HB0714sam003 93RD GENERAL ASSEMBLY

Sen. George P. Shadid

Filed: 6/25/2004

09300HB0714sam003 LRB093 05817 MKM 52110 a

AMENDMENT TO HOUSE BILL 714

AMENDMENT NO. ______. Amend House Bill 714, AS AMENDED, by replacing everything after the enacting clause with the following:

5		"(35 ILCS 5/215 rep.)
6		Section 5. The Illinois Income Tax Act is amended by
7		repealing Section 215.

8		Section 10. The Use Tax Act is amended by changing Sections
9		3-5 and 3-61 as follows:
10		(35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
11		Sec. 3-5. Exemptions. Use of the following tangible
12		personal property is exempt from the tax imposed by this Act:
13		(1) Personal property purchased from a corporation,
14		society, association, foundation, institution, or
15		organization, other than a limited liability company, that is
16		organized and operated as a not-for-profit service enterprise
17		for the benefit of persons 65 years of age or older if the
18		personal property was not purchased by the enterprise for the
19		purpose of resale by the enterprise.
20		(2) Personal property purchased by a not-for-profit
21		Illinois county fair association for use in conducting,
22		operating, or promoting the county fair.
23		(3) Personal property purchased by a not-for-profit arts or

1		cultural organization that establishes, by proof required by
2		the Department by rule, that it has received an exemption under
3		Section 501(c)(3) of the Internal Revenue Code and that is
4		organized and operated primarily for the presentation or
5		support of arts or cultural programming, activities, or
6		services. These organizations include, but are not limited to,
7		music and dramatic arts organizations such as symphony
8		orchestras and theatrical groups, arts and cultural service
9		organizations, local arts councils, visual arts organizations,
10		and media arts organizations. On and after the effective date
11		of this amendatory Act of the 92nd General Assembly, however,
12		an entity otherwise eligible for this exemption shall not make
13		tax-free purchases unless it has an active identification
14		number issued by the Department.
15		(4) Personal property purchased by a governmental body, by
16		a corporation, society, association, foundation, or
17		institution organized and operated exclusively for charitable,
18		religious, or educational purposes, or by a not-for-profit
19		corporation, society, association, foundation, institution, or
20		organization that has no compensated officers or employees and
21		that is organized and operated primarily for the recreation of
22		persons 55 years of age or older. A limited liability company
23		may qualify for the exemption under this paragraph only if the
24		limited liability company is organized and operated
25		exclusively for educational purposes. On and after July 1,
26		1987, however, no entity otherwise eligible for this exemption
27		shall make tax-free purchases unless it has an active exemption
28		identification number issued by the Department.
29		(5) Until July 1, 2003, a passenger car that is a
30		replacement vehicle to the extent that the purchase price of
31		the car is subject to the Replacement Vehicle Tax.
32		(6) 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,

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

1		be registered under Section 3-809 of the Illinois Vehicle Code,
2		but excluding other motor vehicles required to be registered
3		under the Illinois Vehicle Code. Horticultural polyhouses or
4		hoop houses used for propagating, growing, or overwintering
5		plants shall be considered farm machinery and equipment under
6		this item (11). Agricultural chemical tender tanks and dry
7		boxes shall include units sold separately from a motor vehicle
8		required to be licensed and units sold mounted on a motor
9		vehicle required to be licensed if the selling price of the
10		tender is separately stated.
11		Farm machinery and equipment shall include precision
12		farming equipment that is installed or purchased to be
13		installed on farm machinery and equipment including, but not
14		limited to, tractors, harvesters, sprayers, planters, seeders,
15		or spreaders. Precision farming equipment includes, but is not
16		limited to, soil testing sensors, computers, monitors,
17		software, global positioning and mapping systems, and other
18		such equipment.
19		Farm machinery and equipment also includes computers,
20		sensors, software, and related equipment used primarily in the
21		computer-assisted operation of production agriculture
22		facilities, equipment, and activities such as, but not limited
23		to, the collection, monitoring, and correlation of animal and
24		crop data for the purpose of formulating animal diets and
25		agricultural chemicals. This item (11) is exempt from the
26		provisions of Section 3-90.
27		(12) Fuel and petroleum products sold to or used by an air
28		common carrier, certified by the carrier to be used for
29		consumption, shipment, or storage in the conduct of its
30		business as an air common carrier, for a flight destined for or
31		returning from a location or locations outside the United
32		States without regard to previous or subsequent domestic
33		stopovers.
34		(13) Proceeds of mandatory service charges separately

1		stated on customers' bills for the purchase and consumption of
2		food and beverages purchased at retail from a retailer, to the
3		extent that the proceeds of the service charge are in fact
4		turned over as tips or as a substitute for tips to the
5		employees who participate directly in preparing, serving,
6		hosting or cleaning up the food or beverage function with
7		respect to which the service charge is imposed.
8		(14) Until July 1, 2003, oil field exploration, drilling,
9		and production equipment, including (i) rigs and parts of rigs,
10		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
11		tubular goods, including casing and drill strings, (iii) pumps
12		and pump-jack units, (iv) storage tanks and flow lines, (v) any
13		individual replacement part for oil field exploration,
14		drilling, and production equipment, and (vi) machinery and
15		equipment purchased for lease; but excluding motor vehicles
16		required to be registered under the Illinois Vehicle Code.
17		(15) Photoprocessing machinery and equipment, including
18		repair and replacement parts, both new and used, including that
19		manufactured on special order, certified by the purchaser to be
20		used primarily for photoprocessing, and including
21		photoprocessing machinery and equipment purchased for lease.
22		(16) Until July 1, 2003, coal exploration, mining,
23		offhighway hauling, processing, maintenance, and reclamation
24		equipment, including replacement parts and equipment, and
25		including equipment purchased for lease, but excluding motor
26		vehicles required to be registered under the Illinois Vehicle
27		Code.
28		(17) Until July 1, 2003, distillation machinery and
29		equipment, sold as a unit or kit, assembled or installed by the
30		retailer, certified by the user to be used only for the
31		production of ethyl alcohol that will be used for consumption
32		as motor fuel or as a component of motor fuel for the personal
33		use of the user, and not subject to sale or resale.
34		(18) Manufacturing and assembling machinery and equipment

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

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

1		before December 31, 2004, personal property that is donated for
2		disaster relief to be used in a State or federally declared
3		disaster area in Illinois or bordering Illinois by a
4		manufacturer or retailer that is registered in this State to a
5		corporation, society, association, foundation, or institution
6		that has been issued a sales tax exemption identification
7		number by the Department that assists victims of the disaster
8		who reside within the declared disaster area.
9		(25) Beginning with taxable years ending on or after
10		December 31, 1995 and ending with taxable years ending on or
11		before December 31, 2004, personal property that is used in the
12		performance of infrastructure repairs in this State, including
13		but not limited to municipal roads and streets, access roads,
14		bridges, sidewalks, waste disposal systems, water and sewer
15		line extensions, water distribution and purification
16		facilities, storm water drainage and retention facilities, and
17		sewage treatment facilities, resulting from a State or
18		federally declared disaster in Illinois or bordering Illinois
19		when such repairs are initiated on facilities located in the
20		declared disaster area within 6 months after the disaster.
21		(26) Beginning July 1, 1999, game or game birds purchased
22		at a "game breeding and hunting preserve area" or an "exotic
23		game hunting area" as those terms are used in the Wildlife Code
24		or at a hunting enclosure approved through rules adopted by the
25		Department of Natural Resources. This paragraph is exempt from
26		the provisions of Section 3-90.
27		(27) A motor vehicle, as that term is defined in Section
28		1-146 of the Illinois Vehicle Code, that is donated to a
29		corporation, limited liability company, society, association,
30		foundation, or institution that is determined by the Department
31		to be organized and operated exclusively for educational
32		purposes. For purposes of this exemption, "a corporation,
33		limited liability company, society, association, foundation,
34		or institution organized and operated exclusively for

1		educational purposes" means all tax-supported public schools,
2		private schools that offer systematic instruction in useful
3		branches of learning by methods common to public schools and
4		that compare favorably in their scope and intensity with the
5		course of study presented in tax-supported schools, and
6		vocational or technical schools or institutes organized and
7		operated exclusively to provide a course of study of not less
8		than 6 weeks duration and designed to prepare individuals to
9		follow a trade or to pursue a manual, technical, mechanical,
10		industrial, business, or commercial occupation.
11		(28) Beginning January 1, 2000, personal property,
12		including food, purchased through fundraising events for the
13		benefit of a public or private elementary or secondary school,
14		a group of those schools, or one or more school districts if
15		the events are sponsored by an entity recognized by the school
16		district that consists primarily of volunteers and includes
17		parents and teachers of the school children. This paragraph
18		does not apply to fundraising events (i) for the benefit of
19		private home instruction or (ii) for which the fundraising
20		entity purchases the personal property sold at the events from
21		another individual or entity that sold the property for the
22		purpose of resale by the fundraising entity and that profits
23		from the sale to the fundraising entity. This paragraph is
24		exempt from the provisions of Section 3-90.
25		(29) Beginning January 1, 2000 and through December 31,
26		2001, new or used automatic vending machines that prepare and
27		serve hot food and beverages, including coffee, soup, and other
28		items, and replacement parts for these machines. Beginning
29		January 1, 2002 and through June 30, 2003, machines and parts
30		for machines used in commercial, coin-operated amusement and
31		vending business if a use or occupation tax is paid on the
32		gross receipts derived from the use of the commercial,
33		coin-operated amusement and vending machines. This paragraph
34		is exempt from the provisions of Section 3-90.

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

1		Section 3-90.
2		(32) Beginning on the effective date of this amendatory Act
3		of the 92nd General Assembly, personal property purchased by a
4		lessor who leases the property, under a lease of one year or
5		longer executed or in effect at the time the lessor would
6		otherwise be subject to the tax imposed by this Act, to a
7		governmental body that has been issued an active sales tax
8		exemption identification number by the Department under
9		Section 1g of the Retailers' Occupation Tax Act. If the
10		property is leased in a manner that does not qualify for this
11		exemption or used in any other nonexempt manner, the lessor
12		shall be liable for the tax imposed under this Act or the
13		Service Use Tax Act, as the case may be, based on the fair
14		market value of the property at the time the nonqualifying use
15		occurs. No lessor shall collect or attempt to collect an amount
16		(however designated) that purports to reimburse that lessor for
17		the tax imposed by this Act or the Service Use Tax Act, as the
18		case may be, if the tax has not been paid by the lessor. If a
19		lessor improperly collects any such amount from the lessee, the
20		lessee shall have a legal right to claim a refund of that
21		amount from the lessor. If, however, that amount is not
22		refunded to the lessee for any reason, the lessor is liable to
23		pay that amount to the Department. This paragraph is exempt
24		from the provisions of Section 3-90.
25		(33) On and after July 1, 2003 and through June 30, 2004,
26		the use in this State of motor vehicles of the second division
27		with a gross vehicle weight in excess of 8,000 pounds and that
28		are subject to the commercial distribution fee imposed under
29		Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
30		1, 2004 and through June 30, 2005, the use in this State of
31		motor vehicles of the second division: (i) with a gross vehicle
32		weight rating in excess of 8,000 pounds; (ii) that are subject
33		to the commercial distribution fee imposed under Section
34		3-815.1 of the Illinois Vehicle Code; and (iii) that are

1		primarily used for commercial purposes. Through June 30, 2005,
2		this This exemption applies to repair and replacement parts
3		added after the initial purchase of such a motor vehicle if
4		that motor vehicle is used in a manner that would qualify for
5		the rolling stock exemption otherwise provided for in this Act.
6		For purposes of this paragraph, the term "used for commercial
7		purposes" means the transportation of persons or property in
8		furtherance of any commercial or industrial enterprise,
9		whether for-hire or not.
10		(Source: P.A. 92-35, eff. 7-1-01; 92-227, eff. 8-2-01; 92-337,
11		eff. 8-10-01; 92-484, eff. 8-23-01; 92-651, eff. 7-11-02;
12		93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised 9-11-03.)
13		(35 ILCS 105/3-61)
14		Sec. 3-61. Motor vehicles;trailers; use as rolling stock
15		definition.
16		(a) Through June 30, 2003, "use as rolling stock moving in
17		interstate commerce" in subsections (b) and (c) of Section 3-55
18		means for motor vehicles, as defined in Section 1-146 of the
19		Illinois Vehicle Code, and trailers, as defined in Section
20		1-209 of the Illinois Vehicle Code, when on 15 or more
21		occasions in a 12-month period the motor vehicle and trailer
22		has carried persons or property for hire in interstate
23		commerce, even just between points in Illinois, if the motor
24		vehicle and trailer transports persons whose journeys or
25		property whose shipments originate or terminate outside
26		Illinois. This definition applies to all property purchased for
27		the purpose of being attached to those motor vehicles or
28		trailers as a part thereof.
29		(b) On and after July 1, 2003 and through June 30, 2004,
30		"use as rolling stock moving in interstate commerce" in
31		paragraphs (b) and (c) of Section 3-55 occurs for motor
32		vehicles, as defined in Section 1-146 of the Illinois Vehicle
33		Code, when during a 12-month period the rolling stock has

1		carried persons or property for hire in interstate commerce for
2		51% of its total trips and transports persons whose journeys or
3		property whose shipments originate or terminate outside
4		Illinois. Trips that are only between points in Illinois shall
5		not be counted as interstate trips when calculating whether the
6		tangible personal property qualifies for the exemption but such
7		trips shall be included in total trips taken.
8		(c) Beginning July 1, 2004, "use as rolling stock moving in
9		interstate commerce" in paragraphs (b) and (c) of Section 3-55
10		occurs for motor vehicles, as defined in Section 1-146 of the
11		Illinois Vehicle Code, when during a 12-month period the
12		rolling stock has carried persons or property for hire in
13		interstate commerce for greater than 50% of its total trips for
14		that period or for greater than 50% of its total miles for that
15		period. The person claiming the exemption shall make an
16		election at the time of purchase to use either the trips or
17		mileage method. Persons who purchased motor vehicles prior to
18		July 1, 2004 shall make an election to use either the trips or
19		mileage method and document that election in their books and
20		records. If no election is made under this subsection to use
21		the trips or mileage method, the person shall be deemed to have
22		chosen the mileage method. Any election to use either the trips
23		or mileage method will remain in effect for that motor vehicle
24		for any period for which the Department may issue a notice of
25		tax liability under this Act.
26		For purposes of determining qualifying trips or miles,
27		motor vehicles that carry persons or property for hire, even
28		just between points in Illinois, will be considered used for
29		hire in interstate commerce if the motor vehicle transports
30		persons whose journeys or property whose shipments originate or
31		terminate outside Illinois. The exemption for motor vehicles
32		used as rolling stock moving in interstate commerce may be
33		claimed only for motor vehicles whose gross vehicle weight
34		rating exceeds 16,000 pounds. This definition applies to all

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

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

1		Section 15. The Service Use Tax Act is amended by changing
2		Sections 2 and 3-51 as follows:
3		(35 ILCS 110/2) (from Ch. 120, par. 439.32)
4		Sec. 2. "Use" means the exercise by any person of any right
5		or power over tangible personal property incident to the
6		ownership of that property, but does not include the sale or
7		use for demonstration by him of that property in any form as
8		tangible personal property in the regular course of business.
9		"Use" does not mean the interim use of tangible personal
10		property nor the physical incorporation of tangible personal
11		property, as an ingredient or constituent, into other tangible
12		personal property, (a) which is sold in the regular course of
13		business or (b) which the person incorporating such ingredient
14		or constituent therein has undertaken at the time of such
15		purchase to cause to be transported in interstate commerce to
16		destinations outside the State of Illinois.
17		"Purchased from a serviceman" means the acquisition of the
18		ownership of, or title to, tangible personal property through a
19		sale of service.
20		"Purchaser" means any person who, through a sale of
21		service, acquires the ownership of, or title to, any tangible
22		personal property.
23		"Cost price" means the consideration paid by the serviceman
24		for a purchase valued in money, whether paid in money or
25		otherwise, including cash, credits and services, and shall be
26		determined without any deduction on account of the supplier's
27		cost of the property sold or on account of any other expense
28		incurred by the supplier. When a serviceman contracts out part
29		or all of the services required in his sale of service, it
30		shall be presumed that the cost price to the serviceman of the
31		property transferred to him or her by his or her subcontractor
32		is equal to 50% of the subcontractor's charges to the

1		serviceman in the absence of proof of the consideration paid by
2		the subcontractor for the purchase of such property.
3		"Selling price" means the consideration for a sale valued
4		in money whether received in money or otherwise, including
5		cash, credits and service, and shall be determined without any
6		deduction on account of the serviceman's cost of the property
7		sold, the cost of materials used, labor or service cost or any
8		other expense whatsoever, but does not include interest or
9		finance charges which appear as separate items on the bill of
10		sale or sales contract nor charges that are added to prices by
11		sellers on account of the seller's duty to collect, from the
12		purchaser, the tax that is imposed by this Act.
13		"Department" means the Department of Revenue.
14		"Person" means any natural individual, firm, partnership,
15		association, joint stock company, joint venture, public or
16		private corporation, limited liability company, and any
17		receiver, executor, trustee, guardian or other representative
18		appointed by order of any court.
19		"Sale of service" means any transaction except:
20		(1) a retail sale of tangible personal property taxable
21		under the Retailers' Occupation Tax Act or under the Use
22		Tax Act.
23		(2) a sale of tangible personal property for the
24		purpose of resale made in compliance with Section 2c of the
25		Retailers' Occupation Tax Act.
26		(3) except as hereinafter provided, a sale or transfer
27		of tangible personal property as an incident to the
28		rendering of service for or by any governmental body, or
29		for or by any corporation, society, association,
30		foundation or institution organized and operated
31		exclusively for charitable, religious or educational
32		purposes or any not-for-profit corporation, society,
33		association, foundation, institution or organization which
34		has no compensated officers or employees and which is

1		organized and operated primarily for the recreation of
2		persons 55 years of age or older. A limited liability
3		company may qualify for the exemption under this paragraph
4		only if the limited liability company is organized and
5		operated exclusively for educational purposes.
6		(4) a sale or transfer of tangible personal property as
7		an incident to the rendering of service for interstate
8		carriers for hire for use as rolling stock moving in
9		interstate commerce or by lessors under a lease of one year
10		or longer, executed or in effect at the time of purchase of
11		personal property, to interstate carriers for hire for use
12		as rolling stock moving in interstate commerce so long as
13		so used by such interstate carriers for hire, and equipment
14		operated by a telecommunications provider, licensed as a
15		common carrier by the Federal Communications Commission,
16		which is permanently installed in or affixed to aircraft
17		moving in interstate commerce.
18		(4a) a sale or transfer of tangible personal property
19		as an incident to the rendering of service for owners,
20		lessors, or shippers of tangible personal property which is
21		utilized by interstate carriers for hire for use as rolling
22		stock moving in interstate commerce so long as so used by
23		interstate carriers for hire, and equipment operated by a
24		telecommunications provider, licensed as a common carrier
25		by the Federal Communications Commission, which is
26		permanently installed in or affixed to aircraft moving in
27		interstate commerce.
28		(4a-5) on and after July 1, 2003 and through June 30,
29		2004, a sale or transfer of a motor vehicle of the second
30		division with a gross vehicle weight in excess of 8,000
31		pounds as an incident to the rendering of service if that
32		motor vehicle is subject to the commercial distribution fee
33		imposed under Section 3-815.1 of the Illinois Vehicle Code.
34		Beginning on July 1, 2004 and through June 30, 2005, the

1		use in this State of motor vehicles of the second division:
2		(i) with a gross vehicle weight rating in excess of 8,000
3		pounds; (ii) that are subject to the commercial
4		distribution fee imposed under Section 3-815.1 of the
5		Illinois Vehicle Code; and (iii) that are primarily used
6		for commercial purposes. Through June 30, 2005, this This
7		exemption applies to repair and replacement parts added
8		after the initial purchase of such a motor vehicle if that
9		motor vehicle is used in a manner that would qualify for
10		the rolling stock exemption otherwise provided for in this
11		Act. For purposes of this paragraph, "used for commercial
12		purposes" means the transportation of persons or property
13		in furtherance of any commercial or industrial enterprise
14		whether for-hire or not.
15		(5) a sale or transfer of machinery and equipment used
16		primarily in the process of the manufacturing or
17		assembling, either in an existing, an expanded or a new
18		manufacturing facility, of tangible personal property for
19		wholesale or retail sale or lease, whether such sale or
20		lease is made directly by the manufacturer or by some other
21		person, whether the materials used in the process are owned
22		by the manufacturer or some other person, or whether such
23		sale or lease is made apart from or as an incident to the
24		seller's engaging in a service occupation and the
25		applicable tax is a Service Use Tax or Service Occupation
26		Tax, rather than Use Tax or Retailers' Occupation Tax.
27		(5a) the repairing, reconditioning or remodeling, for
28		a common carrier by rail, of tangible personal property
29		which belongs to such carrier for hire, and as to which
30		such carrier receives the physical possession of the
31		repaired, reconditioned or remodeled item of tangible
32		personal property in Illinois, and which such carrier
33		transports, or shares with another common carrier in the
34		transportation of such property, out of Illinois on a

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

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

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

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

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

1		activities in the state in which the supply business
2		engaging in such activities is located would constitute
3		maintaining a place of business in that state.
4		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
5		eff. 6-20-03; revised 8-21-03.)
6		(35 ILCS 110/3-51)
7		Sec. 3-51. Motor vehicles; trailers; use as rolling stock
8		definition.
9		(a) Through June 30, 2003, "use as rolling stock moving in
10		interstate commerce" in subsection (b) of Section 3-45 means
11		for motor vehicles, as defined in Section 1-46 of the Illinois
12		Vehicle Code, and trailers, as defined in Section 1-209 of the
13		Illinois Vehicle Code, when on 15 or more occasions in a
14		12-month period the motor vehicle and trailer has carried
15		persons or property for hire in interstate commerce, even just
16		between points in Illinois, if the motor vehicle and trailer
17		transports persons whose journeys or property whose shipments
18		originate or terminate outside Illinois. This definition
19		applies to all property purchased for the purpose of being
20		attached to those motor vehicles or trailers as a part thereof.
21		(b) On and after July 1, 2003 and through June 30, 2004,
22		"use as rolling stock moving in interstate commerce" in
23		paragraphs (4) and (4a) of the definition of "sale of service"
24		in Section 2 and subsection (b) of Section 3-45 occurs for
25		motor vehicles, as defined in Section 1-146 of the Illinois
26		Vehicle Code, when during a 12-month period the rolling stock
27		has carried persons or property for hire in interstate commerce
28		for 51% of its total trips and transports persons whose
29		journeys or property whose shipments originate or terminate
30		outside Illinois. Trips that are only between points in
31		Illinois shall not be counted as interstate trips when
32		calculating whether the tangible personal property qualifies
33		for the exemption but such trips shall be included in total

1		trips taken.
2		(c) Beginning July 1, 2004, "use as rolling stock moving in
3		interstate commerce" in paragraphs (4) and (4a) of the
4		definition of "sale of service" in Section 2 and subsection (b)
5		of Section 3-45 occurs for motor vehicles, as defined in
6		Section 1-146 of the Illinois Vehicle Code, when during a
7		12-month period the rolling stock has carried persons or
8		property for hire in interstate commerce for greater than 50%
9		of its total trips for that period or for greater than 50% of
10		its total miles for that period. The person claiming the
11		exemption shall make an election at the time of purchase to use
12		either the trips or mileage method. Persons who purchased motor
13		vehicles prior to July 1, 2004 shall make an election to use
14		either the trips or mileage method and document that election
15		in their books and records. If no election is made under this
16		subsection to use the trips or mileage method, the person shall
17		be deemed to have chosen the mileage method. Any election to
18		use either the trips or mileage method will remain in effect
19		for that motor vehicle for any period for which the Department
20		may issue a notice of 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 (4) and (4a) of the
34		definition of "sale of service" in Section 2 and subsection (b)

1		of Section 3-45 occurs for trailers, as defined in Section
2		1-209 of the Illinois Vehicle Code, semitrailers as defined in
3		Section 1-187 of the Illinois Vehicle Code, and pole trailers
4		as defined in Section 1-161 of the Illinois Vehicle Code, when
5		during a 12-month period the rolling stock has carried persons
6		or property for hire in interstate commerce for greater than
7		50% of its total trips for that period or for greater than 50%
8		of its total miles for that period. The person claiming the
9		exemption for a trailer or trailers that will not be dedicated
10		to a motor vehicle or group of motor vehicles shall make an
11		election at the time of purchase to use either the trips or
12		mileage method. Persons who purchased trailers prior to July 1,
13		2004 that are not dedicated to a motor vehicle or group of
14		motor vehicles shall make an election to use either the trips
15		or mileage method and document that election in their books and
16		records. If no election is made under this subsection to use
17		the trips or mileage method, the person shall be deemed to have
18		chosen the mileage method. Any election to use either the trips
19		or mileage method will remain in effect for that trailer for
20		any period for which the Department may issue a notice of tax
21		liability under this Act.
22		For purposes of determining qualifying trips or miles,
23		trailers, semitrailers, or pole trailers that carry property
24		for hire, even just between points in Illinois, will be
25		considered used for hire in interstate commerce if the
26		trailers, semitrailers, or pole trailers transport property
27		whose shipments originate or terminate outside Illinois. This
28		definition applies to all property purchased for the purpose of
29		being attached to those trailers, semitrailers, or pole
30		trailers as a part thereof. In lieu of a person providing
31		documentation regarding the qualifying use of each individual
32		trailer, semitrailer, or pole trailer, that person may document
33		such qualifying use by providing documentation of the
34		following:

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

31		Section 20. The Service Occupation Tax Act is amended by
32		changing Sections 2 and 2d as follows:

1		(35 ILCS 115/2) (from Ch. 120, par. 439.102)
2		Sec. 2. "Transfer" means any transfer of the title to
3		property or of the ownership of property whether or not the
4		transferor retains title as security for the payment of amounts
5		due him from the transferee.
6		"Cost Price" means the consideration paid by the serviceman
7		for a purchase valued in money, whether paid in money or
8		otherwise, including cash, credits and services, and shall be
9		determined without any deduction on account of the supplier's
10		cost of the property sold or on account of any other expense
11		incurred by the supplier. When a serviceman contracts out part
12		or all of the services required in his sale of service, it
13		shall be presumed that the cost price to the serviceman of the
14		property transferred to him by his or her subcontractor is
15		equal to 50% of the subcontractor's charges to the serviceman
16		in the absence of proof of the consideration paid by the
17		subcontractor for the purchase of such property.
18		"Department" means the Department of Revenue.
19		"Person" means any natural individual, firm, partnership,
20		association, joint stock company, joint venture, public or
21		private corporation, limited liability company, and any
22		receiver, executor, trustee, guardian or other representative
23		appointed by order of any court.
24		"Sale of Service" means any transaction except:
25		(a) A retail sale of tangible personal property taxable
26		under the Retailers' Occupation Tax Act or under the Use Tax
27		Act.
28		(b) A sale of tangible personal property for the purpose of
29		resale made in compliance with Section 2c of the Retailers'
30		Occupation Tax Act.
31		(c) Except as hereinafter provided, a sale or transfer of
32		tangible personal property as an incident to the rendering of
33		service for or by any governmental body or for or by any
34		corporation, society, association, foundation or institution

1		organized and operated exclusively for charitable, religious
2		or educational purposes or any not-for-profit corporation,
3		society, association, foundation, institution or organization
4		which has no compensated officers or employees and which is
5		organized and operated primarily for the recreation of persons
6		55 years of age or older. A limited liability company may
7		qualify for the exemption under this paragraph only if the
8		limited liability company is organized and operated
9		exclusively for educational purposes.
10		(d) A sale or transfer of tangible personal property as an
11		incident to the rendering of service for interstate carriers
12		for hire for use as rolling stock moving in interstate commerce
13		or lessors under leases of one year or longer, executed or in
14		effect at the time of purchase, to interstate carriers for hire
15		for use as rolling stock moving in interstate commerce, and
16		equipment operated by a telecommunications provider, licensed
17		as a common carrier by the Federal Communications Commission,
18		which is permanently installed in or affixed to aircraft moving
19		in interstate commerce.
20		(d-1) A sale or transfer of tangible personal property as
21		an incident to the rendering of service for owners, lessors or
22		shippers of tangible personal property which is utilized by
23		interstate carriers for hire for use as rolling stock moving in
24		interstate commerce, and equipment operated by a
25		telecommunications provider, licensed as a common carrier by
26		the Federal Communications Commission, which is permanently
27		installed in or affixed to aircraft moving in interstate
28		commerce.
29		(d-1.1) On and after July 1, 2003 and through June 30,
30		2004, a sale or transfer of a motor vehicle of the second
31		division with a gross vehicle weight in excess of 8,000 pounds
32		as an incident to the rendering of service if that motor
33		vehicle is subject to the commercial distribution fee imposed
34		under Section 3-815.1 of the Illinois Vehicle Code. Beginning

1		on July 1, 2004 and through June 30, 2005, the use in this
2		State of motor vehicles of the second division: (i) with a
3		gross vehicle weight rating in excess of 8,000 pounds; (ii)
4		that are subject to the commercial distribution fee imposed
5		under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
6		that are primarily used for commercial purposes. Through June
7		30, 2005, this This exemption applies to repair and replacement
8		parts added after the initial purchase of such a motor vehicle
9		if that motor vehicle is used in a manner that would qualify
10		for the rolling stock exemption otherwise provided for in this
11		Act. For purposes of this paragraph, "used for commercial
12		purposes" means the transportation of persons or property in
13		furtherance of any commercial or industrial enterprise whether
14		for-hire or not.
15		(d-2) The repairing, reconditioning or remodeling, for a
16		common carrier by rail, of tangible personal property which
17		belongs to such carrier for hire, and as to which such carrier
18		receives the physical possession of the repaired,
19		reconditioned or remodeled item of tangible personal property
20		in Illinois, and which such carrier transports, or shares with
21		another common carrier in the transportation of such property,
22		out of Illinois on a standard uniform bill of lading showing
23		the person who repaired, reconditioned or remodeled the
24		property as the shipper or consignor of such property to a
25		destination outside Illinois, for use outside Illinois.
26		(d-3) A sale or transfer of tangible personal property
27		which is produced by the seller thereof on special order in
28		such a way as to have made the applicable tax the Service
29		Occupation Tax or the Service Use Tax, rather than the
30		Retailers' Occupation Tax or the Use Tax, for an interstate
31		carrier by rail which receives the physical possession of such
32		property in Illinois, and which transports such property, or
33		shares with another common carrier in the transportation of
34		such property, out of Illinois on a standard uniform bill of

1		lading showing the seller of the property as the shipper or
2		consignor of such property to a destination outside Illinois,
3		for use outside Illinois.
4		(d-4) Until January 1, 1997, a sale, by a registered
5		serviceman paying tax under this Act to the Department, of
6		special order printed materials delivered outside Illinois and
7		which are not returned to this State, if delivery is made by
8		the seller or agent of the seller, including an agent who
9		causes the product to be delivered outside Illinois by a common
10		carrier or the U.S. postal service.
11		(e) A sale or transfer of machinery and equipment used
12		primarily in the process of the manufacturing or assembling,
13		either in an existing, an expanded or a new manufacturing
14		facility, of tangible personal property for wholesale or retail
15		sale or lease, whether such sale or lease is made directly by
16		the manufacturer or by some other person, whether the materials
17		used in the process are owned by the manufacturer or some other
18		person, or whether such sale or lease is made apart from or as
19		an incident to the seller's engaging in a service occupation
20		and the applicable tax is a Service Occupation Tax or Service
21		Use Tax, rather than Retailers' Occupation Tax or Use Tax.
22		(f) Until July 1, 2003, the sale or transfer of
23		distillation machinery and equipment, sold as a unit or kit and
24		assembled or installed by the retailer, which machinery and
25		equipment is 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 such user and not subject to sale or resale.
29		(g) At the election of any serviceman not required to be
30		otherwise registered as a retailer under Section 2a of the
31		Retailers' Occupation Tax Act, made for each fiscal year sales
32		of service in which the aggregate annual cost price of tangible
33		personal property transferred as an incident to the sales of
34		service is less than 35% (75% in the case of servicemen

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

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

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

1		(35 ILCS 115/2d)
2		Sec. 2d. 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 subsections (d) and (d-1) of the
6		definition of "sale of service" in Section 2 means for motor
7		vehicles, as defined in Section 1-146 of the Illinois Vehicle
8		Code, and trailers, as defined in Section 1-209 of the Illinois
9		Vehicle Code, when on 15 or more occasions in a 12-month period
10		the motor vehicle and trailer has carried persons or property
11		for hire in interstate commerce, even just between points in
12		Illinois, if the motor vehicle and trailer transports persons
13		whose journeys or property whose shipments originate or
14		terminate outside Illinois. This definition applies to all
15		property purchased for the purpose of being attached to those
16		motor vehicles or trailers as a part thereof.
17		(b) On and after July 1, 2003 and through June 30, 2004,
18		"use as rolling stock moving in interstate commerce" in
19		paragraphs (d) and (d-1) of the definition of "sale of service"
20		in Section 2 occurs for motor vehicles, as defined in Section
21		1-146 of the Illinois Vehicle Code, when during a 12-month
22		period the rolling stock has carried persons or property for
23		hire in interstate commerce for 51% of its total trips and
24		transports persons whose journeys or property whose shipments
25		originate or terminate outside Illinois. Trips that are only
26		between points in Illinois will not be counted as interstate
27		trips when calculating whether the tangible personal property
28		qualifies for the exemption but such trips will be included in
29		total trips taken.
30		(c) Beginning July 1, 2004, "use as rolling stock moving in
31		interstate commerce" in paragraphs (d) and (d-1) of the
32		definition of "sale of service" in Section 2 occurs for motor
33		vehicles, as defined in Section 1-146 of the Illinois Vehicle
34		Code, when during a 12-month period the rolling stock has

1		carried persons or property for hire in interstate commerce for
2		greater than 50% of its total trips for that period or for
3		greater than 50% of its total miles for that period. The person
4		claiming the exemption shall make an election at the time of
5		purchase to use either the trips or mileage method. Persons who
6		purchased motor vehicles prior to July 1, 2004 shall make an
7		election to use either the trips or mileage method and document
8		that election in their books and records. If no election is
9		made under this subsection to use the trips or mileage method,
10		the person shall be deemed to have chosen the mileage method.
11		Any election to use either the trips or mileage method will
12		remain in effect for that motor vehicle for any period for
13		which the Department may issue a notice of tax liability under
14		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 (d) and (d-1) of the
28		definition of "sale of service" in Section 2 occurs for
29		trailers, as defined in Section 1-209 of the Illinois Vehicle
30		Code, semitrailers as defined in Section 1-187 of the Illinois
31		Vehicle Code, and pole trailers as defined in Section 1-161 of
32		the Illinois Vehicle Code, when during a 12-month period the
33		rolling stock has carried persons or property for hire in
34		interstate commerce for greater than 50% of its total trips for

1		that period or for greater than 50% of its total miles for that
2		period. The person claiming the exemption for a trailer or
3		trailers that will not be dedicated to a motor vehicle or group
4		of motor vehicles shall make an election at the time of
5		purchase to use either the trips or mileage method. Persons who
6		purchased trailers prior to July 1, 2004 that are not dedicated
7		to a motor vehicle or group of motor vehicles shall make an
8		election to use either the trips or mileage method and document
9		that election in their books and records. If no election is
10		made under this subsection to use the trips or mileage method,
11		the person shall be deemed to have chosen the mileage method.
12		Any election to use either the trips or mileage method will
13		remain in effect for that trailer for any period for which the
14		Department may issue a notice of tax 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 25. The Retailers' Occupation Tax Act is amended by
25		changing Sections 2-5 and 2-51 as follows:
26		(35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
27		Sec. 2-5. Exemptions. Gross receipts from proceeds from the
28		sale of the following tangible personal property are exempt
29		from the tax imposed by this Act:
30		(1) Farm chemicals.
31		(2) Farm machinery and equipment, both new and used,
32		including that manufactured on special order, certified by the

1		purchaser to be used primarily for production agriculture or
2		State or federal agricultural programs, including individual
3		replacement parts for the machinery and equipment, including
4		machinery and equipment purchased for lease, and including
5		implements of husbandry defined in Section 1-130 of the
6		Illinois Vehicle Code, farm machinery and agricultural
7		chemical and fertilizer spreaders, and nurse wagons required to
8		be registered under Section 3-809 of the Illinois Vehicle Code,
9		but excluding other motor vehicles required to be registered
10		under the Illinois Vehicle Code. Horticultural polyhouses or
11		hoop houses used for propagating, growing, or overwintering
12		plants shall be considered farm machinery and equipment under
13		this item (2). Agricultural chemical tender tanks and dry boxes
14		shall include units sold separately from a motor vehicle
15		required to be licensed and units sold mounted on a motor
16		vehicle required to be licensed, if the selling price of the
17		tender is separately stated.
18		Farm machinery and equipment shall include precision
19		farming equipment that is installed or purchased to be
20		installed on farm machinery and equipment including, but not
21		limited to, tractors, harvesters, sprayers, planters, seeders,
22		or spreaders. Precision farming equipment includes, but is not
23		limited to, soil testing sensors, computers, monitors,
24		software, global positioning and mapping systems, and other
25		such equipment.
26		Farm machinery and equipment also includes computers,
27		sensors, software, and related equipment used primarily in the
28		computer-assisted operation of production agriculture
29		facilities, equipment, and activities such as, but not limited
30		to, the collection, monitoring, and correlation of animal and
31		crop data for the purpose of formulating animal diets and
32		agricultural chemicals. This item (7) is exempt from the
33		provisions of Section 2-70.
34		(3) Until July 1, 2003, distillation machinery and

1		equipment, sold as a unit or kit, assembled or installed by the
2		retailer, certified by the user to be used only for the
3		production of ethyl alcohol that will be used for consumption
4		as motor fuel or as a component of motor fuel for the personal
5		use of the user, and not subject to sale or resale.
6		(4) Until July 1, 2003, graphic arts machinery and
7		equipment, including repair and replacement parts, both new and
8		used, and including that manufactured on special order or
9		purchased for lease, certified by the purchaser to be used
10		primarily for graphic arts production. Equipment includes
11		chemicals or chemicals acting as catalysts but only if the
12		chemicals or chemicals acting as catalysts effect a direct and
13		immediate change upon a graphic arts product.
14		(5) A motor vehicle of the first division, a motor vehicle
15		of the second division that is a self-contained motor vehicle
16		designed or permanently converted to provide living quarters
17		for recreational, camping, or travel use, with direct walk
18		through access to the living quarters from the driver's seat,
19		or a motor vehicle of the second division that is of the van
20		configuration designed for the transportation of not less than
21		7 nor more than 16 passengers, as defined in Section 1-146 of
22		the Illinois Vehicle Code, that is used for automobile renting,
23		as defined in the Automobile Renting Occupation and Use Tax
24		Act.
25		(6) Personal property sold by a teacher-sponsored student
26		organization affiliated with an elementary or secondary school
27		located in Illinois.
28		(7) Until July 1, 2003, proceeds of that portion of the
29		selling price of a passenger car the sale of which is subject
30		to the Replacement Vehicle Tax.
31		(8) Personal property sold to an Illinois county fair
32		association for use in conducting, operating, or promoting the
33		county fair.
34		(9) Personal property sold to a not-for-profit arts or

1		cultural organization that establishes, by proof required by
2		the Department by rule, that it has received an exemption under
3		Section 501(c)(3) of the Internal Revenue Code and that is
4		organized and operated primarily for the presentation or
5		support of arts or cultural programming, activities, or
6		services. These organizations include, but are not limited to,
7		music and dramatic arts organizations such as symphony
8		orchestras and theatrical groups, arts and cultural service
9		organizations, local arts councils, visual arts organizations,
10		and media arts organizations. On and after the effective date
11		of this amendatory Act of the 92nd General Assembly, however,
12		an entity otherwise eligible for this exemption shall not make
13		tax-free purchases unless it has an active identification
14		number issued by the Department.
15		(10) Personal property sold by a corporation, society,
16		association, foundation, institution, or organization, other
17		than a limited liability company, that is organized and
18		operated as a not-for-profit service enterprise for the benefit
19		of persons 65 years of age or older if the personal property
20		was not purchased by the enterprise for the purpose of resale
21		by the enterprise.
22		(11) Personal property sold to a governmental body, to a
23		corporation, society, association, foundation, or institution
24		organized and operated exclusively for charitable, religious,
25		or educational purposes, or to a not-for-profit corporation,
26		society, association, foundation, institution, or organization
27		that has no compensated officers or employees and that is
28		organized and operated primarily for the recreation of persons
29		55 years of age or older. A limited liability company may
30		qualify for the exemption under this paragraph only if the
31		limited liability company is organized and operated
32		exclusively for educational purposes. On and after July 1,
33		1987, however, no entity otherwise eligible for this exemption
34		shall make tax-free purchases unless it has an active

1		identification number issued by the Department.
2		(12) Tangible personal property sold to interstate
3		carriers for hire for use as rolling stock moving in interstate
4		commerce or to lessors under leases of one year or longer
5		executed or in effect at the time of purchase by interstate
6		carriers for hire for use as rolling stock moving in interstate
7		commerce and equipment operated by a telecommunications
8		provider, licensed as a common carrier by the Federal
9		Communications Commission, which is permanently installed in
10		or affixed to aircraft moving in interstate commerce.
11		(12-5) On and after July 1, 2003 and through June 30, 2004,
12		motor vehicles of the second division with a gross vehicle
13		weight in excess of 8,000 pounds that are subject to the
14		commercial distribution fee imposed under Section 3-815.1 of
15		the Illinois Vehicle Code. Beginning on July 1, 2004 and
16		through June 30, 2005, the use in this State of motor vehicles
17		of the second division: (i) with a gross vehicle weight rating
18		in excess of 8,000 pounds; (ii) that are subject to the
19		commercial distribution fee imposed under Section 3-815.1 of
20		the Illinois Vehicle Code; and (iii) that are primarily used
21		for commercial purposes. Through June 30, 2005, this This
22		exemption applies to repair and replacement parts added after
23		the initial purchase of such a motor vehicle if that motor
24		vehicle is used in a manner that would qualify for the rolling
25		stock exemption otherwise provided for in this Act. For
26		purposes of this paragraph, "used for commercial purposes"
27		means the transportation of persons or property in furtherance
28		of any commercial or industrial enterprise whether for-hire or
29		not.
30		(13) Proceeds from sales to owners, lessors, or shippers of
31		tangible personal property that is utilized 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		(14) Machinery and equipment that will be used by the
4		purchaser, or a lessee of the purchaser, primarily in the
5		process of manufacturing or assembling tangible personal
6		property for wholesale or retail sale or lease, whether the
7		sale or lease is made directly by the manufacturer or by some
8		other person, whether the materials used in the process are
9		owned by the manufacturer or some other person, or whether the
10		sale or lease is made apart from or as an incident to the
11		seller's engaging in the service occupation of producing
12		machines, tools, dies, jigs, patterns, gauges, or other similar
13		items of no commercial value on special order for a particular
14		purchaser.
15		(15) Proceeds of mandatory service charges separately
16		stated on customers' bills for purchase and consumption of food
17		and beverages, to the extent that the proceeds of the service
18		charge are in fact turned over as tips or as a substitute for
19		tips to the employees who participate directly in preparing,
20		serving, hosting or cleaning up the food or beverage function
21		with respect to which the service charge is imposed.
22		(16) Petroleum products sold to a purchaser if the seller
23		is prohibited by federal law from charging tax to the
24		purchaser.
25		(17) Tangible personal property sold to a common carrier by
26		rail or motor that receives the physical possession of the
27		property in Illinois and that transports the property, or
28		shares with another common carrier in the transportation of the
29		property, out of Illinois on a standard uniform bill of lading
30		showing the seller of the property as the shipper or consignor
31		of the property to a destination outside Illinois, for use
32		outside Illinois.
33		(18) Legal tender, currency, medallions, or gold or silver
34		coinage issued by the State of Illinois, the government of the

1		United States of America, or the government of any foreign
2		country, and bullion.
3		(19) 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		(20) 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		(21) Until July 1, 2003, coal exploration, mining,
18		offhighway hauling, processing, maintenance, and reclamation
19		equipment, including replacement parts and equipment, and
20		including equipment purchased for lease, but excluding motor
21		vehicles required to be registered under the Illinois Vehicle
22		Code.
23		(22) Fuel and petroleum products sold to or used by an air
24		carrier, certified by the carrier to be used for consumption,
25		shipment, or storage in the conduct of its business as an air
26		common carrier, for a flight destined for or returning from a
27		location or locations outside the United States without regard
28		to previous or subsequent domestic stopovers.
29		(23) A transaction in which the purchase order is received
30		by a florist who is located outside Illinois, but who has a
31		florist located in Illinois deliver the property to the
32		purchaser or the purchaser's donee in Illinois.
33		(24) Fuel consumed or used in the operation of ships,
34		barges, or vessels that are used primarily in or for the

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

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

1		to be organized and operated exclusively for educational
2		purposes. For purposes of this exemption, "a corporation,
3		limited liability company, society, association, foundation,
4		or institution organized and operated exclusively for
5		educational purposes" means all tax-supported public schools,
6		private schools that offer systematic instruction in useful
7		branches of learning by methods common to public schools and
8		that compare favorably in their scope and intensity with the
9		course of study presented in tax-supported schools, and
10		vocational or technical schools or institutes organized and
11		operated exclusively to provide a course of study of not less
12		than 6 weeks duration and designed to prepare individuals to
13		follow a trade or to pursue a manual, technical, mechanical,
14		industrial, business, or commercial occupation.
15		(34) Beginning January 1, 2000, personal property,
16		including food, purchased through fundraising events for the
17		benefit of a public or private elementary or secondary school,
18		a group of those schools, or one or more school districts if
19		the events are sponsored by an entity recognized by the school
20		district that consists primarily of volunteers and includes
21		parents and teachers of the school children. This paragraph
22		does not apply to fundraising events (i) for the benefit of
23		private home instruction or (ii) for which the fundraising
24		entity purchases the personal property sold at the events from
25		another individual or entity that sold the property for the
26		purpose of resale by the fundraising entity and that profits
27		from the sale to the fundraising entity. This paragraph is
28		exempt from the provisions of Section 2-70.
29		(35) Beginning January 1, 2000 and through December 31,
30		2001, new or used automatic vending machines that prepare and
31		serve hot food and beverages, including coffee, soup, and other
32		items, and replacement parts for these machines. Beginning
33		January 1, 2002 and through June 30, 2003, machines and parts
34		for machines used in commercial, coin-operated amusement and

1		vending business if a use or occupation tax is paid on the
2		gross receipts derived from the use of the commercial,
3		coin-operated amusement and vending machines. This paragraph
4		is exempt from the provisions of Section 2-70.
5		(35-5) Food for human consumption that is to be consumed
6		off the premises where it is sold (other than alcoholic
7		beverages, soft drinks, and food that has been prepared for
8		immediate consumption) and prescription and nonprescription
9		medicines, drugs, medical appliances, and insulin, urine
10		testing materials, syringes, and needles used by diabetics, for
11		human use, when purchased for use by a person receiving medical
12		assistance under Article 5 of the Illinois Public Aid Code who
13		resides in a licensed long-term care facility, as defined in
14		the Nursing Home Care Act.
15		(36) Beginning August 2, 2001, computers and
16		communications equipment utilized for any hospital purpose and
17		equipment used in the diagnosis, analysis, or treatment of
18		hospital patients sold to a lessor who leases the equipment,
19		under a lease of one year or longer executed or in effect at
20		the time of the purchase, to a hospital that has been issued an
21		active tax exemption identification number by the Department
22		under Section 1g of this Act. This paragraph is exempt from the
23		provisions of Section 2-70.
24		(37) Beginning August 2, 2001, personal property sold to a
25		lessor who leases the property, under a lease of one year or
26		longer executed or in effect at the time of the purchase, to a
27		governmental body that has been issued an active tax exemption
28		identification number by the Department under Section 1g of
29		this Act. This paragraph is exempt from the provisions of
30		Section 2-70.
31		(38) Beginning on January 1, 2002, tangible personal
32		property purchased from an Illinois retailer by a taxpayer
33		engaged in centralized purchasing activities in Illinois who
34		will, upon receipt of the property in Illinois, temporarily

1		store the property in Illinois (i) for the purpose of
2		subsequently transporting it outside this State for use or
3		consumption thereafter solely outside this State or (ii) for
4		the purpose of being processed, fabricated, or manufactured
5		into, attached to, or incorporated into other tangible personal
6		property to be transported outside this State and thereafter
7		used or consumed solely outside this State. The Director of
8		Revenue shall, pursuant to rules adopted in accordance with the
9		Illinois Administrative Procedure Act, issue a permit to any
10		taxpayer in good standing with the Department who is eligible
11		for the exemption under this paragraph (38). The permit issued
12		under this paragraph (38) shall authorize the holder, to the
13		extent and in the manner specified in the rules adopted under
14		this Act, to purchase tangible personal property from a
15		retailer exempt from the taxes imposed by this Act. Taxpayers
16		shall maintain all necessary books and records to substantiate
17		the use and consumption of all such tangible personal property
18		outside of the State of Illinois.
19		(Source: P.A. 92-16, eff. 6-28-01; 92-35, eff. 7-1-01; 92-227,
20		eff. 8-2-01; 92-337, eff. 8-10-01; 92-484, eff. 8-23-01;
21		92-488, eff. 8-23-01; 92-651, eff. 7-11-02; 92-680, eff.
22		7-16-02; 93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised
23		9-11-03.)
24		(35 ILCS 120/2-51)
25		Sec. 2-51. Motor vehicles; trailers; use as rolling stock
26		definition.
27		(a) Through June 30, 2003, "use as rolling stock moving in
28		interstate commerce" in paragraphs (12) and (13) of Section 2-5
29		means for motor vehicles, as defined in Section 1-146 of the
30		Illinois Vehicle Code, and trailers, as defined in Section
31		1-209 of the Illinois Vehicle Code, when on 15 or more
32		occasions in a 12-month period the motor vehicle and trailer
33		has carried persons or property for hire in interstate

1		commerce, even just between points in Illinois, if the motor
2		vehicle and trailer transports persons whose journeys or
3		property whose shipments originate or terminate outside
4		Illinois. This definition applies to all property purchased for
5		the purpose of being attached to those motor vehicles or
6		trailers as a part thereof.
7		(b) On and after July 1, 2003 and through June 30, 2004,
8		"use as rolling stock moving in interstate commerce" in
9		paragraphs (12) and (13) of Section 2-5 occurs for motor
10		vehicles, as defined in Section 1-146 of the Illinois Vehicle
11		Code, when during a 12-month period the rolling stock has
12		carried persons or property for hire in interstate commerce for
13		51% of its total trips and transports persons whose journeys or
14		property whose shipments originate or terminate outside
15		Illinois. Trips that are only between points in Illinois shall
16		not be counted as interstate trips when calculating whether the
17		tangible personal property qualifies for the exemption but such
18		trips shall be included in total trips taken.
19		(c) Beginning July 1, 2004, "use as rolling stock moving in
20		interstate commerce" in paragraphs (12) and (13) of Section 2-5
21		occurs for motor vehicles, as defined in Section 1-146 of the
22		Illinois Vehicle Code, when during a 12-month period the
23		rolling stock has carried persons or property for hire in
24		interstate commerce for greater than 50% of its total trips for
25		that period or for greater than 50% of its total miles for that
26		period. The person claiming the exemption shall make an
27		election at the time of purchase to use either the trips or
28		mileage method. Persons who purchased motor vehicles prior to
29		July 1, 2004 shall make an election to use either the trips or
30		mileage method and document that election in their books and
31		records. If no election is made under this subsection to use
32		the trips or mileage method, the person shall be deemed to have
33		chosen the mileage method. Any election to use either the trips
34		or mileage method will remain in effect for that motor vehicle

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

1		any period for which the Department may issue a notice of tax
2		liability under this Act.
3		For purposes of determining qualifying trips or miles,
4		trailers, semitrailers, or pole trailers that carry property
5		for hire, even just between points in Illinois, will be
6		considered used for hire in interstate commerce if the
7		trailers, semitrailers, or pole trailers transport property
8		whose shipments originate or terminate outside Illinois. This
9		definition applies to all property purchased for the purpose of
10		being attached to those trailers, semitrailers, or pole
11		trailers as a part thereof. In lieu of a person providing
12		documentation regarding the qualifying use of each individual
13		trailer, semitrailer, or pole trailer, that person may document
14		such qualifying use by providing documentation of the
15		following:
16		(1) If a trailer, semitrailer, or pole trailer is
17		dedicated to a motor vehicle that qualifies as rolling
18		stock moving in interstate commerce under subsection (c) of
19		this Section, then that trailer, semitrailer, or pole
20		trailer qualifies as rolling stock moving in interstate
21		commerce under this subsection.
22		(2) If a trailer, semitrailer, or pole trailer is
23		dedicated to a group of motor vehicles that all qualify as
24		rolling stock moving in interstate commerce under
25		subsection (c) of this Section, then that trailer,
26		semitrailer, or pole trailer qualifies as rolling stock
27		moving in interstate commerce under this subsection.
28		(3) If one or more trailers, semitrailers, or pole
29		trailers are dedicated to a group of motor vehicles and not
30		all of those motor vehicles in that group qualify as
31		rolling stock moving in interstate commerce under
32		subsection (c) of this Section, then the percentage of
33		those trailers, semitrailers, or pole trailers that
34		qualifies as rolling stock moving in interstate commerce

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

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

1		Code, or subsection (a) of Section 3-818 of this Code, as
2		applicable, rounded up to the nearest whole dollar; and
3		(iii) for a registration year beginning on or after July 1,
4		2006, 14.35% of the taxes and fees incurred under
5		subsection (a) of Section 3-815 of this Code, or subsection
6		(a) of Section 3-818 of this Code, as applicable, rounded
7		up to the nearest whole dollar.
8		(b) Until June 30, 2004, vehicles Vehicles of the
9		second division with a gross vehicle weight of 8,000 pounds
10		or less and that incur any tax or fee under subsection (a)
11		of Section 3-815 of this Code or subsection (a) of Section
12		3-818 of this Code, as applicable, and have claimed the
13		rolling stock exemption under the Retailers' Occupation
14		Tax Act, Use Tax Act, Service Occupation Tax Act, or
15		Service Use Tax Act shall pay to the Illinois Department of
16		Revenue (or the Secretary of State under an
17		intergovernmental agreement) a commercial distribution
18		fee, for each registration year, for the use of the public
19		highways, State infrastructure, and State services, in an
20		amount equal to 36% of the taxes and fees incurred under
21		subsection (a) of Section 3-815 of this Code or subsection
22		(a) of Section 3-818 of this Code, as applicable, rounded
23		up to the nearest whole dollar.
24		The fees paid under this Section shall be deposited by the
25		Secretary of State into the General Revenue Fund.
26		(Source: P.A. 93-23, eff. 6-20-03; revised 10-9-03.)

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