State of Illinois
92nd General Assembly
Legislation

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92_SB0601

 
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 1        AN ACT concerning taxation.

 2        Be  it  enacted  by  the People of the State of Illinois,
 3    represented in the General Assembly:

 4        Section 5.  The  Use  Tax  Act  is  amended  by  changing
 5    Section 3-5 as follows:

 6        (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
 7        Sec.  3-5.   Exemptions.   Use  of the following tangible
 8    personal property is exempt from the tax imposed by this Act:
 9        (1)  Personal  property  purchased  from  a  corporation,
10    society,    association,    foundation,    institution,    or
11    organization, other than a limited liability company, that is
12    organized and operated as a not-for-profit service enterprise
13    for the benefit of persons 65 years of age or  older  if  the
14    personal property was not purchased by the enterprise for the
15    purpose of resale by the enterprise.
16        (2)  Personal  property  purchased  by  a  not-for-profit
17    Illinois  county  fair  association  for  use  in conducting,
18    operating, or promoting the county fair.
19        (3)  Personal property purchased by a not-for-profit arts
20    or cultural organization that establishes, by proof  required
21    by  the Department by rule, that it has received an exemption
22    under Section 501(c)(3) of the Internal Revenue Code and that
23    is organized and operated for the presentation or support  of
24    arts or cultural programming, activities, or services.  These
25    organizations  include,  but  are  not  limited to, music and
26    dramatic arts organizations such as symphony  orchestras  and
27    theatrical  groups,  arts and cultural service organizations,
28    local arts councils, visual  arts  organizations,  and  media
29    arts organizations.
30        (4)  Personal  property purchased by a governmental body,
31    by  a  corporation,  society,  association,  foundation,   or
 
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 1    institution    organized   and   operated   exclusively   for
 2    charitable, religious,  or  educational  purposes,  or  by  a
 3    not-for-profit corporation, society, association, foundation,
 4    institution, or organization that has no compensated officers
 5    or employees and that is organized and operated primarily for
 6    the recreation of persons 55 years of age or older. A limited
 7    liability  company  may  qualify for the exemption under this
 8    paragraph only if the limited liability company is  organized
 9    and  operated  exclusively  for  educational purposes. On and
10    after July 1, 1987, however, no entity otherwise eligible for
11    this exemption shall make tax-free purchases unless it has an
12    active  exemption  identification  number   issued   by   the
13    Department.
14        (5)  A passenger car that is a replacement vehicle to the
15    extent  that  the purchase price of the car is subject to the
16    Replacement Vehicle Tax.
17        (6)  Graphic  arts  machinery  and  equipment,  including
18    repair  and  replacement  parts,  both  new  and  used,   and
19    including  that  manufactured  on special order, certified by
20    the  purchaser  to  be  used  primarily  for   graphic   arts
21    production,  and  including machinery and equipment purchased
22    for lease.
23        (7)  Farm chemicals.
24        (8)  Legal  tender,  currency,  medallions,  or  gold  or
25    silver  coinage  issued  by  the  State  of   Illinois,   the
26    government of the United States of America, or the government
27    of any foreign country, and bullion.
28        (9)  Personal property purchased from a teacher-sponsored
29    student   organization   affiliated  with  an  elementary  or
30    secondary school located in Illinois.
31        (10)  A motor vehicle of  the  first  division,  a  motor
32    vehicle of the second division that is a self-contained motor
33    vehicle  designed  or permanently converted to provide living
34    quarters for  recreational,  camping,  or  travel  use,  with
 
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 1    direct  walk through to the living quarters from the driver's
 2    seat, or a motor vehicle of the second division  that  is  of
 3    the  van configuration designed for the transportation of not
 4    less than 7 nor  more  than  16  passengers,  as  defined  in
 5    Section  1-146 of the Illinois Vehicle Code, that is used for
 6    automobile renting, as  defined  in  the  Automobile  Renting
 7    Occupation and Use Tax Act.
 8        (11)  Farm  machinery  and  equipment, both new and used,
 9    including that manufactured on special  order,  certified  by
10    the purchaser to be used primarily for production agriculture
11    or   State   or   federal  agricultural  programs,  including
12    individual replacement parts for the machinery and equipment,
13    including machinery and equipment purchased  for  lease,  and
14    including implements of husbandry defined in Section 1-130 of
15    the  Illinois  Vehicle  Code, farm machinery and agricultural
16    chemical and fertilizer spreaders, and nurse wagons  required
17    to  be registered under Section 3-809 of the Illinois Vehicle
18    Code, but excluding  other  motor  vehicles  required  to  be
19    registered  under  the  Illinois  Vehicle Code. Horticultural
20    polyhouses or hoop houses used for propagating,  growing,  or
21    overwintering  plants  shall be considered farm machinery and
22    equipment under this item (11). Agricultural chemical  tender
23    tanks  and dry boxes shall include units sold separately from
24    a motor vehicle  required  to  be  licensed  and  units  sold
25    mounted  on  a  motor  vehicle required to be licensed if the
26    selling price of the tender is separately stated.
27        Farm machinery  and  equipment  shall  include  precision
28    farming  equipment  that  is  installed  or  purchased  to be
29    installed on farm machinery and equipment including, but  not
30    limited   to,   tractors,   harvesters,  sprayers,  planters,
31    seeders, or spreaders. Precision farming equipment  includes,
32    but  is  not  limited  to,  soil  testing sensors, computers,
33    monitors, software, global positioning and  mapping  systems,
34    and other such equipment.
 
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 1        Farm  machinery  and  equipment  also includes computers,
 2    sensors, software, and related equipment  used  primarily  in
 3    the  computer-assisted  operation  of  production agriculture
 4    facilities,  equipment,  and  activities  such  as,  but  not
 5    limited to, the collection, monitoring,  and  correlation  of
 6    animal  and  crop  data for the purpose of formulating animal
 7    diets and agricultural chemicals.  This item (11)  is  exempt
 8    from the provisions of Section 3-90.
 9        (12)  Fuel  and  petroleum products sold to or used by an
10    air common carrier, certified by the carrier to be  used  for
11    consumption,  shipment,  or  storage  in  the  conduct of its
12    business as an air common carrier, for a flight destined  for
13    or  returning from a location or locations outside the United
14    States without regard  to  previous  or  subsequent  domestic
15    stopovers.
16        (13)  Proceeds  of  mandatory  service charges separately
17    stated on customers' bills for the purchase  and  consumption
18    of food and beverages purchased at retail from a retailer, to
19    the  extent  that  the  proceeds of the service charge are in
20    fact turned over as tips or as a substitute for tips  to  the
21    employees  who  participate  directly  in preparing, serving,
22    hosting or cleaning up the food  or  beverage  function  with
23    respect to which the service charge is imposed.
24        (14)  Oil  field  exploration,  drilling,  and production
25    equipment, including (i) rigs and parts of rigs, rotary rigs,
26    cable tool rigs, and workover rigs,  (ii)  pipe  and  tubular
27    goods,  including  casing  and drill strings, (iii) pumps and
28    pump-jack units, (iv) storage tanks and flow lines,  (v)  any
29    individual   replacement  part  for  oil  field  exploration,
30    drilling, and production equipment, and  (vi)  machinery  and
31    equipment  purchased  for lease; but excluding motor vehicles
32    required to be registered under the Illinois Vehicle Code.
33        (15)  Photoprocessing machinery and equipment,  including
34    repair  and  replacement  parts, both new and used, including
 
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 1    that  manufactured  on  special  order,  certified   by   the
 2    purchaser  to  be  used  primarily  for  photoprocessing, and
 3    including photoprocessing machinery and  equipment  purchased
 4    for lease.
 5        (16)  Coal   exploration,   mining,  offhighway  hauling,
 6    processing, maintenance, and reclamation equipment, including
 7    replacement parts  and  equipment,  and  including  equipment
 8    purchased for lease, but excluding motor vehicles required to
 9    be registered under the Illinois Vehicle Code.
10        (17)  Distillation  machinery  and  equipment,  sold as a
11    unit  or  kit,  assembled  or  installed  by  the   retailer,
12    certified  by  the user to be used only for the production of
13    ethyl alcohol that will be used for consumption as motor fuel
14    or as a component of motor fuel for the personal use  of  the
15    user, and not subject to sale or resale.
16        (18)  Manufacturing    and   assembling   machinery   and
17    equipment used primarily in the process of  manufacturing  or
18    assembling tangible personal property for wholesale or retail
19    sale or lease, whether that sale or lease is made directly by
20    the  manufacturer  or  by  some  other  person,  whether  the
21    materials  used  in the process are owned by the manufacturer
22    or some other person, or whether that sale or lease  is  made
23    apart  from or as an incident to the seller's engaging in the
24    service occupation of producing machines, tools, dies,  jigs,
25    patterns,  gauges,  or  other  similar items of no commercial
26    value on special order for a particular purchaser.
27        (19)  Personal  property  delivered  to  a  purchaser  or
28    purchaser's donee inside Illinois when the purchase order for
29    that personal property was  received  by  a  florist  located
30    outside  Illinois  who  has a florist located inside Illinois
31    deliver the personal property.
32        (20)  Semen used for artificial insemination of livestock
33    for direct agricultural production.
34        (21)  Horses, or interests in horses, registered with and
 
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 1    meeting the requirements of any of  the  Arabian  Horse  Club
 2    Registry  of  America, Appaloosa Horse Club, American Quarter
 3    Horse Association, United  States  Trotting  Association,  or
 4    Jockey Club, as appropriate, used for purposes of breeding or
 5    racing for prizes.
 6        (22)  Computers and communications equipment utilized for
 7    any  hospital  purpose  and  equipment used in the diagnosis,
 8    analysis, or treatment of hospital patients  purchased  by  a
 9    lessor who leases the equipment, under a lease of one year or
10    longer  executed  or  in  effect at the time the lessor would
11    otherwise be subject to the tax imposed by  this  Act,  to  a
12    hospital    that  has  been  issued  an  active tax exemption
13    identification number by the Department under Section  1g  of
14    the  Retailers'  Occupation  Tax  Act.   If  the equipment is
15    leased in a manner that does not qualify for  this  exemption
16    or  is  used in any other non-exempt manner, the lessor shall
17    be liable for the tax imposed under this Act or  the  Service
18    Use  Tax  Act,  as  the case may be, based on the fair market
19    value of the property at  the  time  the  non-qualifying  use
20    occurs.   No  lessor  shall  collect or attempt to collect an
21    amount (however designated) that purports to  reimburse  that
22    lessor for the tax imposed by this Act or the Service Use Tax
23    Act,  as the case may be, if the tax has not been paid by the
24    lessor.  If a lessor improperly collects any such amount from
25    the lessee, the lessee shall have a legal right  to  claim  a
26    refund  of  that  amount  from the lessor.  If, however, that
27    amount is not refunded to the  lessee  for  any  reason,  the
28    lessor is liable to pay that amount to the Department.
29        (23)  Personal  property purchased by a lessor who leases
30    the property, under a lease of  one year or  longer  executed
31    or  in  effect  at  the  time  the  lessor would otherwise be
32    subject to the tax imposed by this  Act,  to  a  governmental
33    body  that  has  been  issued  an  active sales tax exemption
34    identification number by the Department under Section  1g  of
 
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 1    the  Retailers' Occupation Tax Act. If the property is leased
 2    in a manner that does not qualify for this exemption or  used
 3    in  any  other  non-exempt manner, the lessor shall be liable
 4    for the tax imposed under this Act or  the  Service  Use  Tax
 5    Act,  as  the  case may be, based on the fair market value of
 6    the property at the time the non-qualifying use  occurs.   No
 7    lessor shall collect or attempt to collect an amount (however
 8    designated)  that  purports  to reimburse that lessor for the
 9    tax imposed by this Act or the Service Use Tax  Act,  as  the
10    case  may be, if the tax has not been paid by the lessor.  If
11    a lessor improperly collects any such amount from the lessee,
12    the lessee shall have a legal right to claim a refund of that
13    amount from the lessor.  If,  however,  that  amount  is  not
14    refunded  to  the lessee for any reason, the lessor is liable
15    to pay that amount to the Department.
16        (24)  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  donated
19    for  disaster  relief  to  be  used  in  a State or federally
20    declared disaster area in Illinois or bordering Illinois by a
21    manufacturer or retailer that is registered in this State  to
22    a   corporation,   society,   association,   foundation,   or
23    institution  that  has  been  issued  a  sales  tax exemption
24    identification number by the Department that assists  victims
25    of the disaster who reside within the declared disaster area.
26        (25)  Beginning  with  taxable  years  ending on or after
27    December 31, 1995 and ending with taxable years ending on  or
28    before  December  31, 2004, personal property that is used in
29    the performance of  infrastructure  repairs  in  this  State,
30    including  but  not  limited  to municipal roads and streets,
31    access roads, bridges,  sidewalks,  waste  disposal  systems,
32    water  and  sewer  line  extensions,  water  distribution and
33    purification facilities, storm water drainage  and  retention
34    facilities, and sewage treatment facilities, resulting from a
 
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 1    State or federally declared disaster in Illinois or bordering
 2    Illinois  when  such  repairs  are  initiated  on  facilities
 3    located  in  the declared disaster area within 6 months after
 4    the disaster.
 5        (26)  Beginning  July  1,  1999,  game  or   game   birds
 6    purchased  at  a "game breeding and hunting preserve area" or
 7    an "exotic game hunting area" as those terms are used in  the
 8    Wildlife  Code  or  at  a  hunting enclosure approved through
 9    rules adopted by the Department of Natural  Resources.   This
10    paragraph is exempt from the provisions of Section 3-90.
11        (27)  A motor vehicle, as that term is defined in Section
12    1-146  of  the  Illinois  Vehicle  Code, that is donated to a
13    corporation, limited liability company, society, association,
14    foundation,  or  institution  that  is  determined   by   the
15    Department  to  be  organized  and  operated  exclusively for
16    educational purposes.  For purposes  of  this  exemption,  "a
17    corporation, limited liability company, society, association,
18    foundation, or institution organized and operated exclusively
19    for  educational  purposes"  means  all  tax-supported public
20    schools, private schools that offer systematic instruction in
21    useful branches of  learning  by  methods  common  to  public
22    schools  and  that  compare  favorably  in  their  scope  and
23    intensity with the course of study presented in tax-supported
24    schools,  and  vocational  or technical schools or institutes
25    organized and operated exclusively to  provide  a  course  of
26    study  of  not  less  than  6  weeks duration and designed to
27    prepare individuals to follow a trade or to pursue a  manual,
28    technical,  mechanical,  industrial,  business, or commercial
29    occupation.
30        (28)  Beginning  January  1,  2000,   personal  property,
31    including food, purchased through fundraising events for  the
32    benefit  of  a  public  or  private  elementary  or secondary
33    school, a group of those  schools,  or  one  or  more  school
34    districts if the events are sponsored by an entity recognized
 
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 1    by  the school district that consists primarily of volunteers
 2    and includes parents and teachers  of  the  school  children.
 3    This  paragraph  does not apply to fundraising events (i) for
 4    the benefit of private home instruction or (ii) for which the
 5    fundraising entity purchases the personal  property  sold  at
 6    the  events  from  another individual or entity that sold the
 7    property for the purpose of resale by the fundraising  entity
 8    and  that  profits  from  the sale to the fundraising entity.
 9    This paragraph is exempt from the provisions of Section 3-90.
10        (29)  Beginning January 1, 2000, new  or  used  automatic
11    vending   machines  that  prepare  and  serve  hot  food  and
12    beverages, including  coffee,  soup,  and  other  items,  and
13    replacement  parts  for  these  machines.   This paragraph is
14    exempt from the provisions of Section 3-90.
15        (30)  Food for human consumption that is to  be  consumed
16    off  the  premises  where  it  is  sold (other than alcoholic
17    beverages, soft drinks, and food that has been  prepared  for
18    immediate  consumption)  and prescription and nonprescription
19    medicines, drugs,  medical  appliances,  and  insulin,  urine
20    testing  materials,  syringes, and needles used by diabetics,
21    for human use, when purchased for use by a  person  receiving
22    medical assistance under Article 5 of the Illinois Public Aid
23    Code  who  resides  in a licensed long-term care facility, as
24    defined in the Nursing Home Care Act.
25        (31)  Beginning on the effective date of this  amendatory
26    Act  of  the  92nd General Assembly and ending 10 years after
27    the effective date of this amendatory Act of the 92nd General
28    Assembly, production related tangible personal  property  and
29    machinery  and  equipment,  including  repair and replacement
30    parts,  both  new  and  used,  and  including   those   items
31    manufactured   on  special  order  or  purchased  for  lease,
32    certified by the purchaser to be essential to and used in the
33    integrated process of the production  of  electricity  by  an
34    eligible  facility  owned,  operated,  or leased by an exempt
 
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 1    wholesale  generator.    "Eligible  facility"   and   "exempt
 2    wholesale  generator"  shall  mean  "eligible  facility"  and
 3    "exempt  wholesale generator" as defined in Section 32 of the
 4    Public Utility Holding Company Act of 1935, 15 U.S.C. 79z-5a,
 5    in effect as of the date of this amendatory Act of  the  92nd
 6    General  Assembly.   "Machinery" includes mechanical machines
 7    and components of those machines that directly contribute  to
 8    or  are  directly  used in or essential to the process of the
 9    production   of   electricity.   "Equipment"   includes    an
10    independent  device  or  tool  separate  from  machinery  but
11    essential  to  an  integrated electricity generation process;
12    including pipes of any  kind  used  in  the  process  of  the
13    production   of  electricity;  computers  used  primarily  in
14    operating  exempt  machinery;   any   subunit   or   assembly
15    comprising   a  component  of  any  machinery  or  auxiliary,
16    adjunct, or attachment parts of machinery, and any parts that
17    require  periodic  replacement  in  the  course   of   normal
18    operation;  but  does  not  include  hand  tools. "Production
19    related  tangible  personal  property"  means  all   tangible
20    personal  property  directly  used  in  or  essential  to the
21    process of the production of electricity including,  but  not
22    limited  to,  tangible  personal  property used in activities
23    such as preproduction material handling,  receiving,  quality
24    control,  inventory  control, storage, staging, and piping or
25    lines necessary for the transportation of water, natural gas,
26    steam, and similar items to and from an eligible facility for
27    use in the process of the production of  electricity.    This
28    paragraph  (31)  shall  apply also to machinery and equipment
29    used in the general maintenance or repair of exempt machinery
30    and equipment. This paragraph is solely for  the  purpose  of
31    determining  whether the production related tangible personal
32    property defined in this paragraph is  exempt  from  the  tax
33    imposed  by  this Act.  Nothing in this paragraph, including,
34    but not  limited  to,  any  definitions  set  forth  in  this
 
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 1    paragraph, shall be construed, applied, or relied upon in any
 2    way  to  ascertain  whether  the property exempt from the tax
 3    imposed by this Act is real property or personal property for
 4    the purpose of determining whether the property is subject to
 5    ad valorem taxes on real property  or  to  any  other  taxes.
 6    This  exemption  does not apply to any additional tax imposed
 7    by the Board of  Directors  of  the  Regional  Transportation
 8    Authority  under  Section 4.03 of the Regional Transportation
 9    Authority Act.
10    (Source: P.A. 90-14,  eff.  7-1-97;  90-552,  eff.  12-12-97;
11    90-605,  eff.  6-30-98;  91-51,  eff.  6-30-99;  91-200, eff.
12    7-20-99; 91-439, eff. 8-6-99; 91-637, eff.  8-20-99;  91-644,
13    eff. 8-20-99; 91-901, eff. 1-1-01.)

14        Section  10.   The  Service  Use  Tax  Act  is amended by
15    changing Section 3-5 as follows:

16        (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
17        Sec. 3-5.  Exemptions.  Use  of  the  following  tangible
18    personal property is exempt from the tax imposed by this Act:
19        (1)  Personal  property  purchased  from  a  corporation,
20    society,    association,    foundation,    institution,    or
21    organization, other than a limited liability company, that is
22    organized and operated as a not-for-profit service enterprise
23    for  the  benefit  of persons 65 years of age or older if the
24    personal property was not purchased by the enterprise for the
25    purpose of resale by the enterprise.
26        (2)  Personal property purchased by a non-profit Illinois
27    county fair association for use in conducting, operating,  or
28    promoting the county fair.
29        (3)  Personal property purchased by a not-for-profit arts
30    or  cultural organization that establishes, by proof required
31    by the Department by rule, that it has received an  exemption
32    under Section 501(c)(3) of the Internal Revenue Code and that
 
                            -12-               LRB9205204SMdv
 1    is  organized and operated for the presentation or support of
 2    arts or cultural programming, activities, or services.  These
 3    organizations include, but are  not  limited  to,  music  and
 4    dramatic  arts  organizations such as symphony orchestras and
 5    theatrical groups, arts and cultural  service  organizations,
 6    local  arts  councils,  visual  arts organizations, and media
 7    arts organizations.
 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.
17        (6)  Personal property purchased from a teacher-sponsored
18    student   organization   affiliated  with  an  elementary  or
19    secondary school located in Illinois.
20        (7)  Farm machinery and equipment,  both  new  and  used,
21    including  that  manufactured  on special order, certified by
22    the purchaser to be used primarily for production agriculture
23    or  State  or  federal   agricultural   programs,   including
24    individual replacement parts for the machinery and equipment,
25    including  machinery  and  equipment purchased for lease, and
26    including implements of husbandry defined in Section 1-130 of
27    the Illinois Vehicle Code, farm  machinery  and  agricultural
28    chemical  and fertilizer spreaders, and nurse wagons required
29    to be registered under Section 3-809 of the Illinois  Vehicle
30    Code,  but  excluding  other  motor  vehicles  required to be
31    registered under the  Illinois  Vehicle  Code.  Horticultural
32    polyhouses  or  hoop houses used for propagating, growing, or
33    overwintering plants shall be considered farm  machinery  and
34    equipment  under  this item (7). Agricultural chemical tender
 
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 1    tanks and dry boxes shall include units sold separately  from
 2    a  motor  vehicle  required  to  be  licensed  and units sold
 3    mounted on a motor vehicle required to  be  licensed  if  the
 4    selling price of the tender is separately stated.
 5        Farm  machinery  and  equipment  shall  include precision
 6    farming equipment  that  is  installed  or  purchased  to  be
 7    installed  on farm machinery and equipment including, but not
 8    limited  to,  tractors,   harvesters,   sprayers,   planters,
 9    seeders,  or spreaders. Precision farming equipment includes,
10    but is not  limited  to,  soil  testing  sensors,  computers,
11    monitors,  software,  global positioning and mapping systems,
12    and other such equipment.
13        Farm machinery and  equipment  also  includes  computers,
14    sensors,  software,  and  related equipment used primarily in
15    the computer-assisted  operation  of  production  agriculture
16    facilities,  equipment,  and  activities  such  as,  but  not
17    limited  to,  the  collection, monitoring, and correlation of
18    animal and crop data for the purpose  of  formulating  animal
19    diets  and  agricultural  chemicals.  This item (7) is exempt
20    from the provisions of Section 3-55 3-75.
21        (8)  Fuel and petroleum products sold to or  used  by  an
22    air  common  carrier, certified by the carrier to be used for
23    consumption, shipment, or  storage  in  the  conduct  of  its
24    business  as an air common carrier, for a flight destined for
25    or returning from a location or locations outside the  United
26    States  without  regard  to  previous  or subsequent domestic
27    stopovers.
28        (9)  Proceeds of  mandatory  service  charges  separately
29    stated  on  customers' bills for the purchase and consumption
30    of food and beverages acquired as an incident to the purchase
31    of a service from  a  serviceman,  to  the  extent  that  the
32    proceeds  of  the  service  charge are in fact turned over as
33    tips or as  a  substitute  for  tips  to  the  employees  who
34    participate   directly  in  preparing,  serving,  hosting  or
 
                            -14-               LRB9205204SMdv
 1    cleaning up the food or beverage  function  with  respect  to
 2    which the service charge is imposed.
 3        (10)  Oil  field  exploration,  drilling,  and production
 4    equipment, including (i) rigs and parts of rigs, rotary rigs,
 5    cable tool rigs, and workover rigs,  (ii)  pipe  and  tubular
 6    goods,  including  casing  and drill strings, (iii) pumps and
 7    pump-jack units, (iv) storage tanks and flow lines,  (v)  any
 8    individual   replacement  part  for  oil  field  exploration,
 9    drilling, and production equipment, and  (vi)  machinery  and
10    equipment  purchased  for lease; but excluding motor vehicles
11    required to be registered under the Illinois Vehicle Code.
12        (11)  Proceeds from the sale of photoprocessing machinery
13    and equipment, including repair and replacement  parts,  both
14    new  and  used, including that manufactured on special order,
15    certified  by  the  purchaser  to  be  used   primarily   for
16    photoprocessing,  and including photoprocessing machinery and
17    equipment purchased for lease.
18        (12)  Coal  exploration,  mining,   offhighway   hauling,
19    processing, maintenance, and reclamation equipment, including
20    replacement  parts  and  equipment,  and  including equipment
21    purchased for lease, but excluding motor vehicles required to
22    be registered under the Illinois Vehicle Code.
23        (13)  Semen used for artificial insemination of livestock
24    for direct agricultural production.
25        (14)  Horses, or interests in horses, registered with and
26    meeting the requirements of any of  the  Arabian  Horse  Club
27    Registry  of  America, Appaloosa Horse Club, American Quarter
28    Horse Association, United  States  Trotting  Association,  or
29    Jockey Club, as appropriate, used for purposes of breeding or
30    racing for prizes.
31        (15)  Computers and communications equipment utilized for
32    any  hospital  purpose  and  equipment used in the diagnosis,
33    analysis, or treatment of hospital patients  purchased  by  a
34    lessor who leases the equipment, under a lease of one year or
 
                            -15-               LRB9205204SMdv
 1    longer  executed  or  in  effect at the time the lessor would
 2    otherwise be subject to the tax imposed by  this  Act,  to  a
 3    hospital  that  has  been  issued  an  active  tax  exemption
 4    identification  number  by the Department under Section 1g of
 5    the Retailers' Occupation Tax Act. If the equipment is leased
 6    in a manner that does not qualify for this  exemption  or  is
 7    used  in  any  other  non-exempt  manner, the lessor shall be
 8    liable for the tax imposed under this Act or the Use Tax Act,
 9    as the case may be, based on the fair  market  value  of  the
10    property  at  the  time  the  non-qualifying  use occurs.  No
11    lessor shall collect or attempt to collect an amount (however
12    designated) that purports to reimburse that  lessor  for  the
13    tax  imposed  by this Act or the Use Tax Act, as the case may
14    be, if the tax has not been paid by the lessor.  If a  lessor
15    improperly  collects  any  such  amount  from the lessee, the
16    lessee shall have a legal right to claim  a  refund  of  that
17    amount  from  the  lessor.   If,  however, that amount is not
18    refunded to the lessee for any reason, the lessor  is  liable
19    to pay that amount to the Department.
20        (16)  Personal  property purchased by a lessor who leases
21    the property, under a lease of one year or longer executed or
22    in effect at the time the lessor would otherwise  be  subject
23    to  the  tax imposed by this Act, to a governmental body that
24    has been issued an active tax exemption identification number
25    by  the  Department  under  Section  1g  of  the   Retailers'
26    Occupation  Tax  Act.   If the property is leased in a manner
27    that does not qualify for this exemption or is  used  in  any
28    other  non-exempt  manner, the lessor shall be liable for the
29    tax imposed under this Act or the Use Tax Act,  as  the  case
30    may be, based on the fair market value of the property at the
31    time  the non-qualifying use occurs.  No lessor shall collect
32    or attempt to collect an  amount  (however  designated)  that
33    purports to reimburse that lessor for the tax imposed by this
34    Act  or  the  Use Tax Act, as the case may be, if the tax has
 
                            -16-               LRB9205204SMdv
 1    not been paid by the lessor.  If a lessor improperly collects
 2    any such amount from the lessee,  the  lessee  shall  have  a
 3    legal right to claim a refund of that amount from the lessor.
 4    If,  however,  that  amount is not refunded to the lessee for
 5    any reason, the lessor is liable to pay that  amount  to  the
 6    Department.
 7        (17)  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 donated
10    for disaster relief to  be  used  in  a  State  or  federally
11    declared disaster area in Illinois or bordering Illinois by a
12    manufacturer  or retailer that is registered in this State to
13    a   corporation,   society,   association,   foundation,   or
14    institution that  has  been  issued  a  sales  tax  exemption
15    identification  number by the Department that assists victims
16    of the disaster who reside within the declared disaster area.
17        (18)  Beginning with taxable years  ending  on  or  after
18    December  31, 1995 and ending with taxable years ending on or
19    before December 31, 2004, personal property that is  used  in
20    the  performance  of  infrastructure  repairs  in this State,
21    including but not limited to  municipal  roads  and  streets,
22    access  roads,  bridges,  sidewalks,  waste disposal systems,
23    water and  sewer  line  extensions,  water  distribution  and
24    purification  facilities,  storm water drainage and retention
25    facilities, and sewage treatment facilities, resulting from a
26    State or federally declared disaster in Illinois or bordering
27    Illinois  when  such  repairs  are  initiated  on  facilities
28    located in the declared disaster area within 6  months  after
29    the disaster.
30        (19)  Beginning   July   1,  1999,  game  or  game  birds
31    purchased at a "game breeding and hunting preserve  area"  or
32    an  "exotic game hunting area" as those terms are used in the
33    Wildlife Code or at  a  hunting  enclosure  approved  through
34    rules  adopted  by the Department of Natural Resources.  This
 
                            -17-               LRB9205204SMdv
 1    paragraph is exempt from the provisions of Section 3-75.
 2        (20) (19)  A motor vehicle, as that term  is  defined  in
 3    Section  1-146  of the Illinois Vehicle Code, that is donated
 4    to  a  corporation,  limited  liability   company,   society,
 5    association, foundation, or institution that is determined by
 6    the  Department  to be organized and operated exclusively for
 7    educational purposes.  For purposes  of  this  exemption,  "a
 8    corporation, limited liability company, society, association,
 9    foundation, or institution organized and operated exclusively
10    for  educational  purposes"  means  all  tax-supported public
11    schools, private schools that offer systematic instruction in
12    useful branches of  learning  by  methods  common  to  public
13    schools  and  that  compare  favorably  in  their  scope  and
14    intensity with the course of study presented in tax-supported
15    schools,  and  vocational  or technical schools or institutes
16    organized and operated exclusively to  provide  a  course  of
17    study  of  not  less  than  6  weeks duration and designed to
18    prepare individuals to follow a trade or to pursue a  manual,
19    technical,  mechanical,  industrial,  business, or commercial
20    occupation.
21        (21) (20)  Beginning January 1, 2000,  personal property,
22    including food, purchased through fundraising events for  the
23    benefit  of  a  public  or  private  elementary  or secondary
24    school, a group of those  schools,  or  one  or  more  school
25    districts if the events are sponsored by an entity recognized
26    by  the school district that consists primarily of volunteers
27    and includes parents and teachers  of  the  school  children.
28    This  paragraph  does not apply to fundraising events (i) for
29    the benefit of private home instruction or (ii) for which the
30    fundraising entity purchases the personal  property  sold  at
31    the  events  from  another individual or entity that sold the
32    property for the purpose of resale by the fundraising  entity
33    and  that  profits  from  the sale to the fundraising entity.
34    This paragraph is exempt from the provisions of Section 3-75.
 
                            -18-               LRB9205204SMdv
 1        (22)  (19)  Beginning  January  1,  2000,  new  or   used
 2    automatic  vending  machines  that prepare and serve hot food
 3    and beverages, including coffee, soup, and other  items,  and
 4    replacement  parts  for  these  machines.   This paragraph is
 5    exempt from the provisions of Section 3-75.
 6        (23)  Beginning on the effective date of this  amendatory
 7    Act  of  the  92nd General Assembly and ending 10 years after
 8    the effective date of this amendatory Act of the 92nd General
 9    Assembly, production related tangible personal  property  and
10    machinery  and  equipment,  including  repair and replacement
11    parts,  both  new  and  used,  and  including   those   items
12    manufactured   on  special  order  or  purchased  for  lease,
13    certified by the purchaser to be essential to and used in the
14    integrated process of the production  of  electricity  by  an
15    eligible  facility  owned,  operated,  or leased by an exempt
16    wholesale  generator.   "Eligible   facility"   and   "exempt
17    wholesale  generator"  shall  mean  "eligible  facility"  and
18    "exempt  wholesale generator" as defined in Section 32 of the
19    Public Utility Holding Company Act of 1935, 15 U.S.C. 79z-5a,
20    in effect as of the date of this amendatory Act of  the  92nd
21    General  Assembly.  "Machinery"  includes mechanical machines
22    and components of those machines that directly contribute  to
23    or  are  directly  used in or essential to the process of the
24    production   of   electricity.   "Equipment"   includes    an
25    independent  device  or  tool  separate  from  machinery  but
26    essential  to  an  integrated electricity generation process;
27    including pipes of any  kind  used  in  the  process  of  the
28    production   of  electricity;  computers  used  primarily  in
29    operating  exempt  machinery;   any   subunit   or   assembly
30    comprising   a  component  of  any  machinery  or  auxiliary,
31    adjunct, or attachment parts of machinery, and any parts that
32    require  periodic  replacement  in  the  course   of   normal
33    operation;  but  does  not  include  hand  tools. "Production
34    related  tangible  personal  property"  means  all   tangible
 
                            -19-               LRB9205204SMdv
 1    personal  property  directly  used  in  or  essential  to the
 2    process of the production of electricity including,  but  not
 3    limited  to,  tangible  personal  property used in activities
 4    such as preproduction material handling,  receiving,  quality
 5    control,  inventory  control, storage, staging, and piping or
 6    lines necessary for the transportation of water, natural gas,
 7    steam, and similar items to and from an eligible facility for
 8    use in the process of the  production  of  electricity.  This
 9    paragraph  (23)  shall  apply also to machinery and equipment
10    used in the general maintenance or repair of exempt machinery
11    and equipment. This paragraph is solely for  the  purpose  of
12    determining  whether the production related tangible personal
13    property defined in this paragraph is  exempt  from  the  tax
14    imposed  by  this Act.  Nothing in this paragraph, including,
15    but not  limited  to,  any  definitions  set  forth  in  this
16    paragraph, shall be construed, applied, or relied upon in any
17    way  to  ascertain  whether  the property exempt from the tax
18    imposed by this Act is real property or personal property for
19    the purpose of determining whether the property is subject to
20    ad valorem taxes on real property or to any other taxes. This
21    exemption does not apply to any additional tax imposed by the
22    Board of Directors of the Regional  Transportation  Authority
23    under  Section  4.03 of the Regional Transportation Authority
24    Act.
25    (Source: P.A. 90-14,  eff.  7-1-97;  90-552,  eff.  12-12-97;
26    90-605,  eff.  6-30-98;  91-51,  eff.  6-30-99;  91-200, eff.
27    7-20-99; 91-439, eff. 8-6-99; 91-637, eff.  8-20-99;  91-644,
28    eff. 8-20-99; revised 9-29-99.)

29        Section 15.  The Service Occupation Tax Act is amended by
30    changing Section 3-5 as follows:

31        (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
32        Sec.  3-5.   Exemptions.  The following tangible personal
 
                            -20-               LRB9205204SMdv
 1    property is exempt from the tax imposed by this Act:
 2        (1)  Personal property sold by  a  corporation,  society,
 3    association,  foundation, institution, or organization, other
 4    than a limited  liability  company,  that  is  organized  and
 5    operated  as  a  not-for-profit  service  enterprise  for the
 6    benefit of persons 65 years of age or older if  the  personal
 7    property  was not purchased by the enterprise for the purpose
 8    of resale by the enterprise.
 9        (2)  Personal  property  purchased  by  a  not-for-profit
10    Illinois county  fair  association  for  use  in  conducting,
11    operating, or promoting the county fair.
12        (3)  Personal  property  purchased  by any not-for-profit
13    arts or cultural  organization  that  establishes,  by  proof
14    required  by  the Department by rule, that it has received an
15    exemption  under Section 501(c)(3) of  the  Internal  Revenue
16    Code  and that is organized and operated for the presentation
17    or support of arts or cultural  programming,  activities,  or
18    services.   These  organizations include, but are not limited
19    to, music and dramatic arts organizations  such  as  symphony
20    orchestras  and  theatrical groups, arts and cultural service
21    organizations,   local    arts    councils,    visual    arts
22    organizations, and media arts organizations.
23        (4)  Legal  tender,  currency,  medallions,  or  gold  or
24    silver   coinage   issued  by  the  State  of  Illinois,  the
25    government of the United States of America, or the government
26    of any foreign country, and bullion.
27        (5)  Graphic  arts  machinery  and  equipment,  including
28    repair  and  replacement  parts,  both  new  and  used,   and
29    including that manufactured on special order or purchased for
30    lease,  certified  by  the purchaser to be used primarily for
31    graphic arts production.
32        (6)  Personal  property  sold  by   a   teacher-sponsored
33    student   organization   affiliated  with  an  elementary  or
34    secondary school located in Illinois.
 
                            -21-               LRB9205204SMdv
 1        (7)  Farm machinery and equipment,  both  new  and  used,
 2    including  that  manufactured  on special order, certified by
 3    the purchaser to be used primarily for production agriculture
 4    or  State  or  federal   agricultural   programs,   including
 5    individual replacement parts for the machinery and equipment,
 6    including  machinery  and  equipment purchased for lease, and
 7    including implements of husbandry defined in Section 1-130 of
 8    the Illinois Vehicle Code, farm  machinery  and  agricultural
 9    chemical  and fertilizer spreaders, and nurse wagons required
10    to be registered under Section 3-809 of the Illinois  Vehicle
11    Code,  but  excluding  other  motor  vehicles  required to be
12    registered under the  Illinois  Vehicle  Code.  Horticultural
13    polyhouses  or  hoop houses used for propagating, growing, or
14    overwintering plants shall be considered farm  machinery  and
15    equipment  under  this item (7). Agricultural chemical tender
16    tanks and dry boxes shall include units sold separately  from
17    a  motor  vehicle  required  to  be  licensed  and units sold
18    mounted on a motor vehicle required to  be  licensed  if  the
19    selling price of the tender is separately stated.
20        Farm  machinery  and  equipment  shall  include precision
21    farming equipment  that  is  installed  or  purchased  to  be
22    installed  on farm machinery and equipment including, but not
23    limited  to,  tractors,   harvesters,   sprayers,   planters,
24    seeders,  or spreaders. Precision farming equipment includes,
25    but is not  limited  to,  soil  testing  sensors,  computers,
26    monitors,  software,  global positioning and mapping systems,
27    and other such equipment.
28        Farm machinery and  equipment  also  includes  computers,
29    sensors,  software,  and  related equipment used primarily in
30    the computer-assisted  operation  of  production  agriculture
31    facilities,  equipment,  and  activities  such  as,  but  not
32    limited  to,  the  collection, monitoring, and correlation of
33    animal and crop data for the purpose  of  formulating  animal
34    diets  and  agricultural  chemicals.  This item (7) is exempt
 
                            -22-               LRB9205204SMdv
 1    from the provisions of Section 3-55.
 2        (8)  Fuel and petroleum products sold to or  used  by  an
 3    air  common  carrier, certified by the carrier to be used for
 4    consumption, shipment, or  storage  in  the  conduct  of  its
 5    business  as an air common carrier, for a flight destined for
 6    or returning from a location or locations outside the  United
 7    States  without  regard  to  previous  or subsequent domestic
 8    stopovers.
 9        (9)  Proceeds of  mandatory  service  charges  separately
10    stated  on  customers' bills for the purchase and consumption
11    of food and beverages, to the extent that the proceeds of the
12    service charge are in fact  turned  over  as  tips  or  as  a
13    substitute for tips to the employees who participate directly
14    in  preparing,  serving,  hosting  or cleaning up the food or
15    beverage function with respect to which the service charge is
16    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        (11)  Photoprocessing  machinery and equipment, including
27    repair and replacement parts, both new  and  used,  including
28    that   manufactured   on  special  order,  certified  by  the
29    purchaser to  be  used  primarily  for  photoprocessing,  and
30    including  photoprocessing  machinery and equipment purchased
31    for lease.
32        (12)  Coal  exploration,  mining,   offhighway   hauling,
33    processing, maintenance, and reclamation equipment, including
34    replacement  parts  and  equipment,  and  including equipment
 
                            -23-               LRB9205204SMdv
 1    purchased for lease, but excluding motor vehicles required to
 2    be registered under the Illinois Vehicle Code.
 3        (13)  Food for human consumption that is to  be  consumed
 4    off  the  premises  where  it  is  sold (other than alcoholic
 5    beverages, soft drinks and food that has  been  prepared  for
 6    immediate  consumption) and prescription and non-prescription
 7    medicines, drugs,  medical  appliances,  and  insulin,  urine
 8    testing  materials,  syringes, and needles used by diabetics,
 9    for human use, when purchased for use by a  person  receiving
10    medical assistance under Article 5 of the Illinois Public Aid
11    Code  who  resides  in a licensed long-term care facility, as
12    defined in the Nursing Home Care Act.
13        (14)  Semen used for artificial insemination of livestock
14    for direct agricultural production.
15        (15)  Horses, or interests in horses, registered with and
16    meeting the requirements of any of  the  Arabian  Horse  Club
17    Registry  of  America, Appaloosa Horse Club, American Quarter
18    Horse Association, United  States  Trotting  Association,  or
19    Jockey Club, as appropriate, used for purposes of breeding or
20    racing for prizes.
21        (16)  Computers and communications equipment utilized for
22    any  hospital  purpose  and  equipment used in the diagnosis,
23    analysis, or treatment of hospital patients sold to a  lessor
24    who leases the equipment, under a lease of one year or longer
25    executed  or  in  effect  at  the  time of the purchase, to a
26    hospital  that  has  been  issued  an  active  tax  exemption
27    identification number by the Department under Section  1g  of
28    the Retailers' Occupation Tax Act.
29        (17)  Personal  property  sold to a lessor who leases the
30    property, under a lease of one year or longer executed or  in
31    effect  at  the  time of the purchase, to a governmental body
32    that has been issued an active tax  exemption  identification
33    number  by  the Department under Section 1g of the Retailers'
34    Occupation Tax Act.
 
                            -24-               LRB9205204SMdv
 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  donated
 4    for  disaster  relief  to  be  used  in  a State or federally
 5    declared disaster area in Illinois or bordering Illinois by a
 6    manufacturer or retailer that is registered in this State  to
 7    a   corporation,   society,   association,   foundation,   or
 8    institution  that  has  been  issued  a  sales  tax exemption
 9    identification number by the Department that assists  victims
10    of the disaster who reside within the declared disaster area.
11        (19)  Beginning  with  taxable  years  ending on or after
12    December 31, 1995 and ending with taxable years ending on  or
13    before  December  31, 2004, personal property that is used in
14    the performance of  infrastructure  repairs  in  this  State,
15    including  but  not  limited  to municipal roads and streets,
16    access roads, bridges,  sidewalks,  waste  disposal  systems,
17    water  and  sewer  line  extensions,  water  distribution and
18    purification facilities, storm water drainage  and  retention
19    facilities, and sewage treatment facilities, resulting from a
20    State or federally declared disaster in Illinois or bordering
21    Illinois  when  such  repairs  are  initiated  on  facilities
22    located  in  the declared disaster area within 6 months after
23    the disaster.
24        (20)  Beginning July 1, 1999, game or game birds sold  at
25    a  "game  breeding  and  hunting preserve area" or an "exotic
26    game hunting area" as those terms are used  in  the  Wildlife
27    Code or at a hunting enclosure approved through rules adopted
28    by  the  Department  of Natural Resources.  This paragraph is
29    exempt from the provisions of Section 3-55.
30        (21) (20)  A motor vehicle, as that term  is  defined  in
31    Section  1-146  of the Illinois Vehicle Code, that is donated
32    to  a  corporation,  limited  liability   company,   society,
33    association, foundation, or institution that is determined by
34    the  Department  to be organized and operated exclusively for
 
                            -25-               LRB9205204SMdv
 1    educational purposes.  For purposes  of  this  exemption,  "a
 2    corporation, limited liability company, society, association,
 3    foundation, or institution organized and operated exclusively
 4    for  educational  purposes"  means  all  tax-supported public
 5    schools, private schools that offer systematic instruction in
 6    useful branches of  learning  by  methods  common  to  public
 7    schools  and  that  compare  favorably  in  their  scope  and
 8    intensity with the course of study presented in tax-supported
 9    schools,  and  vocational  or technical schools or institutes
10    organized and operated exclusively to  provide  a  course  of
11    study  of  not  less  than  6  weeks duration and designed to
12    prepare individuals to follow a trade or to pursue a  manual,
13    technical,  mechanical,  industrial,  business, or commercial
14    occupation.
15        (22) (21)  Beginning January 1, 2000,  personal property,
16    including food, purchased through fundraising events for  the
17    benefit  of  a  public  or  private  elementary  or secondary
18    school, a group of those  schools,  or  one  or  more  school
19    districts if the events are sponsored by an entity recognized
20    by  the school district that consists primarily of volunteers
21    and includes parents and teachers  of  the  school  children.
22    This  paragraph  does not apply to fundraising events (i) for
23    the benefit of private home instruction or (ii) for which the
24    fundraising entity purchases the personal  property  sold  at
25    the  events  from  another individual or entity that sold the
26    property for the purpose of resale by the fundraising  entity
27    and  that  profits  from  the sale to the fundraising entity.
28    This paragraph is exempt from the provisions of Section 3-55.
29        (23)  (20)  Beginning  January  1,  2000,  new  or   used
30    automatic  vending  machines  that prepare and serve hot food
31    and beverages, including coffee, soup, and other  items,  and
32    replacement  parts  for  these  machines.   This paragraph is
33    exempt from the provisions of Section 3-55.
34        (24)  Beginning on the effective date of this  amendatory
 
                            -26-               LRB9205204SMdv
 1    Act  of  the  92nd General Assembly and ending 10 years after
 2    the effective date of this amendatory Act of the 92nd General
 3    Assembly, production related tangible personal  property  and
 4    machinery  and  equipment,  including  repair and replacement
 5    parts,  both  new  and  used,  and  including   those   items
 6    manufactured   on  special  order  or  purchased  for  lease,
 7    certified by the purchaser to be essential to and used in the
 8    integrated process of the production  of  electricity  by  an
 9    eligible  facility  owned,  operated,  or leased by an exempt
10    wholesale  generator.   "Eligible   facility"   and   "exempt
11    wholesale  generator"  shall  mean  "eligible  facility"  and
12    "exempt  wholesale generator" as defined in Section 32 of the
13    Public Utility Holding Company Act of 1935, 15 U.S.C. 79z-5a,
14    in effect as of the date of this amendatory Act of  the  92nd
15    General  Assembly.  "Machinery"  includes mechanical machines
16    and components of those machines that directly contribute  to
17    or  are  directly  used in or essential to the process of the
18    production   of   electricity.   "Equipment"   includes    an
19    independent  device  or  tool  separate  from  machinery  but
20    essential  to  an  integrated electricity generation process;
21    including pipes of any  kind  used  in  the  process  of  the
22    production   of  electricity;  computers  used  primarily  in
23    operating  exempt  machinery;   any   subunit   or   assembly
24    comprising   a  component  of  any  machinery  or  auxiliary,
25    adjunct, or attachment parts of machinery, and any parts that
26    require  periodic  replacement  in  the  course   of   normal
27    operation;  but  does  not  include  hand  tools. "Production
28    related  tangible  personal  property"  means  all   tangible
29    personal  property  directly  used  in  or  essential  to the
30    process of the production of electricity including,  but  not
31    limited  to,  tangible  personal  property used in activities
32    such as preproduction material handling,  receiving,  quality
33    control,  inventory  control, storage, staging, and piping or
34    lines necessary for the transportation of water, natural gas,
 
                            -27-               LRB9205204SMdv
 1    steam, and similar items to and from an eligible facility for
 2    use in the process of the  production  of  electricity.  This
 3    paragraph  (24)  shall  apply also to machinery and equipment
 4    used in the general maintenance or repair of exempt machinery
 5    and equipment. This paragraph is solely for  the  purpose  of
 6    determining  whether the production related tangible personal
 7    property defined in this paragraph is  exempt  from  the  tax
 8    imposed  by  this Act.  Nothing in this paragraph, including,
 9    but not  limited  to,  any  definitions  set  forth  in  this
10    paragraph, shall be construed, applied, or relied upon in any
11    way  to  ascertain  whether  the property exempt from the tax
12    imposed by this Act is real property or personal property for
13    the purpose of determining whether the property is subject to
14    ad valorem taxes on real property or to any other taxes. This
15    exemption does not apply to any additional tax imposed by the
16    Board of Directors of the Regional  Transportation  Authority
17    under  Section  4.03 of the Regional Transportation Authority
18    Act.
19    (Source: P.A. 90-14,  eff.  7-1-97;  90-552,  eff.  12-12-97;
20    90-605,  eff.  6-30-98;  91-51,  eff.  6-30-99;  91-200, eff.
21    7-20-99; 91-439, eff. 8-6-99; 91-533, eff.  8-13-99;  91-637,
22    eff. 8-20-99; 91-644, eff. 8-20-99; revised 9-29-99.)

23        Section 20.  The Retailers' Occupation Tax Act is amended
24    by changing Section 2-5 as follows:

25        (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
26        Sec. 2-5.  Exemptions.  Gross receipts from proceeds from
27    the  sale  of  the  following  tangible personal property are
28    exempt from the tax imposed by this Act:
29        (1)  Farm chemicals.
30        (2)  Farm machinery and equipment,  both  new  and  used,
31    including  that  manufactured  on special order, certified by
32    the purchaser to be used primarily for production agriculture
 
                            -28-               LRB9205204SMdv
 1    or  State  or  federal   agricultural   programs,   including
 2    individual replacement parts for the machinery and equipment,
 3    including  machinery  and  equipment purchased for lease, and
 4    including implements of husbandry defined in Section 1-130 of
 5    the Illinois Vehicle Code, farm  machinery  and  agricultural
 6    chemical  and fertilizer spreaders, and nurse wagons required
 7    to be registered under Section 3-809 of the Illinois  Vehicle
 8    Code,  but  excluding  other  motor  vehicles  required to be
 9    registered under the  Illinois  Vehicle  Code.  Horticultural
10    polyhouses  or  hoop houses used for propagating, growing, or
11    overwintering plants shall be considered farm  machinery  and
12    equipment  under  this item (2). Agricultural chemical tender
13    tanks and dry boxes shall include units sold separately  from
14    a  motor  vehicle  required  to  be  licensed  and units sold
15    mounted on a motor vehicle required to be  licensed,  if  the
16    selling price of the tender is separately stated.
17        Farm  machinery  and  equipment  shall  include precision
18    farming equipment  that  is  installed  or  purchased  to  be
19    installed  on farm machinery and equipment including, but not
20    limited  to,  tractors,   harvesters,   sprayers,   planters,
21    seeders,  or spreaders. Precision farming equipment includes,
22    but is not  limited  to,  soil  testing  sensors,  computers,
23    monitors,  software,  global positioning and mapping systems,
24    and other such equipment.
25        Farm machinery and  equipment  also  includes  computers,
26    sensors,  software,  and  related equipment used primarily in
27    the computer-assisted  operation  of  production  agriculture
28    facilities,  equipment,  and  activities  such  as,  but  not
29    limited  to,  the  collection, monitoring, and correlation of
30    animal and crop data for the purpose  of  formulating  animal
31    diets  and  agricultural  chemicals.  This item (7) is exempt
32    from the provisions of Section 2-70.
33        (3)  Distillation machinery and equipment, sold as a unit
34    or kit, assembled or installed by the retailer, certified  by
 
                            -29-               LRB9205204SMdv
 1    the  user to be used only for the production of ethyl alcohol
 2    that will be used for consumption  as  motor  fuel  or  as  a
 3    component of motor fuel for the personal use of the user, and
 4    not subject to sale or resale.
 5        (4)  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.
10        (5)  A  motor  vehicle  of  the  first  division, a motor
11    vehicle of the second division that is a self-contained motor
12    vehicle designed or permanently converted to  provide  living
13    quarters  for  recreational,  camping,  or  travel  use, with
14    direct walk through access to the living  quarters  from  the
15    driver's seat, or a motor vehicle of the second division that
16    is  of  the van configuration designed for the transportation
17    of not less than 7 nor more than 16 passengers, as defined in
18    Section 1-146 of the Illinois Vehicle Code, that is used  for
19    automobile  renting,  as  defined  in  the Automobile Renting
20    Occupation and Use Tax Act.
21        (6)  Personal  property  sold  by   a   teacher-sponsored
22    student   organization   affiliated  with  an  elementary  or
23    secondary school located in Illinois.
24        (7)  Proceeds of that portion of the selling price  of  a
25    passenger car the sale of which is subject to the Replacement
26    Vehicle Tax.
27        (8)  Personal  property  sold  to an Illinois county fair
28    association for use in conducting,  operating,  or  promoting
29    the county fair.
30        (9)  Personal  property  sold to a not-for-profit arts or
31    cultural organization that establishes, by proof required  by
32    the  Department  by  rule,  that it has received an exemption
33    under Section 501(c)(3) of the Internal Revenue Code and that
34    is organized and operated for the presentation or support  of
 
                            -30-               LRB9205204SMdv
 1    arts or cultural programming, activities, or services.  These
 2    organizations  include,  but  are  not  limited to, music and
 3    dramatic arts organizations such as symphony  orchestras  and
 4    theatrical  groups,  arts and cultural service organizations,
 5    local arts councils, visual  arts  organizations,  and  media
 6    arts organizations.
 7        (10)  Personal  property  sold by a corporation, society,
 8    association, foundation, institution, or organization,  other
 9    than  a  limited  liability  company,  that  is organized and
10    operated as  a  not-for-profit  service  enterprise  for  the
11    benefit  of  persons 65 years of age or older if the personal
12    property was not purchased by the enterprise for the  purpose
13    of resale by the enterprise.
14        (11)  Personal property sold to a governmental body, to a
15    corporation, society, association, foundation, or institution
16    organized and operated exclusively for charitable, religious,
17    or  educational purposes, or to a not-for-profit corporation,
18    society,    association,    foundation,    institution,    or
19    organization that has no compensated  officers  or  employees
20    and   that  is  organized  and  operated  primarily  for  the
21    recreation of persons 55 years of age  or  older.  A  limited
22    liability  company  may  qualify for the exemption under this
23    paragraph only if the limited liability company is  organized
24    and  operated  exclusively  for  educational purposes. On and
25    after July 1, 1987, however, no entity otherwise eligible for
26    this exemption shall make tax-free purchases unless it has an
27    active identification number issued by the Department.
28        (12)  Personal property sold to interstate  carriers  for
29    hire  for  use as rolling stock moving in interstate commerce
30    or to lessors under leases of one year or longer executed  or
31    in  effect at the time of purchase by interstate carriers for
32    hire for use as rolling stock moving in  interstate  commerce
33    and  equipment  operated  by  a  telecommunications provider,
34    licensed as a common carrier by  the  Federal  Communications
 
                            -31-               LRB9205204SMdv
 1    Commission,  which  is permanently installed in or affixed to
 2    aircraft moving in interstate commerce.
 3        (13)  Proceeds from sales to owners, lessors, or shippers
 4    of tangible personal property that is utilized by  interstate
 5    carriers  for  hire  for  use  as  rolling  stock  moving  in
 6    interstate    commerce    and   equipment   operated   by   a
 7    telecommunications provider, licensed as a common carrier  by
 8    the  Federal  Communications Commission, which is permanently
 9    installed in or affixed  to  aircraft  moving  in  interstate
10    commerce.
11        (14)  Machinery  and  equipment  that will be used by the
12    purchaser, or a lessee of the  purchaser,  primarily  in  the
13    process  of  manufacturing  or  assembling  tangible personal
14    property for wholesale or retail sale or lease,  whether  the
15    sale or lease is made directly by the manufacturer or by some
16    other  person,  whether the materials used in the process are
17    owned by the manufacturer or some other  person,  or  whether
18    the sale or lease is made apart from or as an incident to the
19    seller's  engaging  in  the  service  occupation of producing
20    machines, tools,  dies,  jigs,  patterns,  gauges,  or  other
21    similar  items  of no commercial value on special order for a
22    particular purchaser.
23        (15)  Proceeds of mandatory  service  charges  separately
24    stated  on  customers'  bills for purchase and consumption of
25    food and beverages, to the extent that the  proceeds  of  the
26    service  charge  are  in  fact  turned  over  as tips or as a
27    substitute for tips to the employees who participate directly
28    in preparing, serving, hosting or cleaning  up  the  food  or
29    beverage function with respect to which the service charge is
30    imposed.
31        (16)  Petroleum  products  sold  to  a  purchaser  if the
32    seller is prohibited by federal law from charging tax to  the
33    purchaser.
34        (17)  Tangible personal property sold to a common carrier
 
                            -32-               LRB9205204SMdv
 1    by rail or motor that receives the physical possession of the
 2    property  in  Illinois  and  that transports the property, or
 3    shares with another common carrier in the  transportation  of
 4    the  property,  out of Illinois on a standard uniform bill of
 5    lading showing the seller of the property as the  shipper  or
 6    consignor  of the property to a destination outside Illinois,
 7    for use outside Illinois.
 8        (18)  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        (19)  Oil field  exploration,  drilling,  and  production
13    equipment, including (i) rigs and parts of rigs, rotary rigs,
14    cable  tool  rigs,  and  workover rigs, (ii) pipe and tubular
15    goods, including casing and drill strings,  (iii)  pumps  and
16    pump-jack  units,  (iv) storage tanks and flow lines, (v) any
17    individual  replacement  part  for  oil  field   exploration,
18    drilling,  and  production  equipment, and (vi) machinery and
19    equipment purchased for lease; but excluding  motor  vehicles
20    required to be registered under the Illinois Vehicle Code.
21        (20)  Photoprocessing  machinery and equipment, including
22    repair and replacement parts, both new  and  used,  including
23    that   manufactured   on  special  order,  certified  by  the
24    purchaser to  be  used  primarily  for  photoprocessing,  and
25    including  photoprocessing  machinery and equipment purchased
26    for lease.
27        (21)  Coal  exploration,  mining,   offhighway   hauling,
28    processing, maintenance, and reclamation equipment, including
29    replacement  parts  and  equipment,  and  including equipment
30    purchased for lease, but excluding motor vehicles required to
31    be registered under the Illinois Vehicle Code.
32        (22)  Fuel and petroleum products sold to or used  by  an
33    air  carrier,  certified  by  the  carrier  to  be  used  for
34    consumption,  shipment,  or  storage  in  the  conduct of its
 
                            -33-               LRB9205204SMdv
 1    business as an air common carrier, for a flight destined  for
 2    or  returning from a location or locations outside the United
 3    States without regard  to  previous  or  subsequent  domestic
 4    stopovers.
 5        (23)  A  transaction  in  which  the  purchase  order  is
 6    received  by  a  florist who is located outside Illinois, but
 7    who has a florist located in Illinois deliver the property to
 8    the purchaser or the purchaser's donee in Illinois.
 9        (24)  Fuel consumed or used in the  operation  of  ships,
10    barges,  or  vessels  that  are  used primarily in or for the
11    transportation of property or the conveyance of  persons  for
12    hire  on  rivers  bordering  on  this  State  if  the fuel is
13    delivered by the seller to the purchaser's  barge,  ship,  or
14    vessel while it is afloat upon that bordering river.
15        (25)  A motor vehicle sold in this State to a nonresident
16    even though the motor vehicle is delivered to the nonresident
17    in  this  State,  if the motor vehicle is not to be titled in
18    this State, and if a driveaway decal permit is issued to  the
19    motor  vehicle  as  provided in Section 3-603 of the Illinois
20    Vehicle Code or if  the  nonresident  purchaser  has  vehicle
21    registration  plates  to  transfer  to the motor vehicle upon
22    returning to his or her home  state.   The  issuance  of  the
23    driveaway   decal   permit   or   having   the   out-of-state
24    registration plates to be transferred is prima facie evidence
25    that the motor vehicle will not be titled in this State.
26        (26)  Semen used for artificial insemination of livestock
27    for direct agricultural production.
28        (27)  Horses, or interests in horses, registered with and
29    meeting  the  requirements  of  any of the Arabian Horse Club
30    Registry of America, Appaloosa Horse Club,  American  Quarter
31    Horse  Association,  United  States  Trotting Association, or
32    Jockey Club, as appropriate, used for purposes of breeding or
33    racing for prizes.
34        (28)  Computers and communications equipment utilized for
 
                            -34-               LRB9205204SMdv
 1    any hospital purpose and equipment  used  in  the  diagnosis,
 2    analysis,  or treatment of hospital patients sold to a lessor
 3    who leases the equipment, under a lease of one year or longer
 4    executed or in effect at the  time  of  the  purchase,  to  a
 5    hospital  that  has  been  issued  an  active  tax  exemption
 6    identification  number  by the Department under Section 1g of
 7    this Act.
 8        (29)  Personal property sold to a lessor who  leases  the
 9    property,  under a lease of one year or longer executed or in
10    effect at the time of the purchase, to  a  governmental  body
11    that  has  been issued an active tax exemption identification
12    number by the Department under Section 1g of this Act.
13        (30)  Beginning with taxable years  ending  on  or  after
14    December  31, 1995 and ending with taxable years ending on or
15    before December 31, 2004, personal property that  is  donated
16    for  disaster  relief  to  be  used  in  a State or federally
17    declared disaster area in Illinois or bordering Illinois by a
18    manufacturer or retailer that is registered in this State  to
19    a   corporation,   society,   association,   foundation,   or
20    institution  that  has  been  issued  a  sales  tax exemption
21    identification number by the Department that assists  victims
22    of the disaster who reside within the declared disaster area.
23        (31)  Beginning  with  taxable  years  ending on or after
24    December 31, 1995 and ending with taxable years ending on  or
25    before  December  31, 2004, personal property that is used in
26    the performance of  infrastructure  repairs  in  this  State,
27    including  but  not  limited  to municipal roads and streets,
28    access roads, bridges,  sidewalks,  waste  disposal  systems,
29    water  and  sewer  line  extensions,  water  distribution and
30    purification facilities, storm water drainage  and  retention
31    facilities, and sewage treatment facilities, resulting from a
32    State or federally declared disaster in Illinois or bordering
33    Illinois  when  such  repairs  are  initiated  on  facilities
34    located  in  the declared disaster area within 6 months after
 
                            -35-               LRB9205204SMdv
 1    the disaster.
 2        (32)  Beginning July 1, 1999, game or game birds sold  at
 3    a  "game  breeding  and  hunting preserve area" or an "exotic
 4    game hunting area" as those terms are used  in  the  Wildlife
 5    Code or at a hunting enclosure approved through rules adopted
 6    by  the  Department  of Natural Resources.  This paragraph is
 7    exempt from the provisions of Section 2-70.
 8        (33) (32)  A motor vehicle, as that term  is  defined  in
 9    Section  1-146  of the Illinois Vehicle Code, that is donated
10    to  a  corporation,  limited  liability   company,   society,
11    association, foundation, or institution that is determined by
12    the  Department  to be organized and operated exclusively for
13    educational purposes.  For purposes  of  this  exemption,  "a
14    corporation, limited liability company, society, association,
15    foundation, or institution organized and operated exclusively
16    for  educational  purposes"  means  all  tax-supported public
17    schools, private schools that offer systematic instruction in
18    useful branches of  learning  by  methods  common  to  public
19    schools  and  that  compare  favorably  in  their  scope  and
20    intensity with the course of study presented in tax-supported
21    schools,  and  vocational  or technical schools or institutes
22    organized and operated exclusively to  provide  a  course  of
23    study  of  not  less  than  6  weeks duration and designed to
24    prepare individuals to follow a trade or to pursue a  manual,
25    technical,  mechanical,  industrial,  business, or commercial
26    occupation.
27        (34) (33)  Beginning January 1, 2000,  personal property,
28    including food, purchased through fundraising events for  the
29    benefit  of  a  public  or  private  elementary  or secondary
30    school, a group of those  schools,  or  one  or  more  school
31    districts if the events are sponsored by an entity recognized
32    by  the school district that consists primarily of volunteers
33    and includes parents and teachers  of  the  school  children.
34    This  paragraph  does not apply to fundraising events (i) for
 
                            -36-               LRB9205204SMdv
 1    the benefit of private home instruction or (ii) for which the
 2    fundraising entity purchases the personal  property  sold  at
 3    the  events  from  another individual or entity that sold the
 4    property for the purpose of resale by the fundraising  entity
 5    and  that  profits  from  the sale to the fundraising entity.
 6    This paragraph is exempt from the provisions of Section 2-70.
 7        (35)  (32)  Beginning  January  1,  2000,  new  or   used
 8    automatic  vending  machines  that prepare and serve hot food
 9    and beverages, including coffee, soup, and other  items,  and
10    replacement  parts  for  these  machines.   This paragraph is
11    exempt from the provisions of Section 2-70.
12        (36)  Beginning on the effective date of this  amendatory
13    Act  of  the  92nd General Assembly and ending 10 years after
14    the effective date of this amendatory Act of the 92nd General
15    Assembly, production related tangible personal  property  and
16    machinery  and  equipment,  including  repair and replacement
17    parts,  both  new  and  used,  and  including   those   items
18    manufactured   on  special  order  or  purchased  for  lease,
19    certified by the purchaser to be essential to and used in the
20    integrated process of the production  of  electricity  by  an
21    eligible  facility  owned,  operated,  or leased by an exempt
22    wholesale  generator.   "Eligible   facility"   and   "exempt
23    wholesale  generator"  shall  mean  "eligible  facility"  and
24    "exempt  wholesale generator" as defined in Section 32 of the
25    Public Utility Holding Company Act of 1935, 15 U.S.C. 79z-5a,
26    in effect as of the date of this amendatory Act of  the  92nd
27    General  Assembly.  "Machinery"  includes mechanical machines
28    and components of those machines that directly contribute  to
29    or  are  directly  used in or essential to the process of the
30    production   of   electricity.   "Equipment"   includes    an
31    independent  device  or  tool  separate  from  machinery  but
32    essential  to  an  integrated electricity generation process;
33    including pipes of any  kind  used  in  the  process  of  the
34    production   of  electricity;  computers  used  primarily  in
 
                            -37-               LRB9205204SMdv
 1    operating  exempt  machinery;   any   subunit   or   assembly
 2    comprising   a  component  of  any  machinery  or  auxiliary,
 3    adjunct, or attachment parts of machinery, and any parts that
 4    require  periodic  replacement  in  the  course   of   normal
 5    operation;  but  does  not  include  hand  tools. "Production
 6    related  tangible  personal  property"  means  all   tangible
 7    personal  property  directly  used  in  or  essential  to the
 8    process of the production of electricity including,  but  not
 9    limited  to,  tangible  personal  property used in activities
10    such as preproduction material handling,  receiving,  quality
11    control,  inventory  control, storage, staging, and piping or
12    lines necessary for the transportation of water, natural gas,
13    steam, and similar items to and from an eligible facility for
14    use in the process of the  production  of  electricity.  This
15    paragraph  (36)  shall  apply also to machinery and equipment
16    used in the general maintenance or repair of exempt machinery
17    and equipment. This paragraph is solely for  the  purpose  of
18    determining  whether the production related tangible personal
19    property defined in this paragraph is  exempt  from  the  tax
20    imposed  by  this Act.  Nothing in this paragraph, including,
21    but not  limited  to,  any  definitions  set  forth  in  this
22    paragraph, shall be construed, applied, or relied upon in any
23    way  to  ascertain  whether  the property exempt from the tax
24    imposed by this Act is real property or personal property for
25    the purpose of determining whether the property is subject to
26    ad valorem taxes on real property or to any other taxes. This
27    exemption does not apply to any additional tax imposed by the
28    Board of Directors of the Regional  Transportation  Authority
29    under  Section  4.03 of the Regional Transportation Authority
30    Act.
31    (Source: P.A.  90-14,  eff.  7-1-97;  90-519,  eff.   6-1-98;
32    90-552,  eff.  12-12-97;  90-605,  eff.  6-30-98; 91-51, eff.
33    6-30-99; 91-200, eff. 7-20-99; 91-439, eff.  8-6-99;  91-533,
34    eff.  8-13-99;  91-637,  eff.  8-20-99; 91-644, eff. 8-20-99;
 
                            -38-               LRB9205204SMdv
 1    revised 9-28-99.)

 2        Section 99.  Effective date.  This Act takes effect  upon
 3    becoming law.

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