SB1936ham001 93RD GENERAL ASSEMBLY

Rep. Careen Gordon

Filed: 5/31/2004

09300SB1936ham001 LRB093 08847 MKM 52000 a

AMENDMENT TO SENATE BILL 1936

AMENDMENT NO. ______. Amend Senate Bill 1936 by replacing everything after the enacting clause with the following:

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 the each taxable year beginning on or after January
9		1, 2004 and ending on December 31, 2004, a qualified employer
10		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 fee
17		under Section 3-815.1 of the Illinois Vehicle Code during
18		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 under

1		Section 401(c) of the Internal Revenue Code and whose actual
2		assigned duties are such that, if the individual were a
3		common-law employee performing such duties in 2 or more states,
4		the individual's compensation would be subject to tax only by
5		the individual's state of residence pursuant to 49 U.S.C.
6		14503(a)(1).
7		(d) An employee is an "eligible employee" only if all of
8		the following criteria are met:
9		(1) The employee is an operator of a motor vehicle;
10		(2) The employee's compensation, pursuant to 49 U.S.C.
11		14503(a)(1), is subject to tax only by the employee's state
12		of residence, or would be subject to tax only by the
13		employee's state of residence if the employee's actual
14		duties were performed in 2 or more states;
15		(3) As of the end of the taxable year for which the
16		credit is claimed, the employee is a resident of this State
17		for purposes of this Act and 49 U.S.C. 14503(a)(1); and
18		(4) The employee is a full-time employee working 30 or
19		more hours per week for 180 consecutive days; provided that
20		such 180-day period may be completed after the end of the
21		taxable year for which the credit under this Section is
22		claimed.
23		(e) For partners, shareholders of subchapter S
24		corporations, and owners of limited liability companies, if the
25		limited liability company is treated as a partnership for
26		purposes of federal and State income taxation, there shall be
27		allowed a credit under this Section to be determined in
28		accordance with the determination of income and distributive
29		share of income under Sections 702 and 704 and subchapter S of
30		the Internal Revenue Code.
31		(f) Any credit allowed under this Section which is unused
32		in the year the credit is earned may be carried forward to each
33		of the 5 taxable years following the year for which the credit
34		is first computed until it is used. This credit shall be

1		applied first to the earliest year for which there is a
2		liability. If there is a credit under this Section from more
3		than one tax year that is available to offset a liability, the
4		earliest credit arising under this Section shall be applied
5		first.
6		(g) This Section is exempt from the provisions of Section
7		250 of this Act.
8		(h) The Department of Revenue shall promulgate such rules
9		and regulations as may be deemed necessary to carry out the
10		purposes of this Section.
11		(Source: P.A. 93-23, eff. 6-20-03.)

12		Section 10. The Use Tax Act is amended by changing Sections
13		3-5 and 3-61 as follows:
14		(35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
15		Sec. 3-5. Exemptions. Use of the following tangible
16		personal property is exempt from the tax imposed by this Act:
17		(1) Personal property purchased from a corporation,
18		society, association, foundation, institution, or
19		organization, other than a limited liability company, that is
20		organized and operated as a not-for-profit service enterprise
21		for the benefit of persons 65 years of age or older if the
22		personal property was not purchased by the enterprise for the
23		purpose of resale by the enterprise.
24		(2) Personal property purchased by a not-for-profit
25		Illinois county fair association for use in conducting,
26		operating, or promoting the county fair.
27		(3) Personal property purchased by a not-for-profit arts or
28		cultural organization that establishes, by proof required by
29		the Department by rule, that it has received an exemption under
30		Section 501(c)(3) of the Internal Revenue Code and that is
31		organized and operated primarily for the presentation or
32		support of arts or cultural programming, activities, or

1		services. These organizations include, but are not limited to,
2		music and dramatic arts organizations such as symphony
3		orchestras and theatrical groups, arts and cultural service
4		organizations, local arts councils, visual arts organizations,
5		and media arts organizations. On and after the effective date
6		of this amendatory Act of the 92nd General Assembly, however,
7		an entity otherwise eligible for this exemption shall not make
8		tax-free purchases unless it has an active identification
9		number issued by the Department.
10		(4) Personal property purchased by a governmental body, by
11		a corporation, society, association, foundation, or
12		institution organized and operated exclusively for charitable,
13		religious, or educational purposes, or by a not-for-profit
14		corporation, society, association, foundation, institution, or
15		organization that has no compensated officers or employees and
16		that is organized and operated primarily for the recreation of
17		persons 55 years of age or older. A limited liability company
18		may qualify for the exemption under this paragraph only if the
19		limited liability company is organized and operated
20		exclusively for educational purposes. On and after July 1,
21		1987, however, no entity otherwise eligible for this exemption
22		shall make tax-free purchases unless it has an active exemption
23		identification number issued by the Department.
24		(5) Until July 1, 2003, a passenger car that is a
25		replacement vehicle to the extent that the purchase price of
26		the car is subject to the Replacement Vehicle Tax.
27		(6) Until July 1, 2003, graphic arts machinery and
28		equipment, including repair and replacement parts, both new and
29		used, and including that manufactured on special order,
30		certified by the purchaser to be used primarily for graphic
31		arts production, and including machinery and equipment
32		purchased for lease. Equipment includes chemicals or chemicals
33		acting as catalysts but only if the chemicals or chemicals
34		acting as catalysts effect a direct and immediate change upon a

1		graphic arts product.
2		(7) Farm chemicals.
3		(8) Legal tender, currency, medallions, or gold or silver
4		coinage issued by the State of Illinois, the government of the
5		United States of America, or the government of any foreign
6		country, and bullion.
7		(9) Personal property purchased from a teacher-sponsored
8		student organization affiliated with an elementary or
9		secondary school located in Illinois.
10		(10) A motor vehicle of the first division, a motor vehicle
11		of the second division that is a self-contained motor vehicle
12		designed or permanently converted to provide living quarters
13		for recreational, camping, or travel use, with direct walk
14		through to the living quarters from the driver's seat, or a
15		motor vehicle of the second division that is of the van
16		configuration designed for the transportation of not less than
17		7 nor more than 16 passengers, as defined in Section 1-146 of
18		the Illinois Vehicle Code, that is used for automobile renting,
19		as defined in the Automobile Renting Occupation and Use Tax
20		Act.
21		(11) Farm machinery and equipment, both new and used,
22		including that manufactured on special order, certified by the
23		purchaser to be used primarily for production agriculture or
24		State or federal agricultural programs, including individual
25		replacement parts for the machinery and equipment, including
26		machinery and equipment purchased for lease, and including
27		implements of husbandry defined in Section 1-130 of the
28		Illinois Vehicle Code, farm machinery and agricultural
29		chemical and fertilizer spreaders, and nurse wagons required to
30		be registered under Section 3-809 of the Illinois Vehicle Code,
31		but excluding other motor vehicles required to be registered
32		under the Illinois Vehicle Code. Horticultural polyhouses or
33		hoop houses used for propagating, growing, or overwintering
34		plants shall be considered farm machinery and equipment under

1		this item (11). Agricultural chemical tender tanks and dry
2		boxes shall include units sold separately from a motor vehicle
3		required to be licensed and units sold mounted on a motor
4		vehicle required to be licensed if the selling price of the
5		tender is separately stated.
6		Farm machinery and equipment shall include precision
7		farming equipment that is installed or purchased to be
8		installed on farm machinery and equipment including, but not
9		limited to, tractors, harvesters, sprayers, planters, seeders,
10		or spreaders. Precision farming equipment includes, but is not
11		limited to, soil testing sensors, computers, monitors,
12		software, global positioning and mapping systems, and other
13		such equipment.
14		Farm machinery and equipment also includes computers,
15		sensors, software, and related equipment used primarily in the
16		computer-assisted operation of production agriculture
17		facilities, equipment, and activities such as, but not limited
18		to, the collection, monitoring, and correlation of animal and
19		crop data for the purpose of formulating animal diets and
20		agricultural chemicals. This item (11) is exempt from the
21		provisions of Section 3-90.
22		(12) Fuel and petroleum products sold to or used by an air
23		common carrier, certified by the carrier to be used for
24		consumption, shipment, or storage in the conduct of its
25		business as an air common carrier, for a flight destined for or
26		returning from a location or locations outside the United
27		States without regard to previous or subsequent domestic
28		stopovers.
29		(13) Proceeds of mandatory service charges separately
30		stated on customers' bills for the purchase and consumption of
31		food and beverages purchased at retail from a retailer, to the
32		extent that the proceeds of the service charge are in fact
33		turned over as tips or as a substitute for tips to the
34		employees who participate directly in preparing, serving,

1		hosting or cleaning up the food or beverage function with
2		respect to which the service charge is imposed.
3		(14) Until July 1, 2003, oil field exploration, drilling,
4		and production equipment, including (i) rigs and parts of rigs,
5		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
6		tubular goods, including casing and drill strings, (iii) pumps
7		and pump-jack units, (iv) storage tanks and flow lines, (v) any
8		individual replacement part for oil field exploration,
9		drilling, and production equipment, and (vi) machinery and
10		equipment purchased for lease; but excluding motor vehicles
11		required to be registered under the Illinois Vehicle Code.
12		(15) Photoprocessing machinery and equipment, including
13		repair and replacement parts, both new and used, including that
14		manufactured on special order, certified by the purchaser to be
15		used primarily for photoprocessing, and including
16		photoprocessing machinery and equipment purchased for lease.
17		(16) 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		(17) Until July 1, 2003, distillation machinery and
24		equipment, sold as a unit or kit, assembled or installed by the
25		retailer, certified by the user to be used only for the
26		production of ethyl alcohol that will be used for consumption
27		as motor fuel or as a component of motor fuel for the personal
28		use of the user, and not subject to sale or resale.
29		(18) Manufacturing and assembling machinery and equipment
30		used primarily in the process of manufacturing or assembling
31		tangible personal property for wholesale or retail sale or
32		lease, whether that sale or lease is made directly by the
33		manufacturer or by some other person, whether the materials
34		used in the process are owned by the manufacturer or some other

1		person, or whether that sale or lease is made apart from or as
2		an incident to the seller's engaging in the service occupation
3		of producing machines, tools, dies, jigs, patterns, gauges, or
4		other similar items of no commercial value on special order for
5		a particular purchaser.
6		(19) Personal property delivered to a purchaser or
7		purchaser's donee inside Illinois when the purchase order for
8		that personal property was received by a florist located
9		outside Illinois who has a florist located inside Illinois
10		deliver the personal property.
11		(20) Semen used for artificial insemination of livestock
12		for direct agricultural production.
13		(21) Horses, or interests in horses, registered with and
14		meeting the requirements of any of the Arabian Horse Club
15		Registry of America, Appaloosa Horse Club, American Quarter
16		Horse Association, United States Trotting Association, or
17		Jockey Club, as appropriate, used for purposes of breeding or
18		racing for prizes.
19		(22) Computers and communications equipment utilized for
20		any hospital purpose and equipment used in the diagnosis,
21		analysis, or treatment of hospital patients purchased by a
22		lessor who leases the equipment, under a lease of one year or
23		longer executed or in effect at the time the lessor would
24		otherwise be subject to the tax imposed by this Act, to a
25		hospital that has been issued an active tax exemption
26		identification number by the Department under Section 1g of the
27		Retailers' Occupation Tax Act. If the equipment is leased in a
28		manner that does not qualify for this exemption or is used in
29		any other non-exempt manner, the lessor shall be liable for the
30		tax imposed under this Act or the Service Use Tax Act, as the
31		case may be, based on the fair market value of the property at
32		the time the non-qualifying use occurs. No lessor shall collect
33		or attempt to collect an amount (however designated) that
34		purports to reimburse that lessor for the tax imposed by this

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

1		that has been issued a sales tax exemption identification
2		number by the Department that assists victims of the disaster
3		who reside within the declared disaster area.
4		(25) 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 used in the
7		performance of infrastructure repairs in this State, including
8		but not limited to municipal roads and streets, access roads,
9		bridges, sidewalks, waste disposal systems, water and sewer
10		line extensions, water distribution and purification
11		facilities, storm water drainage and retention facilities, and
12		sewage treatment facilities, resulting from a State or
13		federally declared disaster in Illinois or bordering Illinois
14		when such repairs are initiated on facilities located in the
15		declared disaster area within 6 months after the disaster.
16		(26) Beginning July 1, 1999, game or game birds purchased
17		at a "game breeding and hunting preserve area" or an "exotic
18		game hunting area" as those terms are used in the Wildlife Code
19		or at a hunting enclosure approved through rules adopted by the
20		Department of Natural Resources. This paragraph is exempt from
21		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 Department
26		to be organized and operated exclusively for educational
27		purposes. For purposes of this exemption, "a corporation,
28		limited liability company, society, association, foundation,
29		or institution organized and operated exclusively for
30		educational purposes" means all tax-supported public schools,
31		private schools that offer systematic instruction in useful
32		branches of learning by methods common to public schools and
33		that compare favorably in their scope and intensity with the
34		course of study presented in tax-supported schools, and

1		vocational or technical schools or institutes organized and
2		operated exclusively to provide a course of study of not less
3		than 6 weeks duration and designed to prepare individuals to
4		follow a trade or to pursue a manual, technical, mechanical,
5		industrial, business, or commercial occupation.
6		(28) Beginning January 1, 2000, personal property,
7		including food, purchased through fundraising events for the
8		benefit of a public or private elementary or secondary school,
9		a group of those schools, or one or more school districts if
10		the events are sponsored by an entity recognized by the school
11		district that consists primarily of volunteers and includes
12		parents and teachers of the school children. This paragraph
13		does not apply to fundraising events (i) for the benefit of
14		private home instruction or (ii) for which the fundraising
15		entity purchases the personal property sold at the events from
16		another individual or entity that sold the property for the
17		purpose of resale by the fundraising entity and that profits
18		from the sale to the fundraising entity. This paragraph is
19		exempt from the provisions of Section 3-90.
20		(29) Beginning January 1, 2000 and through December 31,
21		2001, new or used automatic vending machines that prepare and
22		serve hot food and beverages, including coffee, soup, and other
23		items, and replacement parts for these machines. Beginning
24		January 1, 2002 and through June 30, 2003, machines and parts
25		for machines used in commercial, coin-operated amusement and
26		vending business if a use or occupation tax is paid on the
27		gross receipts derived from the use of the commercial,
28		coin-operated amusement and vending machines. This paragraph
29		is exempt from the provisions of Section 3-90.
30		(30) Food for human consumption that is to be consumed off
31		the premises where it is sold (other than alcoholic beverages,
32		soft drinks, and food that has been prepared for immediate
33		consumption) and prescription and nonprescription medicines,
34		drugs, medical appliances, and insulin, urine testing

1		materials, syringes, and needles used by diabetics, for human
2		use, when purchased for use by a person receiving medical
3		assistance under Article 5 of the Illinois Public Aid Code who
4		resides in a licensed long-term care facility, as defined in
5		the Nursing Home Care Act.
6		(31) Beginning on the effective date of this amendatory Act
7		of the 92nd General Assembly, computers and communications
8		equipment utilized for any hospital purpose and equipment used
9		in the diagnosis, analysis, or treatment of hospital patients
10		purchased by a lessor who leases the equipment, under a lease
11		of one year or longer executed or in effect at the time the
12		lessor would otherwise be subject to the tax imposed by this
13		Act, to a hospital that has been issued an active tax exemption
14		identification number by the Department under Section 1g of the
15		Retailers' Occupation Tax Act. If the equipment is leased in a
16		manner that does not qualify for this exemption or is used in
17		any other nonexempt manner, the lessor shall be liable for the
18		tax imposed under this Act or the Service Use Tax Act, as the
19		case may be, based on the fair market value of the property at
20		the time the nonqualifying use occurs. No lessor shall collect
21		or attempt to collect an amount (however designated) that
22		purports to reimburse that lessor for the tax imposed by this
23		Act or the Service Use Tax Act, as the case may be, if the tax
24		has not been paid by the lessor. If a lessor improperly
25		collects any such amount from the lessee, the lessee shall have
26		a legal right to claim a refund of that amount from the lessor.
27		If, however, that amount is not refunded to the lessee for any
28		reason, the lessor is liable to pay that amount to the
29		Department. This paragraph is exempt from the provisions of
30		Section 3-90.
31		(32) Beginning on the effective date of this amendatory Act
32		of the 92nd General Assembly, personal property purchased by a
33		lessor who leases the property, under a lease of one year or
34		longer executed or in effect at the time the lessor would

1		otherwise be subject to the tax imposed by this Act, to a
2		governmental body that has been issued an active sales tax
3		exemption identification number by the Department under
4		Section 1g of the Retailers' Occupation Tax Act. If the
5		property is leased in a manner that does not qualify for this
6		exemption or used in any other nonexempt manner, the lessor
7		shall be liable for the tax imposed under this Act or the
8		Service Use Tax Act, as the case may be, based on the fair
9		market value of the property at the time the nonqualifying use
10		occurs. No lessor shall collect or attempt to collect an amount
11		(however designated) that purports to reimburse that lessor for
12		the tax imposed by this Act or the Service Use Tax Act, as the
13		case may be, if the tax has not been paid by the lessor. If a
14		lessor improperly collects any such amount from the lessee, the
15		lessee shall have a legal right to claim a refund of that
16		amount from the lessor. If, however, that amount is not
17		refunded to the lessee for any reason, the lessor is liable to
18		pay that amount to the Department. This paragraph is exempt
19		from the provisions of Section 3-90.
20		(33) On and after July 1, 2003 and through June 30, 2004,
21		the use in this State of motor vehicles of the second division
22		with a gross vehicle weight in excess of 8,000 pounds and that
23		are subject to the commercial distribution fee imposed under
24		Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
25		1, 2004 and through June 30, 2005, the use in this State of
26		motor vehicles of the second division: (i) with a gross vehicle
27		weight rating in excess of 8,000 pounds; (ii) that are subject
28		to the commercial distribution fee imposed under Section
29		3-815.1 of the Illinois Vehicle Code; and (iii) that are
30		primarily used for commercial purposes. Through June 30, 2005,
31		this This exemption applies to repair and replacement parts
32		added after the initial purchase of such a motor vehicle if
33		that motor vehicle is used in a manner that would qualify for
34		the rolling stock exemption otherwise provided for in this Act.

1		For purposes of this paragraph, the term "used for commercial
2		purposes" means the transportation of persons or property in
3		furtherance of any commercial or industrial enterprise,
4		whether for-hire or not.
5		(Source: P.A. 92-35, eff. 7-1-01; 92-227, eff. 8-2-01; 92-337,
6		eff. 8-10-01; 92-484, eff. 8-23-01; 92-651, eff. 7-11-02;
7		93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised 9-11-03.)
8		(35 ILCS 105/3-61)
9		Sec. 3-61. Motor vehicles;trailers; use as rolling stock
10		definition.
11		(a) Through June 30, 2003, "use as rolling stock moving in
12		interstate commerce" in subsections (b) and (c) of Section 3-55
13		means for motor vehicles, as defined in Section 1-146 of the
14		Illinois Vehicle Code, and trailers, as defined in Section
15		1-209 of the Illinois Vehicle Code, when on 15 or more
16		occasions in a 12-month period the motor vehicle and trailer
17		has carried persons or property for hire in interstate
18		commerce, even just between points in Illinois, if the motor
19		vehicle and trailer transports persons whose journeys or
20		property whose shipments originate or terminate outside
21		Illinois. This definition applies to all property purchased for
22		the purpose of being attached to those motor vehicles or
23		trailers as a part thereof.
24		(b) On and after July 1, 2003 and through June 30, 2004,
25		"use as rolling stock moving in interstate commerce" in
26		paragraphs (b) and (c) of Section 3-55 occurs for motor
27		vehicles, as defined in Section 1-146 of the Illinois Vehicle
28		Code, when during a 12-month period the rolling stock has
29		carried persons or property for hire in interstate commerce for
30		51% of its total trips and transports persons whose journeys or
31		property whose shipments originate or terminate outside
32		Illinois. Trips that are only between points in Illinois shall
33		not be counted as interstate trips when calculating whether the

1		tangible personal property qualifies for the exemption but such
2		trips shall be included in total trips taken.
3		(c) Beginning July 1, 2004, "use as rolling stock moving in
4		interstate commerce" in paragraphs (b) and (c) of Section 3-55
5		occurs for motor vehicles, as defined in Section 1-146 of the
6		Illinois Vehicle Code, when during a 12-month period the
7		rolling stock has carried persons or property for hire in
8		interstate commerce for greater than 50% of its total trips for
9		that period or for greater than 50% of its total miles for that
10		period. The person claiming the exemption shall make an
11		election at the time of purchase to use either the trips or
12		mileage method. Persons who purchased motor vehicles prior to
13		July 1, 2004 shall make an election to use either the trips or
14		mileage method and document that election in their books and
15		records. If no election is made under this subsection to use
16		the trips or mileage method, the person shall be deemed to have
17		chosen the mileage method. Any election to use either the trips
18		or mileage method will remain in effect for that motor vehicle
19		for any period for which the Department may issue a notice of
20		tax liability under this Act.
21		For purposes of determining qualifying trips or miles,
22		motor vehicles that carry persons or property for hire, even
23		just between points in Illinois, will be considered used for
24		hire in interstate commerce if the motor vehicle transports
25		persons whose journeys or property whose shipments originate or
26		terminate outside Illinois. The exemption for motor vehicles
27		used as rolling stock moving in interstate commerce may be
28		claimed only for motor vehicles whose gross vehicle weight
29		rating exceeds 16,000 pounds. This definition applies to all
30		property purchased for the purpose of being attached to those
31		motor vehicles as a part thereof.
32		(d) Beginning July 1, 2004, "use as rolling stock moving in
33		interstate commerce" in paragraphs (b) and (c) of Section 3-55
34		occurs for trailers, as defined in Section 1-209 of the

1		Illinois Vehicle Code, semitrailers as defined in Section 1-187
2		of the Illinois Vehicle Code, and pole trailers as defined in
3		Section 1-161 of the Illinois Vehicle Code, when during a
4		12-month period the rolling stock has carried persons or
5		property for hire in interstate commerce for greater than 50%
6		of its total trips for that period or for greater than 50% of
7		its total miles for that period. The person claiming the
8		exemption for a trailer or trailers that will not be dedicated
9		to a motor vehicle or group of motor vehicles shall make an
10		election at the time of purchase to use either the trips or
11		mileage method. Persons who purchased trailers prior to July 1,
12		2004 that are not dedicated to a motor vehicle or group of
13		motor vehicles shall make an election to use either the trips
14		or mileage method and document that election in their books and
15		records. If no election is made under this subsection to use
16		the trips or mileage method, the person shall be deemed to have
17		chosen the mileage method. Any election to use either the trips
18		or mileage method will remain in effect for that trailer for
19		any period for which the Department may issue a notice of tax
20		liability under this Act.
21		For purposes of determining qualifying trips or miles,
22		trailers, semitrailers, or pole trailers that carry property
23		for hire, even just between points in Illinois, will be
24		considered used for hire in interstate commerce if the
25		trailers, semitrailers, or pole trailers transport property
26		whose shipments originate or terminate outside Illinois. This
27		definition applies to all property purchased for the purpose of
28		being attached to those trailers, semitrailers, or pole
29		trailers as a part thereof. In lieu of a person providing
30		documentation regarding the qualifying use of each individual
31		trailer, semitrailer, or pole trailer, that person may document
32		such qualifying use by providing documentation of the
33		following:
34		(1) If a trailer, semitrailer, or pole trailer is

1		dedicated to a motor vehicle that qualifies as rolling
2		stock moving in interstate commerce under subsection (c) of
3		this Section, then that trailer, semitrailer, or pole
4		trailer qualifies as rolling stock moving in interstate
5		commerce under this subsection.
6		(2) If a trailer, semitrailer, or pole trailer is
7		dedicated to a group of motor vehicles that all qualify as
8		rolling stock moving in interstate commerce under
9		subsection (c) of this Section, then that trailer,
10		semitrailer, or pole trailer qualifies as rolling stock
11		moving in interstate commerce under this subsection.
12		(3) If one or more trailers, semitrailers, or pole
13		trailers are dedicated to a group of motor vehicles and not
14		all of those motor vehicles in that group qualify as
15		rolling stock moving in interstate commerce under
16		subsection (c) of this Section, then the percentage of
17		those trailers, semitrailers, or pole trailers that
18		qualifies as rolling stock moving in interstate commerce
19		under this subsection is equal to the percentage of those
20		motor vehicles in that group that qualify as rolling stock
21		moving in interstate commerce under subsection (c) of this
22		Section to which those trailer, semitrailers, or pole
23		trailers are dedicated. However, to determine the
24		qualification for the exemption provided under this item
25		(3), the mathematical application of the qualifying
26		percentage to one or more trailers, semitrailers, or pole
27		trailers under this subpart shall not be allowed as to any
28		fraction of a trailer, semitrailer, or pole trailer.
29		(Source: P.A. 93-23, eff. 6-20-03.)

30		Section 15. The Service Use Tax Act is amended by changing
31		Sections 2 and 3-51 as follows:
32		(35 ILCS 110/2) (from Ch. 120, par. 439.32)

1		Sec. 2. "Use" means the exercise by any person of any right
2		or power over tangible personal property incident to the
3		ownership of that property, but does not include the sale or
4		use for demonstration by him of that property in any form as
5		tangible personal property in the regular course of business.
6		"Use" does not mean the interim use of tangible personal
7		property nor the physical incorporation of tangible personal
8		property, as an ingredient or constituent, into other tangible
9		personal property, (a) which is sold in the regular course of
10		business or (b) which the person incorporating such ingredient
11		or constituent therein has undertaken at the time of such
12		purchase to cause to be transported in interstate commerce to
13		destinations outside the State of Illinois.
14		"Purchased from a serviceman" means the acquisition of the
15		ownership of, or title to, tangible personal property through a
16		sale of service.
17		"Purchaser" means any person who, through a sale of
18		service, acquires the ownership of, or title to, any tangible
19		personal property.
20		"Cost price" means the consideration paid by the serviceman
21		for a purchase valued in money, whether paid in money or
22		otherwise, including cash, credits and services, and shall be
23		determined without any deduction on account of the supplier's
24		cost of the property sold or on account of any other expense
25		incurred by the supplier. When a serviceman contracts out part
26		or all of the services required in his sale of service, it
27		shall be presumed that the cost price to the serviceman of the
28		property transferred to him or her by his or her subcontractor
29		is equal to 50% of the subcontractor's charges to the
30		serviceman in the absence of proof of the consideration paid by
31		the subcontractor for the purchase of such property.
32		"Selling price" means the consideration for a sale valued
33		in money whether received in money or otherwise, including
34		cash, credits and service, and shall be determined without any

1		deduction on account of the serviceman's cost of the property
2		sold, the cost of materials used, labor or service cost or any
3		other expense whatsoever, but does not include interest or
4		finance charges which appear as separate items on the bill of
5		sale or sales contract nor charges that are added to prices by
6		sellers on account of the seller's duty to collect, from the
7		purchaser, the tax that is imposed by this Act.
8		"Department" means the Department of Revenue.
9		"Person" means any natural individual, firm, partnership,
10		association, joint stock company, joint venture, public or
11		private corporation, limited liability company, and any
12		receiver, executor, trustee, guardian or other representative
13		appointed by order of any court.
14		"Sale of service" means any transaction except:
15		(1) a retail sale of tangible personal property taxable
16		under the Retailers' Occupation Tax Act or under the Use
17		Tax Act.
18		(2) a sale of tangible personal property for the
19		purpose of resale made in compliance with Section 2c of the
20		Retailers' Occupation Tax Act.
21		(3) except as hereinafter provided, a sale or transfer
22		of tangible personal property as an incident to the
23		rendering of service for or by any governmental body, or
24		for or by any corporation, society, association,
25		foundation or institution organized and operated
26		exclusively for charitable, religious or educational
27		purposes or any not-for-profit corporation, society,
28		association, foundation, institution or organization which
29		has no compensated officers or employees and which is
30		organized and operated primarily for the recreation of
31		persons 55 years of age or older. A limited liability
32		company may qualify for the exemption under this paragraph
33		only if the limited liability company is organized and
34		operated exclusively for educational purposes.

1		(4) a sale or transfer of tangible personal property as
2		an incident to the rendering of service for interstate
3		carriers for hire for use as rolling stock moving in
4		interstate commerce or by lessors under a lease of one year
5		or longer, executed or in effect at the time of purchase of
6		personal property, to interstate carriers for hire for use
7		as rolling stock moving in interstate commerce so long as
8		so used by such interstate carriers for hire, and equipment
9		operated by a telecommunications provider, licensed as a
10		common carrier by the Federal Communications Commission,
11		which is permanently installed in or affixed to aircraft
12		moving in interstate commerce.
13		(4a) a sale or transfer of tangible personal property
14		as an incident to the rendering of service for owners,
15		lessors, or shippers of tangible personal property which is
16		utilized by interstate carriers for hire for use as rolling
17		stock moving in interstate commerce so long as so used by
18		interstate carriers for hire, and equipment operated by a
19		telecommunications provider, licensed as a common carrier
20		by the Federal Communications Commission, which is
21		permanently installed in or affixed to aircraft moving in
22		interstate commerce.
23		(4a-5) on and after July 1, 2003 and through June 30,
24		2004, a sale or transfer of a motor vehicle of the second
25		division with a gross vehicle weight in excess of 8,000
26		pounds as an incident to the rendering of service if that
27		motor vehicle is subject to the commercial distribution fee
28		imposed under Section 3-815.1 of the Illinois Vehicle Code.
29		Beginning on July 1, 2004 and through June 30, 2005, the
30		use in this State of motor vehicles of the second division:
31		(i) with a gross vehicle weight rating in excess of 8,000
32		pounds; (ii) that are subject to the commercial
33		distribution fee imposed under Section 3-815.1 of the
34		Illinois Vehicle Code; and (iii) that are primarily used

1		for commercial purposes. Through June 30, 2005, this This
2		exemption applies to repair and replacement parts added
3		after the initial purchase of such a motor vehicle if that
4		motor vehicle is used in a manner that would qualify for
5		the rolling stock exemption otherwise provided for in this
6		Act. For purposes of this paragraph, "used for commercial
7		purposes" means the transportation of persons or property
8		in furtherance of any commercial or industrial enterprise
9		whether for-hire or not.
10		(5) a sale or transfer of machinery and equipment used
11		primarily in the process of the manufacturing or
12		assembling, either in an existing, an expanded or a new
13		manufacturing facility, of tangible personal property for
14		wholesale or retail sale or lease, whether such sale or
15		lease is made directly by the manufacturer or by some other
16		person, whether the materials used in the process are owned
17		by the manufacturer or some other person, or whether such
18		sale or lease is made apart from or as an incident to the
19		seller's engaging in a service occupation and the
20		applicable tax is a Service Use Tax or Service Occupation
21		Tax, rather than Use Tax or Retailers' Occupation Tax.
22		(5a) the repairing, reconditioning or remodeling, for
23		a common carrier by rail, of tangible personal property
24		which belongs to such carrier for hire, and as to which
25		such carrier receives the physical possession of the
26		repaired, reconditioned or remodeled item of tangible
27		personal property in Illinois, and which such carrier
28		transports, or shares with another common carrier in the
29		transportation of such property, out of Illinois on a
30		standard uniform bill of lading showing the person who
31		repaired, reconditioned or remodeled the property to a
32		destination outside Illinois, for use outside Illinois.
33		(5b) a sale or transfer of tangible personal property
34		which is produced by the seller thereof on special order in

1		such a way as to have made the applicable tax the Service
2		Occupation Tax or the Service Use Tax, rather than the
3		Retailers' Occupation Tax or the Use Tax, for an interstate
4		carrier by rail which receives the physical possession of
5		such property in Illinois, and which transports such
6		property, or shares with another common carrier in the
7		transportation of such property, out of Illinois on a
8		standard uniform bill of lading showing the seller of the
9		property as the shipper or consignor of such property to a
10		destination outside Illinois, for use outside Illinois.
11		(6) until July 1, 2003, a sale or transfer of
12		distillation machinery and equipment, sold as a unit or kit
13		and assembled or installed by the retailer, which machinery
14		and equipment is certified by the user to be used only for
15		the production of ethyl alcohol that will be used for
16		consumption as motor fuel or as a component of motor fuel
17		for the personal use of such user and not subject to sale
18		or resale.
19		(7) at the election of any serviceman not required to
20		be otherwise registered as a retailer under Section 2a of
21		the Retailers' Occupation Tax Act, made for each fiscal
22		year sales of service in which the aggregate annual cost
23		price of tangible personal property transferred as an
24		incident to the sales of service is less than 35%, or 75%
25		in the case of servicemen transferring prescription drugs
26		or servicemen engaged in graphic arts production, of the
27		aggregate annual total gross receipts from all sales of
28		service. The purchase of such tangible personal property by
29		the serviceman shall be subject to tax under the Retailers'
30		Occupation Tax Act and the Use Tax Act. However, if a
31		primary serviceman who has made the election described in
32		this paragraph subcontracts service work to a secondary
33		serviceman who has also made the election described in this
34		paragraph, the primary serviceman does not incur a Use Tax

1		liability if the secondary serviceman (i) has paid or will
2		pay Use Tax on his or her cost price of any tangible
3		personal property transferred to the primary serviceman
4		and (ii) certifies that fact in writing to the primary
5		serviceman.
6		Tangible personal property transferred incident to the
7		completion of a maintenance agreement is exempt from the tax
8		imposed pursuant to this Act.
9		Exemption (5) also includes machinery and equipment used in
10		the general maintenance or repair of such exempt machinery and
11		equipment or for in-house manufacture of exempt machinery and
12		equipment. For the purposes of exemption (5), each of these
13		terms shall have the following meanings: (1) "manufacturing
14		process" shall mean the production of any article of tangible
15		personal property, whether such article is a finished product
16		or an article for use in the process of manufacturing or
17		assembling a different article of tangible personal property,
18		by procedures commonly regarded as manufacturing, processing,
19		fabricating, or refining which changes some existing material
20		or materials into a material with a different form, use or
21		name. In relation to a recognized integrated business composed
22		of a series of operations which collectively constitute
23		manufacturing, or individually constitute manufacturing
24		operations, the manufacturing process shall be deemed to
25		commence with the first operation or stage of production in the
26		series, and shall not be deemed to end until the completion of
27		the final product in the last operation or stage of production
28		in the series; and further, for purposes of exemption (5),
29		photoprocessing is deemed to be a manufacturing process of
30		tangible personal property for wholesale or retail sale; (2)
31		"assembling process" shall mean the production of any article
32		of tangible personal property, whether such article is a
33		finished product or an article for use in the process of
34		manufacturing or assembling a different article of tangible

1		personal property, by the combination of existing materials in
2		a manner commonly regarded as assembling which results in a
3		material of a different form, use or name; (3) "machinery"
4		shall mean major mechanical machines or major components of
5		such machines contributing to a manufacturing or assembling
6		process; and (4) "equipment" shall include any independent
7		device or tool separate from any machinery but essential to an
8		integrated manufacturing or assembly process; including
9		computers used primarily in a manufacturer's computer assisted
10		design, computer assisted manufacturing (CAD/CAM) system; or
11		any subunit or assembly comprising a component of any machinery
12		or auxiliary, adjunct or attachment parts of machinery, such as
13		tools, dies, jigs, fixtures, patterns and molds; or any parts
14		which require periodic replacement in the course of normal
15		operation; but shall not include hand tools. Equipment includes
16		chemicals or chemicals acting as catalysts but only if the
17		chemicals or chemicals acting as catalysts effect a direct and
18		immediate change upon a product being manufactured or assembled
19		for wholesale or retail sale or lease. The purchaser of such
20		machinery and equipment who has an active resale registration
21		number shall furnish such number to the seller at the time of
22		purchase. The user of such machinery and equipment and tools
23		without an active resale registration number shall prepare a
24		certificate of exemption for each transaction stating facts
25		establishing the exemption for that transaction, which
26		certificate shall be available to the Department for inspection
27		or audit. The Department shall prescribe the form of the
28		certificate.
29		Any informal rulings, opinions or letters issued by the
30		Department in response to an inquiry or request for any opinion
31		from any person regarding the coverage and applicability of
32		exemption (5) to specific devices shall be published,
33		maintained as a public record, and made available for public
34		inspection and copying. If the informal ruling, opinion or

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

1		2. soliciting orders for tangible personal property by
2		means of a telecommunication or television shopping system
3		(which utilizes toll free numbers) which is intended by the
4		retailer to be broadcast by cable television or other means
5		of broadcasting, to consumers located in this State;
6		3. pursuant to a contract with a broadcaster or
7		publisher located in this State, soliciting orders for
8		tangible personal property by means of advertising which is
9		disseminated primarily to consumers located in this State
10		and only secondarily to bordering jurisdictions;
11		4. soliciting orders for tangible personal property by
12		mail if the solicitations are substantial and recurring and
13		if the retailer benefits from any banking, financing, debt
14		collection, telecommunication, or marketing activities
15		occurring in this State or benefits from the location in
16		this State of authorized installation, servicing, or
17		repair facilities;
18		5. being owned or controlled by the same interests
19		which own or control any retailer engaging in business in
20		the same or similar line of business in this State;
21		6. having a franchisee or licensee operating under its
22		trade name if the franchisee or licensee is required to
23		collect the tax under this Section;
24		7. pursuant to a contract with a cable television
25		operator located in this State, soliciting orders for
26		tangible personal property by means of advertising which is
27		transmitted or distributed over a cable television system
28		in this State; or
29		8. engaging in activities in Illinois, which
30		activities in the state in which the supply business
31		engaging in such activities is located would constitute
32		maintaining a place of business in that state.
33		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
34		eff. 6-20-03; revised 8-21-03.)

1		(35 ILCS 110/3-51)
2		Sec. 3-51. Motor vehicles; trailers; use as rolling stock
3		definition.
4		(a) Through June 30, 2003, "use as rolling stock moving in
5		interstate commerce" in subsection (b) of Section 3-45 means
6		for motor vehicles, as defined in Section 1-46 of the Illinois
7		Vehicle 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 just
11		between points in Illinois, if the motor vehicle and trailer
12		transports persons whose journeys or property whose shipments
13		originate or terminate outside Illinois. This definition
14		applies to all property purchased for the purpose of being
15		attached to those motor vehicles or trailers as a part thereof.
16		(b) On and after July 1, 2003 and through July 1, 2004,
17		"use as rolling stock moving in interstate commerce" in
18		paragraphs (4) and (4a) of the definition of "sale of service"
19		in Section 2 and subsection (b) of Section 3-45 occurs for
20		motor vehicles, as defined in Section 1-146 of the Illinois
21		Vehicle Code, when during a 12-month period the rolling stock
22		has carried persons or property for hire in interstate commerce
23		for 51% of its total trips and transports persons whose
24		journeys or property whose shipments originate or terminate
25		outside Illinois. Trips that are only between points in
26		Illinois shall not be counted as interstate trips when
27		calculating whether the tangible personal property qualifies
28		for the exemption but such trips shall be included in total
29		trips taken.
30		(c) Beginning July 1, 2004, "use as rolling stock moving in
31		interstate commerce" in paragraphs (b) and (c) of Section 3-55
32		occurs for motor vehicles, as defined in Section 1-146 of the
33		Illinois Vehicle Code, when during a 12-month period the

1		rolling stock has carried persons or property for hire in
2		interstate commerce for greater than 50% of its total trips for
3		that period or for greater than 50% of its total miles for that
4		period. The person claiming the exemption shall make an
5		election at the time of purchase to use either the trips or
6		mileage method. Persons who purchased motor vehicles prior to
7		July 1, 2004 shall make an election to use either the trips or
8		mileage method and document that election in their books and
9		records. If no election is made under this subsection to use
10		the trips or mileage method, the person shall be deemed to have
11		chosen the mileage method. Any election to use either the trips
12		or mileage method will remain in effect for that motor vehicle
13		for any period for which the Department may issue a notice of
14		tax liability under this Act.
15		For purposes of determining qualifying trips or miles,
16		motor vehicles that carry persons or property for hire, even
17		just between points in Illinois, will be considered used for
18		hire in interstate commerce if the motor vehicle transports
19		persons whose journeys or property whose shipments originate or
20		terminate outside Illinois. The exemption for motor vehicles
21		used as rolling stock moving in interstate commerce may be
22		claimed only for motor vehicles whose gross vehicle weight
23		rating exceeds 16,000 pounds. This definition applies to all
24		property purchased for the purpose of being attached to those
25		motor vehicles as a part thereof.
26		(d) Beginning July 1, 2004, "use as rolling stock moving in
27		interstate commerce" in paragraphs (b) and (c) of Section 3-55
28		occurs for trailers, as defined in Section 1-209 of the
29		Illinois Vehicle Code, semitrailers as defined in Section 1-187
30		of the Illinois Vehicle Code, and pole trailers as defined in
31		Section 1-161 of the Illinois Vehicle Code, when during a
32		12-month period the rolling stock has carried persons or
33		property for hire in interstate commerce for greater than 50%
34		of its total trips for that period or for greater than 50% of

1		its total miles for that period. The person claiming the
2		exemption for a trailer or trailers that will not be dedicated
3		to a motor vehicle or group of motor vehicles shall make an
4		election at the time of purchase to use either the trips or
5		mileage method. Persons who purchased trailers prior to July 1,
6		2004 that are not dedicated to a motor vehicle or group of
7		motor vehicles shall make an election to use either the trips
8		or mileage method and document that election in their books and
9		records. If no election is made under this subsection to use
10		the trips or mileage method, the person shall be deemed to have
11		chosen the mileage method. Any election to use either the trips
12		or mileage method will remain in effect for that trailer for
13		any period for which the Department may issue a notice of tax
14		liability under this Act.
15		For purposes of determining qualifying trips or miles,
16		trailers, semitrailers, or pole trailers that carry property
17		for hire, even just between points in Illinois, will be
18		considered used for hire in interstate commerce if the
19		trailers, semitrailers, or pole trailers transport property
20		whose shipments originate or terminate outside Illinois. This
21		definition applies to all property purchased for the purpose of
22		being attached to those trailers, semitrailers, or pole
23		trailers as a part thereof. In lieu of a person providing
24		documentation regarding the qualifying use of each individual
25		trailer, semitrailer, or pole trailer, that person may document
26		such qualifying use by providing documentation of the
27		following:
28		(1) If a trailer, semitrailer, or pole trailer is
29		dedicated to a motor vehicle that qualifies as rolling
30		stock moving in interstate commerce under subsection (c) of
31		this Section, then that trailer, semitrailer, or pole
32		trailer qualifies as rolling stock moving in interstate
33		commerce under this subsection.
34		(2) If a trailer, semitrailer, or pole trailer is

1		dedicated to a group of motor vehicles that all qualify as
2		rolling stock moving in interstate commerce under
3		subsection (c) of this Section, then that trailer,
4		semitrailer, or pole trailer qualifies as rolling stock
5		moving in interstate commerce under this subsection.
6		(3) If one or more trailers, semitrailers, or pole
7		trailers are dedicated to a group of motor vehicles and not
8		all of those motor vehicles in that group qualify as
9		rolling stock moving in interstate commerce under
10		subsection (c) of this Section, then the percentage of
11		those trailers, semitrailers, or pole trailers that
12		qualifies as rolling stock moving in interstate commerce
13		under this subsection is equal to the percentage of those
14		motor vehicles in that group that qualify as rolling stock
15		moving in interstate commerce under subsection (c) of this
16		Section to which those trailer, semitrailers, or pole
17		trailers are dedicated. However, to determine the
18		qualification for the exemption provided under this item
19		(3), the mathematical application of the qualifying
20		percentage to one or more trailers, semitrailers, or pole
21		trailers under this subpart shall not be allowed as to any
22		fraction of a trailer, semitrailer, or pole trailer.
23		(Source: P.A. 93-23, eff. 6-20-03.)

24		Section 20. The Service Occupation Tax Act is amended by
25		changing Sections 2 and 2d as follows:
26		(35 ILCS 115/2) (from Ch. 120, par. 439.102)
27		Sec. 2. "Transfer" means any transfer of the title to
28		property or of the ownership of property whether or not the
29		transferor retains title as security for the payment of amounts
30		due him from the transferee.
31		"Cost Price" means the consideration paid by the serviceman
32		for a purchase valued in money, whether paid in money or

1		otherwise, including cash, credits and services, and shall be
2		determined without any deduction on account of the supplier's
3		cost of the property sold or on account of any other expense
4		incurred by the supplier. When a serviceman contracts out part
5		or all of the services required in his sale of service, it
6		shall be presumed that the cost price to the serviceman of the
7		property transferred to him by his or her subcontractor is
8		equal to 50% of the subcontractor's charges to the serviceman
9		in the absence of proof of the consideration paid by the
10		subcontractor for the purchase of such property.
11		"Department" means the Department of Revenue.
12		"Person" means any natural individual, firm, partnership,
13		association, joint stock company, joint venture, public or
14		private corporation, limited liability company, and any
15		receiver, executor, trustee, guardian or other representative
16		appointed by order of any court.
17		"Sale of Service" means any transaction except:
18		(a) A retail sale of tangible personal property taxable
19		under the Retailers' Occupation Tax Act or under the Use Tax
20		Act.
21		(b) A sale of tangible personal property for the purpose of
22		resale made in compliance with Section 2c of the Retailers'
23		Occupation Tax Act.
24		(c) Except as hereinafter provided, a sale or transfer of
25		tangible personal property as an incident to the rendering of
26		service for or by any governmental body or for or by any
27		corporation, society, association, foundation or institution
28		organized and operated exclusively for charitable, religious
29		or educational purposes or any not-for-profit corporation,
30		society, association, foundation, institution or organization
31		which has no compensated officers or employees and which is
32		organized and operated primarily for the recreation of persons
33		55 years of age or older. A limited liability company may
34		qualify for the exemption under this paragraph only if the

1		limited liability company is organized and operated
2		exclusively for educational purposes.
3		(d) A sale or transfer of tangible personal property as an
4		incident to the rendering of service for interstate carriers
5		for hire for use as rolling stock moving in interstate commerce
6		or lessors under leases of one year or longer, executed or in
7		effect at the time of purchase, to interstate carriers for hire
8		for use as rolling stock moving in interstate commerce, and
9		equipment operated by a telecommunications provider, licensed
10		as a common carrier by the Federal Communications Commission,
11		which is permanently installed in or affixed to aircraft moving
12		in interstate commerce.
13		(d-1) A sale or transfer of tangible personal property as
14		an incident to the rendering of service for owners, lessors or
15		shippers of tangible personal property which is utilized by
16		interstate carriers for hire for use as rolling stock moving in
17		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-1.1) On and after July 1, 2003 and through June 30,
23		2004, a sale or transfer of a motor vehicle of the second
24		division with a gross vehicle weight in excess of 8,000 pounds
25		as an incident to the rendering of service if that motor
26		vehicle is subject to the commercial distribution fee imposed
27		under Section 3-815.1 of the Illinois Vehicle Code. Beginning
28		on July 1, 2004 and through June 30, 2005, the use in this
29		State of motor vehicles of the second division: (i) with a
30		gross vehicle weight rating in excess of 8,000 pounds; (ii)
31		that are subject to the commercial distribution fee imposed
32		under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
33		that are primarily used for commercial purposes. Through June
34		30, 2005, this This exemption applies to repair and replacement

1		parts added after the initial purchase of such a motor vehicle
2		if that motor vehicle is used in a manner that would qualify
3		for the rolling stock exemption otherwise provided for in this
4		Act. For purposes of this paragraph, "used for commercial
5		purposes" means the transportation of persons or property in
6		furtherance of any commercial or industrial enterprise whether
7		for-hire or not.
8		(d-2) The repairing, reconditioning or remodeling, for a
9		common carrier by rail, of tangible personal property which
10		belongs to such carrier for hire, and as to which such carrier
11		receives the physical possession of the repaired,
12		reconditioned or remodeled item of tangible personal property
13		in Illinois, and which such carrier transports, or shares with
14		another common carrier in the transportation of such property,
15		out of Illinois on a standard uniform bill of lading showing
16		the person who repaired, reconditioned or remodeled the
17		property as the shipper or consignor of such property to a
18		destination outside Illinois, for use outside 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 such
25		property in Illinois, and which transports such property, or
26		shares with another common carrier in the transportation of
27		such 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 such property to a destination outside Illinois,
30		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 and
34		which are not returned to this State, if delivery is made by

1		the seller or agent of the seller, including an agent who
2		causes the product to be delivered outside Illinois by a common
3		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 retail
8		sale or lease, whether such sale or lease is made directly by
9		the manufacturer or by some other person, whether the materials
10		used in the process are owned by the manufacturer or some other
11		person, or whether such sale or lease is made apart from or as
12		an incident to the seller's engaging in a service occupation
13		and the applicable tax is a Service Occupation Tax or Service
14		Use Tax, rather than Retailers' Occupation Tax or Use Tax.
15		(f) Until July 1, 2003, the sale or transfer of
16		distillation machinery and equipment, sold as a unit or kit and
17		assembled or installed by the retailer, which machinery and
18		equipment is certified by the user to be used only for the
19		production of ethyl alcohol that will be used for consumption
20		as motor fuel or as a component of motor fuel for the personal
21		use of such user and not subject to sale or resale.
22		(g) At the election of any serviceman not required to be
23		otherwise registered as a retailer under Section 2a of the
24		Retailers' Occupation Tax Act, made for each fiscal year sales
25		of service in which the aggregate annual cost price of tangible
26		personal property transferred as an incident to the sales of
27		service is less than 35% (75% in the case of servicemen
28		transferring prescription drugs or servicemen engaged in
29		graphic arts production) of the aggregate annual total gross
30		receipts from all sales of service. The purchase of such
31		tangible personal property by the serviceman shall be subject
32		to tax under the Retailers' Occupation Tax Act and the Use Tax
33		Act. However, if a primary serviceman who has made the election
34		described in this paragraph subcontracts service work to a

1		secondary serviceman who has also made the election described
2		in this paragraph, the primary serviceman does not incur a Use
3		Tax liability if the secondary serviceman (i) has paid or will
4		pay Use Tax on his or her cost price of any tangible personal
5		property transferred to the primary serviceman and (ii)
6		certifies that fact in writing to the primary serviceman.
7		Tangible personal property transferred incident to the
8		completion of a maintenance agreement is exempt from the tax
9		imposed pursuant to this Act.
10		Exemption (e) also includes machinery and equipment used in
11		the general maintenance or repair of such exempt machinery and
12		equipment or for in-house manufacture of exempt machinery and
13		equipment. For the purposes of exemption (e), each of these
14		terms shall have the following meanings: (1) "manufacturing
15		process" shall mean the production of any article of tangible
16		personal property, whether such article is a finished product
17		or an article for use in the process of manufacturing or
18		assembling a different article of tangible personal property,
19		by procedures commonly regarded as manufacturing, processing,
20		fabricating, or refining which changes some existing material
21		or materials into a material with a different form, use or
22		name. In relation to a recognized integrated business composed
23		of a series of operations which collectively constitute
24		manufacturing, or individually constitute manufacturing
25		operations, the manufacturing process shall be deemed to
26		commence with the first operation or stage of production in the
27		series, and shall not be deemed to end until the completion of
28		the final product in the last operation or stage of production
29		in the series; and further for purposes of exemption (e),
30		photoprocessing is deemed to be a manufacturing process of
31		tangible personal property for wholesale or retail sale; (2)
32		"assembling process" shall mean the production of any article
33		of tangible personal property, whether such article is a
34		finished product or an article for use in the process of

1		manufacturing or assembling a different article of tangible
2		personal property, by the combination of existing materials in
3		a manner commonly regarded as assembling which results in a
4		material of a different form, use or name; (3) "machinery"
5		shall mean major mechanical machines or major components of
6		such machines contributing to a manufacturing or assembling
7		process; and (4) "equipment" shall include any independent
8		device or tool separate from any machinery but essential to an
9		integrated manufacturing or assembly process; including
10		computers used primarily in a manufacturer's computer assisted
11		design, computer assisted manufacturing (CAD/CAM) system; or
12		any subunit or assembly comprising a component of any machinery
13		or auxiliary, adjunct or attachment parts of machinery, such as
14		tools, dies, jigs, fixtures, patterns and molds; or any parts
15		which require periodic replacement in the course of normal
16		operation; but shall not include hand tools. Equipment includes
17		chemicals or chemicals acting as catalysts but only if the
18		chemicals or chemicals acting as catalysts effect a direct and
19		immediate change upon a product being manufactured or assembled
20		for wholesale or retail sale or lease. The purchaser of such
21		machinery and equipment who has an active resale registration
22		number shall furnish such number to the seller at the time of
23		purchase. The purchaser of such machinery and equipment and
24		tools without an active resale registration number shall
25		furnish to the seller a certificate of exemption for each
26		transaction stating facts establishing the exemption for that
27		transaction, which certificate shall be available to the
28		Department for inspection or audit.
29		Except as provided in Section 2d of this Act, the rolling
30		stock exemption applies to rolling stock used by an interstate
31		carrier for hire, even just between points in Illinois, if such
32		rolling stock transports, for hire, persons whose journeys or
33		property whose shipments originate or terminate outside
34		Illinois.

1		Any informal rulings, opinions or letters issued by the
2		Department in response to an inquiry or request for any opinion
3		from any person regarding the coverage and applicability of
4		exemption (e) to specific devices shall be published,
5		maintained as a public record, and made available for public
6		inspection and copying. If the informal ruling, opinion or
7		letter contains trade secrets or other confidential
8		information, where possible the Department shall delete such
9		information prior to publication. Whenever such informal
10		rulings, opinions, or letters contain any policy of general
11		applicability, the Department shall formulate and adopt such
12		policy as a rule in accordance with the provisions of the
13		Illinois Administrative Procedure Act.
14		On and after July 1, 1987, no entity otherwise eligible
15		under exemption (c) of this Section shall make tax free
16		purchases unless it has an active exemption identification
17		number issued by the Department.
18		"Serviceman" means any person who is engaged in the
19		occupation of making sales of service.
20		"Sale at Retail" means "sale at retail" as defined in the
21		Retailers' Occupation Tax Act.
22		"Supplier" means any person who makes sales of tangible
23		personal property to servicemen for the purpose of resale as an
24		incident to a sale of service.
25		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
26		eff. 6-20-03; revised 8-21-03.)
27		(35 ILCS 115/2d)
28		Sec. 2d. Motor vehicles; trailers; use as rolling stock
29		definition.
30		(a) Through June 30, 2003, "use as rolling stock moving in
31		interstate commerce" in subsections (d) and (d-1) of the
32		definition of "sale of service" in Section 2 means for motor
33		vehicles, as defined in Section 1-146 of the Illinois Vehicle

1		Code, and trailers, as defined in Section 1-209 of the Illinois
2		Vehicle Code, when on 15 or more occasions in a 12-month period
3		the motor vehicle and trailer has carried persons or property
4		for hire in interstate commerce, even just between points in
5		Illinois, if the motor vehicle and trailer transports persons
6		whose journeys or property whose shipments originate or
7		terminate outside Illinois. This definition applies to all
8		property purchased for the purpose of being attached to those
9		motor vehicles or trailers as a part thereof.
10		(b) On and after July 1, 2003 and through June 30, 2004,
11		"use as rolling stock moving in interstate commerce" in
12		paragraphs (d) and (d-1) of the definition of "sale of service"
13		in Section 2 occurs for motor vehicles, as defined in Section
14		1-146 of the Illinois Vehicle Code, when during a 12-month
15		period the rolling stock has carried persons or property for
16		hire in interstate commerce for 51% of its total trips and
17		transports persons whose journeys or property whose shipments
18		originate or terminate outside Illinois. Trips that are only
19		between points in Illinois will not be counted as interstate
20		trips when calculating whether the tangible personal property
21		qualifies for the exemption but such trips will be included in
22		total trips taken.
23		(c) Beginning July 1, 2004, "use as rolling stock moving in
24		interstate commerce" in paragraphs (b) and (c) of Section 3-55
25		occurs for motor vehicles, as defined in Section 1-146 of the
26		Illinois Vehicle Code, when during a 12-month period the
27		rolling stock has carried persons or property for hire in
28		interstate commerce for greater than 50% of its total trips for
29		that period or for greater than 50% of its total miles for that
30		period. The person claiming the exemption shall make an
31		election at the time of purchase to use either the trips or
32		mileage method. Persons who purchased motor vehicles prior to
33		July 1, 2004 shall make an election to use either the trips or
34		mileage method and document that election in their books and

1		records. If no election is made under this subsection to use
2		the trips or mileage method, the person shall be deemed to have
3		chosen the mileage method. Any election to use either the trips
4		or mileage method will remain in effect for that motor vehicle
5		for any period for which the Department may issue a notice of
6		tax liability under this Act.
7		For purposes of determining qualifying trips or miles,
8		motor vehicles that carry persons or property for hire, even
9		just between points in Illinois, will be considered used for
10		hire in interstate commerce if the motor vehicle transports
11		persons whose journeys or property whose shipments originate or
12		terminate outside Illinois. The exemption for motor vehicles
13		used as rolling stock moving in interstate commerce may be
14		claimed only for motor vehicles whose gross vehicle weight
15		rating exceeds 16,000 pounds. This definition applies to all
16		property purchased for the purpose of being attached to those
17		motor vehicles as a part thereof.
18		(d) Beginning July 1, 2004, "use as rolling stock moving in
19		interstate commerce" in paragraphs (b) and (c) of Section 3-55
20		occurs for trailers, as defined in Section 1-209 of the
21		Illinois Vehicle Code, semitrailers as defined in Section 1-187
22		of the Illinois Vehicle Code, and pole trailers as defined in
23		Section 1-161 of the Illinois Vehicle Code, when during a
24		12-month period the rolling stock has carried persons or
25		property for hire in interstate commerce for greater than 50%
26		of its total trips for that period or for greater than 50% of
27		its total miles for that period. The person claiming the
28		exemption for a trailer or trailers that will not be dedicated
29		to a motor vehicle or group of motor vehicles shall make an
30		election at the time of purchase to use either the trips or
31		mileage method. Persons who purchased trailers prior to July 1,
32		2004 that are not dedicated to a motor vehicle or group of
33		motor vehicles shall make an election to use either the trips
34		or mileage method and document that election in their books and

1		records. If no election is made under this subsection to use
2		the trips or mileage method, the person shall be deemed to have
3		chosen the mileage method. Any election to use either the trips
4		or mileage method will remain in effect for that trailer for
5		any period for which the Department may issue a notice of tax
6		liability under this Act.
7		For purposes of determining qualifying trips or miles,
8		trailers, semitrailers, or pole trailers that carry property
9		for hire, even just between points in Illinois, will be
10		considered used for hire in interstate commerce if the
11		trailers, semitrailers, or pole trailers transport property
12		whose shipments originate or terminate outside Illinois. This
13		definition applies to all property purchased for the purpose of
14		being attached to those trailers, semitrailers, or pole
15		trailers as a part thereof. In lieu of a person providing
16		documentation regarding the qualifying use of each individual
17		trailer, semitrailer, or pole trailer, that person may document
18		such qualifying use by providing documentation of the
19		following:
20		(1) If a trailer, semitrailer, or pole trailer is
21		dedicated to a motor vehicle that qualifies as rolling
22		stock moving in interstate commerce under subsection (c) of
23		this Section, then that trailer, semitrailer, or pole
24		trailer qualifies as rolling stock moving in interstate
25		commerce under this subsection.
26		(2) If a trailer, semitrailer, or pole trailer is
27		dedicated to a group of motor vehicles that all qualify as
28		rolling stock moving in interstate commerce under
29		subsection (c) of this Section, then that trailer,
30		semitrailer, or pole trailer qualifies as rolling stock
31		moving in interstate commerce under this subsection.
32		(3) If one or more trailers, semitrailers, or pole
33		trailers are dedicated to a group of motor vehicles and not
34		all of those motor vehicles in that group qualify as

1		rolling stock moving in interstate commerce under
2		subsection (c) of this Section, then the percentage of
3		those trailers, semitrailers, or pole trailers that
4		qualifies as rolling stock moving in interstate commerce
5		under this subsection is equal to the percentage of those
6		motor vehicles in that group that qualify as rolling stock
7		moving in interstate commerce under subsection (c) of this
8		Section to which those trailer, semitrailers, or pole
9		trailers are dedicated. However, to determine the
10		qualification for the exemption provided under this item
11		(3), the mathematical application of the qualifying
12		percentage to one or more trailers, semitrailers, or pole
13		trailers under this subpart shall not be allowed as to any
14		fraction of a trailer, semitrailer, or pole trailer.
15		(Source: P.A. 93-23, eff. 6-20-03.)

16		Section 25. The Retailers' Occupation Tax Act is amended by
17		changing Sections 2-5 and 2-51 as follows:
18		(35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
19		Sec. 2-5. Exemptions. Gross receipts from proceeds from the
20		sale of the following tangible personal property are exempt
21		from the tax imposed by this Act:
22		(1) Farm chemicals.
23		(2) Farm machinery and equipment, both new and used,
24		including that manufactured on special order, certified by the
25		purchaser to be used primarily for production agriculture or
26		State or federal agricultural programs, including individual
27		replacement parts for the machinery and equipment, including
28		machinery and equipment purchased for lease, and including
29		implements of husbandry defined in Section 1-130 of the
30		Illinois Vehicle Code, farm machinery and agricultural
31		chemical and fertilizer spreaders, and nurse wagons required to
32		be registered under Section 3-809 of the Illinois Vehicle Code,

1		but excluding other motor vehicles required to be registered
2		under the Illinois Vehicle Code. Horticultural polyhouses or
3		hoop houses used for propagating, growing, or overwintering
4		plants shall be considered farm machinery and equipment under
5		this item (2). Agricultural chemical tender tanks and dry boxes
6		shall include units sold separately from a motor vehicle
7		required to be licensed and units sold mounted on a motor
8		vehicle required to be licensed, if the selling price of the
9		tender is separately stated.
10		Farm machinery and equipment shall include precision
11		farming equipment that is installed or purchased to be
12		installed on farm machinery and equipment including, but not
13		limited to, tractors, harvesters, sprayers, planters, seeders,
14		or spreaders. Precision farming equipment includes, but is not
15		limited to, soil testing sensors, computers, monitors,
16		software, global positioning and mapping systems, and other
17		such equipment.
18		Farm machinery and equipment also includes computers,
19		sensors, software, and related equipment used primarily in the
20		computer-assisted operation of production agriculture
21		facilities, equipment, and activities such as, but not limited
22		to, the collection, monitoring, and correlation of animal and
23		crop data for the purpose of formulating animal diets and
24		agricultural chemicals. This item (7) is exempt from the
25		provisions of Section 2-70.
26		(3) Until July 1, 2003, distillation machinery and
27		equipment, sold as a unit or kit, assembled or installed by the
28		retailer, certified by the user to be used only for the
29		production of ethyl alcohol that will be used for consumption
30		as motor fuel or as a component of motor fuel for the personal
31		use of the user, and not subject to sale or resale.
32		(4) Until July 1, 2003, graphic arts machinery and
33		equipment, including repair and replacement parts, both new and
34		used, and including that manufactured on special order or

1		purchased for lease, certified by the purchaser to be used
2		primarily for graphic arts production. Equipment includes
3		chemicals or chemicals acting as catalysts but only if the
4		chemicals or chemicals acting as catalysts effect a direct and
5		immediate change upon a graphic arts product.
6		(5) A motor vehicle of the first division, a motor vehicle
7		of the second division that is a self-contained motor vehicle
8		designed or permanently converted to provide living quarters
9		for recreational, camping, or travel use, with direct walk
10		through access to the living quarters from the driver's seat,
11		or a motor vehicle of the second division that is of the van
12		configuration designed for the transportation of not less than
13		7 nor more than 16 passengers, as defined in Section 1-146 of
14		the Illinois Vehicle Code, that is used for automobile renting,
15		as defined in the Automobile Renting Occupation and Use Tax
16		Act.
17		(6) Personal property sold by a teacher-sponsored student
18		organization affiliated with an elementary or secondary school
19		located in Illinois.
20		(7) Until July 1, 2003, proceeds of that portion of the
21		selling price of a passenger car the sale of which is subject
22		to the Replacement Vehicle Tax.
23		(8) Personal property sold to an Illinois county fair
24		association for use in conducting, operating, or promoting the
25		county fair.
26		(9) Personal property sold to a not-for-profit arts or
27		cultural organization that establishes, by proof required by
28		the Department by rule, that it has received an exemption under
29		Section 501(c)(3) of the Internal Revenue Code and that is
30		organized and operated primarily for the presentation or
31		support of arts or cultural programming, activities, or
32		services. These organizations include, but are not limited to,
33		music and dramatic arts organizations such as symphony
34		orchestras and theatrical groups, arts and cultural service

1		organizations, local arts councils, visual arts organizations,
2		and media arts organizations. On and after the effective date
3		of this amendatory Act of the 92nd General Assembly, however,
4		an entity otherwise eligible for this exemption shall not make
5		tax-free purchases unless it has an active identification
6		number issued by the Department.
7		(10) Personal property sold by a corporation, society,
8		association, foundation, institution, or organization, other
9		than a limited liability company, that is organized and
10		operated as a not-for-profit service enterprise for the benefit
11		of persons 65 years of age or older if the personal property
12		was not purchased by the enterprise for the purpose of resale
13		by the enterprise.
14		(11) Personal property sold to a governmental body, to a
15		corporation, society, association, foundation, or institution
16		organized and operated exclusively for charitable, religious,
17		or educational purposes, or to a not-for-profit corporation,
18		society, association, foundation, institution, or organization
19		that has no compensated officers or employees and that is
20		organized and operated primarily for the recreation of persons
21		55 years of age or older. A limited liability company may
22		qualify for the exemption under this paragraph only if the
23		limited liability company is organized and operated
24		exclusively for educational purposes. On and after July 1,
25		1987, however, no entity otherwise eligible for this exemption
26		shall make tax-free purchases unless it has an active
27		identification number issued by the Department.
28		(12) Tangible personal property sold to interstate
29		carriers for hire for use as rolling stock moving in interstate
30		commerce or to lessors under leases of one year or longer
31		executed or in effect at the time of purchase by interstate
32		carriers for hire for use as rolling stock moving in interstate
33		commerce and equipment operated by a telecommunications
34		provider, licensed as a common carrier by the Federal

1		Communications Commission, which is permanently installed in
2		or affixed to aircraft moving in interstate commerce.
3		(12-5) On and after July 1, 2003 and through June 30, 2005,
4		motor vehicles of the second division with a gross vehicle
5		weight in excess of 8,000 pounds that are subject to the
6		commercial distribution fee imposed under Section 3-815.1 of
7		the Illinois Vehicle Code. Beginning on July 1, 2004 and
8		through June 30, 2005, the use in this State of motor vehicles
9		of the second division: (i) with a gross vehicle weight rating
10		in excess of 8,000 pounds; (ii) that are subject to the
11		commercial distribution fee imposed under Section 3-815.1 of
12		the Illinois Vehicle Code; and (iii) that are primarily used
13		for commercial purposes. Through June 30, 2005, this This
14		exemption applies to repair and replacement parts added after
15		the initial purchase of such a motor vehicle if that motor
16		vehicle is used in a manner that would qualify for the rolling
17		stock exemption otherwise provided for in this Act. For
18		purposes of this paragraph, "used for commercial purposes"
19		means the transportation of persons or property in furtherance
20		of any commercial or industrial enterprise whether for-hire or
21		not.
22		(13) Proceeds from sales to owners, lessors, or shippers of
23		tangible personal property that is utilized by interstate
24		carriers for hire for use as rolling stock moving in interstate
25		commerce and equipment operated by a telecommunications
26		provider, licensed as a common carrier by the Federal
27		Communications Commission, which is permanently installed in
28		or affixed to aircraft moving in interstate commerce.
29		(14) Machinery and equipment that will be used by the
30		purchaser, or a lessee of the purchaser, primarily in the
31		process of manufacturing or assembling tangible personal
32		property for wholesale or retail sale or lease, whether the
33		sale or lease is made directly by the manufacturer or by some
34		other person, whether the materials used in the process are

1		owned by the manufacturer or some other person, or whether the
2		sale or lease is made apart from or as an incident to the
3		seller's engaging in the service occupation of producing
4		machines, tools, dies, jigs, patterns, gauges, or other similar
5		items of no commercial value on special order for a particular
6		purchaser.
7		(15) Proceeds of mandatory service charges separately
8		stated on customers' bills for purchase and consumption of food
9		and beverages, to the extent that the proceeds of the service
10		charge are in fact turned over as tips or as a substitute for
11		tips to the employees who participate directly in preparing,
12		serving, hosting or cleaning up the food or beverage function
13		with respect to which the service charge is imposed.
14		(16) Petroleum products sold to a purchaser if the seller
15		is prohibited by federal law from charging tax to the
16		purchaser.
17		(17) Tangible personal property sold to a common carrier by
18		rail or motor that receives the physical possession of the
19		property in Illinois and that transports the property, or
20		shares with another common carrier in the transportation of the
21		property, out of Illinois on a standard uniform bill of lading
22		showing the seller of the property as the shipper or consignor
23		of the property to a destination outside Illinois, for use
24		outside Illinois.
25		(18) Legal tender, currency, medallions, or gold or silver
26		coinage issued by the State of Illinois, the government of the
27		United States of America, or the government of any foreign
28		country, and bullion.
29		(19) Until July 1 2003, oil field exploration, drilling,
30		and production equipment, including (i) rigs and parts of rigs,
31		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
32		tubular goods, including casing and drill strings, (iii) pumps
33		and pump-jack units, (iv) storage tanks and flow lines, (v) any
34		individual replacement part for oil field exploration,

1		drilling, and production equipment, and (vi) machinery and
2		equipment purchased for lease; but excluding motor vehicles
3		required to be registered under the Illinois Vehicle Code.
4		(20) Photoprocessing machinery and equipment, including
5		repair and replacement parts, both new and used, including that
6		manufactured on special order, certified by the purchaser to be
7		used primarily for photoprocessing, and including
8		photoprocessing machinery and equipment purchased for lease.
9		(21) Until July 1, 2003, coal exploration, mining,
10		offhighway hauling, processing, maintenance, and reclamation
11		equipment, including replacement parts and equipment, and
12		including equipment purchased for lease, but excluding motor
13		vehicles required to be registered under the Illinois Vehicle
14		Code.
15		(22) Fuel and petroleum products sold to or used by an air
16		carrier, certified by the carrier to be used for consumption,
17		shipment, or storage in the conduct of its business as an air
18		common carrier, for a flight destined for or returning from a
19		location or locations outside the United States without regard
20		to previous or subsequent domestic stopovers.
21		(23) A transaction in which the purchase order is received
22		by a florist who is located outside Illinois, but who has a
23		florist located in Illinois deliver the property to the
24		purchaser or the purchaser's donee in Illinois.
25		(24) Fuel consumed or used in the operation of ships,
26		barges, or vessels that are used primarily in or for the
27		transportation of property or the conveyance of persons for
28		hire on rivers bordering on this State if the fuel is delivered
29		by the seller to the purchaser's barge, ship, or vessel while
30		it is afloat upon that bordering river.
31		(25) A motor vehicle sold in this State to a nonresident
32		even though the motor vehicle is delivered to the nonresident
33		in this State, if the motor vehicle is not to be titled in this
34		State, and if a drive-away permit is issued to the motor

1		vehicle as provided in Section 3-603 of the Illinois Vehicle
2		Code or if the nonresident purchaser has vehicle registration
3		plates to transfer to the motor vehicle upon returning to his
4		or her home state. The issuance of the drive-away permit or
5		having the out-of-state registration plates to be transferred
6		is prima facie evidence that the motor vehicle will not be
7		titled in this State.
8		(26) Semen used for artificial insemination of livestock
9		for direct agricultural production.
10		(27) Horses, or interests in horses, registered with and
11		meeting the requirements of any of the Arabian Horse Club
12		Registry of America, Appaloosa Horse Club, American Quarter
13		Horse Association, United States Trotting Association, or
14		Jockey Club, as appropriate, used for purposes of breeding or
15		racing for prizes.
16		(28) Computers and communications equipment utilized for
17		any hospital purpose and equipment used in the diagnosis,
18		analysis, or treatment of hospital patients sold to a lessor
19		who leases the equipment, under a lease of one year or longer
20		executed or in effect at the time of the purchase, to a
21		hospital that has been issued an active tax exemption
22		identification number by the Department under Section 1g of
23		this Act.
24		(29) Personal property sold to a lessor who leases the
25		property, under a lease of one year or longer executed or in
26		effect at the time of the purchase, to a governmental body that
27		has been issued an active tax exemption identification number
28		by the Department under Section 1g of this Act.
29		(30) Beginning with taxable years ending on or after
30		December 31, 1995 and ending with taxable years ending on or
31		before December 31, 2004, personal property that is donated for
32		disaster relief to be used in a State or federally declared
33		disaster area in Illinois or bordering Illinois by a
34		manufacturer or retailer that is registered in this State to a

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

1		course of study presented in tax-supported schools, and
2		vocational or technical schools or institutes organized and
3		operated exclusively to provide a course of study of not less
4		than 6 weeks duration and designed to prepare individuals to
5		follow a trade or to pursue a manual, technical, mechanical,
6		industrial, business, or commercial occupation.
7		(34) 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 school,
10		a group of those schools, or one or more school districts if
11		the events are sponsored by an entity recognized by the school
12		district that consists primarily of volunteers and includes
13		parents and teachers of the school children. This paragraph
14		does not apply to fundraising events (i) for the benefit of
15		private home instruction or (ii) for which the fundraising
16		entity purchases the personal property sold at the events from
17		another individual or entity that sold the property for the
18		purpose of resale by the fundraising entity and that profits
19		from the sale to the fundraising entity. This paragraph is
20		exempt from the provisions of Section 2-70.
21		(35) 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 other
24		items, and replacement parts for these machines. Beginning
25		January 1, 2002 and through June 30, 2003, machines and parts
26		for machines used in commercial, coin-operated amusement and
27		vending business if a use or occupation tax is paid on the
28		gross receipts derived from the use of the commercial,
29		coin-operated amusement and vending machines. This paragraph
30		is exempt from the provisions of Section 2-70.
31		(35-5) 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

1		medicines, drugs, medical appliances, and insulin, urine
2		testing materials, syringes, and needles used by diabetics, for
3		human use, when purchased for use by a person receiving medical
4		assistance under Article 5 of the Illinois Public Aid Code who
5		resides in a licensed long-term care facility, as defined in
6		the Nursing Home Care Act.
7		(36) Beginning August 2, 2001, computers and
8		communications equipment utilized for any hospital purpose and
9		equipment used in the diagnosis, analysis, or treatment of
10		hospital patients sold to a lessor who leases the equipment,
11		under a lease of one year or longer executed or in effect at
12		the time of the purchase, to a hospital that has been issued an
13		active tax exemption identification number by the Department
14		under Section 1g of this Act. This paragraph is exempt from the
15		provisions of Section 2-70.
16		(37) Beginning August 2, 2001, personal property sold to a
17		lessor who leases the property, under a lease of one year or
18		longer executed or in effect at the time of the purchase, to a
19		governmental body that has been issued an active tax exemption
20		identification number by the Department under Section 1g of
21		this Act. This paragraph is exempt from the provisions of
22		Section 2-70.
23		(38) Beginning on January 1, 2002, tangible personal
24		property purchased from an Illinois retailer by a taxpayer
25		engaged in centralized purchasing activities in Illinois who
26		will, upon receipt of the property in Illinois, temporarily
27		store the property in Illinois (i) for the purpose of
28		subsequently transporting it outside this State for use or
29		consumption thereafter solely outside this State or (ii) for
30		the purpose of being processed, fabricated, or manufactured
31		into, attached to, or incorporated into other tangible personal
32		property to be transported outside this State and thereafter
33		used or consumed solely outside this State. The Director of
34		Revenue shall, pursuant to rules adopted in accordance with the

1		Illinois Administrative Procedure Act, issue a permit to any
2		taxpayer in good standing with the Department who is eligible
3		for the exemption under this paragraph (38). The permit issued
4		under this paragraph (38) shall authorize the holder, to the
5		extent and in the manner specified in the rules adopted under
6		this Act, to purchase tangible personal property from a
7		retailer exempt from the taxes imposed by this Act. Taxpayers
8		shall maintain all necessary books and records to substantiate
9		the use and consumption of all such tangible personal property
10		outside of the State of Illinois.
11		(Source: P.A. 92-16, eff. 6-28-01; 92-35, eff. 7-1-01; 92-227,
12		eff. 8-2-01; 92-337, eff. 8-10-01; 92-484, eff. 8-23-01;
13		92-488, eff. 8-23-01; 92-651, eff. 7-11-02; 92-680, eff.
14		7-16-02; 93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised
15		9-11-03.)
16		(35 ILCS 120/2-51)
17		Sec. 2-51. Motor vehicles; trailers; use as rolling stock
18		definition.
19		(a) Through June 30, 2003, "use as rolling stock moving in
20		interstate commerce" in paragraphs (12) and (13) of Section 2-5
21		means for motor vehicles, as defined in Section 1-146 of the
22		Illinois Vehicle Code, and trailers, as defined in Section
23		1-209 of the Illinois Vehicle Code, when on 15 or more
24		occasions in a 12-month period the motor vehicle and trailer
25		has carried persons or property for hire in interstate
26		commerce, even just between points in Illinois, if the motor
27		vehicle and trailer transports persons whose journeys or
28		property whose shipments originate or terminate outside
29		Illinois. This definition applies to all property purchased for
30		the purpose of being attached to those motor vehicles or
31		trailers as a part thereof.
32		(b) On and after July 1, 2003 and through June 30, 2004,
33		"use as rolling stock moving in interstate commerce" in

1		paragraphs (12) and (13) of Section 2-5 occurs for motor
2		vehicles, as defined in Section 1-146 of the Illinois Vehicle
3		Code, when during a 12-month period the rolling stock has
4		carried persons or property for hire in interstate commerce for
5		51% of its total trips and transports persons whose journeys or
6		property whose shipments originate or terminate outside
7		Illinois. Trips that are only between points in Illinois shall
8		not be counted as interstate trips when calculating whether the
9		tangible personal property qualifies for the exemption but such
10		trips shall be included in total trips taken.
11		(c) Beginning July 1, 2004, "use as rolling stock moving in
12		interstate commerce" in paragraphs (b) and (c) of Section 3-55
13		occurs for motor vehicles, as defined in Section 1-146 of the
14		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 greater than 50% of its total trips for
17		that period or for greater than 50% of its total miles for that
18		period. The person claiming the exemption shall make an
19		election at the time of purchase to use either the trips or
20		mileage method. Persons who purchased motor vehicles prior to
21		July 1, 2004 shall make an election to use either the trips or
22		mileage method and document that election in their books and
23		records. If no election is made under this subsection to use
24		the trips or mileage method, the person shall be deemed to have
25		chosen the mileage method. Any election to use either the trips
26		or mileage method will remain in effect for that motor vehicle
27		for any period for which the Department may issue a notice of
28		tax liability under this Act.
29		For purposes of determining qualifying trips or miles,
30		motor vehicles that carry persons or property for hire, even
31		just between points in Illinois, will be considered used for
32		hire in interstate commerce if the motor vehicle transports
33		persons whose journeys or property whose shipments originate or
34		terminate outside Illinois. The exemption for motor vehicles

1		used as rolling stock moving in interstate commerce may be
2		claimed only for motor vehicles whose gross vehicle weight
3		rating exceeds 16,000 pounds. This definition applies to all
4		property purchased for the purpose of being attached to those
5		motor vehicles as a part thereof.
6		(d) Beginning July 1, 2004, "use as rolling stock moving in
7		interstate commerce" in paragraphs (b) and (c) of Section 3-55
8		occurs for trailers, as defined in Section 1-209 of the
9		Illinois Vehicle Code, semitrailers as defined in Section 1-187
10		of the Illinois Vehicle Code, and pole trailers as defined in
11		Section 1-161 of the Illinois Vehicle Code, when during a
12		12-month period the rolling stock has carried persons or
13		property for hire in interstate commerce for greater than 50%
14		of its total trips for that period or for greater than 50% of
15		its total miles for that period. The person claiming the
16		exemption for a trailer or trailers that will not be dedicated
17		to a motor vehicle or group of motor vehicles shall make an
18		election at the time of purchase to use either the trips or
19		mileage method. Persons who purchased trailers prior to July 1,
20		2004 that are not dedicated to a motor vehicle or group of
21		motor vehicles shall make an election to use either the trips
22		or mileage method and document that election in their books and
23		records. If no election is made under this subsection to use
24		the trips or mileage method, the person shall be deemed to have
25		chosen the mileage method. Any election to use either the trips
26		or mileage method will remain in effect for that trailer for
27		any period for which the Department may issue a notice of tax
28		liability under this Act.
29		For purposes of determining qualifying trips or miles,
30		trailers, semitrailers, or pole trailers that carry property
31		for hire, even just between points in Illinois, will be
32		considered used for hire in interstate commerce if the
33		trailers, semitrailers, or pole trailers transport property
34		whose shipments originate or terminate outside Illinois. This

1		definition applies to all property purchased for the purpose of
2		being attached to those trailers, semitrailers, or pole
3		trailers as a part thereof. In lieu of a person providing
4		documentation regarding the qualifying use of each individual
5		trailer, semitrailer, or pole trailer, that person may document
6		such qualifying use by providing documentation of the
7		following:
8		(1) If a trailer, semitrailer, or pole trailer is
9		dedicated to a motor vehicle that qualifies as rolling
10		stock moving in interstate commerce under subsection (c) of
11		this Section, then that trailer, semitrailer, or pole
12		trailer qualifies as rolling stock moving in interstate
13		commerce under this subsection.
14		(2) If a trailer, semitrailer, or pole trailer is
15		dedicated to a group of motor vehicles that all qualify as
16		rolling stock moving in interstate commerce under
17		subsection (c) of this Section, then that trailer,
18		semitrailer, or pole trailer qualifies as rolling stock
19		moving in interstate commerce under this subsection.
20		(3) If one or more trailers, semitrailers, or pole
21		trailers are dedicated to a group of motor vehicles and not
22		all of those motor vehicles in that group qualify as
23		rolling stock moving in interstate commerce under
24		subsection (c) of this Section, then the percentage of
25		those trailers, semitrailers, or pole trailers that
26		qualifies as rolling stock moving in interstate commerce
27		under this subsection is equal to the percentage of those
28		motor vehicles in that group that qualify as rolling stock
29		moving in interstate commerce under subsection (c) of this
30		Section to which those trailer, semitrailers, or pole
31		trailers are dedicated. However, to determine the
32		qualification for the exemption provided under this item
33		(3), the mathematical application of the qualifying
34		percentage to one or more trailers, semitrailers, or pole

1		trailers under this subpart shall not be allowed as to any
2		fraction of a trailer, semitrailer, or pole trailer.
3		(Source: P.A. 93-23, eff. 6-20-03.)

4		Section 30. The Illinois Vehicle Code is amended by
5		changing Section 3-815.1 as follows:
6		(625 ILCS 5/3-815.1)
7		Sec. 3-815.1. Commercial distribution fee. Beginning July
8		1, 2003, in addition to any tax or fee imposed under this Code:
9		(a) Vehicles of the second division with a gross
10		vehicle weight that exceeds 8,000 pounds and that incur any
11		tax or fee under subsection (a) of Section 3-815 of this
12		Code or subsection (a) of Section 3-818 of this Code, as
13		applicable, and shall pay to the Secretary of State a
14		commercial distribution fee, for each registration year,
15		for the use of the public highways, State infrastructure,
16		and State services, in an amount equal to: (i) for a
17		registration year beginning on or after July 1, 2003 and
18		before July 1, 2005, 36% of the taxes and fees incurred
19		under subsection (a) of Section 3-815 of this Code, or
20		subsection (a) of Section 3-818 of this Code, as
21		applicable, rounded up to the nearest whole dollar; (ii)
22		for a registration year beginning on or after July 1, 2005
23		and before July 1, 2006, 21.5% of the taxes and fees
24		incurred under subsection (a) of Section 3-815 of this
25		Code, or subsection (a) of Section 3-818 of this Code, as
26		applicable, rounded up to the nearest whole dollar; and
27		(iii) for a registration year beginning on or after July 1,
28		2006, 14.35% of the taxes and fees incurred under
29		subsection (a) of Section 3-815 of this Code, or subsection
30		(a) of Section 3-818 of this Code, as applicable, rounded
31		up to the nearest whole dollar.
32		(b) Until June 30, 2004, vehicles Vehicles of the

1		second division with a gross vehicle weight of 8,000 pounds
2		or less and that incur any tax or fee under subsection (a)
3		of Section 3-815 of this Code or subsection (a) of Section
4		3-818 of this Code, as applicable, and have claimed the
5		rolling stock exemption under the Retailers' Occupation
6		Tax Act, Use Tax Act, Service Occupation Tax Act, or
7		Service Use Tax Act shall pay to the Illinois Department of
8		Revenue (or the Secretary of State under an
9		intergovernmental agreement) a commercial distribution
10		fee, for each registration year, for the use of the public
11		highways, State infrastructure, and State services, in an
12		amount equal to 36% of the taxes and fees incurred under
13		subsection (a) of Section 3-815 of this Code or subsection
14		(a) of Section 3-818 of this Code, as applicable, rounded
15		up to the nearest whole dollar.
16		The fees paid under this Section shall be deposited by the
17		Secretary of State into the General Revenue Fund.
18		(Source: P.A. 93-23, eff. 6-20-03; revised 10-9-03.)

Section 99. Effective date. This Act takes effect July 1, 2004.".