093_HB3912

 
                                     LRB093 13663 SJM 19046 b

 1        AN ACT concerning taxes.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section   5.   The  Illinois Income Tax Act is amended by
 5    changing Section 215 as follows:

 6        (35 ILCS 5/215)
 7        Sec. 215. Transportation Employee Credit.
 8        (a)  For each taxable year beginning on or after  January
 9    1,  2004  and  on  or  before  December 31, 2006, a qualified
10    employer shall be allowed a credit against the tax imposed by
11    subsections (a) and (b) of Section 201 of  this  Act  in  the
12    amount  of  $50  for  each  eligible employee employed by the
13    taxpayer as of the last day of the taxable year.
14        (b)  For purposes of this Section,  "qualified  employer"
15    means:
16             (1)  any employer who pays a commercial distribution
17        fee  under  Section  3-815.1 of the Illinois Vehicle Code
18        during the taxable year; or
19             (2)  any employer who, as of the end of the  taxable
20        year,  has  one  or  more employees whose compensation is
21        subject to tax only by the employee's state of  residence
22        pursuant to 49 U.S.C 14503(a)(1).
23        (c)  For purposes of this Section, "employee" includes an
24    individual  who  is  treated  as  an employee of the taxpayer
25    under Section 401(c) of the Internal Revenue Code  and  whose
26    actual  assigned duties are such that, if the individual were
27    a common-law employee performing such duties  in  2  or  more
28    states, the individual's compensation would be subject to tax
29    only  by  the  individual's state of residence pursuant to 49
30    U.S.C. 14503(a)(1).
31        (d)  An employee is an "eligible employee" only if all of
 
                            -2-      LRB093 13663 SJM 19046 b
 1    the following criteria are met:
 2             (1)  The employee is an operator of a motor vehicle;
 3             (2)  The employee's  compensation,  pursuant  to  49
 4        U.S.C.  14503(a)(1),  is  subject  to  tax  only  by  the
 5        employee's state of residence, or would be subject to tax
 6        only   by  the  employee's  state  of  residence  if  the
 7        employee's actual duties were  performed  in  2  or  more
 8        states;
 9             (3)  As of the end of the taxable year for which the
10        credit  is  claimed,  the  employee is a resident of this
11        State for purposes of this Act and 49 U.S.C. 14503(a)(1);
12        and
13             (4)  The employee is a full-time employee working 30
14        or more hours per week for 180 consecutive days; provided
15        that such 180-day period may be completed after  the  end
16        of  the  taxable  year  for  which  the credit under this
17        Section is claimed.
18        (e)  For   partners,   shareholders   of   subchapter   S
19    corporations, and owners of limited liability  companies,  if
20    the limited liability company is treated as a partnership for
21    purposes of federal and State income taxation, there shall be
22    allowed  a  credit  under  this  Section  to be determined in
23    accordance with the determination of income and  distributive
24    share  of  income under Sections 702 and 704 and subchapter S
25    of the Internal Revenue Code.
26        (f)  Any credit  allowed  under  this  Section  which  is
27    unused  in  the  year  the  credit  is  earned may be carried
28    forward to each of the 5 taxable years following the year for
29    which the credit is first computed until  it  is  used.  This
30    credit  shall be applied first to the earliest year for which
31    there is a liability. If there is a credit under this Section
32    from more than one tax year that is  available  to  offset  a
33    liability,  the  earliest  credit  arising under this Section
34    shall be applied first.
 
                            -3-      LRB093 13663 SJM 19046 b
 1        (g)  (Blank) This Section is exempt from  the  provisions
 2    of Section 250 of this Act.
 3        (h)  The  Department  of  Revenue  shall  promulgate such
 4    rules and regulations as may be deemed necessary to carry out
 5    the purposes of this Section.
 6    (Source: P.A. 93-23, eff. 6-20-03.)

 7        Section 10.  The Use  Tax  Act  is  amended  by  changing
 8    Sections 3-5 and 3-61 as follows:

 9        (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
10        Sec.  3-5.   Exemptions.   Use  of the following tangible
11    personal property is exempt from the tax imposed by this Act:
12        (1)  Personal  property  purchased  from  a  corporation,
13    society,    association,    foundation,    institution,    or
14    organization, other than a limited liability company, that is
15    organized and operated as a not-for-profit service enterprise
16    for the benefit of persons 65 years of age or  older  if  the
17    personal property was not purchased by the enterprise for the
18    purpose of resale by the enterprise.
19        (2)  Personal  property  purchased  by  a  not-for-profit
20    Illinois  county  fair  association  for  use  in conducting,
21    operating, or promoting the county fair.
22        (3)  Personal property purchased by a not-for-profit arts
23    or cultural organization that establishes, by proof  required
24    by  the Department by rule, that it has received an exemption
25    under Section 501(c)(3) of the Internal Revenue Code and that
26    is organized and operated primarily for the  presentation  or
27    support  of  arts  or  cultural  programming,  activities, or
28    services.  These organizations include, but are  not  limited
29    to,  music  and  dramatic arts organizations such as symphony
30    orchestras and theatrical groups, arts and  cultural  service
31    organizations,    local    arts    councils,    visual   arts
32    organizations, and media arts organizations. On and after the
 
                            -4-      LRB093 13663 SJM 19046 b
 1    effective date of this amendatory Act  of  the  92nd  General
 2    Assembly,  however,  an  entity  otherwise  eligible for this
 3    exemption shall not make tax-free purchases unless it has  an
 4    active identification number issued by the Department.
 5        (4)  Personal  property purchased by a governmental body,
 6    by  a  corporation,  society,  association,  foundation,   or
 7    institution    organized   and   operated   exclusively   for
 8    charitable, religious,  or  educational  purposes,  or  by  a
 9    not-for-profit corporation, society, association, foundation,
10    institution, or organization that has no compensated officers
11    or employees and that is organized and operated primarily for
12    the recreation of persons 55 years of age or older. A limited
13    liability  company  may  qualify for the exemption under this
14    paragraph only if the limited liability company is  organized
15    and  operated  exclusively  for  educational purposes. On and
16    after July 1, 1987, however, no entity otherwise eligible for
17    this exemption shall make tax-free purchases unless it has an
18    active  exemption  identification  number   issued   by   the
19    Department.
20        (5)  Until  July  1,  2003,  a  passenger  car  that is a
21    replacement vehicle to the extent that the purchase price  of
22    the car is subject to the Replacement Vehicle Tax.
23        (6)  Until  July  1,  2003,  graphic  arts  machinery and
24    equipment, including repair and replacement parts,  both  new
25    and  used,  and including that manufactured on special order,
26    certified by the purchaser to be used primarily  for  graphic
27    arts   production,  and  including  machinery  and  equipment
28    purchased  for  lease.    Equipment  includes  chemicals   or
29    chemicals  acting  as  catalysts but only if the chemicals or
30    chemicals acting as catalysts effect a direct  and  immediate
31    change upon a graphic arts product.
32        (7)  Farm chemicals.
33        (8)  Legal  tender,  currency,  medallions,  or  gold  or
34    silver   coinage   issued  by  the  State  of  Illinois,  the
 
                            -5-      LRB093 13663 SJM 19046 b
 1    government of the United States of America, or the government
 2    of any foreign country, and bullion.
 3        (9)  Personal property purchased from a teacher-sponsored
 4    student  organization  affiliated  with  an   elementary   or
 5    secondary school located in Illinois.
 6        (10)  A  motor  vehicle  of  the  first division, a motor
 7    vehicle of the second division that is a self-contained motor
 8    vehicle designed or permanently converted to  provide  living
 9    quarters  for  recreational,  camping,  or  travel  use, with
10    direct walk through to the living quarters from the  driver's
11    seat,  or  a  motor vehicle of the second division that is of
12    the van configuration designed for the transportation of  not
13    less  than  7  nor  more  than  16  passengers, as defined in
14    Section 1-146 of the Illinois Vehicle Code, that is used  for
15    automobile  renting,  as  defined  in  the Automobile Renting
16    Occupation and Use Tax Act.
17        (11)  Farm machinery and equipment, both  new  and  used,
18    including  that  manufactured  on special order, certified by
19    the purchaser to be used primarily for production agriculture
20    or  State  or  federal   agricultural   programs,   including
21    individual replacement parts for the machinery and equipment,
22    including  machinery  and  equipment purchased for lease, and
23    including implements of husbandry defined in Section 1-130 of
24    the Illinois Vehicle Code, farm  machinery  and  agricultural
25    chemical  and fertilizer spreaders, and nurse wagons required
26    to be registered under Section 3-809 of the Illinois  Vehicle
27    Code,  but  excluding  other  motor  vehicles  required to be
28    registered under the  Illinois  Vehicle  Code.  Horticultural
29    polyhouses  or  hoop houses used for propagating, growing, or
30    overwintering plants shall be considered farm  machinery  and
31    equipment  under this item (11). Agricultural chemical tender
32    tanks and dry boxes shall include units sold separately  from
33    a  motor  vehicle  required  to  be  licensed  and units sold
34    mounted on a motor vehicle required to  be  licensed  if  the
 
                            -6-      LRB093 13663 SJM 19046 b
 1    selling price of the tender is separately stated.
 2        Farm  machinery  and  equipment  shall  include precision
 3    farming equipment  that  is  installed  or  purchased  to  be
 4    installed  on farm machinery and equipment including, but not
 5    limited  to,  tractors,   harvesters,   sprayers,   planters,
 6    seeders,  or spreaders. Precision farming equipment includes,
 7    but is not  limited  to,  soil  testing  sensors,  computers,
 8    monitors,  software,  global positioning and mapping systems,
 9    and other such equipment.
10        Farm machinery and  equipment  also  includes  computers,
11    sensors,  software,  and  related equipment used primarily in
12    the computer-assisted  operation  of  production  agriculture
13    facilities,  equipment,  and  activities  such  as,  but  not
14    limited  to,  the  collection, monitoring, and correlation of
15    animal and crop data for the purpose  of  formulating  animal
16    diets  and  agricultural chemicals.  This item (11) is exempt
17    from the provisions of Section 3-90.
18        (12)  Fuel and petroleum products sold to or used  by  an
19    air  common  carrier, certified by the carrier to be used for
20    consumption, shipment, or  storage  in  the  conduct  of  its
21    business  as an air common carrier, for a flight destined for
22    or returning from a location or locations outside the  United
23    States  without  regard  to  previous  or subsequent domestic
24    stopovers.
25        (13)  Proceeds of mandatory  service  charges  separately
26    stated  on  customers' bills for the purchase and consumption
27    of food and beverages purchased at retail from a retailer, to
28    the extent that the proceeds of the  service  charge  are  in
29    fact  turned  over as tips or as a substitute for tips to the
30    employees who participate  directly  in  preparing,  serving,
31    hosting  or  cleaning  up  the food or beverage function with
32    respect to which the service charge is imposed.
33        (14)  Until  July  1,  2003,   oil   field   exploration,
34    drilling,  and  production  equipment, including (i) rigs and
 
                            -7-      LRB093 13663 SJM 19046 b
 1    parts of rigs, rotary rigs, cable  tool  rigs,  and  workover
 2    rigs, (ii) pipe and tubular goods, including casing and drill
 3    strings,  (iii) pumps and pump-jack units, (iv) storage tanks
 4    and flow lines, (v) any individual replacement part  for  oil
 5    field  exploration,  drilling,  and production equipment, and
 6    (vi)  machinery  and  equipment  purchased  for  lease;   but
 7    excluding  motor vehicles required to be registered under the
 8    Illinois Vehicle Code.
 9        (15)  Photoprocessing machinery and equipment,  including
10    repair  and  replacement  parts, both new and used, including
11    that  manufactured  on  special  order,  certified   by   the
12    purchaser  to  be  used  primarily  for  photoprocessing, and
13    including photoprocessing machinery and  equipment  purchased
14    for lease.
15        (16)  Until  July  1,  2003,  coal  exploration,  mining,
16    offhighway  hauling, processing, maintenance, and reclamation
17    equipment, including replacement  parts  and  equipment,  and
18    including  equipment purchased for lease, but excluding motor
19    vehicles required to be registered under the Illinois Vehicle
20    Code.
21        (17)  Until July  1,  2003,  distillation  machinery  and
22    equipment,  sold  as a unit or kit, assembled or installed by
23    the retailer, certified by the user to be used only  for  the
24    production of ethyl alcohol that will be used for consumption
25    as  motor  fuel  or  as  a  component  of  motor fuel for the
26    personal use of the user, and not subject to sale or resale.
27        (18)  Manufacturing   and   assembling   machinery    and
28    equipment  used  primarily in the process of manufacturing or
29    assembling tangible personal property for wholesale or retail
30    sale or lease, whether that sale or lease is made directly by
31    the  manufacturer  or  by  some  other  person,  whether  the
32    materials used in the process are owned by  the  manufacturer
33    or  some  other person, or whether that sale or lease is made
34    apart from or as an incident to the seller's engaging in  the
 
                            -8-      LRB093 13663 SJM 19046 b
 1    service  occupation of producing machines, tools, dies, jigs,
 2    patterns, gauges, or other similar  items  of  no  commercial
 3    value on special order for a particular purchaser.
 4        (19)  Personal  property  delivered  to  a  purchaser  or
 5    purchaser's donee inside Illinois when the purchase order for
 6    that  personal  property  was  received  by a florist located
 7    outside Illinois who has a florist  located  inside  Illinois
 8    deliver the personal property.
 9        (20)  Semen used for artificial insemination of livestock
10    for direct agricultural production.
11        (21)  Horses, or interests in horses, registered with and
12    meeting  the  requirements  of  any of the Arabian Horse Club
13    Registry of America, Appaloosa Horse Club,  American  Quarter
14    Horse  Association,  United  States  Trotting Association, or
15    Jockey Club, as appropriate, used for purposes of breeding or
16    racing for prizes.
17        (22)  Computers and communications equipment utilized for
18    any hospital purpose and equipment  used  in  the  diagnosis,
19    analysis,  or  treatment  of hospital patients purchased by a
20    lessor who leases the equipment, under a lease of one year or
21    longer executed or in effect at the  time  the  lessor  would
22    otherwise  be  subject  to  the tax imposed by this Act, to a
23    hospital  that  has  been  issued  an  active  tax  exemption
24    identification  number  by the Department under Section 1g of
25    the Retailers' Occupation  Tax  Act.   If  the  equipment  is
26    leased  in  a manner that does not qualify for this exemption
27    or is used in any other non-exempt manner, the  lessor  shall
28    be  liable  for the tax imposed under this Act or the Service
29    Use Tax Act, as the case may be, based  on  the  fair  market
30    value  of  the  property  at  the time the non-qualifying use
31    occurs.  No lessor shall collect or  attempt  to  collect  an
32    amount  (however  designated) that purports to reimburse that
33    lessor for the tax imposed by this Act or the Service Use Tax
34    Act, as the case may be, if the tax has not been paid by  the
 
                            -9-      LRB093 13663 SJM 19046 b
 1    lessor.  If a lessor improperly collects any such amount from
 2    the  lessee,  the  lessee shall have a legal right to claim a
 3    refund of that amount from the  lessor.   If,  however,  that
 4    amount  is  not  refunded  to  the lessee for any reason, the
 5    lessor is liable to pay that amount to the Department.
 6        (23)  Personal property purchased by a lessor who  leases
 7    the  property,  under a lease of  one year or longer executed
 8    or in effect at  the  time  the  lessor  would  otherwise  be
 9    subject  to  the  tax  imposed by this Act, to a governmental
10    body that has been  issued  an  active  sales  tax  exemption
11    identification  number  by the Department under Section 1g of
12    the Retailers' Occupation Tax Act. If the property is  leased
13    in  a manner that does not qualify for this exemption or used
14    in any other non-exempt manner, the lessor  shall  be  liable
15    for  the  tax  imposed  under this Act or the Service Use Tax
16    Act, as the case may be, based on the fair  market  value  of
17    the  property  at the time the non-qualifying use occurs.  No
18    lessor shall collect or attempt to collect an amount (however
19    designated) that purports to reimburse that  lessor  for  the
20    tax  imposed  by  this Act or the Service Use Tax Act, as the
21    case may be, if the tax has not been paid by the lessor.   If
22    a lessor improperly collects any such amount from the lessee,
23    the lessee shall have a legal right to claim a refund of that
24    amount  from  the  lessor.   If,  however, that amount is not
25    refunded to the lessee for any reason, the lessor  is  liable
26    to pay that amount to the Department.
27        (24)  Beginning  with  taxable  years  ending on or after
28    December 31, 1995 and ending with taxable years ending on  or
29    before  December  31, 2004, personal property that is donated
30    for disaster relief to  be  used  in  a  State  or  federally
31    declared disaster area in Illinois or bordering Illinois by a
32    manufacturer  or retailer that is registered in this State to
33    a   corporation,   society,   association,   foundation,   or
34    institution that  has  been  issued  a  sales  tax  exemption
 
                            -10-     LRB093 13663 SJM 19046 b
 1    identification  number by the Department that assists victims
 2    of the disaster who reside within the declared disaster area.
 3        (25)  Beginning with taxable years  ending  on  or  after
 4    December  31, 1995 and ending with taxable years ending on or
 5    before December 31, 2004, personal property that is  used  in
 6    the  performance  of  infrastructure  repairs  in this State,
 7    including but not limited to  municipal  roads  and  streets,
 8    access  roads,  bridges,  sidewalks,  waste disposal systems,
 9    water and  sewer  line  extensions,  water  distribution  and
10    purification  facilities,  storm water drainage and retention
11    facilities, and sewage treatment facilities, resulting from a
12    State or federally declared disaster in Illinois or bordering
13    Illinois  when  such  repairs  are  initiated  on  facilities
14    located in the declared disaster area within 6  months  after
15    the disaster.
16        (26)  Beginning   July   1,  1999,  game  or  game  birds
17    purchased at a "game breeding and hunting preserve  area"  or
18    an  "exotic game hunting area" as those terms are used in the
19    Wildlife Code or at  a  hunting  enclosure  approved  through
20    rules  adopted  by the Department of Natural Resources.  This
21    paragraph is exempt from the provisions of Section 3-90.
22        (27)  A motor vehicle, as that term is defined in Section
23    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
24    corporation, limited liability company, society, association,
25    foundation,   or   institution  that  is  determined  by  the
26    Department to  be  organized  and  operated  exclusively  for
27    educational  purposes.    For  purposes of this exemption, "a
28    corporation, limited liability company, society, association,
29    foundation, or institution organized and operated exclusively
30    for educational  purposes"  means  all  tax-supported  public
31    schools, private schools that offer systematic instruction in
32    useful  branches  of  learning  by  methods  common to public
33    schools  and  that  compare  favorably  in  their  scope  and
34    intensity with the course of study presented in tax-supported
 
                            -11-     LRB093 13663 SJM 19046 b
 1    schools, and vocational or technical  schools  or  institutes
 2    organized  and  operated  exclusively  to provide a course of
 3    study of not less than  6  weeks  duration  and  designed  to
 4    prepare  individuals to follow a trade or to pursue a manual,
 5    technical, mechanical, industrial,  business,  or  commercial
 6    occupation.
 7        (28)  Beginning  January  1,  2000,   personal  property,
 8    including  food, purchased through fundraising events for the
 9    benefit of  a  public  or  private  elementary  or  secondary
10    school,  a  group  of  those  schools,  or one or more school
11    districts if the events are sponsored by an entity recognized
12    by the school district that consists primarily of  volunteers
13    and  includes  parents  and  teachers of the school children.
14    This paragraph does not apply to fundraising events  (i)  for
15    the benefit of private home instruction or (ii) for which the
16    fundraising  entity  purchases  the personal property sold at
17    the events from another individual or entity  that  sold  the
18    property  for the purpose of resale by the fundraising entity
19    and that profits from the sale  to  the  fundraising  entity.
20    This paragraph is exempt from the provisions of Section 3-90.
21        (29)  Beginning  January 1, 2000 and through December 31,
22    2001, new or used automatic vending machines that prepare and
23    serve hot food and beverages,  including  coffee,  soup,  and
24    other  items,  and  replacement  parts  for  these  machines.
25    Beginning January 1, 2002 and through June 30, 2003, machines
26    and  parts  for  machines  used  in commercial, coin-operated
27    amusement and vending business if a use or occupation tax  is
28    paid  on  the  gross  receipts  derived  from  the use of the
29    commercial, coin-operated  amusement  and  vending  machines.
30    This paragraph is exempt from the provisions of Section 3-90.
31        (30)  Food  for  human consumption that is to be consumed
32    off the premises where  it  is  sold  (other  than  alcoholic
33    beverages,  soft  drinks, and food that has been prepared for
34    immediate consumption) and prescription  and  nonprescription
 
                            -12-     LRB093 13663 SJM 19046 b
 1    medicines,  drugs,  medical  appliances,  and  insulin, urine
 2    testing materials, syringes, and needles used  by  diabetics,
 3    for  human  use, when purchased for use by a person receiving
 4    medical assistance under Article 5 of the Illinois Public Aid
 5    Code who resides in a licensed long-term  care  facility,  as
 6    defined in the Nursing Home Care Act.
 7        (31)  Beginning  on the effective date of this amendatory
 8    Act   of   the   92nd   General   Assembly,   computers   and
 9    communications equipment utilized for  any  hospital  purpose
10    and  equipment  used in the diagnosis, analysis, or treatment
11    of hospital patients purchased by a  lessor  who  leases  the
12    equipment, under a lease of one year or longer executed or in
13    effect  at  the time the lessor would otherwise be subject to
14    the tax imposed by this Act, to  a  hospital  that  has  been
15    issued  an  active tax exemption identification number by the
16    Department under Section 1g of the Retailers' Occupation  Tax
17    Act.   If  the  equipment is leased in a manner that does not
18    qualify for this exemption or is used in any other  nonexempt
19    manner,  the lessor shall be liable for the tax imposed under
20    this Act or the Service Use Tax Act,  as  the  case  may  be,
21    based  on  the  fair market value of the property at the time
22    the nonqualifying use occurs.  No  lessor  shall  collect  or
23    attempt  to  collect  an  amount  (however  designated)  that
24    purports to reimburse that lessor for the tax imposed by this
25    Act  or  the  Service Use Tax Act, as the case may be, if the
26    tax has not been paid by the lessor.  If a lessor  improperly
27    collects  any  such  amount from the lessee, the lessee shall
28    have a legal right to claim a refund of that amount from  the
29    lessor.   If,  however,  that  amount  is not refunded to the
30    lessee for any reason, the  lessor  is  liable  to  pay  that
31    amount  to  the Department. This paragraph is exempt from the
32    provisions of Section 3-90.
33        (32)  Beginning on the effective date of this  amendatory
34    Act of the 92nd General Assembly, personal property purchased
 
                            -13-     LRB093 13663 SJM 19046 b
 1    by  a  lessor  who  leases the property, under a lease of one
 2    year or longer executed or in effect at the time  the  lessor
 3    would otherwise be subject to the tax imposed by this Act, to
 4    a  governmental body that has been issued an active sales tax
 5    exemption  identification  number  by  the  Department  under
 6    Section 1g of the Retailers'  Occupation  Tax  Act.   If  the
 7    property is leased in a manner that does not qualify for this
 8    exemption  or  used in any other nonexempt manner, the lessor
 9    shall be liable for the tax imposed under  this  Act  or  the
10    Service  Use  Tax  Act, as the case may be, based on the fair
11    market value of the property at the  time  the  nonqualifying
12    use occurs.  No lessor shall collect or attempt to collect an
13    amount  (however  designated) that purports to reimburse that
14    lessor for the tax imposed by this Act or the Service Use Tax
15    Act, as the case may be, if the tax has not been paid by  the
16    lessor.  If a lessor improperly collects any such amount from
17    the  lessee,  the  lessee shall have a legal right to claim a
18    refund of that amount from the  lessor.   If,  however,  that
19    amount  is  not  refunded  to  the lessee for any reason, the
20    lessor is liable to pay that amount to the Department.   This
21    paragraph is exempt from the provisions of Section 3-90.
22        (33)  On  and  after  July  1,  2003 and through June 30,
23    2006, the use in this State of motor vehicles of  the  second
24    division  with  a  gross  vehicle  weight  in excess of 8,000
25    pounds and that are subject to  the  commercial  distribution
26    fee  imposed  under  Section  3-815.1 of the Illinois Vehicle
27    Code. This exemption applies to repair and replacement  parts
28    added  after  the initial purchase of such a motor vehicle if
29    that motor vehicle is used in a manner that would qualify for
30    the rolling stock exemption otherwise provided  for  in  this
31    Act.
32    (Source:  P.A.  92-35,  eff.  7-1-01;  92-227,  eff.  8-2-01;
33    92-337,  eff.  8-10-01;  92-484,  eff.  8-23-01; 92-651, eff.
34    7-11-02; 93-23, eff. 6-20-03; 93-24,  eff.  6-20-03;  revised
 
                            -14-     LRB093 13663 SJM 19046 b
 1    9-11-03.)

 2        (35 ILCS 105/3-61)
 3        Sec.   3-61.    Motor  vehicles;  use  as  rolling  stock
 4    definition.  Through June 30, 2003  and  beginning  again  on
 5    July  1,  2006,  "use  as  rolling stock moving in interstate
 6    commerce" in subsections (b) and (c) of  Section  3-55  means
 7    for  motor  vehicles,  as  defined  in  Section  1-146 of the
 8    Illinois Vehicle Code, and trailers, as  defined  in  Section
 9    1-209  of  the  Illinois  Vehicle  Code,  when  on 15 or more
10    occasions in a 12-month period the motor vehicle and  trailer
11    has  carried  persons  or  property  for  hire  in interstate
12    commerce, even just between points in Illinois, if the  motor
13    vehicle  and  trailer  transports  persons  whose journeys or
14    property  whose  shipments  originate  or  terminate  outside
15    Illinois.  This definition applies to all property  purchased
16    for  the purpose of being attached to those motor vehicles or
17    trailers as a part thereof. On and after  July  1,  2003  and
18    through  June  30,  2006,  "use  as  rolling  stock moving in
19    interstate commerce" in paragraphs (b)  and  (c)  of  Section
20    3-55  occurs  for motor vehicles, as defined in Section 1-146
21    of the Illinois Vehicle Code, when during a  12-month  period
22    the rolling stock has carried persons or property for hire in
23    interstate commerce for 51% of its total trips and transports
24    persons  whose journeys or property whose shipments originate
25    or terminate outside Illinois. Trips that  are  only  between
26    points  in  Illinois shall not be counted as interstate trips
27    when  calculating  whether  the  tangible  personal  property
28    qualifies for the exemption but such trips shall be  included
29    in total trips taken.
30    (Source: P.A. 93-23, eff. 6-20-03.)

31        Section  15.  The  Service  Use  Tax  Act  is  amended by
32    changing Sections 2 and 3-5 as follows:
 
                            -15-     LRB093 13663 SJM 19046 b
 1        (35 ILCS 110/2) (from Ch. 120, par. 439.32)
 2        Sec. 2. "Use" means the exercise by  any  person  of  any
 3    right  or  power  over tangible personal property incident to
 4    the ownership of that property, but does not include the sale
 5    or use for demonstration by him of that property in any  form
 6    as  tangible  personal  property  in  the  regular  course of
 7    business. "Use" does not mean the  interim  use  of  tangible
 8    personal  property nor the physical incorporation of tangible
 9    personal property, as  an  ingredient  or  constituent,  into
10    other  tangible  personal  property, (a) which is sold in the
11    regular  course  of  business  or  (b)   which   the   person
12    incorporating  such  ingredient  or  constituent  therein has
13    undertaken at the time  of  such  purchase  to  cause  to  be
14    transported  in  interstate  commerce to destinations outside
15    the State of Illinois.
16        "Purchased from a serviceman" means  the  acquisition  of
17    the  ownership  of,  or  title to, tangible personal property
18    through a sale of service.
19        "Purchaser" means any  person  who,  through  a  sale  of
20    service, acquires the ownership of, or title to, any tangible
21    personal property.
22        "Cost   price"   means  the  consideration  paid  by  the
23    serviceman for a purchase valued in money,  whether  paid  in
24    money or otherwise, including cash, credits and services, and
25    shall  be  determined without any deduction on account of the
26    supplier's cost of the property sold or  on  account  of  any
27    other  expense  incurred  by  the supplier. When a serviceman
28    contracts out part or all of the  services  required  in  his
29    sale  of service, it shall be presumed that the cost price to
30    the serviceman of the property transferred to him or  her  by
31    his   or   her   subcontractor   is   equal  to  50%  of  the
32    subcontractor's charges to the serviceman in the  absence  of
33    proof  of the consideration paid by the subcontractor for the
34    purchase of such property.
 
                            -16-     LRB093 13663 SJM 19046 b
 1        "Selling price" means the consideration for a sale valued
 2    in money whether received in money  or  otherwise,  including
 3    cash,  credits  and  service, and shall be determined without
 4    any deduction on account of  the  serviceman's  cost  of  the
 5    property  sold,  the cost of materials used, labor or service
 6    cost or any other expense whatsoever, but  does  not  include
 7    interest or finance charges which appear as separate items on
 8    the bill of sale or sales contract nor charges that are added
 9    to  prices  by  sellers  on  account  of the seller's duty to
10    collect, from the purchaser, the tax that is imposed by  this
11    Act.
12        "Department" means the Department of Revenue.
13        "Person" means any natural individual, firm, partnership,
14    association,  joint  stock  company, joint venture, public or
15    private  corporation,  limited  liability  company,  and  any
16    receiver, executor, trustee, guardian or other representative
17    appointed by order of any court.
18        "Sale of service" means any transaction except:
19             (1)  a retail sale  of  tangible  personal  property
20        taxable  under the Retailers' Occupation Tax Act or under
21        the Use Tax Act.
22             (2)  a sale of tangible personal  property  for  the
23        purpose  of  resale made in compliance with Section 2c of
24        the Retailers' Occupation Tax Act.
25             (3)  except  as  hereinafter  provided,  a  sale  or
26        transfer of tangible personal property as an incident  to
27        the rendering of service for or by any governmental body,
28        or  for  or  by  any  corporation,  society, association,
29        foundation  or   institution   organized   and   operated
30        exclusively  for  charitable,  religious  or  educational
31        purposes  or  any  not-for-profit  corporation,  society,
32        association,   foundation,  institution  or  organization
33        which has no compensated officers or employees and  which
34        is organized and operated primarily for the recreation of
 
                            -17-     LRB093 13663 SJM 19046 b
 1        persons  55  years  of  age or older. A limited liability
 2        company  may  qualify  for  the  exemption   under   this
 3        paragraph  only  if  the  limited  liability  company  is
 4        organized   and   operated  exclusively  for  educational
 5        purposes.
 6             (4)  a  sale  or  transfer  of   tangible   personal
 7        property  as  an incident to the rendering of service for
 8        interstate carriers for hire for  use  as  rolling  stock
 9        moving in interstate commerce or by lessors under a lease
10        of  one year or longer, executed or in effect at the time
11        of purchase of personal property, to interstate  carriers
12        for  hire  for  use as rolling stock moving in interstate
13        commerce so long as so used by such  interstate  carriers
14        for  hire, and equipment operated by a telecommunications
15        provider, licensed as a common  carrier  by  the  Federal
16        Communications Commission, which is permanently installed
17        in or affixed to aircraft moving in interstate commerce.
18             (4a)  a   sale  or  transfer  of  tangible  personal
19        property as an incident to the rendering of  service  for
20        owners,   lessors,   or  shippers  of  tangible  personal
21        property which is utilized  by  interstate  carriers  for
22        hire  for  use  as  rolling  stock  moving  in interstate
23        commerce so long as so used by  interstate  carriers  for
24        hire,  and  equipment  operated  by  a telecommunications
25        provider, licensed as a common  carrier  by  the  Federal
26        Communications Commission, which is permanently installed
27        in or affixed to aircraft moving in interstate commerce.
28             (4a-5)  on  and  after July 1, 2003 and through June
29        30, 2006, a sale or transfer of a motor  vehicle  of  the
30        second  division with a gross vehicle weight in excess of
31        8,000 pounds as an incident to the rendering  of  service
32        if  that  motor  vehicle  is  subject   to the commercial
33        distribution fee imposed under  Section  3-815.1  of  the
34        Illinois  Vehicle    Code.    This  exemption  applies to
 
                            -18-     LRB093 13663 SJM 19046 b
 1        repair and replacement  parts  added  after  the  initial
 2        purchase of such a motor vehicle if that motor vehicle is
 3        used  in  a  manner  that  would  qualify for the rolling
 4        stock exemption otherwise provided for in this Act.
 5             (5)  a sale or transfer of machinery  and  equipment
 6        used  primarily  in  the  process of the manufacturing or
 7        assembling, either in an existing, an expanded or  a  new
 8        manufacturing facility, of tangible personal property for
 9        wholesale  or  retail sale or lease, whether such sale or
10        lease is made directly by the  manufacturer  or  by  some
11        other  person,  whether the materials used in the process
12        are owned by the manufacturer or some  other  person,  or
13        whether  such  sale  or lease is made apart from or as an
14        incident to the seller's engaging in a service occupation
15        and the applicable tax is a Service Use  Tax  or  Service
16        Occupation   Tax,  rather  than  Use  Tax  or  Retailers'
17        Occupation Tax.
18             (5a)  the repairing, reconditioning  or  remodeling,
19        for  a  common  carrier  by  rail,  of  tangible personal
20        property which belongs to such carrier for hire,  and  as
21        to which such carrier receives the physical possession of
22        the repaired, reconditioned or remodeled item of tangible
23        personal  property  in  Illinois,  and which such carrier
24        transports, or shares with another common carrier in  the
25        transportation  of  such  property,  out of Illinois on a
26        standard uniform bill of lading showing  the  person  who
27        repaired,  reconditioned  or  remodeled the property to a
28        destination outside Illinois, for use outside Illinois.
29             (5b)  a  sale  or  transfer  of  tangible   personal
30        property  which  is  produced  by  the  seller thereof on
31        special  order  in  such  a  way  as  to  have  made  the
32        applicable tax the Service Occupation Tax or the  Service
33        Use Tax, rather than the Retailers' Occupation Tax or the
34        Use Tax, for an interstate carrier by rail which receives
 
                            -19-     LRB093 13663 SJM 19046 b
 1        the physical possession of such property in Illinois, and
 2        which  transports  such  property, or shares with another
 3        common carrier in the transportation  of  such  property,
 4        out  of  Illinois  on  a  standard uniform bill of lading
 5        showing the seller of the  property  as  the  shipper  or
 6        consignor  of  such  property  to  a  destination outside
 7        Illinois, for use outside Illinois.
 8             (6)  until July 1,  2003,  a  sale  or  transfer  of
 9        distillation  machinery  and equipment, sold as a unit or
10        kit and assembled or installed  by  the  retailer,  which
11        machinery  and  equipment  is certified by the user to be
12        used only for the production of ethyl alcohol  that  will
13        be  used  for consumption as motor fuel or as a component
14        of motor fuel for the personal use of such user  and  not
15        subject to sale or resale.
16             (7)  at  the election of any serviceman not required
17        to be otherwise registered as a retailer under Section 2a
18        of the Retailers'  Occupation  Tax  Act,  made  for  each
19        fiscal  year  sales  of  service  in  which the aggregate
20        annual  cost  price   of   tangible   personal   property
21        transferred  as  an  incident  to the sales of service is
22        less  than  35%,  or  75%  in  the  case  of   servicemen
23        transferring  prescription drugs or servicemen engaged in
24        graphic arts production, of the  aggregate  annual  total
25        gross receipts from all sales of service. The purchase of
26        such  tangible  personal property by the serviceman shall
27        be subject to tax under the Retailers' Occupation Tax Act
28        and the Use Tax Act. However, if a primary serviceman who
29        has  made  the  election  described  in  this   paragraph
30        subcontracts  service  work to a secondary serviceman who
31        has also made the election described in  this  paragraph,
32        the primary serviceman does not incur a Use Tax liability
33        if  the secondary serviceman (i) has paid or will pay Use
34        Tax on his or her cost price  of  any  tangible  personal
 
                            -20-     LRB093 13663 SJM 19046 b
 1        property  transferred  to the primary serviceman and (ii)
 2        certifies that fact in writing to the primary serviceman.
 3        Tangible personal property transferred  incident  to  the
 4    completion  of a maintenance agreement is exempt from the tax
 5    imposed pursuant to this Act.
 6        Exemption (5) also includes machinery and equipment  used
 7    in the general maintenance or repair of such exempt machinery
 8    and equipment or for in-house manufacture of exempt machinery
 9    and  equipment.  For  the  purposes of exemption (5), each of
10    these  terms  shall  have  the   following   meanings:    (1)
11    "manufacturing  process"  shall  mean  the  production of any
12    article of tangible personal property, whether  such  article
13    is a finished product or an article for use in the process of
14    manufacturing  or  assembling a different article of tangible
15    personal  property,  by  procedures  commonly   regarded   as
16    manufacturing,  processing,  fabricating,  or  refining which
17    changes some existing material or materials into  a  material
18    with  a  different  form,  use  or  name.   In  relation to a
19    recognized  integrated  business  composed  of  a  series  of
20    operations which collectively  constitute  manufacturing,  or
21    individually   constitute   manufacturing   operations,   the
22    manufacturing  process  shall  be deemed to commence with the
23    first operation or stage of production  in  the  series,  and
24    shall  not be deemed to end until the completion of the final
25    product in the last operation or stage of production  in  the
26    series;   and   further,   for  purposes  of  exemption  (5),
27    photoprocessing is deemed to be a  manufacturing  process  of
28    tangible  personal property for wholesale or retail sale; (2)
29    "assembling process" shall mean the production of any article
30    of tangible personal property,  whether  such  article  is  a
31    finished  product  or  an  article  for use in the process of
32    manufacturing or assembling a different article  of  tangible
33    personal  property,  by the combination of existing materials
34    in a manner commonly regarded as assembling which results  in
 
                            -21-     LRB093 13663 SJM 19046 b
 1    a  material of a different form, use or name; (3) "machinery"
 2    shall mean major mechanical machines or major  components  of
 3    such  machines  contributing to a manufacturing or assembling
 4    process; and (4) "equipment" shall  include  any  independent
 5    device  or  tool separate from any machinery but essential to
 6    an integrated manufacturing or  assembly  process;  including
 7    computers   used   primarily  in  a  manufacturer's  computer
 8    assisted design, computer  assisted  manufacturing  (CAD/CAM)
 9    system;  or any subunit or assembly comprising a component of
10    any machinery or auxiliary, adjunct or  attachment  parts  of
11    machinery,  such as tools, dies, jigs, fixtures, patterns and
12    molds; or any parts which require periodic replacement in the
13    course of normal operation; but shall not include hand tools.
14    Equipment includes chemicals or chemicals acting as catalysts
15    but only if the chemicals or chemicals  acting  as  catalysts
16    effect  a  direct  and  immediate change upon a product being
17    manufactured or assembled for wholesale  or  retail  sale  or
18    lease.  The purchaser of such machinery and equipment who has
19    an active  resale  registration  number  shall  furnish  such
20    number  to  the  seller  at the time of purchase. The user of
21    such machinery and equipment  and  tools  without  an  active
22    resale  registration  number  shall  prepare a certificate of
23    exemption for each transaction stating facts establishing the
24    exemption for that transaction, which  certificate  shall  be
25    available  to  the  Department  for inspection or audit.  The
26    Department shall prescribe the form of the certificate.
27        Any informal rulings, opinions or letters issued  by  the
28    Department  in  response  to  an  inquiry  or request for any
29    opinion  from  any  person   regarding   the   coverage   and
30    applicability  of  exemption (5) to specific devices shall be
31    published, maintained as a public record, and made  available
32    for  public  inspection and copying.  If the informal ruling,
33    opinion  or  letter   contains   trade   secrets   or   other
34    confidential information, where possible the Department shall
 
                            -22-     LRB093 13663 SJM 19046 b
 1    delete  such information prior to publication.  Whenever such
 2    informal rulings, opinions, or letters contain any policy  of
 3    general  applicability,  the  Department  shall formulate and
 4    adopt such policy as a rule in accordance with the provisions
 5    of the Illinois Administrative Procedure Act.
 6        On and after July 1, 1987, no entity  otherwise  eligible
 7    under  exemption  (3)  of  this  Section  shall make tax free
 8    purchases unless it has an  active  exemption  identification
 9    number issued by the Department.
10        The  purchase,  employment  and transfer of such tangible
11    personal property  as  newsprint  and  ink  for  the  primary
12    purpose of conveying news (with or without other information)
13    is  not  a  purchase,  use  or sale of service or of tangible
14    personal property within the meaning of this Act.
15        "Serviceman" means any  person  who  is  engaged  in  the
16    occupation of making sales of service.
17        "Sale at retail" means "sale at retail" as defined in the
18    Retailers' Occupation Tax Act.
19        "Supplier"  means  any person who makes sales of tangible
20    personal property to servicemen for the purpose of resale  as
21    an incident to a sale of service.
22        "Serviceman  maintaining  a  place  of  business  in this
23    State", or any like term, means and includes any serviceman:
24             1.  having  or  maintaining   within   this   State,
25        directly  or  by  a  subsidiary,  an office, distribution
26        house, sales house, warehouse or other place of business,
27        or any agent or  other  representative  operating  within
28        this  State  under the authority of the serviceman or its
29        subsidiary,  irrespective  of  whether  such   place   of
30        business or agent or other representative is located here
31        permanently or temporarily, or whether such serviceman or
32        subsidiary is licensed to do business in this State;
33             2.  soliciting orders for tangible personal property
34        by  means  of  a telecommunication or television shopping
 
                            -23-     LRB093 13663 SJM 19046 b
 1        system  (which  utilizes  toll  free  numbers)  which  is
 2        intended  by  the  retailer  to  be  broadcast  by  cable
 3        television or other means of broadcasting,  to  consumers
 4        located in this State;
 5             3.  pursuant  to  a  contract  with a broadcaster or
 6        publisher located in this State,  soliciting  orders  for
 7        tangible  personal property by means of advertising which
 8        is disseminated primarily to consumers  located  in  this
 9        State and only secondarily to bordering jurisdictions;
10             4.  soliciting orders for tangible personal property
11        by   mail   if  the  solicitations  are  substantial  and
12        recurring and if the retailer benefits from any  banking,
13        financing,   debt   collection,   telecommunication,   or
14        marketing  activities occurring in this State or benefits
15        from  the  location   in   this   State   of   authorized
16        installation, servicing, or repair facilities;
17             5.  being  owned or controlled by the same interests
18        which own or control any retailer engaging in business in
19        the same or similar line of business in this State;
20             6.  having a franchisee or licensee operating  under
21        its  trade name if the franchisee or licensee is required
22        to collect the tax under this Section;
23             7.  pursuant to a contract with a  cable  television
24        operator  located  in  this  State, soliciting orders for
25        tangible personal property by means of advertising  which
26        is  transmitted  or  distributed  over a cable television
27        system in this State; or
28             8.  engaging  in  activities  in   Illinois,   which
29        activities  in  the  state  in  which the supply business
30        engaging in such activities is located  would  constitute
31        maintaining a place of business in that state.
32    (Source: P.A.  92-484,  eff.  8-23-01;  93-23,  eff. 6-20-03;
33    93-24, eff. 6-20-03; revised 8-21-03.)
 
                            -24-     LRB093 13663 SJM 19046 b
 1        (35 ILCS 110/3-51)
 2        Sec.  3-51.   Motor  vehicles;  use  as   rolling   stock
 3    definition.   Through  June  30,  2003 and beginning again on
 4    July 1, 2006, "use as  rolling  stock  moving  in  interstate
 5    commerce"  in  subsection (b) of Section 3-45 means for motor
 6    vehicles, as defined in Section 1-46 of the Illinois  Vehicle
 7    Code,  and  trailers,  as  defined  in  Section  1-209 of the
 8    Illinois Vehicle Code, when on 15  or  more  occasions  in  a
 9    12-month  period  the  motor  vehicle and trailer has carried
10    persons or property for hire  in  interstate  commerce,  even
11    just  between  points  in  Illinois, if the motor vehicle and
12    trailer transports persons whose journeys or  property  whose
13    shipments  originate  or  terminate  outside  Illinois.  This
14    definition applies to all property purchased for the  purpose
15    of  being  attached  to those motor vehicles or trailers as a
16    part thereof. On and after July 1, 2003 and through June  30,
17    2006, "use as rolling stock moving in interstate commerce" in
18    paragraphs  (4)  and  (4a)  of  the  definition  of  "sale of
19    service" in Section 2 and  subsection  (b)  of  Section  3-45
20    occurs for motor vehicles, as defined in Section 1-146 of the
21    Illinois  Vehicle  Code,  when   during a 12-month period the
22    rolling stock has carried persons or  property  for  hire  in
23    interstate commerce for 51% of its total trips and transports
24    persons whose journeys or  property whose shipments originate
25    or terminate outside Illinois.   Trips that are only  between
26    points  in  Illinois shall not be counted as interstate trips
27    when calculating whether    the  tangible  personal  property
28    qualifies for the exemption but such trips shall be included
29    in total trips taken.
30    (Source: P.A. 93-23, eff. 6-20-03.)

31        Section 20.  The Service Occupation Tax Act is amended by
32    changing Sections 2 and 2d as follows:
 
                            -25-     LRB093 13663 SJM 19046 b
 1        (35 ILCS 115/2) (from Ch. 120, par. 439.102)
 2        Sec.  2.  "Transfer"  means  any transfer of the title to
 3    property or of the ownership of property whether or  not  the
 4    transferor  retains  title  as  security  for  the payment of
 5    amounts due him from the transferee.
 6        "Cost  Price"  means  the  consideration  paid   by   the
 7    serviceman  for  a  purchase valued in money, whether paid in
 8    money or otherwise, including cash, credits and services, and
 9    shall be determined without any deduction on account  of  the
10    supplier's  cost  of  the  property sold or on account of any
11    other expense incurred by the  supplier.  When  a  serviceman
12    contracts  out  part  or  all of the services required in his
13    sale of service, it shall be presumed that the cost price  to
14    the  serviceman  of the property transferred to him by his or
15    her subcontractor is equal  to  50%  of  the  subcontractor's
16    charges  to  the  serviceman  in  the absence of proof of the
17    consideration paid by the subcontractor for the  purchase  of
18    such property.
19        "Department" means the Department of Revenue.
20        "Person" means any natural individual, firm, partnership,
21    association,  joint  stock  company, joint venture, public or
22    private  corporation,  limited  liability  company,  and  any
23    receiver, executor, trustee, guardian or other representative
24    appointed by order of any court.
25        "Sale of Service" means any transaction except:
26        (a)  A retail sale of tangible personal property  taxable
27    under  the Retailers' Occupation Tax Act or under the Use Tax
28    Act.
29        (b)  A sale of tangible personal property for the purpose
30    of  resale  made  in  compliance  with  Section  2c  of   the
31    Retailers' Occupation Tax Act.
32        (c)  Except  as  hereinafter provided, a sale or transfer
33    of tangible personal property as an incident to the rendering
34    of service for or by any governmental body or for or  by  any
 
                            -26-     LRB093 13663 SJM 19046 b
 1    corporation,  society, association, foundation or institution
 2    organized and operated exclusively for charitable,  religious
 3    or  educational  purposes  or any not-for-profit corporation,
 4    society, association, foundation, institution or organization
 5    which has no compensated officers or employees and  which  is
 6    organized  and  operated  primarily  for  the  recreation  of
 7    persons 55 years of age or older. A limited liability company
 8    may  qualify  for  the exemption under this paragraph only if
 9    the limited  liability  company  is  organized  and  operated
10    exclusively for educational purposes.
11        (d)  A  sale or transfer of tangible personal property as
12    an incident  to  the  rendering  of  service  for  interstate
13    carriers  for  hire  for  use  as  rolling  stock  moving  in
14    interstate  commerce  or  lessors under leases of one year or
15    longer, executed or in effect at the  time  of  purchase,  to
16    interstate  carriers for hire for use as rolling stock moving
17    in  interstate  commerce,  and  equipment   operated   by   a
18    telecommunications  provider, licensed as a common carrier by
19    the Federal Communications Commission, which  is  permanently
20    installed  in  or  affixed  to  aircraft moving in interstate
21    commerce.
22        (d-1)  A sale or transfer of tangible  personal  property
23    as  an  incident  to  the  rendering  of  service for owners,
24    lessors or shippers of tangible personal  property  which  is
25    utilized  by  interstate carriers for hire for use as rolling
26    stock moving in interstate commerce, and  equipment  operated
27    by  a  telecommunications  provider,  licensed  as  a  common
28    carrier  by  the  Federal Communications Commission, which is
29    permanently installed in or affixed  to  aircraft  moving  in
30    interstate commerce.
31        (d-1.1)  On  and  after July 1, 2003 and through June 30,
32    2006, a sale or transfer of a motor  vehicle  of  the  second
33    division  with  a  gross  vehicle  weight  in excess of 8,000
34    pounds as an incident to the rendering  of  service  if  that
 
                            -27-     LRB093 13663 SJM 19046 b
 1    motor  vehicle  is subject to the commercial distribution fee
 2    imposed under Section 3-815.1 of the Illinois  Vehicle  Code.
 3    This  exemption applies to repair and replacement parts added
 4    after the initial purchase of such a motor  vehicle  if  that
 5    motor  vehicle is used in a manner that would qualify for the
 6    rolling stock exemption otherwise provided for in this Act.
 7        (d-2)  The repairing, reconditioning or remodeling, for a
 8    common carrier by rail, of tangible personal  property  which
 9    belongs  to  such  carrier  for  hire,  and  as to which such
10    carrier receives the physical  possession  of  the  repaired,
11    reconditioned or remodeled item of tangible personal property
12    in  Illinois,  and  which  such carrier transports, or shares
13    with another common carrier in  the  transportation  of  such
14    property,  out  of  Illinois  on  a  standard uniform bill of
15    lading showing the  person  who  repaired,  reconditioned  or
16    remodeled  the  property  as the shipper or consignor of such
17    property to a destination outside Illinois, for  use  outside
18    Illinois.
19        (d-3)  A  sale  or transfer of tangible personal property
20    which is produced by the seller thereof on special  order  in
21    such  a  way  as  to have made the applicable tax the Service
22    Occupation Tax or  the  Service  Use  Tax,  rather  than  the
23    Retailers'  Occupation  Tax or the Use Tax, for an interstate
24    carrier by rail which receives  the  physical  possession  of
25    such   property   in  Illinois,  and  which  transports  such
26    property, or  shares  with  another  common  carrier  in  the
27    transportation  of  such  property,  out  of  Illinois  on  a
28    standard  uniform  bill  of  lading showing the seller of the
29    property as the shipper or consignor of such  property  to  a
30    destination outside Illinois, for use outside Illinois.
31        (d-4)  Until  January  1,  1997,  a sale, by a registered
32    serviceman paying tax under this Act to  the  Department,  of
33    special  order  printed  materials delivered outside Illinois
34    and which are not returned to this State, if delivery is made
 
                            -28-     LRB093 13663 SJM 19046 b
 1    by the seller or agent of the seller, including an agent  who
 2    causes  the  product  to  be  delivered outside Illinois by a
 3    common carrier or the U.S. postal service.
 4        (e)  A sale or transfer of machinery and  equipment  used
 5    primarily  in the process of the manufacturing or assembling,
 6    either in an existing, an expanded  or  a  new  manufacturing
 7    facility,  of  tangible  personal  property  for wholesale or
 8    retail sale or lease, whether such  sale  or  lease  is  made
 9    directly by the manufacturer or by some other person, whether
10    the   materials   used  in  the  process  are  owned  by  the
11    manufacturer or some other person, or whether  such  sale  or
12    lease  is  made  apart from or as an incident to the seller's
13    engaging in a service occupation and the applicable tax is  a
14    Service  Occupation  Tax  or  Service  Use  Tax,  rather than
15    Retailers' Occupation Tax or Use Tax.
16        (f)  Until  July  1,  2003,  the  sale  or  transfer   of
17    distillation  machinery  and equipment, sold as a unit or kit
18    and assembled or installed by the retailer,  which  machinery
19    and  equipment  is  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 for
22    the  personal  use  of  such  user and not subject to sale or
23    resale.
24        (g)  At the election of any serviceman not required to be
25    otherwise registered as a retailer under Section  2a  of  the
26    Retailers'  Occupation  Tax  Act,  made  for each fiscal year
27    sales of service in which the aggregate annual cost price  of
28    tangible  personal property transferred as an incident to the
29    sales of service is  less  than  35%  (75%  in  the  case  of
30    servicemen  transferring  prescription  drugs  or  servicemen
31    engaged  in  graphic arts production) of the aggregate annual
32    total gross receipts from all sales of service. The  purchase
33    of such tangible personal property by the serviceman shall be
34    subject  to  tax  under the Retailers' Occupation Tax Act and
 
                            -29-     LRB093 13663 SJM 19046 b
 1    the Use Tax Act. However, if a  primary  serviceman  who  has
 2    made  the  election  described in this paragraph subcontracts
 3    service work to a secondary serviceman who has also made  the
 4    election  described in this paragraph, the primary serviceman
 5    does  not  incur  a  Use  Tax  liability  if  the   secondary
 6    serviceman  (i)  has  paid  or will pay Use Tax on his or her
 7    cost price of any tangible personal property  transferred  to
 8    the  primary  serviceman  and  (ii)  certifies  that  fact in
 9    writing to the primary serviceman.
10        Tangible personal property transferred  incident  to  the
11    completion  of a maintenance agreement is exempt from the tax
12    imposed pursuant to this Act.
13        Exemption (e) also includes machinery and equipment  used
14    in the general maintenance or repair of such exempt machinery
15    and equipment or for in-house manufacture of exempt machinery
16    and  equipment.    For the purposes of exemption (e), each of
17    these  terms  shall  have  the   following   meanings:    (1)
18    "manufacturing  process"  shall  mean  the  production of any
19    article of tangible personal property, whether  such  article
20    is a finished product or an article for use in the process of
21    manufacturing  or  assembling a different article of tangible
22    personal  property,  by  procedures  commonly   regarded   as
23    manufacturing,  processing,  fabricating,  or  refining which
24    changes some existing material or materials into  a  material
25    with  a  different  form,  use  or  name.   In  relation to a
26    recognized  integrated  business  composed  of  a  series  of
27    operations which collectively  constitute  manufacturing,  or
28    individually   constitute   manufacturing   operations,   the
29    manufacturing  process  shall  be deemed to commence with the
30    first operation or stage of production  in  the  series,  and
31    shall  not be deemed to end until the completion of the final
32    product in the last operation or stage of production  in  the
33    series;   and   further   for   purposes  of  exemption  (e),
34    photoprocessing is deemed to be a  manufacturing  process  of
 
                            -30-     LRB093 13663 SJM 19046 b
 1    tangible  personal property for wholesale or retail sale; (2)
 2    "assembling process" shall mean the production of any article
 3    of tangible personal property,  whether  such  article  is  a
 4    finished  product  or  an  article  for use in the process of
 5    manufacturing or assembling a different article  of  tangible
 6    personal  property,  by the combination of existing materials
 7    in a manner commonly regarded as assembling which results  in
 8    a  material of a different form, use or name; (3) "machinery"
 9    shall mean major mechanical machines or major  components  of
10    such  machines  contributing to a manufacturing or assembling
11    process; and (4) "equipment" shall  include  any  independent
12    device  or  tool separate from any machinery but essential to
13    an integrated manufacturing or  assembly  process;  including
14    computers   used   primarily  in  a  manufacturer's  computer
15    assisted design, computer  assisted  manufacturing  (CAD/CAM)
16    system;  or any subunit or assembly comprising a component of
17    any machinery or auxiliary, adjunct or  attachment  parts  of
18    machinery,  such as tools, dies, jigs, fixtures, patterns and
19    molds; or any parts which require periodic replacement in the
20    course of normal operation; but shall not include hand tools.
21    Equipment includes chemicals or chemicals acting as catalysts
22    but only if the chemicals or chemicals  acting  as  catalysts
23    effect  a  direct  and  immediate change upon a product being
24    manufactured or assembled for wholesale  or  retail  sale  or
25    lease.  The purchaser of such machinery and equipment who has
26    an  active  resale  registration  number  shall  furnish such
27    number to the seller at the time of purchase.  The  purchaser
28    of  such  machinery and equipment and tools without an active
29    resale registration number shall  furnish  to  the  seller  a
30    certificate  of  exemption for each transaction stating facts
31    establishing  the  exemption  for  that  transaction,   which
32    certificate   shall   be  available  to  the  Department  for
33    inspection or audit.
34        Except as provided in Section 2d of this Act, the rolling
 
                            -31-     LRB093 13663 SJM 19046 b
 1    stock  exemption  applies  to  rolling  stock  used   by   an
 2    interstate  carrier  for  hire,  even  just between points in
 3    Illinois, if such rolling stock transports, for hire, persons
 4    whose journeys  or  property  whose  shipments  originate  or
 5    terminate outside Illinois.
 6        Any  informal  rulings, opinions or letters issued by the
 7    Department in response to  an  inquiry  or  request  for  any
 8    opinion   from   any   person   regarding  the  coverage  and
 9    applicability of exemption (e) to specific devices  shall  be
10    published,  maintained as a public record, and made available
11    for public inspection and copying.  If the  informal  ruling,
12    opinion   or   letter   contains   trade   secrets  or  other
13    confidential information, where possible the Department shall
14    delete such information prior to publication.  Whenever  such
15    informal  rulings, opinions, or letters contain any policy of
16    general applicability, the  Department  shall  formulate  and
17    adopt such policy as a rule in accordance with the provisions
18    of the Illinois Administrative Procedure Act.
19        On  and  after July 1, 1987, no entity otherwise eligible
20    under exemption (c) of  this  Section  shall  make  tax  free
21    purchases  unless  it  has an active exemption identification
22    number issued by the Department.
23        "Serviceman" means any  person  who  is  engaged  in  the
24    occupation of making sales of service.
25        "Sale at Retail" means "sale at retail" as defined in the
26    Retailers' Occupation Tax Act.
27        "Supplier"  means  any person who makes sales of tangible
28    personal property to servicemen for the purpose of resale  as
29    an incident to a sale of service.
30    (Source: P.A.  92-484,  eff.  8-23-01;  93-23,  eff. 6-20-03;
31    93-24, eff. 6-20-03; revised 8-21-03.)

32        (35 ILCS 115/2d)
33        Sec. 2d. Motor vehicles; use as rolling stock definition.
 
                            -32-     LRB093 13663 SJM 19046 b
 1    Through June 30, 2003 and beginning again on  July  1,  2006,
 2    "use  as  rolling  stock  moving  in  interstate commerce" in
 3    subsections (d) and (d-1)  of  the  definition  of  "sale  of
 4    service" in Section 2 means for motor vehicles, as defined in
 5    Section  1-146 of the Illinois Vehicle Code, and trailers, as
 6    defined in Section 1-209 of the Illinois Vehicle  Code,  when
 7    on  15  or  more  occasions  in  a  12-month period the motor
 8    vehicle and trailer has carried persons or property for  hire
 9    in interstate commerce, even just between points in Illinois,
10    if  the  motor  vehicle  and trailer transports persons whose
11    journeys or property whose shipments originate  or  terminate
12    outside  Illinois.    This definition applies to all property
13    purchased for the purpose of being attached  to  those  motor
14    vehicles  or trailers as a part thereof. On and after July 1,
15    2003 and through June 30, 2006, "use as rolling stock  moving
16    in  interstate  commerce"  in paragraphs (d) and (d-1) of the
17    definition of "sale of service" in Section 2 occurs for motor
18    vehicles, as defined in Section 1-146 of the Illinois Vehicle
19    Code, when during a 12-month period  the  rolling  stock  has
20    carried  persons  or property for hire in interstate commerce
21    for 51% of its  total  trips  and  transports  persons  whose
22    journeys  or  property whose shipments originate or terminate
23    outside Illinois. Trips  that  are  only  between  points  in
24    Illinois  will  not  be  counted  as  interstate  trips  when
25    calculating  whether the tangible personal property qualifies
26    for the exemption but such trips will be  included  in  total
27    trips taken.
28    (Source: P.A. 93-23, eff. 6-20-03.)

29        Section 25.  The Retailers' Occupation Tax Act is amended
30    by changing Sections 2-5 and 2-51 as follows:

31        (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
32        Sec. 2-5.  Exemptions.  Gross receipts from proceeds from
 
                            -33-     LRB093 13663 SJM 19046 b
 1    the  sale  of  the  following  tangible personal property are
 2    exempt from the tax imposed by this Act:
 3        (1)  Farm chemicals.
 4        (2)  Farm machinery and equipment,  both  new  and  used,
 5    including  that  manufactured  on special order, certified by
 6    the purchaser to be used primarily for production agriculture
 7    or  State  or  federal   agricultural   programs,   including
 8    individual replacement parts for the machinery and equipment,
 9    including  machinery  and  equipment purchased for lease, and
10    including implements of husbandry defined in Section 1-130 of
11    the Illinois Vehicle Code, farm  machinery  and  agricultural
12    chemical  and fertilizer spreaders, and nurse wagons required
13    to be registered under Section 3-809 of the Illinois  Vehicle
14    Code,  but  excluding  other  motor  vehicles  required to be
15    registered under the  Illinois  Vehicle  Code.  Horticultural
16    polyhouses  or  hoop houses used for propagating, growing, or
17    overwintering plants shall be considered farm  machinery  and
18    equipment  under  this item (2). Agricultural chemical tender
19    tanks and dry boxes shall include units sold separately  from
20    a  motor  vehicle  required  to  be  licensed  and units sold
21    mounted on a motor vehicle required to be  licensed,  if  the
22    selling price of the tender is separately stated.
23        Farm  machinery  and  equipment  shall  include precision
24    farming equipment  that  is  installed  or  purchased  to  be
25    installed  on farm machinery and equipment including, but not
26    limited  to,  tractors,   harvesters,   sprayers,   planters,
27    seeders,  or spreaders. Precision farming equipment includes,
28    but is not  limited  to,  soil  testing  sensors,  computers,
29    monitors,  software,  global positioning and mapping systems,
30    and other such equipment.
31        Farm machinery and  equipment  also  includes  computers,
32    sensors,  software,  and  related equipment used primarily in
33    the computer-assisted  operation  of  production  agriculture
34    facilities,  equipment,  and  activities  such  as,  but  not
 
                            -34-     LRB093 13663 SJM 19046 b
 1    limited  to,  the  collection, monitoring, and correlation of
 2    animal and crop data for the purpose  of  formulating  animal
 3    diets  and  agricultural  chemicals.  This item (7) is exempt
 4    from the provisions of Section 2-70.
 5        (3)  Until  July  1,  2003,  distillation  machinery  and
 6    equipment, sold as a unit or kit, assembled or  installed  by
 7    the  retailer,  certified by the user to be used only for the
 8    production of ethyl alcohol that will be used for consumption
 9    as motor fuel or  as  a  component  of  motor  fuel  for  the
10    personal use of the user, and not subject to sale or resale.
11        (4)  Until  July  1,  2003,  graphic  arts  machinery and
12    equipment, including repair and replacement parts,  both  new
13    and used, and including that manufactured on special order or
14    purchased  for  lease,  certified by the purchaser to be used
15    primarily for graphic  arts  production.  Equipment  includes
16    chemicals  or  chemicals  acting as catalysts but only if the
17    chemicals or chemicals acting as catalysts  effect  a  direct
18    and immediate change upon a graphic arts product.
19        (5)  A  motor  vehicle  of  the  first  division, a motor
20    vehicle of the second division that is a self-contained motor
21    vehicle designed or permanently converted to  provide  living
22    quarters  for  recreational,  camping,  or  travel  use, with
23    direct walk through access to the living  quarters  from  the
24    driver's seat, or a motor vehicle of the second division that
25    is  of  the van configuration designed for the transportation
26    of not less than 7 nor more than 16 passengers, as defined in
27    Section 1-146 of the Illinois Vehicle Code, that is used  for
28    automobile  renting,  as  defined  in  the Automobile Renting
29    Occupation and Use Tax Act.
30        (6)  Personal  property  sold  by   a   teacher-sponsored
31    student   organization   affiliated  with  an  elementary  or
32    secondary school located in Illinois.
33        (7)  Until July 1, 2003, proceeds of that portion of  the
34    selling price of a passenger car the sale of which is subject
 
                            -35-     LRB093 13663 SJM 19046 b
 1    to the Replacement Vehicle Tax.
 2        (8)  Personal  property  sold  to an Illinois county fair
 3    association for use in conducting,  operating,  or  promoting
 4    the county fair.
 5        (9)  Personal  property  sold to a not-for-profit arts or
 6    cultural organization that establishes, by proof required  by
 7    the  Department  by  rule,  that it has received an exemption
 8    under Section 501(c)(3) of the Internal Revenue Code and that
 9    is organized and operated primarily for the  presentation  or
10    support  of  arts  or  cultural  programming,  activities, or
11    services.  These organizations include, but are  not  limited
12    to,  music  and  dramatic arts organizations such as symphony
13    orchestras and theatrical groups, arts and  cultural  service
14    organizations,    local    arts    councils,    visual   arts
15    organizations, and media arts organizations. On and after the
16    effective date of this amendatory Act  of  the  92nd  General
17    Assembly,  however,  an  entity  otherwise  eligible for this
18    exemption shall not make tax-free purchases unless it has  an
19    active identification number issued by the Department.
20        (10)  Personal  property  sold by a corporation, society,
21    association, foundation, institution, or organization,  other
22    than  a  limited  liability  company,  that  is organized and
23    operated as  a  not-for-profit  service  enterprise  for  the
24    benefit  of  persons 65 years of age or older if the personal
25    property was not purchased by the enterprise for the  purpose
26    of resale by the enterprise.
27        (11)  Personal property sold to a governmental body, to a
28    corporation, society, association, foundation, or institution
29    organized and operated exclusively for charitable, religious,
30    or  educational purposes, or to a not-for-profit corporation,
31    society,    association,    foundation,    institution,    or
32    organization that has no compensated  officers  or  employees
33    and   that  is  organized  and  operated  primarily  for  the
34    recreation of persons 55 years of age  or  older.  A  limited
 
                            -36-     LRB093 13663 SJM 19046 b
 1    liability  company  may  qualify for the exemption under this
 2    paragraph only if the limited liability company is  organized
 3    and  operated  exclusively  for  educational purposes. On and
 4    after July 1, 1987, however, no entity otherwise eligible for
 5    this exemption shall make tax-free purchases unless it has an
 6    active identification number issued by the Department.
 7        (12)  Tangible  personal  property  sold  to   interstate
 8    carriers  for  hire  for  use  as  rolling  stock  moving  in
 9    interstate commerce or to lessors under leases of one year or
10    longer  executed  or  in  effect  at  the time of purchase by
11    interstate carriers for hire for use as rolling stock  moving
12    in   interstate   commerce   and   equipment  operated  by  a
13    telecommunications provider, licensed as a common carrier  by
14    the  Federal  Communications Commission, which is permanently
15    installed in or affixed  to  aircraft  moving  in  interstate
16    commerce.
17        (12-5)  On  and  after  July 1, 2003 and through June 30,
18    2006, motor vehicles of the  second  division  with  a  gross
19    vehicle  weight in excess of 8,000 pounds that are subject to
20    the commercial distribution fee imposed under Section 3-815.1
21    of the Illinois  Vehicle  Code.  This  exemption  applies  to
22    repair and replacement parts added after the initial purchase
23    of  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.
26        (13)  Proceeds from sales to owners, lessors, or shippers
27    of  tangible personal property that is utilized by interstate
28    carriers  for  hire  for  use  as  rolling  stock  moving  in
29    interstate   commerce   and   equipment   operated    by    a
30    telecommunications  provider, licensed as a common carrier by
31    the Federal Communications Commission, which  is  permanently
32    installed  in  or  affixed  to  aircraft moving in interstate
33    commerce.
34        (14)  Machinery and equipment that will be  used  by  the
 
                            -37-     LRB093 13663 SJM 19046 b
 1    purchaser,  or  a  lessee  of the purchaser, primarily in the
 2    process of  manufacturing  or  assembling  tangible  personal
 3    property  for  wholesale or retail sale or lease, whether the
 4    sale or lease is made directly by the manufacturer or by some
 5    other person, whether the materials used in the  process  are
 6    owned  by  the  manufacturer or some other person, or whether
 7    the sale or lease is made apart from or as an incident to the
 8    seller's engaging in  the  service  occupation  of  producing
 9    machines,  tools,  dies,  jigs,  patterns,  gauges,  or other
10    similar items of no commercial value on special order  for  a
11    particular purchaser.
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 directly
17    in  preparing,  serving,  hosting  or cleaning up the food or
18    beverage function with respect to which the service charge is
19    imposed.
20        (16)  Petroleum products  sold  to  a  purchaser  if  the
21    seller  is prohibited by federal law from charging tax to the
22    purchaser.
23        (17)  Tangible personal property sold to a common carrier
24    by rail or motor that receives the physical possession of the
25    property in Illinois and that  transports  the  property,  or
26    shares  with  another common carrier in the transportation of
27    the property, out of Illinois on a standard uniform  bill  of
28    lading  showing  the seller of the property as the shipper or
29    consignor of the property to a destination outside  Illinois,
30    for use outside Illinois.
31        (18)  Legal  tender,  currency,  medallions,  or  gold or
32    silver  coinage  issued  by  the  State  of   Illinois,   the
33    government of the United States of America, or the government
34    of any foreign country, and bullion.
 
                            -38-     LRB093 13663 SJM 19046 b
 1        (19)  Until July 1 2003, oil field exploration, drilling,
 2    and  production  equipment,  including  (i) rigs and parts of
 3    rigs, rotary rigs, cable tool rigs, and workover  rigs,  (ii)
 4    pipe  and  tubular goods, including casing and drill strings,
 5    (iii) pumps and pump-jack units, (iv) storage tanks and  flow
 6    lines,  (v)  any  individual  replacement  part for oil field
 7    exploration, drilling, and  production  equipment,  and  (vi)
 8    machinery  and  equipment  purchased for lease; but excluding
 9    motor vehicles required to be registered under  the  Illinois
10    Vehicle Code.
11        (20)  Photoprocessing  machinery and equipment, including
12    repair and replacement parts, both new  and  used,  including
13    that   manufactured   on  special  order,  certified  by  the
14    purchaser to  be  used  primarily  for  photoprocessing,  and
15    including  photoprocessing  machinery and equipment purchased
16    for lease.
17        (21)  Until  July  1,  2003,  coal  exploration,  mining,
18    offhighway hauling, processing, maintenance, and  reclamation
19    equipment,  including  replacement  parts  and equipment, and
20    including equipment purchased for lease, but excluding  motor
21    vehicles required to be registered under the Illinois Vehicle
22    Code.
23        (22)  Fuel  and  petroleum products sold to or used by an
24    air  carrier,  certified  by  the  carrier  to  be  used  for
25    consumption, shipment, or  storage  in  the  conduct  of  its
26    business  as an air common carrier, for a flight destined for
27    or returning from a location or locations outside the  United
28    States  without  regard  to  previous  or subsequent domestic
29    stopovers.
30        (23)  A  transaction  in  which  the  purchase  order  is
31    received by a florist who is located  outside  Illinois,  but
32    who has a florist located in Illinois deliver the property to
33    the purchaser or the purchaser's donee in Illinois.
34        (24)  Fuel  consumed  or  used in the operation of ships,
 
                            -39-     LRB093 13663 SJM 19046 b
 1    barges, or vessels that are used  primarily  in  or  for  the
 2    transportation  of  property or the conveyance of persons for
 3    hire on rivers  bordering  on  this  State  if  the  fuel  is
 4    delivered  by  the  seller to the purchaser's barge, ship, or
 5    vessel while it is afloat upon that bordering river.
 6        (25)  A motor vehicle sold in this State to a nonresident
 7    even though the motor vehicle is delivered to the nonresident
 8    in this State, if the motor vehicle is not to  be  titled  in
 9    this State, and if a drive-away permit is issued to the motor
10    vehicle  as provided in Section 3-603 of the Illinois Vehicle
11    Code or if the nonresident purchaser has vehicle registration
12    plates to transfer to the motor vehicle upon returning to his
13    or her home state.  The issuance of the drive-away permit  or
14    having the out-of-state registration plates to be transferred
15    is  prima  facie  evidence that the motor vehicle will not be
16    titled in this State.
17        (26)  Semen used for artificial insemination of livestock
18    for direct agricultural production.
19        (27)  Horses, or interests in horses, registered with and
20    meeting the requirements of any of  the  Arabian  Horse  Club
21    Registry  of  America, Appaloosa Horse Club, American Quarter
22    Horse Association, United  States  Trotting  Association,  or
23    Jockey Club, as appropriate, used for purposes of breeding or
24    racing for prizes.
25        (28)  Computers and communications equipment utilized for
26    any  hospital  purpose  and  equipment used in the diagnosis,
27    analysis, or treatment of hospital patients sold to a  lessor
28    who leases the equipment, under a lease of one year or longer
29    executed  or  in  effect  at  the  time of the purchase, to a
30    hospital  that  has  been  issued  an  active  tax  exemption
31    identification number by the Department under Section  1g  of
32    this Act.
33        (29)  Personal  property  sold to a lessor who leases the
34    property, under a lease of one year or longer executed or  in
 
                            -40-     LRB093 13663 SJM 19046 b
 1    effect  at  the  time of the purchase, to a governmental body
 2    that has been issued an active tax  exemption  identification
 3    number by the Department under Section 1g of this Act.
 4        (30)  Beginning  with  taxable  years  ending on or after
 5    December 31, 1995 and ending with taxable years ending on  or
 6    before  December  31, 2004, personal property that is donated
 7    for disaster relief to  be  used  in  a  State  or  federally
 8    declared disaster area in Illinois or bordering Illinois by a
 9    manufacturer  or retailer that is registered in this State to
10    a   corporation,   society,   association,   foundation,   or
11    institution that  has  been  issued  a  sales  tax  exemption
12    identification  number by the Department that assists victims
13    of the disaster who reside within the declared disaster area.
14        (31)  Beginning with taxable years  ending  on  or  after
15    December  31, 1995 and ending with taxable years ending on or
16    before December 31, 2004, personal property that is  used  in
17    the  performance  of  infrastructure  repairs  in this State,
18    including but not limited to  municipal  roads  and  streets,
19    access  roads,  bridges,  sidewalks,  waste disposal systems,
20    water and  sewer  line  extensions,  water  distribution  and
21    purification  facilities,  storm water drainage and retention
22    facilities, and sewage treatment facilities, resulting from a
23    State or federally declared disaster in Illinois or bordering
24    Illinois  when  such  repairs  are  initiated  on  facilities
25    located in the declared disaster area within 6  months  after
26    the disaster.
27        (32)  Beginning  July 1, 1999, game or game birds sold at
28    a "game breeding and hunting preserve  area"  or  an  "exotic
29    game  hunting  area"  as those terms are used in the Wildlife
30    Code or at a hunting enclosure approved through rules adopted
31    by the Department of Natural Resources.   This  paragraph  is
32    exempt from the provisions of Section 2-70.
33        (33)  A motor vehicle, as that term is defined in Section
34    1-146  of  the  Illinois  Vehicle  Code, that is donated to a
 
                            -41-     LRB093 13663 SJM 19046 b
 1    corporation, limited liability company, society, association,
 2    foundation,  or  institution  that  is  determined   by   the
 3    Department  to  be  organized  and  operated  exclusively for
 4    educational purposes.  For purposes  of  this  exemption,  "a
 5    corporation, limited liability company, society, association,
 6    foundation, or institution organized and operated exclusively
 7    for  educational  purposes"  means  all  tax-supported public
 8    schools, private schools that offer systematic instruction in
 9    useful branches of  learning  by  methods  common  to  public
10    schools  and  that  compare  favorably  in  their  scope  and
11    intensity with the course of study presented in tax-supported
12    schools,  and  vocational  or technical schools or institutes
13    organized and operated exclusively to  provide  a  course  of
14    study  of  not  less  than  6  weeks duration and designed to
15    prepare individuals to follow a trade or to pursue a  manual,
16    technical,  mechanical,  industrial,  business, or commercial
17    occupation.
18        (34)  Beginning  January  1,  2000,  personal   property,
19    including  food, purchased through fundraising events for the
20    benefit of  a  public  or  private  elementary  or  secondary
21    school,  a  group  of  those  schools,  or one or more school
22    districts if the events are sponsored by an entity recognized
23    by the school district that consists primarily of  volunteers
24    and  includes  parents  and  teachers of the school children.
25    This paragraph does not apply to fundraising events  (i)  for
26    the benefit of private home instruction or (ii) for which the
27    fundraising  entity  purchases  the personal property sold at
28    the events from another individual or entity  that  sold  the
29    property  for the purpose of resale by the fundraising entity
30    and that profits from the sale  to  the  fundraising  entity.
31    This paragraph is exempt from the provisions of Section 2-70.
32        (35)  Beginning  January 1, 2000 and through December 31,
33    2001, new or used automatic vending machines that prepare and
34    serve hot food and beverages,  including  coffee,  soup,  and
 
                            -42-     LRB093 13663 SJM 19046 b
 1    other  items,  and  replacement  parts  for  these  machines.
 2    Beginning January 1, 2002 and through June 30, 2003, machines
 3    and  parts  for  machines  used  in commercial, coin-operated
 4    amusement and vending business if a use or occupation tax  is
 5    paid  on  the  gross  receipts  derived  from  the use of the
 6    commercial, coin-operated  amusement  and  vending  machines.
 7    This paragraph is exempt from the provisions of Section 2-70.
 8        (35-5)  Food for human consumption that is to be consumed
 9    off  the  premises  where  it  is  sold (other than alcoholic
10    beverages, soft drinks, and food that has been  prepared  for
11    immediate  consumption)  and prescription and nonprescription
12    medicines, drugs,  medical  appliances,  and  insulin,  urine
13    testing  materials,  syringes, and needles used by diabetics,
14    for human use, when purchased for use by a  person  receiving
15    medical assistance under Article 5 of the Illinois Public Aid
16    Code  who  resides  in a licensed long-term care facility, as
17    defined in the Nursing Home Care Act.
18        (36)  Beginning   August   2,   2001,    computers    and
19    communications  equipment  utilized  for any hospital purpose
20    and equipment used in the diagnosis, analysis,  or  treatment
21    of  hospital  patients  sold  to  a  lessor  who  leases  the
22    equipment, under a lease of one year or longer executed or in
23    effect  at  the  time of the purchase, to a hospital that has
24    been issued an active tax exemption identification number  by
25    the  Department under Section 1g of this Act.  This paragraph
26    is exempt from the provisions of Section 2-70.
27        (37)  Beginning August 2, 2001, personal property sold to
28    a lessor who leases the property, under a lease of  one  year
29    or  longer executed or in effect at the time of the purchase,
30    to a governmental body that has been  issued  an  active  tax
31    exemption  identification  number  by  the  Department  under
32    Section  1g  of  this Act.  This paragraph is exempt from the
33    provisions of Section 2-70.
34        (38)  Beginning on January  1,  2002,  tangible  personal
 
                            -43-     LRB093 13663 SJM 19046 b
 1    property  purchased  from  an Illinois retailer by a taxpayer
 2    engaged in centralized purchasing activities in Illinois  who
 3    will,  upon  receipt of the property in Illinois, temporarily
 4    store the  property  in  Illinois  (i)  for  the  purpose  of
 5    subsequently  transporting  it  outside this State for use or
 6    consumption thereafter solely outside this State or (ii)  for
 7    the  purpose  of being processed, fabricated, or manufactured
 8    into,  attached  to,  or  incorporated  into  other  tangible
 9    personal property to be transported outside  this  State  and
10    thereafter  used  or consumed solely outside this State.  The
11    Director of Revenue  shall,  pursuant  to  rules  adopted  in
12    accordance  with  the  Illinois Administrative Procedure Act,
13    issue a permit to any taxpayer  in  good  standing  with  the
14    Department  who  is  eligible  for  the  exemption under this
15    paragraph (38).  The permit issued under this paragraph  (38)
16    shall  authorize  the holder, to the extent and in the manner
17    specified in the rules adopted under this  Act,  to  purchase
18    tangible  personal  property  from a retailer exempt from the
19    taxes imposed by this  Act.   Taxpayers  shall  maintain  all
20    necessary  books  and  records  to  substantiate  the use and
21    consumption of all such tangible personal property outside of
22    the State of Illinois.
23    (Source: P.A.  92-16,  eff.  6-28-01;  92-35,  eff.   7-1-01;
24    92-227,  eff.  8-2-01;  92-337,  eff.  8-10-01;  92-484, eff.
25    8-23-01; 92-488, eff. 8-23-01; 92-651, eff. 7-11-02;  92-680,
26    eff.  7-16-02;  93-23,  eff.  6-20-03;  93-24,  eff. 6-20-03;
27    revised 9-11-03.)

28        (35 ILCS 120/2-51)
29        Sec.  2-51.   Motor  vehicles;  use  as   rolling   stock
30    definition.   Through  June  30,  2003 and beginning again on
31    July 1, 2006, "use as  rolling  stock  moving  in  interstate
32    commerce"  in  paragraphs  (12) and (13) of Section 2-5 means
33    for motor vehicles,  as  defined  in  Section  1-146  of  the
 
                            -44-     LRB093 13663 SJM 19046 b
 1    Illinois  Vehicle  Code,  and trailers, as defined in Section
 2    1-209 of the Illinois  Vehicle  Code,  when  on  15  or  more
 3    occasions  in a 12-month period the motor vehicle and trailer
 4    has carried  persons  or  property  for  hire  in  interstate
 5    commerce,  even just between points in Illinois, if the motor
 6    vehicle and trailer  transports  persons  whose  journeys  or
 7    property  whose  shipments  originate  or  terminate  outside
 8    Illinois.   This definition applies to all property purchased
 9    for the purpose of being attached to those motor vehicles  or
10    trailers  as  a  part  thereof. On and after July 1, 2003 and
11    through June 30,  2006,  "use  as  rolling  stock  moving  in
12    interstate  commerce"  in paragraphs (12) and (13) of Section
13    2-5 occurs for motor vehicles, as defined in Section 1-146 of
14    the Illinois Vehicle Code, when during a 12-month period  the
15    rolling  stock  has  carried  persons or property for hire in
16    interstate commerce for 51% of its total trips and transports
17    persons whose journeys or property whose shipments  originate
18    or  terminate  outside  Illinois. Trips that are only between
19    points in Illinois shall not be counted as  interstate  trips
20    when  calculating  whether  the  tangible  personal  property
21    qualifies  for the exemption but such trips shall be included
22    in total trips taken.
23    (Source: P.A. 93-23, eff. 6-20-03.)

24        Section  30.  The Illinois Vehicle  Code  is  amended  by
25    changing Section 3-815.1 as follows:

26        (625 ILCS 5/3-815.1)
27        Sec.  3-815.1.  Commercial  distribution  fee.  Beginning
28    July  1,  2003,  in  addition to any tax or fee imposed under
29    this Code:
30             (a)  Vehicles of the second division  with  a  gross
31        vehicle  weight  that exceeds 8,000 pounds and that incur
32        any tax or fee under subsection (a) of Section  3-815  of
 
                            -45-     LRB093 13663 SJM 19046 b
 1        this  Code  or  subsection  (a)  of Section 3-818 of this
 2        Code, as applicable, and shall pay to  the  Secretary  of
 3        State   a   commercial   distribution   fee,   for   each
 4        registration  year,  for  the use of the public highways,
 5        State infrastructure, and State services,  in  an  amount
 6        equal to:
 7                  36% for the registration year beginning on July
 8             1, 2003;
 9                  24% for the registration year beginning on July
10             1, 2004;
11                  12% for the registration year beginning on July
12             1, 2005; and
13                  0%  for the registration year beginning on July
14             1, 2006 and for each registration year thereafter
15        of the taxes and fees incurred under  subsection  (a)  of
16        Section  3-815 of this Code, or subsection (a) of Section
17        3-818 of this Code, as  applicable,  rounded  up  to  the
18        nearest whole dollar.
19             (b)  Vehicles  of  the  second division with a gross
20        vehicle weight of 8,000 pounds or less and that incur any
21        tax or fee under subsection (a) of Section 3-815 of  this
22        Code  or subsection (a) of Section 3-818 of this Code, as
23        applicable, and have claimed the rolling stock  exemption
24        under  the  Retailers'  Occupation  Tax Act, Use Tax Act,
25        Service Occupation Tax Act, or Service Use Tax Act  shall
26        pay  to  the  Illinois  Department  of  Revenue  (or  the
27        Secretary  of State under an intergovernmental agreement)
28        a commercial  distribution  fee,  for  each  registration
29        year,   for   the  use  of  the  public  highways,  State
30        infrastructure, and State services, in  an  amount  equal
31        to:
32                  36% for the registration year beginning on July
33             1, 2003;
34                  24% for the registration year beginning on July
 
                            -46-     LRB093 13663 SJM 19046 b
 1             1, 2004;
 2                  12% for the registration year beginning on July
 3             1, 2005; and
 4                  0%  for the registration year beginning on July
 5             1, 2006 and for each registration year thereafter
 6        of the taxes and fees incurred under  subsection  (a)  of
 7        Section  3-815  of this Code or subsection (a) of Section
 8        3-818 of this Code, as  applicable,  rounded  up  to  the
 9        nearest whole dollar.
10        The  fees  paid  under this Section shall be deposited by
11    the Secretary of State into the General Revenue Fund.
12    (Source: P.A. 93-23, eff. 6-20-03; revised 10-9-03.)