98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB3249

 

Introduced , by Rep. Jack D. Franks

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 105/6z-18  from Ch. 127, par. 142z-18
30 ILCS 105/6z-20  from Ch. 127, par. 142z-20
35 ILCS 105/3  from Ch. 120, par. 439.3
35 ILCS 110/3  from Ch. 120, par. 439.33
35 ILCS 115/3  from Ch. 120, par. 439.103
35 ILCS 120/2  from Ch. 120, par. 441

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that, for the purposes of determining the location where a sale takes place: (i) if a buyer purchases tangible personal property at a retail location and either the buyer takes possession of that property at that retail location or the seller ships that property to the buyer from that location, the sale occurs at that location and (ii) in all other cases, the sales location is the location where certain specified selling activity occurs with respect to that sale. Contains provisions concerning out-of-State sales. Amends the State Finance Act to make conforming changes. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3249LRB098 07958 HLH 38047 b

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 State Finance Act is amended by changing
5Sections 6z-18 and 6z-20 as follows:
 
6    (30 ILCS 105/6z-18)  (from Ch. 127, par. 142z-18)
7    Sec. 6z-18. A portion of the money paid into the Local
8Government Tax Fund from sales of food for human consumption
9which is to be consumed off the premises where it is sold
10(other than alcoholic beverages, soft drinks and food which has
11been prepared for immediate consumption) and prescription and
12nonprescription medicines, drugs, medical appliances and
13insulin, urine testing materials, syringes and needles used by
14diabetics, which occurred in municipalities, shall be
15distributed to each municipality based upon the sales which
16occurred in that municipality. The remainder shall be
17distributed to each county based upon the sales which occurred
18in the unincorporated area of that county. For sales occurring
19on and after July 1, 2013, the determination of where a sale
20has occurred shall be determined using the sourcing rules
21provided in subsection (b) of Section 2 of the Retailers'
22Occupation Tax Act.
23    A portion of the money paid into the Local Government Tax

 

 

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1Fund from the 6.25% general use tax rate on the selling price
2of tangible personal property which is purchased outside
3Illinois at retail from a retailer and which is titled or
4registered by any agency of this State's government shall be
5distributed to municipalities as provided in this paragraph.
6Each municipality shall receive the amount attributable to
7sales for which Illinois addresses for titling or registration
8purposes are given as being in such municipality. The remainder
9of the money paid into the Local Government Tax Fund from such
10sales shall be distributed to counties. Each county shall
11receive the amount attributable to sales for which Illinois
12addresses for titling or registration purposes are given as
13being located in the unincorporated area of such county.
14    A portion of the money paid into the Local Government Tax
15Fund from the 6.25% general rate (and, beginning July 1, 2000
16and through December 31, 2000, the 1.25% rate on motor fuel and
17gasohol, and beginning on August 6, 2010 through August 15,
182010, the 1.25% rate on sales tax holiday items) on sales
19subject to taxation under the Retailers' Occupation Tax Act and
20the Service Occupation Tax Act, which occurred in
21municipalities, shall be distributed to each municipality,
22based upon the sales which occurred in that municipality. The
23remainder shall be distributed to each county, based upon the
24sales which occurred in the unincorporated area of such county.
25    Before July 1, 2013, For the purpose of determining
26allocation to the local government unit, a retail sale by a

 

 

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1producer of coal or other mineral mined in Illinois is a sale
2at retail at the place where the coal or other mineral mined in
3Illinois is extracted from the earth. This paragraph does not
4apply to coal or other mineral when it is delivered or shipped
5by the seller to the purchaser at a point outside Illinois so
6that the sale is exempt under the United States Constitution as
7a sale in interstate or foreign commerce.
8    Whenever the Department determines that a refund of money
9paid into the Local Government Tax Fund should be made to a
10claimant instead of issuing a credit memorandum, the Department
11shall notify the State Comptroller, who shall cause the order
12to be drawn for the amount specified, and to the person named,
13in such notification from the Department. Such refund shall be
14paid by the State Treasurer out of the Local Government Tax
15Fund.
16    As soon as possible after the first day of each month,
17beginning January 1, 2011, upon certification of the Department
18of Revenue, the Comptroller shall order transferred, and the
19Treasurer shall transfer, to the STAR Bonds Revenue Fund the
20local sales tax increment, as defined in the Innovation
21Development and Economy Act, collected during the second
22preceding calendar month for sales within a STAR bond district
23and deposited into the Local Government Tax Fund, less 3% of
24that amount, which shall be transferred into the Tax Compliance
25and Administration Fund and shall be used by the Department,
26subject to appropriation, to cover the costs of the Department

 

 

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1in administering the Innovation Development and Economy Act.
2    After the monthly transfer to the STAR Bonds Revenue Fund,
3on or before the 25th day of each calendar month, the
4Department shall prepare and certify to the Comptroller the
5disbursement of stated sums of money to named municipalities
6and counties, the municipalities and counties to be those
7entitled to distribution of taxes or penalties paid to the
8Department during the second preceding calendar month. The
9amount to be paid to each municipality or county shall be the
10amount (not including credit memoranda) collected during the
11second preceding calendar month by the Department and paid into
12the Local Government Tax Fund, plus an amount the Department
13determines is necessary to offset any amounts which were
14erroneously paid to a different taxing body, and not including
15an amount equal to the amount of refunds made during the second
16preceding calendar month by the Department, and not including
17any amount which the Department determines is necessary to
18offset any amounts which are payable to a different taxing body
19but were erroneously paid to the municipality or county, and
20not including any amounts that are transferred to the STAR
21Bonds Revenue Fund. Within 10 days after receipt, by the
22Comptroller, of the disbursement certification to the
23municipalities and counties, provided for in this Section to be
24given to the Comptroller by the Department, the Comptroller
25shall cause the orders to be drawn for the respective amounts
26in accordance with the directions contained in such

 

 

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1certification.
2    When certifying the amount of monthly disbursement to a
3municipality or county under this Section, the Department shall
4increase or decrease that amount by an amount necessary to
5offset any misallocation of previous disbursements. The offset
6amount shall be the amount erroneously disbursed within the 6
7months preceding the time a misallocation is discovered.
8    The provisions directing the distributions from the
9special fund in the State Treasury provided for in this Section
10shall constitute an irrevocable and continuing appropriation
11of all amounts as provided herein. The State Treasurer and
12State Comptroller are hereby authorized to make distributions
13as provided in this Section.
14    In construing any development, redevelopment, annexation,
15preannexation or other lawful agreement in effect prior to
16September 1, 1990, which describes or refers to receipts from a
17county or municipal retailers' occupation tax, use tax or
18service occupation tax which now cannot be imposed, such
19description or reference shall be deemed to include the
20replacement revenue for such abolished taxes, distributed from
21the Local Government Tax Fund.
22(Source: P.A. 96-939, eff. 6-24-10; 96-1012, eff. 7-7-10;
2397-333, eff. 8-12-11.)
 
24    (30 ILCS 105/6z-20)  (from Ch. 127, par. 142z-20)
25    Sec. 6z-20. Of the money received from the 6.25% general

 

 

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1rate (and, beginning July 1, 2000 and through December 31,
22000, the 1.25% rate on motor fuel and gasohol, and beginning
3on August 6, 2010 through August 15, 2010, the 1.25% rate on
4sales tax holiday items) on sales subject to taxation under the
5Retailers' Occupation Tax Act and Service Occupation Tax Act
6and paid into the County and Mass Transit District Fund,
7distribution to the Regional Transportation Authority tax
8fund, created pursuant to Section 4.03 of the Regional
9Transportation Authority Act, for deposit therein shall be made
10based upon the retail sales occurring in a county having more
11than 3,000,000 inhabitants. The remainder shall be distributed
12to each county having 3,000,000 or fewer inhabitants based upon
13the retail sales occurring in each such county.
14    For sales occurring on and after July 1, 2013, the
15determination of where a sale has occurred shall be determined
16using the sourcing rules provided in subsection (b) of Section
172 of the Retailers' Occupation Tax Act.
18    Before July 1, 2013, for For the purpose of determining
19allocation to the local government unit, a retail sale by a
20producer of coal or other mineral mined in Illinois is a sale
21at retail at the place where the coal or other mineral mined in
22Illinois is extracted from the earth. This paragraph does not
23apply to coal or other mineral when it is delivered or shipped
24by the seller to the purchaser at a point outside Illinois so
25that the sale is exempt under the United States Constitution as
26a sale in interstate or foreign commerce.

 

 

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1    Of the money received from the 6.25% general use tax rate
2on tangible personal property which is purchased outside
3Illinois at retail from a retailer and which is titled or
4registered by any agency of this State's government and paid
5into the County and Mass Transit District Fund, the amount for
6which Illinois addresses for titling or registration purposes
7are given as being in each county having more than 3,000,000
8inhabitants shall be distributed into the Regional
9Transportation Authority tax fund, created pursuant to Section
104.03 of the Regional Transportation Authority Act. The
11remainder of the money paid from such sales shall be
12distributed to each county based on sales for which Illinois
13addresses for titling or registration purposes are given as
14being located in the county. Any money paid into the Regional
15Transportation Authority Occupation and Use Tax Replacement
16Fund from the County and Mass Transit District Fund prior to
17January 14, 1991, which has not been paid to the Authority
18prior to that date, shall be transferred to the Regional
19Transportation Authority tax fund.
20    Whenever the Department determines that a refund of money
21paid into the County and Mass Transit District Fund should be
22made to a claimant instead of issuing a credit memorandum, the
23Department shall notify the State Comptroller, who shall cause
24the order to be drawn for the amount specified, and to the
25person named, in such notification from the Department. Such
26refund shall be paid by the State Treasurer out of the County

 

 

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1and Mass Transit District Fund.
2    As soon as possible after the first day of each month,
3beginning January 1, 2011, upon certification of the Department
4of Revenue, the Comptroller shall order transferred, and the
5Treasurer shall transfer, to the STAR Bonds Revenue Fund the
6local sales tax increment, as defined in the Innovation
7Development and Economy Act, collected during the second
8preceding calendar month for sales within a STAR bond district
9and deposited into the County and Mass Transit District Fund,
10less 3% of that amount, which shall be transferred into the Tax
11Compliance and Administration Fund and shall be used by the
12Department, subject to appropriation, to cover the costs of the
13Department in administering the Innovation Development and
14Economy Act.
15    After the monthly transfer to the STAR Bonds Revenue Fund,
16on or before the 25th day of each calendar month, the
17Department shall prepare and certify to the Comptroller the
18disbursement of stated sums of money to the Regional
19Transportation Authority and to named counties, the counties to
20be those entitled to distribution, as hereinabove provided, of
21taxes or penalties paid to the Department during the second
22preceding calendar month. The amount to be paid to the Regional
23Transportation Authority and each county having 3,000,000 or
24fewer inhabitants shall be the amount (not including credit
25memoranda) collected during the second preceding calendar
26month by the Department and paid into the County and Mass

 

 

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1Transit District Fund, plus an amount the Department determines
2is necessary to offset any amounts which were erroneously paid
3to a different taxing body, and not including an amount equal
4to the amount of refunds made during the second preceding
5calendar month by the Department, and not including any amount
6which the Department determines is necessary to offset any
7amounts which were payable to a different taxing body but were
8erroneously paid to the Regional Transportation Authority or
9county, and not including any amounts that are transferred to
10the STAR Bonds Revenue Fund. Within 10 days after receipt, by
11the Comptroller, of the disbursement certification to the
12Regional Transportation Authority and counties, provided for
13in this Section to be given to the Comptroller by the
14Department, the Comptroller shall cause the orders to be drawn
15for the respective amounts in accordance with the directions
16contained in such certification.
17    When certifying the amount of a monthly disbursement to the
18Regional Transportation Authority or to a county under this
19Section, the Department shall increase or decrease that amount
20by an amount necessary to offset any misallocation of previous
21disbursements. The offset amount shall be the amount
22erroneously disbursed within the 6 months preceding the time a
23misallocation is discovered.
24    The provisions directing the distributions from the
25special fund in the State Treasury provided for in this Section
26and from the Regional Transportation Authority tax fund created

 

 

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1by Section 4.03 of the Regional Transportation Authority Act
2shall constitute an irrevocable and continuing appropriation
3of all amounts as provided herein. The State Treasurer and
4State Comptroller are hereby authorized to make distributions
5as provided in this Section.
6    In construing any development, redevelopment, annexation,
7preannexation or other lawful agreement in effect prior to
8September 1, 1990, which describes or refers to receipts from a
9county or municipal retailers' occupation tax, use tax or
10service occupation tax which now cannot be imposed, such
11description or reference shall be deemed to include the
12replacement revenue for such abolished taxes, distributed from
13the County and Mass Transit District Fund or Local Government
14Distributive Fund, as the case may be.
15(Source: P.A. 96-939, eff. 6-24-10; 96-1012, eff. 7-7-10;
1697-333, eff. 8-12-11.)
 
17    Section 10. The Use Tax Act is amended by changing Section
183 as follows:
 
19    (35 ILCS 105/3)  (from Ch. 120, par. 439.3)
20    Sec. 3. Tax imposed. A tax is imposed upon the privilege of
21using in this State tangible personal property purchased at
22retail from a retailer, including computer software, and
23including photographs, negatives, and positives that are the
24product of photoprocessing, but not including products of

 

 

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1photoprocessing produced for use in motion pictures for
2commercial exhibition. Beginning January 1, 2001, prepaid
3telephone calling arrangements shall be considered tangible
4personal property subject to the tax imposed under this Act
5regardless of the form in which those arrangements may be
6embodied, transmitted, or fixed by any method now known or
7hereafter developed. For sales occurring on and after July 1,
82013, the determination of where a sale has occurred shall be
9determined using the sourcing rules provided in subsection (b)
10of Section 2 of the Retailers' Occupation Tax Act.
11(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)
 
12    Section 15. The Service Use Tax Act is amended by changing
13Section 3 as follows:
 
14    (35 ILCS 110/3)  (from Ch. 120, par. 439.33)
15    Sec. 3. Tax imposed. A tax is imposed upon the privilege of
16using in this State real or tangible personal property acquired
17as an incident to the purchase of a service from a serviceman,
18including computer software, and including photographs,
19negatives, and positives that are the product of
20photoprocessing, but not including products of photoprocessing
21produced for use in motion pictures for public commercial
22exhibition. Beginning January 1, 2001, prepaid telephone
23calling arrangements shall be considered tangible personal
24property subject to the tax imposed under this Act regardless

 

 

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1of the form in which those arrangements may be embodied,
2transmitted, or fixed by any method now known or hereafter
3developed. For sales occurring on and after July 1, 2013, the
4determination of where a sale has occurred shall be determined
5using the sourcing rules provided in subsection (b) of Section
63 of the Service Occupation Tax Act.
7(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)
 
8    Section 20. The Service Occupation Tax Act is amended by
9changing Section 3 as follows:
 
10    (35 ILCS 115/3)  (from Ch. 120, par. 439.103)
11    Sec. 3. Tax imposed.
12    (a) A tax is imposed upon all persons engaged in the
13business of making sales of service (referred to as
14"servicemen") on all tangible personal property transferred as
15an incident of a sale of service, including computer software,
16and including photographs, negatives, and positives that are
17the product of photoprocessing, but not including products of
18photoprocessing produced for use in motion pictures for public
19commercial exhibition. Beginning January 1, 2001, prepaid
20telephone calling arrangements shall be considered tangible
21personal property subject to the tax imposed under this Act
22regardless of the form in which those arrangements may be
23embodied, transmitted, or fixed by any method now known or
24hereafter developed.

 

 

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1    (b) Notwithstanding any other provision of this Act, on or
2after July 1, 2013, the location where a sale of service takes
3place shall be determined under the following rules:
4        (1) When a buyer purchases tangible personal property
5    at a retail location and either the buyer takes possession
6    of that property at that retail location or the seller
7    ships that property to the buyer from that location, the
8    sale occurs at that location.
9        (2) For all sales other than those listed in item (1)
10    of this subsection (b), a sale occurs at the location where
11    the most selling activity occurs with respect to that sale.
12    The amount of selling activity occurring at a given
13    location shall be determined by considering the degree to
14    which the following activities occur at that location, with
15    no one activity being determinative:
16            (A) solicitation of the sale;
17            (B) determination of buyer creditworthiness;
18            (C) verification of inventory;
19            (D) negotiation of the terms of the sale;
20            (E) where the price is set;
21            (F) acceptance of the order;
22            (G) entrance of the sale on the books and records
23        of the seller;
24            (H) processing of the order;
25            (I) receipt of payment;
26            (J) passing of title from the seller to the buyer;

 

 

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1            (K) delivery of the tangible personal property;
2        and
3            (L) any other activity without which the sale could
4        not occur.
5        (3) For all sales other than those listed in item (1)
6    of this subsection (b), if most of the selling activities
7    surrounding the sale occur outside of Illinois, then the
8    sale shall be deemed to occur outside of Illinois. However,
9    with respect to those out-of-State sales, if the tangible
10    personal property being sold is in the inventory of the
11    seller or its authorized representative at a location
12    within Illinois at the time of sale (or is subsequently
13    produced by the seller at a location in Illinois), then the
14    inventory location is deemed to be the location of the
15    sale.
16(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)
 
17    Section 25. The Retailers' Occupation Tax Act is amended by
18changing Section 2 as follows:
 
19    (35 ILCS 120/2)  (from Ch. 120, par. 441)
20    Sec. 2. Tax imposed.
21    (a) A tax is imposed upon persons engaged in the business
22of selling at retail tangible personal property, including
23computer software, and including photographs, negatives, and
24positives that are the product of photoprocessing, but not

 

 

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1including products of photoprocessing produced for use in
2motion pictures for public commercial exhibition. Beginning
3January 1, 2001, prepaid telephone calling arrangements shall
4be considered tangible personal property subject to the tax
5imposed under this Act regardless of the form in which those
6arrangements may be embodied, transmitted, or fixed by any
7method now known or hereafter developed.
8    (b) Notwithstanding any other provision of this Act, on or
9after July 1, 2013, the location where a sale of tangible
10personal property takes place shall be determined under the
11following rules:
12        (1) When a buyer purchases tangible personal property
13    at a retail location and either the buyer takes possession
14    of that property at that retail location or the seller
15    ships that property to the buyer from that location, the
16    sale occurs at that location.
17        (2) For all sales other than those listed in item (1)
18    of this subsection (b), a sale occurs at the location where
19    the most selling activity occurs with respect to that sale.
20    The amount of selling activity occurring at a given
21    location shall be determined by considering the degree to
22    which the following activities occur at that location, with
23    no one activity being determinative:
24            (A) solicitation of the sale;
25            (B) determination of buyer creditworthiness;
26            (C) verification of inventory;

 

 

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1            (D) negotiation of the terms of the sale;
2            (E) where the price is set;
3            (F) acceptance of the order;
4            (G) entrance of the sale on the books and records
5        of the seller;
6            (H) processing of the order;
7            (I) receipt of payment;
8            (J) passing of title from the seller to the buyer;
9            (K) delivery of the tangible personal property;
10        and
11            (L) any other activity without which the sale could
12        not occur.
13        (3) For all sales other than those listed in item (1)
14    of this subsection (b), if most of the selling activities
15    surrounding the sale occur outside of Illinois, then the
16    sale shall be deemed to occur outside of Illinois. However,
17    with respect to those out-of-State sales, if the tangible
18    personal property being sold is in the inventory of the
19    seller or its authorized representative at a location
20    within Illinois at the time of sale (or is subsequently
21    produced by the seller at a location in Illinois), then the
22    inventory location is deemed to be the location of the
23    sale.
24(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)
 
25    Section 99. Effective date. This Act takes effect upon
26becoming law.