Full Text of SB0711 94th General Assembly
SB0711sam002 94TH GENERAL ASSEMBLY
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Sen. M. Maggie Crotty
Filed: 3/30/2006
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| AMENDMENT TO SENATE BILL 711
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| AMENDMENT NO. ______. Amend Senate Bill 711, AS AMENDED, by | 3 |
| replacing everything after the enacting clause with the | 4 |
| following:
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| "Section 3. The Service Use Tax Act is amended by changing | 6 |
| Section 2 as follows:
| 7 |
| (35 ILCS 110/2) (from Ch. 120, par. 439.32)
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| Sec. 2. "Use" means the exercise by any person of any right | 9 |
| or power
over tangible personal property incident to the | 10 |
| ownership of that
property, but does not include the sale or | 11 |
| use for demonstration by him
of that property in any form as | 12 |
| tangible personal property in the
regular course of business.
| 13 |
| "Use" does not mean the interim
use of
tangible personal | 14 |
| property nor the physical incorporation of tangible
personal | 15 |
| property, as an ingredient or constituent, into other tangible
| 16 |
| personal property, (a) which is sold in the regular course of | 17 |
| business
or (b) which the person incorporating such ingredient | 18 |
| or constituent
therein has undertaken at the time of such | 19 |
| purchase to cause to be
transported in interstate commerce to | 20 |
| destinations outside the State of
Illinois.
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| "Purchased from a serviceman" means the acquisition of the | 22 |
| ownership
of, or title to, tangible personal property through a | 23 |
| sale of service.
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| "Purchaser" means any person who, through a sale of |
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| service, acquires
the ownership of, or title to, any tangible | 2 |
| personal property.
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| "Cost price" means the consideration paid by the serviceman | 4 |
| for a
purchase valued in money, whether paid in money or | 5 |
| otherwise, including
cash, credits and services, and shall be | 6 |
| determined without any
deduction on account of the supplier's | 7 |
| cost of the property sold or on
account of any other expense | 8 |
| incurred by the supplier. When a serviceman
contracts out part | 9 |
| or all of the services required in his sale of service,
it | 10 |
| shall be presumed that the cost price to the serviceman of the | 11 |
| property
transferred to him or her by his or her subcontractor | 12 |
| is equal to 50% of
the subcontractor's charges to the | 13 |
| serviceman in the absence of proof of
the consideration paid by | 14 |
| the subcontractor for the purchase of such property.
| 15 |
| "Selling price" means the consideration for a sale valued | 16 |
| in money
whether received in money or otherwise, including | 17 |
| cash, credits and
service, and shall be determined without any | 18 |
| deduction on account of the
serviceman's cost of the property | 19 |
| sold, the cost of materials used,
labor or service cost or any | 20 |
| other expense whatsoever, but does not
include interest or | 21 |
| finance charges which appear as separate items on
the bill of | 22 |
| sale or sales contract nor charges that are added to prices
by | 23 |
| sellers on account of the seller's duty to collect, from the
| 24 |
| purchaser, the tax that is imposed by this Act.
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| "Department" means the Department of Revenue.
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| "Person" means any natural individual, firm, partnership,
| 27 |
| association, joint stock company, joint venture, public or | 28 |
| private
corporation, limited liability company, and any | 29 |
| receiver, executor, trustee,
guardian or other representative | 30 |
| appointed by order of any court.
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| "Sale of service" means any transaction except:
| 32 |
| (1) a retail sale of tangible personal property taxable | 33 |
| under the
Retailers' Occupation Tax Act or under the Use | 34 |
| Tax Act.
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| (2) a sale of tangible personal property for the | 2 |
| purpose of resale
made in compliance with Section 2c of the | 3 |
| Retailers' Occupation Tax Act.
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| (3) except as hereinafter provided, a sale or transfer | 5 |
| of tangible
personal property as an incident to the | 6 |
| rendering of service for or by
any governmental body, or | 7 |
| for or by any corporation, society,
association, | 8 |
| foundation or institution organized and operated
| 9 |
| exclusively for charitable, religious or educational | 10 |
| purposes or any
not-for-profit corporation, society, | 11 |
| association, foundation,
institution or organization which | 12 |
| has no compensated officers or
employees and which is | 13 |
| organized and operated primarily for the
recreation of | 14 |
| persons 55 years of age or older. A limited liability | 15 |
| company
may qualify for the exemption under this paragraph | 16 |
| only if the limited
liability company is organized and | 17 |
| operated exclusively for educational
purposes.
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| (4) a sale or transfer of tangible personal
property as | 19 |
| an incident to the
rendering of service for interstate | 20 |
| carriers for hire for use as rolling stock
moving in | 21 |
| interstate commerce or by lessors under a lease of one year | 22 |
| or
longer, executed or in effect at the time of purchase of | 23 |
| personal property, to
interstate carriers for hire for use | 24 |
| as rolling stock moving in interstate
commerce so long as | 25 |
| so used by such interstate carriers for hire, and equipment
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| operated by a telecommunications provider, licensed as a | 27 |
| common carrier by the
Federal Communications Commission, | 28 |
| which is permanently installed in or affixed
to aircraft | 29 |
| moving in interstate commerce.
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| (4a) a sale or transfer of tangible personal
property | 31 |
| as an incident
to the rendering of service for owners, | 32 |
| lessors, or shippers of tangible
personal property which is | 33 |
| utilized by interstate carriers for hire for
use as rolling | 34 |
| stock moving in interstate commerce so long as so used by
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| interstate carriers for hire, and equipment operated by a
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| telecommunications provider, licensed as a common carrier | 3 |
| by the Federal
Communications Commission, which is | 4 |
| permanently installed in or affixed to
aircraft moving in | 5 |
| interstate commerce.
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| (4a-5) on and after July 1, 2003 and through June 30, | 7 |
| 2004, a sale or transfer of a motor vehicle
of
the
second | 8 |
| division with a gross vehicle weight in excess of 8,000 | 9 |
| pounds as an
incident to the rendering of service if that | 10 |
| motor
vehicle is subject
to the commercial distribution fee | 11 |
| imposed under Section 3-815.1 of the
Illinois Vehicle
Code. | 12 |
| Beginning on July 1, 2004 and through June 30, 2005, the | 13 |
| use in this State of motor vehicles of the second division: | 14 |
| (i) with a gross vehicle weight rating in excess of 8,000 | 15 |
| pounds; (ii) that are subject to the commercial | 16 |
| distribution fee imposed under Section 3-815.1 of the | 17 |
| Illinois Vehicle Code; and (iii) that are primarily used | 18 |
| for commercial purposes. Through June 30, 2005, this
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| exemption applies to repair and replacement parts added | 20 |
| after the
initial
purchase of such a motor vehicle if that | 21 |
| motor vehicle is used in a manner that
would
qualify for | 22 |
| the rolling stock exemption otherwise provided for in this | 23 |
| Act. For purposes of this paragraph, "used for commercial | 24 |
| purposes" means the transportation of persons or property | 25 |
| in furtherance of any commercial or industrial enterprise | 26 |
| whether for-hire or not.
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| (5) a sale or transfer of machinery and equipment used | 28 |
| primarily in the
process of the manufacturing or | 29 |
| assembling, either in an existing, an expanded
or a new | 30 |
| manufacturing facility, of tangible personal property for | 31 |
| wholesale or
retail sale or lease, whether such sale or | 32 |
| lease is made directly by the
manufacturer or by some other | 33 |
| person, whether the materials used in the process
are owned | 34 |
| by the manufacturer or some other person, or whether such |
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| sale or
lease is made apart from or as an incident to the | 2 |
| seller's engaging in a
service occupation and the | 3 |
| applicable tax is a Service Use Tax or Service
Occupation | 4 |
| Tax, rather than Use Tax or Retailers' Occupation Tax.
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| (5a) the repairing, reconditioning or remodeling, for | 6 |
| a
common carrier by rail, of tangible personal property | 7 |
| which belongs to such
carrier for hire, and as to which | 8 |
| such carrier receives the physical possession
of the | 9 |
| repaired, reconditioned or remodeled item of tangible | 10 |
| personal property
in Illinois, and which such carrier | 11 |
| transports, 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 person who | 14 |
| repaired, reconditioned or
remodeled the property to a | 15 |
| destination outside Illinois, for use outside
Illinois.
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| (5b) a sale or transfer of tangible personal property | 17 |
| which is produced by
the seller thereof on special order in | 18 |
| such a way as to have made the
applicable tax the Service | 19 |
| Occupation Tax or the Service Use Tax, rather than
the | 20 |
| Retailers' Occupation Tax or the Use Tax, for an interstate | 21 |
| carrier by rail
which receives the physical possession of | 22 |
| such property in Illinois, and which
transports such | 23 |
| property, or shares with another common carrier in the
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| transportation of such property, out of Illinois on a | 25 |
| standard uniform bill of
lading showing the seller of the | 26 |
| property as the shipper or consignor of such
property to a | 27 |
| destination outside Illinois, for use outside Illinois.
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| (6) until July 1, 2003, a sale or transfer of | 29 |
| distillation machinery
and equipment, sold
as a unit or kit | 30 |
| and assembled or installed by the retailer, which
machinery | 31 |
| and equipment is certified by the user to be used only for | 32 |
| the
production of ethyl alcohol that will be used for | 33 |
| consumption as motor fuel
or as a component of motor fuel | 34 |
| for the personal use of such user and not
subject to sale |
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| or resale.
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| (7) at the election of any serviceman not required to | 3 |
| be
otherwise registered as a retailer under Section 2a of | 4 |
| the Retailers'
Occupation Tax Act, made for each fiscal | 5 |
| year sales
of service in which the aggregate annual cost | 6 |
| price of tangible
personal property transferred as an | 7 |
| incident to the sales of service is
less than 35%, or 75% | 8 |
| in the case of servicemen transferring prescription
drugs | 9 |
| or servicemen engaged in graphic arts production, of the | 10 |
| aggregate
annual total gross receipts from all sales of | 11 |
| service. The purchase of
such tangible personal property by | 12 |
| the serviceman shall be subject to tax
under the Retailers' | 13 |
| Occupation Tax Act and the Use Tax Act.
However, if a
| 14 |
| primary serviceman who has made the election described in | 15 |
| this paragraph
subcontracts service work to a secondary | 16 |
| serviceman who has also made the
election described in this | 17 |
| paragraph, the primary serviceman does not
incur a Use Tax | 18 |
| liability if the secondary serviceman (i) has paid or will | 19 |
| pay
Use
Tax on his or her cost price of any tangible | 20 |
| personal property transferred
to the primary serviceman | 21 |
| and (ii) certifies that fact in writing to the
primary
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| serviceman. | 23 |
| (8) for purposes of this definition, veterinary | 24 |
| practices are engaged in a service occupation and are | 25 |
| subject to this Act when they transfer tangible personal | 26 |
| property in conjunction with providing professional | 27 |
| veterinary services. Veterinary practices are acting as | 28 |
| servicemen and not retailers when they transfer tangible | 29 |
| personal property incident to these services. This | 30 |
| includes:
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| (1) medicines, drugs, and other products having | 32 |
| medicinal purposes that are directly applied or | 33 |
| administered during a veterinary exam or procedure; | 34 |
| (2) medicines, drugs, and other products having |
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| medicinal purposes that are recommended or prescribed | 2 |
| as a result of a veterinary exam; and | 3 |
| (3) medicines, drugs, and other products having | 4 |
| medicinal purposes that are sold as a part of a | 5 |
| continuing plan for the health and well being of an | 6 |
| animal under the care of the veterinarian. | 7 |
| The criteria for determining as to whether a continuing | 8 |
| plan for health and well being has been established between | 9 |
| a veterinary practice and a customer is whether a valid | 10 |
| Veterinarian-Client-Patient Relationship (VCPR) has been | 11 |
| established in accordance with the Veterinary Medicine and | 12 |
| Surgery Practice Act of 2004. | 13 |
| Veterinary practices must maintain appropriate | 14 |
| information within their records to indicate that a | 15 |
| particular sale or transfer of tangible personal property | 16 |
| made in conjunction with providing veterinary services was | 17 |
| a part of a valid VCPR between the veterinarian and the | 18 |
| customer. A notation must be maintained that a particular | 19 |
| product was prescribed or recommended as a result of an | 20 |
| exam or after consultation with the client.
| 21 |
| Tangible personal property transferred incident to the | 22 |
| completion of a
maintenance agreement is exempt from the tax | 23 |
| imposed pursuant to this Act.
| 24 |
| Exemption (5) also includes machinery and equipment used in | 25 |
| the general
maintenance or repair of such exempt machinery and | 26 |
| equipment or for in-house
manufacture of exempt machinery and | 27 |
| equipment. For the purposes of exemption
(5), each of these | 28 |
| terms shall have the following meanings: (1) "manufacturing
| 29 |
| process" shall mean the production of any article of tangible | 30 |
| personal
property, whether such article is a finished product | 31 |
| or an article for use in
the process of manufacturing or | 32 |
| assembling a different article of tangible
personal property, | 33 |
| by procedures commonly regarded as manufacturing,
processing, | 34 |
| fabricating, or refining which changes some existing
material |
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| or materials into a material with a different form, use or
| 2 |
| name. In relation to a recognized integrated business composed | 3 |
| of a
series of operations which collectively constitute | 4 |
| manufacturing, or
individually constitute manufacturing | 5 |
| operations, the manufacturing
process shall be deemed to | 6 |
| commence with the first operation or stage of
production in the | 7 |
| series, and shall not be deemed to end until the
completion of | 8 |
| the final product in the last operation or stage of
production | 9 |
| in the series; and further, for purposes of exemption (5),
| 10 |
| photoprocessing is deemed to be a manufacturing process of | 11 |
| tangible
personal property for wholesale or retail sale; (2) | 12 |
| "assembling process" shall
mean the production of any article | 13 |
| of tangible personal property, whether such
article is a | 14 |
| finished product or an article for use in the process of
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| manufacturing or assembling a different article of tangible | 16 |
| personal
property, by the combination of existing materials in | 17 |
| a manner commonly
regarded as assembling which results in a | 18 |
| material of a different form,
use or name; (3) "machinery" | 19 |
| shall mean major mechanical machines or
major components of | 20 |
| such machines contributing to a manufacturing or
assembling | 21 |
| process; and (4) "equipment" shall include any independent
| 22 |
| device or tool separate from any machinery but essential to an
| 23 |
| integrated manufacturing or assembly process; including | 24 |
| computers
used primarily in a manufacturer's computer
assisted | 25 |
| design, computer assisted manufacturing (CAD/CAM) system;
or | 26 |
| any subunit or assembly comprising a component of any machinery | 27 |
| or
auxiliary, adjunct or attachment parts of machinery, such as | 28 |
| tools, dies,
jigs, fixtures, patterns and molds; or any parts | 29 |
| which require periodic
replacement in the course of normal | 30 |
| operation; but shall not include hand
tools.
Equipment includes | 31 |
| chemicals or chemicals acting as catalysts but only if the
| 32 |
| chemicals or chemicals acting as catalysts effect a direct and | 33 |
| immediate change
upon a
product being manufactured or assembled | 34 |
| for wholesale or retail sale or
lease.
The purchaser of such |
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| machinery and equipment who has an active
resale registration | 2 |
| number shall furnish such number to the seller at the
time of | 3 |
| purchase. The user of such machinery and equipment and tools
| 4 |
| without an active resale registration number shall prepare a | 5 |
| certificate of
exemption for each transaction stating facts | 6 |
| establishing the exemption for
that transaction, which | 7 |
| certificate shall be available to the Department
for inspection | 8 |
| or audit. The Department shall prescribe the form of the
| 9 |
| certificate.
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| Any informal rulings, opinions or letters issued by the | 11 |
| Department in
response to an inquiry or request for any opinion | 12 |
| from any person
regarding the coverage and applicability of | 13 |
| exemption (5) to specific
devices shall be published, | 14 |
| maintained as a public record, and made
available for public | 15 |
| inspection and copying. If the informal ruling,
opinion or | 16 |
| letter contains trade secrets or other confidential
| 17 |
| information, where possible the Department shall delete such | 18 |
| information
prior to publication. Whenever such informal | 19 |
| rulings, opinions, or
letters contain any policy of general | 20 |
| applicability, the Department
shall formulate and adopt such | 21 |
| policy as a rule in accordance with the
provisions of the | 22 |
| Illinois Administrative Procedure Act.
| 23 |
| On and after July 1, 1987, no entity otherwise eligible | 24 |
| under exemption
(3) of this Section shall make tax free | 25 |
| purchases unless it has an active
exemption identification | 26 |
| number issued by the Department.
| 27 |
| The purchase, employment and transfer of such tangible | 28 |
| personal
property as newsprint and ink for the primary purpose | 29 |
| of conveying news
(with or without other information) is not a | 30 |
| purchase, use or sale of
service or of tangible personal | 31 |
| property within the meaning of this Act.
| 32 |
| "Serviceman" means any person who is engaged in the | 33 |
| occupation of
making sales of service.
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| "Sale at retail" means "sale at retail" as defined in the |
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| Retailers'
Occupation Tax Act.
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| "Supplier" means any person who makes sales of tangible | 3 |
| personal
property to servicemen for the purpose of resale as an | 4 |
| incident to a
sale of service.
| 5 |
| "Serviceman maintaining a place of business in this State", | 6 |
| or any
like term, means and includes any serviceman:
| 7 |
| 1. having or maintaining within this State, directly or | 8 |
| by a
subsidiary, an office, distribution house, sales | 9 |
| house, warehouse or
other place of business, or any agent | 10 |
| or other representative operating
within this State under | 11 |
| the authority of the serviceman or its
subsidiary, | 12 |
| irrespective of whether such place of business or agent or
| 13 |
| other representative is located here permanently or | 14 |
| temporarily, or
whether such serviceman or subsidiary is | 15 |
| licensed to do business in this
State;
| 16 |
| 2. soliciting orders for tangible personal property by | 17 |
| means of a
telecommunication or television shopping system | 18 |
| (which utilizes toll free
numbers) which is intended by the | 19 |
| retailer to be broadcast by cable
television or other means | 20 |
| of broadcasting, to consumers located in this State;
| 21 |
| 3. pursuant to a contract with a broadcaster or | 22 |
| publisher located in this
State, soliciting orders for | 23 |
| tangible personal property by means of advertising
which is | 24 |
| disseminated primarily to consumers located in this State | 25 |
| and only
secondarily to bordering jurisdictions;
| 26 |
| 4. soliciting orders for tangible personal property by | 27 |
| mail if the
solicitations are substantial and recurring and | 28 |
| if the retailer benefits
from any banking, financing, debt | 29 |
| collection, telecommunication, or
marketing activities | 30 |
| occurring in this State or benefits from the location
in | 31 |
| this State of authorized installation, servicing, or | 32 |
| repair facilities;
| 33 |
| 5. being owned or controlled by the same interests | 34 |
| which own or
control any retailer engaging in business in |
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| the same or similar line of
business in this State;
| 2 |
| 6. having a franchisee or licensee operating under its | 3 |
| trade name if
the franchisee or licensee is required to | 4 |
| collect the tax under this Section;
| 5 |
| 7. pursuant to a contract with a cable television | 6 |
| operator located in
this State, soliciting orders for | 7 |
| tangible personal property by means of
advertising which is | 8 |
| transmitted or distributed over a cable television
system | 9 |
| in this State; or
| 10 |
| 8. engaging in activities in Illinois, which | 11 |
| activities in the
state in which the supply business | 12 |
| engaging in such activities is located
would constitute | 13 |
| maintaining a place of business in that state.
| 14 |
| (Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24, | 15 |
| eff. 6-20-03; 93-1033, eff. 9-3-04.)"; and
| 16 |
| Section 5. The Service Occupation Tax Act is amended by | 17 |
| changing Section 2 as follows:
| 18 |
| (35 ILCS 115/2) (from Ch. 120, par. 439.102)
| 19 |
| Sec. 2. "Transfer" means any transfer of the title to | 20 |
| property or of
the ownership of property whether or not the | 21 |
| transferor retains title as
security for the payment of amounts | 22 |
| due him from the transferee.
| 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 by his or her subcontractor is | 32 |
| equal to 50% of the
subcontractor's charges to the serviceman |
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| in the absence of proof of the
consideration paid by the | 2 |
| subcontractor for the purchase of such
property.
| 3 |
| "Department" means the Department of Revenue.
| 4 |
| "Person" means any natural individual, firm, partnership, | 5 |
| association, joint
stock company, joint venture, public or | 6 |
| private corporation, limited liability
company, and any | 7 |
| receiver, executor, trustee, guardian or other representative
| 8 |
| appointed by order of any court.
| 9 |
| "Sale of Service" means any transaction except:
| 10 |
| (a) A retail sale of tangible personal property taxable | 11 |
| under the Retailers'
Occupation Tax Act or under the Use Tax | 12 |
| Act.
| 13 |
| (b) A sale of tangible personal property for the purpose of | 14 |
| resale made in
compliance with Section 2c of the Retailers' | 15 |
| Occupation Tax Act.
| 16 |
| (c) Except as hereinafter provided, a sale or transfer of | 17 |
| tangible personal
property as an incident to the rendering of | 18 |
| service for or by any governmental
body or for or by any | 19 |
| corporation, society, association, foundation or
institution | 20 |
| organized and operated exclusively for charitable, religious | 21 |
| or
educational purposes or any not-for-profit corporation, | 22 |
| society, association,
foundation, institution or organization | 23 |
| which has no compensated officers or
employees and which is | 24 |
| organized and operated primarily for the recreation of
persons | 25 |
| 55 years of age or older. A limited liability company may | 26 |
| qualify for
the exemption under this paragraph only if the | 27 |
| limited liability company is
organized and operated | 28 |
| exclusively for educational purposes.
| 29 |
| (d) A sale or transfer of tangible personal
property
as an | 30 |
| incident to the
rendering of service for interstate carriers | 31 |
| for hire for use as rolling stock
moving in interstate commerce | 32 |
| or lessors under leases of one year or longer,
executed or in | 33 |
| effect at the time of purchase, to interstate carriers for hire
| 34 |
| for use as rolling stock moving in interstate commerce, and |
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| equipment operated
by a telecommunications provider, licensed | 2 |
| as a common
carrier by the Federal Communications Commission, | 3 |
| which is permanently
installed in or affixed to aircraft moving | 4 |
| in interstate commerce.
| 5 |
| (d-1) A sale or transfer of tangible personal
property as | 6 |
| an incident to
the rendering of service for owners, lessors or | 7 |
| shippers of tangible personal
property which is utilized by | 8 |
| interstate carriers for hire for use as rolling
stock moving in | 9 |
| interstate commerce, and equipment operated
by a | 10 |
| telecommunications provider, licensed as a common carrier by | 11 |
| the
Federal Communications Commission, which is permanently | 12 |
| installed in or
affixed to aircraft moving in interstate | 13 |
| commerce.
| 14 |
| (d-1.1) On and after July 1, 2003 and through June 30, | 15 |
| 2004, a sale or transfer of a motor vehicle
of the
second | 16 |
| division with a gross vehicle weight in excess of 8,000 pounds | 17 |
| as an
incident to the rendering of service if that motor
| 18 |
| vehicle is subject
to the commercial distribution fee imposed | 19 |
| under Section 3-815.1 of the
Illinois Vehicle
Code. Beginning | 20 |
| on July 1, 2004 and through June 30, 2005, the use in this | 21 |
| State of motor vehicles of the second division: (i) with a | 22 |
| gross vehicle weight rating in excess of 8,000 pounds; (ii) | 23 |
| that are subject to the commercial distribution fee imposed | 24 |
| under Section 3-815.1 of the Illinois Vehicle Code; and (iii) | 25 |
| that are primarily used for commercial purposes. Through June | 26 |
| 30, 2005, this exemption applies to repair and replacement | 27 |
| parts added after the
initial
purchase of such a motor vehicle | 28 |
| if that motor vehicle is used in a manner that
would
qualify | 29 |
| for the rolling stock exemption otherwise provided for in this | 30 |
| Act. For purposes of this paragraph, "used for commercial | 31 |
| purposes" means the transportation of persons or property in | 32 |
| furtherance of any commercial or industrial enterprise whether | 33 |
| for-hire or not.
| 34 |
| (d-2) The repairing, reconditioning or remodeling, for a |
|
|
|
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| 1 |
| common carrier by
rail, of tangible personal property which | 2 |
| belongs to such carrier for hire, and
as to which such carrier | 3 |
| receives the physical possession of the repaired,
| 4 |
| reconditioned or remodeled item of tangible personal property | 5 |
| in Illinois, and
which such carrier transports, or shares with | 6 |
| another common carrier in the
transportation of such property, | 7 |
| out of Illinois on a standard uniform bill of
lading showing | 8 |
| the person who repaired, reconditioned or remodeled the | 9 |
| property
as the shipper or consignor of such property to a | 10 |
| destination outside Illinois,
for use outside Illinois.
| 11 |
| (d-3) A sale or transfer of tangible personal property | 12 |
| which
is produced by the seller thereof on special order in | 13 |
| such a way as to have
made the applicable tax the Service | 14 |
| Occupation Tax or the Service Use Tax,
rather than the | 15 |
| Retailers' Occupation Tax or the Use Tax, for an interstate
| 16 |
| carrier by rail which receives the physical possession of such | 17 |
| property in
Illinois, and which transports such property, or | 18 |
| shares with another common
carrier in the transportation of | 19 |
| such property, out of Illinois on a standard
uniform bill of | 20 |
| lading showing the seller of the property as the shipper or
| 21 |
| consignor of such property to a destination outside Illinois, | 22 |
| for use outside
Illinois.
| 23 |
| (d-4) Until January 1, 1997, a sale, by a registered | 24 |
| serviceman paying tax
under this Act to the Department, of | 25 |
| special order printed materials delivered
outside Illinois and | 26 |
| which are not returned to this State, if delivery is made
by | 27 |
| the seller or agent of the seller, including an agent who | 28 |
| causes the product
to be delivered outside Illinois by a common | 29 |
| carrier or the U.S.
postal service.
| 30 |
| (d-5) For purposes of this definition, veterinary | 31 |
| practices are engaged in a service occupation and are subject | 32 |
| to this Act when they transfer tangible personal property in | 33 |
| conjunction with providing professional veterinary services. | 34 |
| Veterinary practices are acting as servicemen and not retailers |
|
|
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| when they transfer tangible personal property incident to these | 2 |
| services. This includes:
| 3 |
| (1) medicines, drugs, and other products having | 4 |
| medicinal purposes that are directly applied or | 5 |
| administered during a veterinary exam or procedure; | 6 |
| (2) medicines, drugs, and other products having | 7 |
| medicinal purposes that are recommended or prescribed as a | 8 |
| result of a veterinary exam; and | 9 |
| (3) medicines, drugs, and other products having | 10 |
| medicinal purposes that are sold as a part of a continuing | 11 |
| plan for the health and well being of an animal under the | 12 |
| care of the veterinarian. | 13 |
| The criteria for determining as to whether a continuing | 14 |
| plan for health and well being has been established between a | 15 |
| veterinary practice and a customer is whether a valid | 16 |
| Veterinarian-Client-Patient Relationship (VCPR) has been | 17 |
| established in accordance with the Veterinary Medicine and | 18 |
| Surgery Practice Act of 2004. | 19 |
| Veterinary practices must maintain appropriate information | 20 |
| within their records to indicate that a particular sale or | 21 |
| transfer of tangible personal property made in conjunction with | 22 |
| providing veterinary services was a part of a valid VCPR | 23 |
| between the veterinarian and the customer. A notation must be | 24 |
| maintained that a particular product was prescribed or | 25 |
| recommended as a result of an exam or after consultation with | 26 |
| the client.
| 27 |
| (e) A sale or transfer of machinery and equipment used | 28 |
| primarily in
the process of the manufacturing or assembling, | 29 |
| either in an existing, an
expanded or a new manufacturing | 30 |
| facility, of tangible personal property for
wholesale or retail | 31 |
| sale or lease, whether such sale or lease is made directly
by | 32 |
| the manufacturer or by some other person, whether the materials | 33 |
| used in the
process are owned by the manufacturer or some other | 34 |
| person, or whether such
sale or lease is made apart from or as |
|
|
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| 1 |
| an incident to the seller's engaging in
a service occupation | 2 |
| and the applicable tax is a Service Occupation Tax or
Service | 3 |
| Use Tax, rather than Retailers' Occupation Tax or Use Tax.
| 4 |
| (f) Until July 1, 2003, the sale or transfer of | 5 |
| distillation
machinery
and equipment, sold as a
unit or kit and | 6 |
| assembled or installed by the retailer, which machinery
and | 7 |
| equipment is certified by the user to be used only for the | 8 |
| production
of ethyl alcohol that will be used for consumption | 9 |
| as motor fuel or as a
component of motor fuel for the personal | 10 |
| use of such user and not subject
to sale or resale.
| 11 |
| (g) At the election of any serviceman not required to be | 12 |
| otherwise
registered as a retailer under Section 2a of the | 13 |
| Retailers' Occupation Tax Act,
made for each fiscal year sales | 14 |
| of service in which the aggregate annual cost
price of tangible | 15 |
| personal property transferred as an incident to the sales of
| 16 |
| service is less than 35% (75% in the case of servicemen | 17 |
| transferring
prescription drugs or servicemen engaged in | 18 |
| graphic arts production) of the
aggregate annual total gross | 19 |
| receipts from all sales of service. For purposes of this | 20 |
| Section, a serviceman is not required to register as a retailer | 21 |
| under Section 2a of the Retailers' Occupation Tax Act if: (i) | 22 |
| all of his or her sales activities constitute accommodation | 23 |
| retail sales made to service customers; and (ii) these | 24 |
| accommodation retail sales do not exceed 3% of the serviceman's | 25 |
| annual revenues from sales of service. The purchase
of such | 26 |
| tangible personal property by the serviceman shall be subject | 27 |
| to tax
under the Retailers' Occupation Tax Act and the Use Tax | 28 |
| Act.
However, if a
primary serviceman who has made the election | 29 |
| described in this paragraph
subcontracts service work to a | 30 |
| secondary serviceman who has also made the
election described | 31 |
| in this paragraph, the primary serviceman does not
incur a Use | 32 |
| Tax liability if the secondary serviceman (i) has paid or will | 33 |
| pay
Use
Tax on his or her cost price of any tangible personal | 34 |
| property transferred
to the primary serviceman and (ii) |
|
|
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| 1 |
| certifies that fact in writing to the
primary serviceman.
| 2 |
| Tangible personal property transferred incident to the | 3 |
| completion of a
maintenance agreement is exempt from the tax | 4 |
| imposed pursuant to this Act.
| 5 |
| Exemption (e) also includes machinery and equipment used in | 6 |
| the
general maintenance or repair of such exempt machinery and | 7 |
| equipment or for
in-house manufacture of exempt machinery and | 8 |
| equipment.
For the purposes of exemption (e), each of these | 9 |
| terms shall have the following
meanings: (1) "manufacturing | 10 |
| process" shall mean the production of any
article of tangible | 11 |
| personal property, whether such article is a
finished product | 12 |
| or an article for use in the process of manufacturing
or | 13 |
| assembling a different article of tangible personal property, | 14 |
| by
procedures commonly regarded as manufacturing, processing, | 15 |
| fabricating,
or refining which changes some existing material | 16 |
| or materials into a
material with a different form, use or | 17 |
| name. In relation to a
recognized integrated business composed | 18 |
| of a series of operations which
collectively constitute | 19 |
| manufacturing, or individually constitute
manufacturing | 20 |
| operations, the manufacturing process shall be deemed to
| 21 |
| commence with the first operation or stage of production in the | 22 |
| series,
and shall not be deemed to end until the completion of | 23 |
| the final product
in the last operation or stage of production | 24 |
| in the series; and further for
purposes of exemption (e), | 25 |
| photoprocessing is deemed to be a manufacturing
process of | 26 |
| tangible personal property for wholesale or retail sale;
(2) | 27 |
| "assembling process" shall mean the production of any article | 28 |
| of
tangible personal property, whether such article is a | 29 |
| finished product
or an article for use in the process of | 30 |
| manufacturing or assembling a
different article of tangible | 31 |
| personal property, by the combination of
existing materials in | 32 |
| a manner commonly regarded as assembling which
results in a | 33 |
| material of a different form, use or name; (3) "machinery"
| 34 |
| shall mean major mechanical machines or major components of |
|
|
|
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| 1 |
| such machines
contributing to a manufacturing or assembling | 2 |
| process; and (4) "equipment"
shall include any independent | 3 |
| device or tool separate from any machinery but
essential to an | 4 |
| integrated manufacturing or assembly process; including
| 5 |
| computers used primarily in a manufacturer's computer
assisted | 6 |
| design, computer assisted manufacturing (CAD/CAM) system; or | 7 |
| any
subunit or assembly comprising a component of any machinery | 8 |
| or auxiliary,
adjunct or attachment parts of machinery, such as | 9 |
| tools, dies, jigs, fixtures,
patterns and molds; or any parts | 10 |
| which require periodic replacement in the
course of normal | 11 |
| operation; but shall not include hand tools. Equipment
includes | 12 |
| chemicals or chemicals acting as catalysts but only if the | 13 |
| chemicals
or chemicals acting as catalysts effect a direct and | 14 |
| immediate change upon a
product being manufactured or assembled | 15 |
| for wholesale or retail sale or lease.
The purchaser of such | 16 |
| machinery and equipment
who has an active resale registration | 17 |
| number shall furnish such number to
the seller at the time of | 18 |
| purchase. The purchaser of such machinery and
equipment and | 19 |
| tools without an active resale registration number shall | 20 |
| furnish
to the seller a certificate of exemption for each | 21 |
| transaction stating facts
establishing the exemption for that | 22 |
| transaction, which certificate shall
be available to the | 23 |
| Department for inspection or audit.
| 24 |
| Except as provided in Section 2d of this Act, the rolling | 25 |
| stock exemption
applies to rolling
stock
used by an interstate
| 26 |
| carrier for hire, even just between points in Illinois, if such | 27 |
| rolling
stock transports, for hire, persons whose journeys or | 28 |
| property whose
shipments originate or terminate outside | 29 |
| Illinois.
| 30 |
| Any informal rulings, opinions or letters issued by the | 31 |
| Department in
response to an inquiry or request for any opinion | 32 |
| from any person
regarding the coverage and applicability of | 33 |
| exemption (e) to specific
devices shall be published, | 34 |
| maintained as a public record, and made
available for public |
|
|
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| 1 |
| inspection and copying. If the informal ruling,
opinion or | 2 |
| letter contains trade secrets or other confidential
| 3 |
| information, where possible the Department shall delete such | 4 |
| information
prior to publication. Whenever such informal | 5 |
| rulings, opinions, or
letters contain any policy of general | 6 |
| applicability, the Department
shall formulate and adopt such | 7 |
| policy as a rule in accordance with the
provisions of the | 8 |
| Illinois Administrative Procedure Act.
| 9 |
| On and after July 1, 1987, no entity otherwise eligible | 10 |
| under exemption
(c) of this Section shall make tax free | 11 |
| purchases unless it has an active
exemption identification | 12 |
| number issued by the Department.
| 13 |
| "Serviceman" means any person who is engaged in the | 14 |
| occupation of
making sales of service.
| 15 |
| "Sale at Retail" means "sale at retail" as defined in the | 16 |
| Retailers'
Occupation Tax Act.
| 17 |
| "Supplier" means any person who makes sales of tangible | 18 |
| personal
property to servicemen for the purpose of resale as an | 19 |
| incident to a
sale of service.
| 20 |
| (Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24, | 21 |
| eff. 6-20-03; 93-1033, eff. 9-3-04.)
| 22 |
| Section 99. Effective date. This Act takes effect upon | 23 |
| becoming law.".
|
|