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| [ Engrossed ] | [ Senate Amendment 001 ] |
90_SB0618
35 ILCS 105/2 from Ch. 120, par. 439.2
35 ILCS 120/1 from Ch. 120, par. 440
Amends the Use Tax Act and the Retailers' Occupation Tax
Act. Provides that the sale of nonreusable tangible personal
property used in delivering, packaging, or consuming food to
persons operating a restaurant, cafeteria, or drive-in and
transferred by the restaurant, cafeteria, or drive-in to
customers in the ordinary course of business as part of the
sale of food, food products, and beverages is not a sale at
retail but is a sale for resale for purposes of the Acts.
Effective immediately.
LRB9003075KDks
LRB9003075KDks
1 AN ACT in relation to taxes, amending named Acts.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Use Tax Act is amended by changing
5 Section 2 as follows:
6 (35 ILCS 105/2) (from Ch. 120, par. 439.2)
7 Sec. 2. "Use" means the exercise by any person of any
8 right or power over tangible personal property incident to
9 the ownership of that property, except that it does not
10 include the sale of such property in any form as tangible
11 personal property in the regular course of business to the
12 extent that such property is not first subjected to a use for
13 which it was purchased, and does not include the use of such
14 property by its owner for demonstration purposes: Provided
15 that the property purchased is deemed to be purchased for the
16 purpose of resale, despite first being used, to the extent to
17 which it is resold as an ingredient of an intentionally
18 produced product or by-product of manufacturing. "Use" does
19 not mean the demonstration use or interim use of tangible
20 personal property by a retailer before he sells that tangible
21 personal property. For watercraft or aircraft, if the period
22 of demonstration use or interim use by the retailer exceeds
23 18 months, the retailer shall pay on the retailers' original
24 cost price the tax imposed by this Act, and no credit for
25 that tax is permitted if the watercraft or aircraft is
26 subsequently sold by the retailer. "Use" does not mean the
27 physical incorporation of tangible personal property, to the
28 extent not first subjected to a use for which it was
29 purchased, as an ingredient or constituent, into other
30 tangible personal property (a) which is sold in the regular
31 course of business or (b) which the person incorporating such
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1 ingredient or constituent therein has undertaken at the time
2 of such purchase to cause to be transported in interstate
3 commerce to destinations outside the State of Illinois:
4 Provided that the property purchased is deemed to be
5 purchased for the purpose of resale, despite first being
6 used, to the extent to which it is resold as an ingredient of
7 an intentionally produced product or by-product of
8 manufacturing.
9 "Watercraft" means a Class 2, Class 3, or Class 4
10 watercraft as defined in Section 3-2 of the Boat Registration
11 and Safety Act, a personal watercraft, or any boat equipped
12 with an inboard motor.
13 "Purchase at retail" means the acquisition of the
14 ownership of or title to tangible personal property through a
15 sale at retail.
16 "Purchaser" means anyone who, through a sale at retail,
17 acquires the ownership of tangible personal property for a
18 valuable consideration.
19 "Sale at retail" means any transfer of the ownership of
20 or title to tangible personal property to a purchaser, for
21 the purpose of use, and not for the purpose of resale in any
22 form as tangible personal property to the extent not first
23 subjected to a use for which it was purchased, for a valuable
24 consideration: Provided that the property purchased is deemed
25 to be purchased for the purpose of resale, despite first
26 being used, to the extent to which it is resold as an
27 ingredient of an intentionally produced product or by-product
28 of manufacturing. For this purpose, slag produced as an
29 incident to manufacturing pig iron or steel and sold is
30 considered to be an intentionally produced by-product of
31 manufacturing. "Sale at retail" includes any such transfer
32 made for resale unless made in compliance with Section 2c of
33 the Retailers' Occupation Tax Act, as incorporated by
34 reference into Section 12 of this Act. Transactions whereby
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1 the possession of the property is transferred but the seller
2 retains the title as security for payment of the selling
3 price are sales.
4 "Sale at retail" shall also be construed to include any
5 Illinois florist's sales transaction in which the purchase
6 order is received in Illinois by a florist and the sale is
7 for use or consumption, but the Illinois florist has a
8 florist in another state deliver the property to the
9 purchaser or the purchaser's donee in such other state.
10 The sale to persons engaged in the business of operating
11 a restaurant, cafeteria, or drive-in of nonreusable tangible
12 personal property employed in delivering, packaging, or
13 consuming food, including, but not limited to, paper and
14 plastic cups, plates, baskets, boxes, sleeves, buckets, or
15 other containers, utensils, straws, placemats, napkins,
16 doggie bags, and wrapping or packaging material that is
17 transferred by the restaurant, cafeteria, or drive-in in the
18 ordinary course of business to customers as part of the sale
19 of food, food products, and beverages, is a sale for resale
20 and not a sale at retail, whether consumption occurs on or
21 off the premises.
22 The purchase, employment and transfer of such tangible
23 personal property as newsprint and ink for the primary
24 purpose of conveying news (with or without other information)
25 is not a purchase, use or sale of tangible personal property.
26 "Selling price" means the consideration for a sale valued
27 in money whether received in money or otherwise, including
28 cash, credits, property other than as hereinafter provided,
29 and services, but not including the value of or credit given
30 for traded-in tangible personal property where the item that
31 is traded-in is of like kind and character as that which is
32 being sold, and shall be determined without any deduction on
33 account of the cost of the property sold, the cost of
34 materials used, labor or service cost or any other expense
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1 whatsoever, but does not include interest or finance charges
2 which appear as separate items on the bill of sale or sales
3 contract nor charges that are added to prices by sellers on
4 account of the seller's tax liability under the "Retailers'
5 Occupation Tax Act", or on account of the seller's duty to
6 collect, from the purchaser, the tax that is imposed by this
7 Act, or on account of the seller's tax liability under
8 Section 8-11-1 of the Illinois Municipal Code, as heretofore
9 and hereafter amended, or on account of the seller's tax
10 liability under the "County Retailers' Occupation Tax Act".
11 Effective December 1, 1985, "selling price" shall include
12 charges that are added to prices by sellers on account of the
13 seller's tax liability under the Cigarette Tax Act, on
14 account of the seller's duty to collect, from the purchaser,
15 the tax imposed under the Cigarette Use Tax Act, and on
16 account of the seller's duty to collect, from the purchaser,
17 any cigarette tax imposed by a home rule unit.
18 The phrase "like kind and character" shall be liberally
19 construed (including but not limited to any form of motor
20 vehicle for any form of motor vehicle, or any kind of farm or
21 agricultural implement for any other kind of farm or
22 agricultural implement), while not including a kind of item
23 which, if sold at retail by that retailer, would be exempt
24 from retailers' occupation tax and use tax as an isolated or
25 occasional sale.
26 "Department" means the Department of Revenue.
27 "Person" means any natural individual, firm, partnership,
28 association, joint stock company, joint adventure, public or
29 private corporation, limited liability company, or a
30 receiver, executor, trustee, guardian or other representative
31 appointed by order of any court.
32 "Retailer" means and includes every person engaged in the
33 business of making sales at retail as defined in this
34 Section.
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1 A person who holds himself or herself out as being
2 engaged (or who habitually engages) in selling tangible
3 personal property at retail is a retailer hereunder with
4 respect to such sales (and not primarily in a service
5 occupation) notwithstanding the fact that such person designs
6 and produces such tangible personal property on special order
7 for the purchaser and in such a way as to render the property
8 of value only to such purchaser, if such tangible personal
9 property so produced on special order serves substantially
10 the same function as stock or standard items of tangible
11 personal property that are sold at retail.
12 A person whose activities are organized and conducted
13 primarily as a not-for-profit service enterprise, and who
14 engages in selling tangible personal property at retail
15 (whether to the public or merely to members and their guests)
16 is a retailer with respect to such transactions, excepting
17 only a person organized and operated exclusively for
18 charitable, religious or educational purposes either (1), to
19 the extent of sales by such person to its members, students,
20 patients or inmates of tangible personal property to be used
21 primarily for the purposes of such person, or (2), to the
22 extent of sales by such person of tangible personal property
23 which is not sold or offered for sale by persons organized
24 for profit. The selling of school books and school supplies
25 by schools at retail to students is not "primarily for the
26 purposes of" the school which does such selling. This
27 paragraph does not apply to nor subject to taxation
28 occasional dinners, social or similar activities of a person
29 organized and operated exclusively for charitable, religious
30 or educational purposes, whether or not such activities are
31 open to the public.
32 A person who is the recipient of a grant or contract
33 under Title VII of the Older Americans Act of 1965 (P.L.
34 92-258) and serves meals to participants in the federal
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1 Nutrition Program for the Elderly in return for contributions
2 established in amount by the individual participant pursuant
3 to a schedule of suggested fees as provided for in the
4 federal Act is not a retailer under this Act with respect to
5 such transactions.
6 Persons who engage in the business of transferring
7 tangible personal property upon the redemption of trading
8 stamps are retailers hereunder when engaged in such business.
9 The isolated or occasional sale of tangible personal
10 property at retail by a person who does not hold himself out
11 as being engaged (or who does not habitually engage) in
12 selling such tangible personal property at retail or a sale
13 through a bulk vending machine does not make such person a
14 retailer hereunder. However, any person who is engaged in a
15 business which is not subject to the tax imposed by the
16 "Retailers' Occupation Tax Act" because of involving the sale
17 of or a contract to sell real estate or a construction
18 contract to improve real estate, but who, in the course of
19 conducting such business, transfers tangible personal
20 property to users or consumers in the finished form in which
21 it was purchased, and which does not become real estate,
22 under any provision of a construction contract or real estate
23 sale or real estate sales agreement entered into with some
24 other person arising out of or because of such nontaxable
25 business, is a retailer to the extent of the value of the
26 tangible personal property so transferred. If, in such
27 transaction, a separate charge is made for the tangible
28 personal property so transferred, the value of such property,
29 for the purposes of this Act, is the amount so separately
30 charged, but not less than the cost of such property to the
31 transferor; if no separate charge is made, the value of such
32 property, for the purposes of this Act, is the cost to the
33 transferor of such tangible personal property.
34 "Retailer maintaining a place of business in this State",
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1 or any like term, means and includes any of the following
2 retailers:
3 1. A retailer having or maintaining within this
4 State, directly or by a subsidiary, an office,
5 distribution house, sales house, warehouse or other place
6 of business, or any agent or other representative
7 operating within this State under the authority of the
8 retailer or its subsidiary, irrespective of whether such
9 place of business or agent or other representative is
10 located here permanently or temporarily, or whether such
11 retailer or subsidiary is licensed to do business in this
12 State. However, the ownership of property that is located
13 at the premises of a printer with which the retailer has
14 contracted for printing and that consists of the final
15 printed product, property that becomes a part of the
16 final printed product, or copy from which the printed
17 product is produced shall not result in the retailer
18 being deemed to have or maintain an office, distribution
19 house, sales house, warehouse, or other place of business
20 within this State.
21 2. A retailer soliciting orders for tangible
22 personal property by means of a telecommunication or
23 television shopping system (which utilizes toll free
24 numbers) which is intended by the retailer to be
25 broadcast by cable television or other means of
26 broadcasting, to consumers located in this State.
27 3. A retailer, pursuant to a contract with a
28 broadcaster or publisher located in this State,
29 soliciting orders for tangible personal property by means
30 of advertising which is disseminated primarily to
31 consumers located in this State and only secondarily to
32 bordering jurisdictions.
33 4. A retailer soliciting orders for tangible
34 personal property by mail if the solicitations are
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1 substantial and recurring and if the retailer benefits
2 from any banking, financing, debt collection,
3 telecommunication, or marketing activities occurring in
4 this State or benefits from the location in this State of
5 authorized installation, servicing, or repair facilities.
6 5. A retailer that is owned or controlled by the
7 same interests that own or control any retailer engaging
8 in business in the same or similar line of business in
9 this State.
10 6. A retailer having a franchisee or licensee
11 operating under its trade name if the franchisee or
12 licensee is required to collect the tax under this
13 Section.
14 7. A retailer, pursuant to a contract with a cable
15 television operator located in this State, soliciting
16 orders for tangible personal property by means of
17 advertising which is transmitted or distributed over a
18 cable television system in this State.
19 8. A retailer engaging in activities in Illinois,
20 which activities in the state in which the retail
21 business engaging in such activities is located would
22 constitute maintaining a place of business in that state.
23 "Bulk vending machine" means a nonelectrically operated
24 vending machine, containing unsorted confections, nuts or
25 other merchandise which, when a coin of a denomination not
26 larger than one cent is inserted, are dispensed in equal
27 portions, at random and without selection by the customer.
28 (Source: P.A. 88-194; 88-361; 88-480; 88-660, eff. 9-16-94;
29 88-669, eff. 11-29-94; 88-670, eff. 12-2-94.)
30 Section 10. The Retailers' Occupation Tax Act is amended
31 by changing Section 1 as follows:
32 (35 ILCS 120/1) (from Ch. 120, par. 440)
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1 Sec. 1. Definitions. "Sale at retail" means any
2 transfer of the ownership of or title to tangible personal
3 property to a purchaser, for the purpose of use or
4 consumption, and not for the purpose of resale in any form as
5 tangible personal property to the extent not first subjected
6 to a use for which it was purchased, for a valuable
7 consideration: Provided that the property purchased is
8 deemed to be purchased for the purpose of resale, despite
9 first being used, to the extent to which it is resold as an
10 ingredient of an intentionally produced product or byproduct
11 of manufacturing. For this purpose, slag produced as an
12 incident to manufacturing pig iron or steel and sold is
13 considered to be an intentionally produced byproduct of
14 manufacturing. Transactions whereby the possession of the
15 property is transferred but the seller retains the title as
16 security for payment of the selling price shall be deemed to
17 be sales.
18 "Sale at retail" shall be construed to include any
19 transfer of the ownership of or title to tangible personal
20 property to a purchaser, for use or consumption by any other
21 person to whom such purchaser may transfer the tangible
22 personal property without a valuable consideration, and to
23 include any transfer, whether made for or without a valuable
24 consideration, for resale in any form as tangible personal
25 property unless made in compliance with Section 2c of this
26 Act.
27 Sales of tangible personal property, which property, to
28 the extent not first subjected to a use for which it was
29 purchased, as an ingredient or constituent, goes into and
30 forms a part of tangible personal property subsequently the
31 subject of a "Sale at retail", are not sales at retail as
32 defined in this Act: Provided that the property purchased is
33 deemed to be purchased for the purpose of resale, despite
34 first being used, to the extent to which it is resold as an
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1 ingredient of an intentionally produced product or byproduct
2 of manufacturing.
3 "Sale at retail" shall be construed to include any
4 Illinois florist's sales transaction in which the purchase
5 order is received in Illinois by a florist and the sale is
6 for use or consumption, but the Illinois florist has a
7 florist in another state deliver the property to the
8 purchaser or the purchaser's donee in such other state.
9 The sale to persons engaged in the business of operating
10 a restaurant, cafeteria, or drive-in of nonreusable tangible
11 personal property employed in delivering, packaging, or
12 consuming food, including, but not limited to, paper and
13 plastic cups, plates, baskets, boxes, sleeves, buckets, or
14 other containers, utensils, straws, placemats, napkins,
15 doggie bags, and wrapping or packaging material that is
16 transferred by the restaurant, cafeteria, or drive-in in the
17 ordinary course of business to customers as part of the sale
18 of food, food products, and beverages, is a sale for resale
19 and not a sale at retail, whether consumption occurs on or
20 off the premises.
21 The purchase, employment and transfer of such tangible
22 personal property as newsprint and ink for the primary
23 purpose of conveying news (with or without other information)
24 is not a purchase, use or sale of tangible personal property.
25 A person whose activities are organized and conducted
26 primarily as a not-for-profit service enterprise, and who
27 engages in selling tangible personal property at retail
28 (whether to the public or merely to members and their guests)
29 is engaged in the business of selling tangible personal
30 property at retail with respect to such transactions,
31 excepting only a person organized and operated exclusively
32 for charitable, religious or educational purposes either (1),
33 to the extent of sales by such person to its members,
34 students, patients or inmates of tangible personal property
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1 to be used primarily for the purposes of such person, or (2),
2 to the extent of sales by such person of tangible personal
3 property which is not sold or offered for sale by persons
4 organized for profit. The selling of school books and school
5 supplies by schools at retail to students is not "primarily
6 for the purposes of" the school which does such selling. The
7 provisions of this paragraph shall not apply to nor subject
8 to taxation occasional dinners, socials or similar activities
9 of a person organized and operated exclusively for
10 charitable, religious or educational purposes, whether or not
11 such activities are open to the public.
12 A person who is the recipient of a grant or contract
13 under Title VII of the Older Americans Act of 1965 (P.L.
14 92-258) and serves meals to participants in the federal
15 Nutrition Program for the Elderly in return for contributions
16 established in amount by the individual participant pursuant
17 to a schedule of suggested fees as provided for in the
18 federal Act is not engaged in the business of selling
19 tangible personal property at retail with respect to such
20 transactions.
21 "Purchaser" means anyone who, through a sale at retail,
22 acquires the ownership of or title to tangible personal
23 property for a valuable consideration.
24 "Reseller of motor fuel" means any person engaged in the
25 business of selling or delivering or transferring title of
26 motor fuel to another person other than for use or
27 consumption. No person shall act as a reseller of motor fuel
28 within this State without first being registered as a
29 reseller pursuant to Section 2c or a retailer pursuant to
30 Section 2a.
31 "Selling price" or the "amount of sale" means the
32 consideration for a sale valued in money whether received in
33 money or otherwise, including cash, credits, property, other
34 than as hereinafter provided, and services, but not including
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1 the value of or credit given for traded-in tangible personal
2 property where the item that is traded-in is of like kind and
3 character as that which is being sold, and shall be
4 determined without any deduction on account of the cost of
5 the property sold, the cost of materials used, labor or
6 service cost or any other expense whatsoever, but does not
7 include charges that are added to prices by sellers on
8 account of the seller's tax liability under this Act, or on
9 account of the seller's duty to collect, from the purchaser,
10 the tax that is imposed by the Use Tax Act, or on account of
11 the seller's tax liability under Section 8-11-1 of the
12 Illinois Municipal Code, as heretofore and hereafter amended,
13 or on account of the seller's tax liability under the County
14 Retailers' Occupation Tax Act, or on account of the seller's
15 tax liability under the Home Rule Municipal Soft Drink
16 Retailers' Occupation Tax, or on account of the seller's tax
17 liability under any tax imposed under the "Regional
18 Transportation Authority Act", approved December 12, 1973.
19 Effective December 1, 1985, "selling price" shall include
20 charges that are added to prices by sellers on account of the
21 seller's tax liability under the Cigarette Tax Act, on
22 account of the sellers' duty to collect, from the purchaser,
23 the tax imposed under the Cigarette Use Tax Act, and on
24 account of the seller's duty to collect, from the purchaser,
25 any cigarette tax imposed by a home rule unit.
26 The phrase "like kind and character" shall be liberally
27 construed (including but not limited to any form of motor
28 vehicle for any form of motor vehicle, or any kind of farm or
29 agricultural implement for any other kind of farm or
30 agricultural implement), while not including a kind of item
31 which, if sold at retail by that retailer, would be exempt
32 from retailers' occupation tax and use tax as an isolated or
33 occasional sale.
34 "Gross receipts" from the sales of tangible personal
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1 property at retail means the total selling price or the
2 amount of such sales, as hereinbefore defined. In the case
3 of charge and time sales, the amount thereof shall be
4 included only as and when payments are received by the
5 seller. Receipts or other consideration derived by a seller
6 from the sale, transfer or assignment of accounts receivable
7 to a wholly owned subsidiary will not be deemed payments
8 prior to the time the purchaser makes payment on such
9 accounts.
10 "Department" means the Department of Revenue.
11 "Person" means any natural individual, firm, partnership,
12 association, joint stock company, joint adventure, public or
13 private corporation, limited liability company, or a
14 receiver, executor, trustee, guardian or other representative
15 appointed by order of any court.
16 The isolated or occasional sale of tangible personal
17 property at retail by a person who does not hold himself out
18 as being engaged (or who does not habitually engage) in
19 selling such tangible personal property at retail, or a sale
20 through a bulk vending machine, does not constitute engaging
21 in a business of selling such tangible personal property at
22 retail within the meaning of this Act; provided that any
23 person who is engaged in a business which is not subject to
24 the tax imposed by this Act because of involving the sale of
25 or a contract to sell real estate or a construction contract
26 to improve real estate or a construction contract to
27 engineer, install, and maintain an integrated system of
28 products, but who, in the course of conducting such business,
29 transfers tangible personal property to users or consumers in
30 the finished form in which it was purchased, and which does
31 not become real estate or was not engineered and installed,
32 under any provision of a construction contract or real estate
33 sale or real estate sales agreement entered into with some
34 other person arising out of or because of such nontaxable
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1 business, is engaged in the business of selling tangible
2 personal property at retail to the extent of the value of the
3 tangible personal property so transferred. If, in such a
4 transaction, a separate charge is made for the tangible
5 personal property so transferred, the value of such property,
6 for the purpose of this Act, shall be the amount so
7 separately charged, but not less than the cost of such
8 property to the transferor; if no separate charge is made,
9 the value of such property, for the purposes of this Act, is
10 the cost to the transferor of such tangible personal
11 property. Construction contracts for the improvement of real
12 estate consisting of engineering, installation, and
13 maintenance of voice, data, video, security, and all
14 telecommunication systems do not constitute engaging in a
15 business of selling tangible personal property at retail
16 within the meaning of this Act if they are sold at one
17 specified contract price.
18 A person who holds himself or herself out as being
19 engaged (or who habitually engages) in selling tangible
20 personal property at retail is a person engaged in the
21 business of selling tangible personal property at retail
22 hereunder with respect to such sales (and not primarily in a
23 service occupation) notwithstanding the fact that such person
24 designs and produces such tangible personal property on
25 special order for the purchaser and in such a way as to
26 render the property of value only to such purchaser, if such
27 tangible personal property so produced on special order
28 serves substantially the same function as stock or standard
29 items of tangible personal property that are sold at retail.
30 Persons who engage in the business of transferring
31 tangible personal property upon the redemption of trading
32 stamps are engaged in the business of selling such property
33 at retail and shall be liable for and shall pay the tax
34 imposed by this Act on the basis of the retail value of the
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1 property transferred upon redemption of such stamps.
2 "Bulk vending machine" means a nonelectrically operated
3 vending machine, containing unsorted confections, nuts or
4 other merchandise which, when a coin of a denomination not
5 larger than one cent is inserted, are dispensed in equal
6 portions, at random and without selection by the customer.
7 (Source: P.A. 88-420; 88-480; 88-507; 88-670, eff. 12-2-94.)
8 Section 99. Effective date. This Act takes effect upon
9 becoming law.