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Full Text of SB2079  97th General Assembly




State of Illinois
2011 and 2012


Introduced 2/10/2011, by Sen. Kirk W. Dillard


35 ILCS 615/1  from Ch. 120, par. 467.16
35 ILCS 630/2  from Ch. 120, par. 2002
35 ILCS 640/2-4

    Amends the Gas Revenue Tax Act, the Telecommunications Excise Tax Act, and the Electricity Excise Tax Act. Provides that businesses that are primarily engaged in manufacturing are exempt from taxation under the Acts. Provides that the Acts' automatic sunset provisions do not apply to the exemption.

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SB2079LRB097 10318 HLH 50526 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 Gas Revenue Tax Act is amended by changing
5Section 1 as follows:
6    (35 ILCS 615/1)  (from Ch. 120, par. 467.16)
7    Sec. 1. For the purposes of this Act: "Gross receipts"
8means the consideration received for gas distributed,
9supplied, furnished or sold to persons for use or consumption
10and not for resale, and for all services (including the
11transportation or storage of gas for an end-user) rendered in
12connection therewith, and shall include cash, services and
13property of every kind or nature, and shall be determined
14without any deduction on account of the cost of the service,
15product or commodity supplied, the cost of materials used,
16labor or service costs, or any other expense whatsoever.
17However, "gross receipts" shall not include receipts from:
18        (i) any minimum or other charge for gas or gas service
19    where the customer has taken no therms of gas;
20        (ii) any charge for a dishonored check;
21        (iii) any finance or credit charge, penalty or charge
22    for delayed payment, or discount for prompt payment;
23        (iv) any charge for reconnection of service or for



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1    replacement or relocation of facilities;
2        (v) any advance or contribution in aid of construction;
3        (vi) repair, inspection or servicing of equipment
4    located on customer premises;
5        (vii) leasing or rental of equipment, the leasing or
6    rental of which is not necessary to distributing,
7    furnishing, supplying, selling, transporting or storing
8    gas;
9        (viii) any sale to a customer if the taxpayer is
10    prohibited by federal or State constitution, treaty,
11    convention, statute or court decision from recovering the
12    related tax liability from such customer;
13        (ix) any charges added to customers' bills pursuant to
14    the provisions of Section 9-221 or Section 9-222 of the
15    Public Utilities Act, as amended, or any charges added to
16    customers' bills by taxpayers who are not subject to rate
17    regulation by the Illinois Commerce Commission for the
18    purpose of recovering any of the tax liabilities or other
19    amounts specified in such provisions of such Act; and
20        (x) prior to October 1, 2003, any charge for gas or gas
21    services to a customer who acquired contractual rights for
22    the direct purchase of gas or gas services originating from
23    an out-of-state supplier or source on or before March 1,
24    1995, except for those charges solely related to the local
25    distribution of gas by a public utility. This exemption
26    includes any charge for gas or gas service, except for



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1    those charges solely related to the local distribution of
2    gas by a public utility, to a customer who maintained an
3    account with a public utility (as defined in Section 3-105
4    of the Public Utilities Act) for the transportation of
5    customer-owned gas on or before March 1, 1995. The
6    provisions of this amendatory Act of 1997 are intended to
7    clarify, rather than change, existing law as to the meaning
8    and scope of this exemption. This exemption (x) expires on
9    September 30, 2003.
10    In case credit is extended, the amount thereof shall be
11included only as and when payments are received.
12    "Gross receipts" shall not include consideration received
13from business enterprises certified under Section 9-222.1 of
14the Public Utilities Act, as amended, to the extent of such
15exemption and during the period of time specified by the
16Department of Commerce and Economic Opportunity.
17    "Gross receipts" shall not include consideration received
18from businesses that are primarily engaged in manufacturing.
19This paragraph is exempt from the provisions of Section 2a.3 of
20this Act.
21    "Department" means the Department of Revenue of the State
22of Illinois.
23    "Director" means the Director of Revenue for the Department
24of Revenue of the State of Illinois.
25    "Taxpayer" means a person engaged in the business of
26distributing, supplying, furnishing or selling gas for use or



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1consumption and not for resale.
2    "Person" means any natural individual, firm, trust,
3estate, partnership, association, joint stock company, joint
4adventure, corporation, limited liability company, or a
5receiver, trustee, guardian or other representative appointed
6by order of any court, or any city, town, county or other
7political subdivision of this State.
8    "Invested capital" means that amount equal to (i) the
9average of the balances at the beginning and end of each
10taxable period of the taxpayer's total stockholder's equity and
11total long-term debt, less investments in and advances to all
12corporations, as set forth on the balance sheets included in
13the taxpayer's annual report to the Illinois Commerce
14Commission for the taxable period; (ii) multiplied by a
15fraction determined under Sections 301 and 304(a) of the
16"Illinois Income Tax Act" and reported on the Illinois income
17tax return for the taxable period ending in or with the taxable
18period in question. However, notwithstanding the income tax
19return reporting requirement stated above, beginning July 1,
201979, no taxpayer's denominators used to compute the sales,
21property or payroll factors under subsection (a) of Section 304
22of the Illinois Income Tax Act shall include payroll, property
23or sales of any corporate entity other than the taxpayer for
24the purposes of determining an allocation for the invested
25capital tax. This amendatory Act of 1982, Public Act 82-1024,
26is not intended to and does not make any change in the meaning



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1of any provision of this Act, it having been the intent of the
2General Assembly in initially enacting the definition of
3"invested capital" to provide for apportionment of the invested
4capital of each company, based solely upon the sales, property
5and payroll of that company.
6    "Taxable period" means each period which ends after the
7effective date of this Act and which is covered by an annual
8report filed by the taxpayer with the Illinois Commerce
10(Source: P.A. 93-31, eff. 10-1-03; 94-793, eff. 5-19-06.)
11    Section 10. The Telecommunications Excise Tax Act is
12amended by changing Section 2 as follows:
13    (35 ILCS 630/2)  (from Ch. 120, par. 2002)
14    Sec. 2. As used in this Article, unless the context clearly
15requires otherwise:
16    (a) "Gross charge" means the amount paid for the act or
17privilege of originating or receiving telecommunications in
18this State and for all services and equipment provided in
19connection therewith by a retailer, valued in money whether
20paid in money or otherwise, including cash, credits, services
21and property of every kind or nature, and shall be determined
22without any deduction on account of the cost of such
23telecommunications, the cost of materials used, labor or
24service costs or any other expense whatsoever. In case credit



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1is extended, the amount thereof shall be included only as and
2when paid. "Gross charges" for private line service shall
3include charges imposed at each channel termination point
4within this State, charges for the channel mileage between each
5channel termination point within this State, and charges for
6that portion of the interstate inter-office channel provided
7within Illinois. Charges for that portion of the interstate
8inter-office channel provided in Illinois shall be determined
9by the retailer as follows: (i) for interstate inter-office
10channels having 2 channel termination points, only one of which
11is in Illinois, 50% of the total charge imposed; or (ii) for
12interstate inter-office channels having more than 2 channel
13termination points, one or more of which are in Illinois, an
14amount equal to the total charge multiplied by a fraction, the
15numerator of which is the number of channel termination points
16within Illinois and the denominator of which is the total
17number of channel termination points. Prior to January 1, 2004,
18any method consistent with this paragraph or other method that
19reasonably apportions the total charges for interstate
20inter-office channels among the states in which channel
21terminations points are located shall be accepted as a
22reasonable method to determine the charges for that portion of
23the interstate inter-office channel provided within Illinois
24for that period. However, "gross charges" shall not include any
25of the following:
26        (1) Any amounts added to a purchaser's bill because of



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1    a charge made pursuant to (i) the tax imposed by this
2    Article; (ii) charges added to customers' bills pursuant to
3    the provisions of Sections 9-221 or 9-222 of the Public
4    Utilities Act, as amended, or any similar charges added to
5    customers' bills by retailers who are not subject to rate
6    regulation by the Illinois Commerce Commission for the
7    purpose of recovering any of the tax liabilities or other
8    amounts specified in such provisions of such Act; (iii) the
9    tax imposed by Section 4251 of the Internal Revenue Code;
10    (iv) 911 surcharges; or (v) the tax imposed by the
11    Simplified Municipal Telecommunications Tax Act.
12        (2) Charges for a sent collect telecommunication
13    received outside of the State.
14        (3) Charges for leased time on equipment or charges for
15    the storage of data or information for subsequent retrieval
16    or the processing of data or information intended to change
17    its form or content. Such equipment includes, but is not
18    limited to, the use of calculators, computers, data
19    processing equipment, tabulating equipment or accounting
20    equipment and also includes the usage of computers under a
21    time-sharing agreement.
22        (4) Charges for customer equipment, including such
23    equipment that is leased or rented by the customer from any
24    source, wherein such charges are disaggregated and
25    separately identified from other charges.
26        (5) Charges to business enterprises certified under



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1    Section 9-222.1 of the Public Utilities Act, as amended, to
2    the extent of such exemption and during the period of time
3    specified by the Department of Commerce and Economic
4    Opportunity.
5        (5-5) Charges to businesses that are primarily engaged
6    in manufacturing. This item (5-5) is exempt from the
7    provisions of Section 4.5.
8        (6) Charges for telecommunications and all services
9    and equipment provided in connection therewith between a
10    parent corporation and its wholly owned subsidiaries or
11    between wholly owned subsidiaries when the tax imposed
12    under this Article has already been paid to a retailer and
13    only to the extent that the charges between the parent
14    corporation and wholly owned subsidiaries or between
15    wholly owned subsidiaries represent expense allocation
16    between the corporations and not the generation of profit
17    for the corporation rendering such service.
18        (7) Bad debts. Bad debt means any portion of a debt
19    that is related to a sale at retail for which gross charges
20    are not otherwise deductible or excludable that has become
21    worthless or uncollectable, as determined under applicable
22    federal income tax standards. If the portion of the debt
23    deemed to be bad is subsequently paid, the retailer shall
24    report and pay the tax on that portion during the reporting
25    period in which the payment is made.
26        (8) Charges paid by inserting coins in coin-operated



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1    telecommunication devices.
2        (9) Amounts paid by telecommunications retailers under
3    the Telecommunications Municipal Infrastructure
4    Maintenance Fee Act.
5        (10) Charges for nontaxable services or
6    telecommunications if (i) those charges are aggregated
7    with other charges for telecommunications that are
8    taxable, (ii) those charges are not separately stated on
9    the customer bill or invoice, and (iii) the retailer can
10    reasonably identify the nontaxable charges on the
11    retailer's books and records kept in the regular course of
12    business. If the nontaxable charges cannot reasonably be
13    identified, the gross charge from the sale of both taxable
14    and nontaxable services or telecommunications billed on a
15    combined basis shall be attributed to the taxable services
16    or telecommunications. The burden of proving nontaxable
17    charges shall be on the retailer of the telecommunications.
18    (b) "Amount paid" means the amount charged to the
19taxpayer's service address in this State regardless of where
20such amount is billed or paid.
21    (c) "Telecommunications", in addition to the meaning
22ordinarily and popularly ascribed to it, includes, without
23limitation, messages or information transmitted through use of
24local, toll and wide area telephone service; private line
25services; channel services; telegraph services;
26teletypewriter; computer exchange services; cellular mobile



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1telecommunications service; specialized mobile radio;
2stationary two way radio; paging service; or any other form of
3mobile and portable one-way or two-way communications; or any
4other transmission of messages or information by electronic or
5similar means, between or among points by wire, cable,
6fiber-optics, laser, microwave, radio, satellite or similar
7facilities. As used in this Act, "private line" means a
8dedicated non-traffic sensitive service for a single customer,
9that entitles the customer to exclusive or priority use of a
10communications channel or group of channels, from one or more
11specified locations to one or more other specified locations.
12The definition of "telecommunications" shall not include value
13added services in which computer processing applications are
14used to act on the form, content, code and protocol of the
15information for purposes other than transmission.
16"Telecommunications" shall not include purchases of
17telecommunications by a telecommunications service provider
18for use as a component part of the service provided by him to
19the ultimate retail consumer who originates or terminates the
20taxable end-to-end communications. Carrier access charges,
21right of access charges, charges for use of inter-company
22facilities, and all telecommunications resold in the
23subsequent provision of, used as a component of, or integrated
24into end-to-end telecommunications service shall be
25non-taxable as sales for resale.
26    (d) "Interstate telecommunications" means all



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1telecommunications that either originate or terminate outside
2this State.
3    (e) "Intrastate telecommunications" means all
4telecommunications that originate and terminate within this
6    (f) "Department" means the Department of Revenue of the
7State of Illinois.
8    (g) "Director" means the Director of Revenue for the
9Department of Revenue of the State of Illinois.
10    (h) "Taxpayer" means a person who individually or through
11his agents, employees or permittees engages in the act or
12privilege of originating or receiving telecommunications in
13this State and who incurs a tax liability under this Article.
14    (i) "Person" means any natural individual, firm, trust,
15estate, partnership, association, joint stock company, joint
16venture, corporation, limited liability company, or a
17receiver, trustee, guardian or other representative appointed
18by order of any court, the Federal and State governments,
19including State universities created by statute or any city,
20town, county or other political subdivision of this State.
21    (j) "Purchase at retail" means the acquisition,
22consumption or use of telecommunication through a sale at
24    (k) "Sale at retail" means the transmitting, supplying or
25furnishing of telecommunications and all services and
26equipment provided in connection therewith for a consideration



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1to persons other than the Federal and State governments, and
2State universities created by statute and other than between a
3parent corporation and its wholly owned subsidiaries or between
4wholly owned subsidiaries for their use or consumption and not
5for resale.
6    (l) "Retailer" means and includes every person engaged in
7the business of making sales at retail as defined in this
8Article. The Department may, in its discretion, upon
9application, authorize the collection of the tax hereby imposed
10by any retailer not maintaining a place of business within this
11State, who, to the satisfaction of the Department, furnishes
12adequate security to insure collection and payment of the tax.
13Such retailer shall be issued, without charge, a permit to
14collect such tax. When so authorized, it shall be the duty of
15such retailer to collect the tax upon all of the gross charges
16for telecommunications in this State in the same manner and
17subject to the same requirements as a retailer maintaining a
18place of business within this State. The permit may be revoked
19by the Department at its discretion.
20    (m) "Retailer maintaining a place of business in this
21State", or any like term, means and includes any retailer
22having or maintaining within this State, directly or by a
23subsidiary, an office, distribution facilities, transmission
24facilities, sales office, warehouse or other place of business,
25or any agent or other representative operating within this
26State under the authority of the retailer or its subsidiary,



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1irrespective of whether such place of business or agent or
2other representative is located here permanently or
3temporarily, or whether such retailer or subsidiary is licensed
4to do business in this State.
5    (n) "Service address" means the location of
6telecommunications equipment from which the telecommunications
7services are originated or at which telecommunications
8services are received by a taxpayer. In the event this may not
9be a defined location, as in the case of mobile phones, paging
10systems, maritime systems, service address means the
11customer's place of primary use as defined in the Mobile
12Telecommunications Sourcing Conformity Act. For air-to-ground
13systems and the like, service address shall mean the location
14of a taxpayer's primary use of the telecommunications equipment
15as defined by telephone number, authorization code, or location
16in Illinois where bills are sent.
17    (o) "Prepaid telephone calling arrangements" mean the
18right to exclusively purchase telephone or telecommunications
19services that must be paid for in advance and enable the
20origination of one or more intrastate, interstate, or
21international telephone calls or other telecommunications
22using an access number, an authorization code, or both, whether
23manually or electronically dialed, for which payment to a
24retailer must be made in advance, provided that, unless
25recharged, no further service is provided once that prepaid
26amount of service has been consumed. Prepaid telephone calling



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1arrangements include the recharge of a prepaid calling
2arrangement. For purposes of this subsection, "recharge" means
3the purchase of additional prepaid telephone or
4telecommunications services whether or not the purchaser
5acquires a different access number or authorization code.
6"Prepaid telephone calling arrangement" does not include an
7arrangement whereby a customer purchases a payment card and
8pursuant to which the service provider reflects the amount of
9such purchase as a credit on an invoice issued to that customer
10under an existing subscription plan.
11(Source: P.A. 93-286, 1-1-04; 94-793, eff. 5-19-06.)
12    Section 15. The Electricity Excise Tax Law is amended by
13changing Section 2-4 as follows:
14    (35 ILCS 640/2-4)
15    Sec. 2-4. Tax imposed.
16    (a) Except as provided in subsection (b), a tax is imposed
17on the privilege of using in this State electricity purchased
18for use or consumption and not for resale, other than by
19municipal corporations owning and operating a local
20transportation system for public service, at the following
21rates per kilowatt-hour delivered to the purchaser:
22        (i) For the first 2000 kilowatt-hours used or consumed
23    in a month: 0.330 cents per kilowatt-hour;
24        (ii) For the next 48,000 kilowatt-hours used or



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1    consumed in a month: 0.319 cents per kilowatt-hour;
2        (iii) For the next 50,000 kilowatt-hours used or
3    consumed in a month: 0.303 cents per kilowatt-hour;
4        (iv) For the next 400,000 kilowatt-hours used or
5    consumed in a month: 0.297 cents per kilowatt-hour;
6        (v) For the next 500,000 kilowatt-hours used or
7    consumed in a month: 0.286 cents per kilowatt-hour;
8        (vi) For the next 2,000,000 kilowatt-hours used or
9    consumed in a month: 0.270 cents per kilowatt-hour;
10        (vii) For the next 2,000,000 kilowatt-hours used or
11    consumed in a month: 0.254 cents per kilowatt-hour;
12        (viii) For the next 5,000,000 kilowatt-hours used or
13    consumed in a month: 0.233 cents per kilowatt-hour;
14        (ix) For the next 10,000,000 kilowatt-hours used or
15    consumed in a month: 0.207 cents per kilowatt-hour;
16        (x) For all electricity in excess of 20,000,000
17    kilowatt-hours used or consumed in a month: 0.202 cents per
18    kilowatt-hour.
19    Provided, that in lieu of the foregoing rates, the tax is
20imposed on a self-assessing purchaser at the rate of 5.1% of
21the self-assessing purchaser's purchase price for all
22electricity distributed, supplied, furnished, sold,
23transmitted and delivered to the self-assessing purchaser in a
25    (b) A tax is imposed on the privilege of using in this
26State electricity purchased from a municipal system or electric



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1cooperative, as defined in Article XVII of the Public Utilities
2Act, which has not made an election as permitted by either
3Section 17-200 or Section 17-300 of such Act, at the lesser of
40.32 cents per kilowatt hour of all electricity distributed,
5supplied, furnished, sold, transmitted, and delivered by such
6municipal system or electric cooperative to the purchaser or 5%
7of each such purchaser's purchase price for all electricity
8distributed, supplied, furnished, sold, transmitted, and
9delivered by such municipal system or electric cooperative to
10the purchaser, whichever is the lower rate as applied to each
11purchaser in each billing period.
12    (c) The tax imposed by this Section 2-4 is not imposed with
13respect to any use of electricity by business enterprises
14certified under Section 9-222.1 or 9-222.1A of the Public
15Utilities Act, as amended, to the extent of such exemption and
16during the time specified by the Department of Commerce and
17Economic Opportunity; or with respect to any transaction in
18interstate commerce, or otherwise, to the extent to which such
19transaction may not, under the Constitution and statutes of the
20United States, be made the subject of taxation by this State.
21    (d) The tax imposed by this Section 2-4 is not imposed with
22respect to any use of electricity by businesses that are
23primarily engaged in manufacturing. This subsection (d) is
24exempt from the provisions of Section 2-6.
25(Source: P.A. 94-793, eff. 5-19-06.)