102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2256

 

Introduced 2/26/2021, by Sen. Craig Wilcox

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-55  from Ch. 120, par. 439.3-55
35 ILCS 110/3-45  from Ch. 120, par. 439.33-45

    Amends the Use Tax Act and the Service Use Tax Act. Provides that the multistate exemption includes the return of property of an out-of-State lessor or purchaser to this State for storage, repair, or refurbishment, so long as the property is not used by a lessee or purchaser in this State. Effective immediately.


LRB102 16471 HLH 21863 b

 

 

A BILL FOR

 

SB2256LRB102 16471 HLH 21863 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Section
53-55 as follows:
 
6    (35 ILCS 105/3-55)  (from Ch. 120, par. 439.3-55)
7    Sec. 3-55. Multistate exemption. To prevent actual or
8likely multistate taxation, the tax imposed by this Act does
9not apply to the use of tangible personal property in this
10State under the following circumstances:
11    (a) The use, in this State, of tangible personal property
12acquired outside this State by a nonresident individual and
13brought into this State by the individual for his or her own
14use while temporarily within this State or while passing
15through this State.
16    (b) (Blank).
17    (c) The use, in this State, by owners, lessors, or
18shippers of tangible personal property that is utilized by
19interstate carriers for hire for use as rolling stock moving
20in interstate commerce as long as so used by the interstate
21carriers for hire, and equipment operated by a
22telecommunications provider, licensed as a common carrier by
23the Federal Communications Commission, which is permanently

 

 

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1installed in or affixed to aircraft moving in interstate
2commerce.
3    (d) The use, in this State, of tangible personal property
4that is acquired outside this State and caused to be brought
5into this State by a person who has already paid a tax in
6another State in respect to the sale, purchase, or use of that
7property, to the extent of the amount of the tax properly due
8and paid in the other State.
9    (e) The temporary storage, in this State, of tangible
10personal property that is acquired outside this State and
11that, after being brought into this State and stored here
12temporarily, is used solely outside this State or is
13physically attached to or incorporated into other tangible
14personal property that is used solely outside this State, or
15is altered by converting, fabricating, manufacturing,
16printing, processing, or shaping, and, as altered, is used
17solely outside this State. For purposes of this subsection,
18use in this State does not include the return of the property
19of a lessor or purchaser to this state for storage, repair or
20refurbishment so long as the property is not utilized by a
21lessee or purchaser in this State. Refurbishment includes the
22replacement of component parts as well as upgrades.
23    (e-5) The return of property of an out-of-State lessor or
24purchaser to this State for storage, repair, or refurbishment,
25so long as the property is not used by a lessee or purchaser in
26this State. As used in this subsection (e-5), refurbishment

 

 

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1includes the replacement of component parts as well as
2upgrades.
3    (f) The temporary storage in this State of building
4materials and fixtures that are acquired either in this State
5or outside this State by an Illinois registered combination
6retailer and construction contractor, and that the purchaser
7thereafter uses outside this State by incorporating that
8property into real estate located outside this State.
9    (g) The use or purchase of tangible personal property by a
10common carrier by rail or motor that receives the physical
11possession of the property in Illinois, and that transports
12the property, or shares with another common carrier in the
13transportation of the property, out of Illinois on a standard
14uniform bill of lading showing the seller of the property as
15the shipper or consignor of the property to a destination
16outside Illinois, for use outside Illinois.
17    (h) Except as provided in subsection (h-1), the use, in
18this State, of a motor vehicle that was sold in this State to a
19nonresident, even though the motor vehicle is delivered to the
20nonresident in this State, if the motor vehicle is not to be
21titled in this State, and if a drive-away permit is issued to
22the motor vehicle as provided in Section 3-603 of the Illinois
23Vehicle Code or if the nonresident purchaser has vehicle
24registration plates to transfer to the motor vehicle upon
25returning to his or her home state. The issuance of the
26drive-away permit or having the out-of-state registration

 

 

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

 

 

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1or her state of residence within 30 days after the date of
2sale. The tax collected under this Act in accordance with this
3subsection (h-1) shall be proportionately distributed as if
4the tax were collected at the 6.25% general rate imposed under
5this Act.
6    (h-2) The following exemptions apply with respect to
7certain aircraft:
8        (1) Beginning on July 1, 2007, no tax is imposed under
9    this Act on the purchase of an aircraft, as defined in
10    Section 3 of the Illinois Aeronautics Act, if all of the
11    following conditions are met:
12            (A) the aircraft leaves this State within 15 days
13        after the later of either the issuance of the final
14        billing for the purchase of the aircraft or the
15        authorized approval for return to service, completion
16        of the maintenance record entry, and completion of the
17        test flight and ground test for inspection, as
18        required by 14 C.F.R. 91.407;
19            (B) the aircraft is not based or registered in
20        this State after the purchase of the aircraft; and
21            (C) the purchaser provides the Department with a
22        signed and dated certification, on a form prescribed
23        by the Department, certifying that the requirements of
24        this item (1) are met. The certificate must also
25        include the name and address of the purchaser, the
26        address of the location where the aircraft is to be

 

 

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1        titled or registered, the address of the primary
2        physical location of the aircraft, and other
3        information that the Department may reasonably
4        require.
5        (2) Beginning on July 1, 2007, no tax is imposed under
6    this Act on the use of an aircraft, as defined in Section 3
7    of the Illinois Aeronautics Act, that is temporarily
8    located in this State for the purpose of a prepurchase
9    evaluation if all of the following conditions are met:
10            (A) the aircraft is not based or registered in
11        this State after the prepurchase evaluation; and
12            (B) the purchaser provides the Department with a
13        signed and dated certification, on a form prescribed
14        by the Department, certifying that the requirements of
15        this item (2) are met. The certificate must also
16        include the name and address of the purchaser, the
17        address of the location where the aircraft is to be
18        titled or registered, the address of the primary
19        physical location of the aircraft, and other
20        information that the Department may reasonably
21        require.
22        (3) Beginning on July 1, 2007, no tax is imposed under
23    this Act on the use of an aircraft, as defined in Section 3
24    of the Illinois Aeronautics Act, that is temporarily
25    located in this State for the purpose of a post-sale
26    customization if all of the following conditions are met:

 

 

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1            (A) the aircraft leaves this State within 15 days
2        after the authorized approval for return to service,
3        completion of the maintenance record entry, and
4        completion of the test flight and ground test for
5        inspection, as required by 14 C.F.R. 91.407;
6            (B) the aircraft is not based or registered in
7        this State either before or after the post-sale
8        customization; and
9            (C) the purchaser provides the Department with a
10        signed and dated certification, on a form prescribed
11        by the Department, certifying that the requirements of
12        this item (3) are met. The certificate must also
13        include the name and address of the purchaser, the
14        address of the location where the aircraft is to be
15        titled or registered, the address of the primary
16        physical location of the aircraft, and other
17        information that the Department may reasonably
18        require.
19    If tax becomes due under this subsection (h-2) because of
20the purchaser's use of the aircraft in this State, the
21purchaser shall file a return with the Department and pay the
22tax on the fair market value of the aircraft. This return and
23payment of the tax must be made no later than 30 days after the
24aircraft is used in a taxable manner in this State. The tax is
25based on the fair market value of the aircraft on the date that
26it is first used in a taxable manner in this State.

 

 

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1    For purposes of this subsection (h-2):
2    "Based in this State" means hangared, stored, or otherwise
3used, excluding post-sale customizations as defined in this
4Section, for 10 or more days in each 12-month period
5immediately following the date of the sale of the aircraft.
6    "Post-sale customization" means any improvement,
7maintenance, or repair that is performed on an aircraft
8following a transfer of ownership of the aircraft.
9    "Prepurchase evaluation" means an examination of an
10aircraft to provide a potential purchaser with information
11relevant to the potential purchase.
12    "Registered in this State" means an aircraft registered
13with the Department of Transportation, Aeronautics Division,
14or titled or registered with the Federal Aviation
15Administration to an address located in this State.
16    This subsection (h-2) is exempt from the provisions of
17Section 3-90.
18    (i) Beginning July 1, 1999, the use, in this State, of fuel
19acquired outside this State and brought into this State in the
20fuel supply tanks of locomotives engaged in freight hauling
21and passenger service for interstate commerce. This subsection
22is exempt from the provisions of Section 3-90.
23    (j) Beginning on January 1, 2002 and through June 30,
242016, the use of tangible personal property purchased from an
25Illinois retailer by a taxpayer engaged in centralized
26purchasing activities in Illinois who will, upon receipt of

 

 

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1the property in Illinois, temporarily store the property in
2Illinois (i) for the purpose of subsequently transporting it
3outside this State for use or consumption thereafter solely
4outside this State or (ii) for the purpose of being processed,
5fabricated, or manufactured into, attached to, or incorporated
6into other tangible personal property to be transported
7outside this State and thereafter used or consumed solely
8outside this State. The Director of Revenue shall, pursuant to
9rules adopted in accordance with the Illinois Administrative
10Procedure Act, issue a permit to any taxpayer in good standing
11with the Department who is eligible for the exemption under
12this subsection (j). The permit issued under this subsection
13(j) shall authorize the holder, to the extent and in the manner
14specified in the rules adopted under this Act, to purchase
15tangible personal property from a retailer exempt from the
16taxes imposed by this Act. Taxpayers shall maintain all
17necessary books and records to substantiate the use and
18consumption of all such tangible personal property outside of
19the State of Illinois.
20(Source: P.A. 100-321, eff. 8-24-17.)
 
21    Section 10. The Service Use Tax Act is amended by changing
22Section 3-45 as follows:
 
23    (35 ILCS 110/3-45)  (from Ch. 120, par. 439.33-45)
24    Sec. 3-45. Multistate exemption. To prevent actual or

 

 

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1likely multistate taxation, the tax imposed by this Act does
2not apply to the use of tangible personal property in this
3State under the following circumstances:
4    (a) The use, in this State, of property acquired outside
5this State by a nonresident individual and brought into this
6State by the individual for his or her own use while
7temporarily within this State or while passing through this
8State.
9    (b) The use, in this State, of property that is acquired
10outside this State and that is moved into this State for use as
11rolling stock moving in interstate commerce.
12    (c) The use, in this State, of property that is acquired
13outside this State and caused to be brought into this State by
14a person who has already paid a tax in another state in respect
15to the sale, purchase, or use of that property, to the extent
16of the amount of the tax properly due and paid in the other
17state.
18    (d) The temporary storage, in this State, of property that
19is acquired outside this State and that after being brought
20into this State and stored here temporarily, is used solely
21outside this State or is physically attached to or
22incorporated into other property that is used solely outside
23this State, or is altered by converting, fabricating,
24manufacturing, printing, processing, or shaping, and, as
25altered, is used solely outside this State.
26    (d-5) The return of property of an out-of-State lessor or

 

 

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1purchaser to this State for storage, repair, or refurbishment,
2so long as the property is not used by a lessee or purchaser in
3this State. As used in this subsection (d-5), refurbishment
4includes the replacement of component parts as well as
5upgrades.
6    (e) Beginning July 1, 1999, the use, in this State, of fuel
7acquired outside this State and brought into this State in the
8fuel supply tanks of locomotives engaged in freight hauling
9and passenger service for interstate commerce. This subsection
10is exempt from the provisions of Section 3-75.
11    (f) Beginning on January 1, 2002 and through June 30,
122016, the use of tangible personal property purchased from an
13Illinois retailer by a taxpayer engaged in centralized
14purchasing activities in Illinois who will, upon receipt of
15the property in Illinois, temporarily store the property in
16Illinois (i) for the purpose of subsequently transporting it
17outside this State for use or consumption thereafter solely
18outside this State or (ii) for the purpose of being processed,
19fabricated, or manufactured into, attached to, or incorporated
20into other tangible personal property to be transported
21outside this State and thereafter used or consumed solely
22outside this State. The Director of Revenue shall, pursuant to
23rules adopted in accordance with the Illinois Administrative
24Procedure Act, issue a permit to any taxpayer in good standing
25with the Department who is eligible for the exemption under
26this subsection (f). The permit issued under this subsection

 

 

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1(f) shall authorize the holder, to the extent and in the manner
2specified in the rules adopted under this Act, to purchase
3tangible personal property from a retailer exempt from the
4taxes imposed by this Act. Taxpayers shall maintain all
5necessary books and records to substantiate the use and
6consumption of all such tangible personal property outside of
7the State of Illinois.
8(Source: P.A. 97-73, eff. 6-30-11.)
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.