3-50 of the Use Tax Act, purchased on or after | ||||||
3 | July 1, 2019. The exemption provided by this paragraph (5) | ||||||
4 | does not include machinery and equipment used in (i) the | ||||||
5 | generation of electricity for wholesale or retail sale; | ||||||
6 | (ii) the generation or treatment of natural or artificial | ||||||
7 | gas for wholesale or retail sale that is delivered to | ||||||
8 | customers through pipes, pipelines, or mains; or (iii) the | ||||||
9 | treatment of water for wholesale or retail sale that is | ||||||
10 | delivered to customers through pipes, pipelines, or mains. | ||||||
11 | The provisions of Public Act 98-583 are declaratory of | ||||||
12 | existing law as to the meaning and scope of this exemption. | ||||||
13 | The exemption under this paragraph (5) is exempt from the | ||||||
14 | provisions of Section 3-75.
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15 | (5a) the repairing, reconditioning or remodeling, for | ||||||
16 | a
common carrier by rail, of tangible personal property | ||||||
17 | which belongs to such
carrier for hire, and as to which | ||||||
18 | such carrier receives the physical possession
of the | ||||||
19 | repaired, reconditioned or remodeled item of tangible | ||||||
20 | personal property
in Illinois, and which such carrier | ||||||
21 | transports, or shares with another common
carrier in the | ||||||
22 | transportation of such property, out of Illinois on a | ||||||
23 | standard
uniform bill of lading showing the person who | ||||||
24 | repaired, reconditioned or
remodeled the property to a | ||||||
25 | destination outside Illinois, for use outside
Illinois.
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26 | (5b) a sale or transfer of tangible personal property |
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1 | which is produced by
the seller thereof on special order in | ||||||
2 | such a way as to have made the
applicable tax the Service | ||||||
3 | Occupation Tax or the Service Use Tax, rather than
the | ||||||
4 | Retailers' Occupation Tax or the Use Tax, for an interstate | ||||||
5 | carrier by rail
which receives the physical possession of | ||||||
6 | such property in Illinois, and which
transports such | ||||||
7 | property, or shares with another common carrier in the
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8 | transportation of such property, out of Illinois on a | ||||||
9 | standard uniform bill of
lading showing the seller of the | ||||||
10 | property as the shipper or consignor of such
property to a | ||||||
11 | destination outside Illinois, for use outside Illinois.
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12 | (6) until July 1, 2003, a sale or transfer of | ||||||
13 | distillation machinery
and equipment, sold
as a unit or kit | ||||||
14 | and assembled or installed by the retailer, which
machinery | ||||||
15 | and equipment is certified by the user to be used only for | ||||||
16 | the
production of ethyl alcohol that will be used for | ||||||
17 | consumption as motor fuel
or as a component of motor fuel | ||||||
18 | for the personal use of such user and not
subject to sale | ||||||
19 | or resale.
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20 | (7) at the election of any serviceman not required to | ||||||
21 | be
otherwise registered as a retailer under Section 2a of | ||||||
22 | the Retailers'
Occupation Tax Act, made for each fiscal | ||||||
23 | year sales
of service in which the aggregate annual cost | ||||||
24 | price of tangible
personal property transferred as an | ||||||
25 | incident to the sales of service is
less than 35%, or 75% | ||||||
26 | in the case of servicemen transferring prescription
drugs |
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1 | or servicemen engaged in graphic arts production, of the | ||||||
2 | aggregate
annual total gross receipts from all sales of | ||||||
3 | service. The purchase of
such tangible personal property by | ||||||
4 | the serviceman shall be subject to tax
under the Retailers' | ||||||
5 | Occupation Tax Act and the Use Tax Act.
However, if a
| ||||||
6 | primary serviceman who has made the election described in | ||||||
7 | this paragraph
subcontracts service work to a secondary | ||||||
8 | serviceman who has also made the
election described in this | ||||||
9 | paragraph, the primary serviceman does not
incur a Use Tax | ||||||
10 | liability if the secondary serviceman (i) has paid or will | ||||||
11 | pay
Use
Tax on his or her cost price of any tangible | ||||||
12 | personal property transferred
to the primary serviceman | ||||||
13 | and (ii) certifies that fact in writing to the
primary
| ||||||
14 | serviceman.
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15 | Tangible personal property transferred incident to the | ||||||
16 | completion of a
maintenance agreement is exempt from the tax | ||||||
17 | imposed pursuant to this Act.
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18 | Exemption (5) also includes machinery and equipment used in | ||||||
19 | the general
maintenance or repair of such exempt machinery and | ||||||
20 | equipment or for in-house
manufacture of exempt machinery and | ||||||
21 | equipment. On and after July 1, 2017, exemption (5) also
| ||||||
22 | includes graphic arts machinery and equipment, as
defined in | ||||||
23 | paragraph (5) of Section 3-5. The machinery and equipment | ||||||
24 | exemption does not include machinery and equipment used in (i) | ||||||
25 | the generation of electricity for wholesale or retail sale; | ||||||
26 | (ii) the generation or treatment of natural or artificial gas |
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| |||||||
1 | for wholesale or retail sale that is delivered to customers | ||||||
2 | through pipes, pipelines, or mains; or (iii) the treatment of | ||||||
3 | water for wholesale or retail sale that is delivered to | ||||||
4 | customers through pipes, pipelines, or mains. The provisions of | ||||||
5 | Public Act 98-583 are declaratory of existing law as to the | ||||||
6 | meaning and scope of this exemption. For the purposes of | ||||||
7 | exemption
(5), each of these terms shall have the following | ||||||
8 | meanings: (1) "manufacturing
process" shall mean the | ||||||
9 | production of any article of tangible personal
property, | ||||||
10 | whether such article is a finished product or an article for | ||||||
11 | use in
the process of manufacturing or assembling a different | ||||||
12 | article of tangible
personal property, by procedures commonly | ||||||
13 | regarded as manufacturing,
processing, fabricating, or | ||||||
14 | refining which changes some existing
material or materials into | ||||||
15 | a material with a different form, use or
name. In relation to a | ||||||
16 | recognized integrated business composed of a
series of | ||||||
17 | operations which collectively constitute manufacturing, or
| ||||||
18 | individually constitute manufacturing operations, the | ||||||
19 | manufacturing
process shall be deemed to commence with the | ||||||
20 | first operation or stage of
production in the series, and shall | ||||||
21 | not be deemed to end until the
completion of the final product | ||||||
22 | in the last operation or stage of
production in the series; and | ||||||
23 | further, for purposes of exemption (5),
photoprocessing is | ||||||
24 | deemed to be a manufacturing process of tangible
personal | ||||||
25 | property for wholesale or retail sale; (2) "assembling process" | ||||||
26 | shall
mean the production of any article of tangible personal |
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| |||||||
1 | property, whether such
article is a finished product or an | ||||||
2 | article for use in the process of
manufacturing or assembling a | ||||||
3 | different article of tangible personal
property, by the | ||||||
4 | combination of existing materials in a manner commonly
regarded | ||||||
5 | as assembling which results in a material of a different form,
| ||||||
6 | use or name; (3) "machinery" shall mean major mechanical | ||||||
7 | machines or
major components of such machines contributing to a | ||||||
8 | manufacturing or
assembling process; and (4) "equipment" shall | ||||||
9 | include any independent
device or tool separate from any | ||||||
10 | machinery but essential to an
integrated manufacturing or | ||||||
11 | assembly process; including computers
used primarily in a | ||||||
12 | manufacturer's computer
assisted design, computer assisted | ||||||
13 | manufacturing (CAD/CAM) system;
or any subunit or assembly | ||||||
14 | comprising a component of any machinery or
auxiliary, adjunct | ||||||
15 | or attachment parts of machinery, such as tools, dies,
jigs, | ||||||
16 | fixtures, patterns and molds; or any parts which require | ||||||
17 | periodic
replacement in the course of normal operation; but | ||||||
18 | shall not include hand
tools.
Equipment includes chemicals or | ||||||
19 | chemicals acting as catalysts but only if the
chemicals or | ||||||
20 | chemicals acting as catalysts effect a direct and immediate | ||||||
21 | change
upon a
product being manufactured or assembled for | ||||||
22 | wholesale or retail sale or
lease.
The purchaser of such | ||||||
23 | machinery and equipment who has an active
resale registration | ||||||
24 | number shall furnish such number to the seller at the
time of | ||||||
25 | purchase. The purchaser user of such machinery and equipment | ||||||
26 | and tools
without an active resale registration number shall |
| |||||||
| |||||||
1 | prepare a certificate of
exemption for each transaction stating | ||||||
2 | facts establishing the exemption for
that transaction , which | ||||||
3 | certificate shall be available to the Department
for inspection | ||||||
4 | or audit. The Department shall prescribe the form of the
| ||||||
5 | certificate.
| ||||||
6 | Any informal rulings, opinions or letters issued by the | ||||||
7 | Department in
response to an inquiry or request for any opinion | ||||||
8 | from any person
regarding the coverage and applicability of | ||||||
9 | exemption (5) to specific
devices shall be published, | ||||||
10 | maintained as a public record, and made
available for public | ||||||
11 | inspection and copying. If the informal ruling,
opinion or | ||||||
12 | letter contains trade secrets or other confidential
| ||||||
13 | information, where possible the Department shall delete such | ||||||
14 | information
prior to publication. Whenever such informal | ||||||
15 | rulings, opinions, or
letters contain any policy of general | ||||||
16 | applicability, the Department
shall formulate and adopt such | ||||||
17 | policy as a rule in accordance with the
provisions of the | ||||||
18 | Illinois Administrative Procedure Act.
| ||||||
19 | On and after July 1, 1987, no entity otherwise eligible | ||||||
20 | under exemption
(3) of this Section shall make tax-free | ||||||
21 | purchases unless it has an active
exemption identification | ||||||
22 | number issued by the Department.
| ||||||
23 | The purchase, employment and transfer of such tangible | ||||||
24 | personal
property as newsprint and ink for the primary purpose | ||||||
25 | of conveying news
(with or without other information) is not a | ||||||
26 | purchase, use or sale of
service or of tangible personal |
| |||||||
| |||||||
1 | property within the meaning of this Act.
| ||||||
2 | "Serviceman" means any person who is engaged in the | ||||||
3 | occupation of
making sales of service.
| ||||||
4 | "Sale at retail" means "sale at retail" as defined in the | ||||||
5 | Retailers'
Occupation Tax Act.
| ||||||
6 | "Supplier" means any person who makes sales of tangible | ||||||
7 | personal
property to servicemen for the purpose of resale as an | ||||||
8 | incident to a
sale of service.
| ||||||
9 | "Serviceman maintaining a place of business in this State", | ||||||
10 | or any
like term, means and includes any serviceman:
| ||||||
11 | (1) having or maintaining within this State, directly | ||||||
12 | or by a
subsidiary, an office, distribution house, sales | ||||||
13 | house, warehouse or
other place of business, or any agent | ||||||
14 | or other representative operating
within this State under | ||||||
15 | the authority of the serviceman or its
subsidiary, | ||||||
16 | irrespective of whether such place of business or agent or
| ||||||
17 | other representative is located here permanently or | ||||||
18 | temporarily, or
whether such serviceman or subsidiary is | ||||||
19 | licensed to do business in this
State; | ||||||
20 | (1.1) having a contract with a person located in this | ||||||
21 | State under which the person, for a commission or other | ||||||
22 | consideration based on the sale of service by the | ||||||
23 | serviceman, directly or indirectly refers potential | ||||||
24 | customers to the serviceman by providing to the potential | ||||||
25 | customers a promotional code or other mechanism that allows | ||||||
26 | the serviceman to track purchases referred by such persons. |
| |||||||
| |||||||
1 | Examples of mechanisms that allow the serviceman to track | ||||||
2 | purchases referred by such persons include but are not | ||||||
3 | limited to the use of a link on the person's Internet | ||||||
4 | website, promotional codes distributed through the | ||||||
5 | person's hand-delivered or mailed material, and | ||||||
6 | promotional codes distributed by the person through radio | ||||||
7 | or other broadcast media. The provisions of this paragraph | ||||||
8 | (1.1) shall apply only if the cumulative gross receipts | ||||||
9 | from sales of service by the serviceman to customers who | ||||||
10 | are referred to the serviceman by all persons in this State | ||||||
11 | under such contracts exceed $10,000 during the preceding 4 | ||||||
12 | quarterly periods ending on the last day of March, June, | ||||||
13 | September, and December; a serviceman meeting the | ||||||
14 | requirements of this paragraph (1.1) shall be presumed to | ||||||
15 | be maintaining a place of business in this State but may | ||||||
16 | rebut this presumption by submitting proof that the | ||||||
17 | referrals or other activities pursued within this State by | ||||||
18 | such persons were not sufficient to meet the nexus | ||||||
19 | standards of the United States Constitution during the | ||||||
20 | preceding 4 quarterly periods; | ||||||
21 | (1.2) beginning July 1, 2011, having a contract with a | ||||||
22 | person located in this State under which: | ||||||
23 | (A) the serviceman sells the same or substantially | ||||||
24 | similar line of services as the person located in this | ||||||
25 | State and does so using an identical or substantially | ||||||
26 | similar name, trade name, or trademark as the person |
| |||||||
| |||||||
1 | located in this State; and | ||||||
2 | (B) the serviceman provides a commission or other | ||||||
3 | consideration to the person located in this State based | ||||||
4 | upon the sale of services by the serviceman. | ||||||
5 | The provisions of this paragraph (1.2) shall apply only if | ||||||
6 | the cumulative gross receipts from sales of service by the | ||||||
7 | serviceman to customers in this State under all such | ||||||
8 | contracts exceed $10,000 during the preceding 4 quarterly | ||||||
9 | periods ending on the last day of March, June, September, | ||||||
10 | and December;
| ||||||
11 | (2) soliciting orders for tangible personal property | ||||||
12 | by means of a
telecommunication or television shopping | ||||||
13 | system (which utilizes toll free
numbers) which is intended | ||||||
14 | by the retailer to be broadcast by cable
television or | ||||||
15 | other means of broadcasting, to consumers located in this | ||||||
16 | State;
| ||||||
17 | (3) pursuant to a contract with a broadcaster or | ||||||
18 | publisher located in this
State, soliciting orders for | ||||||
19 | tangible personal property by means of advertising
which is | ||||||
20 | disseminated primarily to consumers located in this State | ||||||
21 | and only
secondarily to bordering jurisdictions;
| ||||||
22 | (4) soliciting orders for tangible personal property | ||||||
23 | by mail if the
solicitations are substantial and recurring | ||||||
24 | and if the retailer benefits
from any banking, financing, | ||||||
25 | debt collection, telecommunication, or
marketing | ||||||
26 | activities occurring in this State or benefits from the |
| |||||||
| |||||||
1 | location
in this State of authorized installation, | ||||||
2 | servicing, or repair facilities;
| ||||||
3 | (5) being owned or controlled by the same interests | ||||||
4 | which own or
control any retailer engaging in business in | ||||||
5 | the same or similar line of
business in this State;
| ||||||
6 | (6) having a franchisee or licensee operating under its | ||||||
7 | trade name if
the franchisee or licensee is required to | ||||||
8 | collect the tax under this Section;
| ||||||
9 | (7) pursuant to a contract with a cable television | ||||||
10 | operator located in
this State, soliciting orders for | ||||||
11 | tangible personal property by means of
advertising which is | ||||||
12 | transmitted or distributed over a cable television
system | ||||||
13 | in this State;
| ||||||
14 | (8) engaging in activities in Illinois, which | ||||||
15 | activities in the
state in which the supply business | ||||||
16 | engaging in such activities is located
would constitute | ||||||
17 | maintaining a place of business in that state; or
| ||||||
18 | (9) beginning October 1, 2018, making sales of service | ||||||
19 | to purchasers in Illinois from outside of Illinois if: | ||||||
20 | (A) the cumulative gross receipts from sales of | ||||||
21 | service to purchasers in Illinois are $100,000 or more; | ||||||
22 | or | ||||||
23 | (B) the serviceman enters into 200 or more separate | ||||||
24 | transactions for sales of service to purchasers in | ||||||
25 | Illinois. | ||||||
26 | The serviceman shall determine on a quarterly basis, |
| |||||||
| |||||||
1 | ending on the last day of March, June, September, and | ||||||
2 | December, whether he or she meets the criteria of either | ||||||
3 | subparagraph (A) or (B) of this paragraph (9) for the | ||||||
4 | preceding 12-month period. If the serviceman meets the | ||||||
5 | criteria of either subparagraph (A) or (B) for a 12-month | ||||||
6 | period, he or she is considered a serviceman maintaining a | ||||||
7 | place of business in this State and is required to collect | ||||||
8 | and remit the tax imposed under this Act and file returns | ||||||
9 | for one year. At the end of that one-year period, the | ||||||
10 | serviceman shall determine whether the serviceman met the | ||||||
11 | criteria of either subparagraph (A) or (B) during the | ||||||
12 | preceding 12-month period. If the serviceman met the | ||||||
13 | criteria in either subparagraph (A) or (B) for the | ||||||
14 | preceding 12-month period, he or she is considered a | ||||||
15 | serviceman maintaining a place of business in this State | ||||||
16 | and is required to collect and remit the tax imposed under | ||||||
17 | this Act and file returns for the subsequent year. If at | ||||||
18 | the end of a one-year period a serviceman that was required | ||||||
19 | to collect and remit the tax imposed under this Act | ||||||
20 | determines that he or she did not meet the criteria in | ||||||
21 | either subparagraph (A) or (B) during the preceding | ||||||
22 | 12-month period, the serviceman subsequently shall | ||||||
23 | determine on a quarterly basis, ending on the last day of | ||||||
24 | March, June, September, and December, whether he or she | ||||||
25 | meets the criteria of either subparagraph (A) or (B) for | ||||||
26 | the preceding 12-month period. |
| |||||||
| |||||||
1 | Beginning January 1, 2020, neither the gross receipts | ||||||
2 | from nor the number of separate transactions for sales of | ||||||
3 | service to purchasers in Illinois that a serviceman makes | ||||||
4 | through a marketplace facilitator and for which the | ||||||
5 | serviceman has received a certification from the | ||||||
6 | marketplace facilitator pursuant to Section 2d of this Act | ||||||
7 | shall be included for purposes of determining whether he or | ||||||
8 | she has met the thresholds of this paragraph (9). | ||||||
9 | (10) Beginning January 1, 2020, a marketplace | ||||||
10 | facilitator, as defined in Section 2d of this Act. | ||||||
11 | (Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17; | ||||||
12 | 100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article 10, | ||||||
13 | Section 10-15, eff. 6-5-19; 101-9, Article 25, Section 25-10, | ||||||
14 | eff. 6-5-19; revised 7-10-19.)
| ||||||
15 | Section 15. The Service Occupation Tax Act is amended by | ||||||
16 | changing Section 2 as follows:
| ||||||
17 | (35 ILCS 115/2) (from Ch. 120, par. 439.102)
| ||||||
18 | Sec. 2. In this Act: | ||||||
19 | "Transfer" means any transfer of the title to property or | ||||||
20 | of
the ownership of property whether or not the transferor | ||||||
21 | retains title as
security for the payment of amounts due him | ||||||
22 | from the transferee.
| ||||||
23 | "Cost Price" means the consideration paid by the serviceman | ||||||
24 | for a
purchase valued in money, whether paid in money or |
| |||||||
| |||||||
1 | otherwise, including
cash, credits and services, and shall be | ||||||
2 | determined without any deduction
on account of the supplier's | ||||||
3 | cost of the property sold or on account of any
other expense | ||||||
4 | incurred by the supplier. When a serviceman contracts out
part | ||||||
5 | or all of the services required in his sale of service, it | ||||||
6 | shall be
presumed that the cost price to the serviceman of the | ||||||
7 | property
transferred to him by his or her subcontractor is | ||||||
8 | equal to 50% of the
subcontractor's charges to the serviceman | ||||||
9 | in the absence of proof of the
consideration paid by the | ||||||
10 | subcontractor for the purchase of such
property.
| ||||||
11 | "Department" means the Department of Revenue.
| ||||||
12 | "Person" means any natural individual, firm, partnership, | ||||||
13 | association, joint
stock company, joint venture, public or | ||||||
14 | private corporation, limited liability
company, and any | ||||||
15 | receiver, executor, trustee, guardian or other representative
| ||||||
16 | appointed by order of any court.
| ||||||
17 | "Sale of Service" means any transaction except:
| ||||||
18 | (a) A retail sale of tangible personal property taxable | ||||||
19 | under the Retailers'
Occupation Tax Act or under the Use Tax | ||||||
20 | Act.
| ||||||
21 | (b) A sale of tangible personal property for the purpose of | ||||||
22 | resale made in
compliance with Section 2c of the Retailers' | ||||||
23 | Occupation Tax Act.
| ||||||
24 | (c) Except as hereinafter provided, a sale or transfer of | ||||||
25 | tangible personal
property as an incident to the rendering of | ||||||
26 | service for or by any governmental
body or for or by any |
| |||||||
| |||||||
1 | corporation, society, association, foundation or
institution | ||||||
2 | organized and operated exclusively for charitable, religious | ||||||
3 | or
educational purposes or any not-for-profit corporation, | ||||||
4 | society, association,
foundation, institution or organization | ||||||
5 | which has no compensated officers or
employees and which is | ||||||
6 | organized and operated primarily for the recreation of
persons | ||||||
7 | 55 years of age or older. A limited liability company may | ||||||
8 | qualify for
the exemption under this paragraph only if the | ||||||
9 | limited liability company is
organized and operated | ||||||
10 | exclusively for educational purposes.
| ||||||
11 | (d) (Blank).
| ||||||
12 | (d-1) A sale or transfer of tangible personal
property as | ||||||
13 | an incident to
the rendering of service for owners, lessors or | ||||||
14 | shippers of tangible personal
property which is utilized by | ||||||
15 | interstate carriers for hire for use as rolling
stock moving in | ||||||
16 | interstate commerce, and equipment operated
by a | ||||||
17 | telecommunications provider, licensed as a common carrier by | ||||||
18 | the
Federal Communications Commission, which is permanently | ||||||
19 | installed in or
affixed to aircraft moving in interstate | ||||||
20 | commerce.
| ||||||
21 | (d-1.1) On and after July 1, 2003 and through June 30, | ||||||
22 | 2004, a sale or transfer of a motor vehicle
of the
second | ||||||
23 | division with a gross vehicle weight in excess of 8,000 pounds | ||||||
24 | as an
incident to the rendering of service if that motor
| ||||||
25 | vehicle is subject
to the commercial distribution fee imposed | ||||||
26 | under Section 3-815.1 of the
Illinois Vehicle
Code. Beginning |
| |||||||
| |||||||
1 | on July 1, 2004 and through June 30, 2005, the use in this | ||||||
2 | State of motor vehicles of the second division: (i) with a | ||||||
3 | gross vehicle weight rating in excess of 8,000 pounds; (ii) | ||||||
4 | that are subject to the commercial distribution fee imposed | ||||||
5 | under Section 3-815.1 of the Illinois Vehicle Code; and (iii) | ||||||
6 | that are primarily used for commercial purposes. Through June | ||||||
7 | 30, 2005, this exemption applies to repair and replacement | ||||||
8 | parts added after the
initial
purchase of such a motor vehicle | ||||||
9 | if that motor vehicle is used in a manner that
would
qualify | ||||||
10 | for the rolling stock exemption otherwise provided for in this | ||||||
11 | Act. For purposes of this paragraph, "used for commercial | ||||||
12 | purposes" means the transportation of persons or property in | ||||||
13 | furtherance of any commercial or industrial enterprise whether | ||||||
14 | for-hire or not.
| ||||||
15 | (d-2) The repairing, reconditioning or remodeling, for a | ||||||
16 | common carrier by
rail, of tangible personal property which | ||||||
17 | belongs to such carrier for hire, and
as to which such carrier | ||||||
18 | receives the physical possession of the repaired,
| ||||||
19 | reconditioned or remodeled item of tangible personal property | ||||||
20 | in Illinois, and
which such carrier transports, or shares with | ||||||
21 | another common carrier in the
transportation of such property, | ||||||
22 | out of Illinois on a standard uniform bill of
lading showing | ||||||
23 | the person who repaired, reconditioned or remodeled the | ||||||
24 | property
as the shipper or consignor of such property to a | ||||||
25 | destination outside Illinois,
for use outside Illinois.
| ||||||
26 | (d-3) A sale or transfer of tangible personal property |
| |||||||
| |||||||
1 | which
is produced by the seller thereof on special order in | ||||||
2 | such a way as to have
made the applicable tax the Service | ||||||
3 | Occupation Tax or the Service Use Tax,
rather than the | ||||||
4 | Retailers' Occupation Tax or the Use Tax, for an interstate
| ||||||
5 | carrier by rail which receives the physical possession of such | ||||||
6 | property in
Illinois, and which transports such property, or | ||||||
7 | shares with another common
carrier in the transportation of | ||||||
8 | such property, out of Illinois on a standard
uniform bill of | ||||||
9 | lading showing the seller of the property as the shipper or
| ||||||
10 | consignor of such property to a destination outside Illinois, | ||||||
11 | for use outside
Illinois.
| ||||||
12 | (d-4) Until January 1, 1997, a sale, by a registered | ||||||
13 | serviceman paying tax
under this Act to the Department, of | ||||||
14 | special order printed materials delivered
outside Illinois and | ||||||
15 | which are not returned to this State, if delivery is made
by | ||||||
16 | the seller or agent of the seller, including an agent who | ||||||
17 | causes the product
to be delivered outside Illinois by a common | ||||||
18 | carrier or the U.S.
postal service.
| ||||||
19 | (e) A sale or transfer of machinery and equipment used | ||||||
20 | primarily in
the process of the manufacturing or assembling, | ||||||
21 | either in an existing, an
expanded or a new manufacturing | ||||||
22 | facility, of tangible personal property for
wholesale or retail | ||||||
23 | sale or lease, whether such sale or lease is made directly
by | ||||||
24 | the manufacturer or by some other person, whether the materials | ||||||
25 | used in the
process are owned by the manufacturer or some other | ||||||
26 | person, or whether such
sale or lease is made apart from or as |
| |||||||
| |||||||
1 | an incident to the seller's engaging in
a service occupation | ||||||
2 | and the applicable tax is a Service Occupation Tax or
Service | ||||||
3 | Use Tax, rather than Retailers' Occupation Tax or Use Tax. The | ||||||
4 | exemption provided by this paragraph (e) includes production | ||||||
5 | related tangible personal property, as defined in Section 3-50 | ||||||
6 | of the Use Tax Act, purchased on or after July 1, 2019. The | ||||||
7 | exemption provided by this paragraph (e) does not include | ||||||
8 | machinery and equipment used in (i) the generation of | ||||||
9 | electricity for wholesale or retail sale; (ii) the generation | ||||||
10 | or treatment of natural or artificial gas for wholesale or | ||||||
11 | retail sale that is delivered to customers through pipes, | ||||||
12 | pipelines, or mains; or (iii) the treatment of water for | ||||||
13 | wholesale or retail sale that is delivered to customers through | ||||||
14 | pipes, pipelines, or mains. The provisions of Public Act 98-583 | ||||||
15 | are declaratory of existing law as to the meaning and scope of | ||||||
16 | this exemption. The exemption under this subsection (e) is | ||||||
17 | exempt from the provisions of Section 3-75.
| ||||||
18 | (f) Until July 1, 2003, the sale or transfer of | ||||||
19 | distillation
machinery
and equipment, sold as a
unit or kit and | ||||||
20 | assembled or installed by the retailer, which machinery
and | ||||||
21 | equipment is certified by the user to be used only for the | ||||||
22 | production
of ethyl alcohol that will be used for consumption | ||||||
23 | as motor fuel or as a
component of motor fuel for the personal | ||||||
24 | use of such user and not subject
to sale or resale.
| ||||||
25 | (g) At the election of any serviceman not required to be | ||||||
26 | otherwise
registered as a retailer under Section 2a of the |
| |||||||
| |||||||
1 | Retailers' Occupation Tax Act,
made for each fiscal year sales | ||||||
2 | of service in which the aggregate annual cost
price of tangible | ||||||
3 | personal property transferred as an incident to the sales of
| ||||||
4 | service is less than 35% (75% in the case of servicemen | ||||||
5 | transferring
prescription drugs or servicemen engaged in | ||||||
6 | graphic arts production) of the
aggregate annual total gross | ||||||
7 | receipts from all sales of service. The purchase
of such | ||||||
8 | tangible personal property by the serviceman shall be subject | ||||||
9 | to tax
under the Retailers' Occupation Tax Act and the Use Tax | ||||||
10 | Act.
However, if a
primary serviceman who has made the election | ||||||
11 | described in this paragraph
subcontracts service work to a | ||||||
12 | secondary serviceman who has also made the
election described | ||||||
13 | in this paragraph, the primary serviceman does not
incur a Use | ||||||
14 | Tax liability if the secondary serviceman (i) has paid or will | ||||||
15 | pay
Use
Tax on his or her cost price of any tangible personal | ||||||
16 | property transferred
to the primary serviceman and (ii) | ||||||
17 | certifies that fact in writing to the
primary serviceman.
| ||||||
18 | Tangible personal property transferred incident to the | ||||||
19 | completion of a
maintenance agreement is exempt from the tax | ||||||
20 | imposed pursuant to this Act.
| ||||||
21 | Exemption (e) also includes machinery and equipment used in | ||||||
22 | the
general maintenance or repair of such exempt machinery and | ||||||
23 | equipment or for
in-house manufacture of exempt machinery and | ||||||
24 | equipment.
On and after July 1, 2017, exemption (e) also
| ||||||
25 | includes graphic arts machinery and equipment, as
defined in | ||||||
26 | paragraph (5) of Section 3-5. The machinery and equipment |
| |||||||
| |||||||
1 | exemption does not include machinery and equipment used in (i) | ||||||
2 | the generation of electricity for wholesale or retail sale; | ||||||
3 | (ii) the generation or treatment of natural or artificial gas | ||||||
4 | for wholesale or retail sale that is delivered to customers | ||||||
5 | through pipes, pipelines, or mains; or (iii) the treatment of | ||||||
6 | water for wholesale or retail sale that is delivered to | ||||||
7 | customers through pipes, pipelines, or mains. The provisions of | ||||||
8 | Public Act 98-583 are declaratory of existing law as to the | ||||||
9 | meaning and scope of this exemption. For the purposes of | ||||||
10 | exemption (e), each of these terms shall have the following
| ||||||
11 | meanings: (1) "manufacturing process" shall mean the | ||||||
12 | production of any
article of tangible personal property, | ||||||
13 | whether such article is a
finished product or an article for | ||||||
14 | use in the process of manufacturing
or assembling a different | ||||||
15 | article of tangible personal property, by
procedures commonly | ||||||
16 | regarded as manufacturing, processing, fabricating,
or | ||||||
17 | refining which changes some existing material or materials into | ||||||
18 | a
material with a different form, use or name. In relation to a
| ||||||
19 | recognized integrated business composed of a series of | ||||||
20 | operations which
collectively constitute manufacturing, or | ||||||
21 | individually constitute
manufacturing operations, the | ||||||
22 | manufacturing process shall be deemed to
commence with the | ||||||
23 | first operation or stage of production in the series,
and shall | ||||||
24 | not be deemed to end until the completion of the final product
| ||||||
25 | in the last operation or stage of production in the series; and | ||||||
26 | further for
purposes of exemption (e), photoprocessing is |
| |||||||
| |||||||
1 | deemed to be a manufacturing
process of tangible personal | ||||||
2 | property for wholesale or retail sale;
(2) "assembling process" | ||||||
3 | shall mean the production of any article of
tangible personal | ||||||
4 | property, whether such article is a finished product
or an | ||||||
5 | article for use in the process of manufacturing or assembling a
| ||||||
6 | different article of tangible personal property, by the | ||||||
7 | combination of
existing materials in a manner commonly regarded | ||||||
8 | as assembling which
results in a material of a different form, | ||||||
9 | use or name; (3) "machinery"
shall mean major mechanical | ||||||
10 | machines or major components of such machines
contributing to a | ||||||
11 | manufacturing or assembling process; and (4) "equipment"
shall | ||||||
12 | include any independent device or tool separate from any | ||||||
13 | machinery but
essential to an integrated manufacturing or | ||||||
14 | assembly process; including
computers used primarily in a | ||||||
15 | manufacturer's computer
assisted design, computer assisted | ||||||
16 | manufacturing (CAD/CAM) system; or any
subunit or assembly | ||||||
17 | comprising a component of any machinery or auxiliary,
adjunct | ||||||
18 | or attachment parts of machinery, such as tools, dies, jigs, | ||||||
19 | fixtures,
patterns and molds; or any parts which require | ||||||
20 | periodic replacement in the
course of normal operation; but | ||||||
21 | shall not include hand tools. Equipment
includes chemicals or | ||||||
22 | chemicals acting as catalysts but only if the chemicals
or | ||||||
23 | chemicals acting as catalysts effect a direct and immediate | ||||||
24 | change upon a
product being manufactured or assembled for | ||||||
25 | wholesale or retail sale or lease.
The purchaser of such | ||||||
26 | machinery and equipment
who has an active resale registration |
| |||||||
| |||||||
1 | number shall furnish such number to
the seller at the time of | ||||||
2 | purchase. The purchaser of such machinery and
equipment and | ||||||
3 | tools without an active resale registration number shall | ||||||
4 | furnish
to the seller a certificate of exemption for each | ||||||
5 | transaction stating facts
establishing the exemption for that | ||||||
6 | transaction , which certificate shall
be available to the | ||||||
7 | Department for inspection or audit.
| ||||||
8 | Except as provided in Section 2d of this Act, the rolling | ||||||
9 | stock exemption
applies to rolling
stock
used by an interstate
| ||||||
10 | carrier for hire, even just between points in Illinois, if such | ||||||
11 | rolling
stock transports, for hire, persons whose journeys or | ||||||
12 | property whose
shipments originate or terminate outside | ||||||
13 | Illinois.
| ||||||
14 | Any informal rulings, opinions or letters issued by the | ||||||
15 | Department in
response to an inquiry or request for any opinion | ||||||
16 | from any person
regarding the coverage and applicability of | ||||||
17 | exemption (e) to specific
devices shall be published, | ||||||
18 | maintained as a public record, and made
available for public | ||||||
19 | inspection and copying. If the informal ruling,
opinion or | ||||||
20 | letter contains trade secrets or other confidential
| ||||||
21 | information, where possible the Department shall delete such | ||||||
22 | information
prior to publication. Whenever such informal | ||||||
23 | rulings, opinions, or
letters contain any policy of general | ||||||
24 | applicability, the Department
shall formulate and adopt such | ||||||
25 | policy as a rule in accordance with the
provisions of the | ||||||
26 | Illinois Administrative Procedure Act.
|
| |||||||
| |||||||
1 | On and after July 1, 1987, no entity otherwise eligible | ||||||
2 | under exemption
(c) of this Section shall make tax-free | ||||||
3 | purchases unless it has an active
exemption identification | ||||||
4 | number issued by the Department.
| ||||||
5 | "Serviceman" means any person who is engaged in the | ||||||
6 | occupation of
making sales of service.
| ||||||
7 | "Sale at Retail" means "sale at retail" as defined in the | ||||||
8 | Retailers'
Occupation Tax Act.
| ||||||
9 | "Supplier" means any person who makes sales of tangible | ||||||
10 | personal
property to servicemen for the purpose of resale as an | ||||||
11 | incident to a
sale of service.
| ||||||
12 | (Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17; | ||||||
13 | 100-863, eff. 8-14-18; 101-9, eff. 6-5-19.)
| ||||||
14 | Section 20. The Retailers' Occupation Tax Act is amended by | ||||||
15 | changing Section 2-45 as follows:
| ||||||
16 | (35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
| ||||||
17 | Sec. 2-45. Manufacturing and assembly exemption. The | ||||||
18 | manufacturing
and assembly machinery and equipment exemption | ||||||
19 | includes machinery
and equipment that replaces machinery
and | ||||||
20 | equipment in an existing manufacturing facility as well as | ||||||
21 | machinery
and equipment that are for use in an expanded or new
| ||||||
22 | manufacturing facility.
| ||||||
23 | The machinery and equipment exemption also includes | ||||||
24 | machinery
and equipment used in the
general maintenance or |
| |||||||
| |||||||
1 | repair of exempt machinery and equipment or for
in-house | ||||||
2 | manufacture of exempt machinery and equipment.
Beginning on | ||||||
3 | July 1, 2017, the manufacturing and assembling machinery and | ||||||
4 | equipment exemption also includes graphic arts machinery and | ||||||
5 | equipment, as defined in paragraph (4) of Section 2-5. The | ||||||
6 | machinery and equipment exemption does not include machinery | ||||||
7 | and equipment used in (i) the generation of electricity for | ||||||
8 | wholesale or retail sale; (ii) the generation or treatment of | ||||||
9 | natural or artificial gas for wholesale or retail sale that is | ||||||
10 | delivered to customers through pipes, pipelines, or mains; or | ||||||
11 | (iii) the treatment of water for wholesale or retail sale that | ||||||
12 | is delivered to customers through pipes, pipelines, or mains. | ||||||
13 | The provisions of this amendatory Act of the 98th General | ||||||
14 | Assembly are declaratory of existing law as to the meaning and | ||||||
15 | scope of this exemption. For the purposes of this exemption, | ||||||
16 | terms have the following meanings:
| ||||||
17 | (1) "Manufacturing process" means the production of an | ||||||
18 | article of
tangible personal property, whether the article | ||||||
19 | is a finished product or an
article for use in the process | ||||||
20 | of manufacturing or assembling a different
article of | ||||||
21 | tangible personal property, by a procedure commonly | ||||||
22 | regarded as
manufacturing, processing, fabricating, or | ||||||
23 | refining that changes some
existing material or materials | ||||||
24 | into a material with a different form, use,
or name. In | ||||||
25 | relation to a recognized integrated business composed of a
| ||||||
26 | series of operations that collectively constitute |
| |||||||
| |||||||
1 | manufacturing, or
individually constitute manufacturing | ||||||
2 | operations, the manufacturing process
commences with the | ||||||
3 | first operation or stage of production in the series and
| ||||||
4 | does not end until the completion of the final product in | ||||||
5 | the last
operation or stage of production in the series. | ||||||
6 | For purposes of this
exemption, photoprocessing is a | ||||||
7 | manufacturing process of tangible personal
property for | ||||||
8 | wholesale or retail sale.
| ||||||
9 | (2) "Assembling process" means the production of an | ||||||
10 | article of
tangible personal property, whether the article | ||||||
11 | is a finished product or an
article for use in the process | ||||||
12 | of manufacturing or assembling a different
article of | ||||||
13 | tangible personal property, by the combination of existing
| ||||||
14 | materials in a manner commonly regarded as assembling that | ||||||
15 | results in a
material of a different form, use, or name.
| ||||||
16 | (3) "Machinery" means major mechanical machines or | ||||||
17 | major components of
those machines contributing to a | ||||||
18 | manufacturing or assembling process.
| ||||||
19 | (4) "Equipment" includes an independent device or tool | ||||||
20 | separate from
machinery but essential to an integrated | ||||||
21 | manufacturing or assembly process;
including computers | ||||||
22 | used primarily in a manufacturer's computer assisted | ||||||
23 | design, computer assisted manufacturing
(CAD/CAM) system; | ||||||
24 | any subunit or assembly comprising a component of any
| ||||||
25 | machinery or auxiliary, adjunct, or attachment parts of | ||||||
26 | machinery, such as
tools, dies, jigs, fixtures, patterns, |
| |||||||
| |||||||
1 | and molds; and any parts that
require periodic replacement | ||||||
2 | in the course of normal operation; but does
not include | ||||||
3 | hand tools. Equipment includes chemicals or chemicals | ||||||
4 | acting as
catalysts but only if
the chemicals or chemicals | ||||||
5 | acting as catalysts effect a direct and
immediate change | ||||||
6 | upon a
product being manufactured or assembled for | ||||||
7 | wholesale or retail sale or
lease.
| ||||||
8 | (5) "Production related tangible personal property" | ||||||
9 | means all tangible personal property that is used or | ||||||
10 | consumed by the purchaser in a manufacturing facility in | ||||||
11 | which a manufacturing process takes place and includes, | ||||||
12 | without limitation, tangible personal property that is | ||||||
13 | purchased for incorporation into real estate within a | ||||||
14 | manufacturing facility, supplies and consumables used in a | ||||||
15 | manufacturing facility including fuels, coolants, | ||||||
16 | solvents, oils, lubricants, and adhesives, hand tools, | ||||||
17 | protective apparel, and fire and safety equipment used or | ||||||
18 | consumed within a manufacturing facility, and tangible | ||||||
19 | personal property that is used or consumed in activities | ||||||
20 | such as research and development, preproduction material | ||||||
21 | handling, receiving, quality control, inventory control, | ||||||
22 | storage, staging, and packaging for shipping and | ||||||
23 | transportation purposes. "Production related tangible | ||||||
24 | personal property" does not include (i) tangible personal | ||||||
25 | property that is used, within or without a manufacturing | ||||||
26 | facility, in sales, purchasing, accounting, fiscal |
| |||||||
| |||||||
1 | management, marketing, personnel recruitment or selection, | ||||||
2 | or landscaping or (ii) tangible personal property that is | ||||||
3 | required to be titled or registered with a department, | ||||||
4 | agency, or unit of federal, State, or local government.
| ||||||
5 | The manufacturing and assembling machinery and equipment | ||||||
6 | exemption includes production related tangible personal | ||||||
7 | property that is purchased on or after July 1, 2007 and on or | ||||||
8 | before June 30, 2008 and on or after July 1, 2019. The | ||||||
9 | exemption for production related tangible personal property | ||||||
10 | purchased on or after July 1, 2007 and before June 30, 2008 is | ||||||
11 | subject to both of the following limitations: | ||||||
12 | (1) The maximum amount of the exemption for any one | ||||||
13 | taxpayer may not exceed 5% of the purchase price of | ||||||
14 | production related tangible personal property that is | ||||||
15 | purchased on or after July 1, 2007 and on or before June | ||||||
16 | 30, 2008. A credit under Section 3-85 of this Act may not | ||||||
17 | be earned by the purchase of production related tangible | ||||||
18 | personal property for which an exemption is received under | ||||||
19 | this Section. | ||||||
20 | (2) The maximum aggregate amount of the exemptions for | ||||||
21 | production related tangible personal property awarded | ||||||
22 | under this Act and the Use
Tax Act to all taxpayers may not | ||||||
23 | exceed $10,000,000. If the claims for the exemption exceed | ||||||
24 | $10,000,000, then the Department shall reduce the amount of | ||||||
25 | the exemption to each taxpayer on a pro rata basis. | ||||||
26 | The Department shall adopt rules to implement and administer |
| |||||||
| |||||||
1 | the exemption for production related tangible personal | ||||||
2 | property. | ||||||
3 | The manufacturing and assembling machinery and equipment | ||||||
4 | exemption
includes the sale of materials to a purchaser who | ||||||
5 | produces exempted types
of machinery, equipment, or tools and | ||||||
6 | who rents or leases that machinery,
equipment, or tools to a | ||||||
7 | manufacturer of tangible personal property. This
exemption | ||||||
8 | also includes the sale of materials to a purchaser who | ||||||
9 | manufactures
those materials into an exempted type of | ||||||
10 | machinery, equipment, or tools
that the purchaser uses himself | ||||||
11 | or herself in the manufacturing of tangible
personal property. | ||||||
12 | The purchaser of the machinery and equipment who has an
active | ||||||
13 | resale registration number shall furnish that number to the | ||||||
14 | seller
at the time of purchase. A purchaser of the machinery, | ||||||
15 | equipment, and
tools without an active resale registration | ||||||
16 | number shall furnish to the
seller a certificate of exemption | ||||||
17 | for each transaction stating facts
establishing the exemption | ||||||
18 | for that transaction , and that certificate shall
be available | ||||||
19 | to the Department for inspection or audit. Informal
rulings, | ||||||
20 | opinions, or letters issued by the Department in response to an
| ||||||
21 | inquiry or request for an opinion from any person regarding the | ||||||
22 | coverage and
applicability of this exemption to specific | ||||||
23 | devices shall be published,
maintained as a public record,
and | ||||||
24 | made available for public inspection and copying. If the | ||||||
25 | informal
ruling, opinion, or letter contains trade secrets or | ||||||
26 | other confidential
information, where possible, the Department |
| |||||||
| |||||||
1 | shall delete that information
before publication. Whenever | ||||||
2 | informal rulings, opinions, or letters
contain a policy of | ||||||
3 | general applicability, the Department shall
formulate and | ||||||
4 | adopt that policy as a rule in accordance with the Illinois
| ||||||
5 | Administrative Procedure Act.
| ||||||
6 | The manufacturing and assembling machinery and equipment
| ||||||
7 | exemption is exempt from the provisions of Section 2-70. | ||||||
8 | (Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19.)".
|