98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB0155

 

Introduced 1/14/2013, by Rep. Chad Hays

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/2  from Ch. 120, par. 439.2
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 120/1  from Ch. 120, par. 440

    Amends the Use Tax Act, the Service Use Tax Act, and the Retailers' Occupation Tax Act. Provides that, with respect to sales of cellular telephones and other wireless cellular devices, the terms "selling price" and "gross receipts" do not include consideration paid by a third-party cellular service provider. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Section 2
5as follows:
 
6    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
7    Sec. 2. "Use" means the exercise by any person of any right
8or power over tangible personal property incident to the
9ownership of that property, except that it does not include the
10sale of such property in any form as tangible personal property
11in the regular course of business to the extent that such
12property is not first subjected to a use for which it was
13purchased, and does not include the use of such property by its
14owner for demonstration purposes: Provided that the property
15purchased is deemed to be purchased for the purpose of resale,
16despite first being used, to the extent to which it is resold
17as an ingredient of an intentionally produced product or
18by-product of manufacturing. "Use" does not mean the
19demonstration use or interim use of tangible personal property
20by a retailer before he sells that tangible personal property.
21For watercraft or aircraft, if the period of demonstration use
22or interim use by the retailer exceeds 18 months, the retailer
23shall pay on the retailers' original cost price the tax imposed

 

 

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1by this Act, and no credit for that tax is permitted if the
2watercraft or aircraft is subsequently sold by the retailer.
3"Use" does not mean the physical incorporation of tangible
4personal property, to the extent not first subjected to a use
5for which it was purchased, as an ingredient or constituent,
6into other tangible personal property (a) which is sold in the
7regular course of business or (b) which the person
8incorporating such ingredient or constituent therein has
9undertaken at the time of such purchase to cause to be
10transported in interstate commerce to destinations outside the
11State of Illinois: Provided that the property purchased is
12deemed to be purchased for the purpose of resale, despite first
13being used, to the extent to which it is resold as an
14ingredient of an intentionally produced product or by-product
15of manufacturing.
16    "Watercraft" means a Class 2, Class 3, or Class 4
17watercraft as defined in Section 3-2 of the Boat Registration
18and Safety Act, a personal watercraft, or any boat equipped
19with an inboard motor.
20    "Purchase at retail" means the acquisition of the ownership
21of or title to tangible personal property through a sale at
22retail.
23    "Purchaser" means anyone who, through a sale at retail,
24acquires the ownership of tangible personal property for a
25valuable consideration.
26    "Sale at retail" means any transfer of the ownership of or

 

 

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1title to tangible personal property to a purchaser, for the
2purpose of use, and not for the purpose of resale in any form
3as tangible personal property to the extent not first subjected
4to a use for which it was purchased, for a valuable
5consideration: Provided that the property purchased is deemed
6to be purchased for the purpose of resale, despite first being
7used, to the extent to which it is resold as an ingredient of
8an intentionally produced product or by-product of
9manufacturing. For this purpose, slag produced as an incident
10to manufacturing pig iron or steel and sold is considered to be
11an intentionally produced by-product of manufacturing. "Sale
12at retail" includes any such transfer made for resale unless
13made in compliance with Section 2c of the Retailers' Occupation
14Tax Act, as incorporated by reference into Section 12 of this
15Act. Transactions whereby the possession of the property is
16transferred but the seller retains the title as security for
17payment of the selling price are sales.
18    "Sale at retail" shall also be construed to include any
19Illinois florist's sales transaction in which the purchase
20order is received in Illinois by a florist and the sale is for
21use or consumption, but the Illinois florist has a florist in
22another state deliver the property to the purchaser or the
23purchaser's donee in such other state.
24    Nonreusable tangible personal property that is used by
25persons engaged in the business of operating a restaurant,
26cafeteria, or drive-in is a sale for resale when it is

 

 

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1transferred to customers in the ordinary course of business as
2part of the sale of food or beverages and is used to deliver,
3package, or consume food or beverages, regardless of where
4consumption of the food or beverages occurs. Examples of those
5items include, but are not limited to nonreusable, paper and
6plastic cups, plates, baskets, boxes, sleeves, buckets or other
7containers, utensils, straws, placemats, napkins, doggie bags,
8and wrapping or packaging materials that are transferred to
9customers as part of the sale of food or beverages in the
10ordinary course of business.
11    The purchase, employment and transfer of such tangible
12personal property as newsprint and ink for the primary purpose
13of conveying news (with or without other information) is not a
14purchase, use or sale of tangible personal property.
15    "Selling price" means the consideration for a sale valued
16in money whether received in money or otherwise, including
17cash, credits, property other than as hereinafter provided, and
18services, but not including the value of or credit given for
19traded-in tangible personal property where the item that is
20traded-in is of like kind and character as that which is being
21sold, and shall be determined without any deduction on account
22of the cost of the property sold, the cost of materials used,
23labor or service cost or any other expense whatsoever, but does
24not include interest or finance charges which appear as
25separate items on the bill of sale or sales contract nor
26charges that are added to prices by sellers on account of the

 

 

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1seller's tax liability under the "Retailers' Occupation Tax
2Act", or on account of the seller's duty to collect, from the
3purchaser, the tax that is imposed by this Act, or, except as
4otherwise provided with respect to any cigarette tax imposed by
5a home rule unit, on account of the seller's tax liability
6under any local occupation tax administered by the Department,
7or, except as otherwise provided with respect to any cigarette
8tax imposed by a home rule unit on account of the seller's duty
9to collect, from the purchasers, the tax that is imposed under
10any local use tax administered by the Department. Effective
11December 1, 1985, "selling price" shall include charges that
12are added to prices by sellers on account of the seller's tax
13liability under the Cigarette Tax Act, on account of the
14seller's duty to collect, from the purchaser, the tax imposed
15under the Cigarette Use Tax Act, and on account of the seller's
16duty to collect, from the purchaser, any cigarette tax imposed
17by a home rule unit. With respect to sales of cellular
18telephones or other wireless cellular devices, the term
19"selling price" does not include consideration paid by a
20third-party cellular service provider.
21    "Wireless cellular device" means any wireless
22communication device that provides for voice or data
23communication between 2 or more parties, including, but not
24limited to, a text messaging device or other device that sends
25or receives messages or electronic data.
26    The phrase "like kind and character" shall be liberally

 

 

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1construed (including but not limited to any form of motor
2vehicle for any form of motor vehicle, or any kind of farm or
3agricultural implement for any other kind of farm or
4agricultural implement), while not including a kind of item
5which, if sold at retail by that retailer, would be exempt from
6retailers' occupation tax and use tax as an isolated or
7occasional sale.
8    "Department" means the Department of Revenue.
9    "Person" means any natural individual, firm, partnership,
10association, joint stock company, joint adventure, public or
11private corporation, limited liability company, or a receiver,
12executor, trustee, guardian or other representative appointed
13by order of any court.
14    "Retailer" means and includes every person engaged in the
15business of making sales at retail as defined in this Section.
16    A person who holds himself or herself out as being engaged
17(or who habitually engages) in selling tangible personal
18property at retail is a retailer hereunder with respect to such
19sales (and not primarily in a service occupation)
20notwithstanding the fact that such person designs and produces
21such tangible personal property on special order for the
22purchaser and in such a way as to render the property of value
23only to such purchaser, if such tangible personal property so
24produced on special order serves substantially the same
25function as stock or standard items of tangible personal
26property that are sold at retail.

 

 

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1    A person whose activities are organized and conducted
2primarily as a not-for-profit service enterprise, and who
3engages in selling tangible personal property at retail
4(whether to the public or merely to members and their guests)
5is a retailer with respect to such transactions, excepting only
6a person organized and operated exclusively for charitable,
7religious or educational purposes either (1), to the extent of
8sales by such person to its members, students, patients or
9inmates of tangible personal property to be used primarily for
10the purposes of such person, or (2), to the extent of sales by
11such person of tangible personal property which is not sold or
12offered for sale by persons organized for profit. The selling
13of school books and school supplies by schools at retail to
14students is not "primarily for the purposes of" the school
15which does such selling. This paragraph does not apply to nor
16subject to taxation occasional dinners, social or similar
17activities of a person organized and operated exclusively for
18charitable, religious or educational purposes, whether or not
19such activities are open to the public.
20    A person who is the recipient of a grant or contract under
21Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
22serves meals to participants in the federal Nutrition Program
23for the Elderly in return for contributions established in
24amount by the individual participant pursuant to a schedule of
25suggested fees as provided for in the federal Act is not a
26retailer under this Act with respect to such transactions.

 

 

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1    Persons who engage in the business of transferring tangible
2personal property upon the redemption of trading stamps are
3retailers hereunder when engaged in such business.
4    The isolated or occasional sale of tangible personal
5property at retail by a person who does not hold himself out as
6being engaged (or who does not habitually engage) in selling
7such tangible personal property at retail or a sale through a
8bulk vending machine does not make such person a retailer
9hereunder. However, any person who is engaged in a business
10which is not subject to the tax imposed by the "Retailers'
11Occupation Tax Act" because of involving the sale of or a
12contract to sell real estate or a construction contract to
13improve real estate, but who, in the course of conducting such
14business, transfers tangible personal property to users or
15consumers in the finished form in which it was purchased, and
16which does not become real estate, under any provision of a
17construction contract or real estate sale or real estate sales
18agreement entered into with some other person arising out of or
19because of such nontaxable business, is a retailer to the
20extent of the value of the tangible personal property so
21transferred. If, in such transaction, a separate charge is made
22for the tangible personal property so transferred, the value of
23such property, for the purposes of this Act, is the amount so
24separately charged, but not less than the cost of such property
25to the transferor; if no separate charge is made, the value of
26such property, for the purposes of this Act, is the cost to the

 

 

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1transferor of such tangible personal property.
2    "Retailer maintaining a place of business in this State",
3or any like term, means and includes any of the following
4retailers:
5        1. A retailer having or maintaining within this State,
6    directly or by a subsidiary, an office, distribution house,
7    sales house, warehouse or other place of business, or any
8    agent or other representative operating within this State
9    under the authority of the retailer or its subsidiary,
10    irrespective of whether such place of business or agent or
11    other representative is located here permanently or
12    temporarily, or whether such retailer or subsidiary is
13    licensed to do business in this State. However, the
14    ownership of property that is located at the premises of a
15    printer with which the retailer has contracted for printing
16    and that consists of the final printed product, property
17    that becomes a part of the final printed product, or copy
18    from which the printed product is produced shall not result
19    in the retailer being deemed to have or maintain an office,
20    distribution house, sales house, warehouse, or other place
21    of business within this State.
22        1.1. Beginning July 1, 2011, a retailer having a
23    contract with a person located in this State under which
24    the person, for a commission or other consideration based
25    upon the sale of tangible personal property by the
26    retailer, directly or indirectly refers potential

 

 

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1    customers to the retailer by a link on the person's
2    Internet website. The provisions of this paragraph 1.1
3    shall apply only if the cumulative gross receipts from
4    sales of tangible personal property by the retailer to
5    customers who are referred to the retailer by all persons
6    in this State under such contracts exceed $10,000 during
7    the preceding 4 quarterly periods ending on the last day of
8    March, June, September, and December.
9        1.2. Beginning July 1, 2011, a retailer having a
10    contract with a person located in this State under which:
11            A. the retailer sells the same or substantially
12        similar line of products as the person located in this
13        State and does so using an identical or substantially
14        similar name, trade name, or trademark as the person
15        located in this State; and
16            B. the retailer provides a commission or other
17        consideration to the person located in this State based
18        upon the sale of tangible personal property by the
19        retailer.
20    The provisions of this paragraph 1.2 shall apply only if
21    the cumulative gross receipts from sales of tangible
22    personal property by the retailer to customers in this
23    State under all such contracts exceed $10,000 during the
24    preceding 4 quarterly periods ending on the last day of
25    March, June, September, and December.
26        2. A retailer soliciting orders for tangible personal

 

 

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1    property by means of a telecommunication or television
2    shopping system (which utilizes toll free numbers) which is
3    intended by the retailer to be broadcast by cable
4    television or other means of broadcasting, to consumers
5    located in this State.
6        3. A retailer, pursuant to a contract with a
7    broadcaster or publisher located in this State, soliciting
8    orders for tangible personal property by means of
9    advertising which is disseminated primarily to consumers
10    located in this State and only secondarily to bordering
11    jurisdictions.
12        4. A retailer soliciting orders for tangible personal
13    property by mail if the solicitations are substantial and
14    recurring and if the retailer benefits from any banking,
15    financing, debt collection, telecommunication, or
16    marketing activities occurring in this State or benefits
17    from the location in this State of authorized installation,
18    servicing, or repair facilities.
19        5. A retailer that is owned or controlled by the same
20    interests that own or control any retailer engaging in
21    business in the same or similar line of business in this
22    State.
23        6. A retailer having a franchisee or licensee operating
24    under its trade name if the franchisee or licensee is
25    required to collect the tax under this Section.
26        7. A retailer, pursuant to a contract with a cable

 

 

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1    television operator located in this State, soliciting
2    orders for tangible personal property by means of
3    advertising which is transmitted or distributed over a
4    cable television system in this State.
5        8. A retailer engaging in activities in Illinois, which
6    activities in the state in which the retail business
7    engaging in such activities is located would constitute
8    maintaining a place of business in that state.
9    "Bulk vending machine" means a vending machine, containing
10unsorted confections, nuts, toys, or other items designed
11primarily to be used or played with by children which, when a
12coin or coins of a denomination not larger than $0.50 are
13inserted, are dispensed in equal portions, at random and
14without selection by the customer.
15(Source: P.A. 95-723, eff. 6-23-08; 96-1544, eff. 3-10-11.)
 
16    Section 10. The Service Use Tax Act is amended by changing
17Section 2 as follows:
 
18    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
19    Sec. 2. "Use" means the exercise by any person of any right
20or power over tangible personal property incident to the
21ownership of that property, but does not include the sale or
22use for demonstration by him of that property in any form as
23tangible personal property in the regular course of business.
24"Use" does not mean the interim use of tangible personal

 

 

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1property nor the physical incorporation of tangible personal
2property, as an ingredient or constituent, into other tangible
3personal property, (a) which is sold in the regular course of
4business or (b) which the person incorporating such ingredient
5or constituent therein has undertaken at the time of such
6purchase to cause to be transported in interstate commerce to
7destinations outside the State of Illinois.
8    "Purchased from a serviceman" means the acquisition of the
9ownership of, or title to, tangible personal property through a
10sale of service.
11    "Purchaser" means any person who, through a sale of
12service, acquires the ownership of, or title to, any tangible
13personal property.
14    "Cost price" means the consideration paid by the serviceman
15for a purchase valued in money, whether paid in money or
16otherwise, including cash, credits and services, and shall be
17determined without any deduction on account of the supplier's
18cost of the property sold or on account of any other expense
19incurred by the supplier. When a serviceman contracts out part
20or all of the services required in his sale of service, it
21shall be presumed that the cost price to the serviceman of the
22property transferred to him or her by his or her subcontractor
23is equal to 50% of the subcontractor's charges to the
24serviceman in the absence of proof of the consideration paid by
25the subcontractor for the purchase of such property.
26    "Selling price" means the consideration for a sale valued

 

 

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1in money whether received in money or otherwise, including
2cash, credits and service, and shall be determined without any
3deduction on account of the serviceman's cost of the property
4sold, the cost of materials used, labor or service cost or any
5other expense whatsoever, but does not include interest or
6finance charges which appear as separate items on the bill of
7sale or sales contract nor charges that are added to prices by
8sellers on account of the seller's duty to collect, from the
9purchaser, the tax that is imposed by this Act. With respect to
10sales of cellular telephones or other wireless cellular
11devices, the term "selling price" does not include
12consideration paid by a third-party cellular service provider.
13    "Wireless cellular device" means any wireless
14communication device that provides for voice or data
15communication between 2 or more parties, including, but not
16limited to, a text messaging device or other device that sends
17or receives messages or electronic data.
18    "Department" means the Department of Revenue.
19    "Person" means any natural individual, firm, partnership,
20association, joint stock company, joint venture, public or
21private corporation, limited liability company, and any
22receiver, executor, trustee, guardian or other representative
23appointed by order of any court.
24    "Sale of service" means any transaction except:
25        (1) a retail sale of tangible personal property taxable
26    under the Retailers' Occupation Tax Act or under the Use

 

 

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1    Tax Act.
2        (2) a sale of tangible personal property for the
3    purpose of resale made in compliance with Section 2c of the
4    Retailers' Occupation Tax Act.
5        (3) except as hereinafter provided, a sale or transfer
6    of tangible personal property as an incident to the
7    rendering of service for or by any governmental body, or
8    for or by any corporation, society, association,
9    foundation or institution organized and operated
10    exclusively for charitable, religious or educational
11    purposes or any not-for-profit corporation, society,
12    association, foundation, institution or organization which
13    has no compensated officers or employees and which is
14    organized and operated primarily for the recreation of
15    persons 55 years of age or older. A limited liability
16    company may qualify for the exemption under this paragraph
17    only if the limited liability company is organized and
18    operated exclusively for educational purposes.
19        (4) a sale or transfer of tangible personal property as
20    an incident to the rendering of service for interstate
21    carriers for hire for use as rolling stock moving in
22    interstate commerce or by lessors under a lease of one year
23    or longer, executed or in effect at the time of purchase of
24    personal property, to interstate carriers for hire for use
25    as rolling stock moving in interstate commerce so long as
26    so used by such interstate carriers for hire, and equipment

 

 

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1    operated by a telecommunications provider, licensed as a
2    common carrier by the Federal Communications Commission,
3    which is permanently installed in or affixed to aircraft
4    moving in interstate commerce.
5        (4a) a sale or transfer of tangible personal property
6    as an incident to the rendering of service for owners,
7    lessors, or shippers of tangible personal property which is
8    utilized by interstate carriers for hire for use as rolling
9    stock moving in interstate commerce so long as so used by
10    interstate carriers for hire, and equipment operated by a
11    telecommunications provider, licensed as a common carrier
12    by the Federal Communications Commission, which is
13    permanently installed in or affixed to aircraft moving in
14    interstate commerce.
15        (4a-5) on and after July 1, 2003 and through June 30,
16    2004, a sale or transfer of a motor vehicle of the second
17    division with a gross vehicle weight in excess of 8,000
18    pounds as an incident to the rendering of service if that
19    motor vehicle is subject to the commercial distribution fee
20    imposed under Section 3-815.1 of the Illinois Vehicle Code.
21    Beginning on July 1, 2004 and through June 30, 2005, the
22    use in this State of motor vehicles of the second division:
23    (i) with a gross vehicle weight rating in excess of 8,000
24    pounds; (ii) that are subject to the commercial
25    distribution fee imposed under Section 3-815.1 of the
26    Illinois Vehicle Code; and (iii) that are primarily used

 

 

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1    for commercial purposes. Through June 30, 2005, this
2    exemption applies to repair and replacement parts added
3    after the initial purchase of such a motor vehicle if that
4    motor vehicle is used in a manner that would qualify for
5    the rolling stock exemption otherwise provided for in this
6    Act. For purposes of this paragraph, "used for commercial
7    purposes" means the transportation of persons or property
8    in furtherance of any commercial or industrial enterprise
9    whether for-hire or not.
10        (5) a sale or transfer of machinery and equipment used
11    primarily in the process of the manufacturing or
12    assembling, either in an existing, an expanded or a new
13    manufacturing facility, of tangible personal property for
14    wholesale or retail sale or lease, whether such sale or
15    lease is made directly by the manufacturer or by some other
16    person, whether the materials used in the process are owned
17    by the manufacturer or some other person, or whether such
18    sale or lease is made apart from or as an incident to the
19    seller's engaging in a service occupation and the
20    applicable tax is a Service Use Tax or Service Occupation
21    Tax, rather than Use Tax or Retailers' Occupation Tax.
22        (5a) the repairing, reconditioning or remodeling, for
23    a common carrier by rail, of tangible personal property
24    which belongs to such carrier for hire, and as to which
25    such carrier receives the physical possession of the
26    repaired, reconditioned or remodeled item of tangible

 

 

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1    personal property in Illinois, and which such carrier
2    transports, or shares with another common carrier in the
3    transportation of such property, out of Illinois on a
4    standard uniform bill of lading showing the person who
5    repaired, reconditioned or remodeled the property to a
6    destination outside Illinois, for use outside Illinois.
7        (5b) a sale or transfer of tangible personal property
8    which is produced by the seller thereof on special order in
9    such a way as to have made the applicable tax the Service
10    Occupation Tax or the Service Use Tax, rather than the
11    Retailers' Occupation Tax or the Use Tax, for an interstate
12    carrier by rail which receives the physical possession of
13    such property in Illinois, and which transports such
14    property, or shares with another common carrier in the
15    transportation of such property, out of Illinois on a
16    standard uniform bill of lading showing the seller of the
17    property as the shipper or consignor of such property to a
18    destination outside Illinois, for use outside Illinois.
19        (6) until July 1, 2003, a sale or transfer of
20    distillation machinery and equipment, sold as a unit or kit
21    and assembled or installed by the retailer, which machinery
22    and equipment is certified by the user to be used only for
23    the production of ethyl alcohol that will be used for
24    consumption as motor fuel or as a component of motor fuel
25    for the personal use of such user and not subject to sale
26    or resale.

 

 

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1        (7) at the election of any serviceman not required to
2    be otherwise registered as a retailer under Section 2a of
3    the Retailers' Occupation Tax Act, made for each fiscal
4    year sales of service in which the aggregate annual cost
5    price of tangible personal property transferred as an
6    incident to the sales of service is less than 35%, or 75%
7    in the case of servicemen transferring prescription drugs
8    or servicemen engaged in graphic arts production, of the
9    aggregate annual total gross receipts from all sales of
10    service. The purchase of such tangible personal property by
11    the serviceman shall be subject to tax under the Retailers'
12    Occupation Tax Act and the Use Tax Act. However, if a
13    primary serviceman who has made the election described in
14    this paragraph subcontracts service work to a secondary
15    serviceman who has also made the election described in this
16    paragraph, the primary serviceman does not incur a Use Tax
17    liability if the secondary serviceman (i) has paid or will
18    pay Use Tax on his or her cost price of any tangible
19    personal property transferred to the primary serviceman
20    and (ii) certifies that fact in writing to the primary
21    serviceman.
22    Tangible personal property transferred incident to the
23completion of a maintenance agreement is exempt from the tax
24imposed pursuant to this Act.
25    Exemption (5) also includes machinery and equipment used in
26the general maintenance or repair of such exempt machinery and

 

 

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1equipment or for in-house manufacture of exempt machinery and
2equipment. For the purposes of exemption (5), each of these
3terms shall have the following meanings: (1) "manufacturing
4process" shall mean the production of any article of tangible
5personal property, whether such article is a finished product
6or an article for use in the process of manufacturing or
7assembling a different article of tangible personal property,
8by procedures commonly regarded as manufacturing, processing,
9fabricating, or refining which changes some existing material
10or materials into a material with a different form, use or
11name. In relation to a recognized integrated business composed
12of a series of operations which collectively constitute
13manufacturing, or individually constitute manufacturing
14operations, the manufacturing process shall be deemed to
15commence with the first operation or stage of production in the
16series, and shall not be deemed to end until the completion of
17the final product in the last operation or stage of production
18in the series; and further, for purposes of exemption (5),
19photoprocessing is deemed to be a manufacturing process of
20tangible personal property for wholesale or retail sale; (2)
21"assembling process" shall mean the production of any article
22of tangible personal property, whether such article is a
23finished product or an article for use in the process of
24manufacturing or assembling a different article of tangible
25personal property, by the combination of existing materials in
26a manner commonly regarded as assembling which results in a

 

 

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1material of a different form, use or name; (3) "machinery"
2shall mean major mechanical machines or major components of
3such machines contributing to a manufacturing or assembling
4process; and (4) "equipment" shall include any independent
5device or tool separate from any machinery but essential to an
6integrated manufacturing or assembly process; including
7computers used primarily in a manufacturer's computer assisted
8design, computer assisted manufacturing (CAD/CAM) system; or
9any subunit or assembly comprising a component of any machinery
10or auxiliary, adjunct or attachment parts of machinery, such as
11tools, dies, jigs, fixtures, patterns and molds; or any parts
12which require periodic replacement in the course of normal
13operation; but shall not include hand tools. Equipment includes
14chemicals or chemicals acting as catalysts but only if the
15chemicals or chemicals acting as catalysts effect a direct and
16immediate change upon a product being manufactured or assembled
17for wholesale or retail sale or lease. The purchaser of such
18machinery and equipment who has an active resale registration
19number shall furnish such number to the seller at the time of
20purchase. The user of such machinery and equipment and tools
21without an active resale registration number shall prepare a
22certificate of exemption for each transaction stating facts
23establishing the exemption for that transaction, which
24certificate shall be available to the Department for inspection
25or audit. The Department shall prescribe the form of the
26certificate.

 

 

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1    Any informal rulings, opinions or letters issued by the
2Department in response to an inquiry or request for any opinion
3from any person regarding the coverage and applicability of
4exemption (5) to specific devices shall be published,
5maintained as a public record, and made available for public
6inspection and copying. If the informal ruling, opinion or
7letter contains trade secrets or other confidential
8information, where possible the Department shall delete such
9information prior to publication. Whenever such informal
10rulings, opinions, or letters contain any policy of general
11applicability, the Department shall formulate and adopt such
12policy as a rule in accordance with the provisions of the
13Illinois Administrative Procedure Act.
14    On and after July 1, 1987, no entity otherwise eligible
15under exemption (3) of this Section shall make tax free
16purchases unless it has an active exemption identification
17number issued by the Department.
18    The purchase, employment and transfer of such tangible
19personal property as newsprint and ink for the primary purpose
20of conveying news (with or without other information) is not a
21purchase, use or sale of service or of tangible personal
22property within the meaning of this Act.
23    "Serviceman" means any person who is engaged in the
24occupation of making sales of service.
25    "Sale at retail" means "sale at retail" as defined in the
26Retailers' Occupation Tax Act.

 

 

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1    "Supplier" means any person who makes sales of tangible
2personal property to servicemen for the purpose of resale as an
3incident to a sale of service.
4    "Serviceman maintaining a place of business in this State",
5or any like term, means and includes any serviceman:
6        1. having or maintaining within this State, directly or
7    by a subsidiary, an office, distribution house, sales
8    house, warehouse or other place of business, or any agent
9    or other representative operating within this State under
10    the authority of the serviceman or its subsidiary,
11    irrespective of whether such place of business or agent or
12    other representative is located here permanently or
13    temporarily, or whether such serviceman or subsidiary is
14    licensed to do business in this State;
15        1.1. beginning July 1, 2011, having a contract with a
16    person located in this State under which the person, for a
17    commission or other consideration based on the sale of
18    service by the serviceman, directly or indirectly refers
19    potential customers to the serviceman by a link on the
20    person's Internet website. The provisions of this
21    paragraph 1.1 shall apply only if the cumulative gross
22    receipts from sales of service by the serviceman to
23    customers who are referred to the serviceman by all persons
24    in this State under such contracts exceed $10,000 during
25    the preceding 4 quarterly periods ending on the last day of
26    March, June, September, and December;

 

 

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1        1.2. beginning July 1, 2011, having a contract with a
2    person located in this State under which:
3            A. the serviceman sells the same or substantially
4        similar line of services as the person located in this
5        State and does so using an identical or substantially
6        similar name, trade name, or trademark as the person
7        located in this State; and
8            B. the serviceman provides a commission or other
9        consideration to the person located in this State based
10        upon the sale of services by the serviceman.
11    The provisions of this paragraph 1.2 shall apply only if
12    the cumulative gross receipts from sales of service by the
13    serviceman to customers in this State under all such
14    contracts exceed $10,000 during the preceding 4 quarterly
15    periods ending on the last day of March, June, September,
16    and December;
17        2. soliciting orders for tangible personal property by
18    means of a telecommunication or television shopping system
19    (which utilizes toll free numbers) which is intended by the
20    retailer to be broadcast by cable television or other means
21    of broadcasting, to consumers located in this State;
22        3. pursuant to a contract with a broadcaster or
23    publisher located in this State, soliciting orders for
24    tangible personal property by means of advertising which is
25    disseminated primarily to consumers located in this State
26    and only secondarily to bordering jurisdictions;

 

 

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1        4. soliciting orders for tangible personal property by
2    mail if the solicitations are substantial and recurring and
3    if the retailer benefits from any banking, financing, debt
4    collection, telecommunication, or marketing activities
5    occurring in this State or benefits from the location in
6    this State of authorized installation, servicing, or
7    repair facilities;
8        5. being owned or controlled by the same interests
9    which own or control any retailer engaging in business in
10    the same or similar line of business in this State;
11        6. having a franchisee or licensee operating under its
12    trade name if the franchisee or licensee is required to
13    collect the tax under this Section;
14        7. pursuant to a contract with a cable television
15    operator located in this State, soliciting orders for
16    tangible personal property by means of advertising which is
17    transmitted or distributed over a cable television system
18    in this State; or
19        8. engaging in activities in Illinois, which
20    activities in the state in which the supply business
21    engaging in such activities is located would constitute
22    maintaining a place of business in that state.
23(Source: P.A. 96-1544, eff. 3-10-11.)
 
24    Section 15. The Retailers' Occupation Tax Act is amended by
25changing Section 1 as follows:
 

 

 

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1    (35 ILCS 120/1)  (from Ch. 120, par. 440)
2    Sec. 1. Definitions. "Sale at retail" means any transfer of
3the ownership of or title to tangible personal property to a
4purchaser, for the purpose of use or consumption, and not for
5the purpose of resale in any form as tangible personal property
6to the extent not first subjected to a use for which it was
7purchased, for a valuable consideration: Provided that the
8property purchased is deemed to be purchased for the purpose of
9resale, despite first being used, to the extent to which it is
10resold as an ingredient of an intentionally produced product or
11byproduct of manufacturing. For this purpose, slag produced as
12an incident to manufacturing pig iron or steel and sold is
13considered to be an intentionally produced byproduct of
14manufacturing. Transactions whereby the possession of the
15property is transferred but the seller retains the title as
16security for payment of the selling price shall be deemed to be
17sales.
18    "Sale at retail" shall be construed to include any transfer
19of the ownership of or title to tangible personal property to a
20purchaser, for use or consumption by any other person to whom
21such purchaser may transfer the tangible personal property
22without a valuable consideration, and to include any transfer,
23whether made for or without a valuable consideration, for
24resale in any form as tangible personal property unless made in
25compliance with Section 2c of this Act.

 

 

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1    Sales of tangible personal property, which property, to the
2extent not first subjected to a use for which it was purchased,
3as an ingredient or constituent, goes into and forms a part of
4tangible personal property subsequently the subject of a "Sale
5at retail", are not sales at retail as defined in this Act:
6Provided that the property purchased is deemed to be purchased
7for the purpose of resale, despite first being used, to the
8extent to which it is resold as an ingredient of an
9intentionally produced product or byproduct of manufacturing.
10    "Sale at retail" shall be construed to include any Illinois
11florist's sales transaction in which the purchase order is
12received in Illinois by a florist and the sale is for use or
13consumption, but the Illinois florist has a florist in another
14state deliver the property to the purchaser or the purchaser's
15donee in such other state.
16    Nonreusable tangible personal property that is used by
17persons engaged in the business of operating a restaurant,
18cafeteria, or drive-in is a sale for resale when it is
19transferred to customers in the ordinary course of business as
20part of the sale of food or beverages and is used to deliver,
21package, or consume food or beverages, regardless of where
22consumption of the food or beverages occurs. Examples of those
23items include, but are not limited to nonreusable, paper and
24plastic cups, plates, baskets, boxes, sleeves, buckets or other
25containers, utensils, straws, placemats, napkins, doggie bags,
26and wrapping or packaging materials that are transferred to

 

 

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1customers as part of the sale of food or beverages in the
2ordinary course of business.
3    The purchase, employment and transfer of such tangible
4personal property as newsprint and ink for the primary purpose
5of conveying news (with or without other information) is not a
6purchase, use or sale of tangible personal property.
7    A person whose activities are organized and conducted
8primarily as a not-for-profit service enterprise, and who
9engages in selling tangible personal property at retail
10(whether to the public or merely to members and their guests)
11is engaged in the business of selling tangible personal
12property at retail with respect to such transactions, excepting
13only a person organized and operated exclusively for
14charitable, religious or educational purposes either (1), to
15the extent of sales by such person to its members, students,
16patients or inmates of tangible personal property to be used
17primarily for the purposes of such person, or (2), to the
18extent of sales by such person of tangible personal property
19which is not sold or offered for sale by persons organized for
20profit. The selling of school books and school supplies by
21schools at retail to students is not "primarily for the
22purposes of" the school which does such selling. The provisions
23of this paragraph shall not apply to nor subject to taxation
24occasional dinners, socials or similar activities of a person
25organized and operated exclusively for charitable, religious
26or educational purposes, whether or not such activities are

 

 

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1open to the public.
2    A person who is the recipient of a grant or contract under
3Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
4serves meals to participants in the federal Nutrition Program
5for the Elderly in return for contributions established in
6amount by the individual participant pursuant to a schedule of
7suggested fees as provided for in the federal Act is not
8engaged in the business of selling tangible personal property
9at retail with respect to such transactions.
10    "Purchaser" means anyone who, through a sale at retail,
11acquires the ownership of or title to tangible personal
12property for a valuable consideration.
13    "Reseller of motor fuel" means any person engaged in the
14business of selling or delivering or transferring title of
15motor fuel to another person other than for use or consumption.
16No person shall act as a reseller of motor fuel within this
17State without first being registered as a reseller pursuant to
18Section 2c or a retailer pursuant to Section 2a.
19    "Selling price" or the "amount of sale" means the
20consideration for a sale valued in money whether received in
21money or otherwise, including cash, credits, property, other
22than as hereinafter provided, and services, but not including
23the value of or credit given for traded-in tangible personal
24property where the item that is traded-in is of like kind and
25character as that which is being sold, and shall be determined
26without any deduction on account of the cost of the property

 

 

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1sold, the cost of materials used, labor or service cost or any
2other expense whatsoever, but does not include charges that are
3added to prices by sellers on account of the seller's tax
4liability under this Act, or on account of the seller's duty to
5collect, from the purchaser, the tax that is imposed by the Use
6Tax Act, or, except as otherwise provided with respect to any
7cigarette tax imposed by a home rule unit, on account of the
8seller's tax liability under any local occupation tax
9administered by the Department, or, except as otherwise
10provided with respect to any cigarette tax imposed by a home
11rule unit on account of the seller's duty to collect, from the
12purchasers, the tax that is imposed under any local use tax
13administered by the Department. Effective December 1, 1985,
14"selling price" shall include charges that are added to prices
15by sellers on account of the seller's tax liability under the
16Cigarette Tax Act, on account of the sellers' duty to collect,
17from the purchaser, the tax imposed under the Cigarette Use Tax
18Act, and on account of the seller's duty to collect, from the
19purchaser, any cigarette tax imposed by a home rule unit. With
20respect to sales of cellular telephones or other wireless
21cellular devices, the term "selling price" does not include
22consideration paid by a third-party cellular service provider.
23    The phrase "like kind and character" shall be liberally
24construed (including but not limited to any form of motor
25vehicle for any form of motor vehicle, or any kind of farm or
26agricultural implement for any other kind of farm or

 

 

HB0155- 31 -LRB098 02912 HLH 32924 b

1agricultural implement), while not including a kind of item
2which, if sold at retail by that retailer, would be exempt from
3retailers' occupation tax and use tax as an isolated or
4occasional sale.
5    "Gross receipts" from the sales of tangible personal
6property at retail means the total selling price or the amount
7of such sales, as hereinbefore defined. In the case of charge
8and time sales, the amount thereof shall be included only as
9and when payments are received by the seller. Receipts or other
10consideration derived by a seller from the sale, transfer or
11assignment of accounts receivable to a wholly owned subsidiary
12will not be deemed payments prior to the time the purchaser
13makes payment on such accounts. With respect to sales of
14cellular telephones or other wireless cellular devices, the
15term "gross receipts" does not include consideration paid by a
16third-party cellular service provider.
17    "Wireless cellular device" means any wireless
18communication device that provides for voice or data
19communication between 2 or more parties, including, but not
20limited to, a text messaging device or other device that sends
21or receives messages or electronic data.
22    "Department" means the Department of Revenue.
23    "Person" means any natural individual, firm, partnership,
24association, joint stock company, joint adventure, public or
25private corporation, limited liability company, or a receiver,
26executor, trustee, guardian or other representative appointed

 

 

HB0155- 32 -LRB098 02912 HLH 32924 b

1by order of any court.
2    The isolated or occasional sale of tangible personal
3property at retail by a person who does not hold himself out as
4being engaged (or who does not habitually engage) in selling
5such tangible personal property at retail, or a sale through a
6bulk vending machine, does not constitute engaging in a
7business of selling such tangible personal property at retail
8within the meaning of this Act; provided that any person who is
9engaged in a business which is not subject to the tax imposed
10by this Act because of involving the sale of or a contract to
11sell real estate or a construction contract to improve real
12estate or a construction contract to engineer, install, and
13maintain an integrated system of products, but who, in the
14course of conducting such business, transfers tangible
15personal property to users or consumers in the finished form in
16which it was purchased, and which does not become real estate
17or was not engineered and installed, under any provision of a
18construction contract or real estate sale or real estate sales
19agreement entered into with some other person arising out of or
20because of such nontaxable business, is engaged in the business
21of selling tangible personal property at retail to the extent
22of the value of the tangible personal property so transferred.
23If, in such a transaction, a separate charge is made for the
24tangible personal property so transferred, the value of such
25property, for the purpose of this Act, shall be the amount so
26separately charged, but not less than the cost of such property

 

 

HB0155- 33 -LRB098 02912 HLH 32924 b

1to the transferor; if no separate charge is made, the value of
2such property, for the purposes of this Act, is the cost to the
3transferor of such tangible personal property. Construction
4contracts for the improvement of real estate consisting of
5engineering, installation, and maintenance of voice, data,
6video, security, and all telecommunication systems do not
7constitute engaging in a business of selling tangible personal
8property at retail within the meaning of this Act if they are
9sold at one specified contract price.
10    A person who holds himself or herself out as being engaged
11(or who habitually engages) in selling tangible personal
12property at retail is a person engaged in the business of
13selling tangible personal property at retail hereunder with
14respect to such sales (and not primarily in a service
15occupation) notwithstanding the fact that such person designs
16and produces such tangible personal property on special order
17for the purchaser and in such a way as to render the property
18of value only to such purchaser, if such tangible personal
19property so produced on special order serves substantially the
20same function as stock or standard items of tangible personal
21property that are sold at retail.
22    Persons who engage in the business of transferring tangible
23personal property upon the redemption of trading stamps are
24engaged in the business of selling such property at retail and
25shall be liable for and shall pay the tax imposed by this Act
26on the basis of the retail value of the property transferred

 

 

HB0155- 34 -LRB098 02912 HLH 32924 b

1upon redemption of such stamps.
2    "Bulk vending machine" means a vending machine, containing
3unsorted confections, nuts, toys, or other items designed
4primarily to be used or played with by children which, when a
5coin or coins of a denomination not larger than $0.50 are
6inserted, are dispensed in equal portions, at random and
7without selection by the customer.
8(Source: P.A. 95-723, eff. 6-23-08.)
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.