HB3249 98TH GENERAL ASSEMBLY

LRB098 07958 HLH 38047 b

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.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

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

Section 5. The State Finance Act is amended by changing Sections 6z-18 and 6z-20 as follows:

(30 ILCS 105/6z-18) (from Ch. 127, par. 142z-18)

Sec. 6z-18. A portion of the money paid into the Local Government Tax Fund from sales of food for human consumption which is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks and food which has been prepared for immediate consumption) and prescription and nonprescription medicines, drugs, medical appliances and insulin, urine testing materials, syringes and needles used by diabetics, which occurred in municipalities, shall be distributed to each municipality based upon the sales which occurred in that municipality. The remainder shall be distributed to each county based upon the sales which occurred in the unincorporated area of that county. For sales occurring on and after July 1, 2013, the determination of where a sale has occurred shall be determined using the sourcing rules provided in subsection (b) of Section 2 of the Retailers' Occupation Tax Act.

A portion of the money paid into the Local Government Tax Fund from the 6.25% general use tax rate on the selling price of tangible personal property which is purchased outside Illinois at retail from a retailer and which is titled or registered by any agency of this State's government shall be distributed to municipalities as provided in this paragraph. Each municipality shall receive the amount attributable to sales for which Illinois addresses for titling or registration purposes are given as being in such municipality. The remainder of the money paid into the Local Government Tax Fund from such sales shall be distributed to counties. Each county shall receive the amount attributable to sales for which Illinois addresses for titling or registration purposes are given as being located in the unincorporated area of such county.

A portion of the money paid into the Local Government Tax Fund from the 6.25% general rate (and, beginning July 1, 2000 and through December 31, 2000, the 1.25% rate on motor fuel and gasohol, and beginning on August 6, 2010 through August 15, 2010, the 1.25% rate on sales tax holiday items) on sales subject to taxation under the Retailers' Occupation Tax Act and the Service Occupation Tax Act, which occurred in municipalities, shall be distributed to each municipality, based upon the sales which occurred in that municipality. The remainder shall be distributed to each county, based upon the sales which occurred in the unincorporated area of such county.

Before July 1, 2013, For the purpose of determining allocation to the local government unit, a retail sale by a producer of coal or other mineral mined in Illinois is a sale at retail at the place where the coal or other mineral mined in Illinois is extracted from the earth. This paragraph does not apply to coal or other mineral when it is delivered or shipped by the seller to the purchaser at a point outside Illinois so that the sale is exempt under the United States Constitution as a sale in interstate or foreign commerce.

Whenever the Department determines that a refund of money paid into the Local Government Tax Fund should be made to a claimant instead of issuing a credit memorandum, the Department shall notify the State Comptroller, who shall cause the order to be drawn for the amount specified, and to the person named, in such notification from the Department. Such refund shall be paid by the State Treasurer out of the Local Government Tax Fund.

As soon as possible after the first day of each month, beginning January 1, 2011, upon certification of the Department of Revenue, the Comptroller shall order transferred, and the Treasurer shall transfer, to the STAR Bonds Revenue Fund the local sales tax increment, as defined in the Innovation Development and Economy Act, collected during the second preceding calendar month for sales within a STAR bond district and deposited into the Local Government Tax Fund, less 3% of that amount, which shall be transferred into the Tax Compliance and Administration Fund and shall be used by the Department, subject to appropriation, to cover the costs of the Department in administering the Innovation Development and Economy Act.

After the monthly transfer to the STAR Bonds Revenue Fund, on or before the 25th day of each calendar month, the Department shall prepare and certify to the Comptroller the disbursement of stated sums of money to named municipalities and counties, the municipalities and counties to be those entitled to distribution of taxes or penalties paid to the Department during the second preceding calendar month. The amount to be paid to each municipality or county shall be the amount (not including credit memoranda) collected during the second preceding calendar month by the Department and paid into the Local Government Tax Fund, plus an amount the Department determines is necessary to offset any amounts which were erroneously paid to a different taxing body, and not including an amount equal to the amount of refunds made during the second preceding calendar month by the Department, and not including any amount which the Department determines is necessary to offset any amounts which are payable to a different taxing body but were erroneously paid to the municipality or county, and not including any amounts that are transferred to the STAR Bonds Revenue Fund. Within 10 days after receipt, by the Comptroller, of the disbursement certification to the municipalities and counties, provided for in this Section to be given to the Comptroller by the Department, the Comptroller shall cause the orders to be drawn for the respective amounts in accordance with the directions contained in such certification.

When certifying the amount of monthly disbursement to a municipality or county under this Section, the Department shall increase or decrease that amount by an amount necessary to offset any misallocation of previous disbursements. The offset amount shall be the amount erroneously disbursed within the 6 months preceding the time a misallocation is discovered.

The provisions directing the distributions from the special fund in the State Treasury provided for in this Section shall constitute an irrevocable and continuing appropriation of all amounts as provided herein. The State Treasurer and State Comptroller are hereby authorized to make distributions as provided in this Section.

In construing any development, redevelopment, annexation, preannexation or other lawful agreement in effect prior to September 1, 1990, which describes or refers to receipts from a county or municipal retailers' occupation tax, use tax or service occupation tax which now cannot be imposed, such description or reference shall be deemed to include the replacement revenue for such abolished taxes, distributed from the Local Government Tax Fund.

(Source: P.A. 96-939, eff. 6-24-10; 96-1012, eff. 7-7-10; 97-333, eff. 8-12-11.)

(30 ILCS 105/6z-20) (from Ch. 127, par. 142z-20)

Sec. 6z-20. Of the money received from the 6.25% general rate (and, beginning July 1, 2000 and through December 31, 2000, the 1.25% rate on motor fuel and gasohol, and beginning on August 6, 2010 through August 15, 2010, the 1.25% rate on sales tax holiday items) on sales subject to taxation under the Retailers' Occupation Tax Act and Service Occupation Tax Act and paid into the County and Mass Transit District Fund, distribution to the Regional Transportation Authority tax fund, created pursuant to Section 4.03 of the Regional Transportation Authority Act, for deposit therein shall be made based upon the retail sales occurring in a county having more than 3,000,000 inhabitants. The remainder shall be distributed to each county having 3,000,000 or fewer inhabitants based upon the retail sales occurring in each such county.

For sales occurring on and after July 1, 2013, the determination of where a sale has occurred shall be determined using the sourcing rules provided in subsection (b) of Section 2 of the Retailers' Occupation Tax Act.

Before July 1, 2013, for For the purpose of determining allocation to the local government unit, a retail sale by a producer of coal or other mineral mined in Illinois is a sale at retail at the place where the coal or other mineral mined in Illinois is extracted from the earth. This paragraph does not apply to coal or other mineral when it is delivered or shipped by the seller to the purchaser at a point outside Illinois so that the sale is exempt under the United States Constitution as a sale in interstate or foreign commerce.

Of the money received from the 6.25% general use tax rate on tangible personal property which is purchased outside Illinois at retail from a retailer and which is titled or registered by any agency of this State's government and paid into the County and Mass Transit District Fund, the amount for which Illinois addresses for titling or registration purposes are given as being in each county having more than 3,000,000 inhabitants shall be distributed into the Regional Transportation Authority tax fund, created pursuant to Section 4.03 of the Regional Transportation Authority Act. The remainder of the money paid from such sales shall be distributed to each county based on sales for which Illinois addresses for titling or registration purposes are given as being located in the county. Any money paid into the Regional Transportation Authority Occupation and Use Tax Replacement Fund from the County and Mass Transit District Fund prior to January 14, 1991, which has not been paid to the Authority prior to that date, shall be transferred to the Regional Transportation Authority tax fund.

Whenever the Department determines that a refund of money paid into the County and Mass Transit District Fund should be made to a claimant instead of issuing a credit memorandum, the Department shall notify the State Comptroller, who shall cause the order to be drawn for the amount specified, and to the person named, in such notification from the Department. Such refund shall be paid by the State Treasurer out of the County and Mass Transit District Fund.

As soon as possible after the first day of each month, beginning January 1, 2011, upon certification of the Department of Revenue, the Comptroller shall order transferred, and the Treasurer shall transfer, to the STAR Bonds Revenue Fund the local sales tax increment, as defined in the Innovation Development and Economy Act, collected during the second preceding calendar month for sales within a STAR bond district and deposited into the County and Mass Transit District Fund, less 3% of that amount, which shall be transferred into the Tax Compliance and Administration Fund and shall be used by the Department, subject to appropriation, to cover the costs of the Department in administering the Innovation Development and Economy Act.

After the monthly transfer to the STAR Bonds Revenue Fund, on or before the 25th day of each calendar month, the Department shall prepare and certify to the Comptroller the disbursement of stated sums of money to the Regional Transportation Authority and to named counties, the counties to be those entitled to distribution, as hereinabove provided, of taxes or penalties paid to the Department during the second preceding calendar month. The amount to be paid to the Regional Transportation Authority and each county having 3,000,000 or fewer inhabitants shall be the amount (not including credit memoranda) collected during the second preceding calendar month by the Department and paid into the County and Mass Transit District Fund, plus an amount the Department determines is necessary to offset any amounts which were erroneously paid to a different taxing body, and not including an amount equal to the amount of refunds made during the second preceding calendar month by the Department, and not including any amount which the Department determines is necessary to offset any amounts which were payable to a different taxing body but were erroneously paid to the Regional Transportation Authority or county, and not including any amounts that are transferred to the STAR Bonds Revenue Fund. Within 10 days after receipt, by the Comptroller, of the disbursement certification to the Regional Transportation Authority and counties, provided for in this Section to be given to the Comptroller by the Department, the Comptroller shall cause the orders to be drawn for the respective amounts in accordance with the directions contained in such certification.

When certifying the amount of a monthly disbursement to the Regional Transportation Authority or to a county under this Section, the Department shall increase or decrease that amount by an amount necessary to offset any misallocation of previous disbursements. The offset amount shall be the amount erroneously disbursed within the 6 months preceding the time a misallocation is discovered.

The provisions directing the distributions from the special fund in the State Treasury provided for in this Section and from the Regional Transportation Authority tax fund created by Section 4.03 of the Regional Transportation Authority Act shall constitute an irrevocable and continuing appropriation of all amounts as provided herein. The State Treasurer and State Comptroller are hereby authorized to make distributions as provided in this Section.

In construing any development, redevelopment, annexation, preannexation or other lawful agreement in effect prior to September 1, 1990, which describes or refers to receipts from a county or municipal retailers' occupation tax, use tax or service occupation tax which now cannot be imposed, such description or reference shall be deemed to include the replacement revenue for such abolished taxes, distributed from the County and Mass Transit District Fund or Local Government Distributive Fund, as the case may be.

(Source: P.A. 96-939, eff. 6-24-10; 96-1012, eff. 7-7-10; 97-333, eff. 8-12-11.)

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

(35 ILCS 105/3) (from Ch. 120, par. 439.3)

Sec. 3. Tax imposed. A tax is imposed upon the privilege of using in this State tangible personal property purchased at retail from a retailer, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for commercial exhibition. Beginning January 1, 2001, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. For sales occurring on and after July 1, 2013, the determination of where a sale has occurred shall be determined using the sourcing rules provided in subsection (b) of Section 2 of the Retailers' Occupation Tax Act.

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

Section 15. The Service Use Tax Act is amended by changing Section 3 as follows:

(35 ILCS 110/3) (from Ch. 120, par. 439.33)

Sec. 3. Tax imposed. A tax is imposed upon the privilege of using in this State real or tangible personal property acquired as an incident to the purchase of a service from a serviceman, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for public commercial exhibition. Beginning January 1, 2001, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed. For sales occurring on and after July 1, 2013, the determination of where a sale has occurred shall be determined using the sourcing rules provided in subsection (b) of Section 3 of the Service Occupation Tax Act.

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

Section 20. The Service Occupation Tax Act is amended by changing Section 3 as follows:

(35 ILCS 115/3) (from Ch. 120, par. 439.103)

Sec. 3. Tax imposed.

(a) A tax is imposed upon all persons engaged in the business of making sales of service (referred to as "servicemen") on all tangible personal property transferred as an incident of a sale of service, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for public commercial exhibition. Beginning January 1, 2001, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed.

(b) Notwithstanding any other provision of this Act, on or after July 1, 2013, the location where a sale of service takes place shall be determined under the following rules:

(1) When 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.

(2) For all sales other than those listed in item (1) of this subsection (b), a sale occurs at the location where the most selling activity occurs with respect to that sale. The amount of selling activity occurring at a given location shall be determined by considering the degree to which the following activities occur at that location, with no one activity being determinative:

(A) solicitation of the sale;

(B) determination of buyer creditworthiness;

(C) verification of inventory;

(D) negotiation of the terms of the sale;

(E) where the price is set;

(F) acceptance of the order;

(G) entrance of the sale on the books and records of the seller;

(H) processing of the order;

(I) receipt of payment;

(J) passing of title from the seller to the buyer;

(K) delivery of the tangible personal property; and

(L) any other activity without which the sale could not occur.

(3) For all sales other than those listed in item (1) of this subsection (b), if most of the selling activities surrounding the sale occur outside of Illinois, then the sale shall be deemed to occur outside of Illinois. However, with respect to those out-of-State sales, if the tangible personal property being sold is in the inventory of the seller or its authorized representative at a location within Illinois at the time of sale (or is subsequently produced by the seller at a location in Illinois), then the inventory location is deemed to be the location of the sale.

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

Section 25. The Retailers' Occupation Tax Act is amended by changing Section 2 as follows:

(35 ILCS 120/2) (from Ch. 120, par. 441)

Sec. 2. Tax imposed.

(a) A tax is imposed upon persons engaged in the business of selling at retail tangible personal property, including computer software, and including photographs, negatives, and positives that are the product of photoprocessing, but not including products of photoprocessing produced for use in motion pictures for public commercial exhibition. Beginning January 1, 2001, prepaid telephone calling arrangements shall be considered tangible personal property subject to the tax imposed under this Act regardless of the form in which those arrangements may be embodied, transmitted, or fixed by any method now known or hereafter developed.

(b) Notwithstanding any other provision of this Act, on or after July 1, 2013, the location where a sale of tangible personal property takes place shall be determined under the following rules:

(1) When 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.

(2) For all sales other than those listed in item (1) of this subsection (b), a sale occurs at the location where the most selling activity occurs with respect to that sale. The amount of selling activity occurring at a given location shall be determined by considering the degree to which the following activities occur at that location, with no one activity being determinative:

(A) solicitation of the sale;

(B) determination of buyer creditworthiness;

(C) verification of inventory;

(D) negotiation of the terms of the sale;

(E) where the price is set;

(F) acceptance of the order;

(G) entrance of the sale on the books and records of the seller;

(H) processing of the order;

(I) receipt of payment;

(J) passing of title from the seller to the buyer;

(K) delivery of the tangible personal property; and

(L) any other activity without which the sale could not occur.

(3) For all sales other than those listed in item (1) of this subsection (b), if most of the selling activities surrounding the sale occur outside of Illinois, then the sale shall be deemed to occur outside of Illinois. However, with respect to those out-of-State sales, if the tangible personal property being sold is in the inventory of the seller or its authorized representative at a location within Illinois at the time of sale (or is subsequently produced by the seller at a location in Illinois), then the inventory location is deemed to be the location of the sale.

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

Section 99. Effective date. This Act takes effect upon becoming law.