Full Text of HB3608 101st General Assembly
HB3608sam001 101ST GENERAL ASSEMBLY | Sen. Sue Rezin Adopted in Senate on Oct 29, 2019
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| 1 | | AMENDMENT TO HOUSE BILL 3608
| 2 | | AMENDMENT NO. ______. Amend House Bill 3608 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Use Tax Act is amended by changing Section | 5 | | 3-50 as follows:
| 6 | | (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
| 7 | | Sec. 3-50. Manufacturing and assembly exemption. The | 8 | | manufacturing
and assembling machinery and equipment exemption | 9 | | includes
machinery and equipment that replaces machinery and | 10 | | equipment in an
existing manufacturing facility as well as | 11 | | machinery and equipment that
are for use in an expanded or new | 12 | | manufacturing facility. The machinery and
equipment exemption | 13 | | also includes machinery and equipment used in the
general | 14 | | maintenance or repair of exempt machinery and equipment or for
| 15 | | in-house manufacture of exempt machinery and equipment. | 16 | | Beginning on July 1, 2017, the manufacturing and assembling |
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| 1 | | machinery and equipment exemption also includes graphic arts | 2 | | machinery and equipment, as defined in paragraph (6) of Section | 3 | | 3-5. The machinery and equipment exemption does not include | 4 | | machinery and equipment used in (i) the generation of | 5 | | electricity for wholesale or retail sale; (ii) the generation | 6 | | or treatment of natural or artificial gas for wholesale or | 7 | | retail sale that is delivered to customers through pipes, | 8 | | pipelines, or mains; or (iii) the treatment of water for | 9 | | wholesale or retail sale that is delivered to customers through | 10 | | pipes, pipelines, or mains. The provisions of this amendatory | 11 | | Act of the 98th General Assembly are declaratory of existing | 12 | | law as to the meaning and scope of this exemption. For the
| 13 | | purposes of this exemption, terms have the following
meanings:
| 14 | | (1) "Manufacturing process" means the production of
an | 15 | | article of tangible personal property, whether the article
| 16 | | is a finished product or an article for use in the process | 17 | | of manufacturing
or assembling a different article of | 18 | | tangible personal property, by
a procedure commonly | 19 | | regarded as manufacturing, processing, fabricating, or
| 20 | | refining that changes some existing material into a | 21 | | material
with a different form, use, or name. In relation | 22 | | to a recognized integrated
business composed of a series of | 23 | | operations that collectively constitute
manufacturing, or | 24 | | individually constitute
manufacturing operations, the | 25 | | manufacturing process commences with the
first operation | 26 | | or stage of production in the series
and does not end until |
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| 1 | | the completion of the final product
in the last operation | 2 | | or stage of production in the series. For purposes
of this | 3 | | exemption, photoprocessing is a
manufacturing process of | 4 | | tangible personal property for wholesale or retail
sale.
| 5 | | (2) "Assembling process" means the production of
an | 6 | | article of tangible personal property, whether the article
| 7 | | is a finished product or an article for use in the process | 8 | | of manufacturing
or assembling a different article of | 9 | | tangible personal property, by the
combination of existing | 10 | | materials in a manner commonly regarded as
assembling that | 11 | | results in an article or material of a different
form, use, | 12 | | or name.
| 13 | | (3) "Machinery" means major
mechanical machines or | 14 | | major components of those machines contributing to a
| 15 | | manufacturing or assembling process.
| 16 | | (4) "Equipment" includes an independent device
or tool | 17 | | separate from machinery but essential to an integrated
| 18 | | manufacturing or assembly process; including computers | 19 | | used primarily in
a manufacturer's computer assisted | 20 | | design,
computer assisted manufacturing (CAD/CAM) system; | 21 | | any
subunit or assembly comprising a component of any | 22 | | machinery or auxiliary,
adjunct, or attachment parts of | 23 | | machinery, such as tools, dies, jigs,
fixtures, patterns, | 24 | | and molds; and any parts that require
periodic replacement | 25 | | in the course of normal operation; but does not
include | 26 | | hand tools. Equipment includes chemicals or chemicals |
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| 1 | | acting as
catalysts but only if
the chemicals or chemicals | 2 | | acting as catalysts effect a direct and
immediate change | 3 | | upon a
product being manufactured or assembled for | 4 | | wholesale or retail sale or
lease. | 5 | | (5) "Production related tangible personal property" | 6 | | means all tangible personal property that is used or | 7 | | consumed by the purchaser in a manufacturing facility in | 8 | | which a manufacturing process takes place and includes, | 9 | | without limitation, tangible personal property that is | 10 | | purchased for incorporation into real estate within a | 11 | | manufacturing facility, supplies and consumables used in a | 12 | | manufacturing facility including fuels, coolants, | 13 | | solvents, oils, lubricants, and adhesives, hand tools, | 14 | | protective apparel, and fire and safety equipment used or | 15 | | consumed within a manufacturing facility, and tangible | 16 | | personal property that is used or consumed in activities | 17 | | such as research and development, preproduction material | 18 | | handling, receiving, quality control, inventory control, | 19 | | storage, staging, and packaging for shipping and | 20 | | transportation purposes. "Production related tangible | 21 | | personal property" does not include (i) tangible personal | 22 | | property that is used, within or without a manufacturing | 23 | | facility, in sales, purchasing, accounting, fiscal | 24 | | management, marketing, personnel recruitment or selection, | 25 | | or landscaping or (ii) tangible personal property that is | 26 | | required to be titled or registered with a department, |
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| 1 | | agency, or unit of federal, State, or local government.
| 2 | | The manufacturing and assembling machinery and equipment | 3 | | exemption includes production related tangible personal | 4 | | property that is purchased on or after July 1, 2007 and on or | 5 | | before June 30, 2008 and on or after July 1, 2019. The | 6 | | exemption for production related tangible personal property | 7 | | purchased on or after July 1, 2007 and on or before June 30, | 8 | | 2008 is subject to both of the following limitations: | 9 | | (1) The maximum amount of the exemption for any one | 10 | | taxpayer may not exceed 5% of the purchase price of | 11 | | production related tangible personal property that is | 12 | | purchased on or after July 1, 2007 and on or before June | 13 | | 30, 2008. A credit under Section 3-85 of this Act may not | 14 | | be earned by the purchase of production related tangible | 15 | | personal property for which an exemption is received under | 16 | | this Section. | 17 | | (2) The maximum aggregate amount of the exemptions for | 18 | | production related tangible personal property purchased on | 19 | | or after July 1, 2007 and on or before June 30, 2008 | 20 | | awarded under this Act and the Retailers' Occupation Tax | 21 | | Act to all taxpayers may not exceed $10,000,000. If the | 22 | | claims for the exemption exceed $10,000,000, then the | 23 | | Department shall reduce the amount of the exemption to each | 24 | | taxpayer on a pro rata basis. | 25 | | The Department shall adopt rules to implement and administer | 26 | | the exemption for production related tangible personal |
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| 1 | | property. | 2 | | The manufacturing and assembling machinery and equipment
| 3 | | exemption includes the sale of materials to a purchaser who
| 4 | | produces exempted types of machinery, equipment, or tools and | 5 | | who rents or
leases that machinery, equipment, or tools to a
| 6 | | manufacturer of tangible
personal property. This exemption | 7 | | also includes the sale of materials to a
purchaser who | 8 | | manufactures those materials into an exempted type of
| 9 | | machinery, equipment, or tools that the purchaser uses
himself | 10 | | or herself in the
manufacturing of tangible personal property. | 11 | | This exemption includes the
sale of exempted types of machinery | 12 | | or equipment to a
purchaser who is not the manufacturer, but | 13 | | who rents or leases the use of
the property to a manufacturer. | 14 | | The purchaser of the machinery and
equipment who has an active | 15 | | resale registration number shall
furnish that number to the | 16 | | seller at the time of purchase.
A purchaser user of the | 17 | | machinery, equipment, or tools without an
active resale | 18 | | registration number shall prepare a certificate of exemption
| 19 | | for each transaction stating facts establishing the exemption | 20 | | for that
transaction , and that certificate shall be
available | 21 | | to the Department for inspection or audit. The Department shall
| 22 | | prescribe the form of the certificate. Informal rulings, | 23 | | opinions, or
letters issued by the Department in
response to an | 24 | | inquiry or request for an opinion from any person
regarding the | 25 | | coverage and applicability of this exemption to specific
| 26 | | devices shall be published, maintained as a public record, and |
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| 1 | | made
available for public inspection and copying. If the | 2 | | informal ruling,
opinion, or letter contains trade secrets or | 3 | | other confidential
information, where possible, the Department | 4 | | shall delete that information
before publication. Whenever | 5 | | informal rulings, opinions, or
letters contain a policy of | 6 | | general applicability, the Department
shall formulate and | 7 | | adopt that policy as a rule in accordance with the
Illinois | 8 | | Administrative Procedure Act.
| 9 | | The manufacturing and assembling machinery and equipment
| 10 | | exemption is exempt from the provisions of Section 3-90. | 11 | | (Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19.)
| 12 | | Section 10. The Service Use Tax Act is amended by changing | 13 | | Section 2 as follows:
| 14 | | (35 ILCS 110/2) (from Ch. 120, par. 439.32)
| 15 | | Sec. 2. Definitions. In this Act: | 16 | | "Use" means the exercise by any person of any right or | 17 | | power
over tangible personal property incident to the ownership | 18 | | of that
property, but does not include the sale or use for | 19 | | demonstration by him
of that property in any form as tangible | 20 | | personal property in the
regular course of business.
"Use" does | 21 | | not mean the interim
use of
tangible personal property nor the | 22 | | physical incorporation of tangible
personal property, as an | 23 | | ingredient or constituent, into other tangible
personal | 24 | | property, (a) which is sold in the regular course of business
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| 1 | | or (b) which the person incorporating such ingredient or | 2 | | constituent
therein has undertaken at the time of such purchase | 3 | | to cause to be
transported in interstate commerce to | 4 | | destinations outside the State of
Illinois.
| 5 | | "Purchased from a serviceman" means the acquisition of the | 6 | | ownership
of, or title to, tangible personal property through a | 7 | | sale of service.
| 8 | | "Purchaser" means any person who, through a sale of | 9 | | service, acquires
the ownership of, or title to, any tangible | 10 | | personal property.
| 11 | | "Cost price" means the consideration paid by the serviceman | 12 | | for a
purchase valued in money, whether paid in money or | 13 | | otherwise, including
cash, credits and services, and shall be | 14 | | determined without any
deduction on account of the supplier's | 15 | | cost of the property sold or on
account of any other expense | 16 | | incurred by the supplier. When a serviceman
contracts out part | 17 | | or all of the services required in his sale of service,
it | 18 | | shall be presumed that the cost price to the serviceman of the | 19 | | property
transferred to him or her by his or her subcontractor | 20 | | is equal to 50% of
the subcontractor's charges to the | 21 | | serviceman in the absence of proof of
the consideration paid by | 22 | | the subcontractor for the purchase of such property.
| 23 | | "Selling price" means the consideration for a sale valued | 24 | | in money
whether received in money or otherwise, including | 25 | | cash, credits and
service, and shall be determined without any | 26 | | deduction on account of the
serviceman's cost of the property |
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| 1 | | sold, the cost of materials used,
labor or service cost or any | 2 | | other expense whatsoever, but does not
include interest or | 3 | | finance charges which appear as separate items on
the bill of | 4 | | sale or sales contract nor charges that are added to prices
by | 5 | | sellers on account of the seller's duty to collect, from the
| 6 | | purchaser, the tax that is imposed by this Act.
| 7 | | "Department" means the Department of Revenue.
| 8 | | "Person" means any natural individual, firm, partnership,
| 9 | | association, joint stock company, joint venture, public or | 10 | | private
corporation, limited liability company, and any | 11 | | receiver, executor, trustee,
guardian or other representative | 12 | | appointed by order of any court.
| 13 | | "Sale of service" means any transaction except:
| 14 | | (1) a retail sale of tangible personal property taxable | 15 | | under the
Retailers' Occupation Tax Act or under the Use | 16 | | Tax Act.
| 17 | | (2) a sale of tangible personal property for the | 18 | | purpose of resale
made in compliance with Section 2c of the | 19 | | Retailers' Occupation Tax Act.
| 20 | | (3) except as hereinafter provided, a sale or transfer | 21 | | of tangible
personal property as an incident to the | 22 | | rendering of service for or by
any governmental body, or | 23 | | for or by any corporation, society,
association, | 24 | | foundation or institution organized and operated
| 25 | | exclusively for charitable, religious or educational | 26 | | purposes or any
not-for-profit corporation, society, |
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| 1 | | association, foundation,
institution or organization which | 2 | | has no compensated officers or
employees and which is | 3 | | organized and operated primarily for the
recreation of | 4 | | persons 55 years of age or older. A limited liability | 5 | | company
may qualify for the exemption under this paragraph | 6 | | only if the limited
liability company is organized and | 7 | | operated exclusively for educational
purposes.
| 8 | | (4) (blank).
| 9 | | (4a) a sale or transfer of tangible personal
property | 10 | | as an incident
to the rendering of service for owners, | 11 | | lessors, or shippers of tangible
personal property which is | 12 | | utilized by interstate carriers for hire for
use as rolling | 13 | | stock moving in interstate commerce so long as so used by
| 14 | | interstate carriers for hire, and equipment operated by a
| 15 | | telecommunications provider, licensed as a common carrier | 16 | | by the Federal
Communications Commission, which is | 17 | | permanently installed in or affixed to
aircraft moving in | 18 | | interstate commerce.
| 19 | | (4a-5) on and after July 1, 2003 and through June 30, | 20 | | 2004, a sale or transfer of a motor vehicle
of
the
second | 21 | | division with a gross vehicle weight in excess of 8,000 | 22 | | pounds as an
incident to the rendering of service if that | 23 | | motor
vehicle is subject
to the commercial distribution fee | 24 | | imposed under Section 3-815.1 of the
Illinois Vehicle
Code. | 25 | | Beginning on July 1, 2004 and through June 30, 2005, the | 26 | | use in this State of motor vehicles of the second division: |
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| 1 | | (i) with a gross vehicle weight rating in excess of 8,000 | 2 | | pounds; (ii) that are subject to the commercial | 3 | | distribution fee imposed under Section 3-815.1 of the | 4 | | Illinois Vehicle Code; and (iii) that are primarily used | 5 | | for commercial purposes. Through June 30, 2005, this
| 6 | | exemption applies to repair and replacement parts added | 7 | | after the
initial
purchase of such a motor vehicle if that | 8 | | motor vehicle is used in a manner that
would
qualify for | 9 | | the rolling stock exemption otherwise provided for in this | 10 | | Act. For purposes of this paragraph, "used for commercial | 11 | | purposes" means the transportation of persons or property | 12 | | in furtherance of any commercial or industrial enterprise | 13 | | whether for-hire or not.
| 14 | | (5) a sale or transfer of machinery and equipment used | 15 | | primarily in the
process of the manufacturing or | 16 | | assembling, either in an existing, an expanded
or a new | 17 | | manufacturing facility, of tangible personal property for | 18 | | wholesale or
retail sale or lease, whether such sale or | 19 | | lease is made directly by the
manufacturer or by some other | 20 | | person, whether the materials used in the process
are owned | 21 | | by the manufacturer or some other person, or whether such | 22 | | sale or
lease is made apart from or as an incident to the | 23 | | seller's engaging in a
service occupation and the | 24 | | applicable tax is a Service Use Tax or Service
Occupation | 25 | | Tax, rather than Use Tax or Retailers' Occupation Tax. The | 26 | | exemption provided by this paragraph (5) includes |
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| 1 | | production related tangible personal property, as defined | 2 | | in Section 3-50 of the Use Tax Act, purchased on or after | 3 | | July 1, 2019. The exemption provided by this paragraph (5) | 4 | | does not include machinery and equipment used in (i) the | 5 | | generation of electricity for wholesale or retail sale; | 6 | | (ii) the generation or treatment of natural or artificial | 7 | | gas for wholesale or retail sale that is delivered to | 8 | | customers through pipes, pipelines, or mains; or (iii) the | 9 | | treatment of water for wholesale or retail sale that is | 10 | | delivered to customers through pipes, pipelines, or mains. | 11 | | The provisions of Public Act 98-583 are declaratory of | 12 | | existing law as to the meaning and scope of this exemption. | 13 | | The exemption under this paragraph (5) is exempt from the | 14 | | provisions of Section 3-75.
| 15 | | (5a) the repairing, reconditioning or remodeling, for | 16 | | a
common carrier by rail, of tangible personal property | 17 | | which belongs to such
carrier for hire, and as to which | 18 | | such carrier receives the physical possession
of the | 19 | | repaired, reconditioned or remodeled item of tangible | 20 | | personal property
in Illinois, and which such carrier | 21 | | transports, or shares with another common
carrier in the | 22 | | transportation of such property, out of Illinois on a | 23 | | standard
uniform bill of lading showing the person who | 24 | | repaired, reconditioned or
remodeled the property to a | 25 | | destination outside Illinois, for use outside
Illinois.
| 26 | | (5b) a sale or transfer of tangible personal property |
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| 1 | | which is produced by
the seller thereof on special order in | 2 | | such a way as to have made the
applicable tax the Service | 3 | | Occupation Tax or the Service Use Tax, rather than
the | 4 | | Retailers' Occupation Tax or the Use Tax, for an interstate | 5 | | carrier by rail
which receives the physical possession of | 6 | | such property in Illinois, and which
transports such | 7 | | property, or shares with another common carrier in the
| 8 | | transportation of such property, out of Illinois on a | 9 | | standard uniform bill of
lading showing the seller of the | 10 | | property as the shipper or consignor of such
property to a | 11 | | destination outside Illinois, for use outside Illinois.
| 12 | | (6) until July 1, 2003, a sale or transfer of | 13 | | distillation machinery
and equipment, sold
as a unit or kit | 14 | | and assembled or installed by the retailer, which
machinery | 15 | | and equipment is certified by the user to be used only for | 16 | | the
production of ethyl alcohol that will be used for | 17 | | consumption as motor fuel
or as a component of motor fuel | 18 | | for the personal use of such user and not
subject to sale | 19 | | or resale.
| 20 | | (7) at the election of any serviceman not required to | 21 | | be
otherwise registered as a retailer under Section 2a of | 22 | | the Retailers'
Occupation Tax Act, made for each fiscal | 23 | | year sales
of service in which the aggregate annual cost | 24 | | price of tangible
personal property transferred as an | 25 | | incident to the sales of service is
less than 35%, or 75% | 26 | | in the case of servicemen transferring prescription
drugs |
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| 1 | | or servicemen engaged in graphic arts production, of the | 2 | | aggregate
annual total gross receipts from all sales of | 3 | | service. The purchase of
such tangible personal property by | 4 | | the serviceman shall be subject to tax
under the Retailers' | 5 | | Occupation Tax Act and the Use Tax Act.
However, if a
| 6 | | primary serviceman who has made the election described in | 7 | | this paragraph
subcontracts service work to a secondary | 8 | | serviceman who has also made the
election described in this | 9 | | paragraph, the primary serviceman does not
incur a Use Tax | 10 | | liability if the secondary serviceman (i) has paid or will | 11 | | pay
Use
Tax on his or her cost price of any tangible | 12 | | personal property transferred
to the primary serviceman | 13 | | and (ii) certifies that fact in writing to the
primary
| 14 | | serviceman.
| 15 | | Tangible personal property transferred incident to the | 16 | | completion of a
maintenance agreement is exempt from the tax | 17 | | imposed pursuant to this Act.
| 18 | | Exemption (5) also includes machinery and equipment used in | 19 | | the general
maintenance or repair of such exempt machinery and | 20 | | equipment or for in-house
manufacture of exempt machinery and | 21 | | equipment. On and after July 1, 2017, exemption (5) also
| 22 | | includes graphic arts machinery and equipment, as
defined in | 23 | | paragraph (5) of Section 3-5. The machinery and equipment | 24 | | exemption does not include machinery and equipment used in (i) | 25 | | the generation of electricity for wholesale or retail sale; | 26 | | (ii) the generation or treatment of natural or artificial gas |
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| 1 | | for wholesale or retail sale that is delivered to customers | 2 | | through pipes, pipelines, or mains; or (iii) the treatment of | 3 | | water for wholesale or retail sale that is delivered to | 4 | | customers through pipes, pipelines, or mains. The provisions of | 5 | | Public Act 98-583 are declaratory of existing law as to the | 6 | | meaning and scope of this exemption. For the purposes of | 7 | | exemption
(5), each of these terms shall have the following | 8 | | meanings: (1) "manufacturing
process" shall mean the | 9 | | production of any article of tangible personal
property, | 10 | | whether such article is a finished product or an article for | 11 | | use in
the process of manufacturing or assembling a different | 12 | | article of tangible
personal property, by procedures commonly | 13 | | regarded as manufacturing,
processing, fabricating, or | 14 | | refining which changes some existing
material or materials into | 15 | | a material with a different form, use or
name. In relation to a | 16 | | recognized integrated business composed of a
series of | 17 | | operations which collectively constitute manufacturing, or
| 18 | | individually constitute manufacturing operations, the | 19 | | manufacturing
process shall be deemed to commence with the | 20 | | first operation or stage of
production in the series, and shall | 21 | | not be deemed to end until the
completion of the final product | 22 | | in the last operation or stage of
production in the series; and | 23 | | further, for purposes of exemption (5),
photoprocessing is | 24 | | deemed to be a manufacturing process of tangible
personal | 25 | | property for wholesale or retail sale; (2) "assembling process" | 26 | | shall
mean the production of any article of tangible personal |
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| 1 | | property, whether such
article is a finished product or an | 2 | | article for use in the process of
manufacturing or assembling a | 3 | | different article of tangible personal
property, by the | 4 | | combination of existing materials in a manner commonly
regarded | 5 | | as assembling which results in a material of a different form,
| 6 | | use or name; (3) "machinery" shall mean major mechanical | 7 | | machines or
major components of such machines contributing to a | 8 | | manufacturing or
assembling process; and (4) "equipment" shall | 9 | | include any independent
device or tool separate from any | 10 | | machinery but essential to an
integrated manufacturing or | 11 | | assembly process; including computers
used primarily in a | 12 | | manufacturer's computer
assisted design, computer assisted | 13 | | manufacturing (CAD/CAM) system;
or any subunit or assembly | 14 | | comprising a component of any machinery or
auxiliary, adjunct | 15 | | or attachment parts of machinery, such as tools, dies,
jigs, | 16 | | fixtures, patterns and molds; or any parts which require | 17 | | periodic
replacement in the course of normal operation; but | 18 | | shall not include hand
tools.
Equipment includes chemicals or | 19 | | chemicals acting as catalysts but only if the
chemicals or | 20 | | chemicals acting as catalysts effect a direct and immediate | 21 | | change
upon a
product being manufactured or assembled for | 22 | | wholesale or retail sale or
lease.
The purchaser of such | 23 | | machinery and equipment who has an active
resale registration | 24 | | number shall furnish such number to the seller at the
time of | 25 | | purchase. The purchaser user of such machinery and equipment | 26 | | and tools
without an active resale registration number shall |
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| 1 | | prepare a certificate of
exemption for each transaction stating | 2 | | facts establishing the exemption for
that transaction , which | 3 | | certificate shall be available to the Department
for inspection | 4 | | or audit. The Department shall prescribe the form of the
| 5 | | certificate.
| 6 | | Any informal rulings, opinions or letters issued by the | 7 | | Department in
response to an inquiry or request for any opinion | 8 | | from any person
regarding the coverage and applicability of | 9 | | exemption (5) to specific
devices shall be published, | 10 | | maintained as a public record, and made
available for public | 11 | | inspection and copying. If the informal ruling,
opinion or | 12 | | letter contains trade secrets or other confidential
| 13 | | information, where possible the Department shall delete such | 14 | | information
prior to publication. Whenever such informal | 15 | | rulings, opinions, or
letters contain any policy of general | 16 | | applicability, the Department
shall formulate and adopt such | 17 | | policy as a rule in accordance with the
provisions of the | 18 | | Illinois Administrative Procedure Act.
| 19 | | On and after July 1, 1987, no entity otherwise eligible | 20 | | under exemption
(3) of this Section shall make tax-free | 21 | | purchases unless it has an active
exemption identification | 22 | | number issued by the Department.
| 23 | | The purchase, employment and transfer of such tangible | 24 | | personal
property as newsprint and ink for the primary purpose | 25 | | of conveying news
(with or without other information) is not a | 26 | | purchase, use or sale of
service or of tangible personal |
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| 1 | | property within the meaning of this Act.
| 2 | | "Serviceman" means any person who is engaged in the | 3 | | occupation of
making sales of service.
| 4 | | "Sale at retail" means "sale at retail" as defined in the | 5 | | Retailers'
Occupation Tax Act.
| 6 | | "Supplier" means any person who makes sales of tangible | 7 | | personal
property to servicemen for the purpose of resale as an | 8 | | incident to a
sale of service.
| 9 | | "Serviceman maintaining a place of business in this State", | 10 | | or any
like term, means and includes any serviceman:
| 11 | | (1) having or maintaining within this State, directly | 12 | | or by a
subsidiary, an office, distribution house, sales | 13 | | house, warehouse or
other place of business, or any agent | 14 | | or other representative operating
within this State under | 15 | | the authority of the serviceman or its
subsidiary, | 16 | | irrespective of whether such place of business or agent or
| 17 | | other representative is located here permanently or | 18 | | temporarily, or
whether such serviceman or subsidiary is | 19 | | licensed to do business in this
State; | 20 | | (1.1) having a contract with a person located in this | 21 | | State under which the person, for a commission or other | 22 | | consideration based on the sale of service by the | 23 | | serviceman, directly or indirectly refers potential | 24 | | customers to the serviceman by providing to the potential | 25 | | customers a promotional code or other mechanism that allows | 26 | | the serviceman to track purchases referred by such persons. |
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| 1 | | Examples of mechanisms that allow the serviceman to track | 2 | | purchases referred by such persons include but are not | 3 | | limited to the use of a link on the person's Internet | 4 | | website, promotional codes distributed through the | 5 | | person's hand-delivered or mailed material, and | 6 | | promotional codes distributed by the person through radio | 7 | | or other broadcast media. The provisions of this paragraph | 8 | | (1.1) shall apply only if the cumulative gross receipts | 9 | | from sales of service by the serviceman to customers who | 10 | | are referred to the serviceman by all persons in this State | 11 | | under such contracts exceed $10,000 during the preceding 4 | 12 | | quarterly periods ending on the last day of March, June, | 13 | | September, and December; a serviceman meeting the | 14 | | requirements of this paragraph (1.1) shall be presumed to | 15 | | be maintaining a place of business in this State but may | 16 | | rebut this presumption by submitting proof that the | 17 | | referrals or other activities pursued within this State by | 18 | | such persons were not sufficient to meet the nexus | 19 | | standards of the United States Constitution during the | 20 | | preceding 4 quarterly periods; | 21 | | (1.2) beginning July 1, 2011, having a contract with a | 22 | | person located in this State under which: | 23 | | (A) the serviceman sells the same or substantially | 24 | | similar line of services as the person located in this | 25 | | State and does so using an identical or substantially | 26 | | similar name, trade name, or trademark as the person |
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| 1 | | located in this State; and | 2 | | (B) the serviceman provides a commission or other | 3 | | consideration to the person located in this State based | 4 | | upon the sale of services by the serviceman. | 5 | | The provisions of this paragraph (1.2) shall apply only if | 6 | | the cumulative gross receipts from sales of service by the | 7 | | serviceman to customers in this State under all such | 8 | | contracts exceed $10,000 during the preceding 4 quarterly | 9 | | periods ending on the last day of March, June, September, | 10 | | and December;
| 11 | | (2) soliciting orders for tangible personal property | 12 | | by means of a
telecommunication or television shopping | 13 | | system (which utilizes toll free
numbers) which is intended | 14 | | by the retailer to be broadcast by cable
television or | 15 | | other means of broadcasting, to consumers located in this | 16 | | State;
| 17 | | (3) pursuant to a contract with a broadcaster or | 18 | | publisher located in this
State, soliciting orders for | 19 | | tangible personal property by means of advertising
which is | 20 | | disseminated primarily to consumers located in this State | 21 | | and only
secondarily to bordering jurisdictions;
| 22 | | (4) soliciting orders for tangible personal property | 23 | | by mail if the
solicitations are substantial and recurring | 24 | | and if the retailer benefits
from any banking, financing, | 25 | | debt collection, telecommunication, or
marketing | 26 | | activities occurring in this State or benefits from the |
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| 1 | | location
in this State of authorized installation, | 2 | | servicing, or repair facilities;
| 3 | | (5) being owned or controlled by the same interests | 4 | | which own or
control any retailer engaging in business in | 5 | | the same or similar line of
business in this State;
| 6 | | (6) having a franchisee or licensee operating under its | 7 | | trade name if
the franchisee or licensee is required to | 8 | | collect the tax under this Section;
| 9 | | (7) pursuant to a contract with a cable television | 10 | | operator located in
this State, soliciting orders for | 11 | | tangible personal property by means of
advertising which is | 12 | | transmitted or distributed over a cable television
system | 13 | | in this State;
| 14 | | (8) engaging in activities in Illinois, which | 15 | | activities in the
state in which the supply business | 16 | | engaging in such activities is located
would constitute | 17 | | maintaining a place of business in that state; or
| 18 | | (9) beginning October 1, 2018, making sales of service | 19 | | to purchasers in Illinois from outside of Illinois if: | 20 | | (A) the cumulative gross receipts from sales of | 21 | | service to purchasers in Illinois are $100,000 or more; | 22 | | or | 23 | | (B) the serviceman enters into 200 or more separate | 24 | | transactions for sales of service to purchasers in | 25 | | Illinois. | 26 | | The serviceman shall determine on a quarterly basis, |
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| 1 | | ending on the last day of March, June, September, and | 2 | | December, whether he or she meets the criteria of either | 3 | | subparagraph (A) or (B) of this paragraph (9) for the | 4 | | preceding 12-month period. If the serviceman meets the | 5 | | criteria of either subparagraph (A) or (B) for a 12-month | 6 | | period, he or she is considered a serviceman maintaining a | 7 | | place of business in this State and is required to collect | 8 | | and remit the tax imposed under this Act and file returns | 9 | | for one year. At the end of that one-year period, the | 10 | | serviceman shall determine whether the serviceman met the | 11 | | criteria of either subparagraph (A) or (B) during the | 12 | | preceding 12-month period. If the serviceman met the | 13 | | criteria in either subparagraph (A) or (B) for the | 14 | | preceding 12-month period, he or she is considered a | 15 | | serviceman maintaining a place of business in this State | 16 | | and is required to collect and remit the tax imposed under | 17 | | this Act and file returns for the subsequent year. If at | 18 | | the end of a one-year period a serviceman that was required | 19 | | to collect and remit the tax imposed under this Act | 20 | | determines that he or she did not meet the criteria in | 21 | | either subparagraph (A) or (B) during the preceding | 22 | | 12-month period, the serviceman subsequently shall | 23 | | determine on a quarterly basis, ending on the last day of | 24 | | March, June, September, and December, whether he or she | 25 | | meets the criteria of either subparagraph (A) or (B) for | 26 | | the preceding 12-month period. |
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| 1 | | Beginning January 1, 2020, neither the gross receipts | 2 | | from nor the number of separate transactions for sales of | 3 | | service to purchasers in Illinois that a serviceman makes | 4 | | through a marketplace facilitator and for which the | 5 | | serviceman has received a certification from the | 6 | | marketplace facilitator pursuant to Section 2d of this Act | 7 | | shall be included for purposes of determining whether he or | 8 | | she has met the thresholds of this paragraph (9). | 9 | | (10) Beginning January 1, 2020, a marketplace | 10 | | facilitator, as defined in Section 2d of this Act. | 11 | | (Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17; | 12 | | 100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article 10, | 13 | | Section 10-15, eff. 6-5-19; 101-9, Article 25, Section 25-10, | 14 | | eff. 6-5-19; revised 7-10-19.)
| 15 | | Section 15. The Service Occupation Tax Act is amended by | 16 | | changing Section 2 as follows:
| 17 | | (35 ILCS 115/2) (from Ch. 120, par. 439.102)
| 18 | | Sec. 2. In this Act: | 19 | | "Transfer" means any transfer of the title to property or | 20 | | of
the ownership of property whether or not the transferor | 21 | | retains title as
security for the payment of amounts due him | 22 | | 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 |
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| 1 | | otherwise, including
cash, credits and services, and shall be | 2 | | determined without any deduction
on account of the supplier's | 3 | | cost of the property sold or on account of any
other expense | 4 | | incurred by the supplier. When a serviceman contracts out
part | 5 | | or all of the services required in his sale of service, it | 6 | | shall be
presumed that the cost price to the serviceman of the | 7 | | property
transferred to him by his or her subcontractor is | 8 | | equal to 50% of the
subcontractor's charges to the serviceman | 9 | | in the absence of proof of the
consideration paid by the | 10 | | subcontractor for the purchase of such
property.
| 11 | | "Department" means the Department of Revenue.
| 12 | | "Person" means any natural individual, firm, partnership, | 13 | | association, joint
stock company, joint venture, public or | 14 | | private corporation, limited liability
company, and any | 15 | | receiver, executor, trustee, guardian or other representative
| 16 | | appointed by order of any court.
| 17 | | "Sale of Service" means any transaction except:
| 18 | | (a) A retail sale of tangible personal property taxable | 19 | | under the Retailers'
Occupation Tax Act or under the Use Tax | 20 | | Act.
| 21 | | (b) A sale of tangible personal property for the purpose of | 22 | | resale made in
compliance with Section 2c of the Retailers' | 23 | | Occupation Tax Act.
| 24 | | (c) Except as hereinafter provided, a sale or transfer of | 25 | | tangible personal
property as an incident to the rendering of | 26 | | service for or by any governmental
body or for or by any |
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| 1 | | corporation, society, association, foundation or
institution | 2 | | organized and operated exclusively for charitable, religious | 3 | | or
educational purposes or any not-for-profit corporation, | 4 | | society, association,
foundation, institution or organization | 5 | | which has no compensated officers or
employees and which is | 6 | | organized and operated primarily for the recreation of
persons | 7 | | 55 years of age or older. A limited liability company may | 8 | | qualify for
the exemption under this paragraph only if the | 9 | | limited liability company is
organized and operated | 10 | | exclusively for educational purposes.
| 11 | | (d) (Blank).
| 12 | | (d-1) A sale or transfer of tangible personal
property as | 13 | | an incident to
the rendering of service for owners, lessors or | 14 | | shippers of tangible personal
property which is utilized by | 15 | | interstate carriers for hire for use as rolling
stock moving in | 16 | | interstate commerce, and equipment operated
by a | 17 | | telecommunications provider, licensed as a common carrier by | 18 | | the
Federal Communications Commission, which is permanently | 19 | | installed in or
affixed to aircraft moving in interstate | 20 | | commerce.
| 21 | | (d-1.1) On and after July 1, 2003 and through June 30, | 22 | | 2004, a sale or transfer of a motor vehicle
of the
second | 23 | | division with a gross vehicle weight in excess of 8,000 pounds | 24 | | as an
incident to the rendering of service if that motor
| 25 | | vehicle is subject
to the commercial distribution fee imposed | 26 | | under Section 3-815.1 of the
Illinois Vehicle
Code. Beginning |
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| 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 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 |
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| 1 | | which
is produced by the seller thereof on special order in | 2 | | such a way as to have
made the applicable tax the Service | 3 | | Occupation Tax or the Service Use Tax,
rather than the | 4 | | Retailers' Occupation Tax or the Use Tax, for an interstate
| 5 | | carrier by rail which receives the physical possession of such | 6 | | property in
Illinois, and which transports such property, or | 7 | | shares with another common
carrier in the transportation of | 8 | | such property, out of Illinois on a standard
uniform bill of | 9 | | lading showing the seller of the property as the shipper or
| 10 | | consignor of such property to a destination outside Illinois, | 11 | | for use outside
Illinois.
| 12 | | (d-4) Until January 1, 1997, a sale, by a registered | 13 | | serviceman paying tax
under this Act to the Department, of | 14 | | special order printed materials delivered
outside Illinois and | 15 | | which are not returned to this State, if delivery is made
by | 16 | | the seller or agent of the seller, including an agent who | 17 | | causes the product
to be delivered outside Illinois by a common | 18 | | carrier or the U.S.
postal service.
| 19 | | (e) A sale or transfer of machinery and equipment used | 20 | | primarily in
the process of the manufacturing or assembling, | 21 | | either in an existing, an
expanded or a new manufacturing | 22 | | facility, of tangible personal property for
wholesale or retail | 23 | | sale or lease, whether such sale or lease is made directly
by | 24 | | the manufacturer or by some other person, whether the materials | 25 | | used in the
process are owned by the manufacturer or some other | 26 | | 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. The | 4 | | exemption provided by this paragraph (e) includes production | 5 | | related tangible personal property, as defined in Section 3-50 | 6 | | of the Use Tax Act, purchased on or after July 1, 2019. The | 7 | | exemption provided by this paragraph (e) does not include | 8 | | machinery and equipment used in (i) the generation of | 9 | | electricity for wholesale or retail sale; (ii) the generation | 10 | | or treatment of natural or artificial gas for wholesale or | 11 | | retail sale that is delivered to customers through pipes, | 12 | | pipelines, or mains; or (iii) the treatment of water for | 13 | | wholesale or retail sale that is delivered to customers through | 14 | | pipes, pipelines, or mains. The provisions of Public Act 98-583 | 15 | | are declaratory of existing law as to the meaning and scope of | 16 | | this exemption. The exemption under this subsection (e) is | 17 | | exempt from the provisions of Section 3-75.
| 18 | | (f) Until July 1, 2003, the sale or transfer of | 19 | | distillation
machinery
and equipment, sold as a
unit or kit and | 20 | | assembled or installed by the retailer, which machinery
and | 21 | | equipment is certified by the user to be used only for the | 22 | | production
of ethyl alcohol that will be used for consumption | 23 | | as motor fuel or as a
component of motor fuel for the personal | 24 | | use of such user and not subject
to sale or resale.
| 25 | | (g) At the election of any serviceman not required to be | 26 | | otherwise
registered as a retailer under Section 2a of the |
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| 1 | | Retailers' Occupation Tax Act,
made for each fiscal year sales | 2 | | of service in which the aggregate annual cost
price of tangible | 3 | | personal property transferred as an incident to the sales of
| 4 | | service is less than 35% (75% in the case of servicemen | 5 | | transferring
prescription drugs or servicemen engaged in | 6 | | graphic arts production) of the
aggregate annual total gross | 7 | | receipts from all sales of service. The purchase
of such | 8 | | tangible personal property by the serviceman shall be subject | 9 | | to tax
under the Retailers' Occupation Tax Act and the Use Tax | 10 | | Act.
However, if a
primary serviceman who has made the election | 11 | | described in this paragraph
subcontracts service work to a | 12 | | secondary serviceman who has also made the
election described | 13 | | in this paragraph, the primary serviceman does not
incur a Use | 14 | | Tax liability if the secondary serviceman (i) has paid or will | 15 | | pay
Use
Tax on his or her cost price of any tangible personal | 16 | | property transferred
to the primary serviceman and (ii) | 17 | | certifies that fact in writing to the
primary serviceman.
| 18 | | Tangible personal property transferred incident to the | 19 | | completion of a
maintenance agreement is exempt from the tax | 20 | | imposed pursuant to this Act.
| 21 | | Exemption (e) also includes machinery and equipment used in | 22 | | the
general maintenance or repair of such exempt machinery and | 23 | | equipment or for
in-house manufacture of exempt machinery and | 24 | | equipment.
On and after July 1, 2017, exemption (e) also
| 25 | | includes graphic arts machinery and equipment, as
defined in | 26 | | paragraph (5) of Section 3-5. The machinery and equipment |
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| 1 | | exemption does not include machinery and equipment used in (i) | 2 | | the generation of electricity for wholesale or retail sale; | 3 | | (ii) the generation or treatment of natural or artificial gas | 4 | | for wholesale or retail sale that is delivered to customers | 5 | | through pipes, pipelines, or mains; or (iii) the treatment of | 6 | | water for wholesale or retail sale that is delivered to | 7 | | customers through pipes, pipelines, or mains. The provisions of | 8 | | Public Act 98-583 are declaratory of existing law as to the | 9 | | meaning and scope of this exemption. For the purposes of | 10 | | exemption (e), each of these terms shall have the following
| 11 | | meanings: (1) "manufacturing process" shall mean the | 12 | | production of any
article of tangible personal property, | 13 | | whether such article is a
finished product or an article for | 14 | | use in the process of manufacturing
or assembling a different | 15 | | article of tangible personal property, by
procedures commonly | 16 | | regarded as manufacturing, processing, fabricating,
or | 17 | | refining which changes some existing material or materials into | 18 | | a
material with a different form, use or name. In relation to a
| 19 | | recognized integrated business composed of a series of | 20 | | operations which
collectively constitute manufacturing, or | 21 | | individually constitute
manufacturing operations, the | 22 | | manufacturing process shall be deemed to
commence with the | 23 | | first operation or stage of production in the series,
and shall | 24 | | not be deemed to end until the completion of the final product
| 25 | | in the last operation or stage of production in the series; and | 26 | | further for
purposes of exemption (e), photoprocessing is |
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| 1 | | deemed to be a manufacturing
process of tangible personal | 2 | | property for wholesale or retail sale;
(2) "assembling process" | 3 | | shall mean the production of any article of
tangible personal | 4 | | property, whether such article is a finished product
or an | 5 | | article for use in the process of manufacturing or assembling a
| 6 | | different article of tangible personal property, by the | 7 | | combination of
existing materials in a manner commonly regarded | 8 | | as assembling which
results in a material of a different form, | 9 | | use or name; (3) "machinery"
shall mean major mechanical | 10 | | machines or major components of such machines
contributing to a | 11 | | manufacturing or assembling process; and (4) "equipment"
shall | 12 | | include any independent device or tool separate from any | 13 | | machinery but
essential to an integrated manufacturing or | 14 | | assembly process; including
computers used primarily in a | 15 | | manufacturer's computer
assisted design, computer assisted | 16 | | manufacturing (CAD/CAM) system; or any
subunit or assembly | 17 | | comprising a component of any machinery or auxiliary,
adjunct | 18 | | or attachment parts of machinery, such as tools, dies, jigs, | 19 | | fixtures,
patterns and molds; or any parts which require | 20 | | periodic replacement in the
course of normal operation; but | 21 | | shall not include hand tools. Equipment
includes chemicals or | 22 | | chemicals acting as catalysts but only if the chemicals
or | 23 | | chemicals acting as catalysts effect a direct and immediate | 24 | | change upon a
product being manufactured or assembled for | 25 | | wholesale or retail sale or lease.
The purchaser of such | 26 | | machinery and equipment
who has an active resale registration |
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| 1 | | number shall furnish such number to
the seller at the time of | 2 | | purchase. The purchaser of such machinery and
equipment and | 3 | | tools without an active resale registration number shall | 4 | | furnish
to the seller a certificate of exemption for each | 5 | | transaction stating facts
establishing the exemption for that | 6 | | transaction , which certificate shall
be available to the | 7 | | Department for inspection or audit.
| 8 | | Except as provided in Section 2d of this Act, the rolling | 9 | | stock exemption
applies to rolling
stock
used by an interstate
| 10 | | carrier for hire, even just between points in Illinois, if such | 11 | | rolling
stock transports, for hire, persons whose journeys or | 12 | | property whose
shipments originate or terminate outside | 13 | | Illinois.
| 14 | | Any informal rulings, opinions or letters issued by the | 15 | | Department in
response to an inquiry or request for any opinion | 16 | | from any person
regarding the coverage and applicability of | 17 | | exemption (e) to specific
devices shall be published, | 18 | | maintained as a public record, and made
available for public | 19 | | inspection and copying. If the informal ruling,
opinion or | 20 | | letter contains trade secrets or other confidential
| 21 | | information, where possible the Department shall delete such | 22 | | information
prior to publication. Whenever such informal | 23 | | rulings, opinions, or
letters contain any policy of general | 24 | | applicability, the Department
shall formulate and adopt such | 25 | | policy as a rule in accordance with the
provisions of the | 26 | | Illinois Administrative Procedure Act.
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| 1 | | On and after July 1, 1987, no entity otherwise eligible | 2 | | under exemption
(c) of this Section shall make tax-free | 3 | | purchases unless it has an active
exemption identification | 4 | | number issued by the Department.
| 5 | | "Serviceman" means any person who is engaged in the | 6 | | occupation of
making sales of service.
| 7 | | "Sale at Retail" means "sale at retail" as defined in the | 8 | | Retailers'
Occupation Tax Act.
| 9 | | "Supplier" means any person who makes sales of tangible | 10 | | personal
property to servicemen for the purpose of resale as an | 11 | | incident to a
sale of service.
| 12 | | (Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17; | 13 | | 100-863, eff. 8-14-18; 101-9, eff. 6-5-19.)
| 14 | | Section 20. The Retailers' Occupation Tax Act is amended by | 15 | | changing Section 2-45 as follows:
| 16 | | (35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
| 17 | | Sec. 2-45. Manufacturing and assembly exemption. The | 18 | | manufacturing
and assembly machinery and equipment exemption | 19 | | includes machinery
and equipment that replaces machinery
and | 20 | | equipment in an existing manufacturing facility as well as | 21 | | machinery
and equipment that are for use in an expanded or new
| 22 | | manufacturing facility.
| 23 | | The machinery and equipment exemption also includes | 24 | | machinery
and equipment used in the
general maintenance or |
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| 1 | | repair of exempt machinery and equipment or for
in-house | 2 | | manufacture of exempt machinery and equipment.
Beginning on | 3 | | July 1, 2017, the manufacturing and assembling machinery and | 4 | | equipment exemption also includes graphic arts machinery and | 5 | | equipment, as defined in paragraph (4) of Section 2-5. The | 6 | | machinery and equipment exemption does not include machinery | 7 | | and equipment used in (i) the generation of electricity for | 8 | | wholesale or retail sale; (ii) the generation or treatment of | 9 | | natural or artificial gas for wholesale or retail sale that is | 10 | | delivered to customers through pipes, pipelines, or mains; or | 11 | | (iii) the treatment of water for wholesale or retail sale that | 12 | | is delivered to customers through pipes, pipelines, or mains. | 13 | | The provisions of this amendatory Act of the 98th General | 14 | | Assembly are declaratory of existing law as to the meaning and | 15 | | scope of this exemption. For the purposes of this exemption, | 16 | | terms have the following meanings:
| 17 | | (1) "Manufacturing process" means the production of an | 18 | | article of
tangible personal property, whether the article | 19 | | is a finished product or an
article for use in the process | 20 | | of manufacturing or assembling a different
article of | 21 | | tangible personal property, by a procedure commonly | 22 | | regarded as
manufacturing, processing, fabricating, or | 23 | | refining that changes some
existing material or materials | 24 | | into a material with a different form, use,
or name. In | 25 | | relation to a recognized integrated business composed of a
| 26 | | series of operations that collectively constitute |
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| 1 | | manufacturing, or
individually constitute manufacturing | 2 | | operations, the manufacturing process
commences with the | 3 | | first operation or stage of production in the series and
| 4 | | does not end until the completion of the final product in | 5 | | the last
operation or stage of production in the series. | 6 | | For purposes of this
exemption, photoprocessing is a | 7 | | manufacturing process of tangible personal
property for | 8 | | wholesale or retail sale.
| 9 | | (2) "Assembling process" means the production of an | 10 | | article of
tangible personal property, whether the article | 11 | | is a finished product or an
article for use in the process | 12 | | of manufacturing or assembling a different
article of | 13 | | tangible personal property, by the combination of existing
| 14 | | materials in a manner commonly regarded as assembling that | 15 | | results in a
material of a different form, use, or name.
| 16 | | (3) "Machinery" means major mechanical machines or | 17 | | major components of
those machines contributing to a | 18 | | manufacturing or assembling process.
| 19 | | (4) "Equipment" includes an independent device or tool | 20 | | separate from
machinery but essential to an integrated | 21 | | manufacturing or assembly process;
including computers | 22 | | used primarily in a manufacturer's computer assisted | 23 | | design, computer assisted manufacturing
(CAD/CAM) system; | 24 | | any subunit or assembly comprising a component of any
| 25 | | machinery or auxiliary, adjunct, or attachment parts of | 26 | | machinery, such as
tools, dies, jigs, fixtures, patterns, |
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| 1 | | and molds; and any parts that
require periodic replacement | 2 | | in the course of normal operation; but does
not include | 3 | | hand tools. 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 | 6 | | upon a
product being manufactured or assembled for | 7 | | wholesale or retail sale or
lease.
| 8 | | (5) "Production related tangible personal property" | 9 | | means all tangible personal property that is used or | 10 | | consumed by the purchaser in a manufacturing facility in | 11 | | which a manufacturing process takes place and includes, | 12 | | without limitation, tangible personal property that is | 13 | | purchased for incorporation into real estate within a | 14 | | manufacturing facility, supplies and consumables used in a | 15 | | manufacturing facility including fuels, coolants, | 16 | | solvents, oils, lubricants, and adhesives, hand tools, | 17 | | protective apparel, and fire and safety equipment used or | 18 | | consumed within a manufacturing facility, and tangible | 19 | | personal property that is used or consumed in activities | 20 | | such as research and development, preproduction material | 21 | | handling, receiving, quality control, inventory control, | 22 | | storage, staging, and packaging for shipping and | 23 | | transportation purposes. "Production related tangible | 24 | | personal property" does not include (i) tangible personal | 25 | | property that is used, within or without a manufacturing | 26 | | facility, in sales, purchasing, accounting, fiscal |
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| 1 | | management, marketing, personnel recruitment or selection, | 2 | | or landscaping or (ii) tangible personal property that is | 3 | | required to be titled or registered with a department, | 4 | | agency, or unit of federal, State, or local government.
| 5 | | The manufacturing and assembling machinery and equipment | 6 | | exemption includes production related tangible personal | 7 | | property that is purchased on or after July 1, 2007 and on or | 8 | | before June 30, 2008 and on or after July 1, 2019. The | 9 | | exemption for production related tangible personal property | 10 | | purchased on or after July 1, 2007 and before June 30, 2008 is | 11 | | subject to both of the following limitations: | 12 | | (1) The maximum amount of the exemption for any one | 13 | | taxpayer may not exceed 5% of the purchase price of | 14 | | production related tangible personal property that is | 15 | | purchased on or after July 1, 2007 and on or before June | 16 | | 30, 2008. A credit under Section 3-85 of this Act may not | 17 | | be earned by the purchase of production related tangible | 18 | | personal property for which an exemption is received under | 19 | | this Section. | 20 | | (2) The maximum aggregate amount of the exemptions for | 21 | | production related tangible personal property awarded | 22 | | under this Act and the Use
Tax Act to all taxpayers may not | 23 | | exceed $10,000,000. If the claims for the exemption exceed | 24 | | $10,000,000, then the Department shall reduce the amount of | 25 | | the exemption to each taxpayer on a pro rata basis. | 26 | | The Department shall adopt rules to implement and administer |
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| 1 | | the exemption for production related tangible personal | 2 | | property. | 3 | | The manufacturing and assembling machinery and equipment | 4 | | exemption
includes the sale of materials to a purchaser who | 5 | | produces exempted types
of machinery, equipment, or tools and | 6 | | who rents or leases that machinery,
equipment, or tools to a | 7 | | manufacturer of tangible personal property. This
exemption | 8 | | also includes the sale of materials to a purchaser who | 9 | | manufactures
those materials into an exempted type of | 10 | | machinery, equipment, or tools
that the purchaser uses himself | 11 | | or herself in the manufacturing of tangible
personal property. | 12 | | The purchaser of the machinery and equipment who has an
active | 13 | | resale registration number shall furnish that number to the | 14 | | seller
at the time of purchase. A purchaser of the machinery, | 15 | | equipment, and
tools without an active resale registration | 16 | | number shall furnish to the
seller a certificate of exemption | 17 | | for each transaction stating facts
establishing the exemption | 18 | | for that transaction , and that certificate shall
be available | 19 | | to the Department for inspection or audit. Informal
rulings, | 20 | | opinions, or letters issued by the Department in response to an
| 21 | | inquiry or request for an opinion from any person regarding the | 22 | | coverage and
applicability of this exemption to specific | 23 | | devices shall be published,
maintained as a public record,
and | 24 | | made available for public inspection and copying. If the | 25 | | informal
ruling, opinion, or letter contains trade secrets or | 26 | | other confidential
information, where possible, the Department |
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| 1 | | shall delete that information
before publication. Whenever | 2 | | informal rulings, opinions, or letters
contain a policy of | 3 | | general applicability, the Department shall
formulate and | 4 | | adopt that policy as a rule in accordance with the Illinois
| 5 | | Administrative Procedure Act.
| 6 | | The manufacturing and assembling machinery and equipment
| 7 | | exemption is exempt from the provisions of Section 2-70. | 8 | | (Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19.)".
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