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90_SB1546
35 ILCS 5/201 from Ch. 120, par. 2-201
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/206 from Ch. 120, par. 2-206
35 ILCS 5/207 from Ch. 120, par. 2-207
35 ILCS 105/2a from Ch. 120, par. 439.2a
35 ILCS 105/3-5 from Ch. 120, par. 439.3-5
35 ILCS 105/3-60 from Ch. 120, par. 439.3-60
35 ILCS 105/3-85
35 ILCS 105/12 from Ch. 120, par. 439.12
35 ILCS 110/2 from Ch. 120, par. 439.32
35 ILCS 110/2a from Ch. 120, par. 439.32a
35 ILCS 110/3-5 from Ch. 120, par. 439.33-5
35 ILCS 110/3-70
35 ILCS 110/12 from Ch. 120, par. 439.42
35 ILCS 115/2 from Ch. 120, par. 439.102
35 ILCS 115/2a from Ch. 120, par. 439.102a
35 ILCS 115/3-5 from Ch. 120, par. 439.103-5
35 ILCS 115/12 from Ch. 120, par. 439.112
35 ILCS 120/1a from Ch. 120, par. 440a
35 ILCS 120/1d from Ch. 120, par. 440d
35 ILCS 120/1j from Ch. 120, par. 440j
35 ILCS 120/2-5 from Ch. 120, par. 441-5
35 ILCS 120/5k from Ch. 120, par. 444k
35 ILCS 505/2a from Ch. 120, par. 418a
35 ILCS 615/1 from Ch. 120, par. 467.16
35 ILCS 620/1 from Ch. 120, par. 468
35 ILCS 630/2 from Ch. 120, par. 2003
220 ILCS 5/8-403.1 from Ch. 111 2/3, par. 8-403.1
Amends the Illinois Income Tax Act, the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, the Motor Fuel Tax Law, the
Gas Revenue Tax Act, the Public Utilities Revenue Act, the
Telecommunications Excise Tax Act, and the Public Utilities
Act. Sunsets various tax credits, deductions, exemptions, and
discounts on December 31, 2003. Effective immediately.
LRB9011573KDmb
LRB9011573KDmb
1 AN ACT concerning 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 Illinois Income Tax Act is amended by
5 changing Sections 201, 203, 206, and 207 as follows:
6 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
7 Sec. 201. Tax Imposed.
8 (a) In general. A tax measured by net income is hereby
9 imposed on every individual, corporation, trust and estate
10 for each taxable year ending after July 31, 1969 on the
11 privilege of earning or receiving income in or as a resident
12 of this State. Such tax shall be in addition to all other
13 occupation or privilege taxes imposed by this State or by any
14 municipal corporation or political subdivision thereof.
15 (b) Rates. The tax imposed by subsection (a) of this
16 Section shall be determined as follows:
17 (1) In the case of an individual, trust or estate,
18 for taxable years ending prior to July 1, 1989, an amount
19 equal to 2 1/2% of the taxpayer's net income for the
20 taxable year.
21 (2) In the case of an individual, trust or estate,
22 for taxable years beginning prior to July 1, 1989 and
23 ending after June 30, 1989, an amount equal to the sum of
24 (i) 2 1/2% of the taxpayer's net income for the period
25 prior to July 1, 1989, as calculated under Section 202.3,
26 and (ii) 3% of the taxpayer's net income for the period
27 after June 30, 1989, as calculated under Section 202.3.
28 (3) In the case of an individual, trust or estate,
29 for taxable years beginning after June 30, 1989, an
30 amount equal to 3% of the taxpayer's net income for the
31 taxable year.
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1 (4) (Blank).
2 (5) (Blank).
3 (6) In the case of a corporation, for taxable years
4 ending prior to July 1, 1989, an amount equal to 4% of
5 the taxpayer's net income for the taxable year.
6 (7) In the case of a corporation, for taxable years
7 beginning prior to July 1, 1989 and ending after June 30,
8 1989, an amount equal to the sum of (i) 4% of the
9 taxpayer's net income for the period prior to July 1,
10 1989, as calculated under Section 202.3, and (ii) 4.8% of
11 the taxpayer's net income for the period after June 30,
12 1989, as calculated under Section 202.3.
13 (8) In the case of a corporation, for taxable years
14 beginning after June 30, 1989, an amount equal to 4.8% of
15 the taxpayer's net income for the taxable year.
16 (c) Beginning on July 1, 1979 and thereafter, in
17 addition to such income tax, there is also hereby imposed the
18 Personal Property Tax Replacement Income Tax measured by net
19 income on every corporation (including Subchapter S
20 corporations), partnership and trust, for each taxable year
21 ending after June 30, 1979. Such taxes are imposed on the
22 privilege of earning or receiving income in or as a resident
23 of this State. The Personal Property Tax Replacement Income
24 Tax shall be in addition to the income tax imposed by
25 subsections (a) and (b) of this Section and in addition to
26 all other occupation or privilege taxes imposed by this State
27 or by any municipal corporation or political subdivision
28 thereof.
29 (d) Additional Personal Property Tax Replacement Income
30 Tax Rates. The personal property tax replacement income tax
31 imposed by this subsection and subsection (c) of this Section
32 in the case of a corporation, other than a Subchapter S
33 corporation, shall be an additional amount equal to 2.85% of
34 such taxpayer's net income for the taxable year, except that
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1 beginning on January 1, 1981, and thereafter, the rate of
2 2.85% specified in this subsection shall be reduced to 2.5%,
3 and in the case of a partnership, trust or a Subchapter S
4 corporation shall be an additional amount equal to 1.5% of
5 such taxpayer's net income for the taxable year.
6 (e) Investment credit. A taxpayer shall be allowed a
7 credit against the Personal Property Tax Replacement Income
8 Tax for investment in qualified property.
9 (1) A taxpayer shall be allowed a credit equal to
10 .5% of the basis of qualified property placed in service
11 during the taxable year, provided such property is placed
12 in service on or after July 1, 1984. There shall be
13 allowed an additional credit equal to .5% of the basis of
14 qualified property placed in service during the taxable
15 year, provided such property is placed in service on or
16 after July 1, 1986, and the taxpayer's base employment
17 within Illinois has increased by 1% or more over the
18 preceding year as determined by the taxpayer's employment
19 records filed with the Illinois Department of Employment
20 Security. Taxpayers who are new to Illinois shall be
21 deemed to have met the 1% growth in base employment for
22 the first year in which they file employment records with
23 the Illinois Department of Employment Security. The
24 provisions added to this Section by Public Act 85-1200
25 (and restored by Public Act 87-895) shall be construed as
26 declaratory of existing law and not as a new enactment.
27 If, in any year, the increase in base employment within
28 Illinois over the preceding year is less than 1%, the
29 additional credit shall be limited to that percentage
30 times a fraction, the numerator of which is .5% and the
31 denominator of which is 1%, but shall not exceed .5%.
32 The investment credit shall not be allowed to the extent
33 that it would reduce a taxpayer's liability in any tax
34 year below zero, nor may any credit for qualified
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1 property be allowed for any year other than the year in
2 which the property was placed in service in Illinois. For
3 tax years ending on or after December 31, 1987, and on or
4 before December 31, 1988, the credit shall be allowed for
5 the tax year in which the property is placed in service,
6 or, if the amount of the credit exceeds the tax liability
7 for that year, whether it exceeds the original liability
8 or the liability as later amended, such excess may be
9 carried forward and applied to the tax liability of the 5
10 taxable years following the excess credit years if the
11 taxpayer (i) makes investments which cause the creation
12 of a minimum of 2,000 full-time equivalent jobs in
13 Illinois, (ii) is located in an enterprise zone
14 established pursuant to the Illinois Enterprise Zone Act
15 and (iii) is certified by the Department of Commerce and
16 Community Affairs as complying with the requirements
17 specified in clause (i) and (ii) by July 1, 1986. The
18 Department of Commerce and Community Affairs shall notify
19 the Department of Revenue of all such certifications
20 immediately. For tax years ending after December 31,
21 1988, the credit shall be allowed for the tax year in
22 which the property is placed in service, or, if the
23 amount of the credit exceeds the tax liability for that
24 year, whether it exceeds the original liability or the
25 liability as later amended, such excess may be carried
26 forward and applied to the tax liability of the 5 taxable
27 years following the excess credit years. The credit shall
28 be applied to the earliest year for which there is a
29 liability. If there is credit from more than one tax year
30 that is available to offset a liability, earlier credit
31 shall be applied first.
32 (2) The term "qualified property" means property
33 which:
34 (A) is tangible, whether new or used,
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1 including buildings and structural components of
2 buildings and signs that are real property, but not
3 including land or improvements to real property that
4 are not a structural component of a building such as
5 landscaping, sewer lines, local access roads,
6 fencing, parking lots, and other appurtenances;
7 (B) is depreciable pursuant to Section 167 of
8 the Internal Revenue Code, except that "3-year
9 property" as defined in Section 168(c)(2)(A) of that
10 Code is not eligible for the credit provided by this
11 subsection (e);
12 (C) is acquired by purchase as defined in
13 Section 179(d) of the Internal Revenue Code;
14 (D) is used in Illinois by a taxpayer who is
15 primarily engaged in manufacturing, or in mining
16 coal or fluorite, or in retailing; and
17 (E) has not previously been used in Illinois
18 in such a manner and by such a person as would
19 qualify for the credit provided by this subsection
20 (e) or subsection (f).
21 (3) For purposes of this subsection (e),
22 "manufacturing" means the material staging and production
23 of tangible personal property by procedures commonly
24 regarded as manufacturing, processing, fabrication, or
25 assembling which changes some existing material into new
26 shapes, new qualities, or new combinations. For purposes
27 of this subsection (e) the term "mining" shall have the
28 same meaning as the term "mining" in Section 613(c) of
29 the Internal Revenue Code. For purposes of this
30 subsection (e), the term "retailing" means the sale of
31 tangible personal property or services rendered in
32 conjunction with the sale of tangible consumer goods or
33 commodities.
34 (4) The basis of qualified property shall be the
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1 basis used to compute the depreciation deduction for
2 federal income tax purposes.
3 (5) If the basis of the property for federal income
4 tax depreciation purposes is increased after it has been
5 placed in service in Illinois by the taxpayer, the amount
6 of such increase shall be deemed property placed in
7 service on the date of such increase in basis.
8 (6) The term "placed in service" shall have the
9 same meaning as under Section 46 of the Internal Revenue
10 Code.
11 (7) If during any taxable year, any property ceases
12 to be qualified property in the hands of the taxpayer
13 within 48 months after being placed in service, or the
14 situs of any qualified property is moved outside Illinois
15 within 48 months after being placed in service, the
16 Personal Property Tax Replacement Income Tax for such
17 taxable year shall be increased. Such increase shall be
18 determined by (i) recomputing the investment credit which
19 would have been allowed for the year in which credit for
20 such property was originally allowed by eliminating such
21 property from such computation and, (ii) subtracting such
22 recomputed credit from the amount of credit previously
23 allowed. For the purposes of this paragraph (7), a
24 reduction of the basis of qualified property resulting
25 from a redetermination of the purchase price shall be
26 deemed a disposition of qualified property to the extent
27 of such reduction.
28 (8) Unless the investment credit is extended by
29 law, the basis of qualified property shall not include
30 costs incurred after December 31, 2003, except for costs
31 incurred pursuant to a binding contract entered into on
32 or before December 31, 2003.
33 (9) Each taxable year, a partnership may elect to
34 pass through to its partners the credits to which the
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1 partnership is entitled under this subsection (e) for the
2 taxable year. A partner may use the credit allocated to
3 him or her under this paragraph only against the tax
4 imposed in subsections (c) and (d) of this Section. If
5 the partnership makes that election, those credits shall
6 be allocated among the partners in the partnership in
7 accordance with the rules set forth in Section 704(b) of
8 the Internal Revenue Code, and the rules promulgated
9 under that Section, and the allocated amount of the
10 credits shall be allowed to the partners for that taxable
11 year. The partnership shall make this election on its
12 Personal Property Tax Replacement Income Tax return for
13 that taxable year. The election to pass through the
14 credits shall be irrevocable.
15 (f) Investment credit; Enterprise Zone.
16 (1) A taxpayer shall be allowed a credit against
17 the tax imposed by subsections (a) and (b) of this
18 Section for investment in qualified property which is
19 placed in service in an Enterprise Zone created pursuant
20 to the Illinois Enterprise Zone Act. For partners and for
21 shareholders of Subchapter S corporations, there shall be
22 allowed a credit under this subsection (f) to be
23 determined in accordance with the determination of income
24 and distributive share of income under Sections 702 and
25 704 and Subchapter S of the Internal Revenue Code. The
26 credit shall be .5% of the basis for such property. The
27 credit shall be available only in the taxable year in
28 which the property is placed in service in the Enterprise
29 Zone and shall not be allowed to the extent that it would
30 reduce a taxpayer's liability for the tax imposed by
31 subsections (a) and (b) of this Section to below zero.
32 For tax years ending on or after December 31, 1985, the
33 credit shall be allowed for the tax year in which the
34 property is placed in service, or, if the amount of the
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1 credit exceeds the tax liability for that year, whether
2 it exceeds the original liability or the liability as
3 later amended, such excess may be carried forward and
4 applied to the tax liability of the 5 taxable years
5 following the excess credit year. The credit shall be
6 applied to the earliest year for which there is a
7 liability. If there is credit from more than one tax year
8 that is available to offset a liability, the credit
9 accruing first in time shall be applied first.
10 (2) The term qualified property means property
11 which:
12 (A) is tangible, whether new or used,
13 including buildings and structural components of
14 buildings;
15 (B) is depreciable pursuant to Section 167 of
16 the Internal Revenue Code, except that "3-year
17 property" as defined in Section 168(c)(2)(A) of that
18 Code is not eligible for the credit provided by this
19 subsection (f);
20 (C) is acquired by purchase as defined in
21 Section 179(d) of the Internal Revenue Code;
22 (D) is used in the Enterprise Zone by the
23 taxpayer; and
24 (E) has not been previously used in Illinois
25 in such a manner and by such a person as would
26 qualify for the credit provided by this subsection
27 (f) or subsection (e).
28 (3) The basis of qualified property shall be the
29 basis used to compute the depreciation deduction for
30 federal income tax purposes.
31 (4) If the basis of the property for federal income
32 tax depreciation purposes is increased after it has been
33 placed in service in the Enterprise Zone by the taxpayer,
34 the amount of such increase shall be deemed property
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1 placed in service on the date of such increase in basis.
2 (5) The term "placed in service" shall have the
3 same meaning as under Section 46 of the Internal Revenue
4 Code.
5 (6) If during any taxable year, any property ceases
6 to be qualified property in the hands of the taxpayer
7 within 48 months after being placed in service, or the
8 situs of any qualified property is moved outside the
9 Enterprise Zone within 48 months after being placed in
10 service, the tax imposed under subsections (a) and (b) of
11 this Section for such taxable year shall be increased.
12 Such increase shall be determined by (i) recomputing the
13 investment credit which would have been allowed for the
14 year in which credit for such property was originally
15 allowed by eliminating such property from such
16 computation, and (ii) subtracting such recomputed credit
17 from the amount of credit previously allowed. For the
18 purposes of this paragraph (6), a reduction of the basis
19 of qualified property resulting from a redetermination of
20 the purchase price shall be deemed a disposition of
21 qualified property to the extent of such reduction.
22 This credit applies only to tax years ending on or before
23 December 31, 2003 and does not apply thereafter.
24 (g) Jobs Tax Credit; Enterprise Zone and Foreign
25 Trade Zone or Sub-Zone.
26 (1) A taxpayer conducting a trade or business in an
27 enterprise zone or a High Impact Business designated by
28 the Department of Commerce and Community Affairs
29 conducting a trade or business in a federally designated
30 Foreign Trade Zone or Sub-Zone shall be allowed a credit
31 against the tax imposed by subsections (a) and (b) of
32 this Section in the amount of $500 per eligible employee
33 hired to work in the zone during the taxable year.
34 (2) To qualify for the credit:
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1 (A) the taxpayer must hire 5 or more eligible
2 employees to work in an enterprise zone or federally
3 designated Foreign Trade Zone or Sub-Zone during the
4 taxable year;
5 (B) the taxpayer's total employment within the
6 enterprise zone or federally designated Foreign
7 Trade Zone or Sub-Zone must increase by 5 or more
8 full-time employees beyond the total employed in
9 that zone at the end of the previous tax year for
10 which a jobs tax credit under this Section was
11 taken, or beyond the total employed by the taxpayer
12 as of December 31, 1985, whichever is later; and
13 (C) the eligible employees must be employed
14 180 consecutive days in order to be deemed hired for
15 purposes of this subsection.
16 (3) An "eligible employee" means an employee who
17 is:
18 (A) Certified by the Department of Commerce
19 and Community Affairs as "eligible for services"
20 pursuant to regulations promulgated in accordance
21 with Title II of the Job Training Partnership Act,
22 Training Services for the Disadvantaged or Title III
23 of the Job Training Partnership Act, Employment and
24 Training Assistance for Dislocated Workers Program.
25 (B) Hired after the enterprise zone or
26 federally designated Foreign Trade Zone or Sub-Zone
27 was designated or the trade or business was located
28 in that zone, whichever is later.
29 (C) Employed in the enterprise zone or Foreign
30 Trade Zone or Sub-Zone. An employee is employed in
31 an enterprise zone or federally designated Foreign
32 Trade Zone or Sub-Zone if his services are rendered
33 there or it is the base of operations for the
34 services performed.
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1 (D) A full-time employee working 30 or more
2 hours per week.
3 (4) For tax years ending on or after December 31,
4 1985 and prior to December 31, 1988, the credit shall be
5 allowed for the tax year in which the eligible employees
6 are hired. For tax years ending on or after December 31,
7 1988, the credit shall be allowed for the tax year
8 immediately following the tax year in which the eligible
9 employees are hired. If the amount of the credit exceeds
10 the tax liability for that year, whether it exceeds the
11 original liability or the liability as later amended,
12 such excess may be carried forward and applied to the tax
13 liability of the 5 taxable years following the excess
14 credit year. The credit shall be applied to the earliest
15 year for which there is a liability. If there is credit
16 from more than one tax year that is available to offset a
17 liability, earlier credit shall be applied first.
18 (5) The Department of Revenue shall promulgate such
19 rules and regulations as may be deemed necessary to carry
20 out the purposes of this subsection (g).
21 (6) The credit shall be available for eligible
22 employees hired on or after January 1, 1986.
23 (h) Investment credit; High Impact Business.
24 (1) Subject to subsection (b) of Section 5.5 of the
25 Illinois Enterprise Zone Act, a taxpayer shall be allowed
26 a credit against the tax imposed by subsections (a) and
27 (b) of this Section for investment in qualified property
28 which is placed in service by a Department of Commerce
29 and Community Affairs designated High Impact Business.
30 The credit shall be .5% of the basis for such property.
31 The credit shall not be available until the minimum
32 investments in qualified property set forth in Section
33 5.5 of the Illinois Enterprise Zone Act have been
34 satisfied and shall not be allowed to the extent that it
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1 would reduce a taxpayer's liability for the tax imposed
2 by subsections (a) and (b) of this Section to below zero.
3 The credit applicable to such minimum investments shall
4 be taken in the taxable year in which such minimum
5 investments have been completed. The credit for
6 additional investments beyond the minimum investment by a
7 designated high impact business shall be available only
8 in the taxable year in which the property is placed in
9 service and shall not be allowed to the extent that it
10 would reduce a taxpayer's liability for the tax imposed
11 by subsections (a) and (b) of this Section to below zero.
12 For tax years ending on or after December 31, 1987, the
13 credit shall be allowed for the tax year in which the
14 property is placed in service, or, if the amount of the
15 credit exceeds the tax liability for that year, whether
16 it exceeds the original liability or the liability as
17 later amended, such excess may be carried forward and
18 applied to the tax liability of the 5 taxable years
19 following the excess credit year. The credit shall be
20 applied to the earliest year for which there is a
21 liability. If there is credit from more than one tax
22 year that is available to offset a liability, the credit
23 accruing first in time shall be applied first.
24 Changes made in this subdivision (h)(1) by Public
25 Act 88-670 restore changes made by Public Act 85-1182 and
26 reflect existing law.
27 (2) The term qualified property means property
28 which:
29 (A) is tangible, whether new or used,
30 including buildings and structural components of
31 buildings;
32 (B) is depreciable pursuant to Section 167 of
33 the Internal Revenue Code, except that "3-year
34 property" as defined in Section 168(c)(2)(A) of that
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1 Code is not eligible for the credit provided by this
2 subsection (h);
3 (C) is acquired by purchase as defined in
4 Section 179(d) of the Internal Revenue Code; and
5 (D) is not eligible for the Enterprise Zone
6 Investment Credit provided by subsection (f) of this
7 Section.
8 (3) The basis of qualified property shall be the
9 basis used to compute the depreciation deduction for
10 federal income tax purposes.
11 (4) If the basis of the property for federal income
12 tax depreciation purposes is increased after it has been
13 placed in service in a federally designated Foreign Trade
14 Zone or Sub-Zone located in Illinois by the taxpayer, the
15 amount of such increase shall be deemed property placed
16 in service on the date of such increase in basis.
17 (5) The term "placed in service" shall have the
18 same meaning as under Section 46 of the Internal Revenue
19 Code.
20 (6) If during any taxable year ending on or before
21 December 31, 1996, any property ceases to be qualified
22 property in the hands of the taxpayer within 48 months
23 after being placed in service, or the situs of any
24 qualified property is moved outside Illinois within 48
25 months after being placed in service, the tax imposed
26 under subsections (a) and (b) of this Section for such
27 taxable year shall be increased. Such increase shall be
28 determined by (i) recomputing the investment credit which
29 would have been allowed for the year in which credit for
30 such property was originally allowed by eliminating such
31 property from such computation, and (ii) subtracting such
32 recomputed credit from the amount of credit previously
33 allowed. For the purposes of this paragraph (6), a
34 reduction of the basis of qualified property resulting
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1 from a redetermination of the purchase price shall be
2 deemed a disposition of qualified property to the extent
3 of such reduction.
4 (7) Beginning with tax years ending after December
5 31, 1996, if a taxpayer qualifies for the credit under
6 this subsection (h) and thereby is granted a tax
7 abatement and the taxpayer relocates its entire facility
8 in violation of the explicit terms and length of the
9 contract under Section 18-183 of the Property Tax Code,
10 the tax imposed under subsections (a) and (b) of this
11 Section shall be increased for the taxable year in which
12 the taxpayer relocated its facility by an amount equal to
13 the amount of credit received by the taxpayer under this
14 subsection (h).
15 This credit applies only to tax years ending on or before
16 December 31, 2003 and does not apply thereafter.
17 (i) A credit shall be allowed against the tax imposed by
18 subsections (a) and (b) of this Section for the tax imposed
19 by subsections (c) and (d) of this Section. This credit
20 shall be computed by multiplying the tax imposed by
21 subsections (c) and (d) of this Section by a fraction, the
22 numerator of which is base income allocable to Illinois and
23 the denominator of which is Illinois base income, and further
24 multiplying the product by the tax rate imposed by
25 subsections (a) and (b) of this Section.
26 Any credit earned on or after December 31, 1986 under
27 this subsection which is unused in the year the credit is
28 computed because it exceeds the tax liability imposed by
29 subsections (a) and (b) for that year (whether it exceeds the
30 original liability or the liability as later amended) may be
31 carried forward and applied to the tax liability imposed by
32 subsections (a) and (b) of the 5 taxable years following the
33 excess credit year. This credit shall be applied first to
34 the earliest year for which there is a liability. If there
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1 is a credit under this subsection from more than one tax year
2 that is available to offset a liability the earliest credit
3 arising under this subsection shall be applied first.
4 If, during any taxable year ending on or after December
5 31, 1986, the tax imposed by subsections (c) and (d) of this
6 Section for which a taxpayer has claimed a credit under this
7 subsection (i) is reduced, the amount of credit for such tax
8 shall also be reduced. Such reduction shall be determined by
9 recomputing the credit to take into account the reduced tax
10 imposed by subsection (c) and (d). If any portion of the
11 reduced amount of credit has been carried to a different
12 taxable year, an amended return shall be filed for such
13 taxable year to reduce the amount of credit claimed.
14 (j) Training expense credit. Beginning with tax years
15 ending on or after December 31, 1986, a taxpayer shall be
16 allowed a credit against the tax imposed by subsection (a)
17 and (b) under this Section for all amounts paid or accrued,
18 on behalf of all persons employed by the taxpayer in Illinois
19 or Illinois residents employed outside of Illinois by a
20 taxpayer, for educational or vocational training in
21 semi-technical or technical fields or semi-skilled or skilled
22 fields, which were deducted from gross income in the
23 computation of taxable income. The credit against the tax
24 imposed by subsections (a) and (b) shall be 1.6% of such
25 training expenses. For partners and for shareholders of
26 subchapter S corporations, there shall be allowed a credit
27 under this subsection (j) to be determined in accordance with
28 the determination of income and distributive share of income
29 under Sections 702 and 704 and subchapter S of the Internal
30 Revenue Code.
31 Any credit allowed under this subsection which is unused
32 in the year the credit is earned may be carried forward to
33 each of the 5 taxable years following the year for which the
34 credit is first computed until it is used. This credit shall
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1 be applied first to the earliest year for which there is a
2 liability. If there is a credit under this subsection from
3 more than one tax year that is available to offset a
4 liability the earliest credit arising under this subsection
5 shall be applied first.
6 This credit applies only to tax years ending on or before
7 December 31, 2003 and does not apply thereafter.
8 (k) Research and development credit.
9 Beginning with tax years ending after July 1, 1990, a
10 taxpayer shall be allowed a credit against the tax imposed by
11 subsections (a) and (b) of this Section for increasing
12 research activities in this State. The credit allowed
13 against the tax imposed by subsections (a) and (b) shall be
14 equal to 6 1/2% of the qualifying expenditures for increasing
15 research activities in this State.
16 For purposes of this subsection, "qualifying
17 expenditures" means the qualifying expenditures as defined
18 for the federal credit for increasing research activities
19 which would be allowable under Section 41 of the Internal
20 Revenue Code and which are conducted in this State,
21 "qualifying expenditures for increasing research activities
22 in this State" means the excess of qualifying expenditures
23 for the taxable year in which incurred over qualifying
24 expenditures for the base period, "qualifying expenditures
25 for the base period" means the average of the qualifying
26 expenditures for each year in the base period, and "base
27 period" means the 3 taxable years immediately preceding the
28 taxable year for which the determination is being made.
29 Any credit in excess of the tax liability for the taxable
30 year may be carried forward. A taxpayer may elect to have the
31 unused credit shown on its final completed return carried
32 over as a credit against the tax liability for the following
33 5 taxable years or until it has been fully used, whichever
34 occurs first.
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1 If an unused credit is carried forward to a given year
2 from 2 or more earlier years, that credit arising in the
3 earliest year will be applied first against the tax liability
4 for the given year. If a tax liability for the given year
5 still remains, the credit from the next earliest year will
6 then be applied, and so on, until all credits have been used
7 or no tax liability for the given year remains. Any
8 remaining unused credit or credits then will be carried
9 forward to the next following year in which a tax liability
10 is incurred, except that no credit can be carried forward to
11 a year which is more than 5 years after the year in which the
12 expense for which the credit is given was incurred.
13 Unless extended by law, the credit shall not include
14 costs incurred after December 31, 1999, except for costs
15 incurred pursuant to a binding contract entered into on or
16 before December 31, 1999.
17 (l) Environmental Remediation Tax Credit.
18 (i) For tax years ending after December 31, 1997
19 and on or before December 31, 2001, a taxpayer shall be
20 allowed a credit against the tax imposed by subsections
21 (a) and (b) of this Section for certain amounts paid for
22 unreimbursed eligible remediation costs, as specified in
23 this subsection. For purposes of this Section,
24 "unreimbursed eligible remediation costs" means costs
25 approved by the Illinois Environmental Protection Agency
26 ("Agency") under Section 58.14 of the Environmental
27 Protection Act that were paid in performing environmental
28 remediation at a site for which a No Further Remediation
29 Letter was issued by the Agency and recorded under
30 Section 58.10 of the Environmental Protection Act, and
31 does not mean approved eligible remediation costs that
32 are at any time deducted under the provisions of the
33 Internal Revenue Code. The credit must be claimed for
34 the taxable year in which Agency approval of the eligible
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1 remediation costs is granted. In no event shall
2 unreimbursed eligible remediation costs include any costs
3 taken into account in calculating an environmental
4 remediation credit granted against a tax imposed under
5 the provisions of the Internal Revenue Code. The credit
6 is not available to any taxpayer if the taxpayer or any
7 related party caused or contributed to, in any material
8 respect, a release of regulated substances on, in, or
9 under the site that was identified and addressed by the
10 remedial action pursuant to the Site Remediation Program
11 of the Environmental Protection Act. After the Pollution
12 Control Board rules are adopted pursuant to the Illinois
13 Administrative Procedure Act for the administration and
14 enforcement of Section 58.9 of the Environmental
15 Protection Act, determinations as to credit availability
16 for purposes of this Section shall be made consistent
17 with those rules. For purposes of this Section,
18 "taxpayer" includes a person whose tax attributes the
19 taxpayer has succeeded to under Section 381 of the
20 Internal Revenue Code and "related party" includes the
21 persons disallowed a deduction for losses by paragraphs
22 (b), (c), and (f)(1) of Section 267 of the Internal
23 Revenue Code by virtue of being a related taxpayer, as
24 well as any of its partners. The credit allowed against
25 the tax imposed by subsections (a) and (b) shall be equal
26 to 25% of the unreimbursed eligible remediation costs in
27 excess of $100,000 per site, except that the $100,000
28 threshold shall not apply to any site contained in an
29 enterprise zone and located in a census tract that is
30 located in a minor civil division and place or county
31 that has been determined by the Department of Commerce
32 and Community Affairs to contain a majority of households
33 consisting of low and moderate income persons. The total
34 credit allowed shall not exceed $40,000 per year with a
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1 maximum total of $150,000 per site. For partners and
2 shareholders of subchapter S corporations, there shall be
3 allowed a credit under this subsection to be determined
4 in accordance with the determination of income and
5 distributive share of income under Sections 702 and 704
6 of subchapter S of the Internal Revenue Code.
7 (ii) A credit allowed under this subsection that is
8 unused in the year the credit is earned may be carried
9 forward to each of the 5 taxable years following the year
10 for which the credit is first earned until it is used.
11 The term "unused credit" does not include any amounts of
12 unreimbursed eligible remediation costs in excess of the
13 maximum credit per site authorized under paragraph (i).
14 This credit shall be applied first to the earliest year
15 for which there is a liability. If there is a credit
16 under this subsection from more than one tax year that is
17 available to offset a liability, the earliest credit
18 arising under this subsection shall be applied first. A
19 credit allowed under this subsection may be sold to a
20 buyer as part of a sale of all or part of the remediation
21 site for which the credit was granted. The purchaser of
22 a remediation site and the tax credit shall succeed to
23 the unused credit and remaining carry-forward period of
24 the seller. To perfect the transfer, the assignor shall
25 record the transfer in the chain of title for the site
26 and provide written notice to the Director of the
27 Illinois Department of Revenue of the assignor's intent
28 to sell the remediation site and the amount of the tax
29 credit to be transferred as a portion of the sale. In no
30 event may a credit be transferred to any taxpayer if the
31 taxpayer or a related party would not be eligible under
32 the provisions of subsection (i).
33 (iii) For purposes of this Section, the term "site"
34 shall have the same meaning as under Section 58.2 of the
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1 Environmental Protection Act.
2 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
3 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
4 8-17-97; revised 10-16-97.)
5 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
6 Sec. 203. Base income defined.
7 (a) Individuals.
8 (1) In general. In the case of an individual, base
9 income means an amount equal to the taxpayer's adjusted
10 gross income for the taxable year as modified by
11 paragraph (2).
12 (2) Modifications. The adjusted gross income
13 referred to in paragraph (1) shall be modified by adding
14 thereto the sum of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest or dividends
17 during the taxable year to the extent excluded from
18 gross income in the computation of adjusted gross
19 income, except stock dividends of qualified public
20 utilities described in Section 305(e) of the
21 Internal Revenue Code;
22 (B) An amount equal to the amount of tax
23 imposed by this Act to the extent deducted from
24 gross income in the computation of adjusted gross
25 income for the taxable year;
26 (C) An amount equal to the amount received
27 during the taxable year as a recovery or refund of
28 real property taxes paid with respect to the
29 taxpayer's principal residence under the Revenue Act
30 of 1939 and for which a deduction was previously
31 taken under subparagraph (L) of this paragraph (2)
32 prior to July 1, 1991, the retrospective application
33 date of Article 4 of Public Act 87-17. In the case
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1 of multi-unit or multi-use structures and farm
2 dwellings, the taxes on the taxpayer's principal
3 residence shall be that portion of the total taxes
4 for the entire property which is attributable to
5 such principal residence;
6 (D) An amount equal to the amount of the
7 capital gain deduction allowable under the Internal
8 Revenue Code, to the extent deducted from gross
9 income in the computation of adjusted gross income;
10 and
11 (D-5) An amount, to the extent not included in
12 adjusted gross income, equal to the amount of money
13 withdrawn by the taxpayer in the taxable year from a
14 medical care savings account and the interest earned
15 on the account in the taxable year of a withdrawal
16 pursuant to subsection (b) of Section 20 of the
17 Medical Care Savings Account Act;
18 and by deducting from the total so obtained the sum of
19 the following amounts:
20 (E) Any amount included in such total in
21 respect of any compensation (including but not
22 limited to any compensation paid or accrued to a
23 serviceman while a prisoner of war or missing in
24 action) paid to a resident by reason of being on
25 active duty in the Armed Forces of the United States
26 and in respect of any compensation paid or accrued
27 to a resident who as a governmental employee was a
28 prisoner of war or missing in action, and in respect
29 of any compensation paid to a resident in 1971 or
30 thereafter for annual training performed pursuant to
31 Sections 502 and 503, Title 32, United States Code
32 as a member of the Illinois National Guard;
33 (F) An amount equal to all amounts included in
34 such total pursuant to the provisions of Sections
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1 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
2 408 of the Internal Revenue Code, or included in
3 such total as distributions under the provisions of
4 any retirement or disability plan for employees of
5 any governmental agency or unit, or retirement
6 payments to retired partners, which payments are
7 excluded in computing net earnings from self
8 employment by Section 1402 of the Internal Revenue
9 Code and regulations adopted pursuant thereto;
10 (G) The valuation limitation amount;
11 (H) An amount equal to the amount of any tax
12 imposed by this Act which was refunded to the
13 taxpayer and included in such total for the taxable
14 year;
15 (I) An amount equal to all amounts included in
16 such total pursuant to the provisions of Section 111
17 of the Internal Revenue Code as a recovery of items
18 previously deducted from adjusted gross income in
19 the computation of taxable income;
20 (J) An amount equal to those dividends
21 included in such total which were paid by a
22 corporation which conducts business operations in an
23 Enterprise Zone or zones created under the Illinois
24 Enterprise Zone Act, and conducts substantially all
25 of its operations in an Enterprise Zone or zones;
26 (K) An amount equal to those dividends
27 included in such total that were paid by a
28 corporation that conducts business operations in a
29 federally designated Foreign Trade Zone or Sub-Zone
30 and that is designated a High Impact Business
31 located in Illinois; provided that dividends
32 eligible for the deduction provided in subparagraph
33 (J) of paragraph (2) of this subsection shall not be
34 eligible for the deduction provided under this
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1 subparagraph (K);
2 (L) For taxable years ending after December
3 31, 1983, an amount equal to all social security
4 benefits and railroad retirement benefits included
5 in such total pursuant to Sections 72(r) and 86 of
6 the Internal Revenue Code;
7 (M) With the exception of any amounts
8 subtracted under subparagraph (N), an amount equal
9 to the sum of all amounts disallowed as deductions
10 by Sections 171(a) (2), and 265(2) of the Internal
11 Revenue Code of 1954, as now or hereafter amended,
12 and all amounts of expenses allocable to interest
13 and disallowed as deductions by Section 265(1) of
14 the Internal Revenue Code of 1954, as now or
15 hereafter amended;
16 (N) An amount equal to all amounts included in
17 such total which are exempt from taxation by this
18 State either by reason of its statutes or
19 Constitution or by reason of the Constitution,
20 treaties or statutes of the United States; provided
21 that, in the case of any statute of this State that
22 exempts income derived from bonds or other
23 obligations from the tax imposed under this Act, the
24 amount exempted shall be the interest net of bond
25 premium amortization;
26 (O) An amount equal to any contribution made
27 to a job training project established pursuant to
28 the Tax Increment Allocation Redevelopment Act;
29 (P) An amount equal to the amount of the
30 deduction used to compute the federal income tax
31 credit for restoration of substantial amounts held
32 under claim of right for the taxable year pursuant
33 to Section 1341 of the Internal Revenue Code of
34 1986;
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1 (Q) An amount equal to any amounts included in
2 such total, received by the taxpayer as an
3 acceleration in the payment of life, endowment or
4 annuity benefits in advance of the time they would
5 otherwise be payable as an indemnity for a terminal
6 illness;
7 (R) An amount equal to the amount of any
8 federal or State bonus paid to veterans of the
9 Persian Gulf War;
10 (S) An amount, to the extent included in
11 adjusted gross income, equal to the amount of a
12 contribution made in the taxable year on behalf of
13 the taxpayer to a medical care savings account
14 established under the Medical Care Savings Account
15 Act to the extent the contribution is accepted by
16 the account administrator as provided in that Act;
17 (T) An amount, to the extent included in
18 adjusted gross income, equal to the amount of
19 interest earned in the taxable year on a medical
20 care savings account established under the Medical
21 Care Savings Account Act on behalf of the taxpayer,
22 other than interest added pursuant to item (D-5) of
23 this paragraph (2);
24 (U) For one taxable year beginning on or after
25 January 1, 1994, an amount equal to the total amount
26 of tax imposed and paid under subsections (a) and
27 (b) of Section 201 of this Act on grant amounts
28 received by the taxpayer under the Nursing Home
29 Grant Assistance Act during the taxpayer's taxable
30 years 1992 and 1993; and
31 (V) Beginning with tax years ending on or
32 after December 31, 1995 and ending with tax years
33 ending on or before December 31, 1999, an amount
34 equal to the amount paid by a taxpayer who is a
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1 self-employed taxpayer, a partner of a partnership,
2 or a shareholder in a Subchapter S corporation for
3 health insurance or long-term care insurance for
4 that taxpayer or that taxpayer's spouse or
5 dependents, to the extent that the amount paid for
6 that health insurance or long-term care insurance
7 may be deducted under Section 213 of the Internal
8 Revenue Code of 1986, has not been deducted on the
9 federal income tax return of the taxpayer, and does
10 not exceed the taxable income attributable to that
11 taxpayer's income, self-employment income, or
12 Subchapter S corporation income; except that no
13 deduction shall be allowed under this item (V) if
14 the taxpayer is eligible to participate in any
15 health insurance or long-term care insurance plan of
16 an employer of the taxpayer or the taxpayer's
17 spouse. The amount of the health insurance and
18 long-term care insurance subtracted under this item
19 (V) shall be determined by multiplying total health
20 insurance and long-term care insurance premiums paid
21 by the taxpayer times a number that represents the
22 fractional percentage of eligible medical expenses
23 under Section 213 of the Internal Revenue Code of
24 1986 not actually deducted on the taxpayer's federal
25 income tax return.
26 The deductions provided in subparagraphs (J), (K), and
27 (O) apply only to tax years ending on or before December 31,
28 2003 and do not apply thereafter.
29 (b) Corporations.
30 (1) In general. In the case of a corporation, base
31 income means an amount equal to the taxpayer's taxable
32 income for the taxable year as modified by paragraph (2).
33 (2) Modifications. The taxable income referred to
34 in paragraph (1) shall be modified by adding thereto the
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1 sum of the following amounts:
2 (A) An amount equal to all amounts paid or
3 accrued to the taxpayer as interest and all
4 distributions received from regulated investment
5 companies during the taxable year to the extent
6 excluded from gross income in the computation of
7 taxable income;
8 (B) An amount equal to the amount of tax
9 imposed by this Act to the extent deducted from
10 gross income in the computation of taxable income
11 for the taxable year;
12 (C) In the case of a regulated investment
13 company, an amount equal to the excess of (i) the
14 net long-term capital gain for the taxable year,
15 over (ii) the amount of the capital gain dividends
16 designated as such in accordance with Section
17 852(b)(3)(C) of the Internal Revenue Code and any
18 amount designated under Section 852(b)(3)(D) of the
19 Internal Revenue Code, attributable to the taxable
20 year.
21 This amendatory Act of 1995 is declarative of existing
22 law and is not a new enactment.
23 (D) The amount of any net operating loss
24 deduction taken in arriving at taxable income, other
25 than a net operating loss carried forward from a
26 taxable year ending prior to December 31, 1986; and
27 (E) For taxable years in which a net operating
28 loss carryback or carryforward from a taxable year
29 ending prior to December 31, 1986 is an element of
30 taxable income under paragraph (1) of subsection (e)
31 or subparagraph (E) of paragraph (2) of subsection
32 (e), the amount by which addition modifications
33 other than those provided by this subparagraph (E)
34 exceeded subtraction modifications in such earlier
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1 taxable year, with the following limitations applied
2 in the order that they are listed:
3 (i) the addition modification relating to
4 the net operating loss carried back or forward
5 to the taxable year from any taxable year
6 ending prior to December 31, 1986 shall be
7 reduced by the amount of addition modification
8 under this subparagraph (E) which related to
9 that net operating loss and which was taken
10 into account in calculating the base income of
11 an earlier taxable year, and
12 (ii) the addition modification relating
13 to the net operating loss carried back or
14 forward to the taxable year from any taxable
15 year ending prior to December 31, 1986 shall
16 not exceed the amount of such carryback or
17 carryforward;
18 For taxable years in which there is a net
19 operating loss carryback or carryforward from more
20 than one other taxable year ending prior to December
21 31, 1986, the addition modification provided in this
22 subparagraph (E) shall be the sum of the amounts
23 computed independently under the preceding
24 provisions of this subparagraph (E) for each such
25 taxable year,
26 and by deducting from the total so obtained the sum of
27 the following amounts:
28 (F) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (G) An amount equal to any amount included in
33 such total under Section 78 of the Internal Revenue
34 Code;
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1 (H) In the case of a regulated investment
2 company, an amount equal to the amount of exempt
3 interest dividends as defined in subsection (b) (5)
4 of Section 852 of the Internal Revenue Code, paid to
5 shareholders for the taxable year;
6 (I) With the exception of any amounts
7 subtracted under subparagraph (J), an amount equal
8 to the sum of all amounts disallowed as deductions
9 by Sections 171(a) (2), and 265(a)(2) and amounts
10 disallowed as interest expense by Section 291(a)(3)
11 of the Internal Revenue Code, as now or hereafter
12 amended, and all amounts of expenses allocable to
13 interest and disallowed as deductions by Section
14 265(a)(1) of the Internal Revenue Code, as now or
15 hereafter amended;
16 (J) An amount equal to all amounts included in
17 such total which are exempt from taxation by this
18 State either by reason of its statutes or
19 Constitution or by reason of the Constitution,
20 treaties or statutes of the United States; provided
21 that, in the case of any statute of this State that
22 exempts income derived from bonds or other
23 obligations from the tax imposed under this Act, the
24 amount exempted shall be the interest net of bond
25 premium amortization;
26 (K) An amount equal to those dividends
27 included in such total which were paid by a
28 corporation which conducts business operations in an
29 Enterprise Zone or zones created under the Illinois
30 Enterprise Zone Act and conducts substantially all
31 of its operations in an Enterprise Zone or zones;
32 (L) An amount equal to those dividends
33 included in such total that were paid by a
34 corporation that conducts business operations in a
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1 federally designated Foreign Trade Zone or Sub-Zone
2 and that is designated a High Impact Business
3 located in Illinois; provided that dividends
4 eligible for the deduction provided in subparagraph
5 (K) of paragraph 2 of this subsection shall not be
6 eligible for the deduction provided under this
7 subparagraph (L);
8 (M) For any taxpayer that is a financial
9 organization within the meaning of Section 304(c) of
10 this Act, an amount included in such total as
11 interest income from a loan or loans made by such
12 taxpayer to a borrower, to the extent that such a
13 loan is secured by property which is eligible for
14 the Enterprise Zone Investment Credit. To determine
15 the portion of a loan or loans that is secured by
16 property eligible for a Section 201(h) investment
17 credit to the borrower, the entire principal amount
18 of the loan or loans between the taxpayer and the
19 borrower should be divided into the basis of the
20 Section 201(h) investment credit property which
21 secures the loan or loans, using for this purpose
22 the original basis of such property on the date that
23 it was placed in service in the Enterprise Zone.
24 The subtraction modification available to taxpayer
25 in any year under this subsection shall be that
26 portion of the total interest paid by the borrower
27 with respect to such loan attributable to the
28 eligible property as calculated under the previous
29 sentence;
30 (M-1) For any taxpayer that is a financial
31 organization within the meaning of Section 304(c) of
32 this Act, an amount included in such total as
33 interest income from a loan or loans made by such
34 taxpayer to a borrower, to the extent that such a
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1 loan is secured by property which is eligible for
2 the High Impact Business Investment Credit. To
3 determine the portion of a loan or loans that is
4 secured by property eligible for a Section 201(i)
5 investment credit to the borrower, the entire
6 principal amount of the loan or loans between the
7 taxpayer and the borrower should be divided into the
8 basis of the Section 201(i) investment credit
9 property which secures the loan or loans, using for
10 this purpose the original basis of such property on
11 the date that it was placed in service in a
12 federally designated Foreign Trade Zone or Sub-Zone
13 located in Illinois. No taxpayer that is eligible
14 for the deduction provided in subparagraph (M) of
15 paragraph (2) of this subsection shall be eligible
16 for the deduction provided under this subparagraph
17 (M-1). The subtraction modification available to
18 taxpayers in any year under this subsection shall be
19 that portion of the total interest paid by the
20 borrower with respect to such loan attributable to
21 the eligible property as calculated under the
22 previous sentence;
23 (N) Two times any contribution made during the
24 taxable year to a designated zone organization to
25 the extent that the contribution (i) qualifies as a
26 charitable contribution under subsection (c) of
27 Section 170 of the Internal Revenue Code and (ii)
28 must, by its terms, be used for a project approved
29 by the Department of Commerce and Community Affairs
30 under Section 11 of the Illinois Enterprise Zone
31 Act;
32 (O) An amount equal to: (i) 85% for taxable
33 years ending on or before December 31, 1992, or, a
34 percentage equal to the percentage allowable under
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1 Section 243(a)(1) of the Internal Revenue Code of
2 1986 for taxable years ending after December 31,
3 1992, of the amount by which dividends included in
4 taxable income and received from a corporation that
5 is not created or organized under the laws of the
6 United States or any state or political subdivision
7 thereof, including, for taxable years ending on or
8 after December 31, 1988, dividends received or
9 deemed received or paid or deemed paid under
10 Sections 951 through 964 of the Internal Revenue
11 Code, exceed the amount of the modification provided
12 under subparagraph (G) of paragraph (2) of this
13 subsection (b) which is related to such dividends;
14 plus (ii) 100% of the amount by which dividends,
15 included in taxable income and received, including,
16 for taxable years ending on or after December 31,
17 1988, dividends received or deemed received or paid
18 or deemed paid under Sections 951 through 964 of the
19 Internal Revenue Code, from any such corporation
20 specified in clause (i) that would but for the
21 provisions of Section 1504 (b) (3) of the Internal
22 Revenue Code be treated as a member of the
23 affiliated group which includes the dividend
24 recipient, exceed the amount of the modification
25 provided under subparagraph (G) of paragraph (2) of
26 this subsection (b) which is related to such
27 dividends;
28 (P) An amount equal to any contribution made
29 to a job training project established pursuant to
30 the Tax Increment Allocation Redevelopment Act; and
31 (Q) An amount equal to the amount of the
32 deduction used to compute the federal income tax
33 credit for restoration of substantial amounts held
34 under claim of right for the taxable year pursuant
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1 to Section 1341 of the Internal Revenue Code of
2 1986.
3 The deductions provided in subparagraphs (K), (L),
4 (M), (M-1), (N), and (P) apply only to tax years ending
5 on or before December 31, 2003 and do not apply
6 thereafter.
7 (3) Special rule. For purposes of paragraph (2)
8 (A), "gross income" in the case of a life insurance
9 company, for tax years ending on and after December 31,
10 1994, shall mean the gross investment income for the
11 taxable year.
12 (c) Trusts and estates.
13 (1) In general. In the case of a trust or estate,
14 base income means an amount equal to the taxpayer's
15 taxable income for the taxable year as modified by
16 paragraph (2).
17 (2) Modifications. Subject to the provisions of
18 paragraph (3), the taxable income referred to in
19 paragraph (1) shall be modified by adding thereto the sum
20 of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest or dividends
23 during the taxable year to the extent excluded from
24 gross income in the computation of taxable income;
25 (B) In the case of (i) an estate, $600; (ii) a
26 trust which, under its governing instrument, is
27 required to distribute all of its income currently,
28 $300; and (iii) any other trust, $100, but in each
29 such case, only to the extent such amount was
30 deducted in the computation of taxable income;
31 (C) An amount equal to the amount of tax
32 imposed by this Act to the extent deducted from
33 gross income in the computation of taxable income
34 for the taxable year;
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1 (D) The amount of any net operating loss
2 deduction taken in arriving at taxable income, other
3 than a net operating loss carried forward from a
4 taxable year ending prior to December 31, 1986;
5 (E) For taxable years in which a net operating
6 loss carryback or carryforward from a taxable year
7 ending prior to December 31, 1986 is an element of
8 taxable income under paragraph (1) of subsection (e)
9 or subparagraph (E) of paragraph (2) of subsection
10 (e), the amount by which addition modifications
11 other than those provided by this subparagraph (E)
12 exceeded subtraction modifications in such taxable
13 year, with the following limitations applied in the
14 order that they are listed:
15 (i) the addition modification relating to
16 the net operating loss carried back or forward
17 to the taxable year from any taxable year
18 ending prior to December 31, 1986 shall be
19 reduced by the amount of addition modification
20 under this subparagraph (E) which related to
21 that net operating loss and which was taken
22 into account in calculating the base income of
23 an earlier taxable year, and
24 (ii) the addition modification relating
25 to the net operating loss carried back or
26 forward to the taxable year from any taxable
27 year ending prior to December 31, 1986 shall
28 not exceed the amount of such carryback or
29 carryforward;
30 For taxable years in which there is a net
31 operating loss carryback or carryforward from more
32 than one other taxable year ending prior to December
33 31, 1986, the addition modification provided in this
34 subparagraph (E) shall be the sum of the amounts
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1 computed independently under the preceding
2 provisions of this subparagraph (E) for each such
3 taxable year;
4 (F) For taxable years ending on or after
5 January 1, 1989, an amount equal to the tax deducted
6 pursuant to Section 164 of the Internal Revenue Code
7 if the trust or estate is claiming the same tax for
8 purposes of the Illinois foreign tax credit under
9 Section 601 of this Act; and
10 (G) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of taxable income;
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (H) An amount equal to all amounts included in
17 such total pursuant to the provisions of Sections
18 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
19 408 of the Internal Revenue Code or included in such
20 total as distributions under the provisions of any
21 retirement or disability plan for employees of any
22 governmental agency or unit, or retirement payments
23 to retired partners, which payments are excluded in
24 computing net earnings from self employment by
25 Section 1402 of the Internal Revenue Code and
26 regulations adopted pursuant thereto;
27 (I) The valuation limitation amount;
28 (J) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (K) An amount equal to all amounts included in
33 taxable income as modified by subparagraphs (A),
34 (B), (C), (D), (E), (F) and (G) which are exempt
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1 from taxation by this State either by reason of its
2 statutes or Constitution or by reason of the
3 Constitution, treaties or statutes of the United
4 States; provided that, in the case of any statute of
5 this State that exempts income derived from bonds or
6 other obligations from the tax imposed under this
7 Act, the amount exempted shall be the interest net
8 of bond premium amortization;
9 (L) With the exception of any amounts
10 subtracted under subparagraph (K), an amount equal
11 to the sum of all amounts disallowed as deductions
12 by Sections 171(a) (2) and 265(a)(2) of the Internal
13 Revenue Code, as now or hereafter amended, and all
14 amounts of expenses allocable to interest and
15 disallowed as deductions by Section 265(1) of the
16 Internal Revenue Code of 1954, as now or hereafter
17 amended;
18 (M) An amount equal to those dividends
19 included in such total which were paid by a
20 corporation which conducts business operations in an
21 Enterprise Zone or zones created under the Illinois
22 Enterprise Zone Act and conducts substantially all
23 of its operations in an Enterprise Zone or Zones;
24 (N) An amount equal to any contribution made
25 to a job training project established pursuant to
26 the Tax Increment Allocation Redevelopment Act;
27 (O) An amount equal to those dividends
28 included in such total that were paid by a
29 corporation that conducts business operations in a
30 federally designated Foreign Trade Zone or Sub-Zone
31 and that is designated a High Impact Business
32 located in Illinois; provided that dividends
33 eligible for the deduction provided in subparagraph
34 (M) of paragraph (2) of this subsection shall not be
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1 eligible for the deduction provided under this
2 subparagraph (O); and
3 (P) An amount equal to the amount of the
4 deduction used to compute the federal income tax
5 credit for restoration of substantial amounts held
6 under claim of right for the taxable year pursuant
7 to Section 1341 of the Internal Revenue Code of
8 1986.
9 The deductions provided in subparagraphs (M), (N),
10 and (O) apply only to tax years ending on or before
11 December 31, 2003 and do not apply thereafter.
12 (3) Limitation. The amount of any modification
13 otherwise required under this subsection shall, under
14 regulations prescribed by the Department, be adjusted by
15 any amounts included therein which were properly paid,
16 credited, or required to be distributed, or permanently
17 set aside for charitable purposes pursuant to Internal
18 Revenue Code Section 642(c) during the taxable year.
19 (d) Partnerships.
20 (1) In general. In the case of a partnership, base
21 income means an amount equal to the taxpayer's taxable
22 income for the taxable year as modified by paragraph (2).
23 (2) Modifications. The taxable income referred to
24 in paragraph (1) shall be modified by adding thereto the
25 sum of the following amounts:
26 (A) An amount equal to all amounts paid or
27 accrued to the taxpayer as interest or dividends
28 during the taxable year to the extent excluded from
29 gross income in the computation of taxable income;
30 (B) An amount equal to the amount of tax
31 imposed by this Act to the extent deducted from
32 gross income for the taxable year; and
33 (C) The amount of deductions allowed to the
34 partnership pursuant to Section 707 (c) of the
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1 Internal Revenue Code in calculating its taxable
2 income;
3 (D) An amount equal to the amount of the
4 capital gain deduction allowable under the Internal
5 Revenue Code, to the extent deducted from gross
6 income in the computation of taxable income;
7 and by deducting from the total so obtained the following
8 amounts:
9 (E) The valuation limitation amount;
10 (F) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the
12 taxpayer and included in such total for the taxable
13 year;
14 (G) An amount equal to all amounts included in
15 taxable income as modified by subparagraphs (A),
16 (B), (C) and (D) which are exempt from taxation by
17 this State either by reason of its statutes or
18 Constitution or by reason of the Constitution,
19 treaties or statutes of the United States; provided
20 that, in the case of any statute of this State that
21 exempts income derived from bonds or other
22 obligations from the tax imposed under this Act, the
23 amount exempted shall be the interest net of bond
24 premium amortization;
25 (H) Any income of the partnership which
26 constitutes personal service income as defined in
27 Section 1348 (b) (1) of the Internal Revenue Code
28 (as in effect December 31, 1981) or a reasonable
29 allowance for compensation paid or accrued for
30 services rendered by partners to the partnership,
31 whichever is greater;
32 (I) An amount equal to all amounts of income
33 distributable to an entity subject to the Personal
34 Property Tax Replacement Income Tax imposed by
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1 subsections (c) and (d) of Section 201 of this Act
2 including amounts distributable to organizations
3 exempt from federal income tax by reason of Section
4 501(a) of the Internal Revenue Code;
5 (J) With the exception of any amounts
6 subtracted under subparagraph (G), an amount equal
7 to the sum of all amounts disallowed as deductions
8 by Sections 171(a) (2), and 265(2) of the Internal
9 Revenue Code of 1954, as now or hereafter amended,
10 and all amounts of expenses allocable to interest
11 and disallowed as deductions by Section 265(1) of
12 the Internal Revenue Code, as now or hereafter
13 amended;
14 (K) An amount equal to those dividends
15 included in such total which were paid by a
16 corporation which conducts business operations in an
17 Enterprise Zone or zones created under the Illinois
18 Enterprise Zone Act, enacted by the 82nd General
19 Assembly, and which does not conduct such operations
20 other than in an Enterprise Zone or Zones;
21 (L) An amount equal to any contribution made
22 to a job training project established pursuant to
23 the Real Property Tax Increment Allocation
24 Redevelopment Act;
25 (M) An amount equal to those dividends
26 included in such total that were paid by a
27 corporation that conducts business operations in a
28 federally designated Foreign Trade Zone or Sub-Zone
29 and that is designated a High Impact Business
30 located in Illinois; provided that dividends
31 eligible for the deduction provided in subparagraph
32 (K) of paragraph (2) of this subsection shall not be
33 eligible for the deduction provided under this
34 subparagraph (M); and
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1 (N) An amount equal to the amount of the
2 deduction used to compute the federal income tax
3 credit for restoration of substantial amounts held
4 under claim of right for the taxable year pursuant
5 to Section 1341 of the Internal Revenue Code of
6 1986.
7 The deductions provided in subparagraphs (K), (L), and
8 (M) apply only to tax years ending on or before December 31,
9 2003 and do not apply thereafter.
10 (e) Gross income; adjusted gross income; taxable income.
11 (1) In general. Subject to the provisions of
12 paragraph (2) and subsection (b) (3), for purposes of
13 this Section and Section 803(e), a taxpayer's gross
14 income, adjusted gross income, or taxable income for the
15 taxable year shall mean the amount of gross income,
16 adjusted gross income or taxable income properly
17 reportable for federal income tax purposes for the
18 taxable year under the provisions of the Internal Revenue
19 Code. Taxable income may be less than zero. However, for
20 taxable years ending on or after December 31, 1986, net
21 operating loss carryforwards from taxable years ending
22 prior to December 31, 1986, may not exceed the sum of
23 federal taxable income for the taxable year before net
24 operating loss deduction, plus the excess of addition
25 modifications over subtraction modifications for the
26 taxable year. For taxable years ending prior to December
27 31, 1986, taxable income may never be an amount in excess
28 of the net operating loss for the taxable year as defined
29 in subsections (c) and (d) of Section 172 of the Internal
30 Revenue Code, provided that when taxable income of a
31 corporation (other than a Subchapter S corporation),
32 trust, or estate is less than zero and addition
33 modifications, other than those provided by subparagraph
34 (E) of paragraph (2) of subsection (b) for corporations
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1 or subparagraph (E) of paragraph (2) of subsection (c)
2 for trusts and estates, exceed subtraction modifications,
3 an addition modification must be made under those
4 subparagraphs for any other taxable year to which the
5 taxable income less than zero (net operating loss) is
6 applied under Section 172 of the Internal Revenue Code or
7 under subparagraph (E) of paragraph (2) of this
8 subsection (e) applied in conjunction with Section 172 of
9 the Internal Revenue Code.
10 (2) Special rule. For purposes of paragraph (1) of
11 this subsection, the taxable income properly reportable
12 for federal income tax purposes shall mean:
13 (A) Certain life insurance companies. In the
14 case of a life insurance company subject to the tax
15 imposed by Section 801 of the Internal Revenue Code,
16 life insurance company taxable income, plus the
17 amount of distribution from pre-1984 policyholder
18 surplus accounts as calculated under Section 815a of
19 the Internal Revenue Code;
20 (B) Certain other insurance companies. In the
21 case of mutual insurance companies subject to the
22 tax imposed by Section 831 of the Internal Revenue
23 Code, insurance company taxable income;
24 (C) Regulated investment companies. In the
25 case of a regulated investment company subject to
26 the tax imposed by Section 852 of the Internal
27 Revenue Code, investment company taxable income;
28 (D) Real estate investment trusts. In the
29 case of a real estate investment trust subject to
30 the tax imposed by Section 857 of the Internal
31 Revenue Code, real estate investment trust taxable
32 income;
33 (E) Consolidated corporations. In the case of
34 a corporation which is a member of an affiliated
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1 group of corporations filing a consolidated income
2 tax return for the taxable year for federal income
3 tax purposes, taxable income determined as if such
4 corporation had filed a separate return for federal
5 income tax purposes for the taxable year and each
6 preceding taxable year for which it was a member of
7 an affiliated group. For purposes of this
8 subparagraph, the taxpayer's separate taxable income
9 shall be determined as if the election provided by
10 Section 243(b) (2) of the Internal Revenue Code had
11 been in effect for all such years;
12 (F) Cooperatives. In the case of a
13 cooperative corporation or association, the taxable
14 income of such organization determined in accordance
15 with the provisions of Section 1381 through 1388 of
16 the Internal Revenue Code;
17 (G) Subchapter S corporations. In the case
18 of: (i) a Subchapter S corporation for which there
19 is in effect an election for the taxable year under
20 Section 1362 of the Internal Revenue Code, the
21 taxable income of such corporation determined in
22 accordance with Section 1363(b) of the Internal
23 Revenue Code, except that taxable income shall take
24 into account those items which are required by
25 Section 1363(b)(1) of the Internal Revenue Code to
26 be separately stated; and (ii) a Subchapter S
27 corporation for which there is in effect a federal
28 election to opt out of the provisions of the
29 Subchapter S Revision Act of 1982 and have applied
30 instead the prior federal Subchapter S rules as in
31 effect on July 1, 1982, the taxable income of such
32 corporation determined in accordance with the
33 federal Subchapter S rules as in effect on July 1,
34 1982; and
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1 (H) Partnerships. In the case of a
2 partnership, taxable income determined in accordance
3 with Section 703 of the Internal Revenue Code,
4 except that taxable income shall take into account
5 those items which are required by Section 703(a)(1)
6 to be separately stated but which would be taken
7 into account by an individual in calculating his
8 taxable income.
9 (f) Valuation limitation amount.
10 (1) In general. The valuation limitation amount
11 referred to in subsections (a) (2) (G), (c) (2) (I) and
12 (d)(2) (E) is an amount equal to:
13 (A) The sum of the pre-August 1, 1969
14 appreciation amounts (to the extent consisting of
15 gain reportable under the provisions of Section 1245
16 or 1250 of the Internal Revenue Code) for all
17 property in respect of which such gain was reported
18 for the taxable year; plus
19 (B) The lesser of (i) the sum of the
20 pre-August 1, 1969 appreciation amounts (to the
21 extent consisting of capital gain) for all property
22 in respect of which such gain was reported for
23 federal income tax purposes for the taxable year, or
24 (ii) the net capital gain for the taxable year,
25 reduced in either case by any amount of such gain
26 included in the amount determined under subsection
27 (a) (2) (F) or (c) (2) (H).
28 (2) Pre-August 1, 1969 appreciation amount.
29 (A) If the fair market value of property
30 referred to in paragraph (1) was readily
31 ascertainable on August 1, 1969, the pre-August 1,
32 1969 appreciation amount for such property is the
33 lesser of (i) the excess of such fair market value
34 over the taxpayer's basis (for determining gain) for
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1 such property on that date (determined under the
2 Internal Revenue Code as in effect on that date), or
3 (ii) the total gain realized and reportable for
4 federal income tax purposes in respect of the sale,
5 exchange or other disposition of such property.
6 (B) If the fair market value of property
7 referred to in paragraph (1) was not readily
8 ascertainable on August 1, 1969, the pre-August 1,
9 1969 appreciation amount for such property is that
10 amount which bears the same ratio to the total gain
11 reported in respect of the property for federal
12 income tax purposes for the taxable year, as the
13 number of full calendar months in that part of the
14 taxpayer's holding period for the property ending
15 July 31, 1969 bears to the number of full calendar
16 months in the taxpayer's entire holding period for
17 the property.
18 (C) The Department shall prescribe such
19 regulations as may be necessary to carry out the
20 purposes of this paragraph.
21 (g) Double deductions. Unless specifically provided
22 otherwise, nothing in this Section shall permit the same item
23 to be deducted more than once.
24 (h) Legislative intention. Except as expressly provided
25 by this Section there shall be no modifications or
26 limitations on the amounts of income, gain, loss or deduction
27 taken into account in determining gross income, adjusted
28 gross income or taxable income for federal income tax
29 purposes for the taxable year, or in the amount of such items
30 entering into the computation of base income and net income
31 under this Act for such taxable year, whether in respect of
32 property values as of August 1, 1969 or otherwise.
33 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
34 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
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1 8-9-96; 90-491, eff. 1-1-98.)
2 (35 ILCS 5/206) (from Ch. 120, par. 2-206)
3 Sec. 206. Tax credits for coal research and coal
4 utilization equipment.
5 (a) Until December 31, 2003 January 1, 2005, each
6 corporation subject to this Act shall be entitled to a credit
7 against the tax imposed by subsections (a) and (b) of Section
8 201 in an amount equal to 20% of the amount donated to the
9 Illinois Center for Research on Sulfur in Coal.
10 (b) Until December 31, 2003 January 1, 2005, each
11 corporation subject to this Act shall be entitled to a credit
12 against the tax imposed by subsections (a) and (b) of Section
13 201 in an amount equal to 5% of the amount spent during the
14 taxable year by the corporation on equipment purchased for
15 the purpose of maintaining or increasing the use of Illinois
16 coal at any Illinois facility owned, leased or operated by
17 the corporation. Such equipment shall be limited to direct
18 coal combustion equipment and pollution control equipment
19 necessary thereto. For purposes of this credit, the amount
20 spent on qualifying equipment shall be defined as the basis
21 of the equipment used to compute the depreciation deduction
22 for federal income tax purposes.
23 For tax years ending on or after December 31, 1987, the
24 credit shall be allowed for the tax year in which the amount
25 is donated or the equipment purchased is placed in service,
26 or, if the amount of the credit exceeds the tax liability for
27 that year, whether it exceeds the original liability or the
28 liability as later amended, such excess may be carried
29 forward and applied to the tax liability of the 5 taxable
30 years following the excess credit years. The credit shall be
31 applied to the earliest year for which there is a liability.
32 If there is credit from more than one tax year that is
33 available to offset a liability, earlier credit shall be
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1 applied first.
2 (c) This credit applies only to tax years ending on or
3 before December 31, 2003 and does not apply thereafter.
4 (Source: P.A. 88-599, eff. 9-1-94.)
5 (35 ILCS 5/207) (from Ch. 120, par. 2-207)
6 Sec. 207. Net Losses.
7 (a) If after applying all of the modifications provided
8 for in paragraph (2) of Section 203(b), paragraph (2) of
9 Section 203(c) and paragraph (2) of Section 203(d) and the
10 allocation and apportionment provisions of Article 3 of this
11 Act, the taxpayer's net income results in a loss, such loss
12 shall be allowed as a carryover or carryback deduction in the
13 manner allowed under Section 172 of the Internal Revenue
14 Code.
15 (b) Any loss determined under subsection (a) of this
16 Section must be carried back or carried forward in the same
17 manner for purposes of subsections (a) and (b) of Section 201
18 of this Act as for purposes of subsections (c) and (d) of
19 Section 201 of this Act.
20 (c) This deduction applies only to tax years ending on
21 or before December 31, 2003 and does not apply thereafter.
22 (Source: P.A. 85-731.)
23 Section 10. The Use Tax Act is amended by changing
24 Sections 2a, 3-5, 3-60, 3-85, and 12 as follows:
25 (35 ILCS 105/2a) (from Ch. 120, par. 439.2a)
26 Sec. 2a. "Pollution control facilities" means any system,
27 method, construction, device or appliance appurtenant thereto
28 sold or used or intended for the primary purpose of
29 eliminating, preventing, or reducing air and water pollution
30 as the term "air pollution" or "water pollution" is defined
31 in the "Environmental Protection Act", enacted by the 76th
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1 General Assembly, or for the primary purpose of treating,
2 pretreating, modifying or disposing of any potential solid,
3 liquid or gaseous pollutant which if released without such
4 treatment, pretreatment, modification or disposal might be
5 harmful, detrimental or offensive to human, plant or animal
6 life, or to property.
7 The purchase, employment and transfer of such tangible
8 personal property as pollution control facilities is not a
9 purchase, use or sale of tangible personal property.
10 This exemption applies only to tax years ending on or
11 before December 31, 2003 and does not apply thereafter.
12 (Source: P.A. 76-2447.)
13 (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
14 Sec. 3-5. Exemptions. Use of the following tangible
15 personal property is exempt from the tax imposed by this Act:
16 (1) Personal property purchased from a corporation,
17 society, association, foundation, institution, or
18 organization, other than a limited liability company, that is
19 organized and operated as a not-for-profit service enterprise
20 for the benefit of persons 65 years of age or older if the
21 personal property was not purchased by the enterprise for the
22 purpose of resale by the enterprise.
23 (2) Personal property purchased by a not-for-profit
24 Illinois county fair association for use in conducting,
25 operating, or promoting the county fair.
26 (3) Personal property purchased by a not-for-profit
27 music or dramatic arts organization that establishes, by
28 proof required by the Department by rule, that it has
29 received an exemption under Section 501(c)(3) of the Internal
30 Revenue Code and that is organized and operated for the
31 presentation of live public performances of musical or
32 theatrical works on a regular basis.
33 (4) Personal property purchased by a governmental body,
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1 by a corporation, society, association, foundation, or
2 institution organized and operated exclusively for
3 charitable, religious, or educational purposes, or by a
4 not-for-profit corporation, society, association, foundation,
5 institution, or organization that has no compensated officers
6 or employees and that is organized and operated primarily for
7 the recreation of persons 55 years of age or older. A limited
8 liability company may qualify for the exemption under this
9 paragraph only if the limited liability company is organized
10 and operated exclusively for educational purposes. On and
11 after July 1, 1987, however, no entity otherwise eligible for
12 this exemption shall make tax-free purchases unless it has an
13 active exemption identification number issued by the
14 Department.
15 (5) A passenger car that is a replacement vehicle to the
16 extent that the purchase price of the car is subject to the
17 Replacement Vehicle Tax.
18 (6) Graphic arts machinery and equipment, including
19 repair and replacement parts, both new and used, and
20 including that manufactured on special order, certified by
21 the purchaser to be used primarily for graphic arts
22 production, and including machinery and equipment purchased
23 for lease. This exemption applies only to tax years ending on
24 or before December 31, 2003 and does not apply thereafter.
25 (7) Farm chemicals. This exemption applies only to tax
26 years ending on or before December 31, 2003 and does not
27 apply thereafter.
28 (8) Legal tender, currency, medallions, or gold or
29 silver coinage issued by the State of Illinois, the
30 government of the United States of America, or the government
31 of any foreign country, and bullion.
32 (9) Personal property purchased from a teacher-sponsored
33 student organization affiliated with an elementary or
34 secondary school located in Illinois.
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1 (10) A motor vehicle of the first division, a motor
2 vehicle of the second division that is a self-contained motor
3 vehicle designed or permanently converted to provide living
4 quarters for recreational, camping, or travel use, with
5 direct walk through to the living quarters from the driver's
6 seat, or a motor vehicle of the second division that is of
7 the van configuration designed for the transportation of not
8 less than 7 nor more than 16 passengers, as defined in
9 Section 1-146 of the Illinois Vehicle Code, that is used for
10 automobile renting, as defined in the Automobile Renting
11 Occupation and Use Tax Act.
12 (11) Farm machinery and equipment, both new and used,
13 including that manufactured on special order, certified by
14 the purchaser to be used primarily for production agriculture
15 or State or federal agricultural programs, including
16 individual replacement parts for the machinery and equipment,
17 and including machinery and equipment purchased for lease,
18 but excluding motor vehicles required to be registered under
19 the Illinois Vehicle Code. Horticultural polyhouses or hoop
20 houses used for propagating, growing, or overwintering plants
21 shall be considered farm machinery and equipment under this
22 paragraph. This exemption applies only to tax years ending on
23 or before December 31, 2003 and does not apply thereafter.
24 (12) Fuel and petroleum products sold to or used by an
25 air common carrier, certified by the carrier to be used for
26 consumption, shipment, or storage in the conduct of its
27 business as an air common carrier, for a flight destined for
28 or returning from a location or locations outside the United
29 States without regard to previous or subsequent domestic
30 stopovers. This exemption applies only to tax years ending on
31 or before December 31, 2003 and does not apply thereafter.
32 (13) Proceeds of mandatory service charges separately
33 stated on customers' bills for the purchase and consumption
34 of food and beverages purchased at retail from a retailer, to
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1 the extent that the proceeds of the service charge are in
2 fact turned over as tips or as a substitute for tips to the
3 employees who participate directly in preparing, serving,
4 hosting or cleaning up the food or beverage function with
5 respect to which the service charge is imposed.
6 (14) Oil field exploration, drilling, and production
7 equipment, including (i) rigs and parts of rigs, rotary rigs,
8 cable tool rigs, and workover rigs, (ii) pipe and tubular
9 goods, including casing and drill strings, (iii) pumps and
10 pump-jack units, (iv) storage tanks and flow lines, (v) any
11 individual replacement part for oil field exploration,
12 drilling, and production equipment, and (vi) machinery and
13 equipment purchased for lease; but excluding motor vehicles
14 required to be registered under the Illinois Vehicle Code.
15 This exemption applies only to tax years ending on or before
16 December 31, 2003 and does not apply thereafter.
17 (15) Photoprocessing machinery and equipment, including
18 repair and replacement parts, both new and used, including
19 that manufactured on special order, certified by the
20 purchaser to be used primarily for photoprocessing, and
21 including photoprocessing machinery and equipment purchased
22 for lease.
23 (16) Coal exploration, mining, offhighway hauling,
24 processing, maintenance, and reclamation equipment, including
25 replacement parts and equipment, and including equipment
26 purchased for lease, but excluding motor vehicles required to
27 be registered under the Illinois Vehicle Code. This exemption
28 applies only to tax years ending on or before December 31,
29 2003 and does not apply thereafter.
30 (17) Distillation machinery and equipment, sold as a
31 unit or kit, assembled or installed by the retailer,
32 certified by the user to be used only for the production of
33 ethyl alcohol that will be used for consumption as motor fuel
34 or as a component of motor fuel for the personal use of the
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1 user, and not subject to sale or resale. This exemption
2 applies only to tax years ending on or before December 31,
3 2003 and does not apply thereafter.
4 (18) Manufacturing and assembling machinery and
5 equipment used primarily in the process of manufacturing or
6 assembling tangible personal property for wholesale or retail
7 sale or lease, whether that sale or lease is made directly by
8 the manufacturer or by some other person, whether the
9 materials used in the process are owned by the manufacturer
10 or some other person, or whether that sale or lease is made
11 apart from or as an incident to the seller's engaging in the
12 service occupation of producing machines, tools, dies, jigs,
13 patterns, gauges, or other similar items of no commercial
14 value on special order for a particular purchaser. This
15 exemption applies only to tax years ending on or before
16 December 31, 2003 and does not apply thereafter.
17 (19) Personal property delivered to a purchaser or
18 purchaser's donee inside Illinois when the purchase order for
19 that personal property was received by a florist located
20 outside Illinois who has a florist located inside Illinois
21 deliver the personal property.
22 (20) Semen used for artificial insemination of livestock
23 for direct agricultural production.
24 (21) Horses, or interests in horses, registered with and
25 meeting the requirements of any of the Arabian Horse Club
26 Registry of America, Appaloosa Horse Club, American Quarter
27 Horse Association, United States Trotting Association, or
28 Jockey Club, as appropriate, used for purposes of breeding or
29 racing for prizes.
30 (22) Computers and communications equipment utilized for
31 any hospital purpose and equipment used in the diagnosis,
32 analysis, or treatment of hospital patients purchased by a
33 lessor who leases the equipment, under a lease of one year or
34 longer executed or in effect at the time the lessor would
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1 otherwise be subject to the tax imposed by this Act, to a
2 hospital that has been issued an active tax exemption
3 identification number by the Department under Section 1g of
4 the Retailers' Occupation Tax Act. If the equipment is
5 leased in a manner that does not qualify for this exemption
6 or is used in any other non-exempt manner, the lessor shall
7 be liable for the tax imposed under this Act or the Service
8 Use Tax Act, as the case may be, based on the fair market
9 value of the property at the time the non-qualifying use
10 occurs. No lessor shall collect or attempt to collect an
11 amount (however designated) that purports to reimburse that
12 lessor for the tax imposed by this Act or the Service Use Tax
13 Act, as the case may be, if the tax has not been paid by the
14 lessor. If a lessor improperly collects any such amount from
15 the lessee, the lessee shall have a legal right to claim a
16 refund of that amount from the lessor. If, however, that
17 amount is not refunded to the lessee for any reason, the
18 lessor is liable to pay that amount to the Department.
19 (23) Personal property purchased by a lessor who leases
20 the property, under a lease of one year or longer executed
21 or in effect at the time the lessor would otherwise be
22 subject to the tax imposed by this Act, to a governmental
23 body that has been issued an active sales tax exemption
24 identification number by the Department under Section 1g of
25 the Retailers' Occupation Tax Act. If the property is leased
26 in a manner that does not qualify for this exemption or used
27 in any other non-exempt manner, the lessor shall be liable
28 for the tax imposed under this Act or the Service Use Tax
29 Act, as the case may be, based on the fair market value of
30 the property at the time the non-qualifying use occurs. No
31 lessor shall collect or attempt to collect an amount (however
32 designated) that purports to reimburse that lessor for the
33 tax imposed by this Act or the Service Use Tax Act, as the
34 case may be, if the tax has not been paid by the lessor. If
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1 a lessor improperly collects any such amount from the lessee,
2 the lessee shall have a legal right to claim a refund of that
3 amount from the lessor. If, however, that amount is not
4 refunded to the lessee for any reason, the lessor is liable
5 to pay that amount to the Department.
6 (24) Beginning with taxable years ending on or after
7 December 31, 1995 and ending with taxable years ending on or
8 before December 31, 2004, personal property that is donated
9 for disaster relief to be used in a State or federally
10 declared disaster area in Illinois or bordering Illinois by a
11 manufacturer or retailer that is registered in this State to
12 a corporation, society, association, foundation, or
13 institution that has been issued a sales tax exemption
14 identification number by the Department that assists victims
15 of the disaster who reside within the declared disaster area.
16 (25) Beginning with taxable years ending on or after
17 December 31, 1995 and ending with taxable years ending on or
18 before December 31, 2004, personal property that is used in
19 the performance of infrastructure repairs in this State,
20 including but not limited to municipal roads and streets,
21 access roads, bridges, sidewalks, waste disposal systems,
22 water and sewer line extensions, water distribution and
23 purification facilities, storm water drainage and retention
24 facilities, and sewage treatment facilities, resulting from a
25 State or federally declared disaster in Illinois or bordering
26 Illinois when such repairs are initiated on facilities
27 located in the declared disaster area within 6 months after
28 the disaster.
29 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
30 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
31 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
32 eff. 12-12-97.)
33 (35 ILCS 105/3-60) (from Ch. 120, par. 439.3-60)
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1 Sec. 3-60. Rolling stock exemption. The rolling stock
2 exemption applies to rolling stock used by an interstate
3 carrier for hire, even just between points in Illinois, if
4 the rolling stock transports, for hire, persons whose
5 journeys or property whose shipments originate or terminate
6 outside Illinois.
7 This exemption applies only to tax years ending on or
8 before December 31, 2003 and does not apply thereafter.
9 (Source: P.A. 86-44; 86-244; 86-252; 86-820; 86-905; 86-928;
10 86-953; 86-1394; 86-1475.)
11 (35 ILCS 105/3-85)
12 Sec. 3-85. Manufacturer's Purchase Credit. For purchases
13 of machinery and equipment made on and after January 1, 1995,
14 a purchaser of manufacturing machinery and equipment that
15 qualifies for the exemption provided by paragraph (18) of
16 Section 3-5 of this Act earns a credit in an amount equal to
17 a fixed percentage of the tax which would have been incurred
18 under this Act on those purchases. For purchases of graphic
19 arts machinery and equipment made on or after July 1, 1996, a
20 purchaser of graphic arts machinery and equipment that
21 qualifies for the exemption provided by paragraph (6) of
22 Section 3-5 of this Act earns a credit in an amount equal to
23 a fixed percentage of the tax that would have been incurred
24 under this Act on those purchases. The credit earned for
25 purchases of manufacturing machinery and equipment or graphic
26 arts machinery and equipment shall be referred to as the
27 Manufacturer's Purchase Credit. A graphic arts producer is a
28 person engaged in graphic arts production as defined in
29 Section 2-30 of the Retailers' Occupation Tax Act. Beginning
30 July 1, 1996, all references in this Section to manufacturers
31 or manufacturing shall also be deemed to refer to graphic
32 arts producers or graphic arts production.
33 The amount of credit shall be a percentage of the tax
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1 that would have been incurred on the purchase of
2 manufacturing machinery and equipment or graphic arts
3 machinery and equipment if the exemptions provided by
4 paragraph (6) or paragraph (18) of Section 3-5 of this Act
5 had not been applicable. The percentage shall be as follows:
6 (1) 15% for purchases made on or before June 30,
7 1995.
8 (2) 25% for purchases made after June 30, 1995, and
9 on or before June 30, 1996.
10 (3) 40% for purchases made after June 30, 1996, and
11 on or before June 30, 1997.
12 (4) 50% for purchases made on or after July 1,
13 1997.
14 A purchaser of production related tangible personal
15 property desiring to use the Manufacturer's Purchase Credit
16 shall certify to the seller that the purchaser is satisfying
17 all or part of the liability under the Use Tax Act or the
18 Service Use Tax Act that is due on the purchase of the
19 production related tangible personal property by use of
20 Manufacturer's Purchase Credit. The Manufacturer's Purchase
21 Credit certification must be dated and shall include the name
22 and address of the purchaser, the purchaser's registration
23 number, if registered, the credit being applied, and a
24 statement that the State Use Tax or Service Use Tax liability
25 is being satisfied with the manufacturer's or graphic arts
26 producer's accumulated purchase credit. Certification may be
27 incorporated into the manufacturer's or graphic arts
28 producer's purchase order. Manufacturer's Purchase Credit
29 certification by the manufacturer or graphic arts producer
30 may be used to satisfy the retailer's or serviceman's
31 liability under the Retailers' Occupation Tax Act or Service
32 Occupation Tax Act for the credit claimed, not to exceed
33 6.25% of the receipts subject to tax from a qualifying
34 purchase, but only if the retailer or serviceman reports the
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1 Manufacturer's Purchase Credit claimed as required by the
2 Department. The Manufacturer's Purchase Credit earned by
3 purchase of exempt manufacturing machinery and equipment or
4 graphic arts machinery and equipment is a non-transferable
5 credit. A manufacturer or graphic arts producer that enters
6 into a contract involving the installation of tangible
7 personal property into real estate within a manufacturing or
8 graphic arts production facility may authorize a construction
9 contractor to utilize credit accumulated by the manufacturer
10 or graphic arts producer to purchase the tangible personal
11 property. A manufacturer or graphic arts producer intending
12 to use accumulated credit to purchase such tangible personal
13 property shall execute a written contract authorizing the
14 contractor to utilize a specified dollar amount of credit.
15 The contractor shall furnish the supplier with the
16 manufacturer's or graphic arts producer's name, registration
17 or resale number, and a statement that a specific amount of
18 the Use Tax or Service Use Tax liability, not to exceed 6.25%
19 of the selling price, is being satisfied with the credit. The
20 manufacturer or graphic arts producer shall remain liable to
21 timely report all information required by the annual Report
22 of Manufacturer's Purchase Credit Used for all credit
23 utilized by a construction contractor.
24 The Manufacturer's Purchase Credit may be used to satisfy
25 liability under the Use Tax Act or the Service Use Tax Act
26 due on the purchase of production related tangible personal
27 property (including purchases by a manufacturer, by a graphic
28 arts producer, or by a lessor who rents or leases the use of
29 the property to a manufacturer or graphic arts producer) that
30 does not otherwise qualify for the manufacturing machinery
31 and equipment exemption or the graphic arts machinery and
32 equipment exemption. "Production related tangible personal
33 property" means (i) all tangible personal property used or
34 consumed by the purchaser in a manufacturing facility in
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1 which a manufacturing process described in Section 2-45 of
2 the Retailers' Occupation Tax Act takes place, including
3 tangible personal property purchased for incorporation into
4 real estate within a manufacturing facility and including,
5 but not limited to, tangible personal property used or
6 consumed in activities such as preproduction material
7 handling, receiving, quality control, inventory control,
8 storage, staging, and packaging for shipping and
9 transportation purposes; (ii) all tangible personal property
10 used or consumed by the purchaser in a graphic arts facility
11 in which graphic arts production as described in Section 2-30
12 of the Retailers' Occupation Tax Act takes place, including
13 tangible personal property purchased for incorporation into
14 real estate within a graphic arts facility and including, but
15 not limited to, all tangible personal property used or
16 consumed in activities such as graphic arts preliminary or
17 pre-press production, pre-production material handling,
18 receiving, quality control, inventory control, storage,
19 staging, sorting, labeling, mailing, tying, wrapping, and
20 packaging; and (iii) all tangible personal property used or
21 consumed by the purchaser for research and development.
22 "Production related tangible personal property" does not
23 include (i) tangible personal property used, within or
24 without a manufacturing facility, in sales, purchasing,
25 accounting, fiscal management, marketing, personnel
26 recruitment or selection, or landscaping or (ii) tangible
27 personal property required to be titled or registered with a
28 department, agency, or unit of federal, state, or local
29 government. The Manufacturer's Purchase Credit may be used
30 to satisfy the tax arising either from the purchase of
31 machinery and equipment on or after January 1, 1995 for which
32 the exemption provided by paragraph (18) of Section 3-5 of
33 this Act was erroneously claimed, or the purchase of
34 machinery and equipment on or after July 1, 1996 for which
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1 the exemption provided by paragraph (6) of Section 3-5 of
2 this Act was erroneously claimed, but not in satisfaction of
3 penalty, if any, and interest for failure to pay the tax when
4 due. A purchaser of production related tangible personal
5 property who is required to pay Illinois Use Tax or Service
6 Use Tax on the purchase directly to the Department may
7 utilize the Manufacturer's Purchase Credit in satisfaction of
8 the tax arising from that purchase, but not in satisfaction
9 of penalty and interest. A purchaser who uses the
10 Manufacturer's Purchase Credit to purchase property which is
11 later determined not to be production related tangible
12 personal property may be liable for tax, penalty, and
13 interest on the purchase of that property as of the date of
14 purchase but shall be entitled to use the disallowed
15 Manufacturer's Purchase Credit, so long as it has not
16 expired, on qualifying purchases of production related
17 tangible personal property not previously subject to credit
18 usage. The Manufacturer's Purchase Credit earned by a
19 manufacturer or graphic arts producer expires the last day of
20 the second calendar year following the calendar year in which
21 the credit arose.
22 A purchaser earning Manufacturer's Purchase Credit shall
23 sign and file an annual Report of Manufacturer's Purchase
24 Credit Earned for each calendar year no later than the last
25 day of the sixth month following the calendar year in which a
26 Manufacturer's Purchase Credit is earned. A Report of
27 Manufacturer's Purchase Credit Earned shall be filed on forms
28 as prescribed or approved by the Department and shall state,
29 for each month of the calendar year: (i) the total purchase
30 price of all purchases of exempt manufacturing or graphic
31 arts machinery on which the credit was earned; (ii) the total
32 State Use Tax or Service Use Tax which would have been due on
33 those items; (iii) the percentage used to calculate the
34 amount of credit earned; (iv) the amount of credit earned;
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1 and (v) such other information as the Department may
2 reasonably require. A purchaser earning Manufacturer's
3 Purchase Credit shall maintain records which identify, as to
4 each purchase of manufacturing or graphic arts machinery and
5 equipment on which the purchaser earned Manufacturer's
6 Purchase Credit, the vendor (including, if applicable, either
7 the vendor's registration number or Federal Employer
8 Identification Number), the purchase price, and the amount of
9 Manufacturer's Purchase Credit earned on each purchase.
10 A purchaser using Manufacturer's Purchase Credit shall
11 sign and file an annual Report of Manufacturer's Purchase
12 Credit Used for each calendar year no later than the last day
13 of the sixth month following the calendar year in which a
14 Manufacturer's Purchase Credit is used. A Report of
15 Manufacturer's Purchase Credit Used shall be filed on forms
16 as prescribed or approved by the Department and shall state,
17 for each month of the calendar year: (i) the total purchase
18 price of production related tangible personal property
19 purchased from Illinois suppliers; (ii) the total purchase
20 price of production related tangible personal property
21 purchased from out-of-state suppliers; (iii) the total amount
22 of credit used during such month; and (iv) such other
23 information as the Department may reasonably require. A
24 purchaser using Manufacturer's Purchase Credit shall maintain
25 records that identify, as to each purchase of production
26 related tangible personal property on which the purchaser
27 used Manufacturer's Purchase Credit, the vendor (including,
28 if applicable, either the vendor's registration number or
29 Federal Employer Identification Number), the purchase price,
30 and the amount of Manufacturer's Purchase Credit used on each
31 purchase.
32 No annual report shall be filed before May 1, 1996. A
33 purchaser that fails to file an annual Report of
34 Manufacturer's Purchase Credit Earned or an annual Report of
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1 Manufacturer's Purchase Credit Used by the last day of the
2 sixth month following the end of the calendar year shall
3 forfeit all Manufacturer's Purchase Credit for that calendar
4 year unless it establishes that its failure to file was due
5 to reasonable cause. Manufacturer's Purchase Credit reports
6 may be amended to report and claim credit on qualifying
7 purchases not previously reported at any time before the
8 credit would have expired, unless both the Department and the
9 purchaser have agreed to an extension of the statute of
10 limitations for the issuance of a notice of tax liability as
11 provided in Section 4 of the Retailers' Occupation Tax Act.
12 If the time for assessment or refund has been extended, then
13 amended reports for a calendar year may be filed at any time
14 prior to the date to which the statute of limitations for the
15 calendar year or portion thereof has been extended. No
16 Manufacturer's Purchase Credit report filed with the
17 Department for periods prior to January 1, 1995 shall be
18 approved. Manufacturer's Purchase Credit claimed on an
19 amended report may be used to satisfy tax liability under the
20 Use Tax Act or the Service Use Tax Act (i) on qualifying
21 purchases of production related tangible personal property
22 made after the date the amended report is filed or (ii)
23 assessed by the Department on qualifying purchases of
24 production related tangible personal property made in the
25 case of manufacturers on or after January 1, 1995, or in the
26 case of graphic arts producers on or after July 1, 1996.
27 If the purchaser is not the manufacturer or a graphic
28 arts producer, but rents or leases the use of the property to
29 a manufacturer or graphic arts producer, the purchaser may
30 earn, report, and use Manufacturer's Purchase Credit in the
31 same manner as a manufacturer or graphic arts producer.
32 A purchaser shall not be entitled to any Manufacturer's
33 Purchase Credit for a purchase that is required to be
34 reported and is not timely reported as provided in this
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1 Section. A purchaser remains liable for (i) any tax that was
2 satisfied by use of a Manufacturer's Purchase Credit, as of
3 the date of purchase, if that use is not timely reported as
4 required in this Section and (ii) for any applicable
5 penalties and interest for failing to pay the tax when due.
6 This credit applies only to tax years ending on or before
7 December 31, 2003 and does not apply thereafter.
8 (Source: P.A. 88-547, eff. 6-30-94; 89-89, eff. 6-30-95;
9 89-235, eff. 8-4-95; 89-531, eff. 7-19-96.)
10 (35 ILCS 105/12) (from Ch. 120, par. 439.12)
11 Sec. 12. Applicability of Retailers' Occupation Tax Act
12 and Uniform Penalty and Interest Act. All of the provisions
13 of Sections 1d, 1e, 1f, 1i, 1j, 1j.1, 1k, 1m, 1n, 2a, 2b, 2c,
14 3, 4 (except that the time limitation provisions shall run
15 from the date when the tax is due rather than from the date
16 when gross receipts are received), 5 (except that the time
17 limitation provisions on the issuance of notices of tax
18 liability shall run from the date when the tax is due rather
19 than from the date when gross receipts are received and
20 except that in the case of a failure to file a return
21 required by this Act, no notice of tax liability shall be
22 issued on and after each July 1 and January 1 covering tax
23 due with that return during any month or period more than 6
24 years before that July 1 or January 1, respectively), 5a, 5b,
25 5c, 5d, 5e, 5f, 5g, 5h, 5j, 5k, 5l, 7, 8, 9, 10, 11 and 12 of
26 the Retailers' Occupation Tax Act and Section 3-7 of the
27 Uniform Penalty and Interest Act, which are not inconsistent
28 with this Act, shall apply, as far as practicable, to the
29 subject matter of this Act to the same extent as if such
30 provisions were included herein.
31 The exemptions provided in Sections 1d, 1j, and 5k of the
32 Retailers' Occupation Tax Act apply only to tax years ending
33 on or before December 31, 2003 and do not apply thereafter.
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1 (Source: P.A. 90-42, eff. 1-1-98.)
2 Section 15. The Service Use Tax Act is amended by
3 changing Sections 2, 2a, 3-5, 3-70, and 12 as follows:
4 (35 ILCS 110/2) (from Ch. 120, par. 439.32)
5 Sec. 2. "Use" means the exercise by any person of any
6 right or power over tangible personal property incident to
7 the ownership of that property, but does not include the sale
8 or use for demonstration by him of that property in any form
9 as tangible personal property in the regular course of
10 business. "Use" does not mean the interim use of tangible
11 personal property nor the physical incorporation of tangible
12 personal property, as an ingredient or constituent, into
13 other tangible personal property, (a) which is sold in the
14 regular course of business or (b) which the person
15 incorporating such ingredient or constituent therein has
16 undertaken at the time of such purchase to cause to be
17 transported in interstate commerce to destinations outside
18 the State of Illinois.
19 "Purchased from a serviceman" means the acquisition of
20 the ownership of, or title to, tangible personal property
21 through a sale of service.
22 "Purchaser" means any person who, through a sale of
23 service, acquires the ownership of, or title to, any tangible
24 personal property.
25 "Cost price" means the consideration paid by the
26 serviceman for a purchase valued in money, whether paid in
27 money or otherwise, including cash, credits and services, and
28 shall be determined without any deduction on account of the
29 supplier's cost of the property sold or on account of any
30 other expense incurred by the supplier. When a serviceman
31 contracts out part or all of the services required in his
32 sale of service, it shall be presumed that the cost price to
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1 the serviceman of the property transferred to him or her by
2 his or her subcontractor is equal to 50% of the
3 subcontractor's charges to the serviceman in the absence of
4 proof of the consideration paid by the subcontractor for the
5 purchase of such property.
6 "Selling price" means the consideration for a sale valued
7 in money whether received in money or otherwise, including
8 cash, credits and service, and shall be determined without
9 any deduction on account of the serviceman's cost of the
10 property sold, the cost of materials used, labor or service
11 cost or any other expense whatsoever, but does not include
12 interest or finance charges which appear as separate items on
13 the bill of sale or sales contract nor charges that are added
14 to prices by sellers on account of the seller's duty to
15 collect, from the purchaser, the tax that is imposed by this
16 Act.
17 "Department" means the Department of Revenue.
18 "Person" means any natural individual, firm, partnership,
19 association, joint stock company, joint venture, public or
20 private corporation, limited liability company, and any
21 receiver, executor, trustee, guardian or other representative
22 appointed by order of any court.
23 "Sale of service" means any transaction except:
24 (1) a retail sale of tangible personal property
25 taxable under the Retailers' Occupation Tax Act or under
26 the Use Tax Act.
27 (2) a sale of tangible personal property for the
28 purpose of resale made in compliance with Section 2c of
29 the Retailers' Occupation Tax Act.
30 (3) except as hereinafter provided, a sale or
31 transfer of tangible personal property as an incident to
32 the rendering of service for or by any governmental body,
33 or for or by any corporation, society, association,
34 foundation or institution organized and operated
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1 exclusively for charitable, religious or educational
2 purposes or any not-for-profit corporation, society,
3 association, foundation, institution or organization
4 which has no compensated officers or employees and which
5 is organized and operated primarily for the recreation of
6 persons 55 years of age or older. A limited liability
7 company may qualify for the exemption under this
8 paragraph only if the limited liability company is
9 organized and operated exclusively for educational
10 purposes.
11 (4) a sale or transfer of tangible personal
12 property as an incident to the rendering of service for
13 interstate carriers for hire for use as rolling stock
14 moving in interstate commerce or by lessors under a lease
15 of one year or longer, executed or in effect at the time
16 of purchase of personal property, to interstate carriers
17 for hire for use as rolling stock moving in interstate
18 commerce so long as so used by such interstate carriers
19 for hire, and equipment operated by a telecommunications
20 provider, licensed as a common carrier by the Federal
21 Communications Commission, which is permanently installed
22 in or affixed to aircraft moving in interstate commerce.
23 This exemption applies only to tax years ending on or
24 before December 31, 2003 and does not apply thereafter.
25 (4a) a sale or transfer of tangible personal
26 property as an incident to the rendering of service for
27 owners, lessors, or shippers of tangible personal
28 property which is utilized by interstate carriers for
29 hire for use as rolling stock moving in interstate
30 commerce so long as so used by interstate carriers for
31 hire, and equipment operated by a telecommunications
32 provider, licensed as a common carrier by the Federal
33 Communications Commission, which is permanently installed
34 in or affixed to aircraft moving in interstate commerce.
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1 This exemption applies only to tax years ending on or
2 before December 31, 2003 and does not apply thereafter.
3 (5) a sale or transfer of machinery and equipment
4 used primarily in the process of the manufacturing or
5 assembling, either in an existing, an expanded or a new
6 manufacturing facility, of tangible personal property for
7 wholesale or retail sale or lease, whether such sale or
8 lease is made directly by the manufacturer or by some
9 other person, whether the materials used in the process
10 are owned by the manufacturer or some other person, or
11 whether such sale or lease is made apart from or as an
12 incident to the seller's engaging in a service occupation
13 and the applicable tax is a Service Use Tax or Service
14 Occupation Tax, rather than Use Tax or Retailers'
15 Occupation Tax. This exemption applies only to tax years
16 ending on or before December 31, 2003 and does not apply
17 thereafter.
18 (5a) the repairing, reconditioning or remodeling,
19 for a common carrier by rail, of tangible personal
20 property which belongs to such carrier for hire, and as
21 to which such carrier receives the physical possession of
22 the repaired, reconditioned or remodeled item of tangible
23 personal property in Illinois, and which such carrier
24 transports, or shares with another common carrier in the
25 transportation of such property, out of Illinois on a
26 standard uniform bill of lading showing the person who
27 repaired, reconditioned or remodeled the property to a
28 destination outside Illinois, for use outside Illinois.
29 (5b) a sale or transfer of tangible personal
30 property which is produced by the seller thereof on
31 special order in such a way as to have made the
32 applicable tax the Service Occupation Tax or the Service
33 Use Tax, rather than the Retailers' Occupation Tax or the
34 Use Tax, for an interstate carrier by rail which receives
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1 the physical possession of such property in Illinois, and
2 which transports such property, or shares with another
3 common carrier in the transportation of such property,
4 out of Illinois on a standard uniform bill of lading
5 showing the seller of the property as the shipper or
6 consignor of such property to a destination outside
7 Illinois, for use outside Illinois.
8 (6) a sale or transfer of distillation machinery
9 and equipment, sold as a unit or kit and assembled or
10 installed by the retailer, which machinery and equipment
11 is certified by the user to be used only for the
12 production of ethyl alcohol that will be used for
13 consumption as motor fuel or as a component of motor fuel
14 for the personal use of such user and not subject to sale
15 or resale. This exemption applies only to tax years
16 ending on or before December 31, 2003 and does not apply
17 thereafter.
18 (7) at the election of any serviceman not required
19 to be otherwise registered as a retailer under Section 2a
20 of the Retailers' Occupation Tax Act, made for each
21 fiscal year sales of service in which the aggregate
22 annual cost price of tangible personal property
23 transferred as an incident to the sales of service is
24 less than 35%, or 75% in the case of servicemen
25 transferring prescription drugs or servicemen engaged in
26 graphic arts production, of the aggregate annual total
27 gross receipts from all sales of service. The purchase of
28 such tangible personal property by the serviceman shall
29 be subject to tax under the Retailers' Occupation Tax Act
30 and the Use Tax Act. However, if a primary serviceman
31 who has made the election described in this paragraph
32 subcontracts service work to a secondary serviceman who
33 has also made the election described in this paragraph,
34 the primary serviceman does not incur a Use Tax liability
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1 if the secondary serviceman (i) has paid or will pay Use
2 Tax on his or her cost price of any tangible personal
3 property transferred to the primary serviceman and (ii)
4 certifies that fact in writing to the primary serviceman.
5 Tangible personal property transferred incident to the
6 completion of a maintenance agreement is exempt from the tax
7 imposed pursuant to this Act.
8 Exemption (5) also includes machinery and equipment used
9 in the general maintenance or repair of such exempt machinery
10 and equipment or for in-house manufacture of exempt machinery
11 and equipment. For the purposes of exemption (5), each of
12 these terms shall have the following meanings: (1)
13 "manufacturing process" shall mean the production of any
14 article of tangible personal property, whether such article
15 is a finished product or an article for use in the process of
16 manufacturing or assembling a different article of tangible
17 personal property, by procedures commonly regarded as
18 manufacturing, processing, fabricating, or refining which
19 changes some existing material or materials into a material
20 with a different form, use or name. In relation to a
21 recognized integrated business composed of a series of
22 operations which collectively constitute manufacturing, or
23 individually constitute manufacturing operations, the
24 manufacturing process shall be deemed to commence with the
25 first operation or stage of production in the series, and
26 shall not be deemed to end until the completion of the final
27 product in the last operation or stage of production in the
28 series; and further, for purposes of exemption (5),
29 photoprocessing is deemed to be a manufacturing process of
30 tangible personal property for wholesale or retail sale; (2)
31 "assembling process" shall mean the production of any article
32 of tangible personal property, whether such article is a
33 finished product or an article for use in the process of
34 manufacturing or assembling a different article of tangible
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1 personal property, by the combination of existing materials
2 in a manner commonly regarded as assembling which results in
3 a material of a different form, use or name; (3) "machinery"
4 shall mean major mechanical machines or major components of
5 such machines contributing to a manufacturing or assembling
6 process; and (4) "equipment" shall include any independent
7 device or tool separate from any machinery but essential to
8 an integrated manufacturing or assembly process; including
9 computers used primarily in operating exempt machinery and
10 equipment in a computer assisted design, computer assisted
11 manufacturing (CAD/CAM) system; or any subunit or assembly
12 comprising a component of any machinery or auxiliary, adjunct
13 or attachment parts of machinery, such as tools, dies, jigs,
14 fixtures, patterns and molds; or any parts which require
15 periodic replacement in the course of normal operation; but
16 shall not include hand tools. The purchaser of such machinery
17 and equipment who has an active resale registration number
18 shall furnish such number to the seller at the time of
19 purchase. The user of such machinery and equipment and tools
20 without an active resale registration number shall prepare a
21 certificate of exemption for each transaction stating facts
22 establishing the exemption for that transaction, which
23 certificate shall be available to the Department for
24 inspection or audit. The Department shall prescribe the form
25 of the certificate.
26 Any informal rulings, opinions or letters issued by the
27 Department in response to an inquiry or request for any
28 opinion from any person regarding the coverage and
29 applicability of exemption (5) to specific devices shall be
30 published, maintained as a public record, and made available
31 for public inspection and copying. If the informal ruling,
32 opinion or letter contains trade secrets or other
33 confidential information, where possible the Department shall
34 delete such information prior to publication. Whenever such
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1 informal rulings, opinions, or letters contain any policy of
2 general applicability, the Department shall formulate and
3 adopt such policy as a rule in accordance with the provisions
4 of the Illinois Administrative Procedure Act.
5 On and after July 1, 1987, no entity otherwise eligible
6 under exemption (3) of this Section shall make tax free
7 purchases unless it has an active exemption identification
8 number issued by the Department.
9 The purchase, employment and transfer of such tangible
10 personal property as newsprint and ink for the primary
11 purpose of conveying news (with or without other information)
12 is not a purchase, use or sale of service or of tangible
13 personal property within the meaning of this Act.
14 "Serviceman" means any person who is engaged in the
15 occupation of making sales of service.
16 "Sale at retail" means "sale at retail" as defined in the
17 Retailers' Occupation Tax Act.
18 "Supplier" means any person who makes sales of tangible
19 personal property to servicemen for the purpose of resale as
20 an incident to a sale of service.
21 "Serviceman maintaining a place of business in this
22 State", or any like term, means and includes any serviceman:
23 1. having or maintaining within this State,
24 directly or by a subsidiary, an office, distribution
25 house, sales house, warehouse or other place of business,
26 or any agent or other representative operating within
27 this State under the authority of the serviceman or its
28 subsidiary, irrespective of whether such place of
29 business or agent or other representative is located here
30 permanently or temporarily, or whether such serviceman or
31 subsidiary is licensed to do business in this State;
32 2. soliciting orders for tangible personal property
33 by means of a telecommunication or television shopping
34 system (which utilizes toll free numbers) which is
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1 intended by the retailer to be broadcast by cable
2 television or other means of broadcasting, to consumers
3 located in this State;
4 3. pursuant to a contract with a broadcaster or
5 publisher located in this State, soliciting orders for
6 tangible personal property by means of advertising which
7 is disseminated primarily to consumers located in this
8 State and only secondarily to bordering jurisdictions;
9 4. soliciting orders for tangible personal property
10 by mail if the solicitations are substantial and
11 recurring and if the retailer benefits from any banking,
12 financing, debt collection, telecommunication, or
13 marketing activities occurring in this State or benefits
14 from the location in this State of authorized
15 installation, servicing, or repair facilities;
16 5. being owned or controlled by the same interests
17 which own or control any retailer engaging in business in
18 the same or similar line of business in this State;
19 6. having a franchisee or licensee operating under
20 its trade name if the franchisee or licensee is required
21 to collect the tax under this Section;
22 7. pursuant to a contract with a cable television
23 operator located in this State, soliciting orders for
24 tangible personal property by means of advertising which
25 is transmitted or distributed over a cable television
26 system in this State; or
27 8. engaging in activities in Illinois, which
28 activities in the state in which the supply business
29 engaging in such activities is located would constitute
30 maintaining a place of business in that state.
31 (Source: P.A. 88-480; 88-505; 88-547; 88-670, eff. 12-2-94;
32 89-675, eff. 8-14-96.)
33 (35 ILCS 110/2a) (from Ch. 120, par. 439.32a)
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1 Sec. 2a. "Pollution control facilities" means any system,
2 method, construction, device or appliance appurtenant thereto
3 used in this State acquired as an incident to the purchase of
4 a service from a serviceman for the primary purpose of
5 eliminating, preventing, or reducing air and water pollution
6 as the term "air pollution" or "water pollution" is defined
7 in the "Environmental Protection Act", enacted by the 76th
8 General Assembly, or for the primary purpose of treating,
9 pretreating, modifying or disposing of any potential solid,
10 liquid or gaseous pollutant which if released without such
11 treatment, pretreatment, modification or disposal might be
12 harmful, detrimental or offensive to human, plant or animal
13 life, or to property.
14 The purchase, employment or transfer of such tangible
15 personal property as pollution control facilities is not a
16 purchase, use or sale of service or of tangible personal
17 property within the meaning of this Act.
18 This exemption applies only to tax years ending on or
19 before December 31, 2003 and does not apply thereafter.
20 (Source: P.A. 76-2248.)
21 (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
22 Sec. 3-5. Exemptions. Use of the following tangible
23 personal property is exempt from the tax imposed by this Act:
24 (1) Personal property purchased from a corporation,
25 society, association, foundation, institution, or
26 organization, other than a limited liability company, that is
27 organized and operated as a not-for-profit service enterprise
28 for the benefit of persons 65 years of age or older if the
29 personal property was not purchased by the enterprise for the
30 purpose of resale by the enterprise.
31 (2) Personal property purchased by a non-profit Illinois
32 county fair association for use in conducting, operating, or
33 promoting the county fair.
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1 (3) Personal property purchased by a not-for-profit
2 music or dramatic arts organization that establishes, by
3 proof required by the Department by rule, that it has
4 received an exemption under Section 501(c)(3) of the Internal
5 Revenue Code and that is organized and operated for the
6 presentation of live public performances of musical or
7 theatrical works on a regular basis.
8 (4) Legal tender, currency, medallions, or gold or
9 silver coinage issued by the State of Illinois, the
10 government of the United States of America, or the government
11 of any foreign country, and bullion.
12 (5) Graphic arts machinery and equipment, including
13 repair and replacement parts, both new and used, and
14 including that manufactured on special order or purchased for
15 lease, certified by the purchaser to be used primarily for
16 graphic arts production. This exemption applies only to tax
17 years ending on or before December 31, 2003 and does not
18 apply thereafter.
19 (6) Personal property purchased from a teacher-sponsored
20 student organization affiliated with an elementary or
21 secondary school located in Illinois.
22 (7) Farm machinery and equipment, both new and used,
23 including that manufactured on special order, certified by
24 the purchaser to be used primarily for production agriculture
25 or State or federal agricultural programs, including
26 individual replacement parts for the machinery and equipment,
27 and including machinery and equipment purchased for lease,
28 but excluding motor vehicles required to be registered under
29 the Illinois Vehicle Code. Horticultural polyhouses or hoop
30 houses used for propagating, growing, or overwintering plants
31 shall be considered farm machinery and equipment under this
32 paragraph. This exemption applies only to tax years ending on
33 or before December 31, 2003 and does not apply thereafter.
34 (8) Fuel and petroleum products sold to or used by an
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1 air common carrier, certified by the carrier to be used for
2 consumption, shipment, or storage in the conduct of its
3 business as an air common carrier, for a flight destined for
4 or returning from a location or locations outside the United
5 States without regard to previous or subsequent domestic
6 stopovers. This exemption applies only to tax years ending on
7 or before December 31, 2003 and does not apply thereafter.
8 (9) Proceeds of mandatory service charges separately
9 stated on customers' bills for the purchase and consumption
10 of food and beverages acquired as an incident to the purchase
11 of a service from a serviceman, to the extent that the
12 proceeds of the service charge are in fact turned over as
13 tips or as a substitute for tips to the employees who
14 participate directly in preparing, serving, hosting or
15 cleaning up the food or beverage function with respect to
16 which the service charge is imposed.
17 (10) Oil field exploration, drilling, and production
18 equipment, including (i) rigs and parts of rigs, rotary rigs,
19 cable tool rigs, and workover rigs, (ii) pipe and tubular
20 goods, including casing and drill strings, (iii) pumps and
21 pump-jack units, (iv) storage tanks and flow lines, (v) any
22 individual replacement part for oil field exploration,
23 drilling, and production equipment, and (vi) machinery and
24 equipment purchased for lease; but excluding motor vehicles
25 required to be registered under the Illinois Vehicle Code.
26 This exemption applies only to tax years ending on or before
27 December 31, 2003 and does not apply thereafter.
28 (11) Proceeds from the sale of photoprocessing machinery
29 and equipment, including repair and replacement parts, both
30 new and used, including that manufactured on special order,
31 certified by the purchaser to be used primarily for
32 photoprocessing, and including photoprocessing machinery and
33 equipment purchased for lease.
34 (12) Coal exploration, mining, offhighway hauling,
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1 processing, maintenance, and reclamation equipment, including
2 replacement parts and equipment, and including equipment
3 purchased for lease, but excluding motor vehicles required to
4 be registered under the Illinois Vehicle Code. This exemption
5 applies only to tax years ending on or before December 31,
6 2003 and does not apply thereafter.
7 (13) Semen used for artificial insemination of livestock
8 for direct agricultural production.
9 (14) Horses, or interests in horses, registered with and
10 meeting the requirements of any of the Arabian Horse Club
11 Registry of America, Appaloosa Horse Club, American Quarter
12 Horse Association, United States Trotting Association, or
13 Jockey Club, as appropriate, used for purposes of breeding or
14 racing for prizes.
15 (15) Computers and communications equipment utilized for
16 any hospital purpose and equipment used in the diagnosis,
17 analysis, or treatment of hospital patients purchased by a
18 lessor who leases the equipment, under a lease of one year or
19 longer executed or in effect at the time the lessor would
20 otherwise be subject to the tax imposed by this Act, to a
21 hospital that has been issued an active tax exemption
22 identification number by the Department under Section 1g of
23 the Retailers' Occupation Tax Act. If the equipment is leased
24 in a manner that does not qualify for this exemption or is
25 used in any other non-exempt manner, the lessor shall be
26 liable for the tax imposed under this Act or the Use Tax Act,
27 as the case may be, based on the fair market value of the
28 property at the time the non-qualifying use occurs. No
29 lessor shall collect or attempt to collect an amount (however
30 designated) that purports to reimburse that lessor for the
31 tax imposed by this Act or the Use Tax Act, as the case may
32 be, if the tax has not been paid by the lessor. If a lessor
33 improperly collects any such amount from the lessee, the
34 lessee shall have a legal right to claim a refund of that
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1 amount from the lessor. If, however, that amount is not
2 refunded to the lessee for any reason, the lessor is liable
3 to pay that amount to the Department.
4 (16) Personal property purchased by a lessor who leases
5 the property, under a lease of one year or longer executed or
6 in effect at the time the lessor would otherwise be subject
7 to the tax imposed by this Act, to a governmental body that
8 has been issued an active tax exemption identification number
9 by the Department under Section 1g of the Retailers'
10 Occupation Tax Act. If the property is leased in a manner
11 that does not qualify for this exemption or is used in any
12 other non-exempt manner, the lessor shall be liable for the
13 tax imposed under this Act or the Use Tax Act, as the case
14 may be, based on the fair market value of the property at the
15 time the non-qualifying use occurs. No lessor shall collect
16 or attempt to collect an amount (however designated) that
17 purports to reimburse that lessor for the tax imposed by this
18 Act or the Use Tax Act, as the case may be, if the tax has
19 not been paid by the lessor. If a lessor improperly collects
20 any such amount from the lessee, the lessee shall have a
21 legal right to claim a refund of that amount from the lessor.
22 If, however, that amount is not refunded to the lessee for
23 any reason, the lessor is liable to pay that amount to the
24 Department.
25 (17) Beginning with taxable years ending on or after
26 December 31, 1995 and ending with taxable years ending on or
27 before December 31, 2004, personal property that is donated
28 for disaster relief to be used in a State or federally
29 declared disaster area in Illinois or bordering Illinois by a
30 manufacturer or retailer that is registered in this State to
31 a corporation, society, association, foundation, or
32 institution that has been issued a sales tax exemption
33 identification number by the Department that assists victims
34 of the disaster who reside within the declared disaster area.
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1 (18) Beginning with taxable years ending on or after
2 December 31, 1995 and ending with taxable years ending on or
3 before December 31, 2004, personal property that is used in
4 the performance of infrastructure repairs in this State,
5 including but not limited to municipal roads and streets,
6 access roads, bridges, sidewalks, waste disposal systems,
7 water and sewer line extensions, water distribution and
8 purification facilities, storm water drainage and retention
9 facilities, and sewage treatment facilities, resulting from a
10 State or federally declared disaster in Illinois or bordering
11 Illinois when such repairs are initiated on facilities
12 located in the declared disaster area within 6 months after
13 the disaster.
14 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
15 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
16 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
17 eff. 12-12-97.)
18 (35 ILCS 110/3-70)
19 Sec. 3-70. Manufacturer's Purchase Credit. For purchases
20 of machinery and equipment made on and after January 1, 1995,
21 a purchaser of manufacturing machinery and equipment that
22 qualifies for the exemption provided by Section 2 of this Act
23 earns a credit in an amount equal to a fixed percentage of
24 the tax which would have been incurred under this Act on
25 those purchases. For purchases of graphic arts machinery and
26 equipment made on or after July 1, 1996, a purchase of
27 graphic arts machinery and equipment that qualifies for the
28 exemption provided by paragraph (5) of Section 3-5 of this
29 Act earns a credit in an amount equal to a fixed percentage
30 of the tax that would have been incurred under this Act on
31 those purchases. The credit earned for the purchase of
32 manufacturing machinery and equipment and graphic arts
33 machinery and equipment shall be referred to as the
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1 Manufacturer's Purchase Credit. A graphic arts producer is a
2 person engaged in graphic arts production as defined in
3 Section 3-30 of the Service Occupation Tax Act. Beginning
4 July 1, 1996, all references in this Section to manufacturers
5 or manufacturing shall also refer to graphic arts producers
6 or graphic arts production.
7 The amount of credit shall be a percentage of the tax
8 that would have been incurred on the purchase of the
9 manufacturing machinery and equipment or graphic arts
10 machinery and equipment if the exemptions provided by Section
11 2 or paragraph (5) of Section 3-5 of this Act had not been
12 applicable.
13 All purchases of manufacturing machinery and equipment
14 and graphic arts machinery and equipment that qualify for the
15 exemptions provided by paragraph (5) of Section 2 or
16 paragraph (5) of Section 3-5 of this Act qualify for the
17 credit without regard to whether the serviceman elected, or
18 could have elected, under paragraph (7) of Section 2 of this
19 Act to exclude the transaction from this Act. If the
20 serviceman's billing to the service customer separately
21 states a selling price for the exempt manufacturing machinery
22 or equipment or the exempt graphic arts machinery and
23 equipment, the credit shall be calculated, as otherwise
24 provided herein, based on that selling price. If the
25 serviceman's billing does not separately state a selling
26 price for the exempt manufacturing machinery and equipment or
27 the exempt graphic arts machinery and equipment, the credit
28 shall be calculated, as otherwise provided herein, based on
29 50% of the entire billing. If the serviceman contracts to
30 design, develop, and produce special order manufacturing
31 machinery and equipment or special order graphic arts
32 machinery and equipment, and the billing does not separately
33 state a selling price for such special order machinery and
34 equipment, the credit shall be calculated, as otherwise
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1 provided herein, based on 50% of the entire billing. The
2 provisions of this paragraph are effective for purchases made
3 on or after January 1, 1995.
4 The percentage shall be as follows:
5 (1) 15% for purchases made on or before June 30,
6 1995.
7 (2) 25% for purchases made after June 30, 1995, and
8 on or before June 30, 1996.
9 (3) 40% for purchases made after June 30, 1996, and
10 on or before June 30, 1997.
11 (4) 50% for purchases made on or after July 1,
12 1997.
13 A purchaser of production related tangible personal
14 property desiring to use the Manufacturer's Purchase Credit
15 shall certify to the seller that the purchaser is satisfying
16 all or part of the liability under the Use Tax Act or the
17 Service Use Tax Act that is due on the purchase of the
18 production related tangible personal property by use of a
19 Manufacturer's Purchase Credit. The Manufacturer's Purchase
20 Credit certification must be dated and shall include the name
21 and address of the purchaser, the purchaser's registration
22 number, if registered, the credit being applied, and a
23 statement that the State Use Tax or Service Use Tax liability
24 is being satisfied with the manufacturer's or graphic arts
25 producer's accumulated purchase credit. Certification may be
26 incorporated into the manufacturer's or graphic arts
27 producer's purchase order. Manufacturer's Purchase Credit
28 certification by the manufacturer or graphic arts producer
29 may be used to satisfy the retailer's or serviceman's
30 liability under the Retailers' Occupation Tax Act or Service
31 Occupation Tax Act for the credit claimed, not to exceed
32 6.25% of the receipts subject to tax from a qualifying
33 purchase, but only if the retailer or serviceman reports the
34 Manufacturer's Purchase Credit claimed as required by the
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1 Department. The Manufacturer's Purchase Credit earned by
2 purchase of exempt manufacturing machinery and equipment or
3 graphic arts machinery and equipment is a non-transferable
4 credit. A manufacturer or graphic arts producer that enters
5 into a contract involving the installation of tangible
6 personal property into real estate within a manufacturing or
7 graphic arts production facility may authorize a construction
8 contractor to utilize credit accumulated by the manufacturer
9 or graphic arts producer to purchase the tangible personal
10 property. A manufacturer or graphic arts producer intending
11 to use accumulated credit to purchase such tangible personal
12 property shall execute a written contract authorizing the
13 contractor to utilize a specified dollar amount of credit.
14 The contractor shall furnish the supplier with the
15 manufacturer's or graphic arts producer's name, registration
16 or resale number, and a statement that a specific amount of
17 the Use Tax or Service Use Tax liability, not to exceed 6.25%
18 of the selling price, is being satisfied with the credit. The
19 manufacturer or graphic arts producer shall remain liable to
20 timely report all information required by the annual Report
21 of Manufacturer's Purchase Credit Used for credit utilized by
22 a construction contractor.
23 The Manufacturer's Purchase Credit may be used to satisfy
24 liability under the Use Tax Act or the Service Use Tax Act
25 due on the purchase of production related tangible personal
26 property (including purchases by a manufacturer, by a graphic
27 arts producer, or a lessor who rents or leases the use of the
28 property to a manufacturer or graphic arts producer) that
29 does not otherwise qualify for the manufacturing machinery
30 and equipment exemption or the graphic arts machinery and
31 equipment exemption. "Production related tangible personal
32 property" means (i) all tangible personal property used or
33 consumed by the purchaser in a manufacturing facility in
34 which a manufacturing process described in Section 2-45 of
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1 the Retailers' Occupation Tax Act takes place, including
2 tangible personal property purchased for incorporation into
3 real estate within a manufacturing facility and including,
4 but not limited to, tangible personal property used or
5 consumed in activities such as pre-production material
6 handling, receiving, quality control, inventory control,
7 storage, staging, and packaging for shipping and
8 transportation purposes; (ii) all tangible personal property
9 used or consumed by the purchaser in a graphic arts facility
10 in which graphic arts production as described in Section 2-30
11 of the Retailers' Occupation Tax Act takes place, including
12 tangible personal property purchased for incorporation into
13 real estate within a graphic arts facility and including, but
14 not limited to, all tangible personal property used or
15 consumed in activities such as graphic arts preliminary or
16 pre-press production, pre-production material handling,
17 receiving, quality control, inventory control, storage,
18 staging, sorting, labeling, mailing, tying, wrapping, and
19 packaging; and (iii) all tangible personal property used or
20 consumed by the purchaser for research and development.
21 "Production related tangible personal property" does not
22 include (i) tangible personal property used, within or
23 without a manufacturing or graphic arts facility, in sales,
24 purchasing, accounting, fiscal management, marketing,
25 personnel recruitment or selection, or landscaping or (ii)
26 tangible personal property required to be titled or
27 registered with a department, agency, or unit of federal,
28 state, or local government. The Manufacturer's Purchase
29 Credit may be used to satisfy the tax arising either from the
30 purchase of machinery and equipment on or after January 1,
31 1995 for which the manufacturing machinery and equipment
32 exemption provided by Section 2 of this Act was erroneously
33 claimed, or the purchase of machinery and equipment on or
34 after July 1, 1996 for which the exemption provided by
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1 paragraph (5) of Section 3-5 of this Act was erroneously
2 claimed, but not in satisfaction of penalty, if any, and
3 interest for failure to pay the tax when due. A purchaser of
4 production related tangible personal property who is required
5 to pay Illinois Use Tax or Service Use Tax on the purchase
6 directly to the Department may utilize the Manufacturer's
7 Purchase Credit in satisfaction of the tax arising from that
8 purchase, but not in satisfaction of penalty and interest. A
9 purchaser who uses the Manufacturer's Purchase Credit to
10 purchase property which is later determined not to be
11 production related tangible personal property may be liable
12 for tax, penalty, and interest on the purchase of that
13 property as of the date of purchase but shall be entitled to
14 use the disallowed Manufacturer's Purchase Credit, so long as
15 it has not expired, on qualifying purchases of production
16 related tangible personal property not previously subject to
17 credit usage. The Manufacturer's Purchase Credit earned by a
18 manufacturer or graphic arts producer expires the last day of
19 the second calendar year following the calendar year in which
20 the credit arose.
21 A purchaser earning Manufacturer's Purchase Credit shall
22 sign and file an annual Report of Manufacturer's Purchase
23 Credit Earned for each calendar year no later than the last
24 day of the sixth month following the calendar year in which a
25 Manufacturer's Purchase Credit is earned. A Report of
26 Manufacturer's Purchase Credit Earned shall be filed on forms
27 as prescribed or approved by the Department and shall state,
28 for each month of the calendar year: (i) the total purchase
29 price of all purchases of exempt manufacturing or graphic
30 arts machinery on which the credit was earned; (ii) the total
31 State Use Tax or Service Use Tax which would have been due on
32 those items; (iii) the percentage used to calculate the
33 amount of credit earned; (iv) the amount of credit earned;
34 and (v) such other information as the Department may
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1 reasonably require. A purchaser earning Manufacturer's
2 Purchase Credit shall maintain records which identify, as to
3 each purchase of manufacturing or graphic arts machinery and
4 equipment on which the purchaser earned Manufacturer's
5 Purchase Credit, the vendor (including, if applicable, either
6 the vendor's registration number or Federal Employer
7 Identification Number), the purchase price, and the amount of
8 Manufacturer's Purchase Credit earned on each purchase.
9 A purchaser using Manufacturer's Purchase Credit shall
10 sign and file an annual Report of Manufacturer's Purchase
11 Credit Used for each calendar year no later than the last day
12 of the sixth month following the calendar year in which a
13 Manufacturer's Purchase Credit is used. A Report of
14 Manufacturer's Purchase Credit Used shall be filed on forms
15 as prescribed or approved by the Department and shall state,
16 for each month of the calendar year: (i) the total purchase
17 price of production related tangible personal property
18 purchased from Illinois suppliers; (ii) the total purchase
19 price of production related tangible personal property
20 purchased from out-of-state suppliers; (iii) the total amount
21 of credit used during such month; and (iv) such other
22 information as the Department may reasonably require. A
23 purchaser using Manufacturer's Purchase Credit shall maintain
24 records that identify, as to each purchase of production
25 related tangible personal property on which the purchaser
26 used Manufacturer's Purchase Credit, the vendor (including,
27 if applicable, either the vendor's registration number or
28 Federal Employer Identification Number), the purchase price,
29 and the amount of Manufacturer's Purchase Credit used on each
30 purchase.
31 No annual report shall be filed before May 1, 1996. A
32 purchaser that fails to file an annual Report of
33 Manufacturer's Purchase Credit Earned or an annual Report of
34 Manufacturer's Purchase Credit Used by the last day of the
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1 sixth month following the end of the calendar year shall
2 forfeit all Manufacturer's Purchase Credit for that calendar
3 year unless it establishes that its failure to file was due
4 to reasonable cause. Manufacturer's Purchase Credit reports
5 may be amended to report and claim credit on qualifying
6 purchases not previously reported at any time before the
7 credit would have expired, unless both the Department and the
8 purchaser have agreed to an extension of the statute of
9 limitations for the issuance of a notice of tax liability as
10 provided in Section 4 of the Retailers' Occupation Tax Act.
11 If the time for assessment or refund has been extended, then
12 amended reports for a calendar year may be filed at any time
13 prior to the date to which the statute of limitations for the
14 calendar year or portion thereof has been extended. No
15 Manufacturer's Purchase Credit report filed with the
16 Department for periods prior to January 1, 1995 shall be
17 approved. Manufacturer's Purchase Credit claimed on an
18 amended report may be used to satisfy tax liability under the
19 Use Tax Act or the Service Use Tax Act (i) on qualifying
20 purchases of production related tangible personal property
21 made after the date the amended report is filed or (ii)
22 assessed by the Department on qualifying purchases of
23 production related tangible personal property made in the
24 case of manufacturers on or after January 1, 1995, or in the
25 case of graphic arts producers on or after July 1, 1996.
26 If the purchaser is not the manufacturer or a graphic
27 arts producer, but rents or leases the use of the property to
28 a manufacturer or a graphic arts producer, the purchaser may
29 earn, report, and use Manufacturer's Purchase Credit in the
30 same manner as a manufacturer or graphic arts producer.
31 A purchaser shall not be entitled to any Manufacturer's
32 Purchase Credit for a purchase that is required to be
33 reported and is not timely reported as provided in this
34 Section. A purchaser remains liable for (i) any tax that was
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1 satisfied by use of a Manufacturer's Purchase Credit, as of
2 the date of purchase, if that use is not timely reported as
3 required in this Section and (ii) for any applicable
4 penalties and interest for failing to pay the tax when due.
5 This exemption applies only to tax years ending on or before
6 December 31, 2003 and does not apply thereafter.
7 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
8 89-531, eff. 7-19-96; 90-166, eff. 7-23-97.)
9 (35 ILCS 110/12) (from Ch. 120, par. 439.42)
10 Sec. 12. Applicability of Retailers' Occupation Tax Act
11 and Uniform Penalty and Interest Act. All of the provisions
12 of Sections 1d, 1e, 1f, 1i, 1j, 1j.1, 1k, 1m, 1n, 2a, 2b, 2c,
13 3 (except as to the disposition by the Department of the
14 money collected under this Act), 4 (except that the time
15 limitation provisions shall run from the date when gross
16 receipts are received), 5 (except that the time limitation
17 provisions on the issuance of notices of tax liability shall
18 run from the date when the tax is due rather than from the
19 date when gross receipts are received and except that in the
20 case of a failure to file a return required by this Act, no
21 notice of tax liability shall be issued on and after July 1
22 and January 1 covering tax due with that return during any
23 month or period more than 6 years before that July 1 or
24 January 1, respectively), 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5j, 5k,
25 5l, 7, 8, 9, 10, 11 and 12 of the Retailers' Occupation Tax
26 Act which are not inconsistent with this Act, and Section 3-7
27 of the Uniform Penalty and Interest Act, shall apply, as far
28 as practicable, to the subject matter of this Act to the same
29 extent as if such provisions were included herein.
30 The exemptions provided in Sections 1d, 1j, and 5k of the
31 Retailers' Occupation Tax Act apply only to tax years ending
32 on or before December 31, 2003 and do not apply thereafter.
33 (Source: P.A. 90-42, eff. 1-1-98.)
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1 Section 20. The Service Occupation Tax Act is amended by
2 changing Sections 2, 2a, 3-5, and 12 as follows:
3 (35 ILCS 115/2) (from Ch. 120, par. 439.102)
4 Sec. 2. "Transfer" means any transfer of the title to
5 property or of the ownership of property whether or not the
6 transferor retains title as security for the payment of
7 amounts due him from the transferee.
8 "Cost Price" means the consideration paid by the
9 serviceman for a purchase valued in money, whether paid in
10 money or otherwise, including cash, credits and services, and
11 shall be determined without any deduction on account of the
12 supplier's cost of the property sold or on account of any
13 other expense incurred by the supplier. When a serviceman
14 contracts out part or all of the services required in his
15 sale of service, it shall be presumed that the cost price to
16 the serviceman of the property transferred to him by his or
17 her subcontractor is equal to 50% of the subcontractor's
18 charges to the serviceman in the absence of proof of the
19 consideration paid by the subcontractor for the purchase of
20 such property.
21 "Department" means the Department of Revenue.
22 "Person" means any natural individual, firm, partnership,
23 association, joint stock company, joint venture, public or
24 private corporation, limited liability company, and any
25 receiver, executor, trustee, guardian or other representative
26 appointed by order of any court.
27 "Sale of Service" means any transaction except:
28 (a) A retail sale of tangible personal property taxable
29 under the Retailers' Occupation Tax Act or under the Use Tax
30 Act.
31 (b) A sale of tangible personal property for the purpose
32 of resale made in compliance with Section 2c of the
33 Retailers' Occupation Tax Act.
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1 (c) Except as hereinafter provided, a sale or transfer
2 of tangible personal property as an incident to the rendering
3 of service for or by any governmental body or for or by any
4 corporation, society, association, foundation or institution
5 organized and operated exclusively for charitable, religious
6 or educational purposes or any not-for-profit corporation,
7 society, association, foundation, institution or organization
8 which has no compensated officers or employees and which is
9 organized and operated primarily for the recreation of
10 persons 55 years of age or older. A limited liability company
11 may qualify for the exemption under this paragraph only if
12 the limited liability company is organized and operated
13 exclusively for educational purposes.
14 (d) A sale or transfer of tangible personal property as
15 an incident to the rendering of service for interstate
16 carriers for hire for use as rolling stock moving in
17 interstate commerce or lessors under leases of one year or
18 longer, executed or in effect at the time of purchase, to
19 interstate carriers for hire for use as rolling stock moving
20 in interstate commerce, and equipment operated by a
21 telecommunications provider, licensed as a common carrier by
22 the Federal Communications Commission, which is permanently
23 installed in or affixed to aircraft moving in interstate
24 commerce. This exemption applies only to tax years ending on
25 or before December 31, 2003 and does not apply thereafter.
26 (d-1) A sale or transfer of tangible personal property
27 as an incident to the rendering of service for owners,
28 lessors or shippers of tangible personal property which is
29 utilized by interstate carriers for hire for use as rolling
30 stock moving in interstate commerce, and equipment operated
31 by a telecommunications provider, licensed as a common
32 carrier by the Federal Communications Commission, which is
33 permanently installed in or affixed to aircraft moving in
34 interstate commerce. This exemption applies only to tax years
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1 ending on or before December 31, 2003 and does not apply
2 thereafter.
3 (d-2) The repairing, reconditioning or remodeling, for a
4 common carrier by rail, of tangible personal property which
5 belongs to such carrier for hire, and as to which such
6 carrier receives the physical possession of the repaired,
7 reconditioned or remodeled item of tangible personal property
8 in Illinois, and which such carrier transports, or shares
9 with another common carrier in the transportation of such
10 property, out of Illinois on a standard uniform bill of
11 lading showing the person who repaired, reconditioned or
12 remodeled the property as the shipper or consignor of such
13 property to a destination outside Illinois, for use outside
14 Illinois.
15 (d-3) A sale or transfer of tangible personal property
16 which is produced by the seller thereof on special order in
17 such a way as to have made the applicable tax the Service
18 Occupation Tax or the Service Use Tax, rather than the
19 Retailers' Occupation Tax or the Use Tax, for an interstate
20 carrier by rail which receives the physical possession of
21 such property in Illinois, and which transports such
22 property, or shares with another common carrier in the
23 transportation of such property, out of Illinois on a
24 standard uniform bill of lading showing the seller of the
25 property as the shipper or consignor of such property to a
26 destination outside Illinois, for use outside Illinois.
27 (d-4) Until January 1, 1997, a sale, by a registered
28 serviceman paying tax under this Act to the Department, of
29 special order printed materials delivered outside Illinois
30 and which are not returned to this State, if delivery is made
31 by the seller or agent of the seller, including an agent who
32 causes the product to be delivered outside Illinois by a
33 common carrier or the U.S. postal service.
34 (e) A sale or transfer of machinery and equipment used
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1 primarily in the process of the manufacturing or assembling,
2 either in an existing, an expanded or a new manufacturing
3 facility, of tangible personal property for wholesale or
4 retail sale or lease, whether such sale or lease is made
5 directly by the manufacturer or by some other person, whether
6 the materials used in the process are owned by the
7 manufacturer or some other person, or whether such sale or
8 lease is made apart from or as an incident to the seller's
9 engaging in a service occupation and the applicable tax is a
10 Service Occupation Tax or Service Use Tax, rather than
11 Retailers' Occupation Tax or Use Tax. This exemption applies
12 only to tax years ending on or before December 31, 2003 and
13 does not apply thereafter.
14 (f) The sale or transfer of distillation machinery and
15 equipment, sold as a unit or kit and assembled or installed
16 by the retailer, which machinery and equipment is certified
17 by the user to be used only for the production of ethyl
18 alcohol that will be used for consumption as motor fuel or as
19 a component of motor fuel for the personal use of such user
20 and not subject to sale or resale. This exemption applies
21 only to tax years ending on or before December 31, 2003 and
22 does not apply thereafter.
23 (g) At the election of any serviceman not required to be
24 otherwise registered as a retailer under Section 2a of the
25 Retailers' Occupation Tax Act, made for each fiscal year
26 sales of service in which the aggregate annual cost price of
27 tangible personal property transferred as an incident to the
28 sales of service is less than 35% (75% in the case of
29 servicemen transferring prescription drugs or servicemen
30 engaged in graphic arts production) of the aggregate annual
31 total gross receipts from all sales of service. The purchase
32 of such tangible personal property by the serviceman shall be
33 subject to tax under the Retailers' Occupation Tax Act and
34 the Use Tax Act. However, if a primary serviceman who has
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1 made the election described in this paragraph subcontracts
2 service work to a secondary serviceman who has also made the
3 election described in this paragraph, the primary serviceman
4 does not incur a Use Tax liability if the secondary
5 serviceman (i) has paid or will pay Use Tax on his or her
6 cost price of any tangible personal property transferred to
7 the primary serviceman and (ii) certifies that fact in
8 writing to the primary serviceman.
9 Tangible personal property transferred incident to the
10 completion of a maintenance agreement is exempt from the tax
11 imposed pursuant to this Act.
12 Exemption (e) also includes machinery and equipment used
13 in the general maintenance or repair of such exempt machinery
14 and equipment or for in-house manufacture of exempt machinery
15 and equipment. For the purposes of exemption (e), each of
16 these terms shall have the following meanings: (1)
17 "manufacturing process" shall mean the production of any
18 article of tangible personal property, whether such article
19 is a finished product or an article for use in the process of
20 manufacturing or assembling a different article of tangible
21 personal property, by procedures commonly regarded as
22 manufacturing, processing, fabricating, or refining which
23 changes some existing material or materials into a material
24 with a different form, use or name. In relation to a
25 recognized integrated business composed of a series of
26 operations which collectively constitute manufacturing, or
27 individually constitute manufacturing operations, the
28 manufacturing process shall be deemed to commence with the
29 first operation or stage of production in the series, and
30 shall not be deemed to end until the completion of the final
31 product in the last operation or stage of production in the
32 series; and further for purposes of exemption (e),
33 photoprocessing is deemed to be a manufacturing process of
34 tangible personal property for wholesale or retail sale; (2)
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1 "assembling process" shall mean the production of any article
2 of tangible personal property, whether such article is a
3 finished product or an article for use in the process of
4 manufacturing or assembling a different article of tangible
5 personal property, by the combination of existing materials
6 in a manner commonly regarded as assembling which results in
7 a material of a different form, use or name; (3) "machinery"
8 shall mean major mechanical machines or major components of
9 such machines contributing to a manufacturing or assembling
10 process; and (4) "equipment" shall include any independent
11 device or tool separate from any machinery but essential to
12 an integrated manufacturing or assembly process; including
13 computers used primarily in operating exempt machinery and
14 equipment in a computer assisted design, computer assisted
15 manufacturing (CAD/CAM) system; or any subunit or assembly
16 comprising a component of any machinery or auxiliary, adjunct
17 or attachment parts of machinery, such as tools, dies, jigs,
18 fixtures, patterns and molds; or any parts which require
19 periodic replacement in the course of normal operation; but
20 shall not include hand tools. The purchaser of such machinery
21 and equipment who has an active resale registration number
22 shall furnish such number to the seller at the time of
23 purchase. The purchaser of such machinery and equipment and
24 tools without an active resale registration number shall
25 furnish to the seller a certificate of exemption for each
26 transaction stating facts establishing the exemption for that
27 transaction, which certificate shall be available to the
28 Department for inspection or audit.
29 The rolling stock exemption applies to rolling stock used
30 by an interstate carrier for hire, even just between points
31 in Illinois, if such rolling stock transports, for hire,
32 persons whose journeys or property whose shipments originate
33 or terminate outside Illinois.
34 Any informal rulings, opinions or letters issued by the
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1 Department in response to an inquiry or request for any
2 opinion from any person regarding the coverage and
3 applicability of exemption (e) to specific devices shall be
4 published, maintained as a public record, and made available
5 for public inspection and copying. If the informal ruling,
6 opinion or letter contains trade secrets or other
7 confidential information, where possible the Department shall
8 delete such information prior to publication. Whenever such
9 informal rulings, opinions, or letters contain any policy of
10 general applicability, the Department shall formulate and
11 adopt such policy as a rule in accordance with the provisions
12 of the Illinois Administrative Procedure Act.
13 On and after July 1, 1987, no entity otherwise eligible
14 under exemption (c) of this Section shall make tax free
15 purchases unless it has an active exemption identification
16 number issued by the Department.
17 "Serviceman" means any person who is engaged in the
18 occupation of making sales of service.
19 "Sale at Retail" means "sale at retail" as defined in the
20 Retailers' Occupation Tax Act.
21 "Supplier" means any person who makes sales of tangible
22 personal property to servicemen for the purpose of resale as
23 an incident to a sale of service.
24 (Source: P.A. 88-480; 88-505; 88-526; 88-547; 88-670, eff.
25 12-2-94; 89-675, eff. 8-14-96.)
26 (35 ILCS 115/2a) (from Ch. 120, par. 439.102a)
27 Sec. 2a. "Pollution control facilities" means any system,
28 method, construction, device or appliance appurtenant thereto
29 transferred by a serviceman for the primary purpose of
30 eliminating, preventing, or reducing air and water pollution
31 as the term "air pollution" or "water pollution" is defined
32 in the "Environmental Protection Act", enacted by the 76th
33 General Assembly, or for the primary purpose of treating,
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1 pretreating, modifying or disposing of any potential solid,
2 liquid or gaseous pollutant which if released without such
3 treatment, pretreatment, modification or disposal might be
4 harmful, detrimental or offensive to human, plant or animal
5 life, or to property.
6 The purchase, employment and transfer of such tangible
7 personal property as pollution control facilities shall not
8 be deemed to be a purchase, use or sale of service or of
9 tangible personal property, but shall be deemed to be
10 intangible personal property.
11 This exemption applies only to tax years ending on or
12 before December 31, 2003 and does not apply thereafter.
13 (Source: P.A. 76-2449.)
14 (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
15 Sec. 3-5. Exemptions. The following tangible personal
16 property is exempt from the tax imposed by this Act:
17 (1) Personal property sold by a corporation, society,
18 association, foundation, institution, or organization, other
19 than a limited liability company, that is organized and
20 operated as a not-for-profit service enterprise for the
21 benefit of persons 65 years of age or older if the personal
22 property was not purchased by the enterprise for the purpose
23 of resale by the enterprise.
24 (2) Personal property purchased by a not-for-profit
25 Illinois county fair association for use in conducting,
26 operating, or promoting the county fair.
27 (3) Personal property purchased by any not-for-profit
28 music or dramatic arts organization that establishes, by
29 proof required by the Department by rule, that it has
30 received an exemption under Section 501(c)(3) of the
31 Internal Revenue Code and that is organized and operated for
32 the presentation of live public performances of musical or
33 theatrical works on a regular basis.
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1 (4) Legal tender, currency, medallions, or gold or
2 silver coinage issued by the State of Illinois, the
3 government of the United States of America, or the government
4 of any foreign country, and bullion.
5 (5) Graphic arts machinery and equipment, including
6 repair and replacement parts, both new and used, and
7 including that manufactured on special order or purchased for
8 lease, certified by the purchaser to be used primarily for
9 graphic arts production. This exemption applies only to tax
10 years ending on or before December 31, 2003 and does not
11 apply thereafter.
12 (6) Personal property sold by a teacher-sponsored
13 student organization affiliated with an elementary or
14 secondary school located in Illinois.
15 (7) Farm machinery and equipment, both new and used,
16 including that manufactured on special order, certified by
17 the purchaser to be used primarily for production agriculture
18 or State or federal agricultural programs, including
19 individual replacement parts for the machinery and equipment,
20 and including machinery and equipment purchased for lease,
21 but excluding motor vehicles required to be registered under
22 the Illinois Vehicle Code. Horticultural polyhouses or hoop
23 houses used for propagating, growing, or overwintering plants
24 shall be considered farm machinery and equipment under this
25 paragraph. This exemption applies only to tax years ending on
26 or before December 31, 2003 and does not apply thereafter.
27 (8) Fuel and petroleum products sold to or used by an
28 air common carrier, certified by the carrier to be used for
29 consumption, shipment, or storage in the conduct of its
30 business as an air common carrier, for a flight destined for
31 or returning from a location or locations outside the United
32 States without regard to previous or subsequent domestic
33 stopovers. This exemption applies only to tax years ending on
34 or before December 31, 2003 and does not apply thereafter.
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1 (9) Proceeds of mandatory service charges separately
2 stated on customers' bills for the purchase and consumption
3 of food and beverages, to the extent that the proceeds of the
4 service charge are in fact turned over as tips or as a
5 substitute for tips to the employees who participate directly
6 in preparing, serving, hosting or cleaning up the food or
7 beverage function with respect to which the service charge is
8 imposed.
9 (10) Oil field exploration, drilling, and production
10 equipment, including (i) rigs and parts of rigs, rotary rigs,
11 cable tool rigs, and workover rigs, (ii) pipe and tubular
12 goods, including casing and drill strings, (iii) pumps and
13 pump-jack units, (iv) storage tanks and flow lines, (v) any
14 individual replacement part for oil field exploration,
15 drilling, and production equipment, and (vi) machinery and
16 equipment purchased for lease; but excluding motor vehicles
17 required to be registered under the Illinois Vehicle Code.
18 This exemption applies only to tax years ending on or before
19 December 31, 2003 and does not apply thereafter.
20 (11) Photoprocessing machinery and equipment, including
21 repair and replacement parts, both new and used, including
22 that manufactured on special order, certified by the
23 purchaser to be used primarily for photoprocessing, and
24 including photoprocessing machinery and equipment purchased
25 for lease.
26 (12) Coal exploration, mining, offhighway hauling,
27 processing, maintenance, and reclamation equipment, including
28 replacement parts and equipment, and including equipment
29 purchased for lease, but excluding motor vehicles required to
30 be registered under the Illinois Vehicle Code. This exemption
31 applies only to tax years ending on or before December 31,
32 2003 and does not apply thereafter.
33 (13) Food for human consumption that is to be consumed
34 off the premises where it is sold (other than alcoholic
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1 beverages, soft drinks and food that has been prepared for
2 immediate consumption) and prescription and non-prescription
3 medicines, drugs, medical appliances, and insulin, urine
4 testing materials, syringes, and needles used by diabetics,
5 for human use, when purchased for use by a person receiving
6 medical assistance under Article 5 of the Illinois Public Aid
7 Code who resides in a licensed long-term care facility, as
8 defined in the Nursing Home Care Act.
9 (14) Semen used for artificial insemination of livestock
10 for direct agricultural production.
11 (15) Horses, or interests in horses, registered with and
12 meeting the requirements of any of the Arabian Horse Club
13 Registry of America, Appaloosa Horse Club, American Quarter
14 Horse Association, United States Trotting Association, or
15 Jockey Club, as appropriate, used for purposes of breeding or
16 racing for prizes.
17 (16) Computers and communications equipment utilized for
18 any hospital purpose and equipment used in the diagnosis,
19 analysis, or treatment of hospital patients sold to a lessor
20 who leases the equipment, under a lease of one year or longer
21 executed or in effect at the time of the purchase, to a
22 hospital that has been issued an active tax exemption
23 identification number by the Department under Section 1g of
24 the Retailers' Occupation Tax Act.
25 (17) Personal property sold to a lessor who leases the
26 property, under a lease of one year or longer executed or in
27 effect at the time of the purchase, to a governmental body
28 that has been issued an active tax exemption identification
29 number by the Department under Section 1g of the Retailers'
30 Occupation Tax Act.
31 (18) Beginning with taxable years ending on or after
32 December 31, 1995 and ending with taxable years ending on or
33 before December 31, 2004, personal property that is donated
34 for disaster relief to be used in a State or federally
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1 declared disaster area in Illinois or bordering Illinois by a
2 manufacturer or retailer that is registered in this State to
3 a corporation, society, association, foundation, or
4 institution that has been issued a sales tax exemption
5 identification number by the Department that assists victims
6 of the disaster who reside within the declared disaster area.
7 (19) Beginning with taxable years ending on or after
8 December 31, 1995 and ending with taxable years ending on or
9 before December 31, 2004, personal property that is used in
10 the performance of infrastructure repairs in this State,
11 including but not limited to municipal roads and streets,
12 access roads, bridges, sidewalks, waste disposal systems,
13 water and sewer line extensions, water distribution and
14 purification facilities, storm water drainage and retention
15 facilities, and sewage treatment facilities, resulting from a
16 State or federally declared disaster in Illinois or bordering
17 Illinois when such repairs are initiated on facilities
18 located in the declared disaster area within 6 months after
19 the disaster.
20 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
21 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
22 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
23 eff. 12-12-97.)
24 (35 ILCS 115/12) (from Ch. 120, par. 439.112)
25 Sec. 12. All of the provisions of Sections 1d, 1e, 1f,
26 1i, 1j, 1j.1, 1k, 1m, 1n, 2a, 2b, 2c, 3 (except as to the
27 disposition by the Department of the tax collected under this
28 Act), 4 (except that the time limitation provisions shall run
29 from the date when the tax is due rather than from the date
30 when gross receipts are received), 5 (except that the time
31 limitation provisions on the issuance of notices of tax
32 liability shall run from the date when the tax is due rather
33 than from the date when gross receipts are received), 5a, 5b,
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1 5c, 5d, 5e, 5f, 5g, 5j, 5k, 5l, 7, 8, 9, 10, 11 and 12 of the
2 "Retailers' Occupation Tax Act" which are not inconsistent
3 with this Act, and Section 3-7 of the Uniform Penalty and
4 Interest Act shall apply, as far as practicable, to the
5 subject matter of this Act to the same extent as if such
6 provisions were included herein. The exemptions provided in
7 Sections 1d, 1j, and 5k of the Retailers' Occupation Tax Act
8 apply only to tax years ending on or before December 31, 2003
9 and do not apply thereafter.
10 (Source: P.A. 90-42, eff. 1-1-98.)
11 Section 25. The Retailers' Occupation Tax Act is amended
12 by changing Sections 1a, 1d, 1j, 2-5, and 5k as follows:
13 (35 ILCS 120/1a) (from Ch. 120, par. 440a)
14 Sec. 1a. "Pollution control facilities" means any system,
15 method, construction, device or appliance appurtenant thereto
16 sold or used or intended for the primary purpose of
17 eliminating, preventing, or reducing air and water pollution
18 as the term "air pollution" or "water pollution" is defined
19 in the "Environmental Protection Act", enacted by the 76th
20 General Assembly, or for the primary purpose of treating,
21 pretreating, modifying or disposing of any potential solid,
22 liquid or gaseous pollutant which if released without such
23 treatment, pretreatment, modification or disposal might be
24 harmful, detrimental or offensive to human, plant or animal
25 life, or to property.
26 The purchase, employment and transfer of such tangible
27 personal property as pollution control facilities is not a
28 purchase, use or sale of tangible personal property.
29 This exemption applies only to tax years ending on or
30 before December 31, 2003 and does not apply thereafter.
31 (Source: P.A. 76-2450.)
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1 (35 ILCS 120/1d) (from Ch. 120, par. 440d)
2 Sec. 1d. Subject to the provisions of Section 1f, all
3 tangible personal property to be used or consumed within an
4 enterprise zone established pursuant to the "Illinois
5 Enterprise Zone Act", as amended, or subject to the
6 provisions of Section 5.5 of the Illinois Enterprise Zone
7 Act, all tangible personal property to be used or consumed by
8 any High Impact Business, in the process of the manufacturing
9 or assembly of tangible personal property for wholesale or
10 retail sale or lease or in the process of graphic arts
11 production if used or consumed at a facility which is a
12 Department of Commerce and Community Affairs certified
13 business and located in a county of more than 4,000 persons
14 and less than 45,000 persons is exempt from the tax imposed
15 by this Act. This exemption includes repair and replacement
16 parts for machinery and equipment used primarily in the
17 process of manufacturing or assembling tangible personal
18 property or in the process of graphic arts production if used
19 or consumed at a facility which is a Department of Commerce
20 and Community Affairs certified business and located in a
21 county of more than 4,000 persons and less than 45,000
22 persons for wholesale or retail sale, or lease, and
23 equipment, manufacturing or graphic arts fuels, material and
24 supplies for the maintenance, repair or operation of such
25 manufacturing or assembling or graphic arts machinery or
26 equipment.
27 This exemption applies only to tax years ending on or
28 before December 31, 2003 and does not apply thereafter.
29 (Source: P.A. 85-1182; 86-1456.)
30 (35 ILCS 120/1j) (from Ch. 120, par. 440j)
31 Sec. 1j. Exemption - Machinery or Equipment used in the
32 operation of high impact service facilities. Subject to the
33 provisions of Section 1i of this Act, machinery or equipment
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1 used in the operation of a high impact service facility, as
2 defined in Section 1i of this Act, located within an
3 enterprise zone established pursuant to the Illinois
4 Enterprise Zone Act shall be exempt from the tax imposed by
5 this Act. Machinery and equipment, new and replacement, shall
6 include, but not be limited to: (i) motor driven heavy
7 equipment not considered rolling stock which is used for the
8 purpose of transporting parcels, machinery, or equipment, or
9 trailers used for the shipment of parcels, and equipment used
10 to maintain and provide in-house services, within the
11 confines of the facility, and (ii) automated machinery and
12 equipment used for the purposes of transporting parcels
13 within the facility, along with all components, parts,
14 pieces, and computer software or hardware contained in the
15 electronic control systems related thereto. The Department of
16 Revenue shall promulgate such rules and regulations as
17 necessary to further define machinery and equipment eligible
18 for exemption in a high impact service facility.
19 This exemption applies only to tax years ending on or
20 before December 31, 2003 and does not apply thereafter.
21 (Source: P.A. 85-1409.)
22 (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
23 Sec. 2-5. Exemptions. Gross receipts from proceeds from
24 the sale of the following tangible personal property are
25 exempt from the tax imposed by this Act:
26 (1) Farm chemicals. This exemption applies only to tax
27 years ending on or before December 31, 2003 and does not
28 apply thereafter.
29 (2) Farm machinery and equipment, both new and used,
30 including that manufactured on special order, certified by
31 the purchaser to be used primarily for production agriculture
32 or State or federal agricultural programs, including
33 individual replacement parts for the machinery and equipment,
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1 and including machinery and equipment purchased for lease,
2 but excluding motor vehicles required to be registered under
3 the Illinois Vehicle Code. Horticultural polyhouses or hoop
4 houses used for propagating, growing, or overwintering plants
5 shall be considered farm machinery and equipment under this
6 paragraph. This exemption applies only to tax years ending on
7 or before December 31, 2003 and does not apply thereafter.
8 (3) Distillation machinery and equipment, sold as a unit
9 or kit, assembled or installed by the retailer, certified by
10 the user to be used only for the production of ethyl alcohol
11 that will be used for consumption as motor fuel or as a
12 component of motor fuel for the personal use of the user, and
13 not subject to sale or resale. This exemption applies only to
14 tax years ending on or before December 31, 2003 and does not
15 apply thereafter.
16 (4) Graphic arts machinery and equipment, including
17 repair and replacement parts, both new and used, and
18 including that manufactured on special order or purchased for
19 lease, certified by the purchaser to be used primarily for
20 graphic arts production. This exemption applies only to tax
21 years ending on or before December 31, 2003 and does not
22 apply thereafter.
23 (5) A motor vehicle of the first division, a motor
24 vehicle of the second division that is a self-contained motor
25 vehicle designed or permanently converted to provide living
26 quarters for recreational, camping, or travel use, with
27 direct walk through access to the living quarters from the
28 driver's seat, or a motor vehicle of the second division that
29 is of the van configuration designed for the transportation
30 of not less than 7 nor more than 16 passengers, as defined in
31 Section 1-146 of the Illinois Vehicle Code, that is used for
32 automobile renting, as defined in the Automobile Renting
33 Occupation and Use Tax Act.
34 (6) Personal property sold by a teacher-sponsored
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1 student organization affiliated with an elementary or
2 secondary school located in Illinois.
3 (7) Proceeds of that portion of the selling price of a
4 passenger car the sale of which is subject to the Replacement
5 Vehicle Tax.
6 (8) Personal property sold to an Illinois county fair
7 association for use in conducting, operating, or promoting
8 the county fair.
9 (9) Personal property sold to a not-for-profit music or
10 dramatic arts organization that establishes, by proof
11 required by the Department by rule, that it has received an
12 exemption under Section 501(c) (3) of the Internal Revenue
13 Code and that is organized and operated for the presentation
14 of live public performances of musical or theatrical works on
15 a regular basis.
16 (10) Personal property sold by a corporation, society,
17 association, foundation, institution, or organization, other
18 than a limited liability company, that is organized and
19 operated as a not-for-profit service enterprise for the
20 benefit of persons 65 years of age or older if the personal
21 property was not purchased by the enterprise for the purpose
22 of resale by the enterprise.
23 (11) Personal property sold to a governmental body, to a
24 corporation, society, association, foundation, or institution
25 organized and operated exclusively for charitable, religious,
26 or educational purposes, or to a not-for-profit corporation,
27 society, association, foundation, institution, or
28 organization that has no compensated officers or employees
29 and that is organized and operated primarily for the
30 recreation of persons 55 years of age or older. A limited
31 liability company may qualify for the exemption under this
32 paragraph only if the limited liability company is organized
33 and operated exclusively for educational purposes. On and
34 after July 1, 1987, however, no entity otherwise eligible for
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1 this exemption shall make tax-free purchases unless it has an
2 active identification number issued by the Department.
3 (12) Personal property sold to interstate carriers for
4 hire for use as rolling stock moving in interstate commerce
5 or to lessors under leases of one year or longer executed or
6 in effect at the time of purchase by interstate carriers for
7 hire for use as rolling stock moving in interstate commerce
8 and equipment operated by a telecommunications provider,
9 licensed as a common carrier by the Federal Communications
10 Commission, which is permanently installed in or affixed to
11 aircraft moving in interstate commerce. This exemption
12 applies only to tax years ending on or before December 31,
13 2003 and does not apply thereafter.
14 (13) Proceeds from sales to owners, lessors, or shippers
15 of tangible personal property that is utilized by interstate
16 carriers for hire for use as rolling stock moving in
17 interstate commerce and equipment operated by a
18 telecommunications provider, licensed as a common carrier by
19 the Federal Communications Commission, which is permanently
20 installed in or affixed to aircraft moving in interstate
21 commerce. This exemption applies only to tax years ending on
22 or before December 31, 2003 and does not apply thereafter.
23 (14) Machinery and equipment that will be used by the
24 purchaser, or a lessee of the purchaser, primarily in the
25 process of manufacturing or assembling tangible personal
26 property for wholesale or retail sale or lease, whether the
27 sale or lease is made directly by the manufacturer or by some
28 other person, whether the materials used in the process are
29 owned by the manufacturer or some other person, or whether
30 the sale or lease is made apart from or as an incident to the
31 seller's engaging in the service occupation of producing
32 machines, tools, dies, jigs, patterns, gauges, or other
33 similar items of no commercial value on special order for a
34 particular purchaser. This exemption applies only to tax
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1 years ending on or before December 31, 2003 and does not
2 apply thereafter.
3 (15) Proceeds of mandatory service charges separately
4 stated on customers' bills for purchase and consumption of
5 food and beverages, to the extent that the proceeds of the
6 service charge are in fact turned over as tips or as a
7 substitute for tips to the employees who participate directly
8 in preparing, serving, hosting or cleaning up the food or
9 beverage function with respect to which the service charge is
10 imposed.
11 (16) Petroleum products sold to a purchaser if the
12 seller is prohibited by federal law from charging tax to the
13 purchaser.
14 (17) Tangible personal property sold to a common carrier
15 by rail or motor that receives the physical possession of the
16 property in Illinois and that transports the property, or
17 shares with another common carrier in the transportation of
18 the property, out of Illinois on a standard uniform bill of
19 lading showing the seller of the property as the shipper or
20 consignor of the property to a destination outside Illinois,
21 for use outside Illinois.
22 (18) Legal tender, currency, medallions, or gold or
23 silver coinage issued by the State of Illinois, the
24 government of the United States of America, or the government
25 of any foreign country, and bullion.
26 (19) Oil field exploration, drilling, and production
27 equipment, including (i) rigs and parts of rigs, rotary rigs,
28 cable tool rigs, and workover rigs, (ii) pipe and tubular
29 goods, including casing and drill strings, (iii) pumps and
30 pump-jack units, (iv) storage tanks and flow lines, (v) any
31 individual replacement part for oil field exploration,
32 drilling, and production equipment, and (vi) machinery and
33 equipment purchased for lease; but excluding motor vehicles
34 required to be registered under the Illinois Vehicle Code.
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1 This exemption applies only to tax years ending on or before
2 December 31, 2003 and does not apply thereafter.
3 (20) Photoprocessing machinery and equipment, including
4 repair and replacement parts, both new and used, including
5 that manufactured on special order, certified by the
6 purchaser to be used primarily for photoprocessing, and
7 including photoprocessing machinery and equipment purchased
8 for lease.
9 (21) Coal exploration, mining, offhighway hauling,
10 processing, maintenance, and reclamation equipment, including
11 replacement parts and equipment, and including equipment
12 purchased for lease, but excluding motor vehicles required to
13 be registered under the Illinois Vehicle Code. This exemption
14 applies only to tax years ending on or before December 31,
15 2003 and does not apply thereafter.
16 (22) Fuel and petroleum products sold to or used by an
17 air carrier, certified by the carrier to be used for
18 consumption, shipment, or storage in the conduct of its
19 business as an air common carrier, for a flight destined for
20 or returning from a location or locations outside the United
21 States without regard to previous or subsequent domestic
22 stopovers. This exemption applies only to tax years ending on
23 or before December 31, 2003 and does not apply thereafter.
24 (23) A transaction in which the purchase order is
25 received by a florist who is located outside Illinois, but
26 who has a florist located in Illinois deliver the property to
27 the purchaser or the purchaser's donee in Illinois.
28 (24) Fuel consumed or used in the operation of ships,
29 barges, or vessels that are used primarily in or for the
30 transportation of property or the conveyance of persons for
31 hire on rivers bordering on this State if the fuel is
32 delivered by the seller to the purchaser's barge, ship, or
33 vessel while it is afloat upon that bordering river.
34 (25) A motor vehicle sold in this State to a nonresident
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1 even though the motor vehicle is delivered to the nonresident
2 in this State, if the motor vehicle is not to be titled in
3 this State, and if a driveaway decal permit is issued to the
4 motor vehicle as provided in Section 3-603 of the Illinois
5 Vehicle Code or if the nonresident purchaser has vehicle
6 registration plates to transfer to the motor vehicle upon
7 returning to his or her home state. The issuance of the
8 driveaway decal permit or having the out-of-state
9 registration plates to be transferred is prima facie evidence
10 that the motor vehicle will not be titled in this State.
11 (26) Semen used for artificial insemination of livestock
12 for direct agricultural production.
13 (27) Horses, or interests in horses, registered with and
14 meeting the requirements of any of the Arabian Horse Club
15 Registry of America, Appaloosa Horse Club, American Quarter
16 Horse Association, United States Trotting Association, or
17 Jockey Club, as appropriate, used for purposes of breeding or
18 racing for prizes.
19 (28) Computers and communications equipment utilized for
20 any hospital purpose and equipment used in the diagnosis,
21 analysis, or treatment of hospital patients sold to a lessor
22 who leases the equipment, under a lease of one year or longer
23 executed or in effect at the time of the purchase, to a
24 hospital that has been issued an active tax exemption
25 identification number by the Department under Section 1g of
26 this Act.
27 (29) Personal property sold to a lessor who leases the
28 property, under a lease of one year or longer executed or in
29 effect at the time of the purchase, to a governmental body
30 that has been issued an active tax exemption identification
31 number by the Department under Section 1g of this Act.
32 (30) Beginning with taxable years ending on or after
33 December 31, 1995 and ending with taxable years ending on or
34 before December 31, 2004, personal property that is donated
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1 for disaster relief to be used in a State or federally
2 declared disaster area in Illinois or bordering Illinois by a
3 manufacturer or retailer that is registered in this State to
4 a corporation, society, association, foundation, or
5 institution that has been issued a sales tax exemption
6 identification number by the Department that assists victims
7 of the disaster who reside within the declared disaster area.
8 (31) Beginning with taxable years ending on or after
9 December 31, 1995 and ending with taxable years ending on or
10 before December 31, 2004, personal property that is used in
11 the performance of infrastructure repairs in this State,
12 including but not limited to municipal roads and streets,
13 access roads, bridges, sidewalks, waste disposal systems,
14 water and sewer line extensions, water distribution and
15 purification facilities, storm water drainage and retention
16 facilities, and sewage treatment facilities, resulting from a
17 State or federally declared disaster in Illinois or bordering
18 Illinois when such repairs are initiated on facilities
19 located in the declared disaster area within 6 months after
20 the disaster.
21 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
22 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
23 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-519,
24 eff. 6-1-98; 90-552, eff. 12-12-97.)
25 (35 ILCS 120/5k) (from Ch. 120, par. 444k)
26 Sec. 5k. Each retailer whose place a business is within
27 a county or municipality which has established an Enterprise
28 Zone pursuant to the "Illinois Enterprise Zone Act" and who
29 makes a sale of building materials to be incorporated into
30 real estate in such enterprise zone by remodeling,
31 rehabilitation or new construction, may deduct receipts from
32 such sales when calculating the tax imposed by this Act. The
33 deduction allowed by this Section for the sale of building
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1 materials may be limited, to the extent authorized by
2 ordinance, adopted after the effective date of this
3 amendatory Act of 1992, by the municipality or county that
4 created the enterprise zone. The corporate authorities of
5 any municipality or county that adopts an ordinance or
6 resolution imposing or changing any limitation on the
7 enterprise zone exemption for building materials shall
8 transmit to the Department of Revenue on or not later than 5
9 days after publication, as provided by law, a certified copy
10 of the ordinance or resolution imposing or changing those
11 limitations, whereupon the Department of Revenue shall
12 proceed to administer and enforce those limitations effective
13 the first day of the second calendar month next following
14 date of receipt by the Department of the certified ordinance
15 or resolution.
16 This deduction applies only to tax years ending on or
17 before December 31, 2003 and does not apply thereafter.
18 (Source: P.A. 87-848.)
19 Section 30. The Motor Fuel Tax Law is amended by
20 changing Section 2a as follows:
21 (35 ILCS 505/2a) (from Ch. 120, par. 418a)
22 Sec. 2a. Except as hereinafter provided, on and after
23 January 1, 1990 and before January 1, 2013, a tax of
24 three-tenths of a cent per gallon is imposed upon the
25 privilege of being a receiver in this State of fuel for sale
26 or use.
27 The tax shall be paid by the receiver in this State who
28 first sells or uses fuel. In the case of a sale, the tax
29 shall be stated as a separate item on the invoice.
30 For the purpose of the tax imposed by this Section, being
31 a receiver of "motor fuel" as defined by Section 1.1 of this
32 Act, and aviation fuels, home heating oil and kerosene, but
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1 excluding liquified petroleum gases, is subject to tax
2 without regard to whether the fuel is intended to be used for
3 operation of motor vehicles on the public highways and
4 waters. However, no such tax shall be imposed upon the
5 importation or receipt of aviation fuels and kerosene at
6 airports with over 300,000 operations per year, for years
7 prior to 1991, and over 170,000 operations per year beginning
8 in 1991, located in a city of more than 1,000,000 inhabitants
9 for sale to or use by holders of certificates of public
10 convenience and necessity or foreign air carrier permits,
11 issued by the United States Department of Transportation, and
12 their air carrier affiliates, or upon the importation or
13 receipt of aviation fuels and kerosene at facilities owned or
14 leased by those certificate or permit holders and used in
15 their activities at an airport described above. In addition,
16 no such tax shall be imposed upon the importation or receipt
17 of diesel fuel by a rail carrier, registered pursuant to
18 Section 18c-7201 of the Illinois Vehicle Code and used
19 directly in railroad operations. In addition, no such tax
20 shall be imposed when the sale is made with delivery to a
21 purchaser outside this State or when the sale is made to a
22 person holding a valid license as a receiver. In addition,
23 no tax shall be imposed upon diesel fuel consumed or used in
24 the operation of ships, barges, or vessels, that are used
25 primarily in or for the transportation of property in
26 interstate commerce for hire on rivers bordering on this
27 State, if the diesel fuel is delivered by a licensed receiver
28 to the purchaser's barge, ship, or vessel while it is afloat
29 upon that bordering river. A specific notation thereof shall
30 be made on the invoices or sales slips covering each sale.
31 This exemption applies only to tax years ending on or before
32 December 31, 2003 and does not apply thereafter.
33 (Source: P.A. 88-496; 89-428, eff. 1-1-96; 89-457, eff.
34 5-22-96; 89-468, eff. 1-1-97.)
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1 Section 35. The Gas Revenue Tax Act is amended by
2 changing Section 1 as follows:
3 (35 ILCS 615/1) (from Ch. 120, par. 467.16)
4 Sec. 1. For the purposes of this Act: "Gross receipts"
5 means the consideration received for gas distributed,
6 supplied, furnished or sold to persons for use or consumption
7 and not for resale, and for all services (including the
8 transportation or storage of gas for an end-user) rendered in
9 connection therewith, and shall include cash, services and
10 property of every kind or nature, and shall be determined
11 without any deduction on account of the cost of the service,
12 product or commodity supplied, the cost of materials used,
13 labor or service costs, or any other expense whatsoever.
14 However, "gross receipts" shall not include receipts from:
15 (i) any minimum or other charge for gas or gas
16 service where the customer has taken no therms of gas;
17 (ii) any charge for a dishonored check;
18 (iii) any finance or credit charge, penalty or
19 charge for delayed payment, or discount for prompt
20 payment;
21 (iv) any charge for reconnection of service or for
22 replacement or relocation of facilities;
23 (v) any advance or contribution in aid of
24 construction;
25 (vi) repair, inspection or servicing of equipment
26 located on customer premises;
27 (vii) leasing or rental of equipment, the leasing
28 or rental of which is not necessary to distributing,
29 furnishing, supplying, selling, transporting or storing
30 gas;
31 (viii) any sale to a customer if the taxpayer is
32 prohibited by federal or State constitution, treaty,
33 convention, statute or court decision from recovering the
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1 related tax liability from such customer;
2 (ix) any charges added to customers' bills pursuant
3 to the provisions of Section 9-221 or Section 9-222 of
4 the Public Utilities Act, as amended, or any charges
5 added to customers' bills by taxpayers who are not
6 subject to rate regulation by the Illinois Commerce
7 Commission for the purpose of recovering any of the tax
8 liabilities or other amounts specified in such provisions
9 of such Act; and
10 (x) any charge for gas or gas services to a
11 customer who acquired contractual rights for the direct
12 purchase of gas or gas services originating from an
13 out-of-state supplier or source on or before March 1,
14 1995, except for those charges solely related to the
15 local distribution of gas by a public utility. This
16 exemption includes any charge for gas or gas service,
17 except for those charges solely related to the local
18 distribution of gas by a public utility, to a customer
19 who maintained an account with a public utility (as
20 defined in Section 3-105 of the Public Utilities Act) for
21 the transportation of customer-owned gas on or before
22 March 1, 1995. The provisions of this amendatory Act of
23 1997 are intended to clarify, rather than change,
24 existing law as to the meaning and scope of this
25 exemption.
26 In case credit is extended, the amount thereof shall be
27 included only as and when payments are received.
28 "Gross receipts" shall not include consideration received
29 from business enterprises certified under Section 9-222.1 of
30 the Public Utilities Act, as amended, to the extent of such
31 exemption and during the period of time specified by the
32 Department of Commerce and Community Affairs. This exemption
33 applies only to tax years ending on or before December 31,
34 2003 and does not apply thereafter.
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1 "Department" means the Department of Revenue of the State
2 of Illinois.
3 "Director" means the Director of Revenue for the
4 Department of Revenue of the State of Illinois.
5 "Taxpayer" means a person engaged in the business of
6 distributing, supplying, furnishing or selling gas for use or
7 consumption and not for resale.
8 "Person" means any natural individual, firm, trust,
9 estate, partnership, association, joint stock company, joint
10 adventure, corporation, limited liability company, or a
11 receiver, trustee, guardian or other representative appointed
12 by order of any court, or any city, town, county or other
13 political subdivision of this State.
14 "Invested capital" means that amount equal to (i) the
15 average of the balances at the beginning and end of each
16 taxable period of the taxpayer's total stockholder's equity
17 and total long-term debt, less investments in and advances to
18 all corporations, as set forth on the balance sheets included
19 in the taxpayer's annual report to the Illinois Commerce
20 Commission for the taxable period; (ii) multiplied by a
21 fraction determined under Sections 301 and 304(a) of the
22 "Illinois Income Tax Act" and reported on the Illinois income
23 tax return for the taxable period ending in or with the
24 taxable period in question. However, notwithstanding the
25 income tax return reporting requirement stated above,
26 beginning July 1, 1979, no taxpayer's denominators used to
27 compute the sales, property or payroll factors under
28 subsection (a) of Section 304 of the Illinois Income Tax Act
29 shall include payroll, property or sales of any corporate
30 entity other than the taxpayer for the purposes of
31 determining an allocation for the invested capital tax. This
32 amendatory Act of 1982, Public Act 82-1024, is not intended
33 to and does not make any change in the meaning of any
34 provision of this Act, it having been the intent of the
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1 General Assembly in initially enacting the definition of
2 "invested capital" to provide for apportionment of the
3 invested capital of each company, based solely upon the
4 sales, property and payroll of that company.
5 "Taxable period" means each period which ends after the
6 effective date of this Act and which is covered by an annual
7 report filed by the taxpayer with the Illinois Commerce
8 Commission.
9 (Source: P.A. 89-417, eff. 1-1-96; 90-16, eff. 6-16-97.)
10 Section 40. The Public Utilities Revenue Act is amended
11 by changing Section 1 as follows:
12 (35 ILCS 620/1) (from Ch. 120, par. 468)
13 Sec. 1. For the purposes of this Law:
14 "Consumer Price Index" means the Consumer Price Index For
15 All Urban Consumers for all items published by the United
16 States Department of Labor; provided that if this index no
17 longer exists, the Department of Revenue shall prescribe the
18 use of a comparable, substitute index.
19 "Gross receipts" means the consideration received for
20 electricity distributed, supplied, furnished or sold to
21 persons for use or consumption and not for resale, and for
22 all services (including the transmission of electricity for
23 an end-user) rendered in connection therewith, and includes
24 cash, services and property of every kind or nature, and
25 shall be determined without any deduction on account of the
26 cost of the service, product or commodity supplied, the cost
27 of materials used, labor or service costs, or any other
28 expense whatsoever. However, "gross receipts" shall not
29 include receipts from:
30 (i) any minimum or other charge for electricity or
31 electric service where the customer has taken no
32 kilowatt-hours of electricity;
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1 (ii) any charge for a dishonored check;
2 (iii) any finance or credit charge, penalty or
3 charge for delayed payment, or discount for prompt
4 payment;
5 (iv) any charge for reconnection of service or for
6 replacement or relocation of facilities;
7 (v) any advance or contribution in aid of
8 construction;
9 (vi) repair, inspection or servicing of equipment
10 located on customer premises;
11 (vii) leasing or rental of equipment, the leasing
12 or rental of which is not necessary to distributing,
13 furnishing, supplying, selling or transporting
14 electricity;
15 (viii) any sale to a customer if the taxpayer is
16 prohibited by federal or State constitution, treaty,
17 convention, statute or court decision from recovering the
18 related tax liability from such customer; and
19 (ix) any charges added to customers' bills pursuant
20 to the provisions of Section 9-221 or Section 9-222 of
21 the Public Utilities Act, as amended, or any charges
22 added to customers' bills by taxpayers who are not
23 subject to rate regulation by the Illinois Commerce
24 Commission for the purpose of recovering any of the tax
25 liabilities or other amount specified in such provisions
26 of such Act. In case credit is extended, the amount
27 thereof shall be included only as and when payments are
28 received.
29 "Gross receipts" shall not include consideration received
30 from business enterprises certified under Section 9-222.1 of
31 the Public Utilities Act, as amended, to the extent of such
32 exemption and during the period of time specified by the
33 Department of Commerce and Community Affairs. This exemption
34 applies only to tax years ending on or before December 31,
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1 2003 and does not apply thereafter.
2 "Department" means the Department of Revenue of the State
3 of Illinois.
4 "Director" means the Director of Revenue for the
5 Department of Revenue of the State of Illinois.
6 "Distributing electricity" means delivering electric
7 energy to an end user over facilities owned, leased, or
8 controlled by the taxpayer.
9 "Taxpayer" for purposes of the tax on the distribution of
10 electricity imposed by this Act means an electric
11 cooperative, an electric utility, or an alternative retail
12 electric supplier (other than a person that is an alternative
13 retail electric supplier solely pursuant to subsection (e) of
14 Section 16-115 of the Public Utilities Act), as those terms
15 are defined in the Public Utilities Act, engaged in the
16 business of distributing electricity in this State for use or
17 consumption and not for resale.
18 "Taxpayer" for purposes of the Public Utilities Revenue
19 Tax means a person engaged in the business of distributing,
20 supplying, furnishing or selling electricity for use or
21 consumption and not for resale.
22 "Person" means any natural individual, firm, trust,
23 estate, partnership, association, joint stock company, joint
24 adventure, corporation, limited liability company, or a
25 receiver, trustee, guardian or other representative appointed
26 by order of any court, or any city, town, county or other
27 political subdivision of this State.
28 "Invested capital" in the case of an electric cooperative
29 subject to the tax imposed by Section 2a.1 means an amount
30 equal to the product determined by multiplying, (i) the
31 average of the balances at the beginning and end of the
32 taxable period of the taxpayer's total equity (including
33 memberships, patronage capital, operating margins,
34 non-operating margins, other margins and other equities), as
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1 set forth on the balance sheets included in the taxpayer's
2 annual report to the United States Department of Agriculture
3 Rural Utilities Services (established pursuant to the federal
4 Rural Electrification Act of 1936, as amended), by (ii) the
5 fraction determined under Sections 301 and 304(a) of the
6 Illinois Income Tax Act, as amended, for the taxable period.
7 "Taxable period" means each calendar year which ends
8 after the effective date of this Act. In the case of an
9 electric cooperative subject to the tax imposed by Section
10 2a.1, "taxable period" means each calendar year ending after
11 the effective date of this Act and covered by an annual
12 report filed by the taxpayer with the United States
13 Department of Agriculture Rural Utilities Services.
14 (Source: P.A. 90-561, eff. 1-1-98.)
15 Section 45. The Telecommunications Excise Tax Act is
16 amended by changing Section 2 as follows:
17 (35 ILCS 630/2) (from Ch. 120, par. 2003)
18 Sec. 2. As used in this Article, unless the context
19 clearly requires otherwise:
20 (a) "Gross charge" means the amount paid for the act or
21 privilege of originating or receiving telecommunications in
22 this State and for all services and equipment provided in
23 connection therewith by a retailer, valued in money whether
24 paid in money or otherwise, including cash, credits, services
25 and property of every kind or nature, and shall be determined
26 without any deduction on account of the cost of such
27 telecommunications, the cost of materials used, labor or
28 service costs or any other expense whatsoever. In case
29 credit is extended, the amount thereof shall be included only
30 as and when paid. "Gross charges" for private line service
31 shall include charges imposed at each channel point within
32 this State, charges for the channel mileage between each
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1 channel point within this State, and charges for that portion
2 of the interstate inter-office channel provided within
3 Illinois. However, "gross charges" shall not include:
4 (1) any amounts added to a purchaser's bill because
5 of a charge made pursuant to (i) the tax imposed by this
6 Article; (ii) charges added to customers' bills pursuant
7 to the provisions of Sections 9-221 or 9-222 of the
8 Public Utilities Act, as amended, or any similar charges
9 added to customers' bills by retailers who are not
10 subject to rate regulation by the Illinois Commerce
11 Commission for the purpose of recovering any of the tax
12 liabilities or other amounts specified in such provisions
13 of such Act; or (iii) the tax imposed by Section 4251 of
14 the Internal Revenue Code;
15 (2) charges for a sent collect telecommunication
16 received outside of the State;
17 (3) charges for leased time on equipment or charges
18 for the storage of data or information for subsequent
19 retrieval or the processing of data or information
20 intended to change its form or content. Such equipment
21 includes, but is not limited to, the use of calculators,
22 computers, data processing equipment, tabulating
23 equipment or accounting equipment and also includes the
24 usage of computers under a time-sharing agreement;
25 (4) charges for customer equipment, including such
26 equipment that is leased or rented by the customer from
27 any source, wherein such charges are disaggregated and
28 separately identified from other charges;
29 (5) charges to business enterprises certified under
30 Section 9-222.1 of the Public Utilities Act, as amended,
31 to the extent of such exemption and during the period of
32 time specified by the Department of Commerce and
33 Community Affairs;
34 (6) charges for telecommunications and all services
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1 and equipment provided in connection therewith between a
2 parent corporation and its wholly owned subsidiaries or
3 between wholly owned subsidiaries when the tax imposed
4 under this Article has already been paid to a retailer
5 and only to the extent that the charges between the
6 parent corporation and wholly owned subsidiaries or
7 between wholly owned subsidiaries represent expense
8 allocation between the corporations and not the
9 generation of profit for the corporation rendering such
10 service;
11 (7) bad debts. Bad debt means any portion of a debt
12 that is related to a sale at retail for which gross
13 charges are not otherwise deductible or excludable that
14 has become worthless or uncollectable, as determined
15 under applicable federal income tax standards. If the
16 portion of the debt deemed to be bad is subsequently
17 paid, the retailer shall report and pay the tax on that
18 portion during the reporting period in which the payment
19 is made;
20 (8) charges paid by inserting coins in
21 coin-operated telecommunication devices;
22 (9) amounts paid by telecommunications retailers
23 under the Telecommunications Municipal Infrastructure
24 Maintenance Fee Act.
25 The exemption provided in paragraph (5) of this
26 subsection applies only to tax years ending on or before
27 December 31, 2003 and does not apply thereafter.
28 (b) "Amount paid" means the amount charged to the
29 taxpayer's service address in this State regardless of where
30 such amount is billed or paid.
31 (c) "Telecommunications", in addition to the meaning
32 ordinarily and popularly ascribed to it, includes, without
33 limitation, messages or information transmitted through use
34 of local, toll and wide area telephone service; private line
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1 services; channel services; telegraph services;
2 teletypewriter; computer exchange services; cellular mobile
3 telecommunications service; specialized mobile radio;
4 stationary two way radio; paging service; or any other form
5 of mobile and portable one-way or two-way communications; or
6 any other transmission of messages or information by
7 electronic or similar means, between or among points by wire,
8 cable, fiber-optics, laser, microwave, radio, satellite or
9 similar facilities. As used in this Act, "private line" means
10 a dedicated non-traffic sensitive service for a single
11 customer, that entitles the customer to exclusive or priority
12 use of a communications channel or group of channels, from
13 one or more specified locations to one or more other
14 specified locations. The definition of "telecommunications"
15 shall not include value added services in which computer
16 processing applications are used to act on the form, content,
17 code and protocol of the information for purposes other than
18 transmission. "Telecommunications" shall not include
19 purchases of telecommunications by a telecommunications
20 service provider for use as a component part of the service
21 provided by him to the ultimate retail consumer who
22 originates or terminates the taxable end-to-end
23 communications. Carrier access charges, right of access
24 charges, charges for use of inter-company facilities, and all
25 telecommunications resold in the subsequent provision of,
26 used as a component of, or integrated into end-to-end
27 telecommunications service shall be non-taxable as sales for
28 resale.
29 (d) "Interstate telecommunications" means all
30 telecommunications that either originate or terminate outside
31 this State.
32 (e) "Intrastate telecommunications" means all
33 telecommunications that originate and terminate within this
34 State.
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1 (f) "Department" means the Department of Revenue of the
2 State of Illinois.
3 (g) "Director" means the Director of Revenue for the
4 Department of Revenue of the State of Illinois.
5 (h) "Taxpayer" means a person who individually or
6 through his agents, employees or permittees engages in the
7 act or privilege of originating or receiving
8 telecommunications in this State and who incurs a tax
9 liability under this Article.
10 (i) "Person" means any natural individual, firm, trust,
11 estate, partnership, association, joint stock company, joint
12 venture, corporation, limited liability company, or a
13 receiver, trustee, guardian or other representative appointed
14 by order of any court, the Federal and State governments,
15 including State universities created by statute or any city,
16 town, county or other political subdivision of this State.
17 (j) "Purchase at retail" means the acquisition,
18 consumption or use of telecommunication through a sale at
19 retail.
20 (k) "Sale at retail" means the transmitting, supplying
21 or furnishing of telecommunications and all services and
22 equipment provided in connection therewith for a
23 consideration to persons other than the Federal and State
24 governments, and State universities created by statute and
25 other than between a parent corporation and its wholly owned
26 subsidiaries or between wholly owned subsidiaries for their
27 use or consumption and not for resale.
28 (l) "Retailer" means and includes every person engaged
29 in the business of making sales at retail as defined in this
30 Article. The Department may, in its discretion, upon
31 application, authorize the collection of the tax hereby
32 imposed by any retailer not maintaining a place of business
33 within this State, who, to the satisfaction of the
34 Department, furnishes adequate security to insure collection
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1 and payment of the tax. Such retailer shall be issued,
2 without charge, a permit to collect such tax. When so
3 authorized, it shall be the duty of such retailer to collect
4 the tax upon all of the gross charges for telecommunications
5 in this State in the same manner and subject to the same
6 requirements as a retailer maintaining a place of business
7 within this State. The permit may be revoked by the
8 Department at its discretion.
9 (m) "Retailer maintaining a place of business in this
10 State", or any like term, means and includes any retailer
11 having or maintaining within this State, directly or by a
12 subsidiary, an office, distribution facilities, transmission
13 facilities, sales office, warehouse or other place of
14 business, or any agent or other representative operating
15 within this State under the authority of the retailer or its
16 subsidiary, irrespective of whether such place of business or
17 agent or other representative is located here permanently or
18 temporarily, or whether such retailer or subsidiary is
19 licensed to do business in this State.
20 (n) "Service address" means the location of
21 telecommunications equipment from which the
22 telecommunications services are originated or at which
23 telecommunications services are received by a taxpayer. In
24 the event this may not be a defined location, as in the case
25 of mobile phones, paging systems, maritime systems,
26 air-to-ground systems and the like, service address shall
27 mean the location of a taxpayer's primary use of the
28 telecommunications equipment as defined by telephone number,
29 authorization code, or location in Illinois where bills are
30 sent.
31 (Source: P.A. 90-562, eff. 12-16-97.)
32 Section 50. The Public Utilities Act is amended by
33 changing Section 8-403.1 as follows:
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1 (220 ILCS 5/8-403.1) (from Ch. 111 2/3, par. 8-403.1)
2 Sec. 8-403.1. (a) It is hereby declared to be the policy
3 of this State to encourage the development of alternate
4 energy production facilities in order to conserve our energy
5 resources and to provide for their most efficient use.
6 (b) For the purpose of this Section and Section 9-215.1,
7 "qualified solid waste energy facility" means a facility
8 determined by the Illinois Commerce Commission to qualify as
9 such under the Local Solid Waste Disposal Act, to use methane
10 gas generated from landfills as its primary fuel, and to
11 possess characteristics that would enable it to qualify as a
12 cogeneration or small power production facility under federal
13 law.
14 (c) In furtherance of the policy declared in this
15 Section, the Illinois Commerce Commission shall require
16 electric utilities to enter into long-term contracts to
17 purchase electricity from qualified solid waste energy
18 facilities located in the electric utility's service area,
19 for a period beginning on the date that the facility begins
20 generating electricity and having a duration of not less than
21 10 years in the case of facilities fueled by
22 landfill-generated methane, or 20 years in the case of
23 facilities fueled by methane generated from a landfill owned
24 by a forest preserve district. The purchase rate contained
25 in such contracts shall be equal to the average amount per
26 kilowatt-hour paid from time to time by the unit or units of
27 local government in which the electricity generating
28 facilities are located, excluding amounts paid for street
29 lighting and pumping service.
30 (d) Whenever a public utility is required to purchase
31 electricity pursuant to subsection (c) above, it shall be
32 entitled to credits in respect of its obligations to pay
33 taxes under The Public Utilities Revenue Act equal to the
34 amounts, if any, by which payments for such electricity
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1 exceed (i) the then current rate at which the utility must
2 purchase the output of qualified facilities pursuant to the
3 federal Public Utility Regulatory Policies Act of 1978, less
4 (ii) any costs, expenses, losses, damages or other amounts
5 incurred by the utility, or for which it becomes liable,
6 arising out of its failure to obtain such electricity from
7 such other sources. The amount of any such credit shall, in
8 the first instance, be determined by the utility, which shall
9 make a monthly report of such credits to the Illinois
10 Commerce Commission and, on its monthly tax return, to the
11 Illinois Department of Revenue. Under no circumstances shall
12 a utility be required to purchase electricity from a
13 qualified solid waste energy facility at the rate prescribed
14 in subsection (c) of this Section if such purchase would
15 result in estimated tax credits that exceed, on a monthly
16 basis, the utility's estimated obligation to pay taxes under
17 the Public Utilities Revenue Act. The owner or operator shall
18 negotiate facility operating conditions with the purchasing
19 utility in accordance with that utility's posted standard
20 terms and conditions for small power producers. If the
21 Department of Revenue disputes the amount of any such credit,
22 such dispute shall be decided by the Illinois Commerce
23 Commission. Whenever a qualified solid waste energy facility
24 has paid or otherwise satisfied in full the capital costs or
25 indebtedness incurred in developing and implementing the
26 qualified facility, the qualified facility shall reimburse
27 the Public Utilities Fund in the State treasury for the
28 actual reduction in payments to that Fund caused by this
29 subsection (d) in a manner to be determined by the Illinois
30 Commerce Commission and based on the manner in which revenues
31 for that Fund were reduced.
32 These credits apply only to tax years ending on or before
33 December 31, 2003 and do not apply thereafter.
34 (e) The Illinois Commerce Commission shall not require
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1 an electric utility to purchase electricity from any
2 qualified solid waste energy facility which is owned or
3 operated by an entity that is primarily engaged in the
4 business of producing or selling electricity, gas, or useful
5 thermal energy from a source other than one or more qualified
6 solid waste energy facilities.
7 (f) This Section does not require an electric utility to
8 construct additional facilities unless those facilities are
9 paid for by the owner or operator of the affected qualified
10 solid waste energy facility.
11 (g) The Illinois Commerce Commission shall require that:
12 (1) electric utilities use the electricity purchased from a
13 qualified solid waste energy facility to displace electricity
14 generated from nuclear power or coal mined and purchased
15 outside the boundaries of the State of Illinois before
16 displacing electricity generated from coal mined and
17 purchased within the State of Illinois, to the extent
18 possible, and (2) electric utilities report annually to the
19 Commission on the extent of such displacements.
20 (h) Nothing in this Section is intended to cause an
21 electric utility that is required to purchase power hereunder
22 to incur any economic loss as a result of its purchase. All
23 amounts paid for power which a utility is required to
24 purchase pursuant to subparagraph (c) shall be deemed to be
25 costs prudently incurred for purposes of computing charges
26 under rates authorized by Section 9-220 of this Act. Tax
27 credits provided for herein shall be reflected in charges
28 made pursuant to rates so authorized to the extent such
29 credits are based upon a cost which is also reflected in such
30 charges.
31 (Source: P.A. 89-448, eff. 3-14-96.)
32 Section 99. Effective date. This Act takes effect upon
33 becoming law.