093_SB1433

 
                                     LRB093 09361 SJM 09596 b

 1        AN ACT concerning taxes.

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

 4        Section 5.  The Illinois Income Tax  Act  is  amended  by
 5    changing Sections 201 and 211 as follows:

 6        (35 ILCS 5/201) (from Ch. 120, par. 2-201)
 7        Sec. 201.  Tax Imposed.
 8        (a)  In  general.  A tax measured by net income is hereby
 9    imposed on every individual, corporation,  trust  and  estate
10    for  each  taxable  year  ending  after  July 31, 1969 on the
11    privilege of earning or receiving income in or as a  resident
12    of  this  State.  Such  tax shall be in addition to all other
13    occupation or privilege taxes imposed by this State or by any
14    municipal corporation or political subdivision thereof.
15        (b)  Rates.  The tax imposed by subsection  (a)  of  this
16    Section shall be determined as follows, except as adjusted by
17    subsection (d-1):
18             (1)  In  the case of an individual, trust or estate,
19        for taxable years ending prior to July 1, 1989, an amount
20        equal to 2 1/2% of the  taxpayer's  net  income  for  the
21        taxable year.
22             (2)  In  the case of an individual, trust or estate,
23        for taxable years beginning prior to  July  1,  1989  and
24        ending after June 30, 1989, an amount equal to the sum of
25        (i)  2  1/2%  of the taxpayer's net income for the period
26        prior to July 1, 1989, as calculated under Section 202.3,
27        and (ii) 3% of the taxpayer's net income for  the  period
28        after June 30, 1989, as calculated under Section 202.3.
29             (3)  In  the case of an individual, trust or estate,
30        for taxable years  beginning  after  June  30,  1989,  an
31        amount  equal  to 3% of the taxpayer's net income for the
 
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 1        taxable year.
 2             (4)  (Blank).
 3             (5)  (Blank).
 4             (6)  In the case of a corporation, for taxable years
 5        ending prior to July 1, 1989, an amount equal  to  4%  of
 6        the taxpayer's net income for the taxable year.
 7             (7)  In the case of a corporation, for taxable years
 8        beginning prior to July 1, 1989 and ending after June 30,
 9        1989,  an  amount  equal  to  the  sum  of  (i) 4% of the
10        taxpayer's net income for the period  prior  to  July  1,
11        1989, as calculated under Section 202.3, and (ii) 4.8% of
12        the  taxpayer's  net income for the period after June 30,
13        1989, as calculated under Section 202.3.
14             (8)  In the case of a corporation, for taxable years
15        beginning after June 30, 1989, an amount equal to 4.8% of
16        the taxpayer's net income for the taxable year.
17        (c)  Personal  Property  Tax  Replacement   Income   Tax.
18    Beginning on July 1, 1979 and thereafter, in addition to such
19    income  tax,  there  is  also  hereby  imposed  the  Personal
20    Property Tax Replacement Income Tax measured by net income on
21    every  corporation  (including  Subchapter  S  corporations),
22    partnership  and  trust,  for  each taxable year ending after
23    June 30, 1979.  Such taxes are imposed on  the  privilege  of
24    earning  or  receiving  income  in  or  as a resident of this
25    State.  The Personal  Property  Tax  Replacement  Income  Tax
26    shall be in addition to the income tax imposed by subsections
27    (a)  and  (b)  of  this  Section and in addition to all other
28    occupation or privilege taxes imposed by this State or by any
29    municipal corporation or political subdivision thereof.
30        (d)  Additional Personal Property Tax Replacement  Income
31    Tax  Rates.  The personal property tax replacement income tax
32    imposed by this subsection and subsection (c) of this Section
33    in the case of a  corporation,  other  than  a  Subchapter  S
34    corporation and except as adjusted by subsection (d-1), shall
 
                            -3-      LRB093 09361 SJM 09596 b
 1    be an additional amount equal to 2.85% of such taxpayer's net
 2    income for the taxable year, except that beginning on January
 3    1,  1981, and thereafter, the rate of 2.85% specified in this
 4    subsection shall be reduced to 2.5%, and in  the  case  of  a
 5    partnership,  trust or a Subchapter S corporation shall be an
 6    additional amount equal to 1.5% of such taxpayer's net income
 7    for the taxable year.
 8        (d-1)  Rate reduction for certain foreign insurers.  This
 9    subsection (d-1) applies to taxable years ending on or before
10    June 30, 2005.  In the case of a foreign insurer, as  defined
11    by  Section 35A-5 of the Illinois Insurance Code, whose state
12    or country of  domicile  imposes  on  insurers  domiciled  in
13    Illinois  a  retaliatory  tax  (excluding  any  insurer whose
14    premiums from reinsurance assumed are  50%  or  more  of  its
15    total insurance premiums as determined under paragraph (2) of
16    subsection  (b)  of  Section 304, except that for purposes of
17    this determination premiums from reinsurance do  not  include
18    premiums   from  inter-affiliate  reinsurance  arrangements),
19    beginning with taxable years ending on or after December  31,
20    1999,  the sum of the rates of tax imposed by subsections (b)
21    and (d) shall be reduced (but not increased) to the  rate  at
22    which  the total amount of tax imposed under this Act, net of
23    all credits allowed under this Act, shall equal (i) the total
24    amount of tax that would be imposed on the foreign  insurer's
25    net income allocable to Illinois for the taxable year by such
26    foreign  insurer's  state  or country of domicile if that net
27    income were subject to all income taxes and taxes measured by
28    net income imposed by such foreign insurer's state or country
29    of domicile, net of all credits allowed or  (ii)  a  rate  of
30    zero  if no such tax is imposed on such income by the foreign
31    insurer's  state  of  domicile.  For  the  purposes  of  this
32    subsection  (d-1),  an  inter-affiliate  includes  a   mutual
33    insurer under common management.
34             (1)  For  the  purposes  of  subsection (d-1), in no
 
                            -4-      LRB093 09361 SJM 09596 b
 1        event shall the sum  of  the  rates  of  tax  imposed  by
 2        subsections  (b)  and  (d)  be  reduced below the rate at
 3        which the sum of:
 4                  (A)  the total amount of tax  imposed  on  such
 5             foreign  insurer  under this Act for a taxable year,
 6             net of all credits allowed under this Act, plus
 7                  (B)  the privilege tax imposed by  Section  409
 8             of  the  Illinois Insurance Code, the fire insurance
 9             company tax  imposed  by  Section  12  of  the  Fire
10             Investigation  Act,  and  the  fire department taxes
11             imposed  under  Section  11-10-1  of  the   Illinois
12             Municipal Code,
13        equals  1.25% of the net taxable premiums written for the
14        taxable year, as described by subsection (1)  of  Section
15        409  of  the Illinois Insurance Code. This paragraph will
16        in no event increase the rates imposed under  subsections
17        (b) and (d).
18             (2)  Any  reduction  in  the rates of tax imposed by
19        this subsection shall be applied first against the  rates
20        imposed  by subsection (b) and only after the tax imposed
21        by subsection (a) net of all credits allowed  under  this
22        Section  other  than  the credit allowed under subsection
23        (i) has been reduced to zero, against the  rates  imposed
24        by subsection (d).
25        This  subsection  (d-1)  is exempt from the provisions of
26    Section 250.
27        (e)  Investment credit.  A taxpayer shall  be  allowed  a
28    credit  against  the Personal Property Tax Replacement Income
29    Tax for investment in qualified property.
30             (1)  A taxpayer shall be allowed a credit  equal  to
31        .5%  of the basis of qualified property placed in service
32        during the taxable year, provided such property is placed
33        in service on or after July  1,  1984.   There  shall  be
34        allowed an additional credit equal to .5% of the basis of
 
                            -5-      LRB093 09361 SJM 09596 b
 1        qualified  property  placed in service during the taxable
 2        year, provided such property is placed in service  on  or
 3        after  July  1,  1986, and the taxpayer's base employment
 4        within Illinois has increased by  1%  or  more  over  the
 5        preceding year as determined by the taxpayer's employment
 6        records  filed with the Illinois Department of Employment
 7        Security.  Taxpayers who are new  to  Illinois  shall  be
 8        deemed  to  have met the 1% growth in base employment for
 9        the first year in which they file employment records with
10        the Illinois  Department  of  Employment  Security.   The
11        provisions  added  to  this Section by Public Act 85-1200
12        (and restored by Public Act 87-895) shall be construed as
13        declaratory of existing law and not as a  new  enactment.
14        If,  in  any year, the increase in base employment within
15        Illinois over the preceding year is  less  than  1%,  the
16        additional  credit  shall  be  limited to that percentage
17        times a fraction, the numerator of which is .5%  and  the
18        denominator  of  which  is  1%, but shall not exceed .5%.
19        The investment credit shall not be allowed to the  extent
20        that  it  would  reduce a taxpayer's liability in any tax
21        year  below  zero,  nor  may  any  credit  for  qualified
22        property be allowed for any year other than the  year  in
23        which the property was placed in service in Illinois. For
24        tax years ending on or after December 31, 1987, and on or
25        before December 31, 1988, the credit shall be allowed for
26        the  tax year in which the property is placed in service,
27        or, if the amount of the credit exceeds the tax liability
28        for that year, whether it exceeds the original  liability
29        or  the  liability  as  later amended, such excess may be
30        carried forward and applied to the tax liability of the 5
31        taxable years following the excess credit  years  if  the
32        taxpayer  (i)  makes investments which cause the creation
33        of a  minimum  of  2,000  full-time  equivalent  jobs  in
34        Illinois,   (ii)   is   located  in  an  enterprise  zone
 
                            -6-      LRB093 09361 SJM 09596 b
 1        established pursuant to the Illinois Enterprise Zone  Act
 2        and  (iii) is certified by the Department of Commerce and
 3        Community Affairs  as  complying  with  the  requirements
 4        specified  in  clause  (i) and (ii) by July 1, 1986.  The
 5        Department of Commerce and Community Affairs shall notify
 6        the Department of  Revenue  of  all  such  certifications
 7        immediately.  For  tax  years  ending  after December 31,
 8        1988, the credit shall be allowed for  the  tax  year  in
 9        which  the  property  is  placed  in  service, or, if the
10        amount of the credit exceeds the tax liability  for  that
11        year,  whether  it  exceeds the original liability or the
12        liability as later amended, such excess  may  be  carried
13        forward and applied to the tax liability of the 5 taxable
14        years following the excess credit years. The credit shall
15        be  applied  to  the  earliest  year for which there is a
16        liability. If there is credit from more than one tax year
17        that is available to offset a liability,  earlier  credit
18        shall be applied first.
19             (2)  The  term  "qualified  property" means property
20        which:
21                  (A)  is  tangible,   whether   new   or   used,
22             including  buildings  and  structural  components of
23             buildings and signs that are real property, but  not
24             including land or improvements to real property that
25             are not a structural component of a building such as
26             landscaping,   sewer   lines,  local  access  roads,
27             fencing, parking lots, and other appurtenances;
28                  (B)  is depreciable pursuant to Section 167  of
29             the  Internal  Revenue  Code,  except  that  "3-year
30             property" as defined in Section 168(c)(2)(A) of that
31             Code is not eligible for the credit provided by this
32             subsection (e);
33                  (C)  is  acquired  by  purchase  as  defined in
34             Section 179(d) of the Internal Revenue Code;
 
                            -7-      LRB093 09361 SJM 09596 b
 1                  (D)  is used in Illinois by a taxpayer  who  is
 2             primarily  engaged  in  manufacturing,  or in mining
 3             coal or fluorite, or in retailing; and
 4                  (E)  has not previously been used  in  Illinois
 5             in  such  a  manner  and  by  such a person as would
 6             qualify for the credit provided by  this  subsection
 7             (e) or subsection (f).
 8             (3)  For    purposes   of   this   subsection   (e),
 9        "manufacturing" means the material staging and production
10        of tangible  personal  property  by  procedures  commonly
11        regarded  as  manufacturing,  processing, fabrication, or
12        assembling which changes some existing material into  new
13        shapes, new qualities, or new combinations.  For purposes
14        of  this  subsection (e) the term "mining" shall have the
15        same meaning as the term "mining" in  Section  613(c)  of
16        the   Internal   Revenue  Code.   For  purposes  of  this
17        subsection (e), the term "retailing" means  the  sale  of
18        tangible   personal  property  or  services  rendered  in
19        conjunction with the sale of tangible consumer  goods  or
20        commodities.
21             (4)  The  basis  of  qualified property shall be the
22        basis used to  compute  the  depreciation  deduction  for
23        federal income tax purposes.
24             (5)  If the basis of the property for federal income
25        tax  depreciation purposes is increased after it has been
26        placed in service in Illinois by the taxpayer, the amount
27        of such increase  shall  be  deemed  property  placed  in
28        service on the date of such increase in basis.
29             (6)  The  term  "placed  in  service" shall have the
30        same meaning as under Section 46 of the Internal  Revenue
31        Code.
32             (7)  If during any taxable year, any property ceases
33        to  be  qualified  property  in the hands of the taxpayer
34        within 48 months after being placed in  service,  or  the
 
                            -8-      LRB093 09361 SJM 09596 b
 1        situs of any qualified property is moved outside Illinois
 2        within  48  months  after  being  placed  in service, the
 3        Personal Property Tax Replacement  Income  Tax  for  such
 4        taxable  year shall be increased.  Such increase shall be
 5        determined by (i) recomputing the investment credit which
 6        would have been allowed for the year in which credit  for
 7        such  property was originally allowed by eliminating such
 8        property from such computation and, (ii) subtracting such
 9        recomputed credit from the amount  of  credit  previously
10        allowed.  For  the  purposes  of  this  paragraph  (7), a
11        reduction of the basis of  qualified  property  resulting
12        from  a  redetermination  of  the purchase price shall be
13        deemed a disposition of qualified property to the  extent
14        of such reduction.
15             (8)  Unless  the  investment  credit  is extended by
16        law, the basis of qualified property  shall  not  include
17        costs  incurred after December 31, 2003, except for costs
18        incurred pursuant to a binding contract entered  into  on
19        or before December 31, 2003.
20             (9)  Each  taxable  year  ending before December 31,
21        2000, a partnership may elect  to  pass  through  to  its
22        partners the credits to which the partnership is entitled
23        under  this  subsection  (e)  for  the  taxable  year.  A
24        partner may use the credit allocated to him or her  under
25        this   paragraph   only   against   the  tax  imposed  in
26        subsections  (c)  and  (d)  of  this  Section.   If   the
27        partnership  makes  that election, those credits shall be
28        allocated  among  the  partners  in  the  partnership  in
29        accordance with the rules set forth in Section 704(b)  of
30        the  Internal  Revenue  Code,  and  the rules promulgated
31        under that Section,  and  the  allocated  amount  of  the
32        credits shall be allowed to the partners for that taxable
33        year.   The  partnership  shall make this election on its
34        Personal Property Tax Replacement Income Tax  return  for
 
                            -9-      LRB093 09361 SJM 09596 b
 1        that  taxable  year.  The  election  to  pass through the
 2        credits shall be irrevocable.
 3             For taxable years ending on or  after  December  31,
 4        2000,  a  partner  that  qualifies  its partnership for a
 5        subtraction under subparagraph (I) of  paragraph  (2)  of
 6        subsection  (d)  of  Section  203  or  a shareholder that
 7        qualifies a Subchapter S corporation  for  a  subtraction
 8        under subparagraph (S) of paragraph (2) of subsection (b)
 9        of  Section  203  shall  be  allowed  a credit under this
10        subsection (e) equal to its share of  the  credit  earned
11        under  this subsection (e) during the taxable year by the
12        partnership or Subchapter S  corporation,  determined  in
13        accordance   with   the   determination   of  income  and
14        distributive share of income under Sections 702  and  704
15        and  Subchapter  S  of  the  Internal Revenue Code.  This
16        paragraph is exempt from the provisions of Section 250.
17          (f)  Investment credit; Enterprise Zone.
18             (1)  A taxpayer shall be allowed  a  credit  against
19        the  tax  imposed  by  subsections  (a)  and  (b) of this
20        Section for investment in  qualified  property  which  is
21        placed  in service in an Enterprise Zone created pursuant
22        to the  Illinois  Enterprise  Zone  Act.   For  partners,
23        shareholders  of Subchapter S corporations, and owners of
24        limited liability companies, if the liability company  is
25        treated  as  a  partnership  for  purposes of federal and
26        State income taxation, there shall be  allowed  a  credit
27        under  this subsection (f) to be determined in accordance
28        with the determination of income and  distributive  share
29        of  income under Sections 702 and 704 and Subchapter S of
30        the Internal Revenue Code.  The credit shall  be  .5%  of
31        the  basis  for  such  property.   The  credit  shall  be
32        available  only in the taxable year in which the property
33        is placed in service in the Enterprise Zone and shall not
34        be  allowed  to  the  extent  that  it  would  reduce   a
 
                            -10-     LRB093 09361 SJM 09596 b
 1        taxpayer's  liability  for the tax imposed by subsections
 2        (a) and (b) of this Section to below zero.  For tax years
 3        ending on or after December 31, 1985, the credit shall be
 4        allowed for the tax year in which the property is  placed
 5        in  service,  or, if the amount of the credit exceeds the
 6        tax liability for  that  year,  whether  it  exceeds  the
 7        original  liability  or  the  liability as later amended,
 8        such excess may be carried forward and applied to the tax
 9        liability of the 5 taxable  years  following  the  excess
10        credit year.  The credit shall be applied to the earliest
11        year  for which there is a liability.  If there is credit
12        from more than one tax year that is available to offset a
13        liability, the credit accruing first  in  time  shall  be
14        applied first.
15             (2)  The  term  qualified  property  means  property
16        which:
17                  (A)  is   tangible,   whether   new   or  used,
18             including buildings  and  structural  components  of
19             buildings;
20                  (B)  is  depreciable pursuant to Section 167 of
21             the  Internal  Revenue  Code,  except  that  "3-year
22             property" as defined in Section 168(c)(2)(A) of that
23             Code is not eligible for the credit provided by this
24             subsection (f);
25                  (C)  is acquired  by  purchase  as  defined  in
26             Section 179(d) of the Internal Revenue Code;
27                  (D)  is  used  in  the  Enterprise  Zone by the
28             taxpayer; and
29                  (E)  has not been previously used  in  Illinois
30             in  such  a  manner  and  by  such a person as would
31             qualify for the credit provided by  this  subsection
32             (f) or subsection (e).
33             (3)  The  basis  of  qualified property shall be the
34        basis used to  compute  the  depreciation  deduction  for
 
                            -11-     LRB093 09361 SJM 09596 b
 1        federal income tax purposes.
 2             (4)  If the basis of the property for federal income
 3        tax  depreciation purposes is increased after it has been
 4        placed in service in the Enterprise Zone by the taxpayer,
 5        the amount of such  increase  shall  be  deemed  property
 6        placed in service on the date of such increase in basis.
 7             (5)  The  term  "placed  in  service" shall have the
 8        same meaning as under Section 46 of the Internal  Revenue
 9        Code.
10             (6)  If during any taxable year, any property ceases
11        to  be  qualified  property  in the hands of the taxpayer
12        within 48 months after being placed in  service,  or  the
13        situs  of  any  qualified  property  is moved outside the
14        Enterprise Zone within 48 months after  being  placed  in
15        service, the tax imposed under subsections (a) and (b) of
16        this  Section  for  such taxable year shall be increased.
17        Such increase shall be determined by (i) recomputing  the
18        investment  credit  which would have been allowed for the
19        year in which credit for  such  property  was  originally
20        allowed   by   eliminating   such   property   from  such
21        computation, and (ii) subtracting such recomputed  credit
22        from  the  amount  of credit previously allowed.  For the
23        purposes of this paragraph (6), a reduction of the  basis
24        of qualified property resulting from a redetermination of
25        the  purchase  price  shall  be  deemed  a disposition of
26        qualified property to the extent of such reduction.
27          (g)  Jobs Tax Credit; Enterprise Zone and Foreign Trade
28    Zone or Sub-Zone.
29             (1)  A taxpayer conducting a trade or business in an
30        enterprise zone or a High Impact Business  designated  by
31        the   Department   of   Commerce  and  Community  Affairs
32        conducting a trade or business in a federally  designated
33        Foreign  Trade Zone or Sub-Zone shall be allowed a credit
34        against the tax imposed by subsections  (a)  and  (b)  of
 
                            -12-     LRB093 09361 SJM 09596 b
 1        this  Section in the amount of $500 per eligible employee
 2        hired to work in the zone during the taxable year.
 3             (2)  To qualify for the credit:
 4                  (A)  the taxpayer must hire 5 or more  eligible
 5             employees to work in an enterprise zone or federally
 6             designated Foreign Trade Zone or Sub-Zone during the
 7             taxable year;
 8                  (B)  the taxpayer's total employment within the
 9             enterprise  zone  or  federally  designated  Foreign
10             Trade  Zone  or  Sub-Zone must increase by 5 or more
11             full-time employees beyond  the  total  employed  in
12             that  zone  at  the end of the previous tax year for
13             which a jobs  tax  credit  under  this  Section  was
14             taken,  or beyond the total employed by the taxpayer
15             as of December 31, 1985, whichever is later; and
16                  (C)  the eligible employees  must  be  employed
17             180 consecutive days in order to be deemed hired for
18             purposes of this subsection.
19             (3)  An  "eligible  employee"  means an employee who
20        is:
21                  (A)  Certified by the  Department  of  Commerce
22             and  Community  Affairs  as  "eligible for services"
23             pursuant to regulations  promulgated  in  accordance
24             with  Title  II of the Job Training Partnership Act,
25             Training Services for the Disadvantaged or Title III
26             of the Job Training Partnership Act, Employment  and
27             Training Assistance for Dislocated Workers Program.
28                  (B)  Hired   after   the   enterprise  zone  or
29             federally designated Foreign Trade Zone or  Sub-Zone
30             was  designated or the trade or business was located
31             in that zone, whichever is later.
32                  (C)  Employed in the enterprise zone or Foreign
33             Trade Zone or Sub-Zone. An employee is  employed  in
34             an  enterprise  zone or federally designated Foreign
 
                            -13-     LRB093 09361 SJM 09596 b
 1             Trade Zone or Sub-Zone if his services are  rendered
 2             there  or  it  is  the  base  of  operations for the
 3             services performed.
 4                  (D)  A full-time employee working  30  or  more
 5             hours per week.
 6             (4)  For  tax  years ending on or after December 31,
 7        1985 and prior to December 31, 1988, the credit shall  be
 8        allowed  for the tax year in which the eligible employees
 9        are hired.  For tax years ending on or after December 31,
10        1988, the credit  shall  be  allowed  for  the  tax  year
11        immediately  following the tax year in which the eligible
12        employees are hired.  If the amount of the credit exceeds
13        the tax liability for that year, whether it  exceeds  the
14        original  liability  or  the  liability as later amended,
15        such excess may be carried forward and applied to the tax
16        liability of the 5 taxable  years  following  the  excess
17        credit year.  The credit shall be applied to the earliest
18        year  for  which there is a liability. If there is credit
19        from more than one tax year that is available to offset a
20        liability, earlier credit shall be applied first.
21             (5)  The Department of Revenue shall promulgate such
22        rules and regulations as may be deemed necessary to carry
23        out the purposes of this subsection (g).
24             (6)  The credit  shall  be  available  for  eligible
25        employees hired on or after January 1, 1986.
26        (h)  Investment credit; High Impact Business.
27             (1)  Subject to subsections (b) and (b-5) of Section
28        5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
29        be   allowed   a   credit  against  the  tax  imposed  by
30        subsections (a) and (b) of this Section for investment in
31        qualified property  which  is  placed  in  service  by  a
32        Department  of  Commerce and Community Affairs designated
33        High Impact Business.  The credit shall  be  .5%  of  the
34        basis  for  such  property.   The  credit  shall  not  be
 
                            -14-     LRB093 09361 SJM 09596 b
 1        available  (i) until the minimum investments in qualified
 2        property set forth in subdivision  (a)(3)(A)  of  Section
 3        5.5  of  the  Illinois  Enterprise  Zone  Act  have  been
 4        satisfied or (ii) until the time authorized in subsection
 5        (b-5)  of  the  Illinois Enterprise Zone Act for entities
 6        designated as High Impact Businesses  under  subdivisions
 7        (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the
 8        Illinois Enterprise Zone Act, and shall not be allowed to
 9        the  extent  that  it would reduce a taxpayer's liability
10        for the tax imposed by subsections (a) and  (b)  of  this
11        Section  to  below  zero.   The credit applicable to such
12        investments shall be taken in the taxable year  in  which
13        such  investments  have  been  completed.  The credit for
14        additional investments beyond the minimum investment by a
15        designated  high   impact   business   authorized   under
16        subdivision  (a)(3)(A)  of  Section  5.5  of the Illinois
17        Enterprise Zone  Act  shall  be  available  only  in  the
18        taxable  year  in which the property is placed in service
19        and shall not be allowed to  the  extent  that  it  would
20        reduce  a  taxpayer's  liability  for  the tax imposed by
21        subsections (a) and (b) of this Section  to  below  zero.
22        For  tax  years ending on or after December 31, 1987, the
23        credit shall be allowed for the tax  year  in  which  the
24        property  is  placed in service, or, if the amount of the
25        credit exceeds the tax liability for that  year,  whether
26        it  exceeds  the  original  liability or the liability as
27        later amended, such excess may  be  carried  forward  and
28        applied  to  the  tax  liability  of  the 5 taxable years
29        following the excess credit year.  The  credit  shall  be
30        applied  to  the  earliest  year  for  which  there  is a
31        liability.  If there is credit from  more  than  one  tax
32        year  that is available to offset a liability, the credit
33        accruing first in time shall be applied first.
34             Changes made in this subdivision  (h)(1)  by  Public
 
                            -15-     LRB093 09361 SJM 09596 b
 1        Act 88-670 restore changes made by Public Act 85-1182 and
 2        reflect existing law.
 3             (2)  The  term  qualified  property  means  property
 4        which:
 5                  (A)  is   tangible,   whether   new   or  used,
 6             including buildings  and  structural  components  of
 7             buildings;
 8                  (B)  is  depreciable pursuant to Section 167 of
 9             the  Internal  Revenue  Code,  except  that  "3-year
10             property" as defined in Section 168(c)(2)(A) of that
11             Code is not eligible for the credit provided by this
12             subsection (h);
13                  (C)  is acquired  by  purchase  as  defined  in
14             Section 179(d) of the Internal Revenue Code; and
15                  (D)  is  not  eligible  for the Enterprise Zone
16             Investment Credit provided by subsection (f) of this
17             Section.
18             (3)  The basis of qualified property  shall  be  the
19        basis  used  to  compute  the  depreciation deduction for
20        federal income tax purposes.
21             (4)  If the basis of the property for federal income
22        tax depreciation purposes is increased after it has  been
23        placed in service in a federally designated Foreign Trade
24        Zone or Sub-Zone located in Illinois by the taxpayer, the
25        amount  of  such increase shall be deemed property placed
26        in service on the date of such increase in basis.
27             (5)  The term "placed in  service"  shall  have  the
28        same  meaning as under Section 46 of the Internal Revenue
29        Code.
30             (6)  If during any taxable year ending on or  before
31        December  31,  1996,  any property ceases to be qualified
32        property in the hands of the taxpayer  within  48  months
33        after  being  placed  in  service,  or  the  situs of any
34        qualified property is moved outside  Illinois  within  48
 
                            -16-     LRB093 09361 SJM 09596 b
 1        months  after  being  placed  in service, the tax imposed
 2        under subsections (a) and (b) of this  Section  for  such
 3        taxable  year shall be increased.  Such increase shall be
 4        determined by (i) recomputing the investment credit which
 5        would have been allowed for the year in which credit  for
 6        such  property was originally allowed by eliminating such
 7        property from such computation, and (ii) subtracting such
 8        recomputed credit from the amount  of  credit  previously
 9        allowed.   For  the  purposes  of  this  paragraph (6), a
10        reduction of the basis of  qualified  property  resulting
11        from  a  redetermination  of  the purchase price shall be
12        deemed a disposition of qualified property to the  extent
13        of such reduction.
14             (7)  Beginning  with tax years ending after December
15        31, 1996, if a taxpayer qualifies for  the  credit  under
16        this   subsection  (h)  and  thereby  is  granted  a  tax
17        abatement and the taxpayer relocates its entire  facility
18        in  violation  of  the  explicit  terms and length of the
19        contract under Section 18-183 of the Property  Tax  Code,
20        the  tax  imposed  under  subsections (a) and (b) of this
21        Section shall be increased for the taxable year in  which
22        the taxpayer relocated its facility by an amount equal to
23        the  amount of credit received by the taxpayer under this
24        subsection (h).
25        (i)  Credit for Personal Property Tax Replacement  Income
26    Tax.    A  credit shall be allowed against the tax imposed by
27    subsections (a) and (b) of this Section for the  tax  imposed
28    by  subsections  (c)  and  (d)  of this Section.  This credit
29    shall  be  computed  by  multiplying  the  tax   imposed   by
30    subsections  (c)  and  (d) of this Section by a fraction, the
31    numerator of which is base income allocable to  Illinois  and
32    the denominator of which is Illinois base income, and further
33    multiplying   the   product   by  the  tax  rate  imposed  by
34    subsections (a) and (b) of this Section.
 
                            -17-     LRB093 09361 SJM 09596 b
 1        Any credit earned on or after  December  31,  1986  under
 2    this  subsection  which  is  unused in the year the credit is
 3    computed because it exceeds  the  tax  liability  imposed  by
 4    subsections (a) and (b) for that year (whether it exceeds the
 5    original  liability or the liability as later amended) may be
 6    carried forward and applied to the tax liability  imposed  by
 7    subsections  (a) and (b) of the 5 taxable years following the
 8    excess credit year.  This credit shall be  applied  first  to
 9    the  earliest  year for which there is a liability.  If there
10    is a credit under this subsection from more than one tax year
11    that is available to offset a liability the  earliest  credit
12    arising under this subsection shall be applied first.
13        If,  during  any taxable year ending on or after December
14    31, 1986, the tax imposed by subsections (c) and (d) of  this
15    Section  for which a taxpayer has claimed a credit under this
16    subsection (i) is reduced, the amount of credit for such  tax
17    shall also be reduced.  Such reduction shall be determined by
18    recomputing  the  credit to take into account the reduced tax
19    imposed by subsections (c) and (d).  If any  portion  of  the
20    reduced  amount  of  credit  has  been carried to a different
21    taxable year, an amended  return  shall  be  filed  for  such
22    taxable year to reduce the amount of credit claimed.
23        (j)  Training  expense  credit.  Beginning with tax years
24    ending on or after December 31, 1986,  a  taxpayer  shall  be
25    allowed  a  credit against the tax imposed by subsections (a)
26    and (b) under this Section for all amounts paid  or  accrued,
27    on behalf of all persons employed by the taxpayer in Illinois
28    or  Illinois  residents  employed  outside  of  Illinois by a
29    taxpayer,  for  educational   or   vocational   training   in
30    semi-technical or technical fields or semi-skilled or skilled
31    fields,   which  were  deducted  from  gross  income  in  the
32    computation of taxable income.  The credit  against  the  tax
33    imposed  by  subsections  (a)  and  (b) shall be 1.6% of such
34    training expenses.  For partners, shareholders of  subchapter
 
                            -18-     LRB093 09361 SJM 09596 b
 1    S corporations, and owners of limited liability companies, if
 2    the  liability  company  is  treated  as  a  partnership  for
 3    purposes of federal and State income taxation, there shall be
 4    allowed  a  credit under this subsection (j) to be determined
 5    in  accordance  with  the   determination   of   income   and
 6    distributive  share  of income under Sections 702 and 704 and
 7    subchapter S of the Internal Revenue Code.
 8        Any credit allowed under this subsection which is  unused
 9    in  the  year  the credit is earned may be carried forward to
10    each of the 5 taxable years following the year for which  the
11    credit is first computed until it is used.  This credit shall
12    be  applied  first  to the earliest year for which there is a
13    liability.  If there is a credit under this  subsection  from
14    more  than  one  tax  year  that  is  available  to  offset a
15    liability the earliest credit arising under  this  subsection
16    shall be applied first.
17        (k)  Research and development credit.
18        Beginning  with  tax  years  ending after July 1, 1990, a
19    taxpayer shall be allowed a credit against the tax imposed by
20    subsections (a)  and  (b)  of  this  Section  for  increasing
21    research  activities  in  this  State.   The  credit  allowed
22    against  the  tax imposed by subsections (a) and (b) shall be
23    equal to 6 1/2% of the qualifying expenditures for increasing
24    research   activities   in   this   State.    For   partners,
25    shareholders of subchapter  S  corporations,  and  owners  of
26    limited  liability  companies,  if  the  liability company is
27    treated as a partnership for purposes of  federal  and  State
28    income  taxation,  there shall be allowed a credit under this
29    subsection  to  be  determined   in   accordance   with   the
30    determination  of  income  and  distributive  share of income
31    under Sections 702 and 704 and subchapter S of  the  Internal
32    Revenue Code.
33        For    purposes    of    this   subsection,   "qualifying
34    expenditures" means the qualifying  expenditures  as  defined
 
                            -19-     LRB093 09361 SJM 09596 b
 1    for  the  federal  credit  for increasing research activities
 2    which would be allowable under Section  41  of  the  Internal
 3    Revenue   Code   and  which  are  conducted  in  this  State,
 4    "qualifying expenditures for increasing  research  activities
 5    in  this  State"  means the excess of qualifying expenditures
 6    for the  taxable  year  in  which  incurred  over  qualifying
 7    expenditures  for  the  base period, "qualifying expenditures
 8    for the base period" means  the  average  of  the  qualifying
 9    expenditures  for  each  year  in  the base period, and "base
10    period" means the 3 taxable years immediately  preceding  the
11    taxable year for which the determination is being made.
12        Any credit in excess of the tax liability for the taxable
13    year may be carried forward. A taxpayer may elect to have the
14    unused  credit  shown  on  its final completed return carried
15    over as a credit against the tax liability for the  following
16    5  taxable  years  or until it has been fully used, whichever
17    occurs first.
18        If an unused credit is carried forward to  a  given  year
19    from  2  or  more  earlier  years, that credit arising in the
20    earliest year will be applied first against the tax liability
21    for the given year.  If a tax liability for  the  given  year
22    still  remains,  the  credit from the next earliest year will
23    then be applied, and so on, until all credits have been  used
24    or  no  tax  liability  for  the  given  year  remains.   Any
25    remaining  unused  credit  or  credits  then  will be carried
26    forward to the next following year in which a  tax  liability
27    is  incurred, except that no credit can be carried forward to
28    a year which is more than 5 years after the year in which the
29    expense for which the credit is given was incurred.
30        Unless extended by law,  the  credit  shall  not  include
31    costs  incurred  after  December  31,  2004, except for costs
32    incurred pursuant to a binding contract entered  into  on  or
33    before December 31, 2004.
34        No  inference  shall be drawn from this amendatory Act of
 
                            -20-     LRB093 09361 SJM 09596 b
 1    the 91st General Assembly  in  construing  this  Section  for
 2    taxable years beginning before January 1, 1999.
 3        (l)  Environmental Remediation Tax Credit.
 4             (i)  For  tax   years ending after December 31, 1997
 5        and on or before December 31, 2001, a taxpayer  shall  be
 6        allowed  a  credit against the tax imposed by subsections
 7        (a) and (b) of this Section for certain amounts paid  for
 8        unreimbursed  eligible remediation costs, as specified in
 9        this  subsection.    For  purposes   of   this   Section,
10        "unreimbursed  eligible  remediation  costs"  means costs
11        approved by the Illinois Environmental Protection  Agency
12        ("Agency")  under  Section  58.14  of  the  Environmental
13        Protection Act that were paid in performing environmental
14        remediation  at a site for which a No Further Remediation
15        Letter was  issued  by  the  Agency  and  recorded  under
16        Section  58.10  of the Environmental Protection Act.  The
17        credit must be claimed for  the  taxable  year  in  which
18        Agency  approval  of  the  eligible  remediation costs is
19        granted.  The credit is not available to any taxpayer  if
20        the  taxpayer  or any related party caused or contributed
21        to, in any  material  respect,  a  release  of  regulated
22        substances  on, in, or under the site that was identified
23        and addressed by the remedial action pursuant to the Site
24        Remediation Program of the Environmental Protection  Act.
25        After  the  Pollution  Control  Board  rules  are adopted
26        pursuant to the Illinois Administrative Procedure Act for
27        the administration and enforcement of Section 58.9 of the
28        Environmental Protection Act, determinations as to credit
29        availability for purposes of this Section shall  be  made
30        consistent  with  those  rules.   For  purposes  of  this
31        Section,   "taxpayer"   includes   a   person  whose  tax
32        attributes the taxpayer has succeeded  to  under  Section
33        381  of  the  Internal  Revenue  Code and "related party"
34        includes the persons disallowed a deduction for losses by
 
                            -21-     LRB093 09361 SJM 09596 b
 1        paragraphs (b), (c), and (f)(1) of  Section  267  of  the
 2        Internal  Revenue  Code  by  virtue  of  being  a related
 3        taxpayer, as well as any of  its  partners.   The  credit
 4        allowed  against  the  tax imposed by subsections (a) and
 5        (b) shall be equal to 25% of  the  unreimbursed  eligible
 6        remediation  costs in excess of $100,000 per site, except
 7        that the $100,000 threshold shall not apply to  any  site
 8        contained  in  an  enterprise  zone  as determined by the
 9        Department of Commerce and Community Affairs.  The  total
10        credit  allowed  shall not exceed $40,000 per year with a
11        maximum total of $150,000 per  site.   For  partners  and
12        shareholders of subchapter S corporations, there shall be
13        allowed  a  credit under this subsection to be determined
14        in  accordance  with  the  determination  of  income  and
15        distributive share of income under Sections 702  and  704
16        and subchapter S of the Internal Revenue Code.
17             (ii)  A credit allowed under this subsection that is
18        unused  in  the  year the credit is earned may be carried
19        forward to each of the 5 taxable years following the year
20        for which the credit is first earned until  it  is  used.
21        The  term "unused credit" does not include any amounts of
22        unreimbursed eligible remediation costs in excess of  the
23        maximum  credit  per site authorized under paragraph (i).
24        This credit shall be applied first to the  earliest  year
25        for  which  there  is  a liability.  If there is a credit
26        under this subsection from more than one tax year that is
27        available to offset  a  liability,  the  earliest  credit
28        arising  under this subsection shall be applied first.  A
29        credit allowed under this subsection may  be  sold  to  a
30        buyer as part of a sale of all or part of the remediation
31        site  for which the credit was granted.  The purchaser of
32        a remediation site and the tax credit  shall  succeed  to
33        the  unused  credit and remaining carry-forward period of
34        the seller.  To perfect the transfer, the assignor  shall
 
                            -22-     LRB093 09361 SJM 09596 b
 1        record  the  transfer  in the chain of title for the site
 2        and  provide  written  notice  to  the  Director  of  the
 3        Illinois Department of Revenue of the  assignor's  intent
 4        to  sell  the  remediation site and the amount of the tax
 5        credit to be transferred as a portion of the sale.  In no
 6        event may a credit be transferred to any taxpayer if  the
 7        taxpayer  or  a related party would not be eligible under
 8        the provisions of subsection (i).
 9             (iii)  For purposes of this Section, the term "site"
10        shall have the same meaning as under Section 58.2 of  the
11        Environmental Protection Act.
12        (m)  Education  expense credit.  Beginning with tax years
13    ending after  December  31,  1999,  a  taxpayer  who  is  the
14    custodian of one or more qualifying pupils shall be allowed a
15    credit  against the tax imposed by subsections (a) and (b) of
16    this Section for qualified  education  expenses  incurred  on
17    behalf  of  the qualifying pupils.  The credit shall be equal
18    to 25% of qualified education expenses, but in no  event  may
19    the  total  credit  under this subsection claimed by a family
20    that is the custodian of qualifying pupils exceed  $500.   In
21    no  event  shall  a  credit  under this subsection reduce the
22    taxpayer's liability under this Act to less than zero.   This
23    subsection  is  exempt  from the provisions of Section 250 of
24    this Act.
25        For purposes of this subsection:
26        "Qualifying  pupils"  means  individuals  who   (i)   are
27    residents of the State of Illinois, (ii) are under the age of
28    21  at  the  close  of  the school year for which a credit is
29    sought, and (iii) during the school year for which  a  credit
30    is  sought  were  full-time pupils enrolled in a kindergarten
31    through twelfth grade education program  at  any  school,  as
32    defined in this subsection.
33        "Qualified  education  expense" means the amount incurred
34    on behalf of  a  qualifying  pupil  in  excess  of  $250  for
 
                            -23-     LRB093 09361 SJM 09596 b
 1    tuition,  book  fees, and lab fees at the school in which the
 2    pupil is enrolled during the regular school year.
 3        "School" means any  public  or  nonpublic  elementary  or
 4    secondary school in Illinois that is in compliance with Title
 5    VI  of  the  Civil Rights Act of 1964 and attendance at which
 6    satisfies the requirements of  Section  26-1  of  the  School
 7    Code,  except  that  nothing  shall be construed to require a
 8    child to attend any particular public or nonpublic school  to
 9    qualify for the credit under this Section.
10        "Custodian"  means, with respect to qualifying pupils, an
11    Illinois resident who is  a  parent,  the  parents,  a  legal
12    guardian, or the legal guardians of the qualifying pupils.
13    (Source:  P.A.  91-9,  eff.  1-1-00;  91-357,  eff.  7-29-99;
14    91-643,  eff.  8-20-99;  91-644,  eff.  8-20-99; 91-860, eff.
15    6-22-00; 91-913, eff. 1-1-01; 92-12, eff. 7-1-01; 92-16, eff.
16    6-28-01; 92-651, eff. 7-11-02; 92-846, eff. 8-23-02.)

17        (35 ILCS 5/211)
18        Sec. 211.  Economic Development for a Growing Economy Tax
19    Credit. For tax years beginning on or after January  1,  1999
20    and  ending  on  or  before June 30, 2005, a Taxpayer who has
21    entered into an Agreement under the Economic Development  for
22    a  Growing  Economy  Tax  Credit  Act is entitled to a credit
23    against the taxes imposed under subsections (a)  and  (b)  of
24    Section  201 of this Act in an amount to be determined in the
25    Agreement.  If the Taxpayer is a partnership or Subchapter  S
26    corporation,  the  credit shall be allowed to the partners or
27    shareholders in accordance with the determination  of  income
28    and  distributive  share of income under Sections 702 and 704
29    and  subchapter  S  of  the  Internal   Revenue   Code.   The
30    Department,  in  cooperation  with the Department of Commerce
31    and Community Affairs, shall prescribe rules to  enforce  and
32    administer  the  provisions of this Section.  This Section is
33    exempt from the provisions of Section 250 of this Act.
 
                            -24-     LRB093 09361 SJM 09596 b
 1        The credit shall be  subject to the conditions set  forth
 2    in the Agreement and the following limitations:
 3             (1)  The tax credit shall not exceed the Incremental
 4        Income  Tax  (as  defined  in Section 5-5 of the Economic
 5        Development for a Growing Economy Tax  Credit  Act)  with
 6        respect to the project.
 7             (2)  The amount of the credit allowed during the tax
 8        year  plus  the sum of all amounts allowed in prior years
 9        shall not exceed 100% of the aggregate amount expended by
10        the Taxpayer during all prior tax years on approved costs
11        defined by Agreement.
12             (3)  The amount of the credit shall be determined on
13        an annual basis.  Except as applied in a  carryover  year
14        pursuant  to  Section  211(4) of this Act, the credit may
15        not be applied against any State income tax liability  in
16        more  than  10 taxable years; provided, however, that (i)
17        an eligible  business  certified  by  the  Department  of
18        Commerce   and  Community  Affairs  under  the  Corporate
19        Headquarters Relocation Act  may  not  apply  the  credit
20        against  any  of  its  State income tax liability in more
21        than 15 taxable years and (ii) credits  allowed  to  that
22        eligible  business  are  subject  to  the  conditions and
23        requirements set forth in Sections 5-35 and 5-45  of  the
24        Economic  Development  for  a  Growing Economy Tax Credit
25        Act.
26             (4)  The credit may not exceed the amount  of  taxes
27        imposed  pursuant  to  subsections (a) and (b) of Section
28        201 of this Act.  Any credit that is unused in  the  year
29        the credit is computed may be carried forward and applied
30        to the tax liability of the 5 taxable years following the
31        excess  credit  year.  The credit shall be applied to the
32        earliest year for which there is  a  tax  liability.   If
33        there  are  credits  from more than one tax year that are
34        available to offset a liability, the earlier credit shall
 
                            -25-     LRB093 09361 SJM 09596 b
 1        be applied first.
 2             (5)  No credit shall be allowed with respect to  any
 3        Agreement   for   any   taxable  year  ending  after  the
 4        Noncompliance Date.  Upon receiving notification  by  the
 5        Department  of  Commerce  and  Community  Affairs  of the
 6        noncompliance  of  a  Taxpayer  with  an  Agreement,  the
 7        Department shall notify the Taxpayer that  no  credit  is
 8        allowed  with  respect  to that Agreement for any taxable
 9        year ending after the Noncompliance Date,  as  stated  in
10        such  notification.   If any credit has been allowed with
11        respect to an Agreement for a taxable year  ending  after
12        the  Noncompliance  Date  for  that Agreement, any refund
13        paid to the Taxpayer for that taxable year shall, to  the
14        extent  of  that  credit  allowed, be an erroneous refund
15        within the meaning of Section 912 of this Act.
16             (6)  For  purposes  of  this  Section,   the   terms
17        "Agreement",      "Incremental     Income    Tax",    and
18        "Noncompliance Date" have the same meaning as  when  used
19        in  the  Economic  Development  for a Growing Economy Tax
20        Credit Act.
21    (Source: P.A. 91-476, eff. 8-11-99; 92-207, eff. 8-1-01.)

22        Section 10.  The Use  Tax  Act  is  amended  by  changing
23    Sections 3-5 and 3-55 as follows:

24        (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
25        Sec.  3-5.   Exemptions.   Use  of the following tangible
26    personal property is exempt from the tax imposed by this Act:
27        (1)  Personal  property  purchased  from  a  corporation,
28    society,    association,    foundation,    institution,    or
29    organization, other than a limited liability company, that is
30    organized and operated as a not-for-profit service enterprise
31    for the benefit of persons 65 years of age or  older  if  the
32    personal property was not purchased by the enterprise for the
 
                            -26-     LRB093 09361 SJM 09596 b
 1    purpose of resale by the enterprise.
 2        (2)  Personal  property  purchased  by  a  not-for-profit
 3    Illinois  county  fair  association  for  use  in conducting,
 4    operating, or promoting the county fair.
 5        (3)  Personal property purchased by a not-for-profit arts
 6    or cultural organization that establishes, by proof  required
 7    by  the Department by rule, that it has received an exemption
 8    under Section 501(c)(3) of the Internal Revenue Code and that
 9    is organized and operated primarily for the  presentation  or
10    support  of  arts  or  cultural  programming,  activities, or
11    services.  These organizations include, but are  not  limited
12    to,  music  and  dramatic arts organizations such as symphony
13    orchestras and theatrical groups, arts and  cultural  service
14    organizations,    local    arts    councils,    visual   arts
15    organizations, and media arts organizations. On and after the
16    effective date of this amendatory Act  of  the  92nd  General
17    Assembly,  however,  an  entity  otherwise  eligible for this
18    exemption shall not make tax-free purchases unless it has  an
19    active identification number issued by the Department.
20        (4)  Personal  property purchased by a governmental body,
21    by  a  corporation,  society,  association,  foundation,   or
22    institution    organized   and   operated   exclusively   for
23    charitable, religious,  or  educational  purposes,  or  by  a
24    not-for-profit corporation, society, association, foundation,
25    institution, or organization that has no compensated officers
26    or employees and that is organized and operated primarily for
27    the recreation of persons 55 years of age or older. A limited
28    liability  company  may  qualify for the exemption under this
29    paragraph only if the limited liability company is  organized
30    and  operated  exclusively  for  educational purposes. On and
31    after July 1, 1987, however, no entity otherwise eligible for
32    this exemption shall make tax-free purchases unless it has an
33    active  exemption  identification  number   issued   by   the
34    Department.
 
                            -27-     LRB093 09361 SJM 09596 b
 1        (5)  A passenger car that is a replacement vehicle to the
 2    extent  that  the purchase price of the car is subject to the
 3    Replacement Vehicle Tax.
 4        (6)  Graphic  arts  machinery  and  equipment,  including
 5    repair  and  replacement  parts,  both  new  and  used,   and
 6    including  that  manufactured  on special order, certified by
 7    the  purchaser  to  be  used  primarily  for   graphic   arts
 8    production,  and  including machinery and equipment purchased
 9    for lease.  Equipment includes chemicals or chemicals  acting
10    as catalysts but only if the chemicals or chemicals acting as
11    catalysts effect a direct and immediate change upon a graphic
12    arts product.
13        (7)  Farm chemicals.
14        (8)  Legal  tender,  currency,  medallions,  or  gold  or
15    silver   coinage   issued  by  the  State  of  Illinois,  the
16    government of the United States of America, or the government
17    of any foreign country, and bullion.
18        (9)  Personal property purchased from a teacher-sponsored
19    student  organization  affiliated  with  an   elementary   or
20    secondary school located in Illinois.
21        (10)  A  motor  vehicle  of  the  first division, a motor
22    vehicle of the second division that is a self-contained motor
23    vehicle designed or permanently converted to  provide  living
24    quarters  for  recreational,  camping,  or  travel  use, with
25    direct walk through to the living quarters from the  driver's
26    seat,  or  a  motor vehicle of the second division that is of
27    the van configuration designed for the transportation of  not
28    less  than  7  nor  more  than  16  passengers, as defined in
29    Section 1-146 of the Illinois Vehicle Code, that is used  for
30    automobile  renting,  as  defined  in  the Automobile Renting
31    Occupation and Use Tax Act.
32        (11)  Farm machinery and equipment, both  new  and  used,
33    including  that  manufactured  on special order, certified by
34    the purchaser to be used primarily for production agriculture
 
                            -28-     LRB093 09361 SJM 09596 b
 1    or  State  or  federal   agricultural   programs,   including
 2    individual replacement parts for the machinery and equipment,
 3    including  machinery  and  equipment purchased for lease, and
 4    including implements of husbandry defined in Section 1-130 of
 5    the Illinois Vehicle Code, farm  machinery  and  agricultural
 6    chemical  and fertilizer spreaders, and nurse wagons required
 7    to be registered under Section 3-809 of the Illinois  Vehicle
 8    Code,  but  excluding  other  motor  vehicles  required to be
 9    registered under the  Illinois  Vehicle  Code.  Horticultural
10    polyhouses  or  hoop houses used for propagating, growing, or
11    overwintering plants shall be considered farm  machinery  and
12    equipment  under this item (11). Agricultural chemical tender
13    tanks and dry boxes shall include units sold separately  from
14    a  motor  vehicle  required  to  be  licensed  and units sold
15    mounted on a motor vehicle required to  be  licensed  if  the
16    selling price of the tender is separately stated.
17        Farm  machinery  and  equipment  shall  include precision
18    farming equipment  that  is  installed  or  purchased  to  be
19    installed  on farm machinery and equipment including, but not
20    limited  to,  tractors,   harvesters,   sprayers,   planters,
21    seeders,  or spreaders. Precision farming equipment includes,
22    but is not  limited  to,  soil  testing  sensors,  computers,
23    monitors,  software,  global positioning and mapping systems,
24    and other such equipment.
25        Farm machinery and  equipment  also  includes  computers,
26    sensors,  software,  and  related equipment used primarily in
27    the computer-assisted  operation  of  production  agriculture
28    facilities,  equipment,  and  activities  such  as,  but  not
29    limited  to,  the  collection, monitoring, and correlation of
30    animal and crop data for the purpose  of  formulating  animal
31    diets  and  agricultural chemicals.  This item (11) is exempt
32    from the provisions of Section 3-90.
33        (12)  Fuel and petroleum products sold to or used  by  an
34    air  common  carrier, certified by the carrier to be used for
 
                            -29-     LRB093 09361 SJM 09596 b
 1    consumption, shipment, or  storage  in  the  conduct  of  its
 2    business  as an air common carrier, for a flight destined for
 3    or returning from a location or locations outside the  United
 4    States  without  regard  to  previous  or subsequent domestic
 5    stopovers.
 6        (13)  Proceeds of mandatory  service  charges  separately
 7    stated  on  customers' bills for the purchase and consumption
 8    of food and beverages purchased at retail from a retailer, to
 9    the extent that the proceeds of the  service  charge  are  in
10    fact  turned  over as tips or as a substitute for tips to the
11    employees who participate  directly  in  preparing,  serving,
12    hosting  or  cleaning  up  the food or beverage function with
13    respect to which the service charge is imposed.
14        (14)  Oil field  exploration,  drilling,  and  production
15    equipment, including (i) rigs and parts of rigs, rotary rigs,
16    cable  tool  rigs,  and  workover rigs, (ii) pipe and tubular
17    goods, including casing and drill strings,  (iii)  pumps  and
18    pump-jack  units,  (iv) storage tanks and flow lines, (v) any
19    individual  replacement  part  for  oil  field   exploration,
20    drilling,  and  production  equipment, and (vi) machinery and
21    equipment purchased for lease; but excluding  motor  vehicles
22    required to be registered under the Illinois Vehicle Code.
23        (15)  Photoprocessing  machinery and equipment, including
24    repair and replacement parts, both new  and  used,  including
25    that   manufactured   on  special  order,  certified  by  the
26    purchaser to  be  used  primarily  for  photoprocessing,  and
27    including  photoprocessing  machinery and equipment purchased
28    for lease.
29        (16)  Coal  exploration,  mining,   offhighway   hauling,
30    processing, maintenance, and reclamation equipment, including
31    replacement  parts  and  equipment,  and  including equipment
32    purchased for lease, but excluding motor vehicles required to
33    be registered under the Illinois Vehicle Code.
34        (17)  Distillation machinery and  equipment,  sold  as  a
 
                            -30-     LRB093 09361 SJM 09596 b
 1    unit   or  kit,  assembled  or  installed  by  the  retailer,
 2    certified by the user to be used only for the  production  of
 3    ethyl alcohol that will be used for consumption as motor fuel
 4    or  as  a component of motor fuel for the personal use of the
 5    user, and not subject to sale or resale.
 6        (18)  Manufacturing   and   assembling   machinery    and
 7    equipment  used  primarily in the process of manufacturing or
 8    assembling tangible personal property for wholesale or retail
 9    sale or lease, whether that sale or lease is made directly by
10    the  manufacturer  or  by  some  other  person,  whether  the
11    materials used in the process are owned by  the  manufacturer
12    or  some  other person, or whether that sale or lease is made
13    apart from or as an incident to the seller's engaging in  the
14    service  occupation of producing machines, tools, dies, jigs,
15    patterns, gauges, or other similar  items  of  no  commercial
16    value on special order for a particular purchaser.
17        (19)  Personal  property  delivered  to  a  purchaser  or
18    purchaser's donee inside Illinois when the purchase order for
19    that  personal  property  was  received  by a florist located
20    outside Illinois who has a florist  located  inside  Illinois
21    deliver the personal property.
22        (20)  Semen used for artificial insemination of livestock
23    for direct agricultural production.
24        (21)  Horses, or interests in horses, registered with and
25    meeting  the  requirements  of  any of the Arabian Horse Club
26    Registry of America, Appaloosa Horse Club,  American  Quarter
27    Horse  Association,  United  States  Trotting Association, or
28    Jockey Club, as appropriate, used for purposes of breeding or
29    racing for prizes.
30        (22)  Computers and communications equipment utilized for
31    any hospital purpose and equipment  used  in  the  diagnosis,
32    analysis,  or  treatment  of hospital patients purchased by a
33    lessor who leases the equipment, under a lease of one year or
34    longer executed or in effect at the  time  the  lessor  would
 
                            -31-     LRB093 09361 SJM 09596 b
 1    otherwise  be  subject  to  the tax imposed by this Act, to a
 2    hospital  that  has  been  issued  an  active  tax  exemption
 3    identification  number  by the Department under Section 1g of
 4    the Retailers' Occupation  Tax  Act.   If  the  equipment  is
 5    leased  in  a manner that does not qualify for this exemption
 6    or is used in any other non-exempt manner, the  lessor  shall
 7    be  liable  for the tax imposed under this Act or the Service
 8    Use Tax Act, as the case may be, based  on  the  fair  market
 9    value  of  the  property  at  the time the non-qualifying use
10    occurs.  No lessor shall collect or  attempt  to  collect  an
11    amount  (however  designated) that purports to reimburse that
12    lessor for the tax imposed by this Act or the Service Use Tax
13    Act, as the case may be, if the tax has not been paid by  the
14    lessor.  If a lessor improperly collects any such amount from
15    the  lessee,  the  lessee shall have a legal right to claim a
16    refund of that amount from the  lessor.   If,  however,  that
17    amount  is  not  refunded  to  the lessee for any reason, the
18    lessor is liable to pay that amount to the Department.
19        (23)  Personal property purchased by a lessor who  leases
20    the  property,  under a lease of  one year or longer executed
21    or in effect at  the  time  the  lessor  would  otherwise  be
22    subject  to  the  tax  imposed by this Act, to a governmental
23    body that has been  issued  an  active  sales  tax  exemption
24    identification  number  by the Department under Section 1g of
25    the Retailers' Occupation Tax Act. If the property is  leased
26    in  a manner that does not qualify for this exemption or used
27    in any other non-exempt manner, the lessor  shall  be  liable
28    for  the  tax  imposed  under this Act or the Service Use Tax
29    Act, as the case may be, based on the fair  market  value  of
30    the  property  at the time the non-qualifying use occurs.  No
31    lessor shall collect or attempt to collect an amount (however
32    designated) that purports to reimburse that  lessor  for  the
33    tax  imposed  by  this Act or the Service Use Tax Act, as the
34    case may be, if the tax has not been paid by the lessor.   If
 
                            -32-     LRB093 09361 SJM 09596 b
 1    a lessor improperly collects any such amount from the lessee,
 2    the lessee shall have a legal right to claim a refund of that
 3    amount  from  the  lessor.   If,  however, that amount is not
 4    refunded to the lessee for any reason, the lessor  is  liable
 5    to pay that amount to the Department.
 6        (24)  Beginning  with  taxable  years  ending on or after
 7    December 31, 1995 and ending with taxable years ending on  or
 8    before  December  31, 2004, personal property that is donated
 9    for disaster relief to  be  used  in  a  State  or  federally
10    declared disaster area in Illinois or bordering Illinois by a
11    manufacturer  or retailer that is registered in this State to
12    a   corporation,   society,   association,   foundation,   or
13    institution that  has  been  issued  a  sales  tax  exemption
14    identification  number by the Department that assists victims
15    of the disaster who reside within the declared disaster area.
16        (25)  Beginning with taxable years  ending  on  or  after
17    December  31, 1995 and ending with taxable years ending on or
18    before December 31, 2004, personal property that is  used  in
19    the  performance  of  infrastructure  repairs  in this State,
20    including but not limited to  municipal  roads  and  streets,
21    access  roads,  bridges,  sidewalks,  waste disposal systems,
22    water and  sewer  line  extensions,  water  distribution  and
23    purification  facilities,  storm water drainage and retention
24    facilities, and sewage treatment facilities, resulting from a
25    State or federally declared disaster in Illinois or bordering
26    Illinois  when  such  repairs  are  initiated  on  facilities
27    located in the declared disaster area within 6  months  after
28    the disaster.
29        (26)  Beginning   July   1,  1999,  game  or  game  birds
30    purchased at a "game breeding and hunting preserve  area"  or
31    an  "exotic game hunting area" as those terms are used in the
32    Wildlife Code or at  a  hunting  enclosure  approved  through
33    rules  adopted  by the Department of Natural Resources.  This
34    paragraph is exempt from the provisions of Section 3-90.
 
                            -33-     LRB093 09361 SJM 09596 b
 1        (27)  A motor vehicle, as that term is defined in Section
 2    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
 3    corporation, limited liability company, society, association,
 4    foundation,   or   institution  that  is  determined  by  the
 5    Department to  be  organized  and  operated  exclusively  for
 6    educational  purposes.    For  purposes of this exemption, "a
 7    corporation, limited liability company, society, association,
 8    foundation, or institution organized and operated exclusively
 9    for educational  purposes"  means  all  tax-supported  public
10    schools, private schools that offer systematic instruction in
11    useful  branches  of  learning  by  methods  common to public
12    schools  and  that  compare  favorably  in  their  scope  and
13    intensity with the course of study presented in tax-supported
14    schools, and vocational or technical  schools  or  institutes
15    organized  and  operated  exclusively  to provide a course of
16    study of not less than  6  weeks  duration  and  designed  to
17    prepare  individuals to follow a trade or to pursue a manual,
18    technical, mechanical, industrial,  business,  or  commercial
19    occupation.
20        (28)  Beginning  January  1,  2000  and  through June 30,
21    2005,  personal property, including food,  purchased  through
22    fundraising  events  for  the  benefit of a public or private
23    elementary or secondary school, a group of those schools,  or
24    one  or  more school districts if the events are sponsored by
25    an entity recognized by the  school  district  that  consists
26    primarily  of volunteers and includes parents and teachers of
27    the school  children.   This  paragraph  does  not  apply  to
28    fundraising  events  (i)  for  the  benefit  of  private home
29    instruction  or  (ii)  for  which  the   fundraising   entity
30    purchases  the  personal  property  sold  at  the events from
31    another individual or entity that sold the property  for  the
32    purpose  of resale by the fundraising entity and that profits
33    from the sale to the fundraising entity.  This  paragraph  is
34    exempt from the provisions of Section 3-90.
 
                            -34-     LRB093 09361 SJM 09596 b
 1        (29)  Beginning  January 1, 2000 and through December 31,
 2    2001, new or used automatic vending machines that prepare and
 3    serve hot food and beverages,  including  coffee,  soup,  and
 4    other  items,  and  replacement  parts  for  these  machines.
 5    Beginning January 1, 2002 and through June 30, 2005, machines
 6    and  parts  for  machines  used  in commercial, coin-operated
 7    amusement and vending business if a use or occupation tax  is
 8    paid  on  the  gross  receipts  derived  from  the use of the
 9    commercial, coin-operated  amusement  and  vending  machines.
10    This paragraph is exempt from the provisions of Section 3-90.
11        (30)  Food  for  human consumption that is to be consumed
12    off the premises where  it  is  sold  (other  than  alcoholic
13    beverages,  soft  drinks, and food that has been prepared for
14    immediate consumption) and prescription  and  nonprescription
15    medicines,  drugs,  medical  appliances,  and  insulin, urine
16    testing materials, syringes, and needles used  by  diabetics,
17    for  human  use, when purchased for use by a person receiving
18    medical assistance under Article 5 of the Illinois Public Aid
19    Code who resides in a licensed long-term  care  facility,  as
20    defined in the Nursing Home Care Act.
21        (31)  Beginning  on the effective date of this amendatory
22    Act of the 92nd General Assembly and through June  30,  2005,
23    computers  and  communications  equipment  utilized  for  any
24    hospital   purpose  and  equipment  used  in  the  diagnosis,
25    analysis, or treatment of hospital patients  purchased  by  a
26    lessor who leases the equipment, under a lease of one year or
27    longer  executed  or  in  effect at the time the lessor would
28    otherwise be subject to the tax imposed by  this  Act,  to  a
29    hospital  that  has  been  issued  an  active  tax  exemption
30    identification  number  by the Department under Section 1g of
31    the Retailers' Occupation  Tax  Act.   If  the  equipment  is
32    leased  in  a manner that does not qualify for this exemption
33    or is used in any other nonexempt manner, the lessor shall be
34    liable for the tax imposed under this Act or the Service  Use
 
                            -35-     LRB093 09361 SJM 09596 b
 1    Tax  Act,  as the case may be, based on the fair market value
 2    of the property at the time the nonqualifying use occurs.  No
 3    lessor shall collect or attempt to collect an amount (however
 4    designated) that purports to reimburse that  lessor  for  the
 5    tax  imposed  by  this Act or the Service Use Tax Act, as the
 6    case may be, if the tax has not been paid by the lessor.   If
 7    a lessor improperly collects any such amount from the lessee,
 8    the lessee shall have a legal right to claim a refund of that
 9    amount  from  the  lessor.   If,  however, that amount is not
10    refunded to the lessee for any reason, the lessor  is  liable
11    to  pay  that  amount  to  the  Department. This paragraph is
12    exempt from the provisions of Section 3-90.
13        (32)  Beginning on the effective date of this  amendatory
14    Act  of  the 92nd General Assembly and through June 30, 2005,
15    personal property  purchased  by  a  lessor  who  leases  the
16    property,  under a lease of one year or longer executed or in
17    effect at the time the lessor would otherwise be  subject  to
18    the  tax imposed by this Act, to a governmental body that has
19    been issued an  active  sales  tax  exemption  identification
20    number  by  the Department under Section 1g of the Retailers'
21    Occupation Tax Act.  If the property is leased  in  a  manner
22    that does not qualify for this exemption or used in any other
23    nonexempt  manner,  the  lessor  shall  be liable for the tax
24    imposed under this Act or the Service Use  Tax  Act,  as  the
25    case  may  be, based on the fair market value of the property
26    at the time the nonqualifying use occurs.   No  lessor  shall
27    collect  or attempt to collect an amount (however designated)
28    that purports to reimburse that lessor for the tax imposed by
29    this Act or the Service Use Tax Act, as the case may  be,  if
30    the  tax  has  not  been  paid  by  the  lessor.  If a lessor
31    improperly collects any such  amount  from  the  lessee,  the
32    lessee  shall  have  a  legal right to claim a refund of that
33    amount from the lessor.  If,  however,  that  amount  is  not
34    refunded  to  the lessee for any reason, the lessor is liable
 
                            -36-     LRB093 09361 SJM 09596 b
 1    to pay that amount to  the  Department.   This  paragraph  is
 2    exempt from the provisions of Section 3-90.
 3    (Source:  P.A.  91-51,  eff.  6-30-99;  91-200, eff. 7-20-99;
 4    91-439, eff.  8-6-99;  91-637,  eff.  8-20-99;  91-644,  eff.
 5    8-20-99;  91-901,  eff.  1-1-01;  92-35, eff. 7-1-01; 92-227,
 6    eff. 8-2-01; 92-337,  eff.  8-10-01;  92-484,  eff.  8-23-01;
 7    92-651, eff. 7-11-02.)

 8        (35 ILCS 105/3-55) (from Ch. 120, par. 439.3-55)
 9        Sec.  3-55.  Multistate  exemption.    The tax imposed by
10    this Act does not apply  to  the  use  of  tangible  personal
11    property in this State under the following circumstances:
12        (a)  The   use,  in  this  State,  of  tangible  personal
13    property  acquired  outside  this  State  by  a   nonresident
14    individual  and brought into this State by the individual for
15    his or her own use while temporarily  within  this  State  or
16    while passing through this State.
17        (b)  The   use,  in  this  State,  of  tangible  personal
18    property by an interstate carrier for hire as  rolling  stock
19    moving  in interstate commerce or by lessors under a lease of
20    one year or longer executed or  in  effect  at  the  time  of
21    purchase of tangible personal property by interstate carriers
22    for-hire  for  use  as  rolling  stock  moving  in interstate
23    commerce as long  as  so  used  by  the  interstate  carriers
24    for-hire,  and  equipment  operated  by  a telecommunications
25    provider,  licensed  as  a  common  carrier  by  the  Federal
26    Communications Commission, which is permanently installed  in
27    or affixed to aircraft moving in interstate commerce.
28        (c)  The  use,  in  this  State,  by  owners, lessors, or
29    shippers of tangible personal property that  is  utilized  by
30    interstate  carriers for hire for use as rolling stock moving
31    in interstate commerce as long as so used by  the  interstate
32    carriers    for   hire,   and   equipment   operated   by   a
33    telecommunications provider, licensed as a common carrier  by
 
                            -37-     LRB093 09361 SJM 09596 b
 1    the  Federal  Communications Commission, which is permanently
 2    installed in or affixed  to  aircraft  moving  in  interstate
 3    commerce.
 4        (d)  The   use,  in  this  State,  of  tangible  personal
 5    property that is acquired outside this State and caused to be
 6    brought into this State by a person who has  already  paid  a
 7    tax in another State in respect to the sale, purchase, or use
 8    of  that  property,  to  the  extent of the amount of the tax
 9    properly due and paid in the other State.
10        (e)  The temporary storage, in this  State,  of  tangible
11    personal  property  that  is  acquired outside this State and
12    that, after being brought into this  State  and  stored  here
13    temporarily,   is  used  solely  outside  this  State  or  is
14    physically attached to or incorporated  into  other  tangible
15    personal  property that is used solely outside this State, or
16    is  altered  by   converting,   fabricating,   manufacturing,
17    printing,  processing,  or  shaping, and, as altered, is used
18    solely outside this State.
19        (f)  The temporary storage  in  this  State  of  building
20    materials and fixtures that are acquired either in this State
21    or  outside  this State by an Illinois registered combination
22    retailer and construction contractor, and that the  purchaser
23    thereafter  uses  outside  this  State  by incorporating that
24    property into real estate located outside this State.
25        (g)  The use or purchase of tangible personal property by
26    a common carrier by rail or motor that receives the  physical
27    possession  of  the property in Illinois, and that transports
28    the property, or shares with another common  carrier  in  the
29    transportation of the property, out of Illinois on a standard
30    uniform  bill of lading showing the seller of the property as
31    the shipper or consignor of the  property  to  a  destination
32    outside Illinois, for use outside Illinois.
33        (h)  The  use, in this State, of a motor vehicle that was
34    sold in this State to a nonresident, even  though  the  motor
 
                            -38-     LRB093 09361 SJM 09596 b
 1    vehicle is delivered to the nonresident in this State, if the
 2    motor  vehicle  is  not  to be titled in this State, and if a
 3    drive-away permit is issued to the motor vehicle as  provided
 4    in  Section  3-603  of  the  Illinois  Vehicle Code or if the
 5    nonresident purchaser  has  vehicle  registration  plates  to
 6    transfer  to  the  motor vehicle upon returning to his or her
 7    home state. The issuance of the drive-away permit  or  having
 8    the  out-of-state registration plates to be transferred shall
 9    be prima facie evidence that the motor vehicle  will  not  be
10    titled in this State.
11        (i)  Beginning  July  1, 1999, the use, in this State, of
12    fuel acquired outside this State and brought into this  State
13    in  the  fuel  supply tanks of locomotives engaged in freight
14    hauling and passenger service for interstate  commerce.  This
15    subsection is exempt from the provisions of Section 3-90.
16        (j)  Beginning  on  January  1, 2002 and through June 30,
17    2005, the use of tangible personal property purchased from an
18    Illinois  retailer  by  a  taxpayer  engaged  in  centralized
19    purchasing activities in Illinois who will, upon  receipt  of
20    the  property  in Illinois, temporarily store the property in
21    Illinois (i) for the purpose of subsequently transporting  it
22    outside  this  State for use or consumption thereafter solely
23    outside  this  State  or  (ii)  for  the  purpose  of   being
24    processed,  fabricated, or manufactured into, attached to, or
25    incorporated into other  tangible  personal  property  to  be
26    transported   outside  this  State  and  thereafter  used  or
27    consumed solely outside this State.  The Director of  Revenue
28    shall,  pursuant  to  rules  adopted  in  accordance with the
29    Illinois Administrative Procedure Act, issue a permit to  any
30    taxpayer in good standing with the Department who is eligible
31    for  the  exemption  under  this  subsection (j).  The permit
32    issued under this subsection (j) shall authorize the  holder,
33    to  the  extent  and  in  the  manner  specified in the rules
34    adopted  under  this  Act,  to  purchase  tangible   personal
 
                            -39-     LRB093 09361 SJM 09596 b
 1    property  from  a  retailer  exempt from the taxes imposed by
 2    this Act.  Taxpayers shall maintain all necessary  books  and
 3    records  to  substantiate the use and consumption of all such
 4    tangible personal property outside of the State of Illinois.
 5    (Source: P.A. 91-51,  eff.  6-30-99;  91-313,  eff.  7-29-99;
 6    91-587,  eff.  8-14-99;  92-16,  eff.  6-28-01;  92-488, eff.
 7    8-23-01; 92-680, eff. 7-16-02.)

 8        Section 15.  The  Service  Use  Tax  Act  is  amended  by
 9    changing Sections 3-5 and 3-45 as follows:

10        (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
11        Sec.  3-5.   Exemptions.   Use  of the following tangible
12    personal property is exempt from the tax imposed by this Act:
13        (1)  Personal  property  purchased  from  a  corporation,
14    society,    association,    foundation,    institution,    or
15    organization, other than a limited liability company, that is
16    organized and operated as a not-for-profit service enterprise
17    for the benefit of persons 65 years of age or  older  if  the
18    personal property was not purchased by the enterprise for the
19    purpose of resale by the enterprise.
20        (2)  Personal property purchased by a non-profit Illinois
21    county  fair association for use in conducting, operating, or
22    promoting the county fair.
23        (3)  Personal property purchased by a not-for-profit arts
24    or cultural organization that establishes, by proof  required
25    by  the Department by rule, that it has received an exemption
26    under Section 501(c)(3) of the Internal Revenue Code and that
27    is organized and operated primarily for the  presentation  or
28    support  of  arts  or  cultural  programming,  activities, or
29    services.  These organizations include, but are  not  limited
30    to,  music  and  dramatic arts organizations such as symphony
31    orchestras and theatrical groups, arts and  cultural  service
32    organizations,    local    arts    councils,    visual   arts
 
                            -40-     LRB093 09361 SJM 09596 b
 1    organizations, and media arts organizations. On and after the
 2    effective date of this amendatory Act  of  the  92nd  General
 3    Assembly,  however,  an  entity  otherwise  eligible for this
 4    exemption shall not make tax-free purchases unless it has  an
 5    active identification number issued by the Department.
 6        (4)  Legal  tender,  currency,  medallions,  or  gold  or
 7    silver   coinage   issued  by  the  State  of  Illinois,  the
 8    government of the United States of America, or the government
 9    of any foreign country, and bullion.
10        (5)  Graphic  arts  machinery  and  equipment,  including
11    repair  and  replacement  parts,  both  new  and  used,   and
12    including that manufactured on special order or purchased for
13    lease,  certified  by  the purchaser to be used primarily for
14    graphic arts  production.  Equipment  includes  chemicals  or
15    chemicals  acting  as  catalysts but only if the chemicals or
16    chemicals acting as catalysts effect a direct  and  immediate
17    change upon a graphic arts product.
18        (6)  Personal property purchased from a teacher-sponsored
19    student   organization   affiliated  with  an  elementary  or
20    secondary school located in Illinois.
21        (7)  Farm machinery and equipment,  both  new  and  used,
22    including  that  manufactured  on special order, certified by
23    the purchaser to be used primarily for production agriculture
24    or  State  or  federal   agricultural   programs,   including
25    individual replacement parts for the machinery and equipment,
26    including  machinery  and  equipment purchased for lease, and
27    including implements of husbandry defined in Section 1-130 of
28    the Illinois Vehicle Code, farm  machinery  and  agricultural
29    chemical  and fertilizer spreaders, and nurse wagons required
30    to be registered under Section 3-809 of the Illinois  Vehicle
31    Code,  but  excluding  other  motor  vehicles  required to be
32    registered under the  Illinois  Vehicle  Code.  Horticultural
33    polyhouses  or  hoop houses used for propagating, growing, or
34    overwintering plants shall be considered farm  machinery  and
 
                            -41-     LRB093 09361 SJM 09596 b
 1    equipment  under  this item (7). Agricultural chemical tender
 2    tanks and dry boxes shall include units sold separately  from
 3    a  motor  vehicle  required  to  be  licensed  and units sold
 4    mounted on a motor vehicle required to  be  licensed  if  the
 5    selling price of the tender is separately stated.
 6        Farm  machinery  and  equipment  shall  include precision
 7    farming equipment  that  is  installed  or  purchased  to  be
 8    installed  on farm machinery and equipment including, but not
 9    limited  to,  tractors,   harvesters,   sprayers,   planters,
10    seeders,  or spreaders. Precision farming equipment includes,
11    but is not  limited  to,  soil  testing  sensors,  computers,
12    monitors,  software,  global positioning and mapping systems,
13    and other such equipment.
14        Farm machinery and  equipment  also  includes  computers,
15    sensors,  software,  and  related equipment used primarily in
16    the computer-assisted  operation  of  production  agriculture
17    facilities,  equipment,  and  activities  such  as,  but  not
18    limited  to,  the  collection, monitoring, and correlation of
19    animal and crop data for the purpose  of  formulating  animal
20    diets  and  agricultural  chemicals.  This item (7) is exempt
21    from the provisions of Section 3-75.
22        (8)  Fuel and petroleum products sold to or  used  by  an
23    air  common  carrier, certified by the carrier to be used for
24    consumption, shipment, or  storage  in  the  conduct  of  its
25    business  as an air common carrier, for a flight destined for
26    or returning from a location or locations outside the  United
27    States  without  regard  to  previous  or subsequent domestic
28    stopovers.
29        (9)  Proceeds of  mandatory  service  charges  separately
30    stated  on  customers' bills for the purchase and consumption
31    of food and beverages acquired as an incident to the purchase
32    of a service from  a  serviceman,  to  the  extent  that  the
33    proceeds  of  the  service  charge are in fact turned over as
34    tips or as  a  substitute  for  tips  to  the  employees  who
 
                            -42-     LRB093 09361 SJM 09596 b
 1    participate   directly  in  preparing,  serving,  hosting  or
 2    cleaning up the food or beverage  function  with  respect  to
 3    which the service charge is imposed.
 4        (10)  Oil  field  exploration,  drilling,  and production
 5    equipment, including (i) rigs and parts of rigs, rotary rigs,
 6    cable tool rigs, and workover rigs,  (ii)  pipe  and  tubular
 7    goods,  including  casing  and drill strings, (iii) pumps and
 8    pump-jack units, (iv) storage tanks and flow lines,  (v)  any
 9    individual   replacement  part  for  oil  field  exploration,
10    drilling, and production equipment, and  (vi)  machinery  and
11    equipment  purchased  for lease; but excluding motor vehicles
12    required to be registered under the Illinois Vehicle Code.
13        (11)  Proceeds from the sale of photoprocessing machinery
14    and equipment, including repair and replacement  parts,  both
15    new  and  used, including that manufactured on special order,
16    certified  by  the  purchaser  to  be  used   primarily   for
17    photoprocessing,  and including photoprocessing machinery and
18    equipment purchased for lease.
19        (12)  Coal  exploration,  mining,   offhighway   hauling,
20    processing, maintenance, and reclamation equipment, including
21    replacement  parts  and  equipment,  and  including equipment
22    purchased for lease, but excluding motor vehicles required to
23    be registered under the Illinois Vehicle Code.
24        (13)  Semen used for artificial insemination of livestock
25    for direct agricultural production.
26        (14)  Horses, or interests in horses, registered with and
27    meeting the requirements of any of  the  Arabian  Horse  Club
28    Registry  of  America, Appaloosa Horse Club, American Quarter
29    Horse Association, United  States  Trotting  Association,  or
30    Jockey Club, as appropriate, used for purposes of breeding or
31    racing for prizes.
32        (15)  Computers and communications equipment utilized for
33    any  hospital  purpose  and  equipment used in the diagnosis,
34    analysis, or treatment of hospital patients  purchased  by  a
 
                            -43-     LRB093 09361 SJM 09596 b
 1    lessor who leases the equipment, under a lease of one year or
 2    longer  executed  or  in  effect at the time the lessor would
 3    otherwise be subject to the tax imposed by  this  Act,  to  a
 4    hospital  that  has  been  issued  an  active  tax  exemption
 5    identification  number  by the Department under Section 1g of
 6    the Retailers' Occupation Tax Act. If the equipment is leased
 7    in a manner that does not qualify for this  exemption  or  is
 8    used  in  any  other  non-exempt  manner, the lessor shall be
 9    liable for the tax imposed under this Act or the Use Tax Act,
10    as the case may be, based on the fair  market  value  of  the
11    property  at  the  time  the  non-qualifying  use occurs.  No
12    lessor shall collect or attempt to collect an amount (however
13    designated) that purports to reimburse that  lessor  for  the
14    tax  imposed  by this Act or the Use Tax Act, as the case may
15    be, if the tax has not been paid by the lessor.  If a  lessor
16    improperly  collects  any  such  amount  from the lessee, the
17    lessee shall have a legal right to claim  a  refund  of  that
18    amount  from  the  lessor.   If,  however, that amount is not
19    refunded to the lessee for any reason, the lessor  is  liable
20    to pay that amount to the Department.
21        (16)  Personal  property purchased by a lessor who leases
22    the property, under a lease of one year or longer executed or
23    in effect at the time the lessor would otherwise  be  subject
24    to  the  tax imposed by this Act, to a governmental body that
25    has been issued an active tax exemption identification number
26    by  the  Department  under  Section  1g  of  the   Retailers'
27    Occupation  Tax  Act.   If the property is leased in a manner
28    that does not qualify for this exemption or is  used  in  any
29    other  non-exempt  manner, the lessor shall be liable for the
30    tax imposed under this Act or the Use Tax Act,  as  the  case
31    may be, based on the fair market value of the property at the
32    time  the non-qualifying use occurs.  No lessor shall collect
33    or attempt to collect an  amount  (however  designated)  that
34    purports to reimburse that lessor for the tax imposed by this
 
                            -44-     LRB093 09361 SJM 09596 b
 1    Act  or  the  Use Tax Act, as the case may be, if the tax has
 2    not been paid by the lessor.  If a lessor improperly collects
 3    any such amount from the lessee,  the  lessee  shall  have  a
 4    legal right to claim a refund of that amount from the lessor.
 5    If,  however,  that  amount is not refunded to the lessee for
 6    any reason, the lessor is liable to pay that  amount  to  the
 7    Department.
 8        (17)  Beginning  with  taxable  years  ending on or after
 9    December 31, 1995 and ending with taxable years ending on  or
10    before  December  31, 2004, personal property that is donated
11    for disaster relief to  be  used  in  a  State  or  federally
12    declared disaster area in Illinois or bordering Illinois by a
13    manufacturer  or retailer that is registered in this State to
14    a   corporation,   society,   association,   foundation,   or
15    institution that  has  been  issued  a  sales  tax  exemption
16    identification  number by the Department that assists victims
17    of the disaster who reside within the declared disaster area.
18        (18)  Beginning with taxable years  ending  on  or  after
19    December  31, 1995 and ending with taxable years ending on or
20    before December 31, 2004, personal property that is  used  in
21    the  performance  of  infrastructure  repairs  in this State,
22    including but not limited to  municipal  roads  and  streets,
23    access  roads,  bridges,  sidewalks,  waste disposal systems,
24    water and  sewer  line  extensions,  water  distribution  and
25    purification  facilities,  storm water drainage and retention
26    facilities, and sewage treatment facilities, resulting from a
27    State or federally declared disaster in Illinois or bordering
28    Illinois  when  such  repairs  are  initiated  on  facilities
29    located in the declared disaster area within 6  months  after
30    the disaster.
31        (19)  Beginning   July   1,  1999,  game  or  game  birds
32    purchased at a "game breeding and hunting preserve  area"  or
33    an  "exotic game hunting area" as those terms are used in the
34    Wildlife Code or at  a  hunting  enclosure  approved  through
 
                            -45-     LRB093 09361 SJM 09596 b
 1    rules  adopted  by the Department of Natural Resources.  This
 2    paragraph is exempt from the provisions of Section 3-75.
 3        (20)  A motor vehicle, as that term is defined in Section
 4    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
 5    corporation, limited liability company, society, association,
 6    foundation,   or   institution  that  is  determined  by  the
 7    Department to  be  organized  and  operated  exclusively  for
 8    educational  purposes.   For  purposes  of this exemption, "a
 9    corporation, limited liability company, society, association,
10    foundation, or institution organized and operated exclusively
11    for educational  purposes"  means  all  tax-supported  public
12    schools, private schools that offer systematic instruction in
13    useful  branches  of  learning  by  methods  common to public
14    schools  and  that  compare  favorably  in  their  scope  and
15    intensity with the course of study presented in tax-supported
16    schools, and vocational or technical  schools  or  institutes
17    organized  and  operated  exclusively  to provide a course of
18    study of not less than  6  weeks  duration  and  designed  to
19    prepare  individuals to follow a trade or to pursue a manual,
20    technical, mechanical, industrial,  business,  or  commercial
21    occupation.
22        (21)  Beginning  January  1,  2000  and  through June 30,
23    2005,  personal property, including food,  purchased  through
24    fundraising  events  for  the  benefit of a public or private
25    elementary or secondary school, a group of those schools,  or
26    one  or  more school districts if the events are sponsored by
27    an entity recognized by the  school  district  that  consists
28    primarily  of volunteers and includes parents and teachers of
29    the school  children.   This  paragraph  does  not  apply  to
30    fundraising  events  (i)  for  the  benefit  of  private home
31    instruction  or  (ii)  for  which  the   fundraising   entity
32    purchases  the  personal  property  sold  at  the events from
33    another individual or entity that sold the property  for  the
34    purpose  of resale by the fundraising entity and that profits
 
                            -46-     LRB093 09361 SJM 09596 b
 1    from the sale to the fundraising entity.  This  paragraph  is
 2    exempt from the provisions of Section 3-75.
 3        (22)  Beginning  January 1, 2000 and through December 31,
 4    2001, new or used automatic vending machines that prepare and
 5    serve hot food and beverages,  including  coffee,  soup,  and
 6    other  items,  and  replacement  parts  for  these  machines.
 7    Beginning January 1, 2002 and through June 30, 2005, machines
 8    and  parts  for  machines  used  in commercial, coin-operated
 9    amusement and vending business if a use or occupation tax  is
10    paid  on  the  gross  receipts  derived  from  the use of the
11    commercial, coin-operated  amusement  and  vending  machines.
12    This paragraph is exempt from the provisions of Section 3-75.
13        (23)  Food  for  human consumption that is to be consumed
14    off the premises where  it  is  sold  (other  than  alcoholic
15    beverages,  soft  drinks, and food that has been prepared for
16    immediate consumption) and prescription  and  nonprescription
17    medicines,  drugs,  medical  appliances,  and  insulin, urine
18    testing materials, syringes, and needles used  by  diabetics,
19    for  human  use, when purchased for use by a person receiving
20    medical assistance under Article 5 of the Illinois Public Aid
21    Code who resides in a licensed long-term  care  facility,  as
22    defined in the Nursing Home Care Act.
23        (24)    Beginning   on   the   effective   date  of  this
24    amendatory Act of the 92nd General Assembly and through  June
25    30, 2005, computers and communications equipment utilized for
26    any  hospital  purpose  and  equipment used in the diagnosis,
27    analysis, or treatment of hospital patients  purchased  by  a
28    lessor who leases the equipment, under a lease of one year or
29    longer  executed  or  in  effect at the time the lessor would
30    otherwise be subject to the tax imposed by  this  Act,  to  a
31    hospital  that  has  been  issued  an  active  tax  exemption
32    identification  number  by the Department under Section 1g of
33    the Retailers' Occupation  Tax  Act.   If  the  equipment  is
34    leased  in  a manner that does not qualify for this exemption
 
                            -47-     LRB093 09361 SJM 09596 b
 1    or is used in any other nonexempt manner, the lessor shall be
 2    liable for the tax imposed under this Act or the Use Tax Act,
 3    as the case may be, based on the fair  market  value  of  the
 4    property  at the time the nonqualifying use occurs. No lessor
 5    shall collect  or  attempt  to  collect  an  amount  (however
 6    designated)  that  purports  to reimburse that lessor for the
 7    tax imposed by this Act or the Use Tax Act, as the  case  may
 8    be,  if the tax has not been paid by the lessor.  If a lessor
 9    improperly collects any such  amount  from  the  lessee,  the
10    lessee  shall  have  a  legal right to claim a refund of that
11    amount from the lessor.  If,  however,  that  amount  is  not
12    refunded  to  the lessee for any reason, the lessor is liable
13    to pay that amount  to  the  Department.  This  paragraph  is
14    exempt from the provisions of Section 3-75.
15        (25)  Beginning  on the effective date of this amendatory
16    Act of the 92nd General Assembly and through June  30,  2005,
17    personal  property  purchased  by  a  lessor  who  leases the
18    property, under a lease of one year or longer executed or  in
19    effect  at  the time the lessor would otherwise be subject to
20    the tax imposed by this Act, to a governmental body that  has
21    been  issued an active tax exemption identification number by
22    the Department under Section 1g of the Retailers'  Occupation
23    Tax Act.  If the property is leased in a manner that does not
24    qualify  for this exemption or is used in any other nonexempt
25    manner, the lessor shall be liable for the tax imposed  under
26    this Act or the Use Tax Act, as the case may be, based on the
27    fair   market   value   of  the  property  at  the  time  the
28    nonqualifying use occurs.  No lessor shall collect or attempt
29    to collect an amount (however designated)  that  purports  to
30    reimburse  that lessor for the tax imposed by this Act or the
31    Use Tax Act, as the case may be, if the tax has not been paid
32    by the lessor.  If a  lessor  improperly  collects  any  such
33    amount  from  the lessee, the lessee shall have a legal right
34    to claim a refund  of  that  amount  from  the  lessor.   If,
 
                            -48-     LRB093 09361 SJM 09596 b
 1    however,  that  amount  is not refunded to the lessee for any
 2    reason, the lessor is  liable  to  pay  that  amount  to  the
 3    Department.  This  paragraph is exempt from the provisions of
 4    Section 3-75.
 5    (Source: P.A. 91-51,  eff.  6-30-99;  91-200,  eff.  7-20-99;
 6    91-439,  eff.  8-6-99;  91-637,  eff.  8-20-99;  91-644, eff.
 7    8-20-99; 92-16, eff. 6-28-01;  92-35,  eff.  7-1-01;  92-227,
 8    eff.  8-2-01;  92-337,  eff.  8-10-01;  92-484, eff. 8-23-01;
 9    92-651, eff. 7-11-02.)

10        (35 ILCS 110/3-45) (from Ch. 120, par. 439.33-45)
11        Sec. 3-45.  Multistate exemption.   The  tax  imposed  by
12    this  Act  does  not  apply  to  the use of tangible personal
13    property in this State under the following circumstances:
14        (a)  The use, in this State, of property acquired outside
15    this State by a nonresident individual and brought into  this
16    State  by  the  individual  for  his  or  her  own  use while
17    temporarily within this State or while passing  through  this
18    State.
19        (b)  The use, in this State, of property that is acquired
20    outside  this State and that is moved into this State for use
21    as rolling stock moving in interstate commerce.
22        (c)  The use, in this State, of property that is acquired
23    outside this State and caused to be brought into  this  State
24    by  a  person  who has already paid a tax in another state in
25    respect to the sale, purchase, or use of  that  property,  to
26    the  extent of the amount of the tax properly due and paid in
27    the other state.
28        (d)  The temporary storage, in this  State,  of  property
29    that  is  acquired  outside  this  State and that after being
30    brought into this State and stored here temporarily, is  used
31    solely  outside  this  State  or is physically attached to or
32    incorporated into other property that is used solely  outside
33    this   State,  or  is  altered  by  converting,  fabricating,
 
                            -49-     LRB093 09361 SJM 09596 b
 1    manufacturing, printing,  processing,  or  shaping,  and,  as
 2    altered, is used solely outside this State.
 3        (e)  Beginning  July  1, 1999, the use, in this State, of
 4    fuel acquired outside this State and brought into this  State
 5    in  the  fuel  supply tanks of locomotives engaged in freight
 6    hauling and passenger service for interstate  commerce.  This
 7    subsection is exempt from the provisions of Section 3-75.
 8        (f)  Beginning  on  January  1, 2002 and through June 30,
 9    2005, the use of tangible personal property purchased from an
10    Illinois  retailer  by  a  taxpayer  engaged  in  centralized
11    purchasing activities in Illinois who will, upon  receipt  of
12    the  property  in Illinois, temporarily store the property in
13    Illinois (i) for the purpose of subsequently transporting  it
14    outside  this  State for use or consumption thereafter solely
15    outside  this  State  or  (ii)  for  the  purpose  of   being
16    processed,  fabricated, or manufactured into, attached to, or
17    incorporated into other  tangible  personal  property  to  be
18    transported   outside  this  State  and  thereafter  used  or
19    consumed solely outside this State.  The Director of  Revenue
20    shall,  pursuant  to  rules  adopted  in  accordance with the
21    Illinois Administrative Procedure Act, issue a permit to  any
22    taxpayer in good standing with the Department who is eligible
23    for  the  exemption  under  this  subsection (f).  The permit
24    issued under this subsection (f) shall authorize the  holder,
25    to  the  extent  and  in  the  manner  specified in the rules
26    adopted  under  this  Act,  to  purchase  tangible   personal
27    property  from  a  retailer  exempt from the taxes imposed by
28    this Act.  Taxpayers shall maintain all necessary  books  and
29    records  to  substantiate the use and consumption of all such
30    tangible personal property outside of the State of Illinois.
31    (Source: P.A. 91-51,  eff.  6-30-99;  91-313,  eff.  7-29-99;
32    91-587,  eff.  8-14-99;  92-16,  eff.  6-28-01;  92-488, eff.
33    8-23-01.)
 
                            -50-     LRB093 09361 SJM 09596 b
 1        Section 20.  The Service Occupation Tax Act is amended by
 2    changing Section 3-5 as follows:

 3        (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
 4        Sec. 3-5.  Exemptions.  The following  tangible  personal
 5    property is exempt from the tax imposed by this Act:
 6        (1)  Personal  property  sold  by a corporation, society,
 7    association, foundation, institution, or organization,  other
 8    than  a  limited  liability  company,  that  is organized and
 9    operated as  a  not-for-profit  service  enterprise  for  the
10    benefit  of  persons 65 years of age or older if the personal
11    property was not purchased by the enterprise for the  purpose
12    of resale by the enterprise.
13        (2)  Personal  property  purchased  by  a  not-for-profit
14    Illinois  county  fair  association  for  use  in conducting,
15    operating, or promoting the county fair.
16        (3)  Personal property purchased  by  any  not-for-profit
17    arts  or  cultural  organization  that  establishes, by proof
18    required by the Department by rule, that it has  received  an
19    exemption   under  Section  501(c)(3) of the Internal Revenue
20    Code and that is organized and  operated  primarily  for  the
21    presentation  or  support  of  arts  or cultural programming,
22    activities, or services.  These  organizations  include,  but
23    are  not  limited  to,  music and dramatic arts organizations
24    such as symphony orchestras and theatrical groups,  arts  and
25    cultural  service  organizations, local arts councils, visual
26    arts organizations, and  media  arts  organizations.  On  and
27    after  the  effective date of this amendatory Act of the 92nd
28    General Assembly, however, an entity otherwise  eligible  for
29    this  exemption  shall  not make tax-free purchases unless it
30    has an active identification number issued by the Department.
31        (4)  Legal  tender,  currency,  medallions,  or  gold  or
32    silver  coinage  issued  by  the  State  of   Illinois,   the
33    government of the United States of America, or the government
 
                            -51-     LRB093 09361 SJM 09596 b
 1    of any foreign country, and bullion.
 2        (5)  Graphic  arts  machinery  and  equipment,  including
 3    repair   and  replacement  parts,  both  new  and  used,  and
 4    including that manufactured on special order or purchased for
 5    lease, certified by the purchaser to be  used  primarily  for
 6    graphic  arts  production.  Equipment  includes  chemicals or
 7    chemicals acting as catalysts but only if  the  chemicals  or
 8    chemicals  acting  as catalysts effect a direct and immediate
 9    change upon a graphic arts product.
10        (6)  Personal  property  sold  by   a   teacher-sponsored
11    student   organization   affiliated  with  an  elementary  or
12    secondary school located in Illinois.
13        (7)  Farm machinery and equipment,  both  new  and  used,
14    including  that  manufactured  on special order, certified by
15    the purchaser to be used primarily for production agriculture
16    or  State  or  federal   agricultural   programs,   including
17    individual replacement parts for the machinery and equipment,
18    including  machinery  and  equipment purchased for lease, and
19    including implements of husbandry defined in Section 1-130 of
20    the Illinois Vehicle Code, farm  machinery  and  agricultural
21    chemical  and fertilizer spreaders, and nurse wagons required
22    to be registered under Section 3-809 of the Illinois  Vehicle
23    Code,  but  excluding  other  motor  vehicles  required to be
24    registered under the  Illinois  Vehicle  Code.  Horticultural
25    polyhouses  or  hoop houses used for propagating, growing, or
26    overwintering plants shall be considered farm  machinery  and
27    equipment  under  this item (7). Agricultural chemical tender
28    tanks and dry boxes shall include units sold separately  from
29    a  motor  vehicle  required  to  be  licensed  and units sold
30    mounted on a motor vehicle required to  be  licensed  if  the
31    selling price of the tender is separately stated.
32        Farm  machinery  and  equipment  shall  include precision
33    farming equipment  that  is  installed  or  purchased  to  be
34    installed  on farm machinery and equipment including, but not
 
                            -52-     LRB093 09361 SJM 09596 b
 1    limited  to,  tractors,   harvesters,   sprayers,   planters,
 2    seeders,  or spreaders. Precision farming equipment includes,
 3    but is not  limited  to,  soil  testing  sensors,  computers,
 4    monitors,  software,  global positioning and mapping systems,
 5    and other such equipment.
 6        Farm machinery and  equipment  also  includes  computers,
 7    sensors,  software,  and  related equipment used primarily in
 8    the computer-assisted  operation  of  production  agriculture
 9    facilities,  equipment,  and  activities  such  as,  but  not
10    limited  to,  the  collection, monitoring, and correlation of
11    animal and crop data for the purpose  of  formulating  animal
12    diets  and  agricultural  chemicals.  This item (7) is exempt
13    from the provisions of Section 3-55.
14        (8)  Fuel and petroleum products sold to or  used  by  an
15    air  common  carrier, certified by the carrier to be used for
16    consumption, shipment, or  storage  in  the  conduct  of  its
17    business  as an air common carrier, for a flight destined for
18    or returning from a location or locations outside the  United
19    States  without  regard  to  previous  or subsequent domestic
20    stopovers.
21        (9)  Proceeds of  mandatory  service  charges  separately
22    stated  on  customers' bills for the purchase and consumption
23    of food and beverages, to the extent that the proceeds of the
24    service charge are in fact  turned  over  as  tips  or  as  a
25    substitute for tips to the employees who participate directly
26    in  preparing,  serving,  hosting  or cleaning up the food or
27    beverage function with respect to which the service charge is
28    imposed.
29        (10)  Oil field  exploration,  drilling,  and  production
30    equipment, including (i) rigs and parts of rigs, rotary rigs,
31    cable  tool  rigs,  and  workover rigs, (ii) pipe and tubular
32    goods, including casing and drill strings,  (iii)  pumps  and
33    pump-jack  units,  (iv) storage tanks and flow lines, (v) any
34    individual  replacement  part  for  oil  field   exploration,
 
                            -53-     LRB093 09361 SJM 09596 b
 1    drilling,  and  production  equipment, and (vi) machinery and
 2    equipment purchased for lease; but excluding  motor  vehicles
 3    required to be registered under the Illinois Vehicle Code.
 4        (11)  Photoprocessing  machinery and equipment, including
 5    repair and replacement parts, both new  and  used,  including
 6    that   manufactured   on  special  order,  certified  by  the
 7    purchaser to  be  used  primarily  for  photoprocessing,  and
 8    including  photoprocessing  machinery and equipment purchased
 9    for lease.
10        (12)  Coal  exploration,  mining,   offhighway   hauling,
11    processing, maintenance, and reclamation equipment, including
12    replacement  parts  and  equipment,  and  including equipment
13    purchased for lease, but excluding motor vehicles required to
14    be registered under the Illinois Vehicle Code.
15        (13)  Food for human consumption that is to  be  consumed
16    off  the  premises  where  it  is  sold (other than alcoholic
17    beverages, soft drinks and food that has  been  prepared  for
18    immediate  consumption) and prescription and non-prescription
19    medicines, drugs,  medical  appliances,  and  insulin,  urine
20    testing  materials,  syringes, and needles used by diabetics,
21    for human use, when purchased for use by a  person  receiving
22    medical assistance under Article 5 of the Illinois Public Aid
23    Code  who  resides  in a licensed long-term care facility, as
24    defined in the Nursing Home Care Act.
25        (14)  Semen used for artificial insemination of livestock
26    for direct agricultural production.
27        (15)  Horses, or interests in horses, registered with and
28    meeting the requirements of any of  the  Arabian  Horse  Club
29    Registry  of  America, Appaloosa Horse Club, American Quarter
30    Horse Association, United  States  Trotting  Association,  or
31    Jockey Club, as appropriate, used for purposes of breeding or
32    racing for prizes.
33        (16)  Computers and communications equipment utilized for
34    any  hospital  purpose  and  equipment used in the diagnosis,
 
                            -54-     LRB093 09361 SJM 09596 b
 1    analysis, or treatment of hospital patients sold to a  lessor
 2    who leases the equipment, under a lease of one year or longer
 3    executed  or  in  effect  at  the  time of the purchase, to a
 4    hospital  that  has  been  issued  an  active  tax  exemption
 5    identification number by the Department under Section  1g  of
 6    the Retailers' Occupation Tax Act.
 7        (17)  Personal  property  sold to a lessor who leases the
 8    property, under a lease of one year or longer executed or  in
 9    effect  at  the  time of the purchase, to a governmental body
10    that has been issued an active tax  exemption  identification
11    number  by  the Department under Section 1g of the Retailers'
12    Occupation Tax Act.
13        (18)  Beginning with taxable years  ending  on  or  after
14    December  31, 1995 and ending with taxable years ending on or
15    before December 31, 2004, personal property that  is  donated
16    for  disaster  relief  to  be  used  in  a State or federally
17    declared disaster area in Illinois or bordering Illinois by a
18    manufacturer or retailer that is registered in this State  to
19    a   corporation,   society,   association,   foundation,   or
20    institution  that  has  been  issued  a  sales  tax exemption
21    identification number by the Department that assists  victims
22    of the disaster who reside within the declared disaster area.
23        (19)  Beginning  with  taxable  years  ending on or after
24    December 31, 1995 and ending with taxable years ending on  or
25    before  December  31, 2004, personal property that is used in
26    the performance of  infrastructure  repairs  in  this  State,
27    including  but  not  limited  to municipal roads and streets,
28    access roads, bridges,  sidewalks,  waste  disposal  systems,
29    water  and  sewer  line  extensions,  water  distribution and
30    purification facilities, storm water drainage  and  retention
31    facilities, and sewage treatment facilities, resulting from a
32    State or federally declared disaster in Illinois or bordering
33    Illinois  when  such  repairs  are  initiated  on  facilities
34    located  in  the declared disaster area within 6 months after
 
                            -55-     LRB093 09361 SJM 09596 b
 1    the disaster.
 2        (20)  Beginning July 1, 1999, game or game birds sold  at
 3    a  "game  breeding  and  hunting preserve area" or an "exotic
 4    game hunting area" as those terms are used  in  the  Wildlife
 5    Code or at a hunting enclosure approved through rules adopted
 6    by  the  Department  of Natural Resources.  This paragraph is
 7    exempt from the provisions of Section 3-55.
 8        (21)  A motor vehicle, as that term is defined in Section
 9    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
10    corporation, limited liability company, society, association,
11    foundation,   or   institution  that  is  determined  by  the
12    Department to  be  organized  and  operated  exclusively  for
13    educational  purposes.   For  purposes  of this exemption, "a
14    corporation, limited liability company, society, association,
15    foundation, or institution organized and operated exclusively
16    for educational  purposes"  means  all  tax-supported  public
17    schools, private schools that offer systematic instruction in
18    useful  branches  of  learning  by  methods  common to public
19    schools  and  that  compare  favorably  in  their  scope  and
20    intensity with the course of study presented in tax-supported
21    schools, and vocational or technical  schools  or  institutes
22    organized  and  operated  exclusively  to provide a course of
23    study of not less than  6  weeks  duration  and  designed  to
24    prepare  individuals to follow a trade or to pursue a manual,
25    technical, mechanical, industrial,  business,  or  commercial
26    occupation.
27        (22)  Beginning  January  1,  2000  and  through June 30,
28    2005,  personal property, including food,  purchased  through
29    fundraising  events  for  the  benefit of a public or private
30    elementary or secondary school, a group of those schools,  or
31    one  or  more school districts if the events are sponsored by
32    an entity recognized by the  school  district  that  consists
33    primarily  of volunteers and includes parents and teachers of
34    the school  children.   This  paragraph  does  not  apply  to
 
                            -56-     LRB093 09361 SJM 09596 b
 1    fundraising  events  (i)  for  the  benefit  of  private home
 2    instruction  or  (ii)  for  which  the   fundraising   entity
 3    purchases  the  personal  property  sold  at  the events from
 4    another individual or entity that sold the property  for  the
 5    purpose  of resale by the fundraising entity and that profits
 6    from the sale to the fundraising entity.  This  paragraph  is
 7    exempt from the provisions of Section 3-55.
 8        (23)  Beginning  January 1, 2000 and through December 31,
 9    2001, new or used automatic vending machines that prepare and
10    serve hot food and beverages,  including  coffee,  soup,  and
11    other  items,  and  replacement  parts  for  these  machines.
12    Beginning January 1, 2002 and through June 30, 2005, machines
13    and  parts  for  machines  used  in commercial, coin-operated
14    amusement and vending business if a use or occupation tax  is
15    paid  on  the  gross  receipts  derived  from  the use of the
16    commercial, coin-operated  amusement  and  vending  machines.
17    This paragraph is exempt from the provisions of Section 3-55.
18        (24)  Beginning  on the effective date of this amendatory
19    Act of the 92nd General Assembly and through June  30,  2005,
20    computers  and  communications  equipment  utilized  for  any
21    hospital   purpose  and  equipment  used  in  the  diagnosis,
22    analysis, or treatment of hospital patients sold to a  lessor
23    who leases the equipment, under a lease of one year or longer
24    executed  or  in  effect  at  the  time of the purchase, to a
25    hospital  that  has  been  issued  an  active  tax  exemption
26    identification number by the Department under Section  1g  of
27    the  Retailers' Occupation Tax Act.  This paragraph is exempt
28    from the provisions of Section 3-55.
29        (25)  Beginning on the effective date of this  amendatory
30    Act  of  the 92nd General Assembly and through June 30, 2005,
31    personal property sold to a lessor who leases  the  property,
32    under  a lease of one year or longer executed or in effect at
33    the time of the purchase, to a  governmental  body  that  has
34    been  issued an active tax exemption identification number by
 
                            -57-     LRB093 09361 SJM 09596 b
 1    the Department under Section 1g of the Retailers'  Occupation
 2    Tax  Act.   This  paragraph  is exempt from the provisions of
 3    Section 3-55.
 4        (26)  Beginning on January 1, 2002 and through  June  30,
 5    2005,  tangible  personal property purchased from an Illinois
 6    retailer by a  taxpayer  engaged  in  centralized  purchasing
 7    activities in Illinois who will, upon receipt of the property
 8    in  Illinois,  temporarily store the property in Illinois (i)
 9    for the purpose of subsequently transporting it outside  this
10    State  for  use or consumption thereafter solely outside this
11    State or (ii) for the purpose of being processed, fabricated,
12    or manufactured into, attached to, or incorporated into other
13    tangible personal property to  be  transported  outside  this
14    State  and  thereafter  used  or consumed solely outside this
15    State.  The Director of  Revenue  shall,  pursuant  to  rules
16    adopted   in  accordance  with  the  Illinois  Administrative
17    Procedure Act,  issue  a  permit  to  any  taxpayer  in  good
18    standing   with  the  Department  who  is  eligible  for  the
19    exemption under this paragraph (26).  The permit issued under
20    this paragraph (26) shall authorize the holder, to the extent
21    and in the manner specified in the rules adopted  under  this
22    Act,  to  purchase tangible personal property from a retailer
23    exempt from the taxes imposed by this Act.   Taxpayers  shall
24    maintain  all necessary books and records to substantiate the
25    use and consumption of all such  tangible  personal  property
26    outside of the State of Illinois.
27    (Source: P.A.  91-51,  eff.  6-30-99;  91-200,  eff. 7-20-99;
28    91-439, eff.  8-6-99;  91-533,  eff.  8-13-99;  91-637,  eff.
29    8-20-99;  91-644,  eff.  8-20-99; 92-16, eff. 6-28-01; 92-35,
30    eff. 7-1-01;  92-227,  eff.  8-2-01;  92-337,  eff.  8-10-01;
31    92-484,  eff.  8-23-01;  92-488,  eff.  8-23-01; 92-651, eff.
32    7-11-02.)

33        Section 25.  The Retailers' Occupation Tax Act is amended
 
                            -58-     LRB093 09361 SJM 09596 b
 1    by changing Section 2-5 as follows:

 2        (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
 3        Sec. 2-5.  Exemptions.  Gross receipts from proceeds from
 4    the sale of the  following  tangible  personal  property  are
 5    exempt from the tax imposed by this Act:
 6        (1)  Farm chemicals.
 7        (2)  Farm  machinery  and  equipment,  both new and used,
 8    including that manufactured on special  order,  certified  by
 9    the purchaser to be used primarily for production agriculture
10    or   State   or   federal  agricultural  programs,  including
11    individual replacement parts for the machinery and equipment,
12    including machinery and equipment purchased  for  lease,  and
13    including implements of husbandry defined in Section 1-130 of
14    the  Illinois  Vehicle  Code, farm machinery and agricultural
15    chemical and fertilizer spreaders, and nurse wagons  required
16    to  be registered under Section 3-809 of the Illinois Vehicle
17    Code, but excluding  other  motor  vehicles  required  to  be
18    registered  under  the  Illinois  Vehicle Code. Horticultural
19    polyhouses or hoop houses used for propagating,  growing,  or
20    overwintering  plants  shall be considered farm machinery and
21    equipment under this item (2). Agricultural  chemical  tender
22    tanks  and dry boxes shall include units sold separately from
23    a motor vehicle  required  to  be  licensed  and  units  sold
24    mounted  on  a  motor vehicle required to be licensed, if the
25    selling price of the tender is separately stated.
26        Farm machinery  and  equipment  shall  include  precision
27    farming  equipment  that  is  installed  or  purchased  to be
28    installed on farm machinery and equipment including, but  not
29    limited   to,   tractors,   harvesters,  sprayers,  planters,
30    seeders, or spreaders. Precision farming equipment  includes,
31    but  is  not  limited  to,  soil  testing sensors, computers,
32    monitors, software, global positioning and  mapping  systems,
33    and other such equipment.
 
                            -59-     LRB093 09361 SJM 09596 b
 1        Farm  machinery  and  equipment  also includes computers,
 2    sensors, software, and related equipment  used  primarily  in
 3    the  computer-assisted  operation  of  production agriculture
 4    facilities,  equipment,  and  activities  such  as,  but  not
 5    limited to, the collection, monitoring,  and  correlation  of
 6    animal  and  crop  data for the purpose of formulating animal
 7    diets and agricultural chemicals.  This item  (7)  is  exempt
 8    from the provisions of Section 2-70.
 9        (3)  Distillation machinery and equipment, sold as a unit
10    or  kit, assembled or installed by the retailer, certified by
11    the user to be used only for the production of ethyl  alcohol
12    that  will  be  used  for  consumption  as motor fuel or as a
13    component of motor fuel for the personal use of the user, and
14    not subject to sale or resale.
15        (4)  Graphic  arts  machinery  and  equipment,  including
16    repair  and  replacement  parts,  both  new  and  used,   and
17    including that manufactured on special order or purchased for
18    lease,  certified  by  the purchaser to be used primarily for
19    graphic arts  production.  Equipment  includes  chemicals  or
20    chemicals  acting  as  catalysts but only if the chemicals or
21    chemicals acting as catalysts effect a direct  and  immediate
22    change upon a graphic arts product.
23        (5)  A  motor  vehicle  of  the  first  division, a motor
24    vehicle of the second division that is a self-contained motor
25    vehicle designed or permanently converted to  provide  living
26    quarters  for  recreational,  camping,  or  travel  use, with
27    direct walk through access to the living  quarters  from  the
28    driver's seat, or a motor vehicle of the second division that
29    is  of  the van configuration designed for the transportation
30    of not less than 7 nor more than 16 passengers, as defined in
31    Section 1-146 of the Illinois Vehicle Code, that is used  for
32    automobile  renting,  as  defined  in  the Automobile Renting
33    Occupation and Use Tax Act.
34        (6)  Personal  property  sold  by   a   teacher-sponsored
 
                            -60-     LRB093 09361 SJM 09596 b
 1    student   organization   affiliated  with  an  elementary  or
 2    secondary school located in Illinois.
 3        (7)  Proceeds of that portion of the selling price  of  a
 4    passenger car the sale of which is subject to the Replacement
 5    Vehicle Tax.
 6        (8)  Personal  property  sold  to an Illinois county fair
 7    association for use in conducting,  operating,  or  promoting
 8    the county fair.
 9        (9)  Personal  property  sold to a not-for-profit arts or
10    cultural organization that establishes, by proof required  by
11    the  Department  by  rule,  that it has received an exemption
12    under Section 501(c)(3) of the Internal Revenue Code and that
13    is organized and operated primarily for the  presentation  or
14    support  of  arts  or  cultural  programming,  activities, or
15    services.  These organizations include, but are  not  limited
16    to,  music  and  dramatic arts organizations such as symphony
17    orchestras and theatrical groups, arts and  cultural  service
18    organizations,    local    arts    councils,    visual   arts
19    organizations, and media arts organizations. On and after the
20    effective date of this amendatory Act  of  the  92nd  General
21    Assembly,  however,  an  entity  otherwise  eligible for this
22    exemption shall not make tax-free purchases unless it has  an
23    active identification number issued by the Department.
24        (10)  Personal  property  sold by a corporation, society,
25    association, foundation, institution, or organization,  other
26    than  a  limited  liability  company,  that  is organized and
27    operated as  a  not-for-profit  service  enterprise  for  the
28    benefit  of  persons 65 years of age or older if the personal
29    property was not purchased by the enterprise for the  purpose
30    of resale by the enterprise.
31        (11)  Personal property sold to a governmental body, to a
32    corporation, society, association, foundation, or institution
33    organized and operated exclusively for charitable, religious,
34    or  educational purposes, or to a not-for-profit corporation,
 
                            -61-     LRB093 09361 SJM 09596 b
 1    society,    association,    foundation,    institution,    or
 2    organization that has no compensated  officers  or  employees
 3    and   that  is  organized  and  operated  primarily  for  the
 4    recreation of persons 55 years of age  or  older.  A  limited
 5    liability  company  may  qualify for the exemption under this
 6    paragraph only if the limited liability company is  organized
 7    and  operated  exclusively  for  educational purposes. On and
 8    after July 1, 1987, however, no entity otherwise eligible for
 9    this exemption shall make tax-free purchases unless it has an
10    active identification number issued by the Department.
11        (12)  Personal property sold to interstate  carriers  for
12    hire  for  use as rolling stock moving in interstate commerce
13    or to lessors under leases of one year or longer executed  or
14    in  effect at the time of purchase by interstate carriers for
15    hire for use as rolling stock moving in  interstate  commerce
16    and  equipment  operated  by  a  telecommunications provider,
17    licensed as a common carrier by  the  Federal  Communications
18    Commission,  which  is permanently installed in or affixed to
19    aircraft moving in interstate commerce.
20        (13)  Proceeds from sales to owners, lessors, or shippers
21    of tangible personal property that is utilized by  interstate
22    carriers  for  hire  for  use  as  rolling  stock  moving  in
23    interstate    commerce    and   equipment   operated   by   a
24    telecommunications provider, licensed as a common carrier  by
25    the  Federal  Communications Commission, which is permanently
26    installed in or affixed  to  aircraft  moving  in  interstate
27    commerce.
28        (14)  Machinery  and  equipment  that will be used by the
29    purchaser, or a lessee of the  purchaser,  primarily  in  the
30    process  of  manufacturing  or  assembling  tangible personal
31    property for wholesale or retail sale or lease,  whether  the
32    sale or lease is made directly by the manufacturer or by some
33    other  person,  whether the materials used in the process are
34    owned by the manufacturer or some other  person,  or  whether
 
                            -62-     LRB093 09361 SJM 09596 b
 1    the sale or lease is made apart from or as an incident to the
 2    seller's  engaging  in  the  service  occupation of producing
 3    machines, tools,  dies,  jigs,  patterns,  gauges,  or  other
 4    similar  items  of no commercial value on special order for a
 5    particular purchaser.
 6        (15)  Proceeds of mandatory  service  charges  separately
 7    stated  on  customers'  bills for purchase and consumption of
 8    food and beverages, to the extent that the  proceeds  of  the
 9    service  charge  are  in  fact  turned  over  as tips or as a
10    substitute for tips to the employees who participate directly
11    in preparing, serving, hosting or cleaning  up  the  food  or
12    beverage function with respect to which the service charge is
13    imposed.
14        (16)  Petroleum  products  sold  to  a  purchaser  if the
15    seller is prohibited by federal law from charging tax to  the
16    purchaser.
17        (17)  Tangible personal property sold to a common carrier
18    by rail or motor that receives the physical possession of the
19    property  in  Illinois  and  that transports the property, or
20    shares with another common carrier in the  transportation  of
21    the  property,  out of Illinois on a standard uniform bill of
22    lading showing the seller of the property as the  shipper  or
23    consignor  of the property to a destination outside Illinois,
24    for use outside Illinois.
25        (18)  Legal tender,  currency,  medallions,  or  gold  or
26    silver   coinage   issued  by  the  State  of  Illinois,  the
27    government of the United States of America, or the government
28    of any foreign country, and bullion.
29        (19)  Oil field  exploration,  drilling,  and  production
30    equipment, including (i) rigs and parts of rigs, rotary rigs,
31    cable  tool  rigs,  and  workover rigs, (ii) pipe and tubular
32    goods, including casing and drill strings,  (iii)  pumps  and
33    pump-jack  units,  (iv) storage tanks and flow lines, (v) any
34    individual  replacement  part  for  oil  field   exploration,
 
                            -63-     LRB093 09361 SJM 09596 b
 1    drilling,  and  production  equipment, and (vi) machinery and
 2    equipment purchased for lease; but excluding  motor  vehicles
 3    required to be registered under the Illinois Vehicle Code.
 4        (20)  Photoprocessing  machinery and equipment, including
 5    repair and replacement parts, both new  and  used,  including
 6    that   manufactured   on  special  order,  certified  by  the
 7    purchaser to  be  used  primarily  for  photoprocessing,  and
 8    including  photoprocessing  machinery and equipment purchased
 9    for lease.
10        (21)  Coal  exploration,  mining,   offhighway   hauling,
11    processing, maintenance, and reclamation equipment, including
12    replacement  parts  and  equipment,  and  including equipment
13    purchased for lease, but excluding motor vehicles required to
14    be registered under the Illinois Vehicle Code.
15        (22)  Fuel and petroleum products sold to or used  by  an
16    air  carrier,  certified  by  the  carrier  to  be  used  for
17    consumption,  shipment,  or  storage  in  the  conduct of its
18    business as an air common carrier, for a flight destined  for
19    or  returning from a location or locations outside the United
20    States without regard  to  previous  or  subsequent  domestic
21    stopovers.
22        (23)  A  transaction  in  which  the  purchase  order  is
23    received  by  a  florist who is located outside Illinois, but
24    who has a florist located in Illinois deliver the property to
25    the purchaser or the purchaser's donee in Illinois.
26        (24)  Fuel consumed or used in the  operation  of  ships,
27    barges,  or  vessels  that  are  used primarily in or for the
28    transportation of property or the conveyance of  persons  for
29    hire  on  rivers  bordering  on  this  State  if  the fuel is
30    delivered by the seller to the purchaser's  barge,  ship,  or
31    vessel while it is afloat upon that bordering river.
32        (25)  A motor vehicle sold in this State to a nonresident
33    even though the motor vehicle is delivered to the nonresident
34    in  this  State,  if the motor vehicle is not to be titled in
 
                            -64-     LRB093 09361 SJM 09596 b
 1    this State, and if a drive-away permit is issued to the motor
 2    vehicle as provided in Section 3-603 of the Illinois  Vehicle
 3    Code or if the nonresident purchaser has vehicle registration
 4    plates to transfer to the motor vehicle upon returning to his
 5    or  her home state.  The issuance of the drive-away permit or
 6    having the out-of-state registration plates to be transferred
 7    is prima facie evidence that the motor vehicle  will  not  be
 8    titled in this State.
 9        (26)  Semen used for artificial insemination of livestock
10    for direct agricultural production.
11        (27)  Horses, or interests in horses, registered with and
12    meeting  the  requirements  of  any of the Arabian Horse Club
13    Registry of America, Appaloosa Horse Club,  American  Quarter
14    Horse  Association,  United  States  Trotting Association, or
15    Jockey Club, as appropriate, used for purposes of breeding or
16    racing for prizes.
17        (28)  Computers and communications equipment utilized for
18    any hospital purpose and equipment  used  in  the  diagnosis,
19    analysis,  or treatment of hospital patients sold to a lessor
20    who leases the equipment, under a lease of one year or longer
21    executed or in effect at the  time  of  the  purchase,  to  a
22    hospital  that  has  been  issued  an  active  tax  exemption
23    identification  number  by the Department under Section 1g of
24    this Act.
25        (29)  Personal property sold to a lessor who  leases  the
26    property,  under a lease of one year or longer executed or in
27    effect at the time of the purchase, to  a  governmental  body
28    that  has  been issued an active tax exemption identification
29    number by the Department under Section 1g of this Act.
30        (30)  Beginning with taxable years  ending  on  or  after
31    December  31, 1995 and ending with taxable years ending on or
32    before December 31, 2004, personal property that  is  donated
33    for  disaster  relief  to  be  used  in  a State or federally
34    declared disaster area in Illinois or bordering Illinois by a
 
                            -65-     LRB093 09361 SJM 09596 b
 1    manufacturer or retailer that is registered in this State  to
 2    a   corporation,   society,   association,   foundation,   or
 3    institution  that  has  been  issued  a  sales  tax exemption
 4    identification number by the Department that assists  victims
 5    of the disaster who reside within the declared disaster area.
 6        (31)  Beginning  with  taxable  years  ending on or after
 7    December 31, 1995 and ending with taxable years ending on  or
 8    before  December  31, 2004, personal property that is used in
 9    the performance of  infrastructure  repairs  in  this  State,
10    including  but  not  limited  to municipal roads and streets,
11    access roads, bridges,  sidewalks,  waste  disposal  systems,
12    water  and  sewer  line  extensions,  water  distribution and
13    purification facilities, storm water drainage  and  retention
14    facilities, and sewage treatment facilities, resulting from a
15    State or federally declared disaster in Illinois or bordering
16    Illinois  when  such  repairs  are  initiated  on  facilities
17    located  in  the declared disaster area within 6 months after
18    the disaster.
19        (32)  Beginning July 1, 1999, game or game birds sold  at
20    a  "game  breeding  and  hunting preserve area" or an "exotic
21    game hunting area" as those terms are used  in  the  Wildlife
22    Code or at a hunting enclosure approved through rules adopted
23    by  the  Department  of Natural Resources.  This paragraph is
24    exempt from the provisions of Section 2-70.
25        (33)  A motor vehicle, as that term is defined in Section
26    1-146 of the Illinois Vehicle Code,  that  is  donated  to  a
27    corporation, limited liability company, society, association,
28    foundation,   or   institution  that  is  determined  by  the
29    Department to  be  organized  and  operated  exclusively  for
30    educational  purposes.   For  purposes  of this exemption, "a
31    corporation, limited liability company, society, association,
32    foundation, or institution organized and operated exclusively
33    for educational  purposes"  means  all  tax-supported  public
34    schools, private schools that offer systematic instruction in
 
                            -66-     LRB093 09361 SJM 09596 b
 1    useful  branches  of  learning  by  methods  common to public
 2    schools  and  that  compare  favorably  in  their  scope  and
 3    intensity with the course of study presented in tax-supported
 4    schools, and vocational or technical  schools  or  institutes
 5    organized  and  operated  exclusively  to provide a course of
 6    study of not less than  6  weeks  duration  and  designed  to
 7    prepare  individuals to follow a trade or to pursue a manual,
 8    technical, mechanical, industrial,  business,  or  commercial
 9    occupation.
10        (34)  Beginning  January  1,  2000  and  through June 30,
11    2005, personal property, including  food,  purchased  through
12    fundraising  events  for  the  benefit of a public or private
13    elementary or secondary school, a group of those schools,  or
14    one  or  more school districts if the events are sponsored by
15    an entity recognized by the  school  district  that  consists
16    primarily  of volunteers and includes parents and teachers of
17    the school  children.   This  paragraph  does  not  apply  to
18    fundraising  events  (i)  for  the  benefit  of  private home
19    instruction  or  (ii)  for  which  the   fundraising   entity
20    purchases  the  personal  property  sold  at  the events from
21    another individual or entity that sold the property  for  the
22    purpose  of resale by the fundraising entity and that profits
23    from the sale to the fundraising entity.  This  paragraph  is
24    exempt from the provisions of Section 2-70.
25        (35)  Beginning  January 1, 2000 and through December 31,
26    2001, new or used automatic vending machines that prepare and
27    serve hot food and beverages,  including  coffee,  soup,  and
28    other  items,  and  replacement  parts  for  these  machines.
29    Beginning January 1, 2002 and through June 30, 2005, machines
30    and  parts  for  machines  used  in commercial, coin-operated
31    amusement and vending business if a use or occupation tax  is
32    paid  on  the  gross  receipts  derived  from  the use of the
33    commercial, coin-operated  amusement  and  vending  machines.
34    This paragraph is exempt from the provisions of Section 2-70.
 
                            -67-     LRB093 09361 SJM 09596 b
 1        (35-5)  (36)  Food  for  human  consumption that is to be
 2    consumed off the  premises  where  it  is  sold  (other  than
 3    alcoholic  beverages,  soft  drinks,  and  food that has been
 4    prepared for  immediate  consumption)  and  prescription  and
 5    nonprescription  medicines,  drugs,  medical  appliances, and
 6    insulin, urine testing materials, syringes, and needles  used
 7    by  diabetics,  for  human  use,  when purchased for use by a
 8    person receiving medical assistance under Article  5  of  the
 9    Illinois  Public Aid Code who resides in a licensed long-term
10    care facility, as defined in the Nursing Home Care Act.
11        (36)  Beginning August 2, 2001 and through June 30,  2005
12    on  the  effective  date  of  this amendatory Act of the 92nd
13    General  Assembly,  computers  and  communications  equipment
14    utilized for any hospital purpose and equipment used  in  the
15    diagnosis,  analysis,  or treatment of hospital patients sold
16    to a lessor who leases the equipment, under a  lease  of  one
17    year  or  longer  executed  or  in  effect at the time of the
18    purchase, to a hospital that has been issued  an  active  tax
19    exemption  identification  number  by  the  Department  under
20    Section  1g  of  this  Act. This paragraph is exempt from the
21    provisions of Section 2-70.
22        (37)  Beginning August 2, 2001 and through June 30,  2005
23    on  the  effective  date  of  this amendatory Act of the 92nd
24    General Assembly, personal property  sold  to  a  lessor  who
25    leases  the  property,  under  a  lease of one year or longer
26    executed or in effect at the  time  of  the  purchase,  to  a
27    governmental   body  that  has  been  issued  an  active  tax
28    exemption  identification  number  by  the  Department  under
29    Section 1g of this Act.  This paragraph is  exempt  from  the
30    provisions of Section 2-70.
31        (38)  Beginning  on  January 1, 2002 and through June 30,
32    2005, tangible personal property purchased from  an  Illinois
33    retailer  by  a  taxpayer  engaged  in centralized purchasing
34    activities in Illinois who will, upon receipt of the property
 
                            -68-     LRB093 09361 SJM 09596 b
 1    in Illinois, temporarily store the property in  Illinois  (i)
 2    for  the purpose of subsequently transporting it outside this
 3    State for use or consumption thereafter solely  outside  this
 4    State or (ii) for the purpose of being processed, fabricated,
 5    or manufactured into, attached to, or incorporated into other
 6    tangible  personal  property  to  be transported outside this
 7    State and thereafter used or  consumed  solely  outside  this
 8    State.   The  Director  of  Revenue  shall, pursuant to rules
 9    adopted  in  accordance  with  the  Illinois   Administrative
10    Procedure  Act,  issue  a  permit  to  any  taxpayer  in good
11    standing  with  the  Department  who  is  eligible  for   the
12    exemption under this paragraph (38).  The permit issued under
13    this paragraph (38) shall authorize the holder, to the extent
14    and  in  the manner specified in the rules adopted under this
15    Act, to purchase tangible personal property from  a  retailer
16    exempt  from  the taxes imposed by this Act.  Taxpayers shall
17    maintain all necessary books and records to substantiate  the
18    use  and  consumption  of all such tangible personal property
19    outside of the State of Illinois.
20    (Source: P.A. 91-51,  eff.  6-30-99;  91-200,  eff.  7-20-99;
21    91-439,  eff.  8-6-99;  91-533,  eff.  8-13-99;  91-637, eff.
22    8-20-99; 91-644, eff. 8-20-99;  92-16, eff.  6-28-01;  92-35,
23    eff.  7-1-01;  92-227,  eff.  8-2-01;  92-337,  eff. 8-10-01;
24    92-484, eff. 8-23-01;  92-488,  eff.  8-23-01;  92-651,  eff.
25    7-11-02; 92-680, eff. 7-16-02; revised 1-26-03.)

26        Section 30.  The Liquor Control Act of 1934 is amended by
27    changing Section 8-2 as follows:

28        (235 ILCS 5/8-2) (from Ch. 43, par. 159)
29        Sec.  8-2.   It  is  the  duty  of each manufacturer with
30    respect to alcoholic liquor  produced  or  imported  by  such
31    manufacturer, or purchased tax-free by such manufacturer from
32    another  manufacturer  or  importing distributor, and of each
 
                            -69-     LRB093 09361 SJM 09596 b
 1    importing distributor as to  alcoholic  liquor  purchased  by
 2    such  importing  distributor  from  foreign importers or from
 3    anyone from any point in the United States  outside  of  this
 4    State  or  purchased  tax-free  from  another manufacturer or
 5    importing distributor, to pay the tax imposed by Section  8-1
 6    to the Department of Revenue on or before the 15th day of the
 7    calendar  month  following  the  calendar month in which such
 8    alcoholic liquor is sold or used by such manufacturer  or  by
 9    such  importing  distributor  other  than  in  an  authorized
10    tax-free manner or to pay that tax electronically as provided
11    in this Section.
12        Each  manufacturer  and each importing distributor shall,
13    make payment under one of the following methods:  (1)  on  or
14    before the 15th day of each calendar month, file in person or
15    by United States first-class mail, postage pre-paid, with the
16    Department  of  Revenue, on forms prescribed and furnished by
17    the Department, a report in writing in such form  as  may  be
18    required  by  the  Department in order to compute, and assure
19    the accuracy of, the tax due on all taxable sales and uses of
20    alcoholic  liquor  occurring  during  the  preceding   month.
21    Payment  of  the  tax  in  the amount disclosed by the report
22    shall accompany the report or, (2) on or before the 15th  day
23    of   each   calendar  month,  electronically  file  with  the
24    Department of Revenue, on forms prescribed and  furnished  by
25    the  Department,  an electronic report in such form as may be
26    required by the Department in order to  compute,  and  assure
27    the accuracy of, the tax due on all taxable sales and uses of
28    alcoholic  liquor  occurring  during the preceding month.  An
29    electronic payment of the tax in the amount disclosed by  the
30    report   shall  accompany  the  report.   A  manufacturer  or
31    distributor who files an electronic report and electronically
32    pays  the  tax  imposed  pursuant  to  Section  8-1  to   the
33    Department  of  Revenue  on  or  before  the  15th day of the
34    calendar month following the calendar  month  in  which  such
 
                            -70-     LRB093 09361 SJM 09596 b
 1    alcoholic  liquor  is  sold  or  used by that manufacturer or
 2    importing distributor other than in  an  authorized  tax-free
 3    manner  shall  pay  to  the  Department the amount of the tax
 4    imposed pursuant to Section 8-1, less a discount of 1.75%  or
 5    $1,250  per  return,  whichever  is less, which is allowed to
 6    reimburse the manufacturer or importing distributor  for  the
 7    expenses   incurred   in  keeping  and  maintaining  records,
 8    preparing and filing the electronic  returns,  remitting  the
 9    tax, and supplying data to the Department upon request.
10        The  Department may, if it deems it necessary in order to
11    insure the payment  of  the  tax  imposed  by  this  Article,
12    require  returns to be made more frequently than and covering
13    periods of less than a month. Such return shall contain  such
14    further information as the Department may reasonably require.
15        It  shall be presumed that all alcoholic liquors acquired
16    or made by any importing  distributor  or  manufacturer  have
17    been  sold or used by him in this State and are the basis for
18    the tax  imposed  by  this  Article  unless  proven,  to  the
19    satisfaction  of  the Department, that such alcoholic liquors
20    are (1) still in the possession of such importing distributor
21    or  manufacturer,  or  (2)  prior  to  the   termination   of
22    possession  have  been lost by theft or through unintentional
23    destruction, or (3) that such alcoholic liquors are otherwise
24    exempt from taxation under this Act.
25        The Department may require any foreign importer  to  file
26    monthly  information  returns,  by  the 15th day of the month
27    following the month which any  such  return  covers,  if  the
28    Department  determines  this  to  be  necessary to the proper
29    performance of the Department's functions  and  duties  under
30    this  Act.  Such return shall contain such information as the
31    Department may reasonably require.
32        Every manufacturer and importing distributor  shall  also
33    file,  with the Department, a bond in an amount not less than
34    $1,000 and not to exceed $100,000 on a form  to  be  approved
 
                            -71-     LRB093 09361 SJM 09596 b
 1    by,  and  with  a  surety  or  sureties  satisfactory to, the
 2    Department.  Such  bond  shall  be   conditioned   upon   the
 3    manufacturer   or   importing   distributor   paying  to  the
 4    Department all monies becoming due from such manufacturer  or
 5    importing  distributor  under  this  Article.  The Department
 6    shall fix the penalty of such bond in each case, taking  into
 7    consideration  the  amount of alcoholic liquor expected to be
 8    sold and used by such manufacturer or importing  distributor,
 9    and  the penalty fixed by the Department shall be sufficient,
10    in the Department's opinion, to protect the State of Illinois
11    against failure to pay any amount due under this Article, but
12    the amount of the penalty fixed by the Department  shall  not
13    exceed twice the amount of tax liability of a monthly return,
14    nor shall the amount of such penalty be less than $1,000. The
15    Department  shall  notify  the Commission of the Department's
16    approval  or  disapproval  of  any  such  manufacturer's   or
17    importing  distributor's  bond,  or  of  the  termination  or
18    cancellation  of  any  such  bond,  or  of  the  Department's
19    direction  to a manufacturer or importing distributor that he
20    must file additional  bond  in  order  to  comply  with  this
21    Section.  The  Commission  shall  not  issue a license to any
22    applicant for a  manufacturer's  or  importing  distributor's
23    license  unless  the  Commission  has received a notification
24    from the Department showing that such applicant has  filed  a
25    satisfactory bond with the Department hereunder and that such
26    bond  has  been  approved  by  the Department. Failure by any
27    licensed manufacturer or  importing  distributor  to  keep  a
28    satisfactory bond in effect with the Department or to furnish
29    additional bond to the Department, when required hereunder by
30    the  Department to do so, shall be grounds for the revocation
31    or   suspension   of   such   manufacturer's   or   importing
32    distributor's license by the Commission. If a manufacturer or
33    importing distributor fails to pay any amount due under  this
34    Article,  his  bond  with  the  Department  shall  be  deemed
 
                            -72-     LRB093 09361 SJM 09596 b
 1    forfeited, and the Department may institute a suit in its own
 2    name on such bond.
 3        After  notice  and  opportunity  for  a hearing the State
 4    Commission  may  revoke  or  suspend  the  license   of   any
 5    manufacturer  or  importing  distributor  who fails to comply
 6    with the provisions of this Section. Notice of  such  hearing
 7    and  the time and place thereof shall be in writing and shall
 8    contain a statement of the charges against the licensee. Such
 9    notice may be given by United States registered or  certified
10    mail  with  return receipt requested, addressed to the person
11    concerned at his last known address and shall  be  given  not
12    less  than 7 days prior to the date fixed for the hearing. An
13    order revoking or suspending a license under  the  provisions
14    of  this  Section  may  be reviewed in the manner provided in
15    Section 7-10 of this Act. No new license shall be granted  to
16    a  person  whose  license has been revoked for a violation of
17    this Section or, in case of suspension, shall such suspension
18    be terminated until he has paid to the Department  all  taxes
19    and penalties which he owes the State under the provisions of
20    this Act.
21        Every  manufacturer  or importing distributor who has, as
22    verified by the Department, continuously  complied  with  the
23    conditions of the bond under this Act for a period of 2 years
24    shall  be  considered  to  be  a  prior continuous compliance
25    taxpayer.  In determining the consecutive period of time  for
26    qualification  as a prior continuous compliance taxpayer, any
27    consecutive  period  of   time   of   qualifying   compliance
28    immediately  prior  to  the effective date of this amendatory
29    Act  of  1987  shall  be  credited  to  any  manufacturer  or
30    importing distributor.
31        Every  prior  continuous  compliance  taxpayer  shall  be
32    exempt from the bond  requirements  of  this  Act  until  the
33    Department  has  determined  the taxpayer to be delinquent in
34    the filing of any return or deficient in the payment  of  any
 
                            -73-     LRB093 09361 SJM 09596 b
 1    tax  under  this  Act.   Any  taxpayer  who  fails  to pay an
 2    admitted or established liability under this Act may also  be
 3    required  to  post bond or other acceptable security with the
 4    Department guaranteeing  the  payment  of  such  admitted  or
 5    established liability.
 6        The  Department  shall  discharge  any  surety  and shall
 7    release and return any bond  or  security  deposit  assigned,
 8    pledged  or otherwise provided to it by a taxpayer under this
 9    Section within 30 days after: (1)  such  taxpayer  becomes  a
10    prior  continuous  compliance  taxpayer; or (2) such taxpayer
11    has ceased to collect receipts on which  he  is  required  to
12    remit  tax  to  the Department, has filed a final tax return,
13    and has paid  to  the  Department  an  amount  sufficient  to
14    discharge  his  remaining  tax liability as determined by the
15    Department under this Act.
16    (Source: P.A. 92-393, eff. 1-1-03.)

17        Section 99.  Effective date.  This Act takes effect  upon
18    becoming  law, except that the changes made to Section 8-2 of
19    the Liquor Control Act of 1934 take effect on July 1, 2004.
 
                            -74-     LRB093 09361 SJM 09596 b
 1                                INDEX
 2               Statutes amended in order of appearance
 3    35 ILCS 5/201             from Ch. 120, par. 2-201
 4    35 ILCS 5/211
 5    35 ILCS 105/3-5           from Ch. 120, par. 439.3-5
 6    35 ILCS 105/3-55          from Ch. 120, par. 439.3-55
 7    35 ILCS 110/3-5           from Ch. 120, par. 439.33-5
 8    35 ILCS 110/3-45          from Ch. 120, par. 439.33-45
 9    35 ILCS 115/3-5           from Ch. 120, par. 439.103-5
10    35 ILCS 120/2-5           from Ch. 120, par. 441-5
11    235 ILCS 5/8-2            from Ch. 43, par. 159