Rep. Chad Hays

Filed: 4/8/2013

 

 


 

 


 
09800HB1619ham001LRB098 06035 HLH 44057 a

1
AMENDMENT TO HOUSE BILL 1619

2    AMENDMENT NO. ______. Amend House Bill 1619 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Use Tax Act is amended by changing Section
52 as follows:
 
6    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
7    Sec. 2. "Use" means the exercise by any person of any right
8or power over tangible personal property incident to the
9ownership of that property, except that it does not include the
10sale of such property in any form as tangible personal property
11in the regular course of business to the extent that such
12property is not first subjected to a use for which it was
13purchased, and does not include the use of such property by its
14owner for demonstration purposes: Provided that the property
15purchased is deemed to be purchased for the purpose of resale,
16despite first being used, to the extent to which it is resold

 

 

09800HB1619ham001- 2 -LRB098 06035 HLH 44057 a

1as an ingredient of an intentionally produced product or
2by-product of manufacturing. "Use" does not mean the
3demonstration use or interim use of tangible personal property
4by a retailer before he sells that tangible personal property.
5For watercraft or aircraft, if the period of demonstration use
6or interim use by the retailer exceeds 18 months, the retailer
7shall pay on the retailers' original cost price the tax imposed
8by this Act, and no credit for that tax is permitted if the
9watercraft or aircraft is subsequently sold by the retailer.
10"Use" does not mean the physical incorporation of tangible
11personal property, to the extent not first subjected to a use
12for which it was purchased, as an ingredient or constituent,
13into other tangible personal property (a) which is sold in the
14regular course of business or (b) which the person
15incorporating such ingredient or constituent therein has
16undertaken at the time of such purchase to cause to be
17transported in interstate commerce to destinations outside the
18State of Illinois: Provided that the property purchased is
19deemed to be purchased for the purpose of resale, despite first
20being used, to the extent to which it is resold as an
21ingredient of an intentionally produced product or by-product
22of manufacturing.
23    "Watercraft" means a Class 2, Class 3, or Class 4
24watercraft as defined in Section 3-2 of the Boat Registration
25and Safety Act, a personal watercraft, or any boat equipped
26with an inboard motor.

 

 

09800HB1619ham001- 3 -LRB098 06035 HLH 44057 a

1    "Purchase at retail" means the acquisition of the ownership
2of or title to tangible personal property through a sale at
3retail.
4    "Purchaser" means anyone who, through a sale at retail,
5acquires the ownership of tangible personal property for a
6valuable consideration.
7    "Sale at retail" means any transfer of the ownership of or
8title to tangible personal property to a purchaser, for the
9purpose of use, and not for the purpose of resale in any form
10as tangible personal property to the extent not first subjected
11to a use for which it was purchased, for a valuable
12consideration: Provided that the property purchased is deemed
13to be purchased for the purpose of resale, despite first being
14used, to the extent to which it is resold as an ingredient of
15an intentionally produced product or by-product of
16manufacturing. For this purpose, slag produced as an incident
17to manufacturing pig iron or steel and sold is considered to be
18an intentionally produced by-product of manufacturing. "Sale
19at retail" includes any such transfer made for resale unless
20made in compliance with Section 2c of the Retailers' Occupation
21Tax Act, as incorporated by reference into Section 12 of this
22Act. Transactions whereby the possession of the property is
23transferred but the seller retains the title as security for
24payment of the selling price are sales.
25    "Sale at retail" shall also be construed to include any
26Illinois florist's sales transaction in which the purchase

 

 

09800HB1619ham001- 4 -LRB098 06035 HLH 44057 a

1order is received in Illinois by a florist and the sale is for
2use or consumption, but the Illinois florist has a florist in
3another state deliver the property to the purchaser or the
4purchaser's donee in such other state.
5    Nonreusable tangible personal property that is used by
6persons engaged in the business of operating a restaurant,
7cafeteria, or drive-in is a sale for resale when it is
8transferred to customers in the ordinary course of business as
9part of the sale of food or beverages and is used to deliver,
10package, or consume food or beverages, regardless of where
11consumption of the food or beverages occurs. Examples of those
12items include, but are not limited to nonreusable, paper and
13plastic cups, plates, baskets, boxes, sleeves, buckets or other
14containers, utensils, straws, placemats, napkins, doggie bags,
15and wrapping or packaging materials that are transferred to
16customers as part of the sale of food or beverages in the
17ordinary course of business.
18    The purchase, employment and transfer of such tangible
19personal property as newsprint and ink for the primary purpose
20of conveying news (with or without other information) is not a
21purchase, use or sale of tangible personal property.
22    "Selling price" means the consideration for a sale valued
23in money whether received in money or otherwise, including
24cash, credits, property other than as hereinafter provided, and
25services, but not including the value of or credit given for
26traded-in tangible personal property where the item that is

 

 

09800HB1619ham001- 5 -LRB098 06035 HLH 44057 a

1traded-in is of like kind and character as that which is being
2sold, and shall be determined without any deduction on account
3of the cost of the property sold, the cost of materials used,
4labor or service cost or any other expense whatsoever, but does
5not include interest or finance charges which appear as
6separate items on the bill of sale or sales contract nor
7charges that are added to prices by sellers on account of the
8seller's tax liability under the "Retailers' Occupation Tax
9Act", or on account of the seller's duty to collect, from the
10purchaser, the tax that is imposed by this Act, or, except as
11otherwise provided with respect to any cigarette tax imposed by
12a home rule unit, on account of the seller's tax liability
13under any local occupation tax administered by the Department,
14or, except as otherwise provided with respect to any cigarette
15tax imposed by a home rule unit on account of the seller's duty
16to collect, from the purchasers, the tax that is imposed under
17any local use tax administered by the Department. Effective
18December 1, 1985, "selling price" shall include charges that
19are added to prices by sellers on account of the seller's tax
20liability under the Cigarette Tax Act, on account of the
21seller's duty to collect, from the purchaser, the tax imposed
22under the Cigarette Use Tax Act, and on account of the seller's
23duty to collect, from the purchaser, any cigarette tax imposed
24by a home rule unit. With respect to sales of cellular
25telephones or other wireless cellular devices, the term
26"selling price" does not include consideration paid by a

 

 

09800HB1619ham001- 6 -LRB098 06035 HLH 44057 a

1third-party cellular service provider. The changes made by this
2amendatory Act of the 98th General Assembly are declarative of
3existing law.
4    "Wireless cellular device" means any wireless
5communication device that provides for voice or data
6communication between 2 or more parties, including, but not
7limited to, a text messaging device or other device that sends
8or receives messages or electronic data.
9    The phrase "like kind and character" shall be liberally
10construed (including but not limited to any form of motor
11vehicle for any form of motor vehicle, or any kind of farm or
12agricultural implement for any other kind of farm or
13agricultural implement), while not including a kind of item
14which, if sold at retail by that retailer, would be exempt from
15retailers' occupation tax and use tax as an isolated or
16occasional sale.
17    "Department" means the Department of Revenue.
18    "Person" means any natural individual, firm, partnership,
19association, joint stock company, joint adventure, public or
20private corporation, limited liability company, or a receiver,
21executor, trustee, guardian or other representative appointed
22by order of any court.
23    "Retailer" means and includes every person engaged in the
24business of making sales at retail as defined in this Section.
25    A person who holds himself or herself out as being engaged
26(or who habitually engages) in selling tangible personal

 

 

09800HB1619ham001- 7 -LRB098 06035 HLH 44057 a

1property at retail is a retailer hereunder with respect to such
2sales (and not primarily in a service occupation)
3notwithstanding the fact that such person designs and produces
4such tangible personal property on special order for the
5purchaser and in such a way as to render the property of value
6only to such purchaser, if such tangible personal property so
7produced on special order serves substantially the same
8function as stock or standard items of tangible personal
9property that are sold at retail.
10    A person whose activities are organized and conducted
11primarily as a not-for-profit service enterprise, and who
12engages in selling tangible personal property at retail
13(whether to the public or merely to members and their guests)
14is a retailer with respect to such transactions, excepting only
15a person organized and operated exclusively for charitable,
16religious or educational purposes either (1), to the extent of
17sales by such person to its members, students, patients or
18inmates of tangible personal property to be used primarily for
19the purposes of such person, or (2), to the extent of sales by
20such person of tangible personal property which is not sold or
21offered for sale by persons organized for profit. The selling
22of school books and school supplies by schools at retail to
23students is not "primarily for the purposes of" the school
24which does such selling. This paragraph does not apply to nor
25subject to taxation occasional dinners, social or similar
26activities of a person organized and operated exclusively for

 

 

09800HB1619ham001- 8 -LRB098 06035 HLH 44057 a

1charitable, religious or educational purposes, whether or not
2such activities are open to the public.
3    A person who is the recipient of a grant or contract under
4Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
5serves meals to participants in the federal Nutrition Program
6for the Elderly in return for contributions established in
7amount by the individual participant pursuant to a schedule of
8suggested fees as provided for in the federal Act is not a
9retailer under this Act with respect to such transactions.
10    Persons who engage in the business of transferring tangible
11personal property upon the redemption of trading stamps are
12retailers hereunder when engaged in such business.
13    The isolated or occasional sale of tangible personal
14property at retail by a person who does not hold himself out as
15being engaged (or who does not habitually engage) in selling
16such tangible personal property at retail or a sale through a
17bulk vending machine does not make such person a retailer
18hereunder. However, any person who is engaged in a business
19which is not subject to the tax imposed by the "Retailers'
20Occupation Tax Act" because of involving the sale of or a
21contract to sell real estate or a construction contract to
22improve real estate, but who, in the course of conducting such
23business, transfers tangible personal property to users or
24consumers in the finished form in which it was purchased, and
25which does not become real estate, under any provision of a
26construction contract or real estate sale or real estate sales

 

 

09800HB1619ham001- 9 -LRB098 06035 HLH 44057 a

1agreement entered into with some other person arising out of or
2because of such nontaxable business, is a retailer to the
3extent of the value of the tangible personal property so
4transferred. If, in such transaction, a separate charge is made
5for the tangible personal property so transferred, the value of
6such property, for the purposes of this Act, is the amount so
7separately charged, but not less than the cost of such property
8to the transferor; if no separate charge is made, the value of
9such property, for the purposes of this Act, is the cost to the
10transferor of such tangible personal property.
11    "Retailer maintaining a place of business in this State",
12or any like term, means and includes any of the following
13retailers:
14        1. A retailer having or maintaining within this State,
15    directly or by a subsidiary, an office, distribution house,
16    sales house, warehouse or other place of business, or any
17    agent or other representative operating within this State
18    under the authority of the retailer or its subsidiary,
19    irrespective of whether such place of business or agent or
20    other representative is located here permanently or
21    temporarily, or whether such retailer or subsidiary is
22    licensed to do business in this State. However, the
23    ownership of property that is located at the premises of a
24    printer with which the retailer has contracted for printing
25    and that consists of the final printed product, property
26    that becomes a part of the final printed product, or copy

 

 

09800HB1619ham001- 10 -LRB098 06035 HLH 44057 a

1    from which the printed product is produced shall not result
2    in the retailer being deemed to have or maintain an office,
3    distribution house, sales house, warehouse, or other place
4    of business within this State.
5        1.1. Beginning July 1, 2011, a retailer having a
6    contract with a person located in this State under which
7    the person, for a commission or other consideration based
8    upon the sale of tangible personal property by the
9    retailer, directly or indirectly refers potential
10    customers to the retailer by a link on the person's
11    Internet website. The provisions of this paragraph 1.1
12    shall apply only if the cumulative gross receipts from
13    sales of tangible personal property by the retailer to
14    customers who are referred to the retailer by all persons
15    in this State under such contracts exceed $10,000 during
16    the preceding 4 quarterly periods ending on the last day of
17    March, June, September, and December.
18        1.2. Beginning July 1, 2011, a retailer having a
19    contract with a person located in this State under which:
20            A. the retailer sells the same or substantially
21        similar line of products as the person located in this
22        State and does so using an identical or substantially
23        similar name, trade name, or trademark as the person
24        located in this State; and
25            B. the retailer provides a commission or other
26        consideration to the person located in this State based

 

 

09800HB1619ham001- 11 -LRB098 06035 HLH 44057 a

1        upon the sale of tangible personal property by the
2        retailer.
3    The provisions of this paragraph 1.2 shall apply only if
4    the cumulative gross receipts from sales of tangible
5    personal property by the retailer to customers in this
6    State under all such contracts exceed $10,000 during the
7    preceding 4 quarterly periods ending on the last day of
8    March, June, September, and December.
9        2. A retailer soliciting orders for tangible personal
10    property by means of a telecommunication or television
11    shopping system (which utilizes toll free numbers) which is
12    intended by the retailer to be broadcast by cable
13    television or other means of broadcasting, to consumers
14    located in this State.
15        3. A retailer, pursuant to a contract with a
16    broadcaster or publisher located in this State, soliciting
17    orders for tangible personal property by means of
18    advertising which is disseminated primarily to consumers
19    located in this State and only secondarily to bordering
20    jurisdictions.
21        4. A retailer soliciting orders for tangible personal
22    property by mail if the solicitations are substantial and
23    recurring and if the retailer benefits from any banking,
24    financing, debt collection, telecommunication, or
25    marketing activities occurring in this State or benefits
26    from the location in this State of authorized installation,

 

 

09800HB1619ham001- 12 -LRB098 06035 HLH 44057 a

1    servicing, or repair facilities.
2        5. A retailer that is owned or controlled by the same
3    interests that own or control any retailer engaging in
4    business in the same or similar line of business in this
5    State.
6        6. A retailer having a franchisee or licensee operating
7    under its trade name if the franchisee or licensee is
8    required to collect the tax under this Section.
9        7. A retailer, pursuant to a contract with a cable
10    television operator located in this State, soliciting
11    orders for tangible personal property by means of
12    advertising which is transmitted or distributed over a
13    cable television system in this State.
14        8. A retailer engaging in activities in Illinois, which
15    activities in the state in which the retail business
16    engaging in such activities is located would constitute
17    maintaining a place of business in that state.
18    "Bulk vending machine" means a vending machine, containing
19unsorted confections, nuts, toys, or other items designed
20primarily to be used or played with by children which, when a
21coin or coins of a denomination not larger than $0.50 are
22inserted, are dispensed in equal portions, at random and
23without selection by the customer.
24(Source: P.A. 95-723, eff. 6-23-08; 96-1544, eff. 3-10-11.)
 
25    Section 10. The Service Use Tax Act is amended by changing

 

 

09800HB1619ham001- 13 -LRB098 06035 HLH 44057 a

1Section 2 as follows:
 
2    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
3    Sec. 2. "Use" means the exercise by any person of any right
4or power over tangible personal property incident to the
5ownership of that property, but does not include the sale or
6use for demonstration by him of that property in any form as
7tangible personal property in the regular course of business.
8"Use" does not mean the interim use of tangible personal
9property nor the physical incorporation of tangible personal
10property, as an ingredient or constituent, into other tangible
11personal property, (a) which is sold in the regular course of
12business or (b) which the person incorporating such ingredient
13or constituent therein has undertaken at the time of such
14purchase to cause to be transported in interstate commerce to
15destinations outside the State of Illinois.
16    "Purchased from a serviceman" means the acquisition of the
17ownership of, or title to, tangible personal property through a
18sale of service.
19    "Purchaser" means any person who, through a sale of
20service, acquires the ownership of, or title to, any tangible
21personal property.
22    "Cost price" means the consideration paid by the serviceman
23for a purchase valued in money, whether paid in money or
24otherwise, including cash, credits and services, and shall be
25determined without any deduction on account of the supplier's

 

 

09800HB1619ham001- 14 -LRB098 06035 HLH 44057 a

1cost of the property sold or on account of any other expense
2incurred by the supplier. When a serviceman contracts out part
3or all of the services required in his sale of service, it
4shall be presumed that the cost price to the serviceman of the
5property transferred to him or her by his or her subcontractor
6is equal to 50% of the subcontractor's charges to the
7serviceman in the absence of proof of the consideration paid by
8the subcontractor for the purchase of such property.
9    "Selling price" means the consideration for a sale valued
10in money whether received in money or otherwise, including
11cash, credits and service, and shall be determined without any
12deduction on account of the serviceman's cost of the property
13sold, the cost of materials used, labor or service cost or any
14other expense whatsoever, but does not include interest or
15finance charges which appear as separate items on the bill of
16sale or sales contract nor charges that are added to prices by
17sellers on account of the seller's duty to collect, from the
18purchaser, the tax that is imposed by this Act. With respect to
19sales of cellular telephones or other wireless cellular
20devices, the term "selling price" does not include
21consideration paid by a third-party cellular service provider.
22The changes made by this amendatory Act of the 98th General
23Assembly are declarative of existing law.
24    "Wireless cellular device" means any wireless
25communication device that provides for voice or data
26communication between 2 or more parties, including, but not

 

 

09800HB1619ham001- 15 -LRB098 06035 HLH 44057 a

1limited to, a text messaging device or other device that sends
2or receives messages or electronic data.
3    "Department" means the Department of Revenue.
4    "Person" means any natural individual, firm, partnership,
5association, joint stock company, joint venture, public or
6private corporation, limited liability company, and any
7receiver, executor, trustee, guardian or other representative
8appointed by order of any court.
9    "Sale of service" means any transaction except:
10        (1) a retail sale of tangible personal property taxable
11    under the Retailers' Occupation Tax Act or under the Use
12    Tax Act.
13        (2) a sale of tangible personal property for the
14    purpose of resale made in compliance with Section 2c of the
15    Retailers' Occupation Tax Act.
16        (3) except as hereinafter provided, a sale or transfer
17    of tangible personal property as an incident to the
18    rendering of service for or by any governmental body, or
19    for or by any corporation, society, association,
20    foundation or institution organized and operated
21    exclusively for charitable, religious or educational
22    purposes or any not-for-profit corporation, society,
23    association, foundation, institution or organization which
24    has no compensated officers or employees and which is
25    organized and operated primarily for the recreation of
26    persons 55 years of age or older. A limited liability

 

 

09800HB1619ham001- 16 -LRB098 06035 HLH 44057 a

1    company may qualify for the exemption under this paragraph
2    only if the limited liability company is organized and
3    operated exclusively for educational purposes.
4        (4) a sale or transfer of tangible personal property as
5    an incident to the rendering of service for interstate
6    carriers for hire for use as rolling stock moving in
7    interstate commerce or by lessors under a lease of one year
8    or longer, executed or in effect at the time of purchase of
9    personal property, to interstate carriers for hire for use
10    as rolling stock moving in interstate commerce so long as
11    so used by such interstate carriers for hire, and equipment
12    operated by a telecommunications provider, licensed as a
13    common carrier by the Federal Communications Commission,
14    which is permanently installed in or affixed to aircraft
15    moving in interstate commerce.
16        (4a) a sale or transfer of tangible personal property
17    as an incident to the rendering of service for owners,
18    lessors, or shippers of tangible personal property which is
19    utilized by interstate carriers for hire for use as rolling
20    stock moving in interstate commerce so long as so used by
21    interstate carriers for hire, and equipment operated by a
22    telecommunications provider, licensed as a common carrier
23    by the Federal Communications Commission, which is
24    permanently installed in or affixed to aircraft moving in
25    interstate commerce.
26        (4a-5) on and after July 1, 2003 and through June 30,

 

 

09800HB1619ham001- 17 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 18 -LRB098 06035 HLH 44057 a

1    person, whether the materials used in the process are owned
2    by the manufacturer or some other person, or whether such
3    sale or lease is made apart from or as an incident to the
4    seller's engaging in a service occupation and the
5    applicable tax is a Service Use Tax or Service Occupation
6    Tax, rather than Use Tax or Retailers' Occupation Tax.
7        (5a) the repairing, reconditioning or remodeling, for
8    a common carrier by rail, of tangible personal property
9    which belongs to such carrier for hire, and as to which
10    such carrier receives the physical possession of the
11    repaired, reconditioned or remodeled item of tangible
12    personal property in Illinois, and which such carrier
13    transports, or shares with another common carrier in the
14    transportation of such property, out of Illinois on a
15    standard uniform bill of lading showing the person who
16    repaired, reconditioned or remodeled the property to a
17    destination outside Illinois, for use outside Illinois.
18        (5b) a sale or transfer of tangible personal property
19    which is produced by the seller thereof on special order in
20    such a way as to have made the applicable tax the Service
21    Occupation Tax or the Service Use Tax, rather than the
22    Retailers' Occupation Tax or the Use Tax, for an interstate
23    carrier by rail which receives the physical possession of
24    such property in Illinois, and which transports such
25    property, or shares with another common carrier in the
26    transportation of such property, out of Illinois on a

 

 

09800HB1619ham001- 19 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 20 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 21 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 22 -LRB098 06035 HLH 44057 a

1immediate change upon a product being manufactured or assembled
2for wholesale or retail sale or lease. The purchaser of such
3machinery and equipment who has an active resale registration
4number shall furnish such number to the seller at the time of
5purchase. The user of such machinery and equipment and tools
6without an active resale registration number shall prepare a
7certificate of exemption for each transaction stating facts
8establishing the exemption for that transaction, which
9certificate shall be available to the Department for inspection
10or audit. The Department shall prescribe the form of the
11certificate.
12    Any informal rulings, opinions or letters issued by the
13Department in response to an inquiry or request for any opinion
14from any person regarding the coverage and applicability of
15exemption (5) to specific devices shall be published,
16maintained as a public record, and made available for public
17inspection and copying. If the informal ruling, opinion or
18letter contains trade secrets or other confidential
19information, where possible the Department shall delete such
20information prior to publication. Whenever such informal
21rulings, opinions, or letters contain any policy of general
22applicability, the Department shall formulate and adopt such
23policy as a rule in accordance with the provisions of the
24Illinois Administrative Procedure Act.
25    On and after July 1, 1987, no entity otherwise eligible
26under exemption (3) of this Section shall make tax free

 

 

09800HB1619ham001- 23 -LRB098 06035 HLH 44057 a

1purchases unless it has an active exemption identification
2number issued by the Department.
3    The purchase, employment and transfer of such tangible
4personal property as newsprint and ink for the primary purpose
5of conveying news (with or without other information) is not a
6purchase, use or sale of service or of tangible personal
7property within the meaning of this Act.
8    "Serviceman" means any person who is engaged in the
9occupation of making sales of service.
10    "Sale at retail" means "sale at retail" as defined in the
11Retailers' Occupation Tax Act.
12    "Supplier" means any person who makes sales of tangible
13personal property to servicemen for the purpose of resale as an
14incident to a sale of service.
15    "Serviceman maintaining a place of business in this State",
16or any like term, means and includes any serviceman:
17        1. having or maintaining within this State, directly or
18    by a subsidiary, an office, distribution house, sales
19    house, warehouse or other place of business, or any agent
20    or other representative operating within this State under
21    the authority of the serviceman or its subsidiary,
22    irrespective of whether such place of business or agent or
23    other representative is located here permanently or
24    temporarily, or whether such serviceman or subsidiary is
25    licensed to do business in this State;
26        1.1. beginning July 1, 2011, having a contract with a

 

 

09800HB1619ham001- 24 -LRB098 06035 HLH 44057 a

1    person located in this State under which the person, for a
2    commission or other consideration based on the sale of
3    service by the serviceman, directly or indirectly refers
4    potential customers to the serviceman by a link on the
5    person's Internet website. The provisions of this
6    paragraph 1.1 shall apply only if the cumulative gross
7    receipts from sales of service by the serviceman to
8    customers who are referred to the serviceman by all persons
9    in this State under such contracts exceed $10,000 during
10    the preceding 4 quarterly periods ending on the last day of
11    March, June, September, and December;
12        1.2. beginning July 1, 2011, having a contract with a
13    person located in this State under which:
14            A. the serviceman sells the same or substantially
15        similar line of services as the person located in this
16        State and does so using an identical or substantially
17        similar name, trade name, or trademark as the person
18        located in this State; and
19            B. the serviceman provides a commission or other
20        consideration to the person located in this State based
21        upon the sale of services by the serviceman.
22    The provisions of this paragraph 1.2 shall apply only if
23    the cumulative gross receipts from sales of service by the
24    serviceman to customers in this State under all such
25    contracts exceed $10,000 during the preceding 4 quarterly
26    periods ending on the last day of March, June, September,

 

 

09800HB1619ham001- 25 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 26 -LRB098 06035 HLH 44057 a

1    tangible personal property by means of advertising which is
2    transmitted or distributed over a cable television system
3    in this State; or
4        8. engaging in activities in Illinois, which
5    activities in the state in which the supply business
6    engaging in such activities is located would constitute
7    maintaining a place of business in that state.
8(Source: P.A. 96-1544, eff. 3-10-11.)
 
9    Section 15. The Retailers' Occupation Tax Act is amended by
10changing Section 1 as follows:
 
11    (35 ILCS 120/1)  (from Ch. 120, par. 440)
12    Sec. 1. Definitions. "Sale at retail" means any transfer of
13the ownership of or title to tangible personal property to a
14purchaser, for the purpose of use or consumption, and not for
15the purpose of resale in any form as tangible personal property
16to the extent not first subjected to a use for which it was
17purchased, for a valuable consideration: Provided that the
18property purchased is deemed to be purchased for the purpose of
19resale, despite first being used, to the extent to which it is
20resold as an ingredient of an intentionally produced product or
21byproduct of manufacturing. For this purpose, slag produced as
22an incident to manufacturing pig iron or steel and sold is
23considered to be an intentionally produced byproduct of
24manufacturing. Transactions whereby the possession of the

 

 

09800HB1619ham001- 27 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 28 -LRB098 06035 HLH 44057 a

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

 

 

09800HB1619ham001- 29 -LRB098 06035 HLH 44057 a

1patients or inmates of tangible personal property to be used
2primarily for the purposes of such person, or (2), to the
3extent of sales by such person of tangible personal property
4which is not sold or offered for sale by persons organized for
5profit. The selling of school books and school supplies by
6schools at retail to students is not "primarily for the
7purposes of" the school which does such selling. The provisions
8of this paragraph shall not apply to nor subject to taxation
9occasional dinners, socials or similar activities of a person
10organized and operated exclusively for charitable, religious
11or educational purposes, whether or not such activities are
12open to the public.
13    A person who is the recipient of a grant or contract under
14Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
15serves meals to participants in the federal Nutrition Program
16for the Elderly in return for contributions established in
17amount by the individual participant pursuant to a schedule of
18suggested fees as provided for in the federal Act is not
19engaged in the business of selling tangible personal property
20at retail with respect to such transactions.
21    "Purchaser" means anyone who, through a sale at retail,
22acquires the ownership of or title to tangible personal
23property for a valuable consideration.
24    "Reseller of motor fuel" means any person engaged in the
25business of selling or delivering or transferring title of
26motor fuel to another person other than for use or consumption.

 

 

09800HB1619ham001- 30 -LRB098 06035 HLH 44057 a

1No person shall act as a reseller of motor fuel within this
2State without first being registered as a reseller pursuant to
3Section 2c or a retailer pursuant to Section 2a.
4    "Selling price" or the "amount of sale" means the
5consideration for a sale valued in money whether received in
6money or otherwise, including cash, credits, property, other
7than as hereinafter provided, and services, but not including
8the value of or credit given for traded-in tangible personal
9property where the item that is traded-in is of like kind and
10character as that which is being sold, and shall be determined
11without any deduction on account of the cost of the property
12sold, the cost of materials used, labor or service cost or any
13other expense whatsoever, but does not include charges that are
14added to prices by sellers on account of the seller's tax
15liability under this Act, or on account of the seller's duty to
16collect, from the purchaser, the tax that is imposed by the Use
17Tax Act, or, except as otherwise provided with respect to any
18cigarette tax imposed by a home rule unit, on account of the
19seller's tax liability under any local occupation tax
20administered by the Department, or, except as otherwise
21provided with respect to any cigarette tax imposed by a home
22rule unit on account of the seller's duty to collect, from the
23purchasers, the tax that is imposed under any local use tax
24administered by the Department. Effective December 1, 1985,
25"selling price" shall include charges that are added to prices
26by sellers on account of the seller's tax liability under the

 

 

09800HB1619ham001- 31 -LRB098 06035 HLH 44057 a

1Cigarette Tax Act, on account of the sellers' duty to collect,
2from the purchaser, the tax imposed under the Cigarette Use Tax
3Act, and on account of the seller's duty to collect, from the
4purchaser, any cigarette tax imposed by a home rule unit. With
5respect to sales of cellular telephones or other wireless
6cellular devices, the term "selling price" does not include
7consideration paid by a third-party cellular service provider.
8The changes made by this amendatory Act of the 98th General
9Assembly are declarative of existing law.
10    The phrase "like kind and character" shall be liberally
11construed (including but not limited to any form of motor
12vehicle for any form of motor vehicle, or any kind of farm or
13agricultural implement for any other kind of farm or
14agricultural implement), while not including a kind of item
15which, if sold at retail by that retailer, would be exempt from
16retailers' occupation tax and use tax as an isolated or
17occasional sale.
18    "Gross receipts" from the sales of tangible personal
19property at retail means the total selling price or the amount
20of such sales, as hereinbefore defined. In the case of charge
21and time sales, the amount thereof shall be included only as
22and when payments are received by the seller. Receipts or other
23consideration derived by a seller from the sale, transfer or
24assignment of accounts receivable to a wholly owned subsidiary
25will not be deemed payments prior to the time the purchaser
26makes payment on such accounts. With respect to sales of

 

 

09800HB1619ham001- 32 -LRB098 06035 HLH 44057 a

1cellular telephones or other wireless cellular devices, the
2term "gross receipts" does not include consideration paid by a
3third-party cellular service provider. The changes made by this
4amendatory Act of the 98th General Assembly are declarative of
5existing law.
6    "Wireless cellular device" means any wireless
7communication device that provides for voice or data
8communication between 2 or more parties, including, but not
9limited to, a text messaging device or other device that sends
10or receives messages or electronic data.
11    "Department" means the Department of Revenue.
12    "Person" means any natural individual, firm, partnership,
13association, joint stock company, joint adventure, public or
14private corporation, limited liability company, or a receiver,
15executor, trustee, guardian or other representative appointed
16by order of any court.
17    The isolated or occasional sale of tangible personal
18property at retail by a person who does not hold himself out as
19being engaged (or who does not habitually engage) in selling
20such tangible personal property at retail, or a sale through a
21bulk vending machine, does not constitute engaging in a
22business of selling such tangible personal property at retail
23within the meaning of this Act; provided that any person who is
24engaged in a business which is not subject to the tax imposed
25by this Act because of involving the sale of or a contract to
26sell real estate or a construction contract to improve real

 

 

09800HB1619ham001- 33 -LRB098 06035 HLH 44057 a

1estate or a construction contract to engineer, install, and
2maintain an integrated system of products, but who, in the
3course of conducting such business, transfers tangible
4personal property to users or consumers in the finished form in
5which it was purchased, and which does not become real estate
6or was not engineered and installed, under any provision of a
7construction contract or real estate sale or real estate sales
8agreement entered into with some other person arising out of or
9because of such nontaxable business, is engaged in the business
10of selling tangible personal property at retail to the extent
11of the value of the tangible personal property so transferred.
12If, in such a transaction, a separate charge is made for the
13tangible personal property so transferred, the value of such
14property, for the purpose of this Act, shall be the amount so
15separately charged, but not less than the cost of such property
16to the transferor; if no separate charge is made, the value of
17such property, for the purposes of this Act, is the cost to the
18transferor of such tangible personal property. Construction
19contracts for the improvement of real estate consisting of
20engineering, installation, and maintenance of voice, data,
21video, security, and all telecommunication systems do not
22constitute engaging in a business of selling tangible personal
23property at retail within the meaning of this Act if they are
24sold at one specified contract price.
25    A person who holds himself or herself out as being engaged
26(or who habitually engages) in selling tangible personal

 

 

09800HB1619ham001- 34 -LRB098 06035 HLH 44057 a

1property at retail is a person engaged in the business of
2selling tangible personal property at retail hereunder with
3respect to such sales (and not primarily in a service
4occupation) notwithstanding the fact that such person designs
5and produces such tangible personal property on special order
6for the purchaser and in such a way as to render the property
7of value only to such purchaser, if such tangible personal
8property so produced on special order serves substantially the
9same function as stock or standard items of tangible personal
10property that are sold at retail.
11    Persons who engage in the business of transferring tangible
12personal property upon the redemption of trading stamps are
13engaged in the business of selling such property at retail and
14shall be liable for and shall pay the tax imposed by this Act
15on the basis of the retail value of the property transferred
16upon redemption of such stamps.
17    "Bulk vending machine" means a vending machine, containing
18unsorted confections, nuts, toys, or other items designed
19primarily to be used or played with by children which, when a
20coin or coins of a denomination not larger than $0.50 are
21inserted, are dispensed in equal portions, at random and
22without selection by the customer.
23(Source: P.A. 95-723, eff. 6-23-08.)
 
24    Section 99. Effective date. This Act takes effect upon
25becoming law.".