State of Illinois
90th General Assembly
Legislation

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90_HB0468

      65 ILCS 5/8-11-17         from Ch. 24, par. 8-11-17
          Amends   the   Illinois   Municipal   Code.    Allows   a
      municipality that has imposed a  telecommunications  tax  and
      whose  territory  includes  part  of  another  unit  of local
      government or school district to exempt  the  unit  of  local
      government   or  school  district  from  the  tax.  Allows  a
      municipality that has imposed a telecommunications tax to (i)
      reduce the rate of the tax for persons 65  years  of  age  or
      older  or  (ii)  exempt persons 65 years of age or older from
      the tax.
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 1        AN ACT to amend the Illinois Municipal Code  by  changing
 2    Section 8-11-17.
 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:
 5        Section 5.  The Illinois Municipal  Code  is  amended  by
 6    changing Section 8-11-17 as follows:
 7        (65 ILCS 5/8-11-17) (from Ch. 24, par. 8-11-17)
 8        Sec. 8-11-17.  Municipal telecommunications tax.
 9        (a)  Beginning  on  the effective date of this amendatory
10    Act of 1991, the corporate authorities of any municipality in
11    this State may tax any  or  all  of  the  following  acts  or
12    privileges:
13             (1)  The  act  or  privilege  of originating in such
14        municipality or receiving in such municipality intrastate
15        telecommunications by a person at a rate not to exceed 5%
16        of the gross charge for such telecommunications purchased
17        at retail from a retailer by such person.  However,  such
18        tax is not imposed on such act or privilege to the extent
19        such act or privilege may not, under the Constitution and
20        statutes  of  the  United  States, be made the subject of
21        taxation by municipalities in this State.
22             (2)  The act or privilege  of  originating  in  such
23        municipality or receiving in such municipality interstate
24        telecommunications by a person at a rate not to exceed 5%
25        of the gross charge for such telecommunications purchased
26        at  retail  from  a  retailer by such person.  To prevent
27        actual multi-state taxation of the act or privilege  that
28        is   subject   to  taxation  under  this  paragraph,  any
29        taxpayer, upon proof that the taxpayer has paid a tax  in
30        another  state  on  such event, shall be allowed a credit
31        against  any  tax  enacted  pursuant  to   an   ordinance
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 1        authorized  by this paragraph to the extent of the amount
 2        of such tax properly due and paid  in  such  other  state
 3        which  was not previously allowed as a credit against any
 4        other state or local tax in this  State.   However,  such
 5        tax  is not imposed on the act or privilege to the extent
 6        such act or privilege may not, under the Constitution and
 7        statutes of the United States, be  made  the  subject  of
 8        taxation by municipalities in this State.
 9             (3)  The  taxes authorized by paragraphs (1) and (2)
10        of subsection (a) of this Section may only be  levied  if
11        such  municipality  does  not  then  have  in  effect  an
12        occupation tax imposed on persons engaged in the business
13        of  transmitting  messages  by  means  of  electricity as
14        authorized by Section 8-11-2 of  the  Illinois  Municipal
15        Code.
16        (b)  The   tax   authorized  by  this  Section  shall  be
17    collected from the taxpayer by a retailer maintaining a place
18    of business in this State and making or effectuating the sale
19    at retail and shall be  remitted  by  such  retailer  to  the
20    municipality.   Any  tax required to be collected pursuant to
21    an ordinance authorized by this  Section  and  any  such  tax
22    collected  by  such  retailer shall constitute a debt owed by
23    the retailer to such municipality.  Retailers  shall  collect
24    the  tax  from  the  taxpayer  by adding the tax to the gross
25    charge for the act or privilege of originating  or  receiving
26    telecommunications   when   sold   for  use,  in  the  manner
27    prescribed by the municipality.  The tax authorized  by  this
28    Section  shall  constitute  a  debt  of  the purchaser to the
29    retailer who provides such taxable services until  paid  and,
30    if  unpaid,  is  recoverable at law in the same manner as the
31    original charge for such taxable services.  If  the  retailer
32    fails to collect the tax from the taxpayer, then the taxpayer
33    shall be required to pay the tax directly to the municipality
34    in the manner provided by the municipality.  The municipality
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 1    imposing  the  tax  shall  provide for its administration and
 2    enforcement.
 3        Beginning January 1, 1994, retailers filing  tax  returns
 4    pursuant  to  this  Section shall, at the time of filing such
 5    return, pay to the municipality the amount of the tax imposed
 6    by this Section, less a commission of 1.75% which is  allowed
 7    to  reimburse  the  retailer  for  the  expenses  incurred in
 8    keeping records, billing the customer, preparing  and  filing
 9    returns,   remitting  the  tax  and  supplying  data  to  the
10    municipality upon request. No commission may be claimed by  a
11    retailer for tax not timely remitted to the municipality.
12        Whenever  possible,  the  tax  authorized by this Section
13    shall, when collected, be stated as a distinct item  separate
14    and apart from the gross charge for telecommunications.
15        (c)  For  the  purpose  of  the  taxes authorized by this
16    Section:
17             (1)  "Amount paid" means the amount charged  to  the
18        taxpayer's   service   address   in   such   municipality
19        regardless of where such amount is billed or paid.
20             (2)  "Gross  charge"  means  the amount paid for the
21        act   or   privilege   of   originating   or    receiving
22        telecommunications  in  such  municipality  and  for  all
23        services  rendered  in  connection  therewith,  valued in
24        money whether paid in money or otherwise, including cash,
25        credits, services and property of every kind  or  nature,
26        and  shall be determined without any deduction on account
27        of the cost of such telecommunications, the cost  of  the
28        materials  used,  labor  or  service  costs  or any other
29        expense whatsoever.  In  case  credit  is  extended,  the
30        amount  thereof  shall be included only as and when paid.
31        However, "gross charge" shall not include:
32                  (A)  any amounts added to  a  purchaser's  bill
33             because  of  a  charge made pursuant to: (i) the tax
34             imposed by this  Section,  (ii)  additional  charges
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 1             added  to  a  purchaser's   bill pursuant to Section
 2             9-222 of the Public Utilities  Act,  (iii)  the  tax
 3             imposed by the Telecommunications Excise Tax Act, or
 4             (iv) the tax imposed by Section 4251 of the Internal
 5             Revenue Code;
 6                  (B)  charges     for     a     sent     collect
 7             telecommunication    received    outside   of   such
 8             municipality;
 9                  (C)  charges for leased time  on  equipment  or
10             charges  for  the  storage of data or information or
11             subsequent retrieval or the processing  of  data  or
12             information  intended to change its form or content.
13             Such equipment includes, but is not limited to,  the
14             use   of  calculators,  computers,  data  processing
15             equipment,  tabulating   equipment   or   accounting
16             equipment  and  also includes the usage of computers
17             under a time-sharing agreement;
18                  (D)  charges for customer equipment,  including
19             such  equipment  that  is  leased  or  rented by the
20             customer from any source, wherein such  charges  are
21             disaggregated  and  separately identified from other
22             charges;
23                  (E)  charges to business enterprises  certified
24             under Section 9-222.1 of the Public Utilities Act to
25             the  extent  of such exemption and during the period
26             of time specified by the Department of Commerce  and
27             Community Affairs;
28                  (F)  charges  for  telecommunications  and  all
29             services   and   equipment  provided  in  connection
30             therewith  between  a  parent  corporation  and  its
31             wholly owned subsidiaries or  between  wholly  owned
32             subsidiaries when the tax imposed under this Section
33             has  already been paid to a retailer and only to the
34             extent  that  the   charges   between   the   parent
                            -5-               LRB9001639DNkbA
 1             corporation and wholly owned subsidiaries or between
 2             wholly    owned   subsidiaries   represent   expense
 3             allocation between  the  corporations  and  not  the
 4             generation  of  profit for the corporation rendering
 5             such service;
 6                  (G)  bad debts ("bad debt" means any portion of
 7             a debt that is related to a sale at retail for which
 8             gross  charges  are  not  otherwise  deductible   or
 9             excludable    that    has    become   worthless   or
10             uncollectable,  as   determined   under   applicable
11             federal  income tax standards; if the portion of the
12             debt deemed to be  bad  is  subsequently  paid,  the
13             retailer  shall  report  and  pay  the  tax  on that
14             portion during the reporting  period  in  which  the
15             payment is made); or
16                  (H)  charges   paid   by   inserting  coins  in
17             coin-operated telecommunication devices.
18             (3)  "Interstate   telecommunications"   means   all
19        telecommunications that  either  originate  or  terminate
20        outside this State.
21             (4)  "Intrastate   telecommunications"   means   all
22        telecommunications  that  originate  and terminate within
23        this State.
24             (5)  "Person" means any  natural  individual,  firm,
25        trust,  estate,  partnership,  association,  joint  stock
26        company,  joint  venture,  corporation, limited liability
27        company,  or  a  receiver,  trustee,  guardian  or  other
28        representative appointed  by  order  of  any  court,  the
29        Federal    and   State   governments,   including   State
30        universities created  by  statute,  or  any  city,  town,
31        county, or other political subdivision of this State.
32             (6)  "Purchase  at  retail"  means  the acquisition,
33        consumption or use of telecommunications through  a  sale
34        at retail.
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 1             (7)  "Retailer"  means  and  includes  every  person
 2        engaged  in  the  business  of  making sales at retail as
 3        defined in this Section.   A  municipality  may,  in  its
 4        discretion, upon application, authorize the collection of
 5        the  tax hereby imposed by any retailer not maintaining a
 6        place  of  business  within  this  State,  who   to   the
 7        satisfaction  of  the  municipality,  furnishes  adequate
 8        security  to  insure  collection  and payment of the tax.
 9        Such retailer shall be issued, without charge,  a  permit
10        to collect such tax.  When so authorized, it shall be the
11        duty  of such retailer to collect the tax upon all of the
12        gross charges for telecommunications in such municipality
13        in the same manner and subject to the  same  requirements
14        as a retailer maintaining a place of business within such
15        municipality.
16             (8)  "Retailer  maintaining  a  place of business in
17        this State", or any like term,  means  and  includes  any
18        retailer   having   or  maintaining  within  this  State,
19        directly or by  a  subsidiary,  an  office,  distribution
20        facilities,   transmission   facilities,   sales  office,
21        warehouse or other place of business,  or  any  agent  or
22        other  representative  operating  within this State under
23        the  authority  of  the  retailer  or   its   subsidiary,
24        irrespective  of  whether such place of business or agent
25        or other representative is located  here  permanently  or
26        temporarily,  or  whether  such retailer or subsidiary is
27        licensed to do business in this State.
28             (9)  "Sale  at  retail"  means   the   transmitting,
29        supplying  or  furnishing  of  telecommunications and all
30        services  rendered  in   connection   therewith   for   a
31        consideration,  to  persons  other  than  the Federal and
32        State governments,  and  State  universities  created  by
33        statute  and  other than between a parent corporation and
34        its wholly owned subsidiaries  or  between  wholly  owned
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 1        subsidiaries,  when  the  tax  has already been paid to a
 2        retailer  and  the  gross  charge  made   by   one   such
 3        corporation  to  another  such corporation is not greater
 4        than the gross charge paid to the retailer for their  use
 5        or consumption and not for resale.
 6             (10)  "Service   address"   means  the  location  of
 7        telecommunications       equipment       from       which
 8        telecommunications services are originated  or  at  which
 9        telecommunications  services  are received by a taxpayer.
10        If this is not a defined location,  as  in  the  case  of
11        mobile   phones,   paging   systems,   maritime  systems,
12        air-to-ground systems and  the  like,  "service  address"
13        shall  mean  the  location of a taxpayer's primary use of
14        the telecommunication equipment as defined  by  telephone
15        number, authorization code, or location in Illinois where
16        bills are sent.
17             (11)  "Taxpayer"  means a person who individually or
18        through his agents, employees, or permittees  engages  in
19        the  act or privilege of originating in such municipality
20        or receiving in such municipality telecommunications  and
21        who incurs a tax liability under any ordinance authorized
22        by this Section.
23             (12)  "Telecommunications", in addition to the usual
24        and  popular  meaning,  includes,  but is not limited to,
25        messages or information transmitted through use of local,
26        toll and wide area telephone service,  channel  services,
27        telegraph   services,  teletypewriter  service,  computer
28        exchange  services;  cellular  mobile  telecommunications
29        service,  specialized  mobile  radio   services,   paging
30        service, or any other form of mobile and portable one-way
31        or  two-way  communications, or any other transmission of
32        messages or information by electronic or  similar  means,
33        between  or  among  points  by wire, cable, fiber optics,
34        laser, microwave, radio, satellite or similar facilities.
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 1        The definition of "telecommunications" shall not  include
 2        value   added   services  in  which  computer  processing
 3        applications are used to act on the form,  content,  code
 4        and  protocol  of the information for purposes other than
 5        transmission.   "Telecommunications"  shall  not  include
 6        purchase of telecommunications  by  a  telecommunications
 7        service  provider  for  use  as  a  component part of the
 8        service provided by him to the ultimate  retail  consumer
 9        who  originates  or  terminates  the  taxable  end-to-end
10        communications.   Carrier access charges, right of access
11        charges, charges for use of inter-company facilities, and
12        all telecommunications resold in the subsequent provision
13        used as a component of, or  integrated  into,  end-to-end
14        telecommunications  service shall be non-taxable as sales
15        for resale.
16        (d)  If   a   person,   who   originates   or    receives
17    telecommunications  in  such  municipality  claims  to  be  a
18    reseller  of such telecommunications, such person shall apply
19    to the municipality for  a  resale  number.   Such  applicant
20    shall  state  facts which will show the municipality why such
21    applicant  is  not  liable  for  tax  under   any   ordinance
22    authorized by this Section on any of such purchases and shall
23    furnish  such  additional information as the municipality may
24    reasonably require.
25        Upon approval of the application, the municipality  shall
26    assign  a  resale  number  to the applicant and shall certify
27    such number to the applicant.  The  municipality  may  cancel
28    any  number  which  is obtained through misrepresentation, or
29    which is used  to  send  or  receive  such  telecommunication
30    tax-free  when  such  actions  in fact are not for resale, or
31    which no  longer  applies  because  of  the  person's  having
32    discontinued the making of resales.
33        Except  as  provided hereinabove in this Section, the act
34    or privilege of sending or  receiving  telecommunications  in
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 1    this  State shall not be made tax-free on the ground of being
 2    a sale for resale unless the  person  has  an  active  resale
 3    number from the municipality and furnishes that number to the
 4    retailer  in  connection with certifying to the retailer that
 5    any sale to such person is non-taxable  because  of  being  a
 6    sale for resale.
 7        (e)  A    municipality    that    imposes    taxes   upon
 8    telecommunications under this  Section  and  whose  territory
 9    includes part of another unit of local government or a school
10    district  may,  by  ordinance, exempt the other unit of local
11    government or school district from those taxes.
12        (f)  A   municipality    that    imposes    taxes    upon
13    telecommunications  under this Section may, by ordinance, (i)
14    reduce the rate of the tax for persons 65  years  of  age  or
15    older  or  (ii)  exempt persons 65 years of age or older from
16    those taxes.
17    (Source: P.A. 87-17; 87-895; 88-116; 88-480; 88-499;  88-670,
18    eff. 12-2-94.)

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