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35 ILCS 105/3-50
(35 ILCS 105/3-50)
(from Ch. 120, par. 439.3-50)
Manufacturing and assembly exemption.
and assembling machinery and equipment exemption includes
machinery and equipment that replaces machinery and equipment in an
existing manufacturing facility as well as machinery and equipment that
are for use in an expanded or new manufacturing facility. The machinery and
equipment exemption also includes machinery and equipment used in the
general maintenance or repair of exempt machinery and equipment or for
in-house manufacture of exempt machinery and equipment. Beginning on July 1, 2017, the manufacturing and assembling machinery and equipment exemption also includes graphic arts machinery and equipment, as defined in paragraph (6) of Section 3-5. The machinery and equipment exemption does not include machinery and equipment used in (i) the generation of electricity for wholesale or retail sale; (ii) the generation or treatment of natural or artificial gas for wholesale or retail sale that is delivered to customers through pipes, pipelines, or mains; or (iii) the treatment of water for wholesale or retail sale that is delivered to customers through pipes, pipelines, or mains. The provisions of this amendatory Act of the 98th General Assembly are declaratory of existing law as to the meaning and scope of this exemption. For the
purposes of this exemption, terms have the following
(1) "Manufacturing process" means the production of
an article of tangible personal property, whether the article is a finished product or an article for use in the process of manufacturing or assembling a different article of tangible personal property, by a procedure commonly regarded as manufacturing, processing, fabricating, or refining that changes some existing material into a material with a different form, use, or name. In relation to a recognized integrated business composed of a series of operations that collectively constitute manufacturing, or individually constitute manufacturing operations, the manufacturing process commences with the first operation or stage of production in the series and does not end until the completion of the final product in the last operation or stage of production in the series. For purposes of this exemption, photoprocessing is a manufacturing process of tangible personal property for wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the article is a finished product or an article for use in the process of manufacturing or assembling a different article of tangible personal property, by the combination of existing materials in a manner commonly regarded as assembling that results in an article or material of a different form, use, or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a manufacturing or assembling process.
(4) "Equipment" includes an independent device or
tool separate from machinery but essential to an integrated manufacturing or assembly process; including computers used primarily in a manufacturer's computer assisted design, computer assisted manufacturing (CAD/CAM) system; any subunit or assembly comprising a component of any machinery or auxiliary, adjunct, or attachment parts of machinery, such as tools, dies, jigs, fixtures, patterns, and molds; and any parts that require periodic replacement in the course of normal operation; but does not include hand tools. Equipment includes chemicals or chemicals acting as catalysts but only if the chemicals or chemicals acting as catalysts effect a direct and immediate change upon a product being manufactured or assembled for wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or consumed by the purchaser in a manufacturing facility in which a manufacturing process takes place and includes, without limitation, tangible personal property that is purchased for incorporation into real estate within a manufacturing facility and tangible personal property that is used or consumed in activities such as research and development, preproduction material handling, receiving, quality control, inventory control, storage, staging, and packaging for shipping and transportation purposes. "Production related tangible personal property" does not include (i) tangible personal property that is used, within or without a manufacturing facility, in sales, purchasing, accounting, fiscal management, marketing, personnel recruitment or selection, or landscaping or (ii) tangible personal property that is required to be titled or registered with a department, agency, or unit of federal, State, or local government.
The manufacturing and assembling machinery and equipment exemption includes production related tangible personal property that is purchased on or after July 1, 2007 and on or before June 30, 2008. The exemption for production related tangible personal property is subject to both of the following limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of production related tangible personal property that is purchased on or after July 1, 2007 and on or before June 30, 2008. A credit under Section 3-85 of this Act may not be earned by the purchase of production related tangible personal property for which an exemption is received under this Section.
(2) The maximum aggregate amount of the exemptions
for production related tangible personal property awarded under this Act and the Retailers' Occupation Tax Act to all taxpayers may not exceed $10,000,000. If the claims for the exemption exceed $10,000,000, then the Department shall reduce the amount of the exemption to each taxpayer on a pro rata basis.
The Department may adopt rules to implement and administer the exemption for production related tangible personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and who rents or
leases that machinery, equipment, or tools to a
manufacturer of tangible
personal property. This exemption also includes the sale of materials to a
purchaser who manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses
himself or herself in the
manufacturing of tangible personal property. This exemption includes the
sale of exempted types of machinery or equipment to a
purchaser who is not the manufacturer, but who rents or leases the use of
the property to a manufacturer. The purchaser of the machinery and
equipment who has an active resale registration number shall
furnish that number to the seller at the time of purchase.
A user of the machinery, equipment, or tools without an
active resale registration number shall prepare a certificate of exemption
for each transaction stating facts establishing the exemption for that
transaction, and that certificate shall be
available to the Department for inspection or audit. The Department shall
prescribe the form of the certificate. Informal rulings, opinions, or
letters issued by the Department in
response to an inquiry or request for an opinion from any person
regarding the coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and made
available for public inspection and copying. If the informal ruling,
opinion, or letter contains trade secrets or other confidential
information, where possible, the Department shall delete that information
before publication. Whenever informal rulings, opinions, or
letters contain a policy of general applicability, the Department
shall formulate and adopt that policy as a rule in accordance with the
Illinois Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption is exempt from the provisions of Section 3-90.
(Source: P.A. 100-22, eff. 7-6-17.)