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35 ILCS 120/2-45
(35 ILCS 120/2-45)
(from Ch. 120, par. 441-45)
Manufacturing and assembly exemption.
and assembly 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
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 (4) of Section 2-5. 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 meanings:
(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 or materials 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 a 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 Use 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. 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 purchaser of the machinery, equipment, and
tools without an active resale registration number shall furnish to the
seller 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. 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 2-70.
(Source: P.A. 100-22, eff. 7-6-17.)