Public Act 90-0289 of the 90th General Assembly
Public Act 90-0289
HB0605 Enrolled LRB9003075KDks
AN ACT in relation to taxes, amending named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Use Tax Act is amended by changing
Section 2 as follows:
(35 ILCS 105/2) (from Ch. 120, par. 439.2)
Sec. 2. "Use" means the exercise by any person of any
right or power over tangible personal property incident to
the ownership of that property, except that it does not
include the sale of such property in any form as tangible
personal property in the regular course of business to the
extent that such property is not first subjected to a use for
which it was purchased, and does not include the use of such
property by its owner for demonstration purposes: Provided
that the property purchased is deemed to be purchased for the
purpose of resale, despite first being used, to the extent to
which it is resold as an ingredient of an intentionally
produced product or by-product of manufacturing. "Use" does
not mean the demonstration use or interim use of tangible
personal property by a retailer before he sells that tangible
personal property. For watercraft or aircraft, if the period
of demonstration use or interim use by the retailer exceeds
18 months, the retailer shall pay on the retailers' original
cost price the tax imposed by this Act, and no credit for
that tax is permitted if the watercraft or aircraft is
subsequently sold by the retailer. "Use" does not mean the
physical incorporation of tangible personal property, to the
extent not first subjected to a use for which it was
purchased, as an ingredient or constituent, into other
tangible personal property (a) which is sold in the regular
course of business or (b) which the person incorporating such
ingredient or constituent therein has undertaken at the time
of such purchase to cause to be transported in interstate
commerce to destinations outside the State of Illinois:
Provided that the property purchased is deemed to be
purchased for the purpose of resale, despite first being
used, to the extent to which it is resold as an ingredient of
an intentionally produced product or by-product of
manufacturing.
"Watercraft" means a Class 2, Class 3, or Class 4
watercraft as defined in Section 3-2 of the Boat Registration
and Safety Act, a personal watercraft, or any boat equipped
with an inboard motor.
"Purchase at retail" means the acquisition of the
ownership of or title to tangible personal property through a
sale at retail.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of tangible personal property for a
valuable consideration.
"Sale at retail" means any transfer of the ownership of
or title to tangible personal property to a purchaser, for
the purpose of use, and not for the purpose of resale in any
form as tangible personal property to the extent not first
subjected to a use for which it was purchased, for a valuable
consideration: Provided that the property purchased is deemed
to be purchased for the purpose of resale, despite first
being used, to the extent to which it is resold as an
ingredient of an intentionally produced product or by-product
of manufacturing. For this purpose, slag produced as an
incident to manufacturing pig iron or steel and sold is
considered to be an intentionally produced by-product of
manufacturing. "Sale at retail" includes any such transfer
made for resale unless made in compliance with Section 2c of
the Retailers' Occupation Tax Act, as incorporated by
reference into Section 12 of this Act. Transactions whereby
the possession of the property is transferred but the seller
retains the title as security for payment of the selling
price are sales.
"Sale at retail" shall also be construed to include any
Illinois florist's sales transaction in which the purchase
order is received in Illinois by a florist and the sale is
for use or consumption, but the Illinois florist has a
florist in another state deliver the property to the
purchaser or the purchaser's donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business
as part of the sale of food or beverages and is used to
deliver, package, or consume food or beverages, regardless of
where consumption of the food or beverages occurs. Examples
of those items include, but are not limited to nonreusable,
paper and plastic cups, plates, baskets, boxes, sleeves,
buckets or other containers, utensils, straws, placemats,
napkins, doggie bags, and wrapping or packaging materials
that are transferred to customers as part of the sale of food
or beverages in the ordinary course of business.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary
purpose of conveying news (with or without other information)
is not a purchase, use or sale of tangible personal property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits, property other than as hereinafter provided,
and services, but not including the value of or credit given
for traded-in tangible personal property where the item that
is traded-in is of like kind and character as that which is
being sold, and shall be determined without any deduction on
account of the cost of the property sold, the cost of
materials used, labor or service cost or any other expense
whatsoever, but does not include interest or finance charges
which appear as separate items on the bill of sale or sales
contract nor charges that are added to prices by sellers on
account of the seller's tax liability under the "Retailers'
Occupation Tax Act", or on account of the seller's duty to
collect, from the purchaser, the tax that is imposed by this
Act, or on account of the seller's tax liability under
Section 8-11-1 of the Illinois Municipal Code, as heretofore
and hereafter amended, or on account of the seller's tax
liability under the "County Retailers' Occupation Tax Act".
Effective December 1, 1985, "selling price" shall include
charges that are added to prices by sellers on account of the
seller's tax liability under the Cigarette Tax Act, on
account of the seller's duty to collect, from the purchaser,
the tax imposed under the Cigarette Use Tax Act, and on
account of the seller's duty to collect, from the purchaser,
any cigarette tax imposed by a home rule unit.
The phrase "like kind and character" shall be liberally
construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt
from retailers' occupation tax and use tax as an isolated or
occasional sale.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, limited liability company, or a
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Retailer" means and includes every person engaged in the
business of making sales at retail as defined in this
Section.
A person who holds himself or herself out as being
engaged (or who habitually engages) in selling tangible
personal property at retail is a retailer hereunder with
respect to such sales (and not primarily in a service
occupation) notwithstanding the fact that such person designs
and produces such tangible personal property on special order
for the purchaser and in such a way as to render the property
of value only to such purchaser, if such tangible personal
property so produced on special order serves substantially
the same function as stock or standard items of tangible
personal property that are sold at retail.
A person whose activities are organized and conducted
primarily as a not-for-profit service enterprise, and who
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is a retailer with respect to such transactions, excepting
only a person organized and operated exclusively for
charitable, religious or educational purposes either (1), to
the extent of sales by such person to its members, students,
patients or inmates of tangible personal property to be used
primarily for the purposes of such person, or (2), to the
extent of sales by such person of tangible personal property
which is not sold or offered for sale by persons organized
for profit. The selling of school books and school supplies
by schools at retail to students is not "primarily for the
purposes of" the school which does such selling. This
paragraph does not apply to nor subject to taxation
occasional dinners, social or similar activities of a person
organized and operated exclusively for charitable, religious
or educational purposes, whether or not such activities are
open to the public.
A person who is the recipient of a grant or contract
under Title VII of the Older Americans Act of 1965 (P.L.
92-258) and serves meals to participants in the federal
Nutrition Program for the Elderly in return for contributions
established in amount by the individual participant pursuant
to a schedule of suggested fees as provided for in the
federal Act is not a retailer under this Act with respect to
such transactions.
Persons who engage in the business of transferring
tangible personal property upon the redemption of trading
stamps are retailers hereunder when engaged in such business.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out
as being engaged (or who does not habitually engage) in
selling such tangible personal property at retail or a sale
through a bulk vending machine does not make such person a
retailer hereunder. However, any person who is engaged in a
business which is not subject to the tax imposed by the
"Retailers' Occupation Tax Act" because of involving the sale
of or a contract to sell real estate or a construction
contract to improve real estate, but who, in the course of
conducting such business, transfers tangible personal
property to users or consumers in the finished form in which
it was purchased, and which does not become real estate,
under any provision of a construction contract or real estate
sale or real estate sales agreement entered into with some
other person arising out of or because of such nontaxable
business, is a retailer to the extent of the value of the
tangible personal property so transferred. If, in such
transaction, a separate charge is made for the tangible
personal property so transferred, the value of such property,
for the purposes of this Act, is the amount so separately
charged, but not less than the cost of such property to the
transferor; if no separate charge is made, the value of such
property, for the purposes of this Act, is the cost to the
transferor of such tangible personal property.
"Retailer maintaining a place of business in this State",
or any like term, means and includes any of the following
retailers:
1. A retailer having or maintaining within this
State, directly or by a subsidiary, an office,
distribution house, sales house, warehouse or other place
of business, or any agent or other representative
operating within this State under the authority of the
retailer or its subsidiary, irrespective of whether such
place of business or agent or other representative is
located here permanently or temporarily, or whether such
retailer or subsidiary is licensed to do business in this
State. However, the ownership of property that is located
at the premises of a printer with which the retailer has
contracted for printing and that consists of the final
printed product, property that becomes a part of the
final printed product, or copy from which the printed
product is produced shall not result in the retailer
being deemed to have or maintain an office, distribution
house, sales house, warehouse, or other place of business
within this State.
2. A retailer soliciting orders for tangible
personal property by means of a telecommunication or
television shopping system (which utilizes toll free
numbers) which is intended by the retailer to be
broadcast by cable television or other means of
broadcasting, to consumers located in this State.
3. A retailer, pursuant to a contract with a
broadcaster or publisher located in this State,
soliciting orders for tangible personal property by means
of advertising which is disseminated primarily to
consumers located in this State and only secondarily to
bordering jurisdictions.
4. A retailer soliciting orders for tangible
personal property by mail if the solicitations are
substantial and recurring and if the retailer benefits
from any banking, financing, debt collection,
telecommunication, or marketing activities occurring in
this State or benefits from the location in this State of
authorized installation, servicing, or repair facilities.
5. A retailer that is owned or controlled by the
same interests that own or control any retailer engaging
in business in the same or similar line of business in
this State.
6. A retailer having a franchisee or licensee
operating under its trade name if the franchisee or
licensee is required to collect the tax under this
Section.
7. A retailer, pursuant to a contract with a cable
television operator located in this State, soliciting
orders for tangible personal property by means of
advertising which is transmitted or distributed over a
cable television system in this State.
8. A retailer engaging in activities in Illinois,
which activities in the state in which the retail
business engaging in such activities is located would
constitute maintaining a place of business in that state.
"Bulk vending machine" means a nonelectrically operated
vending machine, containing unsorted confections, nuts or
other merchandise which, when a coin of a denomination not
larger than one cent is inserted, are dispensed in equal
portions, at random and without selection by the customer.
(Source: P.A. 88-194; 88-361; 88-480; 88-660, eff. 9-16-94;
88-669, eff. 11-29-94; 88-670, eff. 12-2-94.)
Section 10. The Retailers' Occupation Tax Act is amended
by changing Section 1 as follows:
(35 ILCS 120/1) (from Ch. 120, par. 440)
Sec. 1. Definitions. "Sale at retail" means any
transfer of the ownership of or title to tangible personal
property to a purchaser, for the purpose of use or
consumption, and not for the purpose of resale in any form as
tangible personal property to the extent not first subjected
to a use for which it was purchased, for a valuable
consideration: Provided that the property purchased is
deemed to be purchased for the purpose of resale, despite
first being used, to the extent to which it is resold as an
ingredient of an intentionally produced product or byproduct
of manufacturing. For this purpose, slag produced as an
incident to manufacturing pig iron or steel and sold is
considered to be an intentionally produced byproduct of
manufacturing. Transactions whereby the possession of the
property is transferred but the seller retains the title as
security for payment of the selling price shall be deemed to
be sales.
"Sale at retail" shall be construed to include any
transfer of the ownership of or title to tangible personal
property to a purchaser, for use or consumption by any other
person to whom such purchaser may transfer the tangible
personal property without a valuable consideration, and to
include any transfer, whether made for or without a valuable
consideration, for resale in any form as tangible personal
property unless made in compliance with Section 2c of this
Act.
Sales of tangible personal property, which property, to
the extent not first subjected to a use for which it was
purchased, as an ingredient or constituent, goes into and
forms a part of tangible personal property subsequently the
subject of a "Sale at retail", are not sales at retail as
defined in this Act: Provided that the property purchased is
deemed to be purchased for the purpose of resale, despite
first being used, to the extent to which it is resold as an
ingredient of an intentionally produced product or byproduct
of manufacturing.
"Sale at retail" shall be construed to include any
Illinois florist's sales transaction in which the purchase
order is received in Illinois by a florist and the sale is
for use or consumption, but the Illinois florist has a
florist in another state deliver the property to the
purchaser or the purchaser's donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business
as part of the sale of food or beverages and is used to
deliver, package, or consume food or beverages, regardless of
where consumption of the food or beverages occurs. Examples
of those items include, but are not limited to nonreusable,
paper and plastic cups, plates, baskets, boxes, sleeves,
buckets or other containers, utensils, straws, placemats,
napkins, doggie bags, and wrapping or packaging materials
that are transferred to customers as part of the sale of food
or beverages in the ordinary course of business.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary
purpose of conveying news (with or without other information)
is not a purchase, use or sale of tangible personal property.
A person whose activities are organized and conducted
primarily as a not-for-profit service enterprise, and who
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is engaged in the business of selling tangible personal
property at retail with respect to such transactions,
excepting only a person organized and operated exclusively
for charitable, religious or educational purposes either (1),
to the extent of sales by such person to its members,
students, patients or inmates of tangible personal property
to be used primarily for the purposes of such person, or (2),
to the extent of sales by such person of tangible personal
property which is not sold or offered for sale by persons
organized for profit. The selling of school books and school
supplies by schools at retail to students is not "primarily
for the purposes of" the school which does such selling. The
provisions of this paragraph shall not apply to nor subject
to taxation occasional dinners, socials or similar activities
of a person organized and operated exclusively for
charitable, religious or educational purposes, whether or not
such activities are open to the public.
A person who is the recipient of a grant or contract
under Title VII of the Older Americans Act of 1965 (P.L.
92-258) and serves meals to participants in the federal
Nutrition Program for the Elderly in return for contributions
established in amount by the individual participant pursuant
to a schedule of suggested fees as provided for in the
federal Act is not engaged in the business of selling
tangible personal property at retail with respect to such
transactions.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of or title to tangible personal
property for a valuable consideration.
"Reseller of motor fuel" means any person engaged in the
business of selling or delivering or transferring title of
motor fuel to another person other than for use or
consumption. No person shall act as a reseller of motor fuel
within this State without first being registered as a
reseller pursuant to Section 2c or a retailer pursuant to
Section 2a.
"Selling price" or the "amount of sale" means the
consideration for a sale valued in money whether received in
money or otherwise, including cash, credits, property, other
than as hereinafter provided, and services, but not including
the value of or credit given for traded-in tangible personal
property where the item that is traded-in is of like kind and
character as that which is being sold, and shall be
determined without any deduction on account of the cost of
the property sold, the cost of materials used, labor or
service cost or any other expense whatsoever, but does not
include charges that are added to prices by sellers on
account of the seller's tax liability under this Act, or on
account of the seller's duty to collect, from the purchaser,
the tax that is imposed by the Use Tax Act, or on account of
the seller's tax liability under Section 8-11-1 of the
Illinois Municipal Code, as heretofore and hereafter amended,
or on account of the seller's tax liability under the County
Retailers' Occupation Tax Act, or on account of the seller's
tax liability under the Home Rule Municipal Soft Drink
Retailers' Occupation Tax, or on account of the seller's tax
liability under any tax imposed under the "Regional
Transportation Authority Act", approved December 12, 1973.
Effective December 1, 1985, "selling price" shall include
charges that are added to prices by sellers on account of the
seller's tax liability under the Cigarette Tax Act, on
account of the sellers' duty to collect, from the purchaser,
the tax imposed under the Cigarette Use Tax Act, and on
account of the seller's duty to collect, from the purchaser,
any cigarette tax imposed by a home rule unit.
The phrase "like kind and character" shall be liberally
construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt
from retailers' occupation tax and use tax as an isolated or
occasional sale.
"Gross receipts" from the sales of tangible personal
property at retail means the total selling price or the
amount of such sales, as hereinbefore defined. In the case
of charge and time sales, the amount thereof shall be
included only as and when payments are received by the
seller. Receipts or other consideration derived by a seller
from the sale, transfer or assignment of accounts receivable
to a wholly owned subsidiary will not be deemed payments
prior to the time the purchaser makes payment on such
accounts.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, limited liability company, or a
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out
as being engaged (or who does not habitually engage) in
selling such tangible personal property at retail, or a sale
through a bulk vending machine, does not constitute engaging
in a business of selling such tangible personal property at
retail within the meaning of this Act; provided that any
person who is engaged in a business which is not subject to
the tax imposed by this Act because of involving the sale of
or a contract to sell real estate or a construction contract
to improve real estate or a construction contract to
engineer, install, and maintain an integrated system of
products, but who, in the course of conducting such business,
transfers tangible personal property to users or consumers in
the finished form in which it was purchased, and which does
not become real estate or was not engineered and installed,
under any provision of a construction contract or real estate
sale or real estate sales agreement entered into with some
other person arising out of or because of such nontaxable
business, is engaged in the business of selling tangible
personal property at retail to the extent of the value of the
tangible personal property so transferred. If, in such a
transaction, a separate charge is made for the tangible
personal property so transferred, the value of such property,
for the purpose of this Act, shall be the amount so
separately charged, but not less than the cost of such
property to the transferor; if no separate charge is made,
the value of such property, for the purposes of this Act, is
the cost to the transferor of such tangible personal
property. Construction contracts for the improvement of real
estate consisting of engineering, installation, and
maintenance of voice, data, video, security, and all
telecommunication systems do not constitute engaging in a
business of selling tangible personal property at retail
within the meaning of this Act if they are sold at one
specified contract price.
A person who holds himself or herself out as being
engaged (or who habitually engages) in selling tangible
personal property at retail is a person engaged in the
business of selling tangible personal property at retail
hereunder with respect to such sales (and not primarily in a
service occupation) notwithstanding the fact that such person
designs and produces such tangible personal property on
special order for the purchaser and in such a way as to
render the property of value only to such purchaser, if such
tangible personal property so produced on special order
serves substantially the same function as stock or standard
items of tangible personal property that are sold at retail.
Persons who engage in the business of transferring
tangible personal property upon the redemption of trading
stamps are engaged in the business of selling such property
at retail and shall be liable for and shall pay the tax
imposed by this Act on the basis of the retail value of the
property transferred upon redemption of such stamps.
"Bulk vending machine" means a nonelectrically operated
vending machine, containing unsorted confections, nuts or
other merchandise which, when a coin of a denomination not
larger than one cent is inserted, are dispensed in equal
portions, at random and without selection by the customer.
(Source: P.A. 88-420; 88-480; 88-507; 88-670, eff. 12-2-94.)
Section 99. Effective date. This Act takes effect upon
becoming law.