102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB4918

 

Introduced 1/27/2022, by Rep. Michael Halpin

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 500/1-10
35 ILCS 5/201
35 ILCS 105/2  from Ch. 120, par. 439.2
35 ILCS 105/3-5
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 110/3-5
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 115/3-5
35 ILCS 120/1  from Ch. 120, par. 440
35 ILCS 120/2-5

    Amends the Illinois Procurement Code. Provides that the Code does not apply to the leasing of State-owned facilities by a wireless carrier, a cable operator, a holder, or a provider of broadband services. Amends the Illinois Income Tax Act. Creates credit for the cost of equipment and materials used in the business of providing broadband services in a county in the State with a population of fewer than 40,000 people or a township in the State with a population density of less than 50 households per square mile in a county with a population of less than 300,000 people. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act to exempt equipment and materials used to provide broadband services in a county in the State with a population of fewer than 40,000 people or a township in the State with a population density of less than 50 households per square mile in a county with a population of less than 300,000 people. Effective immediately.


LRB102 22643 HLH 31787 b

 

 

A BILL FOR

 

HB4918LRB102 22643 HLH 31787 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 1. Short title. This Act may be cited as the
5Illinois Broadband Investment Act.
 
6    Section 3. The Illinois Procurement Code is amended by
7changing Section 1-10 as follows:
 
8    (30 ILCS 500/1-10)
9    Sec. 1-10. Application.
10    (a) This Code applies only to procurements for which
11bidders, offerors, potential contractors, or contractors were
12first solicited on or after July 1, 1998. This Code shall not
13be construed to affect or impair any contract, or any
14provision of a contract, entered into based on a solicitation
15prior to the implementation date of this Code as described in
16Article 99, including, but not limited to, any covenant
17entered into with respect to any revenue bonds or similar
18instruments. All procurements for which contracts are
19solicited between the effective date of Articles 50 and 99 and
20July 1, 1998 shall be substantially in accordance with this
21Code and its intent.
22    (b) This Code shall apply regardless of the source of the

 

 

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1funds with which the contracts are paid, including federal
2assistance moneys. This Code shall not apply to:
3        (1) Contracts between the State and its political
4    subdivisions or other governments, or between State
5    governmental bodies, except as specifically provided in
6    this Code.
7        (2) Grants, except for the filing requirements of
8    Section 20-80.
9        (3) Purchase of care, except as provided in Section
10    5-30.6 of the Illinois Public Aid Code and this Section.
11        (4) Hiring of an individual as an employee and not as
12    an independent contractor, whether pursuant to an
13    employment code or policy or by contract directly with
14    that individual.
15        (5) Collective bargaining contracts.
16        (6) Purchase of real estate, except that notice of
17    this type of contract with a value of more than $25,000
18    must be published in the Procurement Bulletin within 10
19    calendar days after the deed is recorded in the county of
20    jurisdiction. The notice shall identify the real estate
21    purchased, the names of all parties to the contract, the
22    value of the contract, and the effective date of the
23    contract.
24        (7) Contracts necessary to prepare for anticipated
25    litigation, enforcement actions, or investigations,
26    provided that the chief legal counsel to the Governor

 

 

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1    shall give his or her prior approval when the procuring
2    agency is one subject to the jurisdiction of the Governor,
3    and provided that the chief legal counsel of any other
4    procuring entity subject to this Code shall give his or
5    her prior approval when the procuring entity is not one
6    subject to the jurisdiction of the Governor.
7        (8) (Blank).
8        (9) Procurement expenditures by the Illinois
9    Conservation Foundation when only private funds are used.
10        (10) (Blank).
11        (11) Public-private agreements entered into according
12    to the procurement requirements of Section 20 of the
13    Public-Private Partnerships for Transportation Act and
14    design-build agreements entered into according to the
15    procurement requirements of Section 25 of the
16    Public-Private Partnerships for Transportation Act.
17        (12) (A) Contracts for legal, financial, and other
18    professional and artistic services entered into by the
19    Illinois Finance Authority in which the State of Illinois
20    is not obligated. Such contracts shall be awarded through
21    a competitive process authorized by the members of the
22    Illinois Finance Authority and are subject to Sections
23    5-30, 20-160, 50-13, 50-20, 50-35, and 50-37 of this Code,
24    as well as the final approval by the members of the
25    Illinois Finance Authority of the terms of the contract.
26        (B) Contracts for legal and financial services entered

 

 

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1    into by the Illinois Housing Development Authority in
2    connection with the issuance of bonds in which the State
3    of Illinois is not obligated. Such contracts shall be
4    awarded through a competitive process authorized by the
5    members of the Illinois Housing Development Authority and
6    are subject to Sections 5-30, 20-160, 50-13, 50-20, 50-35,
7    and 50-37 of this Code, as well as the final approval by
8    the members of the Illinois Housing Development Authority
9    of the terms of the contract.
10        (13) Contracts for services, commodities, and
11    equipment to support the delivery of timely forensic
12    science services in consultation with and subject to the
13    approval of the Chief Procurement Officer as provided in
14    subsection (d) of Section 5-4-3a of the Unified Code of
15    Corrections, except for the requirements of Sections
16    20-60, 20-65, 20-70, and 20-160 and Article 50 of this
17    Code; however, the Chief Procurement Officer may, in
18    writing with justification, waive any certification
19    required under Article 50 of this Code. For any contracts
20    for services which are currently provided by members of a
21    collective bargaining agreement, the applicable terms of
22    the collective bargaining agreement concerning
23    subcontracting shall be followed.
24        On and after January 1, 2019, this paragraph (13),
25    except for this sentence, is inoperative.
26        (14) Contracts for participation expenditures required

 

 

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1    by a domestic or international trade show or exhibition of
2    an exhibitor, member, or sponsor.
3        (15) Contracts with a railroad or utility that
4    requires the State to reimburse the railroad or utilities
5    for the relocation of utilities for construction or other
6    public purpose. Contracts included within this paragraph
7    (15) shall include, but not be limited to, those
8    associated with: relocations, crossings, installations,
9    and maintenance. For the purposes of this paragraph (15),
10    "railroad" means any form of non-highway ground
11    transportation that runs on rails or electromagnetic
12    guideways and "utility" means: (1) public utilities as
13    defined in Section 3-105 of the Public Utilities Act, (2)
14    telecommunications carriers as defined in Section 13-202
15    of the Public Utilities Act, (3) electric cooperatives as
16    defined in Section 3.4 of the Electric Supplier Act, (4)
17    telephone or telecommunications cooperatives as defined in
18    Section 13-212 of the Public Utilities Act, (5) rural
19    water or waste water systems with 10,000 connections or
20    less, (6) a holder as defined in Section 21-201 of the
21    Public Utilities Act, and (7) municipalities owning or
22    operating utility systems consisting of public utilities
23    as that term is defined in Section 11-117-2 of the
24    Illinois Municipal Code.
25        (16) Procurement expenditures necessary for the
26    Department of Public Health to provide the delivery of

 

 

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1    timely newborn screening services in accordance with the
2    Newborn Metabolic Screening Act.
3        (17) Procurement expenditures necessary for the
4    Department of Agriculture, the Department of Financial and
5    Professional Regulation, the Department of Human Services,
6    and the Department of Public Health to implement the
7    Compassionate Use of Medical Cannabis Program and Opioid
8    Alternative Pilot Program requirements and ensure access
9    to medical cannabis for patients with debilitating medical
10    conditions in accordance with the Compassionate Use of
11    Medical Cannabis Program Act.
12        (18) This Code does not apply to any procurements
13    necessary for the Department of Agriculture, the
14    Department of Financial and Professional Regulation, the
15    Department of Human Services, the Department of Commerce
16    and Economic Opportunity, and the Department of Public
17    Health to implement the Cannabis Regulation and Tax Act if
18    the applicable agency has made a good faith determination
19    that it is necessary and appropriate for the expenditure
20    to fall within this exemption and if the process is
21    conducted in a manner substantially in accordance with the
22    requirements of Sections 20-160, 25-60, 30-22, 50-5,
23    50-10, 50-10.5, 50-12, 50-13, 50-15, 50-20, 50-21, 50-35,
24    50-36, 50-37, 50-38, and 50-50 of this Code; however, for
25    Section 50-35, compliance applies only to contracts or
26    subcontracts over $100,000. Notice of each contract

 

 

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1    entered into under this paragraph (18) that is related to
2    the procurement of goods and services identified in
3    paragraph (1) through (9) of this subsection shall be
4    published in the Procurement Bulletin within 14 calendar
5    days after contract execution. The Chief Procurement
6    Officer shall prescribe the form and content of the
7    notice. Each agency shall provide the Chief Procurement
8    Officer, on a monthly basis, in the form and content
9    prescribed by the Chief Procurement Officer, a report of
10    contracts that are related to the procurement of goods and
11    services identified in this subsection. At a minimum, this
12    report shall include the name of the contractor, a
13    description of the supply or service provided, the total
14    amount of the contract, the term of the contract, and the
15    exception to this Code utilized. A copy of any or all of
16    these contracts shall be made available to the Chief
17    Procurement Officer immediately upon request. The Chief
18    Procurement Officer shall submit a report to the Governor
19    and General Assembly no later than November 1 of each year
20    that includes, at a minimum, an annual summary of the
21    monthly information reported to the Chief Procurement
22    Officer. This exemption becomes inoperative 5 years after
23    June 25, 2022 June 25, 2019 (the effective date of Public
24    Act 101-27).
25        (19) Acquisition of modifications or adjustments,
26    limited to assistive technology devices and assistive

 

 

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1    technology services, adaptive equipment, repairs, and
2    replacement parts to provide reasonable accommodations (i)
3    that enable a qualified applicant with a disability to
4    complete the job application process and be considered for
5    the position such qualified applicant desires, (ii) that
6    modify or adjust the work environment to enable a
7    qualified current employee with a disability to perform
8    the essential functions of the position held by that
9    employee, (iii) to enable a qualified current employee
10    with a disability to enjoy equal benefits and privileges
11    of employment as are enjoyed by its other similarly
12    situated employees without disabilities, and (iv) that
13    allow a customer, client, claimant, or member of the
14    public seeking State services full use and enjoyment of
15    and access to its programs, services, or benefits.
16        For purposes of this paragraph (19):
17        "Assistive technology devices" means any item, piece
18    of equipment, or product system, whether acquired
19    commercially off the shelf, modified, or customized, that
20    is used to increase, maintain, or improve functional
21    capabilities of individuals with disabilities.
22        "Assistive technology services" means any service that
23    directly assists an individual with a disability in
24    selection, acquisition, or use of an assistive technology
25    device.
26        "Qualified" has the same meaning and use as provided

 

 

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1    under the federal Americans with Disabilities Act when
2    describing an individual with a disability.
3        (20) (19) Procurement expenditures necessary for the
4    Illinois Commerce Commission to hire third-party
5    facilitators pursuant to Sections 16-105.17 and Section
6    16-108.18 of the Public Utilities Act or an ombudsman
7    pursuant to Section 16-107.5 of the Public Utilities Act,
8    a facilitator pursuant to Section 16-105.17 of the Public
9    Utilities Act, or a grid auditor pursuant to Section
10    16-105.10 of the Public Utilities Act.
11    Notwithstanding any other provision of law, for contracts
12entered into on or after October 1, 2017 under an exemption
13provided in any paragraph of this subsection (b), except
14paragraph (1), (2), or (5), each State agency shall post to the
15appropriate procurement bulletin the name of the contractor, a
16description of the supply or service provided, the total
17amount of the contract, the term of the contract, and the
18exception to the Code utilized. The chief procurement officer
19shall submit a report to the Governor and General Assembly no
20later than November 1 of each year that shall include, at a
21minimum, an annual summary of the monthly information reported
22to the chief procurement officer.
23    (c) This Code does not apply to the electric power
24procurement process provided for under Section 1-75 of the
25Illinois Power Agency Act and Section 16-111.5 of the Public
26Utilities Act.

 

 

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1    (d) Except for Section 20-160 and Article 50 of this Code,
2and as expressly required by Section 9.1 of the Illinois
3Lottery Law, the provisions of this Code do not apply to the
4procurement process provided for under Section 9.1 of the
5Illinois Lottery Law.
6    (e) This Code does not apply to the process used by the
7Capital Development Board to retain a person or entity to
8assist the Capital Development Board with its duties related
9to the determination of costs of a clean coal SNG brownfield
10facility, as defined by Section 1-10 of the Illinois Power
11Agency Act, as required in subsection (h-3) of Section 9-220
12of the Public Utilities Act, including calculating the range
13of capital costs, the range of operating and maintenance
14costs, or the sequestration costs or monitoring the
15construction of clean coal SNG brownfield facility for the
16full duration of construction.
17    (f) (Blank).
18    (g) (Blank).
19    (g-5) This Code does not apply to the leasing of
20State-owned facilities by a wireless carrier, as defined in
21Section 2 of the Emergency Telephone System Act, and does not
22apply to the leasing of State-owned facilities by a cable
23operator, a holder, or a provider of broadband services, as
24those terms are defined by Section 21-201 of the Public
25Utilities Act.
26    (h) This Code does not apply to the process to procure or

 

 

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1contracts entered into in accordance with Sections 11-5.2 and
211-5.3 of the Illinois Public Aid Code.
3    (i) Each chief procurement officer may access records
4necessary to review whether a contract, purchase, or other
5expenditure is or is not subject to the provisions of this
6Code, unless such records would be subject to attorney-client
7privilege.
8    (j) This Code does not apply to the process used by the
9Capital Development Board to retain an artist or work or works
10of art as required in Section 14 of the Capital Development
11Board Act.
12    (k) This Code does not apply to the process to procure
13contracts, or contracts entered into, by the State Board of
14Elections or the State Electoral Board for hearing officers
15appointed pursuant to the Election Code.
16    (l) This Code does not apply to the processes used by the
17Illinois Student Assistance Commission to procure supplies and
18services paid for from the private funds of the Illinois
19Prepaid Tuition Fund. As used in this subsection (l), "private
20funds" means funds derived from deposits paid into the
21Illinois Prepaid Tuition Trust Fund and the earnings thereon.
22    (m) This Code shall apply regardless of the source of
23funds with which contracts are paid, including federal
24assistance moneys. Except as specifically provided in this
25Code, this Code shall not apply to procurement expenditures
26necessary for the Department of Public Health to conduct the

 

 

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1Healthy Illinois Survey in accordance with Section 2310-431 of
2the Department of Public Health Powers and Duties Law of the
3Civil Administrative Code of Illinois.
4(Source: P.A. 101-27, eff. 6-25-19; 101-81, eff. 7-12-19;
5101-363, eff. 8-9-19; 102-175, eff. 7-29-21; 102-483, eff
61-1-22; 102-558, eff. 8-20-21; 102-600, eff. 8-27-21; 102-662,
7eff. 9-15-21; revised 11-23-21.)
 
8    Section 5. The Illinois Income Tax Act is amended by
9changing Section 201 as follows:
 
10    (35 ILCS 5/201)
11    Sec. 201. Tax imposed.
12    (a) In general. A tax measured by net income is hereby
13imposed on every individual, corporation, trust and estate for
14each taxable year ending after July 31, 1969 on the privilege
15of earning or receiving income in or as a resident of this
16State. Such tax shall be in addition to all other occupation or
17privilege taxes imposed by this State or by any municipal
18corporation or political subdivision thereof.
19    (b) Rates. The tax imposed by subsection (a) of this
20Section shall be determined as follows, except as adjusted by
21subsection (d-1):
22        (1) In the case of an individual, trust or estate, for
23    taxable years ending prior to July 1, 1989, an amount
24    equal to 2 1/2% of the taxpayer's net income for the

 

 

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1    taxable year.
2        (2) In the case of an individual, trust or estate, for
3    taxable years beginning prior to July 1, 1989 and ending
4    after June 30, 1989, an amount equal to the sum of (i) 2
5    1/2% of the taxpayer's net income for the period prior to
6    July 1, 1989, as calculated under Section 202.3, and (ii)
7    3% of the taxpayer's net income for the period after June
8    30, 1989, as calculated under Section 202.3.
9        (3) In the case of an individual, trust or estate, for
10    taxable years beginning after June 30, 1989, and ending
11    prior to January 1, 2011, an amount equal to 3% of the
12    taxpayer's net income for the taxable year.
13        (4) In the case of an individual, trust, or estate,
14    for taxable years beginning prior to January 1, 2011, and
15    ending after December 31, 2010, an amount equal to the sum
16    of (i) 3% of the taxpayer's net income for the period prior
17    to January 1, 2011, as calculated under Section 202.5, and
18    (ii) 5% of the taxpayer's net income for the period after
19    December 31, 2010, as calculated under Section 202.5.
20        (5) In the case of an individual, trust, or estate,
21    for taxable years beginning on or after January 1, 2011,
22    and ending prior to January 1, 2015, an amount equal to 5%
23    of the taxpayer's net income for the taxable year.
24        (5.1) In the case of an individual, trust, or estate,
25    for taxable years beginning prior to January 1, 2015, and
26    ending after December 31, 2014, an amount equal to the sum

 

 

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1    of (i) 5% of the taxpayer's net income for the period prior
2    to January 1, 2015, as calculated under Section 202.5, and
3    (ii) 3.75% of the taxpayer's net income for the period
4    after December 31, 2014, as calculated under Section
5    202.5.
6        (5.2) In the case of an individual, trust, or estate,
7    for taxable years beginning on or after January 1, 2015,
8    and ending prior to July 1, 2017, an amount equal to 3.75%
9    of the taxpayer's net income for the taxable year.
10        (5.3) In the case of an individual, trust, or estate,
11    for taxable years beginning prior to July 1, 2017, and
12    ending after June 30, 2017, an amount equal to the sum of
13    (i) 3.75% of the taxpayer's net income for the period
14    prior to July 1, 2017, as calculated under Section 202.5,
15    and (ii) 4.95% of the taxpayer's net income for the period
16    after June 30, 2017, as calculated under Section 202.5.
17        (5.4) In the case of an individual, trust, or estate,
18    for taxable years beginning on or after July 1, 2017, an
19    amount equal to 4.95% of the taxpayer's net income for the
20    taxable year.
21        (6) In the case of a corporation, for taxable years
22    ending prior to July 1, 1989, an amount equal to 4% of the
23    taxpayer's net income for the taxable year.
24        (7) In the case of a corporation, for taxable years
25    beginning prior to July 1, 1989 and ending after June 30,
26    1989, an amount equal to the sum of (i) 4% of the

 

 

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1    taxpayer's net income for the period prior to July 1,
2    1989, as calculated under Section 202.3, and (ii) 4.8% of
3    the taxpayer's net income for the period after June 30,
4    1989, as calculated under Section 202.3.
5        (8) In the case of a corporation, for taxable years
6    beginning after June 30, 1989, and ending prior to January
7    1, 2011, an amount equal to 4.8% of the taxpayer's net
8    income for the taxable year.
9        (9) In the case of a corporation, for taxable years
10    beginning prior to January 1, 2011, and ending after
11    December 31, 2010, an amount equal to the sum of (i) 4.8%
12    of the taxpayer's net income for the period prior to
13    January 1, 2011, as calculated under Section 202.5, and
14    (ii) 7% of the taxpayer's net income for the period after
15    December 31, 2010, as calculated under Section 202.5.
16        (10) In the case of a corporation, for taxable years
17    beginning on or after January 1, 2011, and ending prior to
18    January 1, 2015, an amount equal to 7% of the taxpayer's
19    net income for the taxable year.
20        (11) In the case of a corporation, for taxable years
21    beginning prior to January 1, 2015, and ending after
22    December 31, 2014, an amount equal to the sum of (i) 7% of
23    the taxpayer's net income for the period prior to January
24    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
25    of the taxpayer's net income for the period after December
26    31, 2014, as calculated under Section 202.5.

 

 

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1        (12) In the case of a corporation, for taxable years
2    beginning on or after January 1, 2015, and ending prior to
3    July 1, 2017, an amount equal to 5.25% of the taxpayer's
4    net income for the taxable year.
5        (13) In the case of a corporation, for taxable years
6    beginning prior to July 1, 2017, and ending after June 30,
7    2017, an amount equal to the sum of (i) 5.25% of the
8    taxpayer's net income for the period prior to July 1,
9    2017, as calculated under Section 202.5, and (ii) 7% of
10    the taxpayer's net income for the period after June 30,
11    2017, as calculated under Section 202.5.
12        (14) In the case of a corporation, for taxable years
13    beginning on or after July 1, 2017, an amount equal to 7%
14    of the taxpayer's net income for the taxable year.
15    The rates under this subsection (b) are subject to the
16provisions of Section 201.5.
17    (b-5) Surcharge; sale or exchange of assets, properties,
18and intangibles of organization gaming licensees. For each of
19taxable years 2019 through 2027, a surcharge is imposed on all
20taxpayers on income arising from the sale or exchange of
21capital assets, depreciable business property, real property
22used in the trade or business, and Section 197 intangibles (i)
23of an organization licensee under the Illinois Horse Racing
24Act of 1975 and (ii) of an organization gaming licensee under
25the Illinois Gambling Act. The amount of the surcharge is
26equal to the amount of federal income tax liability for the

 

 

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1taxable year attributable to those sales and exchanges. The
2surcharge imposed shall not apply if:
3        (1) the organization gaming license, organization
4    license, or racetrack property is transferred as a result
5    of any of the following:
6            (A) bankruptcy, a receivership, or a debt
7        adjustment initiated by or against the initial
8        licensee or the substantial owners of the initial
9        licensee;
10            (B) cancellation, revocation, or termination of
11        any such license by the Illinois Gaming Board or the
12        Illinois Racing Board;
13            (C) a determination by the Illinois Gaming Board
14        that transfer of the license is in the best interests
15        of Illinois gaming;
16            (D) the death of an owner of the equity interest in
17        a licensee;
18            (E) the acquisition of a controlling interest in
19        the stock or substantially all of the assets of a
20        publicly traded company;
21            (F) a transfer by a parent company to a wholly
22        owned subsidiary; or
23            (G) the transfer or sale to or by one person to
24        another person where both persons were initial owners
25        of the license when the license was issued; or
26        (2) the controlling interest in the organization

 

 

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1    gaming license, organization license, or racetrack
2    property is transferred in a transaction to lineal
3    descendants in which no gain or loss is recognized or as a
4    result of a transaction in accordance with Section 351 of
5    the Internal Revenue Code in which no gain or loss is
6    recognized; or
7        (3) live horse racing was not conducted in 2010 at a
8    racetrack located within 3 miles of the Mississippi River
9    under a license issued pursuant to the Illinois Horse
10    Racing Act of 1975.
11    The transfer of an organization gaming license,
12organization license, or racetrack property by a person other
13than the initial licensee to receive the organization gaming
14license is not subject to a surcharge. The Department shall
15adopt rules necessary to implement and administer this
16subsection.
17    (c) Personal Property Tax Replacement Income Tax.
18Beginning on July 1, 1979 and thereafter, in addition to such
19income tax, there is also hereby imposed the Personal Property
20Tax Replacement Income Tax measured by net income on every
21corporation (including Subchapter S corporations), partnership
22and trust, for each taxable year ending after June 30, 1979.
23Such taxes are imposed on the privilege of earning or
24receiving income in or as a resident of this State. The
25Personal Property Tax Replacement Income Tax shall be in
26addition to the income tax imposed by subsections (a) and (b)

 

 

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1of this Section and in addition to all other occupation or
2privilege taxes imposed by this State or by any municipal
3corporation or political subdivision thereof.
4    (d) Additional Personal Property Tax Replacement Income
5Tax Rates. The personal property tax replacement income tax
6imposed by this subsection and subsection (c) of this Section
7in the case of a corporation, other than a Subchapter S
8corporation and except as adjusted by subsection (d-1), shall
9be an additional amount equal to 2.85% of such taxpayer's net
10income for the taxable year, except that beginning on January
111, 1981, and thereafter, the rate of 2.85% specified in this
12subsection shall be reduced to 2.5%, and in the case of a
13partnership, trust or a Subchapter S corporation shall be an
14additional amount equal to 1.5% of such taxpayer's net income
15for the taxable year.
16    (d-1) Rate reduction for certain foreign insurers. In the
17case of a foreign insurer, as defined by Section 35A-5 of the
18Illinois Insurance Code, whose state or country of domicile
19imposes on insurers domiciled in Illinois a retaliatory tax
20(excluding any insurer whose premiums from reinsurance assumed
21are 50% or more of its total insurance premiums as determined
22under paragraph (2) of subsection (b) of Section 304, except
23that for purposes of this determination premiums from
24reinsurance do not include premiums from inter-affiliate
25reinsurance arrangements), beginning with taxable years ending
26on or after December 31, 1999, the sum of the rates of tax

 

 

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1imposed by subsections (b) and (d) shall be reduced (but not
2increased) to the rate at which the total amount of tax imposed
3under this Act, net of all credits allowed under this Act,
4shall equal (i) the total amount of tax that would be imposed
5on the foreign insurer's net income allocable to Illinois for
6the taxable year by such foreign insurer's state or country of
7domicile if that net income were subject to all income taxes
8and taxes measured by net income imposed by such foreign
9insurer's state or country of domicile, net of all credits
10allowed or (ii) a rate of zero if no such tax is imposed on
11such income by the foreign insurer's state of domicile. For
12the purposes of this subsection (d-1), an inter-affiliate
13includes a mutual insurer under common management.
14        (1) For the purposes of subsection (d-1), in no event
15    shall the sum of the rates of tax imposed by subsections
16    (b) and (d) be reduced below the rate at which the sum of:
17            (A) the total amount of tax imposed on such
18        foreign insurer under this Act for a taxable year, net
19        of all credits allowed under this Act, plus
20            (B) the privilege tax imposed by Section 409 of
21        the Illinois Insurance Code, the fire insurance
22        company tax imposed by Section 12 of the Fire
23        Investigation Act, and the fire department taxes
24        imposed under Section 11-10-1 of the Illinois
25        Municipal Code,
26    equals 1.25% for taxable years ending prior to December

 

 

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1    31, 2003, or 1.75% for taxable years ending on or after
2    December 31, 2003, of the net taxable premiums written for
3    the taxable year, as described by subsection (1) of
4    Section 409 of the Illinois Insurance Code. This paragraph
5    will in no event increase the rates imposed under
6    subsections (b) and (d).
7        (2) Any reduction in the rates of tax imposed by this
8    subsection shall be applied first against the rates
9    imposed by subsection (b) and only after the tax imposed
10    by subsection (a) net of all credits allowed under this
11    Section other than the credit allowed under subsection (i)
12    has been reduced to zero, against the rates imposed by
13    subsection (d).
14    This subsection (d-1) is exempt from the provisions of
15Section 250.
16    (e) Investment credit. A taxpayer shall be allowed a
17credit against the Personal Property Tax Replacement Income
18Tax for investment in qualified property.
19        (1) A taxpayer shall be allowed a credit equal to .5%
20    of the basis of qualified property placed in service
21    during the taxable year, provided such property is placed
22    in service on or after July 1, 1984. There shall be allowed
23    an additional credit equal to .5% of the basis of
24    qualified property placed in service during the taxable
25    year, provided such property is placed in service on or
26    after July 1, 1986, and the taxpayer's base employment

 

 

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1    within Illinois has increased by 1% or more over the
2    preceding year as determined by the taxpayer's employment
3    records filed with the Illinois Department of Employment
4    Security. Taxpayers who are new to Illinois shall be
5    deemed to have met the 1% growth in base employment for the
6    first year in which they file employment records with the
7    Illinois Department of Employment Security. The provisions
8    added to this Section by Public Act 85-1200 (and restored
9    by Public Act 87-895) shall be construed as declaratory of
10    existing law and not as a new enactment. If, in any year,
11    the increase in base employment within Illinois over the
12    preceding year is less than 1%, the additional credit
13    shall be limited to that percentage times a fraction, the
14    numerator of which is .5% and the denominator of which is
15    1%, but shall not exceed .5%. The investment credit shall
16    not be allowed to the extent that it would reduce a
17    taxpayer's liability in any tax year below zero, nor may
18    any credit for qualified property be allowed for any year
19    other than the year in which the property was placed in
20    service in Illinois. For tax years ending on or after
21    December 31, 1987, and on or before December 31, 1988, the
22    credit shall be allowed for the tax year in which the
23    property is placed in service, or, if the amount of the
24    credit exceeds the tax liability for that year, whether it
25    exceeds the original liability or the liability as later
26    amended, such excess may be carried forward and applied to

 

 

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1    the tax liability of the 5 taxable years following the
2    excess credit years if the taxpayer (i) makes investments
3    which cause the creation of a minimum of 2,000 full-time
4    equivalent jobs in Illinois, (ii) is located in an
5    enterprise zone established pursuant to the Illinois
6    Enterprise Zone Act and (iii) is certified by the
7    Department of Commerce and Community Affairs (now
8    Department of Commerce and Economic Opportunity) as
9    complying with the requirements specified in clause (i)
10    and (ii) by July 1, 1986. The Department of Commerce and
11    Community Affairs (now Department of Commerce and Economic
12    Opportunity) shall notify the Department of Revenue of all
13    such certifications immediately. For tax years ending
14    after December 31, 1988, the credit shall be allowed for
15    the tax year in which the property is placed in service,
16    or, if the amount of the credit exceeds the tax liability
17    for that year, whether it exceeds the original liability
18    or the liability as later amended, such excess may be
19    carried forward and applied to the tax liability of the 5
20    taxable years following the excess credit years. The
21    credit shall be applied to the earliest year for which
22    there is a liability. If there is credit from more than one
23    tax year that is available to offset a liability, earlier
24    credit shall be applied first.
25        (2) The term "qualified property" means property
26    which:

 

 

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1            (A) is tangible, whether new or used, including
2        buildings and structural components of buildings and
3        signs that are real property, but not including land
4        or improvements to real property that are not a
5        structural component of a building such as
6        landscaping, sewer lines, local access roads, fencing,
7        parking lots, and other appurtenances;
8            (B) is depreciable pursuant to Section 167 of the
9        Internal Revenue Code, except that "3-year property"
10        as defined in Section 168(c)(2)(A) of that Code is not
11        eligible for the credit provided by this subsection
12        (e);
13            (C) is acquired by purchase as defined in Section
14        179(d) of the Internal Revenue Code;
15            (D) is used in Illinois by a taxpayer who is
16        primarily engaged in manufacturing, or in mining coal
17        or fluorite, or in retailing, or was placed in service
18        on or after July 1, 2006 in a River Edge Redevelopment
19        Zone established pursuant to the River Edge
20        Redevelopment Zone Act; and
21            (E) has not previously been used in Illinois in
22        such a manner and by such a person as would qualify for
23        the credit provided by this subsection (e) or
24        subsection (f).
25        (3) For purposes of this subsection (e),
26    "manufacturing" means the material staging and production

 

 

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1    of tangible personal property by procedures commonly
2    regarded as manufacturing, processing, fabrication, or
3    assembling which changes some existing material into new
4    shapes, new qualities, or new combinations. For purposes
5    of this subsection (e) the term "mining" shall have the
6    same meaning as the term "mining" in Section 613(c) of the
7    Internal Revenue Code. For purposes of this subsection
8    (e), the term "retailing" means the sale of tangible
9    personal property for use or consumption and not for
10    resale, or services rendered in conjunction with the sale
11    of tangible personal property for use or consumption and
12    not for resale. For purposes of this subsection (e),
13    "tangible personal property" has the same meaning as when
14    that term is used in the Retailers' Occupation Tax Act,
15    and, for taxable years ending after December 31, 2008,
16    does not include the generation, transmission, or
17    distribution of electricity.
18        (4) The basis of qualified property shall be the basis
19    used to compute the depreciation deduction for federal
20    income tax purposes.
21        (5) If the basis of the property for federal income
22    tax depreciation purposes is increased after it has been
23    placed in service in Illinois by the taxpayer, the amount
24    of such increase shall be deemed property placed in
25    service on the date of such increase in basis.
26        (6) The term "placed in service" shall have the same

 

 

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1    meaning as under Section 46 of the Internal Revenue Code.
2        (7) If during any taxable year, any property ceases to
3    be qualified property in the hands of the taxpayer within
4    48 months after being placed in service, or the situs of
5    any qualified property is moved outside Illinois within 48
6    months after being placed in service, the Personal
7    Property Tax Replacement Income Tax for such taxable year
8    shall be increased. Such increase shall be determined by
9    (i) recomputing the investment credit which would have
10    been allowed for the year in which credit for such
11    property was originally allowed by eliminating such
12    property from such computation and, (ii) subtracting such
13    recomputed credit from the amount of credit previously
14    allowed. For the purposes of this paragraph (7), a
15    reduction of the basis of qualified property resulting
16    from a redetermination of the purchase price shall be
17    deemed a disposition of qualified property to the extent
18    of such reduction.
19        (8) Unless the investment credit is extended by law,
20    the basis of qualified property shall not include costs
21    incurred after December 31, 2018, except for costs
22    incurred pursuant to a binding contract entered into on or
23    before December 31, 2018.
24        (9) Each taxable year ending before December 31, 2000,
25    a partnership may elect to pass through to its partners
26    the credits to which the partnership is entitled under

 

 

HB4918- 27 -LRB102 22643 HLH 31787 b

1    this subsection (e) for the taxable year. A partner may
2    use the credit allocated to him or her under this
3    paragraph only against the tax imposed in subsections (c)
4    and (d) of this Section. If the partnership makes that
5    election, those credits shall be allocated among the
6    partners in the partnership in accordance with the rules
7    set forth in Section 704(b) of the Internal Revenue Code,
8    and the rules promulgated under that Section, and the
9    allocated amount of the credits shall be allowed to the
10    partners for that taxable year. The partnership shall make
11    this election on its Personal Property Tax Replacement
12    Income Tax return for that taxable year. The election to
13    pass through the credits shall be irrevocable.
14        For taxable years ending on or after December 31,
15    2000, a partner that qualifies its partnership for a
16    subtraction under subparagraph (I) of paragraph (2) of
17    subsection (d) of Section 203 or a shareholder that
18    qualifies a Subchapter S corporation for a subtraction
19    under subparagraph (S) of paragraph (2) of subsection (b)
20    of Section 203 shall be allowed a credit under this
21    subsection (e) equal to its share of the credit earned
22    under this subsection (e) during the taxable year by the
23    partnership or Subchapter S corporation, determined in
24    accordance with the determination of income and
25    distributive share of income under Sections 702 and 704
26    and Subchapter S of the Internal Revenue Code. This

 

 

HB4918- 28 -LRB102 22643 HLH 31787 b

1    paragraph is exempt from the provisions of Section 250.
2    (f) Investment credit; Enterprise Zone; River Edge
3Redevelopment Zone.
4        (1) A taxpayer shall be allowed a credit against the
5    tax imposed by subsections (a) and (b) of this Section for
6    investment in qualified property which is placed in
7    service in an Enterprise Zone created pursuant to the
8    Illinois Enterprise Zone Act or, for property placed in
9    service on or after July 1, 2006, a River Edge
10    Redevelopment Zone established pursuant to the River Edge
11    Redevelopment Zone Act. For partners, shareholders of
12    Subchapter S corporations, and owners of limited liability
13    companies, if the liability company is treated as a
14    partnership for purposes of federal and State income
15    taxation, there shall be allowed a credit under this
16    subsection (f) to be determined in accordance with the
17    determination of income and distributive share of income
18    under Sections 702 and 704 and Subchapter S of the
19    Internal Revenue Code. The credit shall be .5% of the
20    basis for such property. The credit shall be available
21    only in the taxable year in which the property is placed in
22    service in the Enterprise Zone or River Edge Redevelopment
23    Zone and shall not be allowed to the extent that it would
24    reduce a taxpayer's liability for the tax imposed by
25    subsections (a) and (b) of this Section to below zero. For
26    tax years ending on or after December 31, 1985, the credit

 

 

HB4918- 29 -LRB102 22643 HLH 31787 b

1    shall be allowed for the tax year in which the property is
2    placed in service, or, if the amount of the credit exceeds
3    the tax liability for that year, whether it exceeds the
4    original liability or the liability as later amended, such
5    excess may be carried forward and applied to the tax
6    liability of the 5 taxable years following the excess
7    credit year. The credit shall be applied to the earliest
8    year for which there is a liability. If there is credit
9    from more than one tax year that is available to offset a
10    liability, the credit accruing first in time shall be
11    applied first.
12        (2) The term qualified property means property which:
13            (A) is tangible, whether new or used, including
14        buildings and structural components of buildings;
15            (B) is depreciable pursuant to Section 167 of the
16        Internal Revenue Code, except that "3-year property"
17        as defined in Section 168(c)(2)(A) of that Code is not
18        eligible for the credit provided by this subsection
19        (f);
20            (C) is acquired by purchase as defined in Section
21        179(d) of the Internal Revenue Code;
22            (D) is used in the Enterprise Zone or River Edge
23        Redevelopment Zone by the taxpayer; and
24            (E) has not been previously used in Illinois in
25        such a manner and by such a person as would qualify for
26        the credit provided by this subsection (f) or

 

 

HB4918- 30 -LRB102 22643 HLH 31787 b

1        subsection (e).
2        (3) The basis of qualified property shall be the basis
3    used to compute the depreciation deduction for federal
4    income tax purposes.
5        (4) If the basis of the property for federal income
6    tax depreciation purposes is increased after it has been
7    placed in service in the Enterprise Zone or River Edge
8    Redevelopment Zone by the taxpayer, the amount of such
9    increase shall be deemed property placed in service on the
10    date of such increase in basis.
11        (5) The term "placed in service" shall have the same
12    meaning as under Section 46 of the Internal Revenue Code.
13        (6) If during any taxable year, any property ceases to
14    be qualified property in the hands of the taxpayer within
15    48 months after being placed in service, or the situs of
16    any qualified property is moved outside the Enterprise
17    Zone or River Edge Redevelopment Zone within 48 months
18    after being placed in service, the tax imposed under
19    subsections (a) and (b) of this Section for such taxable
20    year shall be increased. Such increase shall be determined
21    by (i) recomputing the investment credit which would have
22    been allowed for the year in which credit for such
23    property was originally allowed by eliminating such
24    property from such computation, and (ii) subtracting such
25    recomputed credit from the amount of credit previously
26    allowed. For the purposes of this paragraph (6), a

 

 

HB4918- 31 -LRB102 22643 HLH 31787 b

1    reduction of the basis of qualified property resulting
2    from a redetermination of the purchase price shall be
3    deemed a disposition of qualified property to the extent
4    of such reduction.
5        (7) There shall be allowed an additional credit equal
6    to 0.5% of the basis of qualified property placed in
7    service during the taxable year in a River Edge
8    Redevelopment Zone, provided such property is placed in
9    service on or after July 1, 2006, and the taxpayer's base
10    employment within Illinois has increased by 1% or more
11    over the preceding year as determined by the taxpayer's
12    employment records filed with the Illinois Department of
13    Employment Security. Taxpayers who are new to Illinois
14    shall be deemed to have met the 1% growth in base
15    employment for the first year in which they file
16    employment records with the Illinois Department of
17    Employment Security. If, in any year, the increase in base
18    employment within Illinois over the preceding year is less
19    than 1%, the additional credit shall be limited to that
20    percentage times a fraction, the numerator of which is
21    0.5% and the denominator of which is 1%, but shall not
22    exceed 0.5%.
23        (8) For taxable years beginning on or after January 1,
24    2021, there shall be allowed an Enterprise Zone
25    construction jobs credit against the taxes imposed under
26    subsections (a) and (b) of this Section as provided in

 

 

HB4918- 32 -LRB102 22643 HLH 31787 b

1    Section 13 of the Illinois Enterprise Zone Act.
2        The credit or credits may not reduce the taxpayer's
3    liability to less than zero. If the amount of the credit or
4    credits exceeds the taxpayer's liability, the excess may
5    be carried forward and applied against the taxpayer's
6    liability in succeeding calendar years in the same manner
7    provided under paragraph (4) of Section 211 of this Act.
8    The credit or credits shall be applied to the earliest
9    year for which there is a tax liability. If there are
10    credits from more than one taxable year that are available
11    to offset a liability, the earlier credit shall be applied
12    first.
13        For partners, shareholders of Subchapter S
14    corporations, and owners of limited liability companies,
15    if the liability company is treated as a partnership for
16    the purposes of federal and State income taxation, there
17    shall be allowed a credit under this Section to be
18    determined in accordance with the determination of income
19    and distributive share of income under Sections 702 and
20    704 and Subchapter S of the Internal Revenue Code.
21        The total aggregate amount of credits awarded under
22    the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
23    shall not exceed $20,000,000 in any State fiscal year.
24        This paragraph (8) is exempt from the provisions of
25    Section 250.
26    (g) (Blank).

 

 

HB4918- 33 -LRB102 22643 HLH 31787 b

1    (h) Investment credit; High Impact Business.
2        (1) Subject to subsections (b) and (b-5) of Section
3    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
4    be allowed a credit against the tax imposed by subsections
5    (a) and (b) of this Section for investment in qualified
6    property which is placed in service by a Department of
7    Commerce and Economic Opportunity designated High Impact
8    Business. The credit shall be .5% of the basis for such
9    property. The credit shall not be available (i) until the
10    minimum investments in qualified property set forth in
11    subdivision (a)(3)(A) of Section 5.5 of the Illinois
12    Enterprise Zone Act have been satisfied or (ii) until the
13    time authorized in subsection (b-5) of the Illinois
14    Enterprise Zone Act for entities designated as High Impact
15    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
16    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
17    Act, and shall not be allowed to the extent that it would
18    reduce a taxpayer's liability for the tax imposed by
19    subsections (a) and (b) of this Section to below zero. The
20    credit applicable to such investments shall be taken in
21    the taxable year in which such investments have been
22    completed. The credit for additional investments beyond
23    the minimum investment by a designated high impact
24    business authorized under subdivision (a)(3)(A) of Section
25    5.5 of the Illinois Enterprise Zone Act shall be available
26    only in the taxable year in which the property is placed in

 

 

HB4918- 34 -LRB102 22643 HLH 31787 b

1    service and shall not be allowed to the extent that it
2    would reduce a taxpayer's liability for the tax imposed by
3    subsections (a) and (b) of this Section to below zero. For
4    tax years ending on or after December 31, 1987, the credit
5    shall be allowed for the tax year in which the property is
6    placed in service, or, if the amount of the credit exceeds
7    the tax liability for that year, whether it exceeds the
8    original liability or the liability as later amended, such
9    excess may be carried forward and applied to the tax
10    liability of the 5 taxable years following the excess
11    credit year. The credit shall be applied to the earliest
12    year for which there is a liability. If there is credit
13    from more than one tax year that is available to offset a
14    liability, the credit accruing first in time shall be
15    applied first.
16        Changes made in this subdivision (h)(1) by Public Act
17    88-670 restore changes made by Public Act 85-1182 and
18    reflect existing law.
19        (2) The term qualified property means property which:
20            (A) is tangible, whether new or used, including
21        buildings and structural components of buildings;
22            (B) is depreciable pursuant to Section 167 of the
23        Internal Revenue Code, except that "3-year property"
24        as defined in Section 168(c)(2)(A) of that Code is not
25        eligible for the credit provided by this subsection
26        (h);

 

 

HB4918- 35 -LRB102 22643 HLH 31787 b

1            (C) is acquired by purchase as defined in Section
2        179(d) of the Internal Revenue Code; and
3            (D) is not eligible for the Enterprise Zone
4        Investment Credit provided by subsection (f) of this
5        Section.
6        (3) The basis of qualified property shall be the basis
7    used to compute the depreciation deduction for federal
8    income tax purposes.
9        (4) If the basis of the property for federal income
10    tax depreciation purposes is increased after it has been
11    placed in service in a federally designated Foreign Trade
12    Zone or Sub-Zone located in Illinois by the taxpayer, the
13    amount of such increase shall be deemed property placed in
14    service on the date of such increase in basis.
15        (5) The term "placed in service" shall have the same
16    meaning as under Section 46 of the Internal Revenue Code.
17        (6) If during any taxable year ending on or before
18    December 31, 1996, any property ceases to be qualified
19    property in the hands of the taxpayer within 48 months
20    after being placed in service, or the situs of any
21    qualified property is moved outside Illinois within 48
22    months after being placed in service, the tax imposed
23    under subsections (a) and (b) of this Section for such
24    taxable year shall be increased. Such increase shall be
25    determined by (i) recomputing the investment credit which
26    would have been allowed for the year in which credit for

 

 

HB4918- 36 -LRB102 22643 HLH 31787 b

1    such property was originally allowed by eliminating such
2    property from such computation, and (ii) subtracting such
3    recomputed credit from the amount of credit previously
4    allowed. For the purposes of this paragraph (6), a
5    reduction of the basis of qualified property resulting
6    from a redetermination of the purchase price shall be
7    deemed a disposition of qualified property to the extent
8    of such reduction.
9        (7) Beginning with tax years ending after December 31,
10    1996, if a taxpayer qualifies for the credit under this
11    subsection (h) and thereby is granted a tax abatement and
12    the taxpayer relocates its entire facility in violation of
13    the explicit terms and length of the contract under
14    Section 18-183 of the Property Tax Code, the tax imposed
15    under subsections (a) and (b) of this Section shall be
16    increased for the taxable year in which the taxpayer
17    relocated its facility by an amount equal to the amount of
18    credit received by the taxpayer under this subsection (h).
19    (h-5) High Impact Business construction jobs credit. For
20taxable years beginning on or after January 1, 2021, there
21shall also be allowed a High Impact Business construction jobs
22credit against the tax imposed under subsections (a) and (b)
23of this Section as provided in subsections (i) and (j) of
24Section 5.5 of the Illinois Enterprise Zone Act.
25    The credit or credits may not reduce the taxpayer's
26liability to less than zero. If the amount of the credit or

 

 

HB4918- 37 -LRB102 22643 HLH 31787 b

1credits exceeds the taxpayer's liability, the excess may be
2carried forward and applied against the taxpayer's liability
3in succeeding calendar years in the manner provided under
4paragraph (4) of Section 211 of this Act. The credit or credits
5shall be applied to the earliest year for which there is a tax
6liability. If there are credits from more than one taxable
7year that are available to offset a liability, the earlier
8credit shall be applied first.
9    For partners, shareholders of Subchapter S corporations,
10and owners of limited liability companies, if the liability
11company is treated as a partnership for the purposes of
12federal and State income taxation, there shall be allowed a
13credit under this Section to be determined in accordance with
14the determination of income and distributive share of income
15under Sections 702 and 704 and Subchapter S of the Internal
16Revenue Code.
17    The total aggregate amount of credits awarded under the
18Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
19exceed $20,000,000 in any State fiscal year.
20    This subsection (h-5) is exempt from the provisions of
21Section 250.
22    (i) Credit for Personal Property Tax Replacement Income
23Tax. For tax years ending prior to December 31, 2003, a credit
24shall be allowed against the tax imposed by subsections (a)
25and (b) of this Section for the tax imposed by subsections (c)
26and (d) of this Section. This credit shall be computed by

 

 

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1multiplying the tax imposed by subsections (c) and (d) of this
2Section by a fraction, the numerator of which is base income
3allocable to Illinois and the denominator of which is Illinois
4base income, and further multiplying the product by the tax
5rate imposed by subsections (a) and (b) of this Section.
6    Any credit earned on or after December 31, 1986 under this
7subsection which is unused in the year the credit is computed
8because it exceeds the tax liability imposed by subsections
9(a) and (b) for that year (whether it exceeds the original
10liability or the liability as later amended) may be carried
11forward and applied to the tax liability imposed by
12subsections (a) and (b) of the 5 taxable years following the
13excess credit year, provided that no credit may be carried
14forward to any year ending on or after December 31, 2003. This
15credit shall be applied first to the earliest year for which
16there is a liability. If there is a credit under this
17subsection from more than one tax year that is available to
18offset a liability the earliest credit arising under this
19subsection shall be applied first.
20    If, during any taxable year ending on or after December
2131, 1986, the tax imposed by subsections (c) and (d) of this
22Section for which a taxpayer has claimed a credit under this
23subsection (i) is reduced, the amount of credit for such tax
24shall also be reduced. Such reduction shall be determined by
25recomputing the credit to take into account the reduced tax
26imposed by subsections (c) and (d). If any portion of the

 

 

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1reduced amount of credit has been carried to a different
2taxable year, an amended return shall be filed for such
3taxable year to reduce the amount of credit claimed.
4    (j) Training expense credit. Beginning with tax years
5ending on or after December 31, 1986 and prior to December 31,
62003, a taxpayer shall be allowed a credit against the tax
7imposed by subsections (a) and (b) under this Section for all
8amounts paid or accrued, on behalf of all persons employed by
9the taxpayer in Illinois or Illinois residents employed
10outside of Illinois by a taxpayer, for educational or
11vocational training in semi-technical or technical fields or
12semi-skilled or skilled fields, which were deducted from gross
13income in the computation of taxable income. The credit
14against the tax imposed by subsections (a) and (b) shall be
151.6% of such training expenses. For partners, shareholders of
16subchapter S corporations, and owners of limited liability
17companies, if the liability company is treated as a
18partnership for purposes of federal and State income taxation,
19there shall be allowed a credit under this subsection (j) to be
20determined in accordance with the determination of income and
21distributive share of income under Sections 702 and 704 and
22subchapter S of the Internal Revenue Code.
23    Any credit allowed under this subsection which is unused
24in the year the credit is earned may be carried forward to each
25of the 5 taxable years following the year for which the credit
26is first computed until it is used. This credit shall be

 

 

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1applied first to the earliest year for which there is a
2liability. If there is a credit under this subsection from
3more than one tax year that is available to offset a liability,
4the earliest credit arising under this subsection shall be
5applied first. No carryforward credit may be claimed in any
6tax year ending on or after December 31, 2003.
7    (k) Research and development credit. For tax years ending
8after July 1, 1990 and prior to December 31, 2003, and
9beginning again for tax years ending on or after December 31,
102004, and ending prior to January 1, 2027, a taxpayer shall be
11allowed a credit against the tax imposed by subsections (a)
12and (b) of this Section for increasing research activities in
13this State. The credit allowed against the tax imposed by
14subsections (a) and (b) shall be equal to 6 1/2% of the
15qualifying expenditures for increasing research activities in
16this State. For partners, shareholders of subchapter S
17corporations, and owners of limited liability companies, if
18the liability company is treated as a partnership for purposes
19of federal and State income taxation, there shall be allowed a
20credit under this subsection to be determined in accordance
21with the determination of income and distributive share of
22income under Sections 702 and 704 and subchapter S of the
23Internal Revenue Code.
24    For purposes of this subsection, "qualifying expenditures"
25means the qualifying expenditures as defined for the federal
26credit for increasing research activities which would be

 

 

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1allowable under Section 41 of the Internal Revenue Code and
2which are conducted in this State, "qualifying expenditures
3for increasing research activities in this State" means the
4excess of qualifying expenditures for the taxable year in
5which incurred over qualifying expenditures for the base
6period, "qualifying expenditures for the base period" means
7the average of the qualifying expenditures for each year in
8the base period, and "base period" means the 3 taxable years
9immediately preceding the taxable year for which the
10determination is being made.
11    Any credit in excess of the tax liability for the taxable
12year may be carried forward. A taxpayer may elect to have the
13unused credit shown on its final completed return carried over
14as a credit against the tax liability for the following 5
15taxable years or until it has been fully used, whichever
16occurs first; provided that no credit earned in a tax year
17ending prior to December 31, 2003 may be carried forward to any
18year ending on or after December 31, 2003.
19    If an unused credit is carried forward to a given year from
202 or more earlier years, that credit arising in the earliest
21year will be applied first against the tax liability for the
22given year. If a tax liability for the given year still
23remains, the credit from the next earliest year will then be
24applied, and so on, until all credits have been used or no tax
25liability for the given year remains. Any remaining unused
26credit or credits then will be carried forward to the next

 

 

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1following year in which a tax liability is incurred, except
2that no credit can be carried forward to a year which is more
3than 5 years after the year in which the expense for which the
4credit is given was incurred.
5    No inference shall be drawn from Public Act 91-644 in
6construing this Section for taxable years beginning before
7January 1, 1999.
8    It is the intent of the General Assembly that the research
9and development credit under this subsection (k) shall apply
10continuously for all tax years ending on or after December 31,
112004 and ending prior to January 1, 2027, including, but not
12limited to, the period beginning on January 1, 2016 and ending
13on July 6, 2017 (the effective date of Public Act 100-22). All
14actions taken in reliance on the continuation of the credit
15under this subsection (k) by any taxpayer are hereby
16validated.
17    (l) Environmental Remediation Tax Credit.
18        (i) For tax years ending after December 31, 1997 and
19    on or before December 31, 2001, a taxpayer shall be
20    allowed a credit against the tax imposed by subsections
21    (a) and (b) of this Section for certain amounts paid for
22    unreimbursed eligible remediation costs, as specified in
23    this subsection. For purposes of this Section,
24    "unreimbursed eligible remediation costs" means costs
25    approved by the Illinois Environmental Protection Agency
26    ("Agency") under Section 58.14 of the Environmental

 

 

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1    Protection Act that were paid in performing environmental
2    remediation at a site for which a No Further Remediation
3    Letter was issued by the Agency and recorded under Section
4    58.10 of the Environmental Protection Act. The credit must
5    be claimed for the taxable year in which Agency approval
6    of the eligible remediation costs is granted. The credit
7    is not available to any taxpayer if the taxpayer or any
8    related party caused or contributed to, in any material
9    respect, a release of regulated substances on, in, or
10    under the site that was identified and addressed by the
11    remedial action pursuant to the Site Remediation Program
12    of the Environmental Protection Act. After the Pollution
13    Control Board rules are adopted pursuant to the Illinois
14    Administrative Procedure Act for the administration and
15    enforcement of Section 58.9 of the Environmental
16    Protection Act, determinations as to credit availability
17    for purposes of this Section shall be made consistent with
18    those rules. For purposes of this Section, "taxpayer"
19    includes a person whose tax attributes the taxpayer has
20    succeeded to under Section 381 of the Internal Revenue
21    Code and "related party" includes the persons disallowed a
22    deduction for losses by paragraphs (b), (c), and (f)(1) of
23    Section 267 of the Internal Revenue Code by virtue of
24    being a related taxpayer, as well as any of its partners.
25    The credit allowed against the tax imposed by subsections
26    (a) and (b) shall be equal to 25% of the unreimbursed

 

 

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1    eligible remediation costs in excess of $100,000 per site,
2    except that the $100,000 threshold shall not apply to any
3    site contained in an enterprise zone as determined by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity). The
6    total credit allowed shall not exceed $40,000 per year
7    with a maximum total of $150,000 per site. For partners
8    and shareholders of subchapter S corporations, there shall
9    be allowed a credit under this subsection to be determined
10    in accordance with the determination of income and
11    distributive share of income under Sections 702 and 704
12    and subchapter S of the Internal Revenue Code.
13        (ii) A credit allowed under this subsection that is
14    unused in the year the credit is earned may be carried
15    forward to each of the 5 taxable years following the year
16    for which the credit is first earned until it is used. The
17    term "unused credit" does not include any amounts of
18    unreimbursed eligible remediation costs in excess of the
19    maximum credit per site authorized under paragraph (i).
20    This credit shall be applied first to the earliest year
21    for which there is a liability. If there is a credit under
22    this subsection from more than one tax year that is
23    available to offset a liability, the earliest credit
24    arising under this subsection shall be applied first. A
25    credit allowed under this subsection may be sold to a
26    buyer as part of a sale of all or part of the remediation

 

 

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1    site for which the credit was granted. The purchaser of a
2    remediation site and the tax credit shall succeed to the
3    unused credit and remaining carry-forward period of the
4    seller. To perfect the transfer, the assignor shall record
5    the transfer in the chain of title for the site and provide
6    written notice to the Director of the Illinois Department
7    of Revenue of the assignor's intent to sell the
8    remediation site and the amount of the tax credit to be
9    transferred as a portion of the sale. In no event may a
10    credit be transferred to any taxpayer if the taxpayer or a
11    related party would not be eligible under the provisions
12    of subsection (i).
13        (iii) For purposes of this Section, the term "site"
14    shall have the same meaning as under Section 58.2 of the
15    Environmental Protection Act.
16    (m) Education expense credit. Beginning with tax years
17ending after December 31, 1999, a taxpayer who is the
18custodian of one or more qualifying pupils shall be allowed a
19credit against the tax imposed by subsections (a) and (b) of
20this Section for qualified education expenses incurred on
21behalf of the qualifying pupils. The credit shall be equal to
2225% of qualified education expenses, but in no event may the
23total credit under this subsection claimed by a family that is
24the custodian of qualifying pupils exceed (i) $500 for tax
25years ending prior to December 31, 2017, and (ii) $750 for tax
26years ending on or after December 31, 2017. In no event shall a

 

 

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1credit under this subsection reduce the taxpayer's liability
2under this Act to less than zero. Notwithstanding any other
3provision of law, for taxable years beginning on or after
4January 1, 2017, no taxpayer may claim a credit under this
5subsection (m) if the taxpayer's adjusted gross income for the
6taxable year exceeds (i) $500,000, in the case of spouses
7filing a joint federal tax return or (ii) $250,000, in the case
8of all other taxpayers. This subsection is exempt from the
9provisions of Section 250 of this Act.
10    For purposes of this subsection:
11    "Qualifying pupils" means individuals who (i) are
12residents of the State of Illinois, (ii) are under the age of
1321 at the close of the school year for which a credit is
14sought, and (iii) during the school year for which a credit is
15sought were full-time pupils enrolled in a kindergarten
16through twelfth grade education program at any school, as
17defined in this subsection.
18    "Qualified education expense" means the amount incurred on
19behalf of a qualifying pupil in excess of $250 for tuition,
20book fees, and lab fees at the school in which the pupil is
21enrolled during the regular school year.
22    "School" means any public or nonpublic elementary or
23secondary school in Illinois that is in compliance with Title
24VI of the Civil Rights Act of 1964 and attendance at which
25satisfies the requirements of Section 26-1 of the School Code,
26except that nothing shall be construed to require a child to

 

 

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1attend any particular public or nonpublic school to qualify
2for the credit under this Section.
3    "Custodian" means, with respect to qualifying pupils, an
4Illinois resident who is a parent, the parents, a legal
5guardian, or the legal guardians of the qualifying pupils.
6    (n) River Edge Redevelopment Zone site remediation tax
7credit.
8        (i) For tax years ending on or after December 31,
9    2006, a taxpayer shall be allowed a credit against the tax
10    imposed by subsections (a) and (b) of this Section for
11    certain amounts paid for unreimbursed eligible remediation
12    costs, as specified in this subsection. For purposes of
13    this Section, "unreimbursed eligible remediation costs"
14    means costs approved by the Illinois Environmental
15    Protection Agency ("Agency") under Section 58.14a of the
16    Environmental Protection Act that were paid in performing
17    environmental remediation at a site within a River Edge
18    Redevelopment Zone for which a No Further Remediation
19    Letter was issued by the Agency and recorded under Section
20    58.10 of the Environmental Protection Act. The credit must
21    be claimed for the taxable year in which Agency approval
22    of the eligible remediation costs is granted. The credit
23    is not available to any taxpayer if the taxpayer or any
24    related party caused or contributed to, in any material
25    respect, a release of regulated substances on, in, or
26    under the site that was identified and addressed by the

 

 

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1    remedial action pursuant to the Site Remediation Program
2    of the Environmental Protection Act. Determinations as to
3    credit availability for purposes of this Section shall be
4    made consistent with rules adopted by the Pollution
5    Control Board pursuant to the Illinois Administrative
6    Procedure Act for the administration and enforcement of
7    Section 58.9 of the Environmental Protection Act. For
8    purposes of this Section, "taxpayer" includes a person
9    whose tax attributes the taxpayer has succeeded to under
10    Section 381 of the Internal Revenue Code and "related
11    party" includes the persons disallowed a deduction for
12    losses by paragraphs (b), (c), and (f)(1) of Section 267
13    of the Internal Revenue Code by virtue of being a related
14    taxpayer, as well as any of its partners. The credit
15    allowed against the tax imposed by subsections (a) and (b)
16    shall be equal to 25% of the unreimbursed eligible
17    remediation costs in excess of $100,000 per site.
18        (ii) A credit allowed under this subsection that is
19    unused in the year the credit is earned may be carried
20    forward to each of the 5 taxable years following the year
21    for which the credit is first earned until it is used. This
22    credit shall be applied first to the earliest year for
23    which there is a liability. If there is a credit under this
24    subsection from more than one tax year that is available
25    to offset a liability, the earliest credit arising under
26    this subsection shall be applied first. A credit allowed

 

 

HB4918- 49 -LRB102 22643 HLH 31787 b

1    under this subsection may be sold to a buyer as part of a
2    sale of all or part of the remediation site for which the
3    credit was granted. The purchaser of a remediation site
4    and the tax credit shall succeed to the unused credit and
5    remaining carry-forward period of the seller. To perfect
6    the transfer, the assignor shall record the transfer in
7    the chain of title for the site and provide written notice
8    to the Director of the Illinois Department of Revenue of
9    the assignor's intent to sell the remediation site and the
10    amount of the tax credit to be transferred as a portion of
11    the sale. In no event may a credit be transferred to any
12    taxpayer if the taxpayer or a related party would not be
13    eligible under the provisions of subsection (i).
14        (iii) For purposes of this Section, the term "site"
15    shall have the same meaning as under Section 58.2 of the
16    Environmental Protection Act.
17    (n-5) For taxable years beginning on or after the earlier
18of: (i) January 1, 2025; or (ii) January 1 of the calendar year
19immediately following the calendar year in which the State
20reports to the United States Department of the Treasury that
21all federal funds received under the American Rescue Plan Act
22of 2021 have been fully expended, a taxpayer shall be allowed
23an annual credit against the tax imposed by subsections (a)
24and (b) of this Section of an amount equal to 15% of the cost
25of equipment and materials incorporated into or used in the
26business of providing broadband services in a county in the

 

 

HB4918- 50 -LRB102 22643 HLH 31787 b

1State with a population of fewer than 40,000 people or a
2township in the State with a population density of less than 50
3households per square mile in a county with a population of
4less than 300,000 people during that year. For partners,
5shareholders of Subchapter S corporations, and owners of
6limited liability companies, if the liability company is
7treated as a partnership for purposes of federal and State
8income taxation, there shall be allowed a credit under this
9subsection to be determined in accordance with the
10determination of income and distributive share of income under
11Sections 702 and 704 and Subchapter S of the Internal Revenue
12Code. Such annual credits shall be allowed commencing with the
13taxable year in which such property is placed in service and
14continue for 9 consecutive years thereafter. The aggregate
15credit established by the subsection taken in any one tax year
16shall not reduce taxpayer's tax liability under subsections
17(a) and (b) of Section 201 by more than 50%; provided, however,
18that any tax credit claimed under this subsection but not used
19in any taxable year may be carried forward for 10 consecutive
20years from the close of the tax year in which the credits were
21earned. The maximum aggregate amount of credits that may be
22claimed under this subsection shall not exceed the original
23investment made by the taxpayer in the qualifying equipment.
24    For purposes this subsection: (i) "broadband service"
25means a service provided by wireline or wireless means capable
26of delivering high-speed internet access at speeds of at least

 

 

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125 megabits per second of download speed and 3 megabits per
2second of upload speed; and (ii) "equipment, and materials
3incorporated into or used in the business of providing
4broadband services", means all equipment and materials
5machinery, software, or other tangible personal property
6deployed in Illinois on or after January 1, 2023 that is used
7in whole or in part in producing, broadcasting, distributing,
8sending, receiving, storing, transmitting, retransmitting,
9amplifying, switching, or routing broadband services,
10including the monitoring, testing, maintaining, enabling, or
11facilitating of such equipment, machinery, software, or other
12infrastructure. Such property includes, but is not limited to,
13wires, cables including fiber optic cables, antennas, poles,
14switches, routers, amplifiers, rectifiers, repeaters,
15receivers, multiplexers, duplexers, transmitters, power
16equipment, backup power equipment, diagnostic equipment,
17storage devices, modems, and other general central office
18equipment, such as channel cards, frames, and cabinets.
19    The Department may award no more than $25,000,000 in
20credits under this subsection (n-5) in any taxable year. The
21credit under this subsection (n-5) may be taken for property
22placed in service on or after January 1, 2023; however, the
23credit may not be taken until a taxable year beginning on or
24after the earlier of: (i) January 1, 2025; or (ii) January 1 of
25the calendar year immediately following the calendar year in
26which the State reports to the United States Department of the

 

 

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1Treasury that all federal funds received under the American
2Rescue Plan Act of 2021 have been fully expended. The credit
3under this subsection (n-5) does not apply to property placed
4in service on or after December 31 of the seventh calendar year
5to occur after the earlier of: (i) January 1, 2025; or (ii)
6January 1 of the calendar year immediately following the
7calendar year in which the State reports to the United States
8Department of the Treasury that all federal funds received
9under the American Rescue Plan Act of 2021 have been fully
10expended.
11    (o) For each of taxable years during the Compassionate Use
12of Medical Cannabis Program, a surcharge is imposed on all
13taxpayers on income arising from the sale or exchange of
14capital assets, depreciable business property, real property
15used in the trade or business, and Section 197 intangibles of
16an organization registrant under the Compassionate Use of
17Medical Cannabis Program Act. The amount of the surcharge is
18equal to the amount of federal income tax liability for the
19taxable year attributable to those sales and exchanges. The
20surcharge imposed does not apply if:
21        (1) the medical cannabis cultivation center
22    registration, medical cannabis dispensary registration, or
23    the property of a registration is transferred as a result
24    of any of the following:
25            (A) bankruptcy, a receivership, or a debt
26        adjustment initiated by or against the initial

 

 

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1        registration or the substantial owners of the initial
2        registration;
3            (B) cancellation, revocation, or termination of
4        any registration by the Illinois Department of Public
5        Health;
6            (C) a determination by the Illinois Department of
7        Public Health that transfer of the registration is in
8        the best interests of Illinois qualifying patients as
9        defined by the Compassionate Use of Medical Cannabis
10        Program Act;
11            (D) the death of an owner of the equity interest in
12        a registrant;
13            (E) the acquisition of a controlling interest in
14        the stock or substantially all of the assets of a
15        publicly traded company;
16            (F) a transfer by a parent company to a wholly
17        owned subsidiary; or
18            (G) the transfer or sale to or by one person to
19        another person where both persons were initial owners
20        of the registration when the registration was issued;
21        or
22        (2) the cannabis cultivation center registration,
23    medical cannabis dispensary registration, or the
24    controlling interest in a registrant's property is
25    transferred in a transaction to lineal descendants in
26    which no gain or loss is recognized or as a result of a

 

 

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1    transaction in accordance with Section 351 of the Internal
2    Revenue Code in which no gain or loss is recognized.
3    (p) Pass-through entity tax.
4        (1) For taxable years ending on or after December 31,
5    2021 and beginning prior to January 1, 2026, a partnership
6    (other than a publicly traded partnership under Section
7    7704 of the Internal Revenue Code) or Subchapter S
8    corporation may elect to apply the provisions of this
9    subsection. A separate election shall be made for each
10    taxable year. Such election shall be made at such time,
11    and in such form and manner as prescribed by the
12    Department, and, once made, is irrevocable.
13        (2) Entity-level tax. A partnership or Subchapter S
14    corporation electing to apply the provisions of this
15    subsection shall be subject to a tax for the privilege of
16    earning or receiving income in this State in an amount
17    equal to 4.95% of the taxpayer's net income for the
18    taxable year.
19        (3) Net income defined.
20            (A) In general. For purposes of paragraph (2), the
21        term net income has the same meaning as defined in
22        Section 202 of this Act, except that the following
23        provisions shall not apply:
24                (i) the standard exemption allowed under
25            Section 204;
26                (ii) the deduction for net losses allowed

 

 

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1            under Section 207;
2                (iii) in the case of an S corporation, the
3            modification under Section 203(b)(2)(S); and
4                (iv) in the case of a partnership, the
5            modifications under Section 203(d)(2)(H) and
6            Section 203(d)(2)(I).
7            (B) Special rule for tiered partnerships. If a
8        taxpayer making the election under paragraph (1) is a
9        partner of another taxpayer making the election under
10        paragraph (1), net income shall be computed as
11        provided in subparagraph (A), except that the taxpayer
12        shall subtract its distributive share of the net
13        income of the electing partnership (including its
14        distributive share of the net income of the electing
15        partnership derived as a distributive share from
16        electing partnerships in which it is a partner).
17        (4) Credit for entity level tax. Each partner or
18    shareholder of a taxpayer making the election under this
19    Section shall be allowed a credit against the tax imposed
20    under subsections (a) and (b) of Section 201 of this Act
21    for the taxable year of the partnership or Subchapter S
22    corporation for which an election is in effect ending
23    within or with the taxable year of the partner or
24    shareholder in an amount equal to 4.95% times the partner
25    or shareholder's distributive share of the net income of
26    the electing partnership or Subchapter S corporation, but

 

 

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1    not to exceed the partner's or shareholder's share of the
2    tax imposed under paragraph (1) which is actually paid by
3    the partnership or Subchapter S corporation. If the
4    taxpayer is a partnership or Subchapter S corporation that
5    is itself a partner of a partnership making the election
6    under paragraph (1), the credit under this paragraph shall
7    be allowed to the taxpayer's partners or shareholders (or
8    if the partner is a partnership or Subchapter S
9    corporation then its partners or shareholders) in
10    accordance with the determination of income and
11    distributive share of income under Sections 702 and 704
12    and Subchapter S of the Internal Revenue Code. If the
13    amount of the credit allowed under this paragraph exceeds
14    the partner's or shareholder's liability for tax imposed
15    under subsections (a) and (b) of Section 201 of this Act
16    for the taxable year, such excess shall be treated as an
17    overpayment for purposes of Section 909 of this Act.
18        (5) Nonresidents. A nonresident individual who is a
19    partner or shareholder of a partnership or Subchapter S
20    corporation for a taxable year for which an election is in
21    effect under paragraph (1) shall not be required to file
22    an income tax return under this Act for such taxable year
23    if the only source of net income of the individual (or the
24    individual and the individual's spouse in the case of a
25    joint return) is from an entity making the election under
26    paragraph (1) and the credit allowed to the partner or

 

 

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1    shareholder under paragraph (4) equals or exceeds the
2    individual's liability for the tax imposed under
3    subsections (a) and (b) of Section 201 of this Act for the
4    taxable year.
5        (6) Liability for tax. Except as provided in this
6    paragraph, a partnership or Subchapter S making the
7    election under paragraph (1) is liable for the
8    entity-level tax imposed under paragraph (2). If the
9    electing partnership or corporation fails to pay the full
10    amount of tax deemed assessed under paragraph (2), the
11    partners or shareholders shall be liable to pay the tax
12    assessed (including penalties and interest). Each partner
13    or shareholder shall be liable for the unpaid assessment
14    based on the ratio of the partner's or shareholder's share
15    of the net income of the partnership over the total net
16    income of the partnership. If the partnership or
17    Subchapter S corporation fails to pay the tax assessed
18    (including penalties and interest) and thereafter an
19    amount of such tax is paid by the partners or
20    shareholders, such amount shall not be collected from the
21    partnership or corporation.
22        (7) Foreign tax. For purposes of the credit allowed
23    under Section 601(b)(3) of this Act, tax paid by a
24    partnership or Subchapter S corporation to another state
25    which, as determined by the Department, is substantially
26    similar to the tax imposed under this subsection, shall be

 

 

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1    considered tax paid by the partner or shareholder to the
2    extent that the partner's or shareholder's share of the
3    income of the partnership or Subchapter S corporation
4    allocated and apportioned to such other state bears to the
5    total income of the partnership or Subchapter S
6    corporation allocated or apportioned to such other state.
7        (8) Suspension of withholding. The provisions of
8    Section 709.5 of this Act shall not apply to a partnership
9    or Subchapter S corporation for the taxable year for which
10    an election under paragraph (1) is in effect.
11        (9) Requirement to pay estimated tax. For each taxable
12    year for which an election under paragraph (1) is in
13    effect, a partnership or Subchapter S corporation is
14    required to pay estimated tax for such taxable year under
15    Sections 803 and 804 of this Act if the amount payable as
16    estimated tax can reasonably be expected to exceed $500.
17        (10) The provisions of this subsection shall apply
18    only with respect to taxable years for which the
19    limitation on individual deductions applies under Section
20    164(b)(6) of the Internal Revenue Code.
21(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
22101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff.
238-20-21; 102-658, eff. 8-27-21.)
 
24    Section 10. The Use Tax Act is amended by changing
25Sections 2 and 3-5 as follows:
 

 

 

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1    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
2    Sec. 2. Definitions. As used in this Act:
3    "Broadband service" means a service provided by wireline
4or wireless means capable of delivering high-speed internet
5access at speeds of at least 25 megabits per second of download
6speed and 3 megabits per second of upload speed.
7    "Use" means the exercise by any person of any right or
8power over tangible personal property incident to the
9ownership of that property, except that it does not include
10the sale of such property in any form as tangible personal
11property in the regular course of business to the extent that
12such property is not first subjected to a use for which it was
13purchased, and does not include the use of such property by its
14owner for demonstration purposes: Provided that the property
15purchased is deemed to be purchased for the purpose of resale,
16despite first being used, to the extent to which it is resold
17as an ingredient of an intentionally produced product or
18by-product of manufacturing. "Use" does not mean the
19demonstration use or interim use of tangible personal property
20by a retailer before he sells that tangible personal property.
21For watercraft or aircraft, if the period of demonstration use
22or interim use by the retailer exceeds 18 months, the retailer
23shall pay on the retailers' original cost price the tax
24imposed by this Act, and no credit for that tax is permitted if
25the watercraft or aircraft is subsequently sold by the

 

 

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1retailer. "Use" does not mean the physical incorporation of
2tangible personal property, to the extent not first subjected
3to a use for which it was purchased, as an ingredient or
4constituent, into other tangible personal property (a) which
5is sold in the regular course of business or (b) which the
6person incorporating such ingredient or constituent therein
7has undertaken at the time of such purchase to cause to be
8transported in interstate commerce to destinations outside the
9State of Illinois: Provided that the property purchased is
10deemed to be purchased for the purpose of resale, despite
11first being used, to the extent to which it is resold as an
12ingredient of an intentionally produced product or by-product
13of manufacturing.
14    "Watercraft" means a Class 2, Class 3, or Class 4
15watercraft as defined in Section 3-2 of the Boat Registration
16and Safety Act, a personal watercraft, or any boat equipped
17with an inboard motor.
18    "Purchase at retail" means the acquisition of the
19ownership of or title to tangible personal property through a
20sale at retail.
21    "Purchaser" means anyone who, through a sale at retail,
22acquires the ownership of tangible personal property for a
23valuable consideration.
24    "Sale at retail" means any transfer of the ownership of or
25title to tangible personal property to a purchaser, for the
26purpose of use, and not for the purpose of resale in any form

 

 

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1as tangible personal property to the extent not first
2subjected to a use for which it was purchased, for a valuable
3consideration: Provided that the property purchased is deemed
4to be purchased for the purpose of resale, despite first being
5used, to the extent to which it is resold as an ingredient of
6an intentionally produced product or by-product of
7manufacturing. For this purpose, slag produced as an incident
8to manufacturing pig iron or steel and sold is considered to be
9an intentionally produced by-product of manufacturing. "Sale
10at retail" includes any such transfer made for resale unless
11made in compliance with Section 2c of the Retailers'
12Occupation Tax Act, as incorporated by reference into Section
1312 of this Act. Transactions whereby the possession of the
14property is transferred but the seller retains the title as
15security for payment of the selling price are sales.
16    "Sale at retail" shall also be construed to include any
17Illinois florist's sales transaction in which the purchase
18order is received in Illinois by a florist and the sale is for
19use or consumption, but the Illinois florist has a florist in
20another state deliver the property to the purchaser or the
21purchaser's donee in such other state.
22    Nonreusable tangible personal property that is used by
23persons engaged in the business of operating a restaurant,
24cafeteria, or drive-in is a sale for resale when it is
25transferred to customers in the ordinary course of business as
26part of the sale of food or beverages and is used to deliver,

 

 

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1package, or consume food or beverages, regardless of where
2consumption of the food or beverages occurs. Examples of those
3items include, but are not limited to nonreusable, paper and
4plastic cups, plates, baskets, boxes, sleeves, buckets or
5other containers, utensils, straws, placemats, napkins, doggie
6bags, and wrapping or packaging materials that are transferred
7to customers as part of the sale of food or beverages in the
8ordinary course of business.
9    The purchase, employment and transfer of such tangible
10personal property as newsprint and ink for the primary purpose
11of conveying news (with or without other information) is not a
12purchase, use or sale of tangible personal property.
13    "Selling price" means the consideration for a sale valued
14in money whether received in money or otherwise, including
15cash, credits, property other than as hereinafter provided,
16and services, but, prior to January 1, 2020 and beginning
17again on January 1, 2022, not including the value of or credit
18given for traded-in tangible personal property where the item
19that is traded-in is of like kind and character as that which
20is being sold; beginning January 1, 2020 and until January 1,
212022, "selling price" includes the portion of the value of or
22credit given for traded-in motor vehicles of the First
23Division as defined in Section 1-146 of the Illinois Vehicle
24Code of like kind and character as that which is being sold
25that exceeds $10,000. "Selling price" shall be determined
26without any deduction on account of the cost of the property

 

 

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1sold, the cost of materials used, labor or service cost or any
2other expense whatsoever, but does not include interest or
3finance charges which appear as separate items on the bill of
4sale or sales contract nor charges that are added to prices by
5sellers on account of the seller's tax liability under the
6Retailers' Occupation Tax Act, or on account of the seller's
7duty to collect, from the purchaser, the tax that is imposed by
8this Act, or, except as otherwise provided with respect to any
9cigarette tax imposed by a home rule unit, on account of the
10seller's tax liability under any local occupation tax
11administered by the Department, or, except as otherwise
12provided with respect to any cigarette tax imposed by a home
13rule unit on account of the seller's duty to collect, from the
14purchasers, the tax that is imposed under any local use tax
15administered by the Department. Effective December 1, 1985,
16"selling price" shall include charges that are added to prices
17by sellers on account of the seller's tax liability under the
18Cigarette Tax Act, on account of the seller's duty to collect,
19from the purchaser, the tax imposed under the Cigarette Use
20Tax Act, and on account of the seller's duty to collect, from
21the purchaser, any cigarette tax imposed by a home rule unit.
22    Notwithstanding any law to the contrary, for any motor
23vehicle, as defined in Section 1-146 of the Vehicle Code, that
24is sold on or after January 1, 2015 for the purpose of leasing
25the vehicle for a defined period that is longer than one year
26and (1) is a motor vehicle of the second division that: (A) is

 

 

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

 

 

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

 

 

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

 

 

HB4918- 67 -LRB102 22643 HLH 31787 b

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

 

 

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

 

 

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

 

 

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

 

 

HB4918- 71 -LRB102 22643 HLH 31787 b

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

 

 

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1        State and does so using an identical or substantially
2        similar name, trade name, or trademark as the person
3        located in this State; and
4            (B) the retailer provides a commission or other
5        consideration to the person located in this State
6        based upon the sale of tangible personal property by
7        the retailer.
8        The provisions of this paragraph (1.2) shall apply
9    only if the cumulative gross receipts from sales of
10    tangible personal property by the retailer to customers in
11    this State under all such contracts exceed $10,000 during
12    the preceding 4 quarterly periods ending on the last day
13    of March, June, September, and December.
14        (2) (Blank).
15        (3) (Blank).
16        (4) (Blank).
17        (5) (Blank).
18        (6) (Blank).
19        (7) (Blank).
20        (8) (Blank).
21        (9) Beginning October 1, 2018, a retailer making sales
22    of tangible personal property to purchasers in Illinois
23    from outside of Illinois if:
24            (A) the cumulative gross receipts from sales of
25        tangible personal property to purchasers in Illinois
26        are $100,000 or more; or

 

 

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1            (B) the retailer enters into 200 or more separate
2        transactions for the sale of tangible personal
3        property to purchasers in Illinois.
4        The retailer shall determine on a quarterly basis,
5    ending on the last day of March, June, September, and
6    December, whether he or she meets the criteria of either
7    subparagraph (A) or (B) of this paragraph (9) for the
8    preceding 12-month period. If the retailer meets the
9    threshold of either subparagraph (A) or (B) for a 12-month
10    period, he or she is considered a retailer maintaining a
11    place of business in this State and is required to collect
12    and remit the tax imposed under this Act and file returns
13    for one year. At the end of that one-year period, the
14    retailer shall determine whether he or she met the
15    threshold of either subparagraph (A) or (B) during the
16    preceding 12-month period. If the retailer met the
17    criteria in either subparagraph (A) or (B) for the
18    preceding 12-month period, he or she is considered a
19    retailer maintaining a place of business in this State and
20    is required to collect and remit the tax imposed under
21    this Act and file returns for the subsequent year. If at
22    the end of a one-year period a retailer that was required
23    to collect and remit the tax imposed under this Act
24    determines that he or she did not meet the threshold in
25    either subparagraph (A) or (B) during the preceding
26    12-month period, the retailer shall subsequently determine

 

 

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1    on a quarterly basis, ending on the last day of March,
2    June, September, and December, whether he or she meets the
3    threshold of either subparagraph (A) or (B) for the
4    preceding 12-month period.
5        Beginning January 1, 2020, neither the gross receipts
6    from nor the number of separate transactions for sales of
7    tangible personal property to purchasers in Illinois that
8    a retailer makes through a marketplace facilitator and for
9    which the retailer has received a certification from the
10    marketplace facilitator pursuant to Section 2d of this Act
11    shall be included for purposes of determining whether he
12    or she has met the thresholds of this paragraph (9).
13        (10) Beginning January 1, 2020, a marketplace
14    facilitator that meets a threshold set forth in subsection
15    (b) of Section 2d of this Act.
16    "Bulk vending machine" means a vending machine, containing
17unsorted confections, nuts, toys, or other items designed
18primarily to be used or played with by children which, when a
19coin or coins of a denomination not larger than $0.50 are
20inserted, are dispensed in equal portions, at random and
21without selection by the customer.
22(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 1-1-20;
23101-604, eff. 1-1-20; 102-353, eff. 1-1-22.)
 
24    (35 ILCS 105/3-5)
25    Sec. 3-5. Exemptions. Use of the following tangible

 

 

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1personal property is exempt from the tax imposed by this Act:
2    (1) Personal property purchased from a corporation,
3society, association, foundation, institution, or
4organization, other than a limited liability company, that is
5organized and operated as a not-for-profit service enterprise
6for the benefit of persons 65 years of age or older if the
7personal property was not purchased by the enterprise for the
8purpose of resale by the enterprise.
9    (2) Personal property purchased by a not-for-profit
10Illinois county fair association for use in conducting,
11operating, or promoting the county fair.
12    (3) Personal property purchased by a not-for-profit arts
13or cultural organization that establishes, by proof required
14by the Department by rule, that it has received an exemption
15under Section 501(c)(3) of the Internal Revenue Code and that
16is organized and operated primarily for the presentation or
17support of arts or cultural programming, activities, or
18services. These organizations include, but are not limited to,
19music and dramatic arts organizations such as symphony
20orchestras and theatrical groups, arts and cultural service
21organizations, local arts councils, visual arts organizations,
22and media arts organizations. On and after July 1, 2001 (the
23effective date of Public Act 92-35), however, an entity
24otherwise eligible for this exemption shall not make tax-free
25purchases unless it has an active identification number issued
26by the Department.

 

 

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1    (4) Personal property purchased by a governmental body, by
2a corporation, society, association, foundation, or
3institution organized and operated exclusively for charitable,
4religious, or educational purposes, or by a not-for-profit
5corporation, society, association, foundation, institution, or
6organization that has no compensated officers or employees and
7that is organized and operated primarily for the recreation of
8persons 55 years of age or older. A limited liability company
9may qualify for the exemption under this paragraph only if the
10limited liability company is organized and operated
11exclusively for educational purposes. On and after July 1,
121987, however, no entity otherwise eligible for this exemption
13shall make tax-free purchases unless it has an active
14exemption identification number issued by the Department.
15    (5) Until July 1, 2003, a passenger car that is a
16replacement vehicle to the extent that the purchase price of
17the car is subject to the Replacement Vehicle Tax.
18    (6) Until July 1, 2003 and beginning again on September 1,
192004 through August 30, 2014, graphic arts machinery and
20equipment, including repair and replacement parts, both new
21and used, and including that manufactured on special order,
22certified by the purchaser to be used primarily for graphic
23arts production, and including machinery and equipment
24purchased for lease. Equipment includes chemicals or chemicals
25acting as catalysts but only if the chemicals or chemicals
26acting as catalysts effect a direct and immediate change upon

 

 

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1a graphic arts product. Beginning on July 1, 2017, graphic
2arts machinery and equipment is included in the manufacturing
3and assembling machinery and equipment exemption under
4paragraph (18).
5    (7) Farm chemicals.
6    (8) Legal tender, currency, medallions, or gold or silver
7coinage issued by the State of Illinois, the government of the
8United States of America, or the government of any foreign
9country, and bullion.
10    (9) Personal property purchased from a teacher-sponsored
11student organization affiliated with an elementary or
12secondary school located in Illinois.
13    (10) A motor vehicle that is used for automobile renting,
14as defined in the Automobile Renting Occupation and Use Tax
15Act.
16    (11) Farm machinery and equipment, both new and used,
17including that manufactured on special order, certified by the
18purchaser to be used primarily for production agriculture or
19State or federal agricultural programs, including individual
20replacement parts for the machinery and equipment, including
21machinery and equipment purchased for lease, and including
22implements of husbandry defined in Section 1-130 of the
23Illinois Vehicle Code, farm machinery and agricultural
24chemical and fertilizer spreaders, and nurse wagons required
25to be registered under Section 3-809 of the Illinois Vehicle
26Code, but excluding other motor vehicles required to be

 

 

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1registered under the Illinois Vehicle Code. Horticultural
2polyhouses or hoop houses used for propagating, growing, or
3overwintering plants shall be considered farm machinery and
4equipment under this item (11). Agricultural chemical tender
5tanks and dry boxes shall include units sold separately from a
6motor vehicle required to be licensed and units sold mounted
7on a motor vehicle required to be licensed if the selling price
8of the tender is separately stated.
9    Farm machinery and equipment shall include precision
10farming equipment that is installed or purchased to be
11installed on farm machinery and equipment including, but not
12limited to, tractors, harvesters, sprayers, planters, seeders,
13or spreaders. Precision farming equipment includes, but is not
14limited to, soil testing sensors, computers, monitors,
15software, global positioning and mapping systems, and other
16such equipment.
17    Farm machinery and equipment also includes computers,
18sensors, software, and related equipment used primarily in the
19computer-assisted operation of production agriculture
20facilities, equipment, and activities such as, but not limited
21to, the collection, monitoring, and correlation of animal and
22crop data for the purpose of formulating animal diets and
23agricultural chemicals. This item (11) is exempt from the
24provisions of Section 3-90.
25    (12) Until June 30, 2013, fuel and petroleum products sold
26to or used by an air common carrier, certified by the carrier

 

 

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

 

 

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1pipe and tubular goods, including casing and drill strings,
2(iii) pumps and pump-jack units, (iv) storage tanks and flow
3lines, (v) any individual replacement part for oil field
4exploration, drilling, and production equipment, and (vi)
5machinery and equipment purchased for lease; but excluding
6motor vehicles required to be registered under the Illinois
7Vehicle Code.
8    (15) Photoprocessing machinery and equipment, including
9repair and replacement parts, both new and used, including
10that manufactured on special order, certified by the purchaser
11to be used primarily for photoprocessing, and including
12photoprocessing machinery and equipment purchased for lease.
13    (16) Until July 1, 2023, coal and aggregate exploration,
14mining, off-highway hauling, processing, maintenance, and
15reclamation equipment, including replacement parts and
16equipment, and including equipment purchased for lease, but
17excluding motor vehicles required to be registered under the
18Illinois Vehicle Code. The changes made to this Section by
19Public Act 97-767 apply on and after July 1, 2003, but no claim
20for credit or refund is allowed on or after August 16, 2013
21(the effective date of Public Act 98-456) for such taxes paid
22during the period beginning July 1, 2003 and ending on August
2316, 2013 (the effective date of Public Act 98-456).
24    (17) Until July 1, 2003, distillation machinery and
25equipment, sold as a unit or kit, assembled or installed by the
26retailer, certified by the user to be used only for the

 

 

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1production of ethyl alcohol that will be used for consumption
2as motor fuel or as a component of motor fuel for the personal
3use of the user, and not subject to sale or resale.
4    (18) Manufacturing and assembling machinery and equipment
5used primarily in the process of manufacturing or assembling
6tangible personal property for wholesale or retail sale or
7lease, whether that sale or lease is made directly by the
8manufacturer or by some other person, whether the materials
9used in the process are owned by the manufacturer or some other
10person, or whether that sale or lease is made apart from or as
11an incident to the seller's engaging in the service occupation
12of producing machines, tools, dies, jigs, patterns, gauges, or
13other similar items of no commercial value on special order
14for a particular purchaser. The exemption provided by this
15paragraph (18) includes production related tangible personal
16property, as defined in Section 3-50, purchased on or after
17July 1, 2019. The exemption provided by this paragraph (18)
18does not include machinery and equipment used in (i) the
19generation of electricity for wholesale or retail sale; (ii)
20the generation or treatment of natural or artificial gas for
21wholesale or retail sale that is delivered to customers
22through pipes, pipelines, or mains; or (iii) the treatment of
23water for wholesale or retail sale that is delivered to
24customers through pipes, pipelines, or mains. The provisions
25of Public Act 98-583 are declaratory of existing law as to the
26meaning and scope of this exemption. Beginning on July 1,

 

 

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12017, the exemption provided by this paragraph (18) includes,
2but is not limited to, graphic arts machinery and equipment,
3as defined in paragraph (6) of this Section.
4    (19) Personal property delivered to a purchaser or
5purchaser's donee inside Illinois when the purchase order for
6that personal property was received by a florist located
7outside Illinois who has a florist located inside Illinois
8deliver the personal property.
9    (20) Semen used for artificial insemination of livestock
10for direct agricultural production.
11    (21) Horses, or interests in horses, registered with and
12meeting the requirements of any of the Arabian Horse Club
13Registry of America, Appaloosa Horse Club, American Quarter
14Horse Association, United States Trotting Association, or
15Jockey Club, as appropriate, used for purposes of breeding or
16racing for prizes. This item (21) is exempt from the
17provisions of Section 3-90, and the exemption provided for
18under this item (21) applies for all periods beginning May 30,
191995, but no claim for credit or refund is allowed on or after
20January 1, 2008 for such taxes paid during the period
21beginning May 30, 2000 and ending on January 1, 2008.
22    (22) Computers and communications equipment utilized for
23any hospital purpose and equipment used in the diagnosis,
24analysis, or treatment of hospital patients purchased by a
25lessor who leases the equipment, under a lease of one year or
26longer executed or in effect at the time the lessor would

 

 

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

 

 

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

 

 

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1the performance of infrastructure repairs in this State,
2including but not limited to municipal roads and streets,
3access roads, bridges, sidewalks, waste disposal systems,
4water and sewer line extensions, water distribution and
5purification facilities, storm water drainage and retention
6facilities, and sewage treatment facilities, resulting from a
7State or federally declared disaster in Illinois or bordering
8Illinois when such repairs are initiated on facilities located
9in the declared disaster area within 6 months after the
10disaster.
11    (26) Beginning July 1, 1999, game or game birds purchased
12at a "game breeding and hunting preserve area" as that term is
13used in the Wildlife Code. This paragraph is exempt from the
14provisions of Section 3-90.
15    (27) A motor vehicle, as that term is defined in Section
161-146 of the Illinois Vehicle Code, that is donated to a
17corporation, limited liability company, society, association,
18foundation, or institution that is determined by the
19Department to be organized and operated exclusively for
20educational purposes. For purposes of this exemption, "a
21corporation, limited liability company, society, association,
22foundation, or institution organized and operated exclusively
23for educational purposes" means all tax-supported public
24schools, private schools that offer systematic instruction in
25useful branches of learning by methods common to public
26schools and that compare favorably in their scope and

 

 

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1intensity with the course of study presented in tax-supported
2schools, and vocational or technical schools or institutes
3organized and operated exclusively to provide a course of
4study of not less than 6 weeks duration and designed to prepare
5individuals to follow a trade or to pursue a manual,
6technical, mechanical, industrial, business, or commercial
7occupation.
8    (28) Beginning January 1, 2000, personal property,
9including food, purchased through fundraising events for the
10benefit of a public or private elementary or secondary school,
11a group of those schools, or one or more school districts if
12the events are sponsored by an entity recognized by the school
13district that consists primarily of volunteers and includes
14parents and teachers of the school children. This paragraph
15does not apply to fundraising events (i) for the benefit of
16private home instruction or (ii) for which the fundraising
17entity purchases the personal property sold at the events from
18another individual or entity that sold the property for the
19purpose of resale by the fundraising entity and that profits
20from the sale to the fundraising entity. This paragraph is
21exempt from the provisions of Section 3-90.
22    (29) Beginning January 1, 2000 and through December 31,
232001, new or used automatic vending machines that prepare and
24serve hot food and beverages, including coffee, soup, and
25other items, and replacement parts for these machines.
26Beginning January 1, 2002 and through June 30, 2003, machines

 

 

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

 

 

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

 

 

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1any other nonexempt manner, the lessor shall be liable for the
2tax imposed under this Act or the Service Use Tax Act, as the
3case may be, based on the fair market value of the property at
4the time the nonqualifying use occurs. No lessor shall collect
5or attempt to collect an amount (however designated) that
6purports to reimburse that lessor for the tax imposed by this
7Act or the Service Use Tax Act, as the case may be, if the tax
8has not been paid by the lessor. If a lessor improperly
9collects any such amount from the lessee, the lessee shall
10have a legal right to claim a refund of that amount from the
11lessor. If, however, that amount is not refunded to the lessee
12for any reason, the lessor is liable to pay that amount to the
13Department. This paragraph is exempt from the provisions of
14Section 3-90.
15    (33) On and after July 1, 2003 and through June 30, 2004,
16the use in this State of motor vehicles of the second division
17with a gross vehicle weight in excess of 8,000 pounds and that
18are subject to the commercial distribution fee imposed under
19Section 3-815.1 of the Illinois Vehicle Code. Beginning on
20July 1, 2004 and through June 30, 2005, the use in this State
21of motor vehicles of the second division: (i) with a gross
22vehicle weight rating in excess of 8,000 pounds; (ii) that are
23subject to the commercial distribution fee imposed under
24Section 3-815.1 of the Illinois Vehicle Code; and (iii) that
25are primarily used for commercial purposes. Through June 30,
262005, this exemption applies to repair and replacement parts

 

 

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1added after the initial purchase of such a motor vehicle if
2that motor vehicle is used in a manner that would qualify for
3the rolling stock exemption otherwise provided for in this
4Act. For purposes of this paragraph, the term "used for
5commercial purposes" means the transportation of persons or
6property in furtherance of any commercial or industrial
7enterprise, whether for-hire or not.
8    (34) Beginning January 1, 2008, tangible personal property
9used in the construction or maintenance of a community water
10supply, as defined under Section 3.145 of the Environmental
11Protection Act, that is operated by a not-for-profit
12corporation that holds a valid water supply permit issued
13under Title IV of the Environmental Protection Act. This
14paragraph is exempt from the provisions of Section 3-90.
15    (35) Beginning January 1, 2010 and continuing through
16December 31, 2024, materials, parts, equipment, components,
17and furnishings incorporated into or upon an aircraft as part
18of the modification, refurbishment, completion, replacement,
19repair, or maintenance of the aircraft. This exemption
20includes consumable supplies used in the modification,
21refurbishment, completion, replacement, repair, and
22maintenance of aircraft, but excludes any materials, parts,
23equipment, components, and consumable supplies used in the
24modification, replacement, repair, and maintenance of aircraft
25engines or power plants, whether such engines or power plants
26are installed or uninstalled upon any such aircraft.

 

 

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1"Consumable supplies" include, but are not limited to,
2adhesive, tape, sandpaper, general purpose lubricants,
3cleaning solution, latex gloves, and protective films. This
4exemption applies only to the use of qualifying tangible
5personal property by persons who modify, refurbish, complete,
6repair, replace, or maintain aircraft and who (i) hold an Air
7Agency Certificate and are empowered to operate an approved
8repair station by the Federal Aviation Administration, (ii)
9have a Class IV Rating, and (iii) conduct operations in
10accordance with Part 145 of the Federal Aviation Regulations.
11The exemption does not include aircraft operated by a
12commercial air carrier providing scheduled passenger air
13service pursuant to authority issued under Part 121 or Part
14129 of the Federal Aviation Regulations. The changes made to
15this paragraph (35) by Public Act 98-534 are declarative of
16existing law. It is the intent of the General Assembly that the
17exemption under this paragraph (35) applies continuously from
18January 1, 2010 through December 31, 2024; however, no claim
19for credit or refund is allowed for taxes paid as a result of
20the disallowance of this exemption on or after January 1, 2015
21and prior to the effective date of this amendatory Act of the
22101st General Assembly.
23    (36) Tangible personal property purchased by a
24public-facilities corporation, as described in Section
2511-65-10 of the Illinois Municipal Code, for purposes of
26constructing or furnishing a municipal convention hall, but

 

 

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1only if the legal title to the municipal convention hall is
2transferred to the municipality without any further
3consideration by or on behalf of the municipality at the time
4of the completion of the municipal convention hall or upon the
5retirement or redemption of any bonds or other debt
6instruments issued by the public-facilities corporation in
7connection with the development of the municipal convention
8hall. This exemption includes existing public-facilities
9corporations as provided in Section 11-65-25 of the Illinois
10Municipal Code. This paragraph is exempt from the provisions
11of Section 3-90.
12    (37) Beginning January 1, 2017 and through December 31,
132026, menstrual pads, tampons, and menstrual cups.
14    (38) Merchandise that is subject to the Rental Purchase
15Agreement Occupation and Use Tax. The purchaser must certify
16that the item is purchased to be rented subject to a rental
17purchase agreement, as defined in the Rental Purchase
18Agreement Act, and provide proof of registration under the
19Rental Purchase Agreement Occupation and Use Tax Act. This
20paragraph is exempt from the provisions of Section 3-90.
21    (39) Tangible personal property purchased by a purchaser
22who is exempt from the tax imposed by this Act by operation of
23federal law. This paragraph is exempt from the provisions of
24Section 3-90.
25    (40) Qualified tangible personal property used in the
26construction or operation of a data center that has been

 

 

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1granted a certificate of exemption by the Department of
2Commerce and Economic Opportunity, whether that tangible
3personal property is purchased by the owner, operator, or
4tenant of the data center or by a contractor or subcontractor
5of the owner, operator, or tenant. Data centers that would
6have qualified for a certificate of exemption prior to January
71, 2020 had Public Act 101-31 been in effect may apply for and
8obtain an exemption for subsequent purchases of computer
9equipment or enabling software purchased or leased to upgrade,
10supplement, or replace computer equipment or enabling software
11purchased or leased in the original investment that would have
12qualified.
13    The Department of Commerce and Economic Opportunity shall
14grant a certificate of exemption under this item (40) to
15qualified data centers as defined by Section 605-1025 of the
16Department of Commerce and Economic Opportunity Law of the
17Civil Administrative Code of Illinois.
18    For the purposes of this item (40):
19        "Data center" means a building or a series of
20    buildings rehabilitated or constructed to house working
21    servers in one physical location or multiple sites within
22    the State of Illinois.
23        "Qualified tangible personal property" means:
24    electrical systems and equipment; climate control and
25    chilling equipment and systems; mechanical systems and
26    equipment; monitoring and secure systems; emergency

 

 

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1    generators; hardware; computers; servers; data storage
2    devices; network connectivity equipment; racks; cabinets;
3    telecommunications cabling infrastructure; raised floor
4    systems; peripheral components or systems; software;
5    mechanical, electrical, or plumbing systems; battery
6    systems; cooling systems and towers; temperature control
7    systems; other cabling; and other data center
8    infrastructure equipment and systems necessary to operate
9    qualified tangible personal property, including fixtures;
10    and component parts of any of the foregoing, including
11    installation, maintenance, repair, refurbishment, and
12    replacement of qualified tangible personal property to
13    generate, transform, transmit, distribute, or manage
14    electricity necessary to operate qualified tangible
15    personal property; and all other tangible personal
16    property that is essential to the operations of a computer
17    data center. The term "qualified tangible personal
18    property" also includes building materials physically
19    incorporated in to the qualifying data center. To document
20    the exemption allowed under this Section, the retailer
21    must obtain from the purchaser a copy of the certificate
22    of eligibility issued by the Department of Commerce and
23    Economic Opportunity.
24    This item (40) is exempt from the provisions of Section
253-90.
26    (41) Beginning on the earlier of: (i) January 1, 2025; or

 

 

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1(ii) January 1 of the calendar year immediately following the
2calendar year in which the State reports to the United States
3Department of the Treasury that all federal funds received
4under the American Rescue Plan Act of 2021 have been fully
5expended, and continuing through December 31 of the fifth
6calendar year to occur after the earlier of: (i) January 1,
72025; or (ii) January 1 of the calendar year immediately
8following the calendar year in which the State reports to the
9United States Department of the Treasury that all federal
10funds received under the American Rescue Plan Act of 2021 have
11been fully expended, equipment and material deployed after
12January 1, 2023 in a county in the State with a population of
13fewer than 40,000 people or a township in the State with a
14population density of less than 50 households per square mile
15in a county with a population of less than 300,000 people
16during that year that is incorporated into or used in the
17business of providing broadband services, including all
18equipment and material, machinery, software, or other tangible
19personal property that is used in whole or in part in
20producing, broadcasting, distributing, sending, receiving,
21storing, transmitting, retransmitting, amplifying, switching,
22or routing broadband services, including the monitoring,
23testing, maintaining, enabling, or facilitating of such
24equipment, machinery, software, or other infrastructure. Such
25property includes, but is not limited to, wires, cables
26including fiber optic cables, antennas, poles, switches,

 

 

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1routers, amplifiers, rectifiers, repeaters, receivers,
2multiplexers, duplexers, transmitters, power equipment, backup
3power equipment, diagnostic equipment, storage devices,
4modems, and other general central office equipment, such as
5channel cards, frames, and cabinets. The exemption under this
6item (41) may be taken for property placed in service on or
7after January 1, 2023; however, the credit may not be taken
8until a taxable year beginning on or after the earlier of: (i)
9January 1, 2025; or (ii) January 1 of the calendar year
10immediately following the calendar year in which the State
11reports to the United States Department of the Treasury that
12all federal funds received under the American Rescue Plan Act
13of 2021 have been fully expended.
14(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
15101-81, eff. 7-12-19; 101-629, eff. 2-5-20; 102-16, eff.
166-17-21.)
 
17    Section 15. The Service Use Tax Act is amended by changing
18Sections 2 and 3-5 as follows:
 
19    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
20    Sec. 2. Definitions. In this Act:
21    "Broadband service" means a service provided by wireline
22or wireless means capable of delivering high-speed internet
23access at speeds of at least 25 megabits per second of download
24speed and 3 megabits per second of upload speed.

 

 

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1    "Use" means the exercise by any person of any right or
2power over tangible personal property incident to the
3ownership of that property, but does not include the sale or
4use for demonstration by him of that property in any form as
5tangible personal property in the regular course of business.
6"Use" does not mean the interim use of tangible personal
7property nor the physical incorporation of tangible personal
8property, as an ingredient or constituent, into other tangible
9personal property, (a) which is sold in the regular course of
10business or (b) which the person incorporating such ingredient
11or constituent therein has undertaken at the time of such
12purchase to cause to be transported in interstate commerce to
13destinations outside the State of Illinois.
14    "Purchased from a serviceman" means the acquisition of the
15ownership of, or title to, tangible personal property through
16a sale of service.
17    "Purchaser" means any person who, through a sale of
18service, acquires the ownership of, or title to, any tangible
19personal property.
20    "Cost price" means the consideration paid by the
21serviceman for a purchase valued in money, whether paid in
22money or otherwise, including cash, credits and services, and
23shall be determined without any deduction on account of the
24supplier's cost of the property sold or on account of any other
25expense incurred by the supplier. When a serviceman contracts
26out part or all of the services required in his sale of

 

 

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1service, it shall be presumed that the cost price to the
2serviceman of the property transferred to him or her by his or
3her subcontractor is equal to 50% of the subcontractor's
4charges to the serviceman in the absence of proof of the
5consideration paid by the subcontractor for the purchase of
6such property.
7    "Selling price" means the consideration for a sale valued
8in money whether received in money or otherwise, including
9cash, credits and service, and shall be determined without any
10deduction on account of the serviceman's cost of the property
11sold, the cost of materials used, labor or service cost or any
12other expense whatsoever, but does not include interest or
13finance charges which appear as separate items on the bill of
14sale or sales contract nor charges that are added to prices by
15sellers on account of the seller's duty to collect, from the
16purchaser, the tax that is imposed by this Act.
17    "Department" means the Department of Revenue.
18    "Person" means any natural individual, firm, partnership,
19association, joint stock company, joint venture, public or
20private corporation, limited liability company, and any
21receiver, executor, trustee, guardian or other representative
22appointed by order of any court.
23    "Sale of service" means any transaction except:
24        (1) a retail sale of tangible personal property
25    taxable under the Retailers' Occupation Tax Act or under
26    the Use Tax Act.

 

 

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1        (2) a sale of tangible personal property for the
2    purpose of resale made in compliance with Section 2c of
3    the Retailers' Occupation Tax Act.
4        (3) except as hereinafter provided, a sale or transfer
5    of tangible personal property as an incident to the
6    rendering of service for or by any governmental body, or
7    for or by any corporation, society, association,
8    foundation or institution organized and operated
9    exclusively for charitable, religious or educational
10    purposes or any not-for-profit corporation, society,
11    association, foundation, institution or organization which
12    has no compensated officers or employees and which is
13    organized and operated primarily for the recreation of
14    persons 55 years of age or older. A limited liability
15    company may qualify for the exemption under this paragraph
16    only if the limited liability company is organized and
17    operated exclusively for educational purposes.
18        (4) (blank).
19        (4a) a sale or transfer of tangible personal property
20    as an incident to the rendering of service for owners,
21    lessors, or shippers of tangible personal property which
22    is utilized by interstate carriers for hire for use as
23    rolling stock moving in interstate commerce so long as so
24    used by interstate carriers for hire, and equipment
25    operated by a telecommunications provider, licensed as a
26    common carrier by the Federal Communications Commission,

 

 

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1    which is permanently installed in or affixed to aircraft
2    moving in interstate commerce.
3        (4a-5) on and after July 1, 2003 and through June 30,
4    2004, a sale or transfer of a motor vehicle of the second
5    division with a gross vehicle weight in excess of 8,000
6    pounds as an incident to the rendering of service if that
7    motor vehicle is subject to the commercial distribution
8    fee imposed under Section 3-815.1 of the Illinois Vehicle
9    Code. Beginning on July 1, 2004 and through June 30, 2005,
10    the use in this State of motor vehicles of the second
11    division: (i) with a gross vehicle weight rating in excess
12    of 8,000 pounds; (ii) that are subject to the commercial
13    distribution fee imposed under Section 3-815.1 of the
14    Illinois Vehicle Code; and (iii) that are primarily used
15    for commercial purposes. Through June 30, 2005, this
16    exemption applies to repair and replacement parts added
17    after the initial purchase of such a motor vehicle if that
18    motor vehicle is used in a manner that would qualify for
19    the rolling stock exemption otherwise provided for in this
20    Act. For purposes of this paragraph, "used for commercial
21    purposes" means the transportation of persons or property
22    in furtherance of any commercial or industrial enterprise
23    whether for-hire or not.
24        (5) a sale or transfer of machinery and equipment used
25    primarily in the process of the manufacturing or
26    assembling, either in an existing, an expanded or a new

 

 

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1    manufacturing facility, of tangible personal property for
2    wholesale or retail sale or lease, whether such sale or
3    lease is made directly by the manufacturer or by some
4    other person, whether the materials used in the process
5    are owned by the manufacturer or some other person, or
6    whether such sale or lease is made apart from or as an
7    incident to the seller's engaging in a service occupation
8    and the applicable tax is a Service Use Tax or Service
9    Occupation Tax, rather than Use Tax or Retailers'
10    Occupation Tax. The exemption provided by this paragraph
11    (5) includes production related tangible personal
12    property, as defined in Section 3-50 of the Use Tax Act,
13    purchased on or after July 1, 2019. The exemption provided
14    by this paragraph (5) does not include machinery and
15    equipment used in (i) the generation of electricity for
16    wholesale or retail sale; (ii) the generation or treatment
17    of natural or artificial gas for wholesale or retail sale
18    that is delivered to customers through pipes, pipelines,
19    or mains; or (iii) the treatment of water for wholesale or
20    retail sale that is delivered to customers through pipes,
21    pipelines, or mains. The provisions of Public Act 98-583
22    are declaratory of existing law as to the meaning and
23    scope of this exemption. The exemption under this
24    paragraph (5) is exempt from the provisions of Section
25    3-75.
26        (5a) the repairing, reconditioning or remodeling, for

 

 

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1    a common carrier by rail, of tangible personal property
2    which belongs to such carrier for hire, and as to which
3    such carrier receives the physical possession of the
4    repaired, reconditioned or remodeled item of tangible
5    personal property in Illinois, and which such carrier
6    transports, or shares with another common carrier in the
7    transportation of such property, out of Illinois on a
8    standard uniform bill of lading showing the person who
9    repaired, reconditioned or remodeled the property to a
10    destination outside Illinois, for use outside Illinois.
11        (5b) a sale or transfer of tangible personal property
12    which is produced by the seller thereof on special order
13    in such a way as to have made the applicable tax the
14    Service Occupation Tax or the Service Use Tax, rather than
15    the Retailers' Occupation Tax or the Use Tax, for an
16    interstate carrier by rail which receives the physical
17    possession of such property in Illinois, and which
18    transports such property, or shares with another common
19    carrier in the transportation of such property, out of
20    Illinois on a standard uniform bill of lading showing the
21    seller of the property as the shipper or consignor of such
22    property to a destination outside Illinois, for use
23    outside Illinois.
24        (6) until July 1, 2003, a sale or transfer of
25    distillation machinery and equipment, sold as a unit or
26    kit and assembled or installed by the retailer, which

 

 

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1    machinery and equipment is certified by the user to be
2    used only for the production of ethyl alcohol that will be
3    used for consumption as motor fuel or as a component of
4    motor fuel for the personal use of such user and not
5    subject to sale or resale.
6        (7) at the election of any serviceman not required to
7    be otherwise registered as a retailer under Section 2a of
8    the Retailers' Occupation Tax Act, made for each fiscal
9    year sales of service in which the aggregate annual cost
10    price of tangible personal property transferred as an
11    incident to the sales of service is less than 35%, or 75%
12    in the case of servicemen transferring prescription drugs
13    or servicemen engaged in graphic arts production, of the
14    aggregate annual total gross receipts from all sales of
15    service. The purchase of such tangible personal property
16    by the serviceman shall be subject to tax under the
17    Retailers' Occupation Tax Act and the Use Tax Act.
18    However, if a primary serviceman who has made the election
19    described in this paragraph subcontracts service work to a
20    secondary serviceman who has also made the election
21    described in this paragraph, the primary serviceman does
22    not incur a Use Tax liability if the secondary serviceman
23    (i) has paid or will pay Use Tax on his or her cost price
24    of any tangible personal property transferred to the
25    primary serviceman and (ii) certifies that fact in writing
26    to the primary serviceman.

 

 

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1    Tangible personal property transferred incident to the
2completion of a maintenance agreement is exempt from the tax
3imposed pursuant to this Act.
4    Exemption (5) also includes machinery and equipment used
5in the general maintenance or repair of such exempt machinery
6and equipment or for in-house manufacture of exempt machinery
7and equipment. On and after July 1, 2017, exemption (5) also
8includes graphic arts machinery and equipment, as defined in
9paragraph (5) of Section 3-5. The machinery and equipment
10exemption does not include machinery and equipment used in (i)
11the generation of electricity for wholesale or retail sale;
12(ii) the generation or treatment of natural or artificial gas
13for wholesale or retail sale that is delivered to customers
14through pipes, pipelines, or mains; or (iii) the treatment of
15water for wholesale or retail sale that is delivered to
16customers through pipes, pipelines, or mains. The provisions
17of Public Act 98-583 are declaratory of existing law as to the
18meaning and scope of this exemption. For the purposes of
19exemption (5), each of these terms shall have the following
20meanings: (1) "manufacturing process" shall mean the
21production of any article of tangible personal property,
22whether such article is a finished product or an article for
23use in the process of manufacturing or assembling a different
24article of tangible personal property, by procedures commonly
25regarded as manufacturing, processing, fabricating, or
26refining which changes some existing material or materials

 

 

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1into a material with a different form, use or name. In relation
2to a recognized integrated business composed of a series of
3operations which collectively constitute manufacturing, or
4individually constitute manufacturing operations, the
5manufacturing process shall be deemed to commence with the
6first operation or stage of production in the series, and
7shall not be deemed to end until the completion of the final
8product in the last operation or stage of production in the
9series; and further, for purposes of exemption (5),
10photoprocessing is deemed to be a manufacturing process of
11tangible personal property for wholesale or retail sale; (2)
12"assembling process" shall mean the production of any article
13of tangible personal property, whether such article is a
14finished product or an article for use in the process of
15manufacturing or assembling a different article of tangible
16personal property, by the combination of existing materials in
17a manner commonly regarded as assembling which results in a
18material of a different form, use or name; (3) "machinery"
19shall mean major mechanical machines or major components of
20such machines contributing to a manufacturing or assembling
21process; and (4) "equipment" shall include any independent
22device or tool separate from any machinery but essential to an
23integrated manufacturing or assembly process; including
24computers used primarily in a manufacturer's computer assisted
25design, computer assisted manufacturing (CAD/CAM) system; or
26any subunit or assembly comprising a component of any

 

 

HB4918- 106 -LRB102 22643 HLH 31787 b

1machinery or auxiliary, adjunct or attachment parts of
2machinery, such as tools, dies, jigs, fixtures, patterns and
3molds; or any parts which require periodic replacement in the
4course of normal operation; but shall not include hand tools.
5Equipment includes chemicals or chemicals acting as catalysts
6but only if the chemicals or chemicals acting as catalysts
7effect a direct and immediate change upon a product being
8manufactured or assembled for wholesale or retail sale or
9lease. The purchaser of such machinery and equipment who has
10an active resale registration number shall furnish such number
11to the seller at the time of purchase. The purchaser of such
12machinery and equipment and tools without an active resale
13registration number shall prepare a certificate of exemption
14stating facts establishing the exemption, which certificate
15shall be available to the Department for inspection or audit.
16The Department shall prescribe the form of the certificate.
17    Any informal rulings, opinions or letters issued by the
18Department in response to an inquiry or request for any
19opinion from any person regarding the coverage and
20applicability of exemption (5) to specific devices shall be
21published, maintained as a public record, and made available
22for public inspection and copying. If the informal ruling,
23opinion or letter contains trade secrets or other confidential
24information, where possible the Department shall delete such
25information prior to publication. Whenever such informal
26rulings, opinions, or letters contain any policy of general

 

 

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1applicability, the Department shall formulate and adopt such
2policy as a rule in accordance with the provisions of the
3Illinois Administrative Procedure Act.
4    On and after July 1, 1987, no entity otherwise eligible
5under exemption (3) of this Section shall make tax-free
6purchases unless it has an active exemption identification
7number issued by the Department.
8    The purchase, employment and transfer of such tangible
9personal property as newsprint and ink for the primary purpose
10of conveying news (with or without other information) is not a
11purchase, use or sale of service or of tangible personal
12property within the meaning of this Act.
13    "Serviceman" means any person who is engaged in the
14occupation of making sales of service.
15    "Sale at retail" means "sale at retail" as defined in the
16Retailers' Occupation Tax Act.
17    "Supplier" means any person who makes sales of tangible
18personal property to servicemen for the purpose of resale as
19an incident to a sale of service.
20    "Serviceman maintaining a place of business in this
21State", or any like term, means and includes any serviceman:
22        (1) having or maintaining within this State, directly
23    or by a subsidiary, an office, distribution house, sales
24    house, warehouse or other place of business, or any agent
25    or other representative operating within this State under
26    the authority of the serviceman or its subsidiary,

 

 

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1    irrespective of whether such place of business or agent or
2    other representative is located here permanently or
3    temporarily, or whether such serviceman or subsidiary is
4    licensed to do business in this State;
5        (1.1) having a contract with a person located in this
6    State under which the person, for a commission or other
7    consideration based on the sale of service by the
8    serviceman, directly or indirectly refers potential
9    customers to the serviceman by providing to the potential
10    customers a promotional code or other mechanism that
11    allows the serviceman to track purchases referred by such
12    persons. Examples of mechanisms that allow the serviceman
13    to track purchases referred by such persons include but
14    are not limited to the use of a link on the person's
15    Internet website, promotional codes distributed through
16    the person's hand-delivered or mailed material, and
17    promotional codes distributed by the person through radio
18    or other broadcast media. The provisions of this paragraph
19    (1.1) shall apply only if the cumulative gross receipts
20    from sales of service by the serviceman to customers who
21    are referred to the serviceman by all persons in this
22    State under such contracts exceed $10,000 during the
23    preceding 4 quarterly periods ending on the last day of
24    March, June, September, and December; a serviceman meeting
25    the requirements of this paragraph (1.1) shall be presumed
26    to be maintaining a place of business in this State but may

 

 

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1    rebut this presumption by submitting proof that the
2    referrals or other activities pursued within this State by
3    such persons were not sufficient to meet the nexus
4    standards of the United States Constitution during the
5    preceding 4 quarterly periods;
6        (1.2) beginning July 1, 2011, having a contract with a
7    person located in this State under which:
8            (A) the serviceman sells the same or substantially
9        similar line of services as the person located in this
10        State and does so using an identical or substantially
11        similar name, trade name, or trademark as the person
12        located in this State; and
13            (B) the serviceman provides a commission or other
14        consideration to the person located in this State
15        based upon the sale of services by the serviceman.
16    The provisions of this paragraph (1.2) shall apply only if
17    the cumulative gross receipts from sales of service by the
18    serviceman to customers in this State under all such
19    contracts exceed $10,000 during the preceding 4 quarterly
20    periods ending on the last day of March, June, September,
21    and December;
22        (2) soliciting orders for tangible personal property
23    by means of a telecommunication or television shopping
24    system (which utilizes toll free numbers) which is
25    intended by the retailer to be broadcast by cable
26    television or other means of broadcasting, to consumers

 

 

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1    located in this State;
2        (3) pursuant to a contract with a broadcaster or
3    publisher located in this State, soliciting orders for
4    tangible personal property by means of advertising which
5    is disseminated primarily to consumers located in this
6    State and only secondarily to bordering jurisdictions;
7        (4) soliciting orders for tangible personal property
8    by mail if the solicitations are substantial and recurring
9    and if the retailer benefits from any banking, financing,
10    debt collection, telecommunication, or marketing
11    activities occurring in this State or benefits from the
12    location in this State of authorized installation,
13    servicing, or repair facilities;
14        (5) being owned or controlled by the same interests
15    which own or control any retailer engaging in business in
16    the same or similar line of business in this State;
17        (6) having a franchisee or licensee operating under
18    its trade name if the franchisee or licensee is required
19    to collect the tax under this Section;
20        (7) pursuant to a contract with a cable television
21    operator located in this State, soliciting orders for
22    tangible personal property by means of advertising which
23    is transmitted or distributed over a cable television
24    system in this State;
25        (8) engaging in activities in Illinois, which
26    activities in the state in which the supply business

 

 

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1    engaging in such activities is located would constitute
2    maintaining a place of business in that state; or
3        (9) beginning October 1, 2018, making sales of service
4    to purchasers in Illinois from outside of Illinois if:
5            (A) the cumulative gross receipts from sales of
6        service to purchasers in Illinois are $100,000 or
7        more; or
8            (B) the serviceman enters into 200 or more
9        separate transactions for sales of service to
10        purchasers in Illinois.
11        The serviceman shall determine on a quarterly basis,
12    ending on the last day of March, June, September, and
13    December, whether he or she meets the criteria of either
14    subparagraph (A) or (B) of this paragraph (9) for the
15    preceding 12-month period. If the serviceman meets the
16    criteria of either subparagraph (A) or (B) for a 12-month
17    period, he or she is considered a serviceman maintaining a
18    place of business in this State and is required to collect
19    and remit the tax imposed under this Act and file returns
20    for one year. At the end of that one-year period, the
21    serviceman shall determine whether the serviceman met the
22    criteria of either subparagraph (A) or (B) during the
23    preceding 12-month period. If the serviceman met the
24    criteria in either subparagraph (A) or (B) for the
25    preceding 12-month period, he or she is considered a
26    serviceman maintaining a place of business in this State

 

 

HB4918- 112 -LRB102 22643 HLH 31787 b

1    and is required to collect and remit the tax imposed under
2    this Act and file returns for the subsequent year. If at
3    the end of a one-year period a serviceman that was
4    required to collect and remit the tax imposed under this
5    Act determines that he or she did not meet the criteria in
6    either subparagraph (A) or (B) during the preceding
7    12-month period, the serviceman subsequently shall
8    determine on a quarterly basis, ending on the last day of
9    March, June, September, and December, whether he or she
10    meets the criteria of either subparagraph (A) or (B) for
11    the preceding 12-month period.
12        Beginning January 1, 2020, neither the gross receipts
13    from nor the number of separate transactions for sales of
14    service to purchasers in Illinois that a serviceman makes
15    through a marketplace facilitator and for which the
16    serviceman has received a certification from the
17    marketplace facilitator pursuant to Section 2d of this Act
18    shall be included for purposes of determining whether he
19    or she has met the thresholds of this paragraph (9).
20        (10) Beginning January 1, 2020, a marketplace
21    facilitator, as defined in Section 2d of this Act.
22(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
23100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article
2410, Section 10-15, eff. 6-5-19; 101-9, Article 25, Section
2525-10, eff. 6-5-19; 101-604, eff. 12-13-19.)
 

 

 

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1    (35 ILCS 110/3-5)
2    Sec. 3-5. Exemptions. Use of the following tangible
3personal property is exempt from the tax imposed by this Act:
4    (1) Personal property purchased from a corporation,
5society, association, foundation, institution, or
6organization, other than a limited liability company, that is
7organized and operated as a not-for-profit service enterprise
8for the benefit of persons 65 years of age or older if the
9personal property was not purchased by the enterprise for the
10purpose of resale by the enterprise.
11    (2) Personal property purchased by a non-profit Illinois
12county fair association for use in conducting, operating, or
13promoting the county fair.
14    (3) Personal property purchased by a not-for-profit arts
15or cultural organization that establishes, by proof required
16by the Department by rule, that it has received an exemption
17under Section 501(c)(3) of the Internal Revenue Code and that
18is organized and operated primarily for the presentation or
19support of arts or cultural programming, activities, or
20services. These organizations include, but are not limited to,
21music and dramatic arts organizations such as symphony
22orchestras and theatrical groups, arts and cultural service
23organizations, local arts councils, visual arts organizations,
24and media arts organizations. On and after July 1, 2001 (the
25effective date of Public Act 92-35), however, an entity
26otherwise eligible for this exemption shall not make tax-free

 

 

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1purchases unless it has an active identification number issued
2by the Department.
3    (4) Legal tender, currency, medallions, or gold or silver
4coinage issued by the State of Illinois, the government of the
5United States of America, or the government of any foreign
6country, and bullion.
7    (5) Until July 1, 2003 and beginning again on September 1,
82004 through August 30, 2014, graphic arts machinery and
9equipment, including repair and replacement parts, both new
10and used, and including that manufactured on special order or
11purchased for lease, certified by the purchaser to be used
12primarily for graphic arts production. Equipment includes
13chemicals or chemicals acting as catalysts but only if the
14chemicals or chemicals acting as catalysts effect a direct and
15immediate change upon a graphic arts product. Beginning on
16July 1, 2017, graphic arts machinery and equipment is included
17in the manufacturing and assembling machinery and equipment
18exemption under Section 2 of this Act.
19    (6) Personal property purchased from a teacher-sponsored
20student organization affiliated with an elementary or
21secondary school located in Illinois.
22    (7) Farm machinery and equipment, both new and used,
23including that manufactured on special order, certified by the
24purchaser to be used primarily for production agriculture or
25State or federal agricultural programs, including individual
26replacement parts for the machinery and equipment, including

 

 

HB4918- 115 -LRB102 22643 HLH 31787 b

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

 

 

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1to, the collection, monitoring, and correlation of animal and
2crop data for the purpose of formulating animal diets and
3agricultural chemicals. This item (7) is exempt from the
4provisions of Section 3-75.
5    (8) Until June 30, 2013, fuel and petroleum products sold
6to or used by an air common carrier, certified by the carrier
7to be used for consumption, shipment, or storage in the
8conduct of its business as an air common carrier, for a flight
9destined for or returning from a location or locations outside
10the United States without regard to previous or subsequent
11domestic stopovers.
12    Beginning July 1, 2013, fuel and petroleum products sold
13to or used by an air carrier, certified by the carrier to be
14used for consumption, shipment, or storage in the conduct of
15its business as an air common carrier, for a flight that (i) is
16engaged in foreign trade or is engaged in trade between the
17United States and any of its possessions and (ii) transports
18at least one individual or package for hire from the city of
19origination to the city of final destination on the same
20aircraft, without regard to a change in the flight number of
21that aircraft.
22    (9) Proceeds of mandatory service charges separately
23stated on customers' bills for the purchase and consumption of
24food and beverages acquired as an incident to the purchase of a
25service from a serviceman, to the extent that the proceeds of
26the service charge are in fact turned over as tips or as a

 

 

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1substitute for tips to the employees who participate directly
2in preparing, serving, hosting or cleaning up the food or
3beverage function with respect to which the service charge is
4imposed.
5    (10) Until July 1, 2003, oil field exploration, drilling,
6and production equipment, including (i) rigs and parts of
7rigs, rotary rigs, cable tool rigs, and workover rigs, (ii)
8pipe and tubular goods, including casing and drill strings,
9(iii) pumps and pump-jack units, (iv) storage tanks and flow
10lines, (v) any individual replacement part for oil field
11exploration, drilling, and production equipment, and (vi)
12machinery and equipment purchased for lease; but excluding
13motor vehicles required to be registered under the Illinois
14Vehicle Code.
15    (11) Proceeds from the sale of photoprocessing machinery
16and equipment, including repair and replacement parts, both
17new and used, including that manufactured on special order,
18certified by the purchaser to be used primarily for
19photoprocessing, and including photoprocessing machinery and
20equipment purchased for lease.
21    (12) Until July 1, 2023, coal and aggregate exploration,
22mining, off-highway hauling, processing, maintenance, and
23reclamation equipment, including replacement parts and
24equipment, and including equipment purchased for lease, but
25excluding motor vehicles required to be registered under the
26Illinois Vehicle Code. The changes made to this Section by

 

 

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1Public Act 97-767 apply on and after July 1, 2003, but no claim
2for credit or refund is allowed on or after August 16, 2013
3(the effective date of Public Act 98-456) for such taxes paid
4during the period beginning July 1, 2003 and ending on August
516, 2013 (the effective date of Public Act 98-456).
6    (13) Semen used for artificial insemination of livestock
7for direct agricultural production.
8    (14) Horses, or interests in horses, registered with and
9meeting the requirements of any of the Arabian Horse Club
10Registry of America, Appaloosa Horse Club, American Quarter
11Horse Association, United States Trotting Association, or
12Jockey Club, as appropriate, used for purposes of breeding or
13racing for prizes. This item (14) is exempt from the
14provisions of Section 3-75, and the exemption provided for
15under this item (14) applies for all periods beginning May 30,
161995, but no claim for credit or refund is allowed on or after
17January 1, 2008 (the effective date of Public Act 95-88) for
18such taxes paid during the period beginning May 30, 2000 and
19ending on January 1, 2008 (the effective date of Public Act
2095-88).
21    (15) Computers and communications equipment utilized for
22any hospital purpose and equipment used in the diagnosis,
23analysis, or treatment of hospital patients purchased by a
24lessor who leases the equipment, under a lease of one year or
25longer executed or in effect at the time the lessor would
26otherwise be subject to the tax imposed by this Act, to a

 

 

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

 

 

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1this Act or the Use Tax Act, as the case may be, based on the
2fair market value of the property at the time the
3non-qualifying use occurs. No lessor shall collect or attempt
4to collect an amount (however designated) that purports to
5reimburse that lessor for the tax imposed by this Act or the
6Use Tax Act, as the case may be, if the tax has not been paid
7by the lessor. If a lessor improperly collects any such amount
8from the lessee, the lessee shall have a legal right to claim a
9refund of that amount from the lessor. If, however, that
10amount is not refunded to the lessee for any reason, the lessor
11is liable to pay that amount to the Department.
12    (17) Beginning with taxable years ending on or after
13December 31, 1995 and ending with taxable years ending on or
14before December 31, 2004, personal property that is donated
15for disaster relief to be used in a State or federally declared
16disaster area in Illinois or bordering Illinois by a
17manufacturer or retailer that is registered in this State to a
18corporation, society, association, foundation, or institution
19that has been issued a sales tax exemption identification
20number by the Department that assists victims of the disaster
21who reside within the declared disaster area.
22    (18) 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 used in
25the performance of infrastructure repairs in this State,
26including but not limited to municipal roads and streets,

 

 

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1access roads, bridges, sidewalks, waste disposal systems,
2water and sewer line extensions, water distribution and
3purification facilities, storm water drainage and retention
4facilities, and sewage treatment facilities, resulting from a
5State or federally declared disaster in Illinois or bordering
6Illinois when such repairs are initiated on facilities located
7in the declared disaster area within 6 months after the
8disaster.
9    (19) Beginning July 1, 1999, game or game birds purchased
10at a "game breeding and hunting preserve area" as that term is
11used in the Wildlife Code. This paragraph is exempt from the
12provisions of Section 3-75.
13    (20) 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
17Department to be organized and operated exclusively for
18educational purposes. For purposes of this exemption, "a
19corporation, limited liability company, society, association,
20foundation, or institution organized and operated exclusively
21for educational purposes" means all tax-supported public
22schools, private schools that offer systematic instruction in
23useful branches of learning by methods common to public
24schools and that compare favorably in their scope and
25intensity with the course of study presented in tax-supported
26schools, and vocational or technical schools or institutes

 

 

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1organized and operated exclusively to provide a course of
2study of not less than 6 weeks duration and designed to prepare
3individuals to follow a trade or to pursue a manual,
4technical, mechanical, industrial, business, or commercial
5occupation.
6    (21) Beginning January 1, 2000, personal property,
7including food, purchased through fundraising events for the
8benefit of a public or private elementary or secondary school,
9a group of those schools, or one or more school districts if
10the events are sponsored by an entity recognized by the school
11district that consists primarily of volunteers and includes
12parents and teachers of the school children. This paragraph
13does not apply to fundraising events (i) for the benefit of
14private home instruction or (ii) for which the fundraising
15entity purchases the personal property sold at the events from
16another individual or entity that sold the property for the
17purpose of resale by the fundraising entity and that profits
18from the sale to the fundraising entity. This paragraph is
19exempt from the provisions of Section 3-75.
20    (22) Beginning January 1, 2000 and through December 31,
212001, new or used automatic vending machines that prepare and
22serve hot food and beverages, including coffee, soup, and
23other items, and replacement parts for these machines.
24Beginning January 1, 2002 and through June 30, 2003, machines
25and parts for machines used in commercial, coin-operated
26amusement and vending business if a use or occupation tax is

 

 

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1paid on the gross receipts derived from the use of the
2commercial, coin-operated amusement and vending machines. This
3paragraph is exempt from the provisions of Section 3-75.
4    (23) Beginning August 23, 2001 and through June 30, 2016,
5food for human consumption that is to be consumed off the
6premises where it is sold (other than alcoholic beverages,
7soft drinks, and food that has been prepared for immediate
8consumption) and prescription and nonprescription medicines,
9drugs, medical appliances, and insulin, urine testing
10materials, syringes, and needles used by diabetics, for human
11use, when purchased for use by a person receiving medical
12assistance under Article V of the Illinois Public Aid Code who
13resides in a licensed long-term care facility, as defined in
14the Nursing Home Care Act, or in a licensed facility as defined
15in the ID/DD Community Care Act, the MC/DD Act, or the
16Specialized Mental Health Rehabilitation Act of 2013.
17    (24) Beginning on August 2, 2001 (the effective date of
18Public Act 92-227), computers and communications equipment
19utilized for any hospital purpose and equipment used in the
20diagnosis, analysis, or treatment of hospital patients
21purchased by a lessor who leases the equipment, under a lease
22of one year or longer executed or in effect at the time the
23lessor would otherwise be subject to the tax imposed by this
24Act, to a hospital that has been issued an active tax exemption
25identification number by the Department under Section 1g of
26the Retailers' Occupation Tax Act. If the equipment is leased

 

 

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1in a manner that does not qualify for this exemption or is used
2in any other nonexempt manner, the lessor shall be liable for
3the tax imposed under this Act or the Use Tax Act, as the case
4may be, based on the fair market value of the property at the
5time the nonqualifying use occurs. No lessor shall collect or
6attempt to collect an amount (however designated) that
7purports to reimburse that lessor for the tax imposed by this
8Act or the Use Tax Act, as the case may be, if the tax has not
9been paid by the lessor. If a lessor improperly collects any
10such amount from the lessee, the lessee shall have a legal
11right to claim a refund of that amount from the lessor. If,
12however, that amount is not refunded to the lessee for any
13reason, the lessor is liable to pay that amount to the
14Department. This paragraph is exempt from the provisions of
15Section 3-75.
16    (25) Beginning on August 2, 2001 (the effective date of
17Public Act 92-227), personal property purchased by a lessor
18who leases the property, under a lease of one year or longer
19executed or in effect at the time the lessor would otherwise be
20subject to the tax imposed by this Act, to a governmental body
21that has been issued an active tax exemption identification
22number by the Department under Section 1g of the Retailers'
23Occupation Tax Act. If the property is leased in a manner that
24does not qualify for this exemption or is used in any other
25nonexempt manner, the lessor shall be liable for the tax
26imposed under this Act or the Use Tax Act, as the case may be,

 

 

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1based on the fair market value of the property at the time the
2nonqualifying use occurs. No lessor shall collect or attempt
3to collect an amount (however designated) that purports to
4reimburse that lessor for the tax imposed by this Act or the
5Use Tax Act, as the case may be, if the tax has not been paid
6by the lessor. If a lessor improperly collects any such amount
7from the lessee, the lessee shall have a legal right to claim a
8refund of that amount from the lessor. If, however, that
9amount is not refunded to the lessee for any reason, the lessor
10is liable to pay that amount to the Department. This paragraph
11is exempt from the provisions of Section 3-75.
12    (26) 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
17under Title IV of the Environmental Protection Act. This
18paragraph is exempt from the provisions of Section 3-75.
19    (27) Beginning January 1, 2010 and continuing through
20December 31, 2024, materials, parts, equipment, components,
21and furnishings incorporated into or upon an aircraft as part
22of the modification, refurbishment, completion, replacement,
23repair, or maintenance of the aircraft. This exemption
24includes consumable supplies used in the modification,
25refurbishment, completion, replacement, repair, and
26maintenance of aircraft, but excludes any materials, parts,

 

 

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1equipment, components, and consumable supplies used in the
2modification, replacement, repair, and maintenance of aircraft
3engines or power plants, whether such engines or power plants
4are installed or uninstalled upon any such aircraft.
5"Consumable supplies" include, but are not limited to,
6adhesive, tape, sandpaper, general purpose lubricants,
7cleaning solution, latex gloves, and protective films. This
8exemption applies only to the use of qualifying tangible
9personal property transferred incident to the modification,
10refurbishment, completion, replacement, repair, or maintenance
11of aircraft by persons who (i) hold an Air Agency Certificate
12and are empowered to operate an approved repair station by the
13Federal Aviation Administration, (ii) have a Class IV Rating,
14and (iii) conduct operations in accordance with Part 145 of
15the Federal Aviation Regulations. The exemption does not
16include aircraft operated by a commercial air carrier
17providing scheduled passenger air service pursuant to
18authority issued under Part 121 or Part 129 of the Federal
19Aviation Regulations. The changes made to this paragraph (27)
20by Public Act 98-534 are declarative of existing law. It is the
21intent of the General Assembly that the exemption under this
22paragraph (27) applies continuously from January 1, 2010
23through December 31, 2024; however, no claim for credit or
24refund is allowed for taxes paid as a result of the
25disallowance of this exemption on or after January 1, 2015 and
26prior to the effective date of this amendatory Act of the 101st

 

 

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1General Assembly.
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
11instruments issued by the public-facilities corporation in
12connection with the development of the municipal convention
13hall. This exemption includes existing public-facilities
14corporations as provided in Section 11-65-25 of the Illinois
15Municipal Code. This paragraph is exempt from the provisions
16of Section 3-75.
17    (29) Beginning January 1, 2017 and through December 31,
182026, menstrual pads, tampons, and menstrual cups.
19    (30) Tangible personal property transferred to a purchaser
20who is exempt from the tax imposed by this Act by operation of
21federal law. This paragraph is exempt from the provisions of
22Section 3-75.
23    (31) Qualified tangible personal property used in the
24construction or operation of a data center that has been
25granted a certificate of exemption by the Department of
26Commerce and Economic Opportunity, whether that tangible

 

 

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1personal property is purchased by the owner, operator, or
2tenant of the data center or by a contractor or subcontractor
3of the owner, operator, or tenant. Data centers that would
4have qualified for a certificate of exemption prior to January
51, 2020 had this amendatory Act of the 101st General Assembly
6been in effect, may apply for and obtain an exemption for
7subsequent purchases of computer equipment or enabling
8software purchased or leased to upgrade, supplement, or
9replace computer equipment or enabling software purchased or
10leased in the original investment that would have qualified.
11    The Department of Commerce and Economic Opportunity shall
12grant a certificate of exemption under this item (31) to
13qualified data centers as defined by Section 605-1025 of the
14Department of Commerce and Economic Opportunity Law of the
15Civil Administrative Code of Illinois.
16    For the purposes of this item (31):
17        "Data center" means a building or a series of
18    buildings rehabilitated or constructed to house working
19    servers in one physical location or multiple sites within
20    the State of Illinois.
21        "Qualified tangible personal property" means:
22    electrical systems and equipment; climate control and
23    chilling equipment and systems; mechanical systems and
24    equipment; monitoring and secure systems; emergency
25    generators; hardware; computers; servers; data storage
26    devices; network connectivity equipment; racks; cabinets;

 

 

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1    telecommunications cabling infrastructure; raised floor
2    systems; peripheral components or systems; software;
3    mechanical, electrical, or plumbing systems; battery
4    systems; cooling systems and towers; temperature control
5    systems; other cabling; and other data center
6    infrastructure equipment and systems necessary to operate
7    qualified tangible personal property, including fixtures;
8    and component parts of any of the foregoing, including
9    installation, maintenance, repair, refurbishment, and
10    replacement of qualified tangible personal property to
11    generate, transform, transmit, distribute, or manage
12    electricity necessary to operate qualified tangible
13    personal property; and all other tangible personal
14    property that is essential to the operations of a computer
15    data center. The term "qualified tangible personal
16    property" also includes building materials physically
17    incorporated in to the qualifying data center. To document
18    the exemption allowed under this Section, the retailer
19    must obtain from the purchaser a copy of the certificate
20    of eligibility issued by the Department of Commerce and
21    Economic Opportunity.
22    This item (31) is exempt from the provisions of Section
233-75.
24    (32) Beginning on the earlier of: (i) January 1, 2025; or
25(ii) January 1 of the calendar year immediately following the
26calendar year in which the State reports to the United States

 

 

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1Department of the Treasury that all federal funds received
2under the American Rescue Plan Act of 2021 have been fully
3expended, and continuing through December 31 of the fifth
4calendar year to occur after the earlier of: (i) January 1,
52025; or (ii) January 1 of the calendar year immediately
6following the calendar year in which the State reports to the
7United States Department of the Treasury that all federal
8funds received under the American Rescue Plan Act of 2021 have
9been fully expended, equipment and material deployed after
10January 1, 2023 in a county in the State with a population of
11fewer than 40,000 people or a township in the State with a
12population density of less than 50 households per square mile
13in a county with a population of less than 300,000 people
14during that year that is incorporated into or used in the
15business of providing broadband services, including all
16equipment and material, machinery, software, or other tangible
17personal property that is used in whole or in part in
18producing, broadcasting, distributing, sending, receiving,
19storing, transmitting, retransmitting, amplifying, switching,
20or routing broadband services, including the monitoring,
21testing, maintaining, enabling, or facilitating of such
22equipment, machinery, software, or other infrastructure. Such
23property includes, but is not limited to, wires, cables
24including fiber optic cables, antennas, poles, switches,
25routers, amplifiers, rectifiers, repeaters, receivers,
26multiplexers, duplexers, transmitters, power equipment, backup

 

 

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1power equipment, diagnostic equipment, storage devices,
2modems, and other general central office equipment, such as
3channel cards, frames, and cabinets. The exemption under this
4item (32) may be taken for property placed in service on or
5after January 1, 2023; however, the credit may not be taken
6until a taxable year beginning on or after the earlier of: (i)
7January 1, 2025; or (ii) January 1 of the calendar year
8immediately following the calendar year in which the State
9reports to the United States Department of the Treasury that
10all federal funds received under the American Rescue Plan Act
11of 2021 have been fully expended.
12(Source: P.A. 101-31, eff. 6-28-19; 101-81, eff. 7-12-19;
13101-629, eff. 2-5-20; 102-16, eff. 6-17-21.)
 
14    Section 20. The Service Occupation Tax Act is amended by
15changing Sections 2 and 3-5 as follows:
 
16    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
17    Sec. 2. In this Act:
18    "Broadband service" means a service provided by wireline
19or wireless means capable of delivering high-speed internet
20access at speeds of at least 25 megabits per second of download
21speed and 3 megabits per second of upload speed.
22    "Transfer" means any transfer of the title to property or
23of the ownership of property whether or not the transferor
24retains title as security for the payment of amounts due him

 

 

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1from the transferee.
2    "Cost Price" means the consideration paid by the
3serviceman for a purchase valued in money, whether paid in
4money or otherwise, including cash, credits and services, and
5shall be determined without any deduction on account of the
6supplier's cost of the property sold or on account of any other
7expense incurred by the supplier. When a serviceman contracts
8out part or all of the services required in his sale of
9service, it shall be presumed that the cost price to the
10serviceman of the property transferred to him by his or her
11subcontractor is equal to 50% of the subcontractor's charges
12to the serviceman in the absence of proof of the consideration
13paid by the subcontractor for the purchase of such property.
14    "Department" means the Department of Revenue.
15    "Person" means any natural individual, firm, partnership,
16association, joint stock company, joint venture, public or
17private corporation, limited liability company, and any
18receiver, executor, trustee, guardian or other representative
19appointed by order of any court.
20    "Sale of Service" means any transaction except:
21    (a) A retail sale of tangible personal property taxable
22under the Retailers' Occupation Tax Act or under the Use Tax
23Act.
24    (b) A sale of tangible personal property for the purpose
25of resale made in compliance with Section 2c of the Retailers'
26Occupation Tax Act.

 

 

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1    (c) Except as hereinafter provided, a sale or transfer of
2tangible personal property as an incident to the rendering of
3service for or by any governmental body or for or by any
4corporation, society, association, foundation or institution
5organized and operated exclusively for charitable, religious
6or educational purposes or any not-for-profit corporation,
7society, association, foundation, institution or organization
8which has no compensated officers or employees and which is
9organized and operated primarily for the recreation of persons
1055 years of age or older. A limited liability company may
11qualify for the exemption under this paragraph only if the
12limited liability company is organized and operated
13exclusively for educational purposes.
14    (d) (Blank).
15    (d-1) A sale or transfer of tangible personal property as
16an incident to the rendering of service for owners, lessors or
17shippers of tangible personal property which is utilized by
18interstate carriers for hire for use as rolling stock moving
19in interstate commerce, and equipment operated by a
20telecommunications provider, licensed as a common carrier by
21the Federal Communications Commission, which is permanently
22installed in or affixed to aircraft moving in interstate
23commerce.
24    (d-1.1) On and after July 1, 2003 and through June 30,
252004, a sale or transfer of a motor vehicle of the second
26division with a gross vehicle weight in excess of 8,000 pounds

 

 

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1as an incident to the rendering of service if that motor
2vehicle is subject to the commercial distribution fee imposed
3under Section 3-815.1 of the Illinois Vehicle Code. Beginning
4on July 1, 2004 and through June 30, 2005, the use in this
5State of motor vehicles of the second division: (i) with a
6gross vehicle weight rating in excess of 8,000 pounds; (ii)
7that are subject to the commercial distribution fee imposed
8under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
9that are primarily used for commercial purposes. Through June
1030, 2005, this exemption applies to repair and replacement
11parts added after the initial purchase of such a motor vehicle
12if that motor vehicle is used in a manner that would qualify
13for the rolling stock exemption otherwise provided for in this
14Act. For purposes of this paragraph, "used for commercial
15purposes" means the transportation of persons or property in
16furtherance of any commercial or industrial enterprise whether
17for-hire or not.
18    (d-2) The repairing, reconditioning or remodeling, for a
19common carrier by rail, of tangible personal property which
20belongs to such carrier for hire, and as to which such carrier
21receives the physical possession of the repaired,
22reconditioned or remodeled item of tangible personal property
23in Illinois, and which such carrier transports, or shares with
24another common carrier in the transportation of such property,
25out of Illinois on a standard uniform bill of lading showing
26the person who repaired, reconditioned or remodeled the

 

 

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1property as the shipper or consignor of such property to a
2destination outside Illinois, for use outside Illinois.
3    (d-3) A sale or transfer of tangible personal property
4which is produced by the seller thereof on special order in
5such a way as to have made the applicable tax the Service
6Occupation Tax or the Service Use Tax, rather than the
7Retailers' Occupation Tax or the Use Tax, for an interstate
8carrier by rail which receives the physical possession of such
9property in Illinois, and which transports such property, or
10shares with another common carrier in the transportation of
11such property, out of Illinois on a standard uniform bill of
12lading showing the seller of the property as the shipper or
13consignor of such property to a destination outside Illinois,
14for use outside Illinois.
15    (d-4) Until January 1, 1997, a sale, by a registered
16serviceman paying tax under this Act to the Department, of
17special order printed materials delivered outside Illinois and
18which are not returned to this State, if delivery is made by
19the seller or agent of the seller, including an agent who
20causes the product to be delivered outside Illinois by a
21common carrier or the U.S. postal service.
22    (e) A sale or transfer of machinery and equipment used
23primarily in the process of the manufacturing or assembling,
24either in an existing, an expanded or a new manufacturing
25facility, of tangible personal property for wholesale or
26retail sale or lease, whether such sale or lease is made

 

 

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1directly by the manufacturer or by some other person, whether
2the materials used in the process are owned by the
3manufacturer or some other person, or whether such sale or
4lease is made apart from or as an incident to the seller's
5engaging in a service occupation and the applicable tax is a
6Service Occupation Tax or Service Use Tax, rather than
7Retailers' Occupation Tax or Use Tax. The exemption provided
8by this paragraph (e) includes production related tangible
9personal property, as defined in Section 3-50 of the Use Tax
10Act, purchased on or after July 1, 2019. The exemption
11provided by this paragraph (e) does not include machinery and
12equipment used in (i) the generation of electricity for
13wholesale or retail sale; (ii) the generation or treatment of
14natural or artificial gas for wholesale or retail sale that is
15delivered to customers through pipes, pipelines, or mains; or
16(iii) the treatment of water for wholesale or retail sale that
17is delivered to customers through pipes, pipelines, or mains.
18The provisions of Public Act 98-583 are declaratory of
19existing law as to the meaning and scope of this exemption. The
20exemption under this subsection (e) is exempt from the
21provisions of Section 3-75.
22    (f) Until July 1, 2003, the sale or transfer of
23distillation machinery and equipment, sold as a unit or kit
24and assembled or installed by the retailer, which machinery
25and equipment is certified by the user to be used only for the
26production of ethyl alcohol that will be used for consumption

 

 

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1as motor fuel or as a component of motor fuel for the personal
2use of such user and not subject to sale or resale.
3    (g) At the election of any serviceman not required to be
4otherwise registered as a retailer under Section 2a of the
5Retailers' Occupation Tax Act, made for each fiscal year sales
6of service in which the aggregate annual cost price of
7tangible personal property transferred as an incident to the
8sales of service is less than 35% (75% in the case of
9servicemen transferring prescription drugs or servicemen
10engaged in graphic arts production) of the aggregate annual
11total gross receipts from all sales of service. The purchase
12of such tangible personal property by the serviceman shall be
13subject to tax under the Retailers' Occupation Tax Act and the
14Use Tax Act. However, if a primary serviceman who has made the
15election described in this paragraph subcontracts service work
16to a secondary serviceman who has also made the election
17described in this paragraph, the primary serviceman does not
18incur a Use Tax liability if the secondary serviceman (i) has
19paid or will pay Use Tax on his or her cost price of any
20tangible personal property transferred to the primary
21serviceman and (ii) certifies that fact in writing to the
22primary serviceman.
23    Tangible personal property transferred incident to the
24completion of a maintenance agreement is exempt from the tax
25imposed pursuant to this Act.
26    Exemption (e) also includes machinery and equipment used

 

 

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1in the general maintenance or repair of such exempt machinery
2and equipment or for in-house manufacture of exempt machinery
3and equipment. On and after July 1, 2017, exemption (e) also
4includes graphic arts machinery and equipment, as defined in
5paragraph (5) of Section 3-5. The machinery and equipment
6exemption does not include machinery and equipment used in (i)
7the generation of electricity for wholesale or retail sale;
8(ii) the generation or treatment of natural or artificial gas
9for wholesale or retail sale that is delivered to customers
10through pipes, pipelines, or mains; or (iii) the treatment of
11water for wholesale or retail sale that is delivered to
12customers through pipes, pipelines, or mains. The provisions
13of Public Act 98-583 are declaratory of existing law as to the
14meaning and scope of this exemption. For the purposes of
15exemption (e), each of these terms shall have the following
16meanings: (1) "manufacturing process" shall mean the
17production of any article of tangible personal property,
18whether such article is a finished product or an article for
19use in the process of manufacturing or assembling a different
20article of tangible personal property, by procedures commonly
21regarded as manufacturing, processing, fabricating, or
22refining which changes some existing material or materials
23into a material with a different form, use or name. In relation
24to a recognized integrated business composed of a series of
25operations which collectively constitute manufacturing, or
26individually constitute manufacturing operations, the

 

 

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1manufacturing process shall be deemed to commence with the
2first operation or stage of production in the series, and
3shall not be deemed to end until the completion of the final
4product in the last operation or stage of production in the
5series; and further for purposes of exemption (e),
6photoprocessing is deemed to be a manufacturing process of
7tangible personal property for wholesale or retail sale; (2)
8"assembling process" shall mean the production of any article
9of tangible personal property, whether such article is a
10finished product or an article for use in the process of
11manufacturing or assembling a different article of tangible
12personal property, by the combination of existing materials in
13a manner commonly regarded as assembling which results in a
14material of a different form, use or name; (3) "machinery"
15shall mean major mechanical machines or major components of
16such machines contributing to a manufacturing or assembling
17process; and (4) "equipment" shall include any independent
18device or tool separate from any machinery but essential to an
19integrated manufacturing or assembly process; including
20computers used primarily in a manufacturer's computer assisted
21design, computer assisted manufacturing (CAD/CAM) system; or
22any subunit or assembly comprising a component of any
23machinery or auxiliary, adjunct or attachment parts of
24machinery, such as tools, dies, jigs, fixtures, patterns and
25molds; or any parts which require periodic replacement in the
26course of normal operation; but shall not include hand tools.

 

 

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1Equipment includes chemicals or chemicals acting as catalysts
2but only if the chemicals or chemicals acting as catalysts
3effect a direct and immediate change upon a product being
4manufactured or assembled for wholesale or retail sale or
5lease. The purchaser of such machinery and equipment who has
6an active resale registration number shall furnish such number
7to the seller at the time of purchase. The purchaser of such
8machinery and equipment and tools without an active resale
9registration number shall furnish to the seller a certificate
10of exemption stating facts establishing the exemption, which
11certificate shall be available to the Department for
12inspection or audit.
13    Except as provided in Section 2d of this Act, the rolling
14stock exemption applies to rolling stock used by an interstate
15carrier for hire, even just between points in Illinois, if
16such rolling stock transports, for hire, persons whose
17journeys or property whose shipments originate or terminate
18outside Illinois.
19    Any informal rulings, opinions or letters issued by the
20Department in response to an inquiry or request for any
21opinion from any person regarding the coverage and
22applicability of exemption (e) to specific devices shall be
23published, maintained as a public record, and made available
24for public inspection and copying. If the informal ruling,
25opinion or letter contains trade secrets or other confidential
26information, where possible the Department shall delete such

 

 

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1information prior to publication. Whenever such informal
2rulings, opinions, or letters contain any policy of general
3applicability, the Department shall formulate and adopt such
4policy as a rule in accordance with the provisions of the
5Illinois Administrative Procedure Act.
6    On and after July 1, 1987, no entity otherwise eligible
7under exemption (c) of this Section shall make tax-free
8purchases unless it has an active exemption identification
9number issued by the Department.
10    "Serviceman" means any person who is engaged in the
11occupation of making sales of service.
12    "Sale at Retail" means "sale at retail" as defined in the
13Retailers' Occupation Tax Act.
14    "Supplier" means any person who makes sales of tangible
15personal property to servicemen for the purpose of resale as
16an incident to a sale of service.
17(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
18100-863, eff. 8-14-18; 101-9, eff. 6-5-19; 101-604, eff.
1912-13-19.)
 
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
25than a limited liability company, that is organized and

 

 

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1operated as a not-for-profit service enterprise for the
2benefit of persons 65 years of age or older if the personal
3property was not purchased by the enterprise for the purpose
4of resale by the enterprise.
5    (2) Personal property purchased by a not-for-profit
6Illinois county fair association for use in conducting,
7operating, or promoting the county fair.
8    (3) Personal property purchased by any not-for-profit arts
9or cultural organization that establishes, by proof required
10by the Department by rule, that it has received an exemption
11under Section 501(c)(3) of the Internal Revenue Code and that
12is organized and operated primarily for the presentation or
13support of arts or cultural programming, activities, or
14services. These organizations include, but are not limited to,
15music and dramatic arts organizations such as symphony
16orchestras and theatrical groups, arts and cultural service
17organizations, local arts councils, visual arts organizations,
18and media arts organizations. On and after July 1, 2001 (the
19effective date of Public Act 92-35), however, an entity
20otherwise eligible for this exemption shall not make tax-free
21purchases unless it has an active identification number issued
22by the Department.
23    (4) Legal tender, currency, medallions, or gold or silver
24coinage issued by the State of Illinois, the government of the
25United States of America, or the government of any foreign
26country, and bullion.

 

 

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1    (5) Until July 1, 2003 and beginning again on September 1,
22004 through August 30, 2014, graphic arts machinery and
3equipment, including repair and replacement parts, both new
4and used, and including that manufactured on special order or
5purchased for lease, certified by the purchaser to be used
6primarily for graphic arts production. Equipment includes
7chemicals or chemicals acting as catalysts but only if the
8chemicals or chemicals acting as catalysts effect a direct and
9immediate change upon a graphic arts product. Beginning on
10July 1, 2017, graphic arts machinery and equipment is included
11in the manufacturing and assembling machinery and equipment
12exemption under Section 2 of this Act.
13    (6) Personal property sold by a teacher-sponsored student
14organization affiliated with an elementary or secondary school
15located in Illinois.
16    (7) Farm machinery and equipment, both new and used,
17including that manufactured on special order, certified by the
18purchaser to be used primarily for production agriculture or
19State or federal agricultural programs, including individual
20replacement parts for the machinery and equipment, including
21machinery and equipment purchased for lease, and including
22implements of husbandry defined in Section 1-130 of the
23Illinois Vehicle Code, farm machinery and agricultural
24chemical and fertilizer spreaders, and nurse wagons required
25to be registered under Section 3-809 of the Illinois Vehicle
26Code, but excluding other motor vehicles required to be

 

 

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

 

 

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

 

 

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1pipe and tubular goods, including casing and drill strings,
2(iii) pumps and pump-jack units, (iv) storage tanks and flow
3lines, (v) any individual replacement part for oil field
4exploration, drilling, and production equipment, and (vi)
5machinery and equipment purchased for lease; but excluding
6motor vehicles required to be registered under the Illinois
7Vehicle Code.
8    (11) Photoprocessing machinery and equipment, including
9repair and replacement parts, both new and used, including
10that manufactured on special order, certified by the purchaser
11to be used primarily for photoprocessing, and including
12photoprocessing machinery and equipment purchased for lease.
13    (12) Until July 1, 2023, coal and aggregate exploration,
14mining, off-highway hauling, processing, maintenance, and
15reclamation equipment, including replacement parts and
16equipment, and including equipment purchased for lease, but
17excluding motor vehicles required to be registered under the
18Illinois Vehicle Code. The changes made to this Section by
19Public Act 97-767 apply on and after July 1, 2003, but no claim
20for credit or refund is allowed on or after August 16, 2013
21(the effective date of Public Act 98-456) for such taxes paid
22during the period beginning July 1, 2003 and ending on August
2316, 2013 (the effective 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,

 

 

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1soft drinks 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
19provisions of Section 3-55, and the exemption provided for
20under this item (15) applies for all periods beginning May 30,
211995, but no claim for credit or refund is allowed on or after
22January 1, 2008 (the effective date of Public Act 95-88) for
23such taxes paid during the period beginning May 30, 2000 and
24ending on January 1, 2008 (the effective date of Public Act
2595-88).
26    (16) Computers and communications equipment utilized for

 

 

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

 

 

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1the performance of infrastructure repairs in this State,
2including but not limited to municipal roads and streets,
3access roads, bridges, sidewalks, waste disposal systems,
4water and sewer line extensions, water distribution and
5purification facilities, storm water drainage and retention
6facilities, and sewage treatment facilities, resulting from a
7State or federally declared disaster in Illinois or bordering
8Illinois when such repairs are initiated on facilities located
9in the declared disaster area within 6 months after the
10disaster.
11    (20) Beginning July 1, 1999, game or game birds sold at a
12"game breeding and hunting preserve area" as that term is used
13in the Wildlife Code. This paragraph is exempt from the
14provisions of Section 3-55.
15    (21) A motor vehicle, as that term is defined in Section
161-146 of the Illinois Vehicle Code, that is donated to a
17corporation, limited liability company, society, association,
18foundation, or institution that is determined by the
19Department to be organized and operated exclusively for
20educational purposes. For purposes of this exemption, "a
21corporation, limited liability company, society, association,
22foundation, or institution organized and operated exclusively
23for educational purposes" means all tax-supported public
24schools, private schools that offer systematic instruction in
25useful branches of learning by methods common to public
26schools and that compare favorably in their scope and

 

 

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1intensity with the course of study presented in tax-supported
2schools, and vocational or technical schools or institutes
3organized and operated exclusively to provide a course of
4study of not less than 6 weeks duration and designed to prepare
5individuals to follow a trade or to pursue a manual,
6technical, mechanical, industrial, business, or commercial
7occupation.
8    (22) Beginning January 1, 2000, personal property,
9including food, purchased through fundraising events for the
10benefit of a public or private elementary or secondary school,
11a group of those schools, or one or more school districts if
12the events are sponsored by an entity recognized by the school
13district that consists primarily of volunteers and includes
14parents and teachers of the school children. This paragraph
15does not apply to fundraising events (i) for the benefit of
16private home instruction or (ii) for which the fundraising
17entity purchases the personal property sold at the events from
18another individual or entity that sold the property for the
19purpose of resale by the fundraising entity and that profits
20from the sale to the fundraising entity. This paragraph is
21exempt from the provisions of Section 3-55.
22    (23) Beginning January 1, 2000 and through December 31,
232001, new or used automatic vending machines that prepare and
24serve hot food and beverages, including coffee, soup, and
25other items, and replacement parts for these machines.
26Beginning January 1, 2002 and through June 30, 2003, machines

 

 

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1and parts for machines used in commercial, coin-operated
2amusement and vending business if a use or occupation tax is
3paid on the gross receipts derived from the use of the
4commercial, coin-operated amusement and vending machines. This
5paragraph is exempt from the provisions of Section 3-55.
6    (24) Beginning on August 2, 2001 (the effective date of
7Public Act 92-227), computers and communications equipment
8utilized for any hospital purpose and equipment used in the
9diagnosis, analysis, or treatment of hospital patients sold to
10a lessor who leases the equipment, under a lease of one year or
11longer executed or in effect at the time of the purchase, to a
12hospital that has been issued an active tax exemption
13identification number by the Department under Section 1g of
14the Retailers' Occupation Tax Act. This paragraph is exempt
15from the provisions of Section 3-55.
16    (25) Beginning on August 2, 2001 (the effective date of
17Public Act 92-227), personal property sold to a lessor who
18leases the property, under a lease of one year or longer
19executed or in effect at the time of the purchase, to a
20governmental body that has been issued an active tax exemption
21identification number by the Department under Section 1g of
22the Retailers' Occupation Tax Act. This paragraph is exempt
23from the provisions of Section 3-55.
24    (26) Beginning on January 1, 2002 and through June 30,
252016, tangible personal property purchased from an Illinois
26retailer by a taxpayer engaged in centralized purchasing

 

 

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

 

 

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1paragraph is exempt from the provisions of Section 3-55.
2    (28) Tangible personal property sold to 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
11instruments issued by the public-facilities corporation in
12connection with the development of the municipal convention
13hall. This exemption includes existing public-facilities
14corporations as provided in Section 11-65-25 of the Illinois
15Municipal Code. This paragraph is exempt from the provisions
16of Section 3-55.
17    (29) Beginning January 1, 2010 and continuing through
18December 31, 2024, materials, parts, equipment, components,
19and furnishings incorporated into or upon an aircraft as part
20of the modification, refurbishment, completion, replacement,
21repair, or maintenance of the aircraft. This exemption
22includes consumable supplies used in the modification,
23refurbishment, completion, replacement, repair, and
24maintenance of aircraft, but excludes any materials, parts,
25equipment, components, and consumable supplies used in the
26modification, replacement, repair, and maintenance of aircraft

 

 

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1engines or power plants, whether such engines or power plants
2are installed or uninstalled upon any such aircraft.
3"Consumable supplies" include, but are not limited to,
4adhesive, tape, sandpaper, general purpose lubricants,
5cleaning solution, latex gloves, and protective films. This
6exemption applies only to the transfer of qualifying tangible
7personal property incident to the modification, refurbishment,
8completion, replacement, repair, or maintenance of an aircraft
9by persons who (i) hold an Air Agency Certificate and are
10empowered to operate an approved repair station by the Federal
11Aviation Administration, (ii) have a Class IV Rating, and
12(iii) conduct operations in accordance with Part 145 of the
13Federal Aviation Regulations. The exemption does not include
14aircraft operated by a commercial air carrier providing
15scheduled passenger air service pursuant to authority issued
16under Part 121 or Part 129 of the Federal Aviation
17Regulations. The changes made to this paragraph (29) by Public
18Act 98-534 are declarative of existing law. It is the intent of
19the General Assembly that the exemption under this paragraph
20(29) applies continuously from January 1, 2010 through
21December 31, 2024; however, no claim for credit or refund is
22allowed for taxes paid as a result of the disallowance of this
23exemption on or after January 1, 2015 and prior to the
24effective date of this amendatory Act of the 101st General
25Assembly.
26    (30) Beginning January 1, 2017 and through December 31,

 

 

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12026, menstrual pads, tampons, and menstrual cups.
2    (31) Tangible personal property transferred to a purchaser
3who is exempt from tax by operation of federal law. This
4paragraph is exempt from the provisions of Section 3-55.
5    (32) Qualified tangible personal property used in the
6construction or operation of a data center that has been
7granted a certificate of exemption by the Department of
8Commerce and Economic Opportunity, whether that tangible
9personal property is purchased by the owner, operator, or
10tenant of the data center or by a contractor or subcontractor
11of the owner, operator, or tenant. Data centers that would
12have qualified for a certificate of exemption prior to January
131, 2020 had this amendatory Act of the 101st General Assembly
14been in effect, may apply for and obtain an exemption for
15subsequent purchases of computer equipment or enabling
16software purchased or leased to upgrade, supplement, or
17replace computer equipment or enabling software purchased or
18leased in the original investment that would have qualified.
19    The Department of Commerce and Economic Opportunity shall
20grant a certificate of exemption under this item (32) to
21qualified data centers as defined by Section 605-1025 of the
22Department of Commerce and Economic Opportunity Law of the
23Civil Administrative Code of Illinois.
24    For the purposes of this item (32):
25        "Data center" means a building or a series of
26    buildings rehabilitated or constructed to house working

 

 

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1    servers in one physical location or multiple sites within
2    the State of Illinois.
3        "Qualified tangible personal property" means:
4    electrical systems and equipment; climate control and
5    chilling equipment and systems; mechanical systems and
6    equipment; monitoring and secure systems; emergency
7    generators; hardware; computers; servers; data storage
8    devices; network connectivity equipment; racks; cabinets;
9    telecommunications cabling infrastructure; raised floor
10    systems; peripheral components or systems; software;
11    mechanical, electrical, or plumbing systems; battery
12    systems; cooling systems and towers; temperature control
13    systems; other cabling; and other data center
14    infrastructure equipment and systems necessary to operate
15    qualified tangible personal property, including fixtures;
16    and component parts of any of the foregoing, including
17    installation, maintenance, repair, refurbishment, and
18    replacement of qualified tangible personal property to
19    generate, transform, transmit, distribute, or manage
20    electricity necessary to operate qualified tangible
21    personal property; and all other tangible personal
22    property that is essential to the operations of a computer
23    data center. The term "qualified tangible personal
24    property" also includes building materials physically
25    incorporated in to the qualifying data center. To document
26    the exemption allowed under this Section, the retailer

 

 

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1    must obtain from the purchaser a copy of the certificate
2    of eligibility issued by the Department of Commerce and
3    Economic Opportunity.
4    This item (32) is exempt from the provisions of Section
53-55.
6    (33) Beginning on the earlier of: (i) January 1, 2025; or
7(ii) January 1 of the calendar year immediately following the
8calendar year in which the State reports to the United States
9Department of the Treasury that all federal funds received
10under the American Rescue Plan Act of 2021 have been fully
11expended, and continuing through December 31 of the fifth
12calendar year to occur after the earlier of: (i) January 1,
132025; or (ii) January 1 of the calendar year immediately
14following the calendar year in which the State reports to the
15United States Department of the Treasury that all federal
16funds received under the American Rescue Plan Act of 2021 have
17been fully expended, equipment and material deployed after
18January 1, 2023 in a county in the State with a population of
19fewer than 40,000 people or a township in the State with a
20population density of less than 50 households per square mile
21in a county with a population of less than 300,000 people
22during that year that is incorporated into or used in the
23business of providing broadband services, including all
24equipment and material, machinery, software, or other tangible
25personal property that is used in whole or in part in
26producing, broadcasting, distributing, sending, receiving,

 

 

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1storing, transmitting, retransmitting, amplifying, switching,
2or routing broadband services, including the monitoring,
3testing, maintaining, enabling, or facilitating of such
4equipment, machinery, software, or other infrastructure. Such
5property includes, but is not limited to, wires, cables
6including fiber optic cables, antennas, poles, switches,
7routers, amplifiers, rectifiers, repeaters, receivers,
8multiplexers, duplexers, transmitters, power equipment, backup
9power equipment, diagnostic equipment, storage devices,
10modems, and other general central office equipment, such as
11channel cards, frames, and cabinets. The exemption under this
12item (33) may be taken for property placed in service on or
13after January 1, 2023; however, the credit may not be taken
14until a taxable year beginning on or after the earlier of: (i)
15January 1, 2025; or (ii) January 1 of the calendar year
16immediately following the calendar year in which the State
17reports to the United States Department of the Treasury that
18all federal funds received under the American Rescue Plan Act
19of 2021 have been fully expended.
20(Source: P.A. 101-31, eff. 6-28-19; 101-81, eff. 7-12-19;
21101-629, eff. 2-5-20; 102-16, eff. 6-17-21.)
 
22    Section 25. The Retailers' Occupation Tax Act is amended
23by changing Sections 1 and 2-5 as follows:
 
24    (35 ILCS 120/1)  (from Ch. 120, par. 440)

 

 

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1    Sec. 1. Definitions. As used in this Act:
2    "Broadband service" means a service provided by wireline
3or wireless means capable of delivering high-speed internet
4access at speeds of at least 25 megabits per second of download
5speed and 3 megabits per second of upload speed.
6"Sale at retail" means any transfer of the ownership of or
7title to tangible personal property to a purchaser, for the
8purpose of use or consumption, and not for the purpose of
9resale in any form as tangible personal property to the extent
10not first subjected to a use for which it was purchased, for a
11valuable consideration: Provided that the property purchased
12is deemed to be purchased for the purpose of resale, despite
13first being used, to the extent to which it is resold as an
14ingredient of an intentionally produced product or byproduct
15of manufacturing. For this purpose, slag produced as an
16incident to manufacturing pig iron or steel and sold is
17considered to be an intentionally produced byproduct of
18manufacturing. Transactions whereby the possession of the
19property is transferred but the seller retains the title as
20security for payment of the selling price shall be deemed to be
21sales.
22    "Sale at retail" shall be construed to include any
23transfer of the ownership of or title to tangible personal
24property to a purchaser, for use or consumption by any other
25person to whom such purchaser may transfer the tangible
26personal property without a valuable consideration, and to

 

 

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1include any transfer, whether made for or without a valuable
2consideration, for resale in any form as tangible personal
3property unless made in compliance with Section 2c of this
4Act.
5    Sales of tangible personal property, which property, to
6the extent not first subjected to a use for which it was
7purchased, as an ingredient or constituent, goes into and
8forms a part of tangible personal property subsequently the
9subject of a "Sale at retail", are not sales at retail as
10defined in this Act: Provided that the property purchased is
11deemed to be purchased for the purpose of resale, despite
12first being used, to the extent to which it is resold as an
13ingredient of an intentionally produced product or byproduct
14of manufacturing.
15    "Sale at retail" shall be construed to include any
16Illinois florist's sales transaction in which the purchase
17order is received in Illinois by a florist and the sale is for
18use or consumption, but the Illinois florist has a florist in
19another state deliver the property to the purchaser or the
20purchaser's donee in such other state.
21    Nonreusable tangible personal property that is used by
22persons engaged in the business of operating a restaurant,
23cafeteria, or drive-in is a sale for resale when it is
24transferred to customers in the ordinary course of business as
25part of the sale of food or beverages and is used to deliver,
26package, or consume food or beverages, regardless of where

 

 

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1consumption of the food or beverages occurs. Examples of those
2items include, but are not limited to nonreusable, paper and
3plastic cups, plates, baskets, boxes, sleeves, buckets or
4other containers, utensils, straws, placemats, napkins, doggie
5bags, and wrapping or packaging materials that are transferred
6to customers as part of the sale of food or beverages in the
7ordinary course of business.
8    The purchase, employment and transfer of such tangible
9personal property as newsprint and ink for the primary purpose
10of conveying news (with or without other information) is not a
11purchase, use or sale of tangible personal property.
12    A person whose activities are organized and conducted
13primarily as a not-for-profit service enterprise, and who
14engages in selling tangible personal property at retail
15(whether to the public or merely to members and their guests)
16is engaged in the business of selling tangible personal
17property at retail with respect to such transactions,
18excepting only a person organized and operated exclusively for
19charitable, religious or educational purposes either (1), to
20the extent of sales by such person to its members, students,
21patients or inmates of tangible personal property to be used
22primarily for the purposes of such person, or (2), to the
23extent of sales by such person of tangible personal property
24which is not sold or offered for sale by persons organized for
25profit. The selling of school books and school supplies by
26schools at retail to students is not "primarily for the

 

 

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1purposes of" the school which does such selling. The
2provisions of this paragraph shall not apply to nor subject to
3taxation occasional dinners, socials or similar activities of
4a person organized and operated exclusively for charitable,
5religious or educational purposes, whether or not such
6activities are open to the public.
7    A person who is the recipient of a grant or contract under
8Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
9serves meals to participants in the federal Nutrition Program
10for the Elderly in return for contributions established in
11amount by the individual participant pursuant to a schedule of
12suggested fees as provided for in the federal Act is not
13engaged in the business of selling tangible personal property
14at retail with respect to such transactions.
15    "Purchaser" means anyone who, through a sale at retail,
16acquires the ownership of or title to tangible personal
17property for a valuable consideration.
18    "Reseller of motor fuel" means any person engaged in the
19business of selling or delivering or transferring title of
20motor fuel to another person other than for use or
21consumption. No person shall act as a reseller of motor fuel
22within this State without first being registered as a reseller
23pursuant to Section 2c or a retailer pursuant to Section 2a.
24    "Selling price" or the "amount of sale" means the
25consideration for a sale valued in money whether received in
26money or otherwise, including cash, credits, property, other

 

 

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1than as hereinafter provided, and services, but, prior to
2January 1, 2020 and beginning again on January 1, 2022, not
3including the value of or credit given for traded-in tangible
4personal property where the item that is traded-in is of like
5kind and character as that which is being sold; beginning
6January 1, 2020 and until January 1, 2022, "selling price"
7includes the portion of the value of or credit given for
8traded-in motor vehicles of the First Division as defined in
9Section 1-146 of the Illinois Vehicle Code of like kind and
10character as that which is being sold that exceeds $10,000.
11"Selling price" shall be determined without any deduction on
12account of the cost of the property sold, the cost of materials
13used, labor or service cost or any other expense whatsoever,
14but does not include charges that are added to prices by
15sellers on account of the seller's tax liability under this
16Act, or on account of the seller's duty to collect, from the
17purchaser, the tax that is imposed by the Use Tax Act, or,
18except as otherwise provided with respect to any cigarette tax
19imposed by a home rule unit, on account of the seller's tax
20liability under any local occupation tax administered by the
21Department, or, except as otherwise provided with respect to
22any cigarette tax imposed by a home rule unit on account of the
23seller's duty to collect, from the purchasers, the tax that is
24imposed under any local use tax administered by the
25Department. Effective December 1, 1985, "selling price" shall
26include charges that are added to prices by sellers on account

 

 

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1of the seller's tax liability under the Cigarette Tax Act, on
2account of the sellers' duty to collect, from the purchaser,
3the tax imposed under the Cigarette Use Tax Act, and on account
4of the seller's duty to collect, from the purchaser, any
5cigarette tax imposed by a home rule unit.
6    Notwithstanding any law to the contrary, for any motor
7vehicle, as defined in Section 1-146 of the Vehicle Code, that
8is sold on or after January 1, 2015 for the purpose of leasing
9the vehicle for a defined period that is longer than one year
10and (1) is a motor vehicle of the second division that: (A) is
11a self-contained motor vehicle designed or permanently
12converted to provide living quarters for recreational,
13camping, or travel use, with direct walk through access to the
14living quarters from the driver's seat; (B) is of the van
15configuration designed for the transportation of not less than
167 nor more than 16 passengers; or (C) has a gross vehicle
17weight rating of 8,000 pounds or less or (2) is a motor vehicle
18of the first division, "selling price" or "amount of sale"
19means the consideration received by the lessor pursuant to the
20lease contract, including amounts due at lease signing and all
21monthly or other regular payments charged over the term of the
22lease. Also included in the selling price is any amount
23received by the lessor from the lessee for the leased vehicle
24that is not calculated at the time the lease is executed,
25including, but not limited to, excess mileage charges and
26charges for excess wear and tear. For sales that occur in

 

 

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1Illinois, with respect to any amount received by the lessor
2from the lessee for the leased vehicle that is not calculated
3at the time the lease is executed, the lessor who purchased the
4motor vehicle does not incur the tax imposed by the Use Tax Act
5on those amounts, and the retailer who makes the retail sale of
6the motor vehicle to the lessor is not required to collect the
7tax imposed by the Use Tax Act or to pay the tax imposed by
8this Act on those amounts. However, the lessor who purchased
9the motor vehicle assumes the liability for reporting and
10paying the tax on those amounts directly to the Department in
11the same form (Illinois Retailers' Occupation Tax, and local
12retailers' occupation taxes, if applicable) in which the
13retailer would have reported and paid such tax if the retailer
14had accounted for the tax to the Department. For amounts
15received by the lessor from the lessee that are not calculated
16at the time the lease is executed, the lessor must file the
17return and pay the tax to the Department by the due date
18otherwise required by this Act for returns other than
19transaction returns. If the retailer is entitled under this
20Act to a discount for collecting and remitting the tax imposed
21under this Act to the Department with respect to the sale of
22the motor vehicle to the lessor, then the right to the discount
23provided in this Act shall be transferred to the lessor with
24respect to the tax paid by the lessor for any amount received
25by the lessor from the lessee for the leased vehicle that is
26not calculated at the time the lease is executed; provided

 

 

HB4918- 166 -LRB102 22643 HLH 31787 b

1that the discount is only allowed if the return is timely filed
2and for amounts timely paid. The "selling price" of a motor
3vehicle that is sold on or after January 1, 2015 for the
4purpose of leasing for a defined period of longer than one year
5shall not be reduced by the value of or credit given for
6traded-in tangible personal property owned by the lessor, nor
7shall it be reduced by the value of or credit given for
8traded-in tangible personal property owned by the lessee,
9regardless of whether the trade-in value thereof is assigned
10by the lessee to the lessor. In the case of a motor vehicle
11that is sold for the purpose of leasing for a defined period of
12longer than one year, the sale occurs at the time of the
13delivery of the vehicle, regardless of the due date of any
14lease payments. A lessor who incurs a Retailers' Occupation
15Tax liability on the sale of a motor vehicle coming off lease
16may not take a credit against that liability for the Use Tax
17the lessor paid upon the purchase of the motor vehicle (or for
18any tax the lessor paid with respect to any amount received by
19the lessor from the lessee for the leased vehicle that was not
20calculated at the time the lease was executed) if the selling
21price of the motor vehicle at the time of purchase was
22calculated using the definition of "selling price" as defined
23in this paragraph. Notwithstanding any other provision of this
24Act to the contrary, lessors shall file all returns and make
25all payments required under this paragraph to the Department
26by electronic means in the manner and form as required by the

 

 

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1Department. This paragraph does not apply to leases of motor
2vehicles for which, at the time the lease is entered into, the
3term of the lease is not a defined period, including leases
4with a defined initial period with the option to continue the
5lease on a month-to-month or other basis beyond the initial
6defined period.
7    The phrase "like kind and character" shall be liberally
8construed (including but not limited to any form of motor
9vehicle for any form of motor vehicle, or any kind of farm or
10agricultural implement for any other kind of farm or
11agricultural implement), while not including a kind of item
12which, if sold at retail by that retailer, would be exempt from
13retailers' occupation tax and use tax as an isolated or
14occasional sale.
15    "Gross receipts" from the sales of tangible personal
16property at retail means the total selling price or the amount
17of such sales, as hereinbefore defined. In the case of charge
18and time sales, the amount thereof shall be included only as
19and when payments are received by the seller. Receipts or
20other consideration derived by a seller from the sale,
21transfer or assignment of accounts receivable to a wholly
22owned subsidiary will not be deemed payments prior to the time
23the purchaser makes payment on such accounts.
24    "Department" means the Department of Revenue.
25    "Person" means any natural individual, firm, partnership,
26association, joint stock company, joint adventure, public or

 

 

HB4918- 168 -LRB102 22643 HLH 31787 b

1private corporation, limited liability company, or a receiver,
2executor, trustee, guardian or other representative appointed
3by order of any court.
4    The isolated or occasional sale of tangible personal
5property at retail by a person who does not hold himself out as
6being engaged (or who does not habitually engage) in selling
7such tangible personal property at retail, or a sale through a
8bulk vending machine, does not constitute engaging in a
9business of selling such tangible personal property at retail
10within the meaning of this Act; provided that any person who is
11engaged in a business which is not subject to the tax imposed
12by this Act because of involving the sale of or a contract to
13sell real estate or a construction contract to improve real
14estate or a construction contract to engineer, install, and
15maintain an integrated system of products, but who, in the
16course of conducting such business, transfers tangible
17personal property to users or consumers in the finished form
18in which it was purchased, and which does not become real
19estate or was not engineered and installed, under any
20provision of a construction contract or real estate sale or
21real estate sales agreement entered into with some other
22person arising out of or because of such nontaxable business,
23is engaged in the business of selling tangible personal
24property at retail to the extent of the value of the tangible
25personal property so transferred. If, in such a transaction, a
26separate charge is made for the tangible personal property so

 

 

HB4918- 169 -LRB102 22643 HLH 31787 b

1transferred, the value of such property, for the purpose of
2this Act, shall be the amount so separately charged, but not
3less than the cost of such property to the transferor; if no
4separate charge is made, the value of such property, for the
5purposes of this Act, is the cost to the transferor of such
6tangible personal property. Construction contracts for the
7improvement of real estate consisting of engineering,
8installation, and maintenance of voice, data, video, security,
9and all telecommunication systems do not constitute engaging
10in a business of selling tangible personal property at retail
11within the meaning of this Act if they are sold at one
12specified contract price.
13    A person who holds himself or herself out as being engaged
14(or who habitually engages) in selling tangible personal
15property at retail is a person engaged in the business of
16selling tangible personal property at retail hereunder with
17respect to such sales (and not primarily in a service
18occupation) notwithstanding the fact that such person designs
19and produces such tangible personal property on special order
20for the purchaser and in such a way as to render the property
21of value only to such purchaser, if such tangible personal
22property so produced on special order serves substantially the
23same function as stock or standard items of tangible personal
24property that are sold at retail.
25    Persons who engage in the business of transferring
26tangible personal property upon the redemption of trading

 

 

HB4918- 170 -LRB102 22643 HLH 31787 b

1stamps are engaged in the business of selling such property at
2retail and shall be liable for and shall pay the tax imposed by
3this Act on the basis of the retail value of the property
4transferred upon redemption of such stamps.
5    "Bulk vending machine" means a vending machine, containing
6unsorted confections, nuts, toys, or other items designed
7primarily to be used or played with by children which, when a
8coin or coins of a denomination not larger than $0.50 are
9inserted, are dispensed in equal portions, at random and
10without selection by the customer.
11    "Remote retailer" means a retailer that does not maintain
12within this State, directly or by a subsidiary, an office,
13distribution house, sales house, warehouse or other place of
14business, or any agent or other representative operating
15within this State under the authority of the retailer or its
16subsidiary, irrespective of whether such place of business or
17agent is located here permanently or temporarily or whether
18such retailer or subsidiary is licensed to do business in this
19State.
20    "Marketplace" means a physical or electronic place, forum,
21platform, application, or other method by which a marketplace
22seller sells or offers to sell items.
23    "Marketplace facilitator" means a person who, pursuant to
24an agreement with an unrelated third-party marketplace seller,
25directly or indirectly through one or more affiliates
26facilitates a retail sale by an unrelated third party

 

 

HB4918- 171 -LRB102 22643 HLH 31787 b

1marketplace seller by:
2        (1) listing or advertising for sale by the marketplace
3    seller in a marketplace, tangible personal property that
4    is subject to tax under this Act; and
5        (2) either directly or indirectly, through agreements
6    or arrangements with third parties, collecting payment
7    from the customer and transmitting that payment to the
8    marketplace seller regardless of whether the marketplace
9    facilitator receives compensation or other consideration
10    in exchange for its services.
11    A person who provides advertising services, including
12listing products for sale, is not considered a marketplace
13facilitator, so long as the advertising service platform or
14forum does not engage, directly or indirectly through one or
15more affiliated persons, in the activities described in
16paragraph (2) of this definition of "marketplace facilitator".
17    "Marketplace facilitator" does not include any person
18licensed under the Auction License Act. This exemption does
19not apply to any person who is an Internet auction listing
20service, as defined by the Auction License Act.
21    "Marketplace seller" means a person that makes sales
22through a marketplace operated by an unrelated third party
23marketplace facilitator.
24(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 1-1-20;
25102-353, eff. 1-1-22; 102-634, eff. 8-27-21; revised 11-1-21.)
 

 

 

HB4918- 172 -LRB102 22643 HLH 31787 b

1    (35 ILCS 120/2-5)
2    Sec. 2-5. Exemptions. Gross receipts from proceeds from
3the sale of the following tangible personal property are
4exempt from 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
13    in Section 1-130 of the Illinois Vehicle Code, farm
14    machinery and agricultural chemical and fertilizer
15    spreaders, and nurse wagons required to be registered
16    under Section 3-809 of the Illinois Vehicle Code, but
17    excluding other motor vehicles required to be registered
18    under the Illinois Vehicle Code. Horticultural polyhouses
19    or hoop houses used for propagating, growing, or
20    overwintering plants shall be considered farm machinery
21    and equipment under this item (2). Agricultural chemical
22    tender tanks and dry boxes shall include units sold
23    separately from a motor vehicle required to be licensed
24    and units sold mounted on a motor vehicle required to be
25    licensed, if the selling price of the tender is separately
26    stated.

 

 

HB4918- 173 -LRB102 22643 HLH 31787 b

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

 

 

HB4918- 174 -LRB102 22643 HLH 31787 b

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

 

 

HB4918- 175 -LRB102 22643 HLH 31787 b

1    exemption under Section 501(c)(3) of the Internal Revenue
2    Code and that is organized and operated primarily for the
3    presentation or support of arts or cultural programming,
4    activities, or services. These organizations include, but
5    are not limited to, music and dramatic arts organizations
6    such as symphony orchestras and theatrical groups, arts
7    and cultural service organizations, local arts councils,
8    visual arts organizations, and media arts organizations.
9    On and after July 1, 2001 (the effective date of Public Act
10    92-35), however, an entity otherwise eligible for this
11    exemption shall not make tax-free purchases unless it has
12    an active 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
17    the benefit of persons 65 years of age or older if the
18    personal property was not purchased by the enterprise for
19    the 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

 

 

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1    and operated primarily for the recreation of persons 55
2    years of age or older. A limited liability company may
3    qualify for the exemption under this paragraph only if the
4    limited liability company is organized and operated
5    exclusively for educational purposes. On and after July 1,
6    1987, however, no entity otherwise eligible for this
7    exemption shall make tax-free purchases unless it has an
8    active 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
22    and replacement parts added after the initial purchase of
23    such a motor vehicle if that motor vehicle is used in a
24    manner 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
2    any commercial or industrial enterprise whether for-hire
3    or 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
16    the sale or lease is made directly by the manufacturer or
17    by some other person, whether the materials used in the
18    process are owned by the manufacturer or some other
19    person, or whether the sale or lease is made apart from or
20    as an incident to the seller's engaging in the service
21    occupation of producing machines, tools, dies, jigs,
22    patterns, gauges, or other similar items of no commercial
23    value on special order for a particular purchaser. The
24    exemption provided by this paragraph (14) does not include
25    machinery and equipment used in (i) the generation of
26    electricity for wholesale or retail sale; (ii) the

 

 

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1    generation or treatment of natural or artificial gas for
2    wholesale or retail sale that is delivered to customers
3    through pipes, pipelines, or mains; or (iii) the treatment
4    of water for wholesale or retail sale that is delivered to
5    customers through pipes, pipelines, or mains. The
6    provisions of Public Act 98-583 are declaratory of
7    existing law as to the meaning and scope of this
8    exemption. Beginning on July 1, 2017, the exemption
9    provided by this paragraph (14) includes, but is not
10    limited to, graphic arts machinery and equipment, as
11    defined in paragraph (4) of this Section.
12        (15) Proceeds of mandatory service charges separately
13    stated on customers' bills for purchase and consumption of
14    food and beverages, to the extent that the proceeds of the
15    service charge are in fact turned over as tips or as a
16    substitute for tips to the employees who participate
17    directly in preparing, serving, hosting or cleaning up the
18    food or beverage function with respect to which the
19    service charge is imposed.
20        (16) Tangible personal property sold to a purchaser if
21    the purchaser is exempt from use tax by operation of
22    federal law. This paragraph is exempt from the provisions
23    of Section 2-70.
24        (17) Tangible personal property sold to a common
25    carrier by rail or motor that receives the physical
26    possession of the property in Illinois and that transports

 

 

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1    the property, or shares with another common carrier in the
2    transportation of the property, out of Illinois on a
3    standard uniform bill of lading showing the seller of the
4    property as the shipper or consignor of the property to a
5    destination outside Illinois, for use outside Illinois.
6        (18) Legal tender, currency, medallions, or gold or
7    silver coinage issued by the State of Illinois, the
8    government of the United States of America, or the
9    government of any foreign country, and bullion.
10        (19) Until July 1, 2003, oil field exploration,
11    drilling, and production equipment, including (i) rigs and
12    parts of rigs, rotary rigs, cable tool rigs, and workover
13    rigs, (ii) pipe and tubular goods, including casing and
14    drill strings, (iii) pumps and pump-jack units, (iv)
15    storage tanks and flow lines, (v) any individual
16    replacement part for oil field exploration, drilling, and
17    production equipment, and (vi) machinery and equipment
18    purchased for lease; but excluding motor vehicles required
19    to be registered under the Illinois Vehicle Code.
20        (20) Photoprocessing machinery and equipment,
21    including repair and replacement parts, both new and used,
22    including that manufactured on special order, certified by
23    the purchaser to be used primarily for photoprocessing,
24    and including photoprocessing machinery and equipment
25    purchased for lease.
26        (21) Until July 1, 2023, coal and aggregate

 

 

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

 

 

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1    of final destination on the same aircraft, without regard
2    to a change in the flight number of that aircraft.
3        (23) A transaction in which the purchase order is
4    received by a florist who is located outside Illinois, but
5    who has a florist located in Illinois deliver the property
6    to the purchaser or the purchaser's donee in Illinois.
7        (24) Fuel consumed or used in the operation of ships,
8    barges, or vessels that are used primarily in or for the
9    transportation of property or the conveyance of persons
10    for hire on rivers bordering on this State if the fuel is
11    delivered by the seller to the purchaser's barge, ship, or
12    vessel while it is afloat upon that bordering river.
13        (25) Except as provided in item (25-5) of this
14    Section, a motor vehicle sold in this State to a
15    nonresident even though the motor vehicle is delivered to
16    the nonresident in this State, if the motor vehicle is not
17    to be titled in this State, and if a drive-away permit is
18    issued to the motor vehicle as provided in Section 3-603
19    of the Illinois Vehicle Code or if the nonresident
20    purchaser has vehicle registration plates to transfer to
21    the motor vehicle upon returning to his or her home state.
22    The issuance of the drive-away permit or having the
23    out-of-state registration plates to be transferred is
24    prima facie evidence that the motor vehicle will not be
25    titled in this State.
26        (25-5) The exemption under item (25) does not apply if

 

 

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

 

 

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1    accordance with this item (25-5) shall be proportionately
2    distributed as if the tax were collected at the 6.25%
3    general rate imposed under this Act.
4        (25-7) Beginning on July 1, 2007, no tax is imposed
5    under this Act on the sale of an aircraft, as defined in
6    Section 3 of the Illinois Aeronautics Act, if all of the
7    following conditions are met:
8            (1) the aircraft leaves this State within 15 days
9        after the later of either the issuance of the final
10        billing for the sale of the aircraft, or the
11        authorized approval for return to service, completion
12        of the maintenance record entry, and completion of the
13        test flight and ground test for inspection, as
14        required by 14 C.F.R. 91.407;
15            (2) the aircraft is not based or registered in
16        this State after the sale of the aircraft; and
17            (3) the seller retains in his or her books and
18        records and provides to the Department a signed and
19        dated certification from the purchaser, on a form
20        prescribed by the Department, certifying that the
21        requirements of this item (25-7) are met. The
22        certificate must also include the name and address of
23        the purchaser, the address of the location where the
24        aircraft is to be titled or registered, the address of
25        the primary physical location of the aircraft, and
26        other information that the Department may reasonably

 

 

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

 

 

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1    (the effective date of Public Act 95-88) for such taxes
2    paid during the period beginning May 30, 2000 and ending
3    on January 1, 2008 (the effective date of Public Act
4    95-88).
5        (28) Computers and communications equipment utilized
6    for any hospital purpose and equipment used in the
7    diagnosis, analysis, or treatment of hospital patients
8    sold to a lessor who leases the equipment, under a lease of
9    one year or longer executed or in effect at the time of the
10    purchase, to a hospital that has been issued an active tax
11    exemption identification number by the Department under
12    Section 1g of this Act.
13        (29) Personal property sold to a lessor who leases the
14    property, under a lease of one year or longer executed or
15    in effect at the time of the purchase, to a governmental
16    body that has been issued an active tax exemption
17    identification number by the Department under Section 1g
18    of this Act.
19        (30) Beginning with taxable years ending on or after
20    December 31, 1995 and ending with taxable years ending on
21    or before December 31, 2004, personal property that is
22    donated for disaster relief to be used in a State or
23    federally declared disaster area in Illinois or bordering
24    Illinois by a manufacturer or retailer that is registered
25    in this State to a corporation, society, association,
26    foundation, or institution that has been issued a sales

 

 

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

 

 

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

 

 

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1    the purpose of resale by the fundraising entity and that
2    profits from the sale to the fundraising entity. This
3    paragraph is exempt from the provisions of Section 2-70.
4        (35) Beginning January 1, 2000 and through December
5    31, 2001, new or used automatic vending machines that
6    prepare and serve hot food and beverages, including
7    coffee, soup, and other items, and replacement parts for
8    these machines. Beginning January 1, 2002 and through June
9    30, 2003, machines and parts for machines used in
10    commercial, coin-operated amusement and vending business
11    if a use or occupation tax is paid on the gross receipts
12    derived from the use of the commercial, coin-operated
13    amusement and vending machines. This paragraph is exempt
14    from the provisions of Section 2-70.
15        (35-5) Beginning August 23, 2001 and through June 30,
16    2016, food for human consumption that is to be consumed
17    off the premises where it is sold (other than alcoholic
18    beverages, soft drinks, and food that has been prepared
19    for immediate consumption) and prescription and
20    nonprescription medicines, drugs, medical appliances, and
21    insulin, urine testing materials, syringes, and needles
22    used by diabetics, for human use, when purchased for use
23    by a person receiving medical assistance under Article V
24    of the Illinois Public Aid Code who resides in a licensed
25    long-term care facility, as defined in the Nursing Home
26    Care Act, or a licensed facility as defined in the ID/DD

 

 

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1    Community Care Act, the MC/DD Act, or the Specialized
2    Mental Health Rehabilitation Act of 2013.
3        (36) Beginning August 2, 2001, computers and
4    communications equipment utilized for any hospital purpose
5    and equipment used in the diagnosis, analysis, or
6    treatment of hospital patients sold to a lessor who leases
7    the equipment, under a lease of one year or longer
8    executed or in effect at the time of the purchase, to a
9    hospital that has been issued an active tax exemption
10    identification number by the Department under Section 1g
11    of this Act. This paragraph is exempt from the provisions
12    of Section 2-70.
13        (37) Beginning August 2, 2001, personal property sold
14    to a lessor who leases the property, under a lease of one
15    year or longer executed or in effect at the time of the
16    purchase, to a governmental body that has been issued an
17    active tax exemption identification number by the
18    Department under Section 1g of this Act. This paragraph is
19    exempt from the provisions of Section 2-70.
20        (38) Beginning on January 1, 2002 and through June 30,
21    2016, tangible personal property purchased from an
22    Illinois retailer by a taxpayer engaged in centralized
23    purchasing activities in Illinois who will, upon receipt
24    of the property in Illinois, temporarily store the
25    property in Illinois (i) for the purpose of subsequently
26    transporting it outside this State for use or consumption

 

 

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1    thereafter solely outside this State or (ii) for the
2    purpose of being processed, fabricated, or manufactured
3    into, attached to, or incorporated into other tangible
4    personal property to be transported outside this State and
5    thereafter used or consumed solely outside this State. The
6    Director of Revenue shall, pursuant to rules adopted in
7    accordance with the Illinois Administrative Procedure Act,
8    issue a permit to any taxpayer in good standing with the
9    Department who is eligible for the exemption under this
10    paragraph (38). The permit issued under this paragraph
11    (38) shall authorize the holder, to the extent and in the
12    manner specified in the rules adopted under this Act, to
13    purchase tangible personal property from a retailer exempt
14    from the taxes imposed by this Act. Taxpayers shall
15    maintain all necessary books and records to substantiate
16    the use and consumption of all such tangible personal
17    property outside of the State of Illinois.
18        (39) Beginning January 1, 2008, tangible personal
19    property used in the construction or maintenance of a
20    community water supply, as defined under Section 3.145 of
21    the Environmental Protection Act, that is operated by a
22    not-for-profit corporation that holds a valid water supply
23    permit issued under Title IV of the Environmental
24    Protection Act. This paragraph is exempt from the
25    provisions of Section 2-70.
26        (40) Beginning January 1, 2010 and continuing through

 

 

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1    December 31, 2024, materials, parts, equipment,
2    components, and furnishings incorporated into or upon an
3    aircraft as part of the modification, refurbishment,
4    completion, replacement, repair, or maintenance of the
5    aircraft. This exemption includes consumable supplies used
6    in the modification, refurbishment, completion,
7    replacement, repair, and maintenance of aircraft, but
8    excludes any materials, parts, equipment, components, and
9    consumable supplies used in the modification, replacement,
10    repair, and maintenance of aircraft engines or power
11    plants, whether such engines or power plants are installed
12    or uninstalled upon any such aircraft. "Consumable
13    supplies" include, but are not limited to, adhesive, tape,
14    sandpaper, general purpose lubricants, cleaning solution,
15    latex gloves, and protective films. This exemption applies
16    only to the sale of qualifying tangible personal property
17    to persons who modify, refurbish, complete, replace, or
18    maintain an aircraft and who (i) hold an Air Agency
19    Certificate and are empowered to operate an approved
20    repair station by the Federal Aviation Administration,
21    (ii) have a Class IV Rating, and (iii) conduct operations
22    in accordance with Part 145 of the Federal Aviation
23    Regulations. The exemption does not include aircraft
24    operated by a commercial air carrier providing scheduled
25    passenger air service pursuant to authority issued under
26    Part 121 or Part 129 of the Federal Aviation Regulations.

 

 

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1    The changes made to this paragraph (40) by Public Act
2    98-534 are declarative of existing law. It is the intent
3    of the General Assembly that the exemption under this
4    paragraph (40) applies continuously from January 1, 2010
5    through December 31, 2024; however, no claim for credit or
6    refund is allowed for taxes paid as a result of the
7    disallowance of this exemption on or after January 1, 2015
8    and prior to the effective date of this amendatory Act of
9    the 101st General Assembly.
10        (41) Tangible personal property sold to a
11    public-facilities corporation, as described in Section
12    11-65-10 of the Illinois Municipal Code, for purposes of
13    constructing or furnishing a municipal convention hall,
14    but only if the legal title to the municipal convention
15    hall is transferred to the municipality without any
16    further consideration by or on behalf of the municipality
17    at the time of the completion of the municipal convention
18    hall or upon the retirement or redemption of any bonds or
19    other debt instruments issued by the public-facilities
20    corporation in connection with the development of the
21    municipal convention hall. This exemption includes
22    existing public-facilities corporations as provided in
23    Section 11-65-25 of the Illinois Municipal Code. This
24    paragraph is exempt from the provisions of Section 2-70.
25        (42) Beginning January 1, 2017 and through December
26    31, 2026, menstrual pads, tampons, and menstrual cups.

 

 

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1        (43) Merchandise that is subject to the Rental
2    Purchase Agreement Occupation and Use Tax. The purchaser
3    must certify that the item is purchased to be rented
4    subject to a rental purchase agreement, as defined in the
5    Rental Purchase Agreement Act, and provide proof of
6    registration under the Rental Purchase Agreement
7    Occupation and Use Tax Act. This paragraph is exempt from
8    the provisions of Section 2-70.
9        (44) Qualified tangible personal property used in the
10    construction or operation of a data center that has been
11    granted a certificate of exemption by the Department of
12    Commerce and Economic Opportunity, whether that tangible
13    personal property is purchased by the owner, operator, or
14    tenant of the data center or by a contractor or
15    subcontractor of the owner, operator, or tenant. Data
16    centers that would have qualified for a certificate of
17    exemption prior to January 1, 2020 had this amendatory Act
18    of the 101st General Assembly been in effect, may apply
19    for and obtain an exemption for subsequent purchases of
20    computer equipment or enabling software purchased or
21    leased to upgrade, supplement, or replace computer
22    equipment or enabling software purchased or leased in the
23    original investment that would have qualified.
24        The Department of Commerce and Economic Opportunity
25    shall grant a certificate of exemption under this item
26    (44) to qualified data centers as defined by Section

 

 

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1    605-1025 of the Department of Commerce and Economic
2    Opportunity Law of the Civil Administrative Code of
3    Illinois.
4        For the purposes of this item (44):
5            "Data center" means a building or a series of
6        buildings rehabilitated or constructed to house
7        working servers in one physical location or multiple
8        sites within the State of Illinois.
9            "Qualified tangible personal property" means:
10        electrical systems and equipment; climate control and
11        chilling equipment and systems; mechanical systems and
12        equipment; monitoring and secure systems; emergency
13        generators; hardware; computers; servers; data storage
14        devices; network connectivity equipment; racks;
15        cabinets; telecommunications cabling infrastructure;
16        raised floor systems; peripheral components or
17        systems; software; mechanical, electrical, or plumbing
18        systems; battery systems; cooling systems and towers;
19        temperature control systems; other cabling; and other
20        data center infrastructure equipment and systems
21        necessary to operate qualified tangible personal
22        property, including fixtures; and component parts of
23        any of the foregoing, including installation,
24        maintenance, repair, refurbishment, and replacement of
25        qualified tangible personal property to generate,
26        transform, transmit, distribute, or manage electricity

 

 

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1        necessary to operate qualified tangible personal
2        property; and all other tangible personal property
3        that is essential to the operations of a computer data
4        center. The term "qualified tangible personal
5        property" also includes building materials physically
6        incorporated into in to the qualifying data center. To
7        document the exemption allowed under this Section, the
8        retailer must obtain from the purchaser a copy of the
9        certificate of eligibility issued by the Department of
10        Commerce and Economic Opportunity.
11        This item (44) is exempt from the provisions of
12    Section 2-70.
13        (45) Beginning January 1, 2020 and through December
14    31, 2020, sales of tangible personal property made by a
15    marketplace seller over a marketplace for which tax is due
16    under this Act but for which use tax has been collected and
17    remitted to the Department by a marketplace facilitator
18    under Section 2d of the Use Tax Act are exempt from tax
19    under this Act. A marketplace seller claiming this
20    exemption shall maintain books and records demonstrating
21    that the use tax on such sales has been collected and
22    remitted by a marketplace facilitator. Marketplace sellers
23    that have properly remitted tax under this Act on such
24    sales may file a claim for credit as provided in Section 6
25    of this Act. No claim is allowed, however, for such taxes
26    for which a credit or refund has been issued to the

 

 

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1    marketplace facilitator under the Use Tax Act, or for
2    which the marketplace facilitator has filed a claim for
3    credit or refund under the Use Tax Act.
4        (46) Beginning on the earlier of: (i) January 1, 2025;
5    or (ii) January 1 of the calendar year immediately
6    following the calendar year in which the State reports to
7    the United States Department of the Treasury that all
8    federal funds received under the American Rescue Plan Act
9    of 2021 have been fully expended, and continuing through
10    December 31 of the fifth calendar year to occur after the
11    earlier of: (i) January 1, 2025; or (ii) January 1 of the
12    calendar year immediately following the calendar year in
13    which the State reports to the United States Department of
14    the Treasury that all federal funds received under the
15    American Rescue Plan Act of 2021 have been fully expended,
16    equipment and material deployed after January 1, 2023 in a
17    county in the State with a population of fewer than 40,000
18    people or a township in the State with a population
19    density of less than 50 households per square mile in a
20    county with a population of less than 300,000 people
21    during that year that is incorporated into or used in the
22    business of providing broadband services, including all
23    equipment and material, machinery, software, or other
24    tangible personal property that is used in whole or in
25    part in producing, broadcasting, distributing, sending,
26    receiving, storing, transmitting, retransmitting,

 

 

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1    amplifying, switching, or routing broadband services,
2    including the monitoring, testing, maintaining, enabling,
3    or facilitating of such equipment, machinery, software, or
4    other infrastructure. Such property includes, but is not
5    limited to, wires, cables including fiber optic cables,
6    antennas, poles, switches, routers, amplifiers,
7    rectifiers, repeaters, receivers, multiplexers,
8    duplexers, transmitters, power equipment, backup power
9    equipment, diagnostic equipment, storage devices, modems,
10    and other general central office equipment, such as
11    channel cards, frames, and cabinets. The exemption under
12    this item (46) may be taken for property placed in service
13    on or after January 1, 2023; however, the credit may not be
14    taken until a taxable year beginning on or after the
15    earlier of: (i) January 1, 2025; or (ii) January 1 of the
16    calendar year immediately following the calendar year in
17    which the State reports to the United States Department of
18    the Treasury that all federal funds received under the
19    American Rescue Plan Act of 2021 have been fully expended.
20(Source: P.A. 101-31, eff. 6-28-19; 101-81, eff. 7-12-19;
21101-629, eff. 2-5-20; 102-16, eff. 6-17-21; 102-634, eff.
228-27-21; revised 11-9-21.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.