35 ILCS 120/5n

(35 ILCS 120/5n)

Sec. 5n. Building materials exemption; microchip and semiconductor manufacturing. Each retailer who makes a sale of building materials that will be incorporated into real estate in a qualified facility for which a certificate of exemption has been issued by the Department of Commerce and Economic Opportunity under Section 110-105 of the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act, may deduct receipts from such sales when calculating any State or local use and occupation taxes. No retailer who is eligible for the deduction or credit under Section 5k of this Act related to enterprise zones or Section 5l of this Act related to High Impact Businesses for a given sale shall be eligible for the deduction or credit authorized under this Section for that same sale.

To document the exemption allowed under this Section, the retailer must obtain from the purchaser the purchaser's exemption certificate number issued by the Department and a certification that contains:

(1) a statement that the building materials are being purchased for incorporation into real estate in a qualified facility;

(2) the location or address of the real estate into which the building materials will be incorporated;

(3) the name and address of the construction contractor or other entity;

(4) a description of the building materials being purchased;

(5) the purchaser's MICRO Illinois Building Materials Exemption Certificate number issued by the Department of Revenue; and

(6) the purchaser's signature and date of purchase.

A construction contractor or other entity shall not make tax-free purchases unless it has an active exemption certificate issued by the Department at the time of purchase.

Upon request from a person that has been certified by the Department of Commerce and Economic Opportunity under the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act, the Department shall issue a MICRO Illinois Building Materials Exemption Certificate for each construction contractor or other entity identified by the person so certified. The Department shall make the MICRO Illinois Building Materials Exemption Certificates available to each construction contractor or other entity as well as the person certified under the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act. The request for MICRO Illinois Building Materials Exemption Certificates must include the following information:

(1) the name and address of the construction contractor or other entity;

(2) the name and location or address of the building project site;

(3) the estimated amount of the exemption for each construction contractor or other entity for which a request for an exemption certificate is made, based on a stated estimated average tax rate and the percentage of the contract that consists of materials;

(4) the period of time over which supplies for the project are expected to be purchased; and

(5) other reasonable information as the Department may require, including but not limited to FEIN numbers, to determine if the contractor or other entity, or any partner, or a corporate officer, and in the case of a limited liability company, any manager or member, of the construction contractor or other entity, is or has been the owner, a partner, a corporate officer, and in the case of a limited liability company, a manager or member, of a person that is in default for moneys due to the Department under this Act or any other tax or fee Act administered by the Department.

The Department shall issue the exemption certificate within 3 business days after receipt of request. This requirement does not apply in circumstances where the Department, for reasonable cause, is unable to issue the exemption certificate within 3 business days. The Department may refuse to issue an exemption certificate under this Section if the owner, any partner, or a corporate officer, and in the case of a limited liability company, any manager or member, of the construction contractor or other entity is or has been the owner, a partner, a corporate officer, and in the case of a limited liability company, a manager or member, of a person that is in default for moneys due to the Department under this Act or any other tax or fee Act administered by the Department.

The MICRO Illinois Building Materials Exemption Certificate shall contain language stating that, if the construction contractor or other entity who is issued the exemption certificate makes a tax-exempt purchase, as described in this Section, that is not eligible for exemption under this Section or allows another person to make a tax-exempt purchase, as described in this Section, that is not eligible for exemption under this Section, then, in addition to any tax or other penalty imposed, the construction contractor or other entity is subject to a penalty equal to the tax that would have been paid by the retailer under this Act as well as any applicable local retailers' occupation tax on the purchase that is not eligible for the exemption.

The Department, in its discretion, may require that the request for a MICRO Illinois Exemption Certificate be submitted electronically. The Department may, in its discretion, issue the exemption certificates electronically. The MICRO Illinois Building Materials Exemption Certificate number shall be designed in such a way that the Department can identify from the unique number on the exemption certificate issued to a given construction contractor or other entity, the name of the entity to whom the exemption certificate is issued. The MICRO Illinois Building Materials Exemption Certificate shall contain an expiration date, which shall be no more than 5 years after the date of issuance. At the request of the entity to whom the exemption certificate is issued, the Department may renew an exemption certificate issued under this Section. After the Department issues exemption certificates under this Section, the certified entity may notify the Department of additional construction contractors or other entities eligible for an exemption certificate under this Section. Upon such a notification and subject to the other provisions of this Section, the Department shall issue an exemption certificate to each additional qualified construction contractor or other entity so identified. A certified entity may notify the Department to rescind an exemption certificate previously issued by the Department that has not yet expired. Upon such a notification and subject to the other provisions of this Section, the Department shall rescind the exemption certificate.

If the Department of Revenue determines that a construction contractor or other entity that was issued an exemption certificate under this Section made a tax-exempt purchase, as described in this Section, that was not eligible for exemption under this Section or allowed another person to make a tax-exempt purchase, as described in this Section, that was not eligible for exemption under this Section, then, in addition to any tax or other penalty imposed, the construction contractor or other entity is subject to a penalty equal to the tax that would have been paid by the retailer under this Act as well as any applicable local retailers' occupation tax on the purchase that was not eligible for the exemption.

This Section is exempt from the provisions of Section 2-70.

(Source: P.A. 102-700, eff. 4-19-22; 103-712, eff. 7-19-24.)