093_SB0631

                                     LRB093 10610 SJM 10894 b

 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 2 as follows:

 6        (35 ILCS 105/2) (from Ch. 120, par. 439.2)
 7        Sec.  2.   "Use"  means the exercise by any person of any
 8    right or power over tangible personal  property  incident  to
 9    the  ownership  of  that  property,  except  that it does not
10    include the sale of such property in  any  form  as  tangible
11    personal  property  in  the regular course of business to the
12    extent that such property is not first subjected to a use for
13    which it was purchased, and does not include the use of  such
14    property  by  its  owner for demonstration purposes: Provided
15    that the property purchased is deemed to be purchased for the
16    purpose of resale, despite first being used, to the extent to
17    which it is resold  as  an  ingredient  of  an  intentionally
18    produced  product or by-product of manufacturing.  "Use" does
19    not mean the demonstration use or  interim  use  of  tangible
20    personal property by a retailer before he sells that tangible
21    personal property.  For watercraft or aircraft, if the period
22    of  demonstration  use or interim use by the retailer exceeds
23    18 months, the retailer shall pay on the retailers'  original
24    cost  price  the  tax  imposed by this Act, and no credit for
25    that tax is  permitted  if  the  watercraft  or  aircraft  is
26    subsequently  sold  by the retailer.  "Use" does not mean the
27    physical incorporation of tangible personal property, to  the
28    extent  not  first  subjected  to  a  use  for  which  it was
29    purchased,  as  an  ingredient  or  constituent,  into  other
30    tangible personal property (a) which is sold in  the  regular
31    course of business or (b) which the person incorporating such
 
                            -2-      LRB093 10610 SJM 10894 b
 1    ingredient  or constituent therein has undertaken at the time
 2    of such purchase to cause to  be  transported  in  interstate
 3    commerce  to  destinations  outside  the  State  of Illinois:
 4    Provided  that  the  property  purchased  is  deemed  to   be
 5    purchased  for  the  purpose  of  resale, despite first being
 6    used, to the extent to which it is resold as an ingredient of
 7    an  intentionally   produced   product   or   by-product   of
 8    manufacturing.
 9        "Watercraft"  means  a  Class  2,  Class  3,  or  Class 4
10    watercraft as defined in Section 3-2 of the Boat Registration
11    and Safety Act, a personal watercraft, or any  boat  equipped
12    with an inboard motor.
13        "Purchase   at  retail"  means  the  acquisition  of  the
14    ownership of or title to tangible personal property through a
15    sale at retail.
16        "Purchaser" means anyone who, through a sale  at  retail,
17    acquires  the  ownership  of tangible personal property for a
18    valuable consideration.
19        "Sale at retail" means any transfer of the  ownership  of
20    or  title  to  tangible  personal  property  to  a purchaser,
21    including an Internet transfer, for the purpose of  use,  and
22    not  for  the  purpose  of  resale  in  any  form as tangible
23    personal property to the extent not first subjected to a  use
24    for  which  it  was  purchased, for a valuable consideration:
25    Provided  that  the  property  purchased  is  deemed  to   be
26    purchased  for  the  purpose  of  resale, despite first being
27    used, to the extent to which it is resold as an ingredient of
28    an  intentionally   produced   product   or   by-product   of
29    manufacturing.    For  this  purpose,  slag  produced  as  an
30    incident to manufacturing pig  iron  or  steel  and  sold  is
31    considered  to  be  an  intentionally  produced by-product of
32    manufacturing.  "Sale at retail" includes any  such  transfer
33    made  for resale unless made in compliance with Section 2c of
34    the  Retailers'  Occupation  Tax  Act,  as  incorporated   by
 
                            -3-      LRB093 10610 SJM 10894 b
 1    reference  into Section 12 of this Act.  Transactions whereby
 2    the possession of the property is transferred but the  seller
 3    retains  the  title  as  security  for payment of the selling
 4    price are sales.
 5        "Sale at retail" shall also be construed to  include  any
 6    Illinois  florist's  sales  transaction in which the purchase
 7    order is received in Illinois by a florist and  the  sale  is
 8    for  use  or  consumption,  but  the  Illinois  florist has a
 9    florist  in  another  state  deliver  the  property  to   the
10    purchaser or the purchaser's donee in such other state.
11        Nonreusable  tangible  personal  property that is used by
12    persons engaged in the business of  operating  a  restaurant,
13    cafeteria,  or  drive-in  is  a  sale  for  resale when it is
14    transferred to customers in the ordinary course  of  business
15    as  part  of  the  sale  of  food or beverages and is used to
16    deliver, package, or consume food or beverages, regardless of
17    where consumption of the food or beverages occurs.   Examples
18    of  those  items include, but are not limited to nonreusable,
19    paper and plastic  cups,  plates,  baskets,  boxes,  sleeves,
20    buckets  or  other  containers,  utensils, straws, placemats,
21    napkins, doggie bags, and  wrapping  or  packaging  materials
22    that are transferred to customers as part of the sale of food
23    or beverages in the ordinary course of business.
24        The  purchase,  employment  and transfer of such tangible
25    personal property  as  newsprint  and  ink  for  the  primary
26    purpose of conveying news (with or without other information)
27    is not a purchase, use or sale of tangible personal property.
28        "Selling price" means the consideration for a sale valued
29    in  money  whether  received in money or otherwise, including
30    cash, credits, property other than as  hereinafter  provided,
31    and  services, but not including the value of or credit given
32    for traded-in tangible personal property where the item  that
33    is  traded-in  is of like kind and character as that which is
34    being sold, and shall be determined without any deduction  on
 
                            -4-      LRB093 10610 SJM 10894 b
 1    account  of  the  cost  of  the  property  sold,  the cost of
 2    materials used, labor or service cost or  any  other  expense
 3    whatsoever,  but does not include interest or finance charges
 4    which appear as separate items on the bill of sale  or  sales
 5    contract  nor  charges that are added to prices by sellers on
 6    account of the seller's tax liability under  the  "Retailers'
 7    Occupation  Tax  Act",  or on account of the seller's duty to
 8    collect, from the purchaser, the tax that is imposed by  this
 9    Act,  or  on  account  of  the  seller's  tax liability under
10    Section 8-11-1 of the Illinois Municipal Code, as  heretofore
11    and  hereafter  amended,  or  on  account of the seller's tax
12    liability under the "County Retailers' Occupation  Tax  Act".
13    Effective  December  1,  1985,  "selling price" shall include
14    charges that are added to prices by sellers on account of the
15    seller's tax  liability  under  the  Cigarette  Tax  Act,  on
16    account  of the seller's duty to collect, from the purchaser,
17    the tax imposed under the  Cigarette  Use  Tax  Act,  and  on
18    account  of the seller's duty to collect, from the purchaser,
19    any cigarette tax imposed by a home rule unit.
20        The phrase "like kind and character" shall  be  liberally
21    construed  (including  but  not  limited to any form of motor
22    vehicle for any form of motor vehicle, or any kind of farm or
23    agricultural  implement  for  any  other  kind  of  farm   or
24    agricultural  implement),  while not including a kind of item
25    which, if sold at retail by that retailer,  would  be  exempt
26    from  retailers' occupation tax and use tax as an isolated or
27    occasional sale.
28        "Department" means the Department of Revenue.
29        "Person" means any natural individual, firm, partnership,
30    association, joint stock company, joint adventure, public  or
31    private   corporation,   limited   liability  company,  or  a
32    receiver, executor, trustee, guardian or other representative
33    appointed by order of any court.
34        "Retailer" means and includes every person engaged in the
 
                            -5-      LRB093 10610 SJM 10894 b
 1    business of  making  sales  at  retail  as  defined  in  this
 2    Section.
 3        A  person  who  holds  himself  or  herself  out as being
 4    engaged (or  who  habitually  engages)  in  selling  tangible
 5    personal  property  at  retail  is  a retailer hereunder with
 6    respect to  such  sales  (and  not  primarily  in  a  service
 7    occupation) notwithstanding the fact that such person designs
 8    and produces such tangible personal property on special order
 9    for the purchaser and in such a way as to render the property
10    of  value  only  to such purchaser, if such tangible personal
11    property so produced on special  order  serves  substantially
12    the  same  function  as  stock  or standard items of tangible
13    personal property that are sold at retail.
14        A person whose activities  are  organized  and  conducted
15    primarily  as  a  not-for-profit  service enterprise, and who
16    engages in  selling  tangible  personal  property  at  retail
17    (whether to the public or merely to members and their guests)
18    is  a  retailer  with respect to such transactions, excepting
19    only  a  person  organized  and  operated   exclusively   for
20    charitable,  religious or educational purposes either (1), to
21    the extent of sales by such person to its members,  students,
22    patients  or inmates of tangible personal property to be used
23    primarily for the purposes of such person,  or  (2),  to  the
24    extent  of sales by such person of tangible personal property
25    which is not sold or offered for sale  by  persons  organized
26    for  profit.  The selling of school books and school supplies
27    by schools at retail to students is not  "primarily  for  the
28    purposes  of"  the  school  which  does  such  selling.  This
29    paragraph  does  not  apply  to  nor  subject   to   taxation
30    occasional  dinners, social or similar activities of a person
31    organized and operated exclusively for charitable,  religious
32    or  educational  purposes, whether or not such activities are
33    open to the public.
34        A person who is the recipient  of  a  grant  or  contract
 
                            -6-      LRB093 10610 SJM 10894 b
 1    under  Title  VII  of  the  Older Americans Act of 1965 (P.L.
 2    92-258) and serves  meals  to  participants  in  the  federal
 3    Nutrition Program for the Elderly in return for contributions
 4    established  in amount by the individual participant pursuant
 5    to a schedule of  suggested  fees  as  provided  for  in  the
 6    federal  Act is not a retailer under this Act with respect to
 7    such transactions.
 8        Persons  who  engage  in  the  business  of  transferring
 9    tangible personal property upon  the  redemption  of  trading
10    stamps are retailers hereunder when engaged in such business.
11        The  isolated  or  occasional  sale  of tangible personal
12    property at retail by a person who does not hold himself  out
13    as  being  engaged  (or  who  does  not habitually engage) in
14    selling such tangible personal property at retail or  a  sale
15    through  a  bulk  vending machine does not make such person a
16    retailer hereunder.  However, any person who is engaged in  a
17    business  which  is  not  subject  to  the tax imposed by the
18    "Retailers' Occupation Tax Act" because of involving the sale
19    of or a contract  to  sell  real  estate  or  a  construction
20    contract  to  improve  real estate, but who, in the course of
21    conducting  such  business,   transfers   tangible   personal
22    property  to users or consumers in the finished form in which
23    it was purchased, and which  does  not  become  real  estate,
24    under any provision of a construction contract or real estate
25    sale  or  real  estate sales agreement entered into with some
26    other person arising out of or  because  of  such  nontaxable
27    business,  is  a  retailer  to the extent of the value of the
28    tangible personal  property  so  transferred.   If,  in  such
29    transaction,  a  separate  charge  is  made  for the tangible
30    personal property so transferred, the value of such property,
31    for the purposes of this Act, is  the  amount  so  separately
32    charged,  but  not less than the cost of such property to the
33    transferor; if no separate charge is made, the value of  such
34    property,  for  the  purposes of this Act, is the cost to the
 
                            -7-      LRB093 10610 SJM 10894 b
 1    transferor of such tangible personal property.
 2        "Retailer maintaining a place of business in this State",
 3    or any like term, means and includes  any  of  the  following
 4    retailers:
 5             1.  A  retailer  having  or  maintaining within this
 6        State,  directly  or  by   a   subsidiary,   an   office,
 7        distribution house, sales house, warehouse or other place
 8        of   business,  or  any  agent  or  other  representative
 9        operating within this State under the  authority  of  the
10        retailer  or its subsidiary, irrespective of whether such
11        place of business or agent  or  other  representative  is
12        located  here permanently or temporarily, or whether such
13        retailer or subsidiary is licensed to do business in this
14        State. However, the ownership of property that is located
15        at the premises of a printer with which the retailer  has
16        contracted  for  printing  and that consists of the final
17        printed product, property that  becomes  a  part  of  the
18        final  printed  product,  or  copy from which the printed
19        product is produced shall  not  result  in  the  retailer
20        being  deemed to have or maintain an office, distribution
21        house, sales house, warehouse, or other place of business
22        within this State.
23             2.  A  retailer  soliciting  orders   for   tangible
24        personal  property  by  means  of  a telecommunication or
25        television shopping  system  (which  utilizes  toll  free
26        numbers)   which  is  intended  by  the  retailer  to  be
27        broadcast  by  cable  television  or   other   means   of
28        broadcasting, to consumers located in this State.
29             3.  A  retailer,  pursuant  to  a  contract  with  a
30        broadcaster   or   publisher   located   in  this  State,
31        soliciting orders for tangible personal property by means
32        of  advertising  which  is  disseminated   primarily   to
33        consumers  located  in this State and only secondarily to
34        bordering jurisdictions.
 
                            -8-      LRB093 10610 SJM 10894 b
 1             4.  A  retailer  soliciting  orders   for   tangible
 2        personal  property  by  mail  if  the  solicitations  are
 3        substantial  and  recurring  and if the retailer benefits
 4        from   any   banking,   financing,    debt    collection,
 5        telecommunication,  or  marketing activities occurring in
 6        this State or benefits from the location in this State of
 7        authorized installation, servicing, or repair facilities.
 8             5.  A retailer that is owned or  controlled  by  the
 9        same  interests that own or control any retailer engaging
10        in business in the same or similar line  of  business  in
11        this State.
12             6.  A  retailer  having  a  franchisee  or  licensee
13        operating  under  its  trade  name  if  the franchisee or
14        licensee is  required  to  collect  the  tax  under  this
15        Section.
16             7.  A  retailer, pursuant to a contract with a cable
17        television operator located  in  this  State,  soliciting
18        orders   for  tangible  personal  property  by  means  of
19        advertising which is transmitted or  distributed  over  a
20        cable television system in this State.
21             8.  A  retailer  engaging in activities in Illinois,
22        which  activities  in  the  state  in  which  the  retail
23        business engaging in such  activities  is  located  would
24        constitute maintaining a place of business in that state.
25             9.  A   retailer   soliciting  orders  for  tangible
26        personal property  by  means  of  the  Internet  that  is
27        intended  to  be transmitted to consumers located in this
28        State.
29        "Bulk  vending  machine"   means   a   vending   machine,
30    containing  unsorted  confections, nuts, toys, or other items
31    designed primarily to be used  or  played  with  by  children
32    which, when a coin or coins of a denomination not larger than
33    $0.50  are  inserted,  are  dispensed  in  equal portions, at
34    random and without selection by the customer.
 
                            -9-      LRB093 10610 SJM 10894 b
 1    (Source: P.A. 92-213, eff. 1-1-02.)

 2        Section 10.  The  Service  Use  Tax  Act  is  amended  by
 3    changing Section 2 as follows:

 4        (35 ILCS 110/2) (from Ch. 120, par. 439.32)
 5        Sec.  2.  "Use"  means  the exercise by any person of any
 6    right or power over tangible personal  property  incident  to
 7    the ownership of that property, but does not include the sale
 8    or  use for demonstration by him of that property in any form
 9    as tangible  personal  property  in  the  regular  course  of
10    business.  "Use"  does  not  mean the interim use of tangible
11    personal property nor the physical incorporation of  tangible
12    personal  property,  as  an  ingredient  or constituent, into
13    other tangible personal property, (a) which is  sold  in  the
14    regular   course   of   business  or  (b)  which  the  person
15    incorporating such  ingredient  or  constituent  therein  has
16    undertaken  at  the  time  of  such  purchase  to cause to be
17    transported in interstate commerce  to  destinations  outside
18    the State of Illinois.
19        "Purchased  from  a  serviceman" means the acquisition of
20    the ownership of, or title  to,  tangible  personal  property
21    through a sale of service.
22        "Purchaser"  means  any  person  who,  through  a sale of
23    service, acquires the ownership of, or title to, any tangible
24    personal property.
25        "Cost  price"  means  the  consideration  paid   by   the
26    serviceman  for  a  purchase valued in money, whether paid in
27    money or otherwise, including cash, credits and services, and
28    shall be determined without any deduction on account  of  the
29    supplier's  cost  of  the  property sold or on account of any
30    other expense incurred by the  supplier.  When  a  serviceman
31    contracts  out  part  or  all of the services required in his
32    sale of service, it shall be presumed that the cost price  to
 
                            -10-     LRB093 10610 SJM 10894 b
 1    the  serviceman  of the property transferred to him or her by
 2    his  or  her  subcontractor  is   equal   to   50%   of   the
 3    subcontractor's  charges  to the serviceman in the absence of
 4    proof of the consideration paid by the subcontractor for  the
 5    purchase of such property.
 6        "Selling price" means the consideration for a sale valued
 7    in  money  whether  received in money or otherwise, including
 8    cash, credits and service, and shall  be  determined  without
 9    any  deduction  on  account  of  the serviceman's cost of the
10    property sold, the cost of materials used, labor  or  service
11    cost  or  any  other expense whatsoever, but does not include
12    interest or finance charges which appear as separate items on
13    the bill of sale or sales contract nor charges that are added
14    to prices by sellers on  account  of  the  seller's  duty  to
15    collect,  from the purchaser, the tax that is imposed by this
16    Act.
17        "Department" means the Department of Revenue.
18        "Person" means any natural individual, firm, partnership,
19    association, joint stock company, joint  venture,  public  or
20    private  corporation,  limited  liability  company,  and  any
21    receiver, executor, trustee, guardian or other representative
22    appointed by order of any court.
23        "Sale of service" means any transaction except:
24             (1)  a  retail  sale  of  tangible personal property
25        taxable under the Retailers' Occupation Tax Act or  under
26        the Use Tax Act.
27             (2)  a  sale  of  tangible personal property for the
28        purpose of resale made in compliance with Section  2c  of
29        the Retailers' Occupation Tax Act.
30             (3)  except  as  hereinafter  provided,  a  sale  or
31        transfer  of tangible personal property as an incident to
32        the rendering of service for or by any governmental body,
33        or for  or  by  any  corporation,  society,  association,
34        foundation   or   institution   organized   and  operated
 
                            -11-     LRB093 10610 SJM 10894 b
 1        exclusively  for  charitable,  religious  or  educational
 2        purposes  or  any  not-for-profit  corporation,  society,
 3        association,  foundation,  institution  or   organization
 4        which  has no compensated officers or employees and which
 5        is organized and operated primarily for the recreation of
 6        persons 55 years of age or  older.  A  limited  liability
 7        company   may   qualify  for  the  exemption  under  this
 8        paragraph  only  if  the  limited  liability  company  is
 9        organized  and  operated  exclusively   for   educational
10        purposes.
11             (4)  a   sale   or  transfer  of  tangible  personal
12        property as an incident to the rendering of  service  for
13        interstate  carriers  for  hire  for use as rolling stock
14        moving in interstate commerce or by lessors under a lease
15        of one year or longer, executed or in effect at the  time
16        of  purchase of personal property, to interstate carriers
17        for hire for use as rolling stock  moving  in  interstate
18        commerce  so  long as so used by such interstate carriers
19        for hire, and equipment operated by a  telecommunications
20        provider,  licensed  as  a  common carrier by the Federal
21        Communications Commission, which is permanently installed
22        in or affixed to aircraft moving in interstate commerce.
23             (4a)  a  sale  or  transfer  of  tangible   personal
24        property  as  an incident to the rendering of service for
25        owners,  lessors,  or  shippers  of   tangible   personal
26        property  which  is  utilized  by interstate carriers for
27        hire for  use  as  rolling  stock  moving  in  interstate
28        commerce  so  long  as so used by interstate carriers for
29        hire, and  equipment  operated  by  a  telecommunications
30        provider,  licensed  as  a  common carrier by the Federal
31        Communications Commission, which is permanently installed
32        in or affixed to aircraft moving in interstate commerce.
33             (5)  a sale or transfer of machinery  and  equipment
34        used  primarily  in  the  process of the manufacturing or
 
                            -12-     LRB093 10610 SJM 10894 b
 1        assembling, either in an existing, an expanded or  a  new
 2        manufacturing facility, of tangible personal property for
 3        wholesale  or  retail sale or lease, whether such sale or
 4        lease is made directly by the  manufacturer  or  by  some
 5        other  person,  whether the materials used in the process
 6        are owned by the manufacturer or some  other  person,  or
 7        whether  such  sale  or lease is made apart from or as an
 8        incident to the seller's engaging in a service occupation
 9        and the applicable tax is a Service Use  Tax  or  Service
10        Occupation   Tax,  rather  than  Use  Tax  or  Retailers'
11        Occupation Tax.
12             (5a)  the repairing, reconditioning  or  remodeling,
13        for  a  common  carrier  by  rail,  of  tangible personal
14        property which belongs to such carrier for hire,  and  as
15        to which such carrier receives the physical possession of
16        the repaired, reconditioned or remodeled item of tangible
17        personal  property  in  Illinois,  and which such carrier
18        transports, or shares with another common carrier in  the
19        transportation  of  such  property,  out of Illinois on a
20        standard uniform bill of lading showing  the  person  who
21        repaired,  reconditioned  or  remodeled the property to a
22        destination outside Illinois, for use outside Illinois.
23             (5b)  a  sale  or  transfer  of  tangible   personal
24        property  which  is  produced  by  the  seller thereof on
25        special  order  in  such  a  way  as  to  have  made  the
26        applicable tax the Service Occupation Tax or the  Service
27        Use Tax, rather than the Retailers' Occupation Tax or the
28        Use Tax, for an interstate carrier by rail which receives
29        the physical possession of such property in Illinois, and
30        which  transports  such  property, or shares with another
31        common carrier in the transportation  of  such  property,
32        out  of  Illinois  on  a  standard uniform bill of lading
33        showing the seller of the  property  as  the  shipper  or
34        consignor  of  such  property  to  a  destination outside
 
                            -13-     LRB093 10610 SJM 10894 b
 1        Illinois, for use outside Illinois.
 2             (6)  a sale or transfer  of  distillation  machinery
 3        and  equipment,  sold  as  a unit or kit and assembled or
 4        installed by the retailer, which machinery and  equipment
 5        is  certified  by  the  user  to  be  used  only  for the
 6        production  of  ethyl  alcohol  that  will  be  used  for
 7        consumption as motor fuel or as a component of motor fuel
 8        for the personal use of such user and not subject to sale
 9        or resale.
10             (7)  at the election of any serviceman not  required
11        to be otherwise registered as a retailer under Section 2a
12        of  the  Retailers'  Occupation  Tax  Act,  made for each
13        fiscal year sales  of  service  in  which  the  aggregate
14        annual   cost   price   of   tangible  personal  property
15        transferred as an incident to the  sales  of  service  is
16        less   than  35%,  or  75%  in  the  case  of  servicemen
17        transferring prescription drugs or servicemen engaged  in
18        graphic  arts  production,  of the aggregate annual total
19        gross receipts from all sales of service. The purchase of
20        such tangible personal property by the  serviceman  shall
21        be subject to tax under the Retailers' Occupation Tax Act
22        and the Use Tax Act. However, if a primary serviceman who
23        has   made  the  election  described  in  this  paragraph
24        subcontracts service work to a secondary  serviceman  who
25        has  also  made the election described in this paragraph,
26        the primary serviceman does not incur a Use Tax liability
27        if the secondary serviceman (i) has paid or will pay  Use
28        Tax  on  his  or  her cost price of any tangible personal
29        property transferred to the primary serviceman  and  (ii)
30        certifies that fact in writing to the primary serviceman.
31        Tangible  personal  property  transferred incident to the
32    completion of a maintenance agreement is exempt from the  tax
33    imposed pursuant to this Act.
34        Exemption  (5) also includes machinery and equipment used
 
                            -14-     LRB093 10610 SJM 10894 b
 1    in the general maintenance or repair of such exempt machinery
 2    and equipment or for in-house manufacture of exempt machinery
 3    and equipment. For the purposes of  exemption  (5),  each  of
 4    these   terms   shall   have  the  following  meanings:   (1)
 5    "manufacturing process" shall  mean  the  production  of  any
 6    article  of  tangible personal property, whether such article
 7    is a finished product or an article for use in the process of
 8    manufacturing or assembling a different article  of  tangible
 9    personal   property,   by  procedures  commonly  regarded  as
10    manufacturing, processing,  fabricating,  or  refining  which
11    changes  some  existing material or materials into a material
12    with a different  form,  use  or  name.   In  relation  to  a
13    recognized  integrated  business  composed  of  a  series  of
14    operations  which  collectively  constitute manufacturing, or
15    individually   constitute   manufacturing   operations,   the
16    manufacturing process shall be deemed to  commence  with  the
17    first  operation  or  stage  of production in the series, and
18    shall not be deemed to end until the completion of the  final
19    product  in  the last operation or stage of production in the
20    series;  and  further,  for  purposes   of   exemption   (5),
21    photoprocessing  is  deemed  to be a manufacturing process of
22    tangible personal property for wholesale or retail sale;  (2)
23    "assembling process" shall mean the production of any article
24    of  tangible  personal  property,  whether  such article is a
25    finished product or an article for  use  in  the  process  of
26    manufacturing  or  assembling a different article of tangible
27    personal property, by the combination of  existing  materials
28    in  a manner commonly regarded as assembling which results in
29    a material of a different form, use or name; (3)  "machinery"
30    shall  mean  major mechanical machines or major components of
31    such machines contributing to a manufacturing  or  assembling
32    process;  and  (4)  "equipment" shall include any independent
33    device or tool separate from any machinery but  essential  to
34    an  integrated  manufacturing  or assembly process; including
 
                            -15-     LRB093 10610 SJM 10894 b
 1    computers  used  primarily  in  a   manufacturer's   computer
 2    assisted  design,  computer  assisted manufacturing (CAD/CAM)
 3    system; or any subunit or assembly comprising a component  of
 4    any  machinery  or  auxiliary, adjunct or attachment parts of
 5    machinery, such as tools, dies, jigs, fixtures, patterns  and
 6    molds; or any parts which require periodic replacement in the
 7    course of normal operation; but shall not include hand tools.
 8    Equipment includes chemicals or chemicals acting as catalysts
 9    but  only  if  the chemicals or chemicals acting as catalysts
10    effect a direct and immediate change  upon  a  product  being
11    manufactured  or  assembled  for  wholesale or retail sale or
12    lease. The purchaser of such machinery and equipment who  has
13    an  active  resale  registration  number  shall  furnish such
14    number to the seller at the time of  purchase.  The  user  of
15    such  machinery  and  equipment  and  tools without an active
16    resale registration number shall  prepare  a  certificate  of
17    exemption for each transaction stating facts establishing the
18    exemption  for  that  transaction, which certificate shall be
19    available to the Department for  inspection  or  audit.   The
20    Department shall prescribe the form of the certificate.
21        Any  informal  rulings, opinions or letters issued by the
22    Department in response to  an  inquiry  or  request  for  any
23    opinion   from   any   person   regarding  the  coverage  and
24    applicability of exemption (5) to specific devices  shall  be
25    published,  maintained as a public record, and made available
26    for public inspection and copying.  If the  informal  ruling,
27    opinion   or   letter   contains   trade   secrets  or  other
28    confidential information, where possible the Department shall
29    delete such information prior to publication.  Whenever  such
30    informal  rulings, opinions, or letters contain any policy of
31    general applicability, the  Department  shall  formulate  and
32    adopt such policy as a rule in accordance with the provisions
33    of the Illinois Administrative Procedure Act.
34        On  and  after July 1, 1987, no entity otherwise eligible
 
                            -16-     LRB093 10610 SJM 10894 b
 1    under exemption (3) of  this  Section  shall  make  tax  free
 2    purchases  unless  it  has an active exemption identification
 3    number issued by the Department.
 4        The purchase, employment and transfer  of  such  tangible
 5    personal  property  as  newsprint  and  ink  for  the primary
 6    purpose of conveying news (with or without other information)
 7    is not a purchase, use or sale  of  service  or  of  tangible
 8    personal property within the meaning of this Act.
 9        "Serviceman"  means  any  person  who  is  engaged in the
10    occupation of making sales of service.
11        "Sale at retail" means "sale at retail" as defined in the
12    Retailers' Occupation Tax Act.
13        "Supplier" means any person who makes sales  of  tangible
14    personal  property to servicemen for the purpose of resale as
15    an incident to a sale of service.
16        "Serviceman maintaining  a  place  of  business  in  this
17    State", or any like term, means and includes any serviceman:
18             1.  having   or   maintaining   within  this  State,
19        directly or by  a  subsidiary,  an  office,  distribution
20        house, sales house, warehouse or other place of business,
21        or  any  agent  or  other representative operating within
22        this State under the authority of the serviceman  or  its
23        subsidiary,   irrespective   of  whether  such  place  of
24        business or agent or other representative is located here
25        permanently or temporarily, or whether such serviceman or
26        subsidiary is licensed to do business in this State;
27             2.  soliciting orders for tangible personal property
28        by means of a telecommunication  or  television  shopping
29        system  (which  utilizes  toll  free  numbers)  which  is
30        intended  by  the  retailer  to  be  broadcast  by  cable
31        television  or  other means of broadcasting, to consumers
32        located in this State;
33             3.  pursuant to a contract  with  a  broadcaster  or
34        publisher  located  in  this State, soliciting orders for
 
                            -17-     LRB093 10610 SJM 10894 b
 1        tangible personal property by means of advertising  which
 2        is  disseminated  primarily  to consumers located in this
 3        State and only secondarily to bordering jurisdictions;
 4             4.  soliciting orders for tangible personal property
 5        by  mail  if  the  solicitations  are   substantial   and
 6        recurring  and if the retailer benefits from any banking,
 7        financing,   debt   collection,   telecommunication,   or
 8        marketing activities occurring in this State or  benefits
 9        from   the   location   in   this   State  of  authorized
10        installation, servicing, or repair facilities;
11             5.  being owned or controlled by the same  interests
12        which own or control any retailer engaging in business in
13        the same or similar line of business in this State;
14             6.  having  a franchisee or licensee operating under
15        its trade name if the franchisee or licensee is  required
16        to collect the tax under this Section;
17             7.  pursuant  to  a contract with a cable television
18        operator located in this  State,  soliciting  orders  for
19        tangible  personal property by means of advertising which
20        is transmitted or distributed  over  a  cable  television
21        system in this State; or
22             8.  engaging   in   activities  in  Illinois,  which
23        activities in the state  in  which  the  supply  business
24        engaging  in  such activities is located would constitute
25        maintaining a place of business in that state; or
26             9.  soliciting orders for tangible personal property
27        by  means  of  the  Internet  that  is  intended  to   be
28        transmitted to consumers in this State.
29    (Source: P.A. 91-51, eff. 6-30-99; 92-484, eff. 8-23-01.)

30        Section 15.  The Service Occupation Tax Act is amended by
31    changing Section 2 as follows:

32        (35 ILCS 115/2) (from Ch. 120, par. 439.102)
 
                            -18-     LRB093 10610 SJM 10894 b
 1        Sec.  2.  "Transfer"  means  any transfer of the title to
 2    property or  of  the  ownership  of  property,  including  an
 3    Internet  transfer,  whether  or  not  the transferor retains
 4    title as security for the payment of amounts due him from the
 5    transferee.
 6        "Cost  Price"  means  the  consideration  paid   by   the
 7    serviceman  for  a  purchase valued in money, whether paid in
 8    money or otherwise, including cash, credits and services, and
 9    shall be determined without any deduction on account  of  the
10    supplier's  cost  of  the  property sold or on account of any
11    other expense incurred by the  supplier.  When  a  serviceman
12    contracts  out  part  or  all of the services required in his
13    sale of service, it shall be presumed that the cost price  to
14    the  serviceman  of the property transferred to him by his or
15    her subcontractor is equal  to  50%  of  the  subcontractor's
16    charges  to  the  serviceman  in  the absence of proof of the
17    consideration paid by the subcontractor for the  purchase  of
18    such property.
19        "Department" means the Department of Revenue.
20        "Person" means any natural individual, firm, partnership,
21    association,  joint  stock  company, joint venture, public or
22    private  corporation,  limited  liability  company,  and  any
23    receiver, executor, trustee, guardian or other representative
24    appointed by order of any court.
25        "Sale of Service" means any transaction except:
26        (a)  A retail sale of tangible personal property  taxable
27    under  the Retailers' Occupation Tax Act or under the Use Tax
28    Act.
29        (b)  A sale of tangible personal property for the purpose
30    of  resale  made  in  compliance  with  Section  2c  of   the
31    Retailers' Occupation Tax Act.
32        (c)  Except  as  hereinafter provided, a sale or transfer
33    of tangible personal property as an incident to the rendering
34    of service for or by any governmental body or for or  by  any
 
                            -19-     LRB093 10610 SJM 10894 b
 1    corporation,  society, association, foundation or institution
 2    organized and operated exclusively for charitable,  religious
 3    or  educational  purposes  or any not-for-profit corporation,
 4    society, association, foundation, institution or organization
 5    which has no compensated officers or employees and  which  is
 6    organized  and  operated  primarily  for  the  recreation  of
 7    persons 55 years of age or older. A limited liability company
 8    may  qualify  for  the exemption under this paragraph only if
 9    the limited  liability  company  is  organized  and  operated
10    exclusively for educational purposes.
11        (d)  A  sale or transfer of tangible personal property as
12    an incident  to  the  rendering  of  service  for  interstate
13    carriers  for  hire  for  use  as  rolling  stock  moving  in
14    interstate  commerce  or  lessors under leases of one year or
15    longer, executed or in effect at the  time  of  purchase,  to
16    interstate  carriers for hire for use as rolling stock moving
17    in  interstate  commerce,  and  equipment   operated   by   a
18    telecommunications  provider, licensed as a common carrier by
19    the Federal Communications Commission, which  is  permanently
20    installed  in  or  affixed  to  aircraft moving in interstate
21    commerce.
22        (d-1)  A sale or transfer of tangible  personal  property
23    as  an  incident  to  the  rendering  of  service for owners,
24    lessors or shippers of tangible personal  property  which  is
25    utilized  by  interstate carriers for hire for use as rolling
26    stock moving in interstate commerce, and  equipment  operated
27    by  a  telecommunications  provider,  licensed  as  a  common
28    carrier  by  the  Federal Communications Commission, which is
29    permanently installed in or affixed  to  aircraft  moving  in
30    interstate commerce.
31        (d-2)  The repairing, reconditioning or remodeling, for a
32    common  carrier  by rail, of tangible personal property which
33    belongs to such carrier  for  hire,  and  as  to  which  such
34    carrier  receives  the  physical  possession of the repaired,
 
                            -20-     LRB093 10610 SJM 10894 b
 1    reconditioned or remodeled item of tangible personal property
 2    in Illinois, and which such  carrier  transports,  or  shares
 3    with  another  common  carrier  in the transportation of such
 4    property, out of Illinois  on  a  standard  uniform  bill  of
 5    lading  showing  the  person  who  repaired, reconditioned or
 6    remodeled the property as the shipper or  consignor  of  such
 7    property  to  a destination outside Illinois, for use outside
 8    Illinois.
 9        (d-3)  A sale or transfer of tangible  personal  property
10    which  is  produced by the seller thereof on special order in
11    such a way as to have made the  applicable  tax  the  Service
12    Occupation  Tax  or  the  Service  Use  Tax,  rather than the
13    Retailers' Occupation Tax or the Use Tax, for  an  interstate
14    carrier  by  rail  which  receives the physical possession of
15    such  property  in  Illinois,  and  which   transports   such
16    property,  or  shares  with  another  common  carrier  in the
17    transportation  of  such  property,  out  of  Illinois  on  a
18    standard uniform bill of lading showing  the  seller  of  the
19    property  as  the  shipper or consignor of such property to a
20    destination outside Illinois, for use outside Illinois.
21        (d-4)  Until January 1, 1997, a  sale,  by  a  registered
22    serviceman  paying  tax  under this Act to the Department, of
23    special order printed materials  delivered  outside  Illinois
24    and which are not returned to this State, if delivery is made
25    by  the seller or agent of the seller, including an agent who
26    causes the product to be  delivered  outside  Illinois  by  a
27    common carrier or the U.S. postal service.
28        (e)  A  sale  or transfer of machinery and equipment used
29    primarily in the process of the manufacturing or  assembling,
30    either  in  an  existing,  an expanded or a new manufacturing
31    facility, of tangible  personal  property  for  wholesale  or
32    retail  sale  or  lease,  whether  such sale or lease is made
33    directly by the manufacturer or by some other person, whether
34    the  materials  used  in  the  process  are  owned   by   the
 
                            -21-     LRB093 10610 SJM 10894 b
 1    manufacturer  or  some  other person, or whether such sale or
 2    lease is made apart from or as an incident  to  the  seller's
 3    engaging  in a service occupation and the applicable tax is a
 4    Service Occupation  Tax  or  Service  Use  Tax,  rather  than
 5    Retailers' Occupation Tax or Use Tax.
 6        (f)  The  sale  or transfer of distillation machinery and
 7    equipment, sold as a unit or kit and assembled  or  installed
 8    by  the  retailer, which machinery and equipment is certified
 9    by the user to be used  only  for  the  production  of  ethyl
10    alcohol that will be used for consumption as motor fuel or as
11    a  component  of motor fuel for the personal use of such user
12    and not subject to sale or resale.
13        (g)  At the election of any serviceman not required to be
14    otherwise registered as a retailer under Section  2a  of  the
15    Retailers'  Occupation  Tax  Act,  made  for each fiscal year
16    sales of service in which the aggregate annual cost price  of
17    tangible  personal property transferred as an incident to the
18    sales of service is  less  than  35%  (75%  in  the  case  of
19    servicemen  transferring  prescription  drugs  or  servicemen
20    engaged  in  graphic arts production) of the aggregate annual
21    total gross receipts from all sales of service. The  purchase
22    of such tangible personal property by the serviceman shall be
23    subject  to  tax  under the Retailers' Occupation Tax Act and
24    the Use Tax Act. However, if a  primary  serviceman  who  has
25    made  the  election  described in this paragraph subcontracts
26    service work to a secondary serviceman who has also made  the
27    election  described in this paragraph, the primary serviceman
28    does  not  incur  a  Use  Tax  liability  if  the   secondary
29    serviceman  (i)  has  paid  or will pay Use Tax on his or her
30    cost price of any tangible personal property  transferred  to
31    the  primary  serviceman  and  (ii)  certifies  that  fact in
32    writing to the primary serviceman.
33        Tangible personal property transferred  incident  to  the
34    completion  of a maintenance agreement is exempt from the tax
 
                            -22-     LRB093 10610 SJM 10894 b
 1    imposed pursuant to this Act.
 2        Exemption (e) also includes machinery and equipment  used
 3    in the general maintenance or repair of such exempt machinery
 4    and equipment or for in-house manufacture of exempt machinery
 5    and  equipment.    For the purposes of exemption (e), each of
 6    these  terms  shall  have  the   following   meanings:    (1)
 7    "manufacturing  process"  shall  mean  the  production of any
 8    article of tangible personal property, whether  such  article
 9    is a finished product or an article for use in the process of
10    manufacturing  or  assembling a different article of tangible
11    personal  property,  by  procedures  commonly   regarded   as
12    manufacturing,  processing,  fabricating,  or  refining which
13    changes some existing material or materials into  a  material
14    with  a  different  form,  use  or  name.   In  relation to a
15    recognized  integrated  business  composed  of  a  series  of
16    operations which collectively  constitute  manufacturing,  or
17    individually   constitute   manufacturing   operations,   the
18    manufacturing  process  shall  be deemed to commence with the
19    first operation or stage of production  in  the  series,  and
20    shall  not be deemed to end until the completion of the final
21    product in the last operation or stage of production  in  the
22    series;   and   further   for   purposes  of  exemption  (e),
23    photoprocessing is deemed to be a  manufacturing  process  of
24    tangible  personal property for wholesale or retail sale; (2)
25    "assembling process" shall mean the production of any article
26    of tangible personal property,  whether  such  article  is  a
27    finished  product  or  an  article  for use in the process of
28    manufacturing or assembling a different article  of  tangible
29    personal  property,  by the combination of existing materials
30    in a manner commonly regarded as assembling which results  in
31    a  material of a different form, use or name; (3) "machinery"
32    shall mean major mechanical machines or major  components  of
33    such  machines  contributing to a manufacturing or assembling
34    process; and (4) "equipment" shall  include  any  independent
 
                            -23-     LRB093 10610 SJM 10894 b
 1    device  or  tool separate from any machinery but essential to
 2    an integrated manufacturing or  assembly  process;  including
 3    computers  used primarily in a manufacturer's manufacuturer's
 4    computer assisted  design,  computer  assisted  manufacturing
 5    (CAD/CAM)  system;  or  any  subunit or assembly comprising a
 6    component  of  any  machinery  or   auxiliary,   adjunct   or
 7    attachment  parts  of  machinery,  such as tools, dies, jigs,
 8    fixtures, patterns and molds;  or  any  parts  which  require
 9    periodic  replacement  in the course of normal operation; but
10    shall not include hand tools.  Equipment  includes  chemicals
11    or chemicals acting as catalysts but only if the chemicals or
12    chemicals  acting  as catalysts effect a direct and immediate
13    change upon a product being  manufactured  or  assembled  for
14    wholesale  or  retail  sale  or lease.  The purchaser of such
15    machinery and equipment who has an active resale registration
16    number shall furnish such number to the seller at the time of
17    purchase.  The purchaser of such machinery and equipment  and
18    tools  without  an  active  resale  registration number shall
19    furnish to the seller a certificate  of  exemption  for  each
20    transaction stating facts establishing the exemption for that
21    transaction,  which  certificate  shall  be  available to the
22    Department for inspection or audit.
23        The rolling stock exemption applies to rolling stock used
24    by an interstate carrier for hire, even just  between  points
25    in  Illinois,  if  such  rolling  stock transports, for hire,
26    persons whose journeys or property whose shipments  originate
27    or terminate outside Illinois.
28        Any  informal  rulings, opinions or letters issued by the
29    Department in response to  an  inquiry  or  request  for  any
30    opinion   from   any   person   regarding  the  coverage  and
31    applicability of exemption (e) to specific devices  shall  be
32    published,  maintained as a public record, and made available
33    for public inspection and copying.  If the  informal  ruling,
34    opinion   or   letter   contains   trade   secrets  or  other
 
                            -24-     LRB093 10610 SJM 10894 b
 1    confidential information, where possible the Department shall
 2    delete such information prior to publication.  Whenever  such
 3    informal  rulings, opinions, or letters contain any policy of
 4    general applicability, the  Department  shall  formulate  and
 5    adopt such policy as a rule in accordance with the provisions
 6    of the Illinois Administrative Procedure Act.
 7        On  and  after July 1, 1987, no entity otherwise eligible
 8    under exemption (c) of  this  Section  shall  make  tax  free
 9    purchases  unless  it  has an active exemption identification
10    number issued by the Department.
11        "Serviceman" means any  person  who  is  engaged  in  the
12    occupation of making sales of service.
13        "Sale at Retail" means "sale at retail" as defined in the
14    Retailers' Occupation Tax Act.
15        "Supplier"  means  any person who makes sales of tangible
16    personal property to servicemen for the purpose of resale  as
17    an incident to a sale of service.
18    (Source: P.A.  91-51,  eff.  6-30-99;  92-484,  eff. 8-23-01;
19    revised 11-22-02.)

20        Section 20.  The Retailers' Occupation Tax Act is amended
21    by changing Section 1 as follows:

22        (35 ILCS 120/1) (from Ch. 120, par. 440)
23        Sec.  1.   Definitions.   "Sale  at  retail"  means   any
24    transfer  of  the  ownership of or title to tangible personal
25    property to a purchaser, including an Internet transfer,  for
26    the purpose of use or consumption, and not for the purpose of
27    resale  in  any  form  as  tangible  personal property to the
28    extent not  first  subjected  to  a  use  for  which  it  was
29    purchased,  for  a valuable consideration:  Provided that the
30    property purchased is deemed to be purchased for the  purpose
31    of  resale,  despite first being used, to the extent to which
32    it is resold as an ingredient of  an  intentionally  produced
 
                            -25-     LRB093 10610 SJM 10894 b
 1    product  or  byproduct  of  manufacturing.  For this purpose,
 2    slag produced as an incident to  manufacturing  pig  iron  or
 3    steel  and sold is considered to be an intentionally produced
 4    byproduct  of  manufacturing.    Transactions   whereby   the
 5    possession  of  the  property  is  transferred but the seller
 6    retains the title as security  for  payment  of  the  selling
 7    price shall be deemed to be sales.
 8        "Sale  at  retail"  shall  be  construed  to  include any
 9    transfer of the ownership of or title  to  tangible  personal
10    property  to a purchaser, for use or consumption by any other
11    person to whom  such  purchaser  may  transfer  the  tangible
12    personal  property  without  a valuable consideration, and to
13    include any transfer, whether made for or without a  valuable
14    consideration,  for  resale  in any form as tangible personal
15    property unless made in compliance with Section  2c  of  this
16    Act.
17        Sales  of  tangible personal property, which property, to
18    the extent not first subjected to a  use  for  which  it  was
19    purchased,  as  an  ingredient  or constituent, goes into and
20    forms a part of tangible personal property  subsequently  the
21    subject  of  a  "Sale  at retail", are not sales at retail as
22    defined in this Act:  Provided that the property purchased is
23    deemed to be purchased for the  purpose  of  resale,  despite
24    first  being  used, to the extent to which it is resold as an
25    ingredient of an intentionally produced product or  byproduct
26    of manufacturing.
27        "Sale  at  retail"  shall  be  construed  to  include any
28    Illinois florist's sales transaction in  which  the  purchase
29    order  is  received  in Illinois by a florist and the sale is
30    for use or  consumption,  but  the  Illinois  florist  has  a
31    florist   in  another  state  deliver  the  property  to  the
32    purchaser or the purchaser's donee in such other state.
33        Nonreusable tangible personal property that  is  used  by
34    persons  engaged  in  the business of operating a restaurant,
 
                            -26-     LRB093 10610 SJM 10894 b
 1    cafeteria, or drive-in is  a  sale  for  resale  when  it  is
 2    transferred  to  customers in the ordinary course of business
 3    as part of the sale of food  or  beverages  and  is  used  to
 4    deliver, package, or consume food or beverages, regardless of
 5    where  consumption of the food or beverages occurs.  Examples
 6    of those items include, but are not limited  to  nonreusable,
 7    paper  and  plastic  cups,  plates,  baskets, boxes, sleeves,
 8    buckets or other  containers,  utensils,  straws,  placemats,
 9    napkins,  doggie  bags,  and  wrapping or packaging materials
10    that are transferred to customers as part of the sale of food
11    or beverages in the ordinary course of business.
12        The purchase, employment and transfer  of  such  tangible
13    personal  property  as  newsprint  and  ink  for  the primary
14    purpose of conveying news (with or without other information)
15    is not a purchase, use or sale of tangible personal property.
16        A person whose activities  are  organized  and  conducted
17    primarily  as  a  not-for-profit  service enterprise, and who
18    engages in  selling  tangible  personal  property  at  retail
19    (whether to the public or merely to members and their guests)
20    is  engaged  in  the  business  of  selling tangible personal
21    property  at  retail  with  respect  to  such   transactions,
22    excepting  only  a  person organized and operated exclusively
23    for charitable, religious or educational purposes either (1),
24    to the extent  of  sales  by  such  person  to  its  members,
25    students,  patients  or inmates of tangible personal property
26    to be used primarily for the purposes of such person, or (2),
27    to the extent of sales by such person  of  tangible  personal
28    property  which  is  not  sold or offered for sale by persons
29    organized for profit.  The selling of school books and school
30    supplies by schools at retail to students is  not  "primarily
31    for the purposes of" the school which does such selling.  The
32    provisions  of  this paragraph shall not apply to nor subject
33    to taxation occasional dinners, socials or similar activities
34    of  a  person  organized   and   operated   exclusively   for
 
                            -27-     LRB093 10610 SJM 10894 b
 1    charitable, religious or educational purposes, whether or not
 2    such activities are open to the public.
 3        A  person  who  is  the  recipient of a grant or contract
 4    under Title VII of the Older  Americans  Act  of  1965  (P.L.
 5    92-258)  and  serves  meals  to  participants  in the federal
 6    Nutrition Program for the Elderly in return for contributions
 7    established in amount by the individual participant  pursuant
 8    to  a  schedule  of  suggested  fees  as  provided for in the
 9    federal Act  is  not  engaged  in  the  business  of  selling
10    tangible  personal  property  at  retail with respect to such
11    transactions.
12        "Purchaser" means anyone who, through a sale  at  retail,
13    acquires  the  ownership  of  or  title  to tangible personal
14    property for a valuable consideration.
15        "Reseller of motor fuel" means any person engaged in  the
16    business  of  selling  or delivering or transferring title of
17    motor  fuel  to  another  person  other  than  for   use   or
18    consumption.  No person shall act as a reseller of motor fuel
19    within  this  State  without  first  being  registered  as  a
20    reseller pursuant to Section 2c or  a  retailer  pursuant  to
21    Section 2a.
22        "Selling  price"  or  the  "amount  of  sale"  means  the
23    consideration  for a sale valued in money whether received in
24    money or otherwise, including cash, credits, property,  other
25    than as hereinafter provided, and services, but not including
26    the  value of or credit given for traded-in tangible personal
27    property where the item that is traded-in is of like kind and
28    character  as  that  which  is  being  sold,  and  shall   be
29    determined  without  any  deduction on account of the cost of
30    the property sold, the  cost  of  materials  used,  labor  or
31    service  cost  or  any other expense whatsoever, but does not
32    include charges that  are  added  to  prices  by  sellers  on
33    account  of  the seller's tax liability under this Act, or on
34    account of the seller's duty to collect, from the  purchaser,
 
                            -28-     LRB093 10610 SJM 10894 b
 1    the  tax that is imposed by the Use Tax Act, or on account of
 2    the seller's  tax  liability  under  Section  8-11-1  of  the
 3    Illinois Municipal Code, as heretofore and hereafter amended,
 4    or  on account of the seller's tax liability under the County
 5    Retailers' Occupation Tax Act, or on account of the  seller's
 6    tax  liability  under  the  Home  Rule  Municipal  Soft Drink
 7    Retailers' Occupation Tax, or on account of the seller's  tax
 8    liability   under   any   tax  imposed  under  the  "Regional
 9    Transportation Authority Act", approved  December  12,  1973.
10    Effective  December  1,  1985,  "selling price" shall include
11    charges that are added to prices by sellers on account of the
12    seller's tax  liability  under  the  Cigarette  Tax  Act,  on
13    account  of the sellers' duty to collect, from the purchaser,
14    the tax imposed under the  Cigarette  Use  Tax  Act,  and  on
15    account  of the seller's duty to collect, from the purchaser,
16    any cigarette tax imposed by a home rule unit.
17        The phrase "like kind and character" shall  be  liberally
18    construed  (including  but  not  limited to any form of motor
19    vehicle for any form of motor vehicle, or any kind of farm or
20    agricultural  implement  for  any  other  kind  of  farm   or
21    agricultural  implement),  while not including a kind of item
22    which, if sold at retail by that retailer,  would  be  exempt
23    from  retailers' occupation tax and use tax as an isolated or
24    occasional sale.
25        "Gross receipts" from  the  sales  of  tangible  personal
26    property  at  retail  means  the  total  selling price or the
27    amount of such sales, as hereinbefore defined.  In  the  case
28    of  charge  and  time  sales,  the  amount  thereof  shall be
29    included only as  and  when  payments  are  received  by  the
30    seller.  Receipts  or other consideration derived by a seller
31    from the sale, transfer or assignment of accounts  receivable
32    to  a  wholly  owned  subsidiary  will not be deemed payments
33    prior to  the  time  the  purchaser  makes  payment  on  such
34    accounts.
 
                            -29-     LRB093 10610 SJM 10894 b
 1        "Department" means the Department of Revenue.
 2        "Person" means any natural individual, firm, partnership,
 3    association,  joint stock company, joint adventure, public or
 4    private  corporation,  limited  liability   company,   or   a
 5    receiver, executor, trustee, guardian or other representative
 6    appointed by order of any court.
 7        The  isolated  or  occasional  sale  of tangible personal
 8    property at retail by a person who does not hold himself  out
 9    as  being  engaged  (or  who  does  not habitually engage) in
10    selling such tangible personal property at retail, or a  sale
11    through  a bulk vending machine, does not constitute engaging
12    in a business of selling such tangible personal  property  at
13    retail  within  the  meaning  of  this Act; provided that any
14    person who is engaged in a business which is not  subject  to
15    the  tax imposed by this Act because of involving the sale of
16    or a contract to sell real estate or a construction  contract
17    to   improve  real  estate  or  a  construction  contract  to
18    engineer, install,  and  maintain  an  integrated  system  of
19    products, but who, in the course of conducting such business,
20    transfers tangible personal property to users or consumers in
21    the  finished  form in which it was purchased, and which does
22    not become real estate or was not engineered  and  installed,
23    under any provision of a construction contract or real estate
24    sale  or  real  estate sales agreement entered into with some
25    other person arising out of or  because  of  such  nontaxable
26    business,  is  engaged  in  the  business of selling tangible
27    personal property at retail to the extent of the value of the
28    tangible personal property so  transferred.  If,  in  such  a
29    transaction,  a  separate  charge  is  made  for the tangible
30    personal property so transferred, the value of such property,
31    for  the  purpose  of  this  Act,  shall  be  the  amount  so
32    separately charged, but  not  less  than  the  cost  of  such
33    property  to  the  transferor; if no separate charge is made,
34    the value of such property, for the purposes of this Act,  is
 
                            -30-     LRB093 10610 SJM 10894 b
 1    the   cost  to  the  transferor  of  such  tangible  personal
 2    property. Construction contracts for the improvement of  real
 3    estate   consisting   of   engineering,   installation,   and
 4    maintenance   of   voice,  data,  video,  security,  and  all
 5    telecommunication systems do not  constitute  engaging  in  a
 6    business  of  selling  tangible  personal  property at retail
 7    within the meaning of this  Act  if  they  are  sold  at  one
 8    specified contract price.
 9        A  person  who  holds  himself  or  herself  out as being
10    engaged (or  who  habitually  engages)  in  selling  tangible
11    personal  property  at  retail  is  a  person  engaged in the
12    business of selling  tangible  personal  property  at  retail
13    hereunder  with respect to such sales (and not primarily in a
14    service occupation) notwithstanding the fact that such person
15    designs and  produces  such  tangible  personal  property  on
16    special  order  for  the  purchaser  and  in such a way as to
17    render the property of value only to such purchaser, if  such
18    tangible  personal  property  so  produced  on  special order
19    serves substantially the same function as stock  or  standard
20    items of tangible personal property that are sold at retail.
21        Persons  who  engage  in  the  business  of  transferring
22    tangible  personal  property  upon  the redemption of trading
23    stamps are engaged in the business of selling  such  property
24    at  retail  and  shall  be  liable  for and shall pay the tax
25    imposed by this Act on the basis of the retail value  of  the
26    property transferred upon redemption of such stamps.
27        "Bulk   vending   machine"   means   a  vending  machine,
28    containing unsorted confections, nuts, toys, or  other  items
29    designed  primarily  to  be  used  or played with by children
30    which, when a coin or coins of a denomination not larger than
31    $0.50 are inserted,  are  dispensed  in  equal  portions,  at
32    random and without selection by the customer.
33    (Source: P.A. 92-213, eff. 1-1-02.)