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91_HB0542enr HB0542 Enrolled LRB9101956PTpk 1 AN ACT concerning taxation. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Use Tax Act is amended by changing 5 Section 3-5 as follows: 6 (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5) 7 Sec. 3-5. Exemptions. Use of the following tangible 8 personal property is exempt from the tax imposed by this Act: 9 (1) Personal property purchased from a corporation, 10 society, association, foundation, institution, or 11 organization, other than a limited liability company, that is 12 organized and operated as a not-for-profit service enterprise 13 for the benefit of persons 65 years of age or older if the 14 personal property was not purchased by the enterprise for the 15 purpose of resale by the enterprise. 16 (2) Personal property purchased by a not-for-profit 17 Illinois county fair association for use in conducting, 18 operating, or promoting the county fair. 19 (3) Personal property purchased by a not-for-profit 20 music or dramatic arts organization that establishes, by 21 proof required by the Department by rule, that it has 22 received an exemption under Section 501(c)(3) of the Internal 23 Revenue Code and that is organized and operated for the 24 presentation of live public performances of musical or 25 theatrical works on a regular basis. 26 (4) Personal property purchased by a governmental body, 27 by a corporation, society, association, foundation, or 28 institution organized and operated exclusively for 29 charitable, religious, or educational purposes, or by a 30 not-for-profit corporation, society, association, foundation, 31 institution, or organization that has no compensated officers HB0542 Enrolled -2- LRB9101956PTpk 1 or employees and that is organized and operated primarily for 2 the recreation of persons 55 years of age or older. A limited 3 liability company may qualify for the exemption under this 4 paragraph only if the limited liability company is organized 5 and operated exclusively for educational purposes. On and 6 after July 1, 1987, however, no entity otherwise eligible for 7 this exemption shall make tax-free purchases unless it has an 8 active exemption identification number issued by the 9 Department. 10 (5) A passenger car that is a replacement vehicle to the 11 extent that the purchase price of the car is subject to the 12 Replacement Vehicle Tax. 13 (6) Graphic arts machinery and equipment, including 14 repair and replacement parts, both new and used, and 15 including that manufactured on special order, certified by 16 the purchaser to be used primarily for graphic arts 17 production, and including machinery and equipment purchased 18 for lease. 19 (7) Farm chemicals. 20 (8) Legal tender, currency, medallions, or gold or 21 silver coinage issued by the State of Illinois, the 22 government of the United States of America, or the government 23 of any foreign country, and bullion. 24 (9) Personal property purchased from a teacher-sponsored 25 student organization affiliated with an elementary or 26 secondary school located in Illinois. 27 (10) A motor vehicle of the first division, a motor 28 vehicle of the second division that is a self-contained motor 29 vehicle designed or permanently converted to provide living 30 quarters for recreational, camping, or travel use, with 31 direct walk through to the living quarters from the driver's 32 seat, or a motor vehicle of the second division that is of 33 the van configuration designed for the transportation of not 34 less than 7 nor more than 16 passengers, as defined in HB0542 Enrolled -3- LRB9101956PTpk 1 Section 1-146 of the Illinois Vehicle Code, that is used for 2 automobile renting, as defined in the Automobile Renting 3 Occupation and Use Tax Act. 4 (11) Farm machinery and equipment, both new and used, 5 including that manufactured on special order, certified by 6 the purchaser to be used primarily for production agriculture 7 or State or federal agricultural programs, including 8 individual replacement parts for the machinery and equipment, 9 including machinery and equipment purchased for lease, and 10 including implements of husbandry defined in Section 1-130 of 11 the Illinois Vehicle Code, farm machinery and agricultural 12 chemical and fertilizer spreaders, and nurse wagons required 13 to be registered under Section 3-809 of the Illinois Vehicle 14 Code, but excluding other motor vehicles required to be 15 registered under the Illinois Vehicle Code. Horticultural 16 polyhouses or hoop houses used for propagating, growing, or 17 overwintering plants shall be considered farm machinery and 18 equipment under this item (11). Agricultural chemical tender 19 tanks and dry boxes shall include units sold separately from 20 a motor vehicle required to be licensed and units sold 21 mounted on a motor vehicle required to be licensed if the 22 selling price of the tender is separately stated. 23 Farm machinery and equipment shall include precision 24 farming equipment that is installed or purchased to be 25 installed on farm machinery and equipment including, but not 26 limited to, tractors, harvesters, sprayers, planters, 27 seeders, or spreaders. Precision farming equipment includes, 28 but is not limited to, soil testing sensors, computers, 29 monitors, software, global positioning and mapping systems, 30 and other such equipment. 31 Farm machinery and equipment also includes computers, 32 sensors, software, and related equipment used primarily in 33 the computer-assisted operation of production agriculture 34 facilities, equipment, and activities such as, but not HB0542 Enrolled -4- LRB9101956PTpk 1 limited to, the collection, monitoring, and correlation of 2 animal and crop data for the purpose of formulating animal 3 diets and agricultural chemicals. This item (11) is exempt 4 from the provisions of Section 3-90. 5 (12) Fuel and petroleum products sold to or used by an 6 air common carrier, certified by the carrier to be used for 7 consumption, shipment, or storage in the conduct of its 8 business as an air common carrier, for a flight destined for 9 or returning from a location or locations outside the United 10 States without regard to previous or subsequent domestic 11 stopovers. 12 (13) Proceeds of mandatory service charges separately 13 stated on customers' bills for the purchase and consumption 14 of food and beverages purchased at retail from a retailer, to 15 the extent that the proceeds of the service charge are in 16 fact turned over as tips or as a substitute for tips to the 17 employees who participate directly in preparing, serving, 18 hosting or cleaning up the food or beverage function with 19 respect to which the service charge is imposed. 20 (14) Oil field exploration, drilling, and production 21 equipment, including (i) rigs and parts of rigs, rotary rigs, 22 cable tool rigs, and workover rigs, (ii) pipe and tubular 23 goods, including casing and drill strings, (iii) pumps and 24 pump-jack units, (iv) storage tanks and flow lines, (v) any 25 individual replacement part for oil field exploration, 26 drilling, and production equipment, and (vi) machinery and 27 equipment purchased for lease; but excluding motor vehicles 28 required to be registered under the Illinois Vehicle Code. 29 (15) Photoprocessing machinery and equipment, including 30 repair and replacement parts, both new and used, including 31 that manufactured on special order, certified by the 32 purchaser to be used primarily for photoprocessing, and 33 including photoprocessing machinery and equipment purchased 34 for lease. HB0542 Enrolled -5- LRB9101956PTpk 1 (16) Coal exploration, mining, offhighway hauling, 2 processing, maintenance, and reclamation equipment, including 3 replacement parts and equipment, and including equipment 4 purchased for lease, but excluding motor vehicles required to 5 be registered under the Illinois Vehicle Code. 6 (17) Distillation machinery and equipment, sold as a 7 unit or kit, assembled or installed by the retailer, 8 certified by the user to be used only for the production of 9 ethyl alcohol that will be used for consumption as motor fuel 10 or as a component of motor fuel for the personal use of the 11 user, and not subject to sale or resale. 12 (18) Manufacturing and assembling machinery and 13 equipment used primarily in the process of manufacturing or 14 assembling tangible personal property for wholesale or retail 15 sale or lease, whether that sale or lease is made directly by 16 the manufacturer or by some other person, whether the 17 materials used in the process are owned by the manufacturer 18 or some other person, or whether that sale or lease is made 19 apart from or as an incident to the seller's engaging in the 20 service occupation of producing machines, tools, dies, jigs, 21 patterns, gauges, or other similar items of no commercial 22 value on special order for a particular purchaser. 23 (19) Personal property delivered to a purchaser or 24 purchaser's donee inside Illinois when the purchase order for 25 that personal property was received by a florist located 26 outside Illinois who has a florist located inside Illinois 27 deliver the personal property. 28 (20) Semen used for artificial insemination of livestock 29 for direct agricultural production. 30 (21) Horses, or interests in horses, registered with and 31 meeting the requirements of any of the Arabian Horse Club 32 Registry of America, Appaloosa Horse Club, American Quarter 33 Horse Association, United States Trotting Association, or 34 Jockey Club, as appropriate, used for purposes of breeding or HB0542 Enrolled -6- LRB9101956PTpk 1 racing for prizes. 2 (22) Computers and communications equipment utilized for 3 any hospital purpose and equipment used in the diagnosis, 4 analysis, or treatment of hospital patients purchased by a 5 lessor who leases the equipment, under a lease of one year or 6 longer executed or in effect at the time the lessor would 7 otherwise be subject to the tax imposed by this Act, to a 8 hospital that has been issued an active tax exemption 9 identification number by the Department under Section 1g of 10 the Retailers' Occupation Tax Act. If the equipment is 11 leased in a manner that does not qualify for this exemption 12 or is used in any other non-exempt manner, the lessor shall 13 be liable for the tax imposed under this Act or the Service 14 Use Tax Act, as the case may be, based on the fair market 15 value of the property at the time the non-qualifying use 16 occurs. No lessor shall collect or attempt to collect an 17 amount (however designated) that purports to reimburse that 18 lessor for the tax imposed by this Act or the Service Use Tax 19 Act, as the case may be, if the tax has not been paid by the 20 lessor. If a lessor improperly collects any such amount from 21 the lessee, the lessee shall have a legal right to claim a 22 refund of that amount from the lessor. If, however, that 23 amount is not refunded to the lessee for any reason, the 24 lessor is liable to pay that amount to the Department. 25 (23) Personal property purchased by a lessor who leases 26 the property, under a lease of one year or longer executed 27 or in effect at the time the lessor would otherwise be 28 subject to the tax imposed by this Act, to a governmental 29 body that has been issued an active sales tax exemption 30 identification number by the Department under Section 1g of 31 the Retailers' Occupation Tax Act. If the property is leased 32 in a manner that does not qualify for this exemption or used 33 in any other non-exempt manner, the lessor shall be liable 34 for the tax imposed under this Act or the Service Use Tax HB0542 Enrolled -7- LRB9101956PTpk 1 Act, as the case may be, based on the fair market value of 2 the property at the time the non-qualifying use occurs. No 3 lessor shall collect or attempt to collect an amount (however 4 designated) that purports to reimburse that lessor for the 5 tax imposed by this Act or the Service Use Tax Act, as the 6 case may be, if the tax has not been paid by the lessor. If 7 a lessor improperly collects any such amount from the lessee, 8 the lessee shall have a legal right to claim a refund of that 9 amount from the lessor. If, however, that amount is not 10 refunded to the lessee for any reason, the lessor is liable 11 to pay that amount to the Department. 12 (24) Beginning with taxable years ending on or after 13 December 31, 1995 and ending with taxable years ending on or 14 before December 31, 2004, personal property that is donated 15 for disaster relief to be used in a State or federally 16 declared disaster area in Illinois or bordering Illinois by a 17 manufacturer or retailer that is registered in this State to 18 a corporation, society, association, foundation, or 19 institution that has been issued a sales tax exemption 20 identification number by the Department that assists victims 21 of the disaster who reside within the declared disaster area. 22 (25) Beginning with taxable years ending on or after 23 December 31, 1995 and ending with taxable years ending on or 24 before December 31, 2004, personal property that is used in 25 the performance of infrastructure repairs in this State, 26 including but not limited to municipal roads and streets, 27 access roads, bridges, sidewalks, waste disposal systems, 28 water and sewer line extensions, water distribution and 29 purification facilities, storm water drainage and retention 30 facilities, and sewage treatment facilities, resulting from a 31 State or federally declared disaster in Illinois or bordering 32 Illinois when such repairs are initiated on facilities 33 located in the declared disaster area within 6 months after 34 the disaster. HB0542 Enrolled -8- LRB9101956PTpk 1 (26) A motor vehicle, as that term is defined in Section 2 1-146 of the Illinois Vehicle Code, that is donated to a 3 corporation, limited liability company, society, association, 4 foundation, or institution that is determined by the 5 Department to be organized and operated exclusively for 6 educational purposes. For purposes of this exemption, "a 7 corporation, limited liability company, society, association, 8 foundation, or institution organized and operated exclusively 9 for educational purposes" means all tax-supported public 10 schools, private schools that offer systematic instruction in 11 useful branches of learning by methods common to public 12 schools and that compare favorably in their scope and 13 intensity with the course of study presented in tax-supported 14 schools, and vocational or technical schools or institutes 15 organized and operated exclusively to provide a course of 16 study of not less than 6 weeks duration and designed to 17 prepare individuals to follow a trade or to pursue a manual, 18 technical, mechanical, industrial, business, or commercial 19 occupation. 20 (27) Beginning January 1, 2000, personal property, 21 including food, purchased through fundraising events for the 22 benefit of a public or private elementary or secondary 23 school, a group of those schools, or one or more school 24 districts if the events are sponsored by an entity recognized 25 by the school district that consists primarily of volunteers 26 and includes parents and teachers of the school children. 27 This paragraph does not apply to fundraising events (i) for 28 the benefit of private home instruction or (ii) for which the 29 fundraising entity purchases the personal property sold at 30 the events from another individual or entity that sold the 31 property for the purpose of resale by the fundraising entity 32 and that profits from the sale to the fundraising entity. 33 This paragraph is exempt from the provisions of Section 3-90. 34 HB0542 Enrolled -9- LRB9101956PTpk 1 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 2 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 3 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552, 4 eff. 12-12-97; 90-605, eff. 6-30-98.) 5 Section 10. The Service Use Tax Act is amended by 6 changing Section 3-5 as follows: 7 (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5) 8 Sec. 3-5. Exemptions. Use of the following tangible 9 personal property is exempt from the tax imposed by this Act: 10 (1) Personal property purchased from a corporation, 11 society, association, foundation, institution, or 12 organization, other than a limited liability company, that is 13 organized and operated as a not-for-profit service enterprise 14 for the benefit of persons 65 years of age or older if the 15 personal property was not purchased by the enterprise for the 16 purpose of resale by the enterprise. 17 (2) Personal property purchased by a non-profit Illinois 18 county fair association for use in conducting, operating, or 19 promoting the county fair. 20 (3) Personal property purchased by a not-for-profit 21 music or dramatic arts organization that establishes, by 22 proof required by the Department by rule, that it has 23 received an exemption under Section 501(c)(3) of the Internal 24 Revenue Code and that is organized and operated for the 25 presentation of live public performances of musical or 26 theatrical works on a regular basis. 27 (4) Legal tender, currency, medallions, or gold or 28 silver coinage issued by the State of Illinois, the 29 government of the United States of America, or the government 30 of any foreign country, and bullion. 31 (5) Graphic arts machinery and equipment, including 32 repair and replacement parts, both new and used, and HB0542 Enrolled -10- LRB9101956PTpk 1 including that manufactured on special order or purchased for 2 lease, certified by the purchaser to be used primarily for 3 graphic arts production. 4 (6) Personal property purchased from a teacher-sponsored 5 student organization affiliated with an elementary or 6 secondary school located in Illinois. 7 (7) Farm machinery and equipment, both new and used, 8 including that manufactured on special order, certified by 9 the purchaser to be used primarily for production agriculture 10 or State or federal agricultural programs, including 11 individual replacement parts for the machinery and equipment, 12 including machinery and equipment purchased for lease, and 13 including implements of husbandry defined in Section 1-130 of 14 the Illinois Vehicle Code, farm machinery and agricultural 15 chemical and fertilizer spreaders, and nurse wagons required 16 to be registered under Section 3-809 of the Illinois Vehicle 17 Code, but excluding other motor vehicles required to be 18 registered under the Illinois Vehicle Code. Horticultural 19 polyhouses or hoop houses used for propagating, growing, or 20 overwintering plants shall be considered farm machinery and 21 equipment under this item (7). Agricultural chemical tender 22 tanks and dry boxes shall include units sold separately from 23 a motor vehicle required to be licensed and units sold 24 mounted on a motor vehicle required to be licensed if the 25 selling price of the tender is separately stated. 26 Farm machinery and equipment shall include precision 27 farming equipment that is installed or purchased to be 28 installed on farm machinery and equipment including, but not 29 limited to, tractors, harvesters, sprayers, planters, 30 seeders, or spreaders. Precision farming equipment includes, 31 but is not limited to, soil testing sensors, computers, 32 monitors, software, global positioning and mapping systems, 33 and other such equipment. 34 Farm machinery and equipment also includes computers, HB0542 Enrolled -11- LRB9101956PTpk 1 sensors, software, and related equipment used primarily in 2 the computer-assisted operation of production agriculture 3 facilities, equipment, and activities such as, but not 4 limited to, the collection, monitoring, and correlation of 5 animal and crop data for the purpose of formulating animal 6 diets and agricultural chemicals. This item (7) is exempt 7 from the provisions of Section 3-75. 8 (8) Fuel and petroleum products sold to or used by an 9 air common carrier, certified by the carrier to be used for 10 consumption, shipment, or storage in the conduct of its 11 business as an air common carrier, for a flight destined for 12 or returning from a location or locations outside the United 13 States without regard to previous or subsequent domestic 14 stopovers. 15 (9) Proceeds of mandatory service charges separately 16 stated on customers' bills for the purchase and consumption 17 of food and beverages acquired as an incident to the purchase 18 of a service from a serviceman, to the extent that the 19 proceeds of the service charge are in fact turned over as 20 tips or as a substitute for tips to the employees who 21 participate directly in preparing, serving, hosting or 22 cleaning up the food or beverage function with respect to 23 which the service charge is imposed. 24 (10) Oil field exploration, drilling, and production 25 equipment, including (i) rigs and parts of rigs, rotary rigs, 26 cable tool rigs, and workover rigs, (ii) pipe and tubular 27 goods, including casing and drill strings, (iii) pumps and 28 pump-jack units, (iv) storage tanks and flow lines, (v) any 29 individual replacement part for oil field exploration, 30 drilling, and production equipment, and (vi) machinery and 31 equipment purchased for lease; but excluding motor vehicles 32 required to be registered under the Illinois Vehicle Code. 33 (11) Proceeds from the sale of photoprocessing machinery 34 and equipment, including repair and replacement parts, both HB0542 Enrolled -12- LRB9101956PTpk 1 new and used, including that manufactured on special order, 2 certified by the purchaser to be used primarily for 3 photoprocessing, and including photoprocessing machinery and 4 equipment purchased for lease. 5 (12) Coal exploration, mining, offhighway hauling, 6 processing, maintenance, and reclamation equipment, including 7 replacement parts and equipment, and including equipment 8 purchased for lease, but excluding motor vehicles required to 9 be registered under the Illinois Vehicle Code. 10 (13) Semen used for artificial insemination of livestock 11 for direct agricultural production. 12 (14) Horses, or interests in horses, registered with and 13 meeting the requirements of any of the Arabian Horse Club 14 Registry of America, Appaloosa Horse Club, American Quarter 15 Horse Association, United States Trotting Association, or 16 Jockey Club, as appropriate, used for purposes of breeding or 17 racing for prizes. 18 (15) Computers and communications equipment utilized for 19 any hospital purpose and equipment used in the diagnosis, 20 analysis, or treatment of hospital patients purchased by a 21 lessor who leases the equipment, under a lease of one year or 22 longer executed or in effect at the time the lessor would 23 otherwise be subject to the tax imposed by this Act, to a 24 hospital that has been issued an active tax exemption 25 identification number by the Department under Section 1g of 26 the Retailers' Occupation Tax Act. If the equipment is leased 27 in a manner that does not qualify for this exemption or is 28 used in any other non-exempt manner, the lessor shall be 29 liable for the tax imposed under this Act or the Use Tax Act, 30 as the case may be, based on the fair market value of the 31 property at the time the non-qualifying use occurs. No 32 lessor shall collect or attempt to collect an amount (however 33 designated) that purports to reimburse that lessor for the 34 tax imposed by this Act or the Use Tax Act, as the case may HB0542 Enrolled -13- LRB9101956PTpk 1 be, if the tax has not been paid by the lessor. If a lessor 2 improperly collects any such amount from the lessee, the 3 lessee shall have a legal right to claim a refund of that 4 amount from the lessor. If, however, that amount is not 5 refunded to the lessee for any reason, the lessor is liable 6 to pay that amount to the Department. 7 (16) Personal property purchased by a lessor who leases 8 the property, under a lease of one year or longer executed or 9 in effect at the time the lessor would otherwise be subject 10 to the tax imposed by this Act, to a governmental body that 11 has been issued an active tax exemption identification number 12 by the Department under Section 1g of the Retailers' 13 Occupation Tax Act. If the property is leased in a manner 14 that does not qualify for this exemption or is used in any 15 other non-exempt manner, the lessor shall be liable for the 16 tax imposed under this Act or the Use Tax Act, as the case 17 may be, based on the fair market value of the property at the 18 time the non-qualifying use occurs. No lessor shall collect 19 or attempt to collect an amount (however designated) that 20 purports to reimburse that lessor for the tax imposed by this 21 Act or the Use Tax Act, as the case may be, if the tax has 22 not been paid by the lessor. If a lessor improperly collects 23 any such amount from the lessee, the lessee shall have a 24 legal right to claim a refund of that amount from the lessor. 25 If, however, that amount is not refunded to the lessee for 26 any reason, the lessor is liable to pay that amount to the 27 Department. 28 (17) Beginning with taxable years ending on or after 29 December 31, 1995 and ending with taxable years ending on or 30 before December 31, 2004, personal property that is donated 31 for disaster relief to be used in a State or federally 32 declared disaster area in Illinois or bordering Illinois by a 33 manufacturer or retailer that is registered in this State to 34 a corporation, society, association, foundation, or HB0542 Enrolled -14- LRB9101956PTpk 1 institution that has been issued a sales tax exemption 2 identification number by the Department that assists victims 3 of the disaster who reside within the declared disaster area. 4 (18) Beginning with taxable years ending on or after 5 December 31, 1995 and ending with taxable years ending on or 6 before December 31, 2004, personal property that is used in 7 the performance of infrastructure repairs in this State, 8 including but not limited to municipal roads and streets, 9 access roads, bridges, sidewalks, waste disposal systems, 10 water and sewer line extensions, water distribution and 11 purification facilities, storm water drainage and retention 12 facilities, and sewage treatment facilities, resulting from a 13 State or federally declared disaster in Illinois or bordering 14 Illinois when such repairs are initiated on facilities 15 located in the declared disaster area within 6 months after 16 the disaster. 17 (19) A motor vehicle, as that term is defined in Section 18 1-146 of the Illinois Vehicle Code, that is donated to a 19 corporation, limited liability company, society, association, 20 foundation, or institution that is determined by the 21 Department to be organized and operated exclusively for 22 educational purposes. For purposes of this exemption, "a 23 corporation, limited liability company, society, association, 24 foundation, or institution organized and operated exclusively 25 for educational purposes" means all tax-supported public 26 schools, private schools that offer systematic instruction in 27 useful branches of learning by methods common to public 28 schools and that compare favorably in their scope and 29 intensity with the course of study presented in tax-supported 30 schools, and vocational or technical schools or institutes 31 organized and operated exclusively to provide a course of 32 study of not less than 6 weeks duration and designed to 33 prepare individuals to follow a trade or to pursue a manual, 34 technical, mechanical, industrial, business, or commercial HB0542 Enrolled -15- LRB9101956PTpk 1 occupation. 2 (20) Beginning January 1, 2000, personal property, 3 including food, purchased through fundraising events for the 4 benefit of a public or private elementary or secondary 5 school, a group of those schools, or one or more school 6 districts if the events are sponsored by an entity recognized 7 by the school district that consists primarily of volunteers 8 and includes parents and teachers of the school children. 9 This paragraph does not apply to fundraising events (i) for 10 the benefit of private home instruction or (ii) for which the 11 fundraising entity purchases the personal property sold at 12 the events from another individual or entity that sold the 13 property for the purpose of resale by the fundraising entity 14 and that profits from the sale to the fundraising entity. 15 This paragraph is exempt from the provisions of Section 3-75. 16 17 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 18 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 19 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552, 20 eff. 12-12-97; 90-605, eff. 6-30-98.) 21 Section 15. The Service Occupation Tax Act is amended by 22 changing Section 3-5 as follows: 23 (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5) 24 Sec. 3-5. Exemptions. The following tangible personal 25 property is exempt from the tax imposed by this Act: 26 (1) Personal property sold by a corporation, society, 27 association, foundation, institution, or organization, other 28 than a limited liability company, that is organized and 29 operated as a not-for-profit service enterprise for the 30 benefit of persons 65 years of age or older if the personal 31 property was not purchased by the enterprise for the purpose 32 of resale by the enterprise. HB0542 Enrolled -16- LRB9101956PTpk 1 (2) Personal property purchased by a not-for-profit 2 Illinois county fair association for use in conducting, 3 operating, or promoting the county fair. 4 (3) Personal property purchased by any not-for-profit 5 music or dramatic arts organization that establishes, by 6 proof required by the Department by rule, that it has 7 received an exemption under Section 501(c)(3) of the 8 Internal Revenue Code and that is organized and operated for 9 the presentation of live public performances of musical or 10 theatrical works on a regular basis. 11 (4) Legal tender, currency, medallions, or gold or 12 silver coinage issued by the State of Illinois, the 13 government of the United States of America, or the government 14 of any foreign country, and bullion. 15 (5) Graphic arts machinery and equipment, including 16 repair and replacement parts, both new and used, and 17 including that manufactured on special order or purchased for 18 lease, certified by the purchaser to be used primarily for 19 graphic arts production. 20 (6) Personal property sold by a teacher-sponsored 21 student organization affiliated with an elementary or 22 secondary school located in Illinois. 23 (7) Farm machinery and equipment, both new and used, 24 including that manufactured on special order, certified by 25 the purchaser to be used primarily for production agriculture 26 or State or federal agricultural programs, including 27 individual replacement parts for the machinery and equipment, 28 including machinery and equipment purchased for lease, and 29 including implements of husbandry defined in Section 1-130 of 30 the Illinois Vehicle Code, farm machinery and agricultural 31 chemical and fertilizer spreaders, and nurse wagons required 32 to be registered under Section 3-809 of the Illinois Vehicle 33 Code, but excluding other motor vehicles required to be 34 registered under the Illinois Vehicle Code. Horticultural HB0542 Enrolled -17- LRB9101956PTpk 1 polyhouses or hoop houses used for propagating, growing, or 2 overwintering plants shall be considered farm machinery and 3 equipment under this item (7). Agricultural chemical tender 4 tanks and dry boxes shall include units sold separately from 5 a motor vehicle required to be licensed and units sold 6 mounted on a motor vehicle required to be licensed if the 7 selling price of the tender is separately stated. 8 Farm machinery and equipment shall include precision 9 farming equipment that is installed or purchased to be 10 installed on farm machinery and equipment including, but not 11 limited to, tractors, harvesters, sprayers, planters, 12 seeders, or spreaders. Precision farming equipment includes, 13 but is not limited to, soil testing sensors, computers, 14 monitors, software, global positioning and mapping systems, 15 and other such equipment. 16 Farm machinery and equipment also includes computers, 17 sensors, software, and related equipment used primarily in 18 the computer-assisted operation of production agriculture 19 facilities, equipment, and activities such as, but not 20 limited to, the collection, monitoring, and correlation of 21 animal and crop data for the purpose of formulating animal 22 diets and agricultural chemicals. This item (7) is exempt 23 from the provisions of Section 3-553-75. 24 (8) Fuel and petroleum products sold to or used by an 25 air common carrier, certified by the carrier to be used for 26 consumption, shipment, or storage in the conduct of its 27 business as an air common carrier, for a flight destined for 28 or returning from a location or locations outside the United 29 States without regard to previous or subsequent domestic 30 stopovers. 31 (9) Proceeds of mandatory service charges separately 32 stated on customers' bills for the purchase and consumption 33 of food and beverages, to the extent that the proceeds of the 34 service charge are in fact turned over as tips or as a HB0542 Enrolled -18- LRB9101956PTpk 1 substitute for tips to the employees who participate directly 2 in preparing, serving, hosting or cleaning up the food or 3 beverage function with respect to which the service charge is 4 imposed. 5 (10) Oil field exploration, drilling, and production 6 equipment, including (i) rigs and parts of rigs, rotary rigs, 7 cable tool rigs, and workover rigs, (ii) pipe and tubular 8 goods, including casing and drill strings, (iii) pumps and 9 pump-jack units, (iv) storage tanks and flow lines, (v) any 10 individual replacement part for oil field exploration, 11 drilling, and production equipment, and (vi) machinery and 12 equipment purchased for lease; but excluding motor vehicles 13 required to be registered under the Illinois Vehicle Code. 14 (11) Photoprocessing machinery and equipment, including 15 repair and replacement parts, both new and used, including 16 that manufactured on special order, certified by the 17 purchaser to be used primarily for photoprocessing, and 18 including photoprocessing machinery and equipment purchased 19 for lease. 20 (12) Coal exploration, mining, offhighway hauling, 21 processing, maintenance, and reclamation equipment, including 22 replacement parts and equipment, and including equipment 23 purchased for lease, but excluding motor vehicles required to 24 be registered under the Illinois Vehicle Code. 25 (13) Food for human consumption that is to be consumed 26 off the premises where it is sold (other than alcoholic 27 beverages, soft drinks and food that has been prepared for 28 immediate consumption) and prescription and non-prescription 29 medicines, drugs, medical appliances, and insulin, urine 30 testing materials, syringes, and needles used by diabetics, 31 for human use, when purchased for use by a person receiving 32 medical assistance under Article 5 of the Illinois Public Aid 33 Code who resides in a licensed long-term care facility, as 34 defined in the Nursing Home Care Act. HB0542 Enrolled -19- LRB9101956PTpk 1 (14) Semen used for artificial insemination of livestock 2 for direct agricultural production. 3 (15) Horses, or interests in horses, registered with and 4 meeting the requirements of any of the Arabian Horse Club 5 Registry of America, Appaloosa Horse Club, American Quarter 6 Horse Association, United States Trotting Association, or 7 Jockey Club, as appropriate, used for purposes of breeding or 8 racing for prizes. 9 (16) Computers and communications equipment utilized for 10 any hospital purpose and equipment used in the diagnosis, 11 analysis, or treatment of hospital patients sold to a lessor 12 who leases the equipment, under a lease of one year or longer 13 executed or in effect at the time of the purchase, to a 14 hospital that has been issued an active tax exemption 15 identification number by the Department under Section 1g of 16 the Retailers' Occupation Tax Act. 17 (17) Personal property sold to a lessor who leases the 18 property, under a lease of one year or longer executed or in 19 effect at the time of the purchase, to a governmental body 20 that has been issued an active tax exemption identification 21 number by the Department under Section 1g of the Retailers' 22 Occupation Tax Act. 23 (18) Beginning with taxable years ending on or after 24 December 31, 1995 and ending with taxable years ending on or 25 before December 31, 2004, personal property that is donated 26 for disaster relief to be used in a State or federally 27 declared disaster area in Illinois or bordering Illinois by a 28 manufacturer or retailer that is registered in this State to 29 a corporation, society, association, foundation, or 30 institution that has been issued a sales tax exemption 31 identification number by the Department that assists victims 32 of the disaster who reside within the declared disaster area. 33 (19) Beginning with taxable years ending on or after 34 December 31, 1995 and ending with taxable years ending on or HB0542 Enrolled -20- LRB9101956PTpk 1 before December 31, 2004, personal property that is used in 2 the performance of infrastructure repairs in this State, 3 including but not limited to municipal roads and streets, 4 access roads, bridges, sidewalks, waste disposal systems, 5 water and sewer line extensions, water distribution and 6 purification facilities, storm water drainage and retention 7 facilities, and sewage treatment facilities, resulting from a 8 State or federally declared disaster in Illinois or bordering 9 Illinois when such repairs are initiated on facilities 10 located in the declared disaster area within 6 months after 11 the disaster. 12 (20) A motor vehicle, as that term is defined in Section 13 1-146 of the Illinois Vehicle Code, that is donated to a 14 corporation, limited liability company, society, association, 15 foundation, or institution that is determined by the 16 Department to be organized and operated exclusively for 17 educational purposes. For purposes of this exemption, "a 18 corporation, limited liability company, society, association, 19 foundation, or institution organized and operated exclusively 20 for educational purposes" means all tax-supported public 21 schools, private schools that offer systematic instruction in 22 useful branches of learning by methods common to public 23 schools and that compare favorably in their scope and 24 intensity with the course of study presented in tax-supported 25 schools, and vocational or technical schools or institutes 26 organized and operated exclusively to provide a course of 27 study of not less than 6 weeks duration and designed to 28 prepare individuals to follow a trade or to pursue a manual, 29 technical, mechanical, industrial, business, or commercial 30 occupation. 31 (21) Beginning January 1, 2000, personal property, 32 including food, purchased through fundraising events for the 33 benefit of a public or private elementary or secondary 34 school, a group of those schools, or one or more school HB0542 Enrolled -21- LRB9101956PTpk 1 districts if the events are sponsored by an entity recognized 2 by the school district that consists primarily of volunteers 3 and includes parents and teachers of the school children. 4 This paragraph does not apply to fundraising events (i) for 5 the benefit of private home instruction or (ii) for which the 6 fundraising entity purchases the personal property sold at 7 the events from another individual or entity that sold the 8 property for the purpose of resale by the fundraising entity 9 and that profits from the sale to the fundraising entity. 10 This paragraph is exempt from the provisions of Section 3-55. 11 12 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 13 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 14 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552, 15 eff. 12-12-97; 90-605, eff. 6-30-98; revised 2-10-99.) 16 Section 20. The Retailers' Occupation Tax Act is amended 17 by changing Section 2-5 as follows: 18 (35 ILCS 120/2-5) (from Ch. 120, par. 441-5) 19 Sec. 2-5. Exemptions. Gross receipts from proceeds from 20 the sale of the following tangible personal property are 21 exempt from the tax imposed by this Act: 22 (1) Farm chemicals. 23 (2) Farm machinery and equipment, both new and used, 24 including that manufactured on special order, certified by 25 the purchaser to be used primarily for production agriculture 26 or State or federal agricultural programs, including 27 individual replacement parts for the machinery and equipment, 28 including machinery and equipment purchased for lease, and 29 including implements of husbandry defined in Section 1-130 of 30 the Illinois Vehicle Code, farm machinery and agricultural 31 chemical and fertilizer spreaders, and nurse wagons required 32 to be registered under Section 3-809 of the Illinois Vehicle HB0542 Enrolled -22- LRB9101956PTpk 1 Code, but excluding other motor vehicles required to be 2 registered under the Illinois Vehicle Code. Horticultural 3 polyhouses or hoop houses used for propagating, growing, or 4 overwintering plants shall be considered farm machinery and 5 equipment under this item (2). Agricultural chemical tender 6 tanks and dry boxes shall include units sold separately from 7 a motor vehicle required to be licensed and units sold 8 mounted on a motor vehicle required to be licensed, if the 9 selling price of the tender is separately stated. 10 Farm machinery and equipment shall include precision 11 farming equipment that is installed or purchased to be 12 installed on farm machinery and equipment including, but not 13 limited to, tractors, harvesters, sprayers, planters, 14 seeders, or spreaders. Precision farming equipment includes, 15 but is not limited to, soil testing sensors, computers, 16 monitors, software, global positioning and mapping systems, 17 and other such equipment. 18 Farm machinery and equipment also includes computers, 19 sensors, software, and related equipment used primarily in 20 the computer-assisted operation of production agriculture 21 facilities, equipment, and activities such as, but not 22 limited to, the collection, monitoring, and correlation of 23 animal and crop data for the purpose of formulating animal 24 diets and agricultural chemicals. This item (7) is exempt 25 from the provisions of Section 2-703-75. 26 (3) Distillation machinery and equipment, sold as a unit 27 or kit, assembled or installed by the retailer, certified by 28 the user to be used only for the production of ethyl alcohol 29 that will be used for consumption as motor fuel or as a 30 component of motor fuel for the personal use of the user, and 31 not subject to sale or resale. 32 (4) Graphic arts machinery and equipment, including 33 repair and replacement parts, both new and used, and 34 including that manufactured on special order or purchased for HB0542 Enrolled -23- LRB9101956PTpk 1 lease, certified by the purchaser to be used primarily for 2 graphic arts production. 3 (5) A motor vehicle of the first division, a motor 4 vehicle of the second division that is a self-contained motor 5 vehicle designed or permanently converted to provide living 6 quarters for recreational, camping, or travel use, with 7 direct walk through access to the living quarters from the 8 driver's seat, or a motor vehicle of the second division that 9 is of the van configuration designed for the transportation 10 of not less than 7 nor more than 16 passengers, as defined in 11 Section 1-146 of the Illinois Vehicle Code, that is used for 12 automobile renting, as defined in the Automobile Renting 13 Occupation and Use Tax Act. 14 (6) Personal property sold by a teacher-sponsored 15 student organization affiliated with an elementary or 16 secondary school located in Illinois. 17 (7) Proceeds of that portion of the selling price of a 18 passenger car the sale of which is subject to the Replacement 19 Vehicle Tax. 20 (8) Personal property sold to an Illinois county fair 21 association for use in conducting, operating, or promoting 22 the county fair. 23 (9) Personal property sold to a not-for-profit music or 24 dramatic arts organization that establishes, by proof 25 required by the Department by rule, that it has received an 26 exemption under Section 501(c) (3) of the Internal Revenue 27 Code and that is organized and operated for the presentation 28 of live public performances of musical or theatrical works on 29 a regular basis. 30 (10) Personal property sold by a corporation, society, 31 association, foundation, institution, or organization, other 32 than a limited liability company, that is organized and 33 operated as a not-for-profit service enterprise for the 34 benefit of persons 65 years of age or older if the personal HB0542 Enrolled -24- LRB9101956PTpk 1 property was not purchased by the enterprise for the purpose 2 of resale by the enterprise. 3 (11) Personal property sold to a governmental body, to a 4 corporation, society, association, foundation, or institution 5 organized and operated exclusively for charitable, religious, 6 or educational purposes, or to a not-for-profit corporation, 7 society, association, foundation, institution, or 8 organization that has no compensated officers or employees 9 and that is organized and operated primarily for the 10 recreation of persons 55 years of age or older. A limited 11 liability company may qualify for the exemption under this 12 paragraph only if the limited liability company is organized 13 and operated exclusively for educational purposes. On and 14 after July 1, 1987, however, no entity otherwise eligible for 15 this exemption shall make tax-free purchases unless it has an 16 active identification number issued by the Department. 17 (12) Personal property sold to interstate carriers for 18 hire for use as rolling stock moving in interstate commerce 19 or to lessors under leases of one year or longer executed or 20 in effect at the time of purchase by interstate carriers for 21 hire for use as rolling stock moving in interstate commerce 22 and equipment operated by a telecommunications provider, 23 licensed as a common carrier by the Federal Communications 24 Commission, which is permanently installed in or affixed to 25 aircraft moving in interstate commerce. 26 (13) Proceeds from sales to owners, lessors, or shippers 27 of tangible personal property that is utilized by interstate 28 carriers for hire for use as rolling stock moving in 29 interstate commerce and equipment operated by a 30 telecommunications provider, licensed as a common carrier by 31 the Federal Communications Commission, which is permanently 32 installed in or affixed to aircraft moving in interstate 33 commerce. 34 (14) Machinery and equipment that will be used by the HB0542 Enrolled -25- LRB9101956PTpk 1 purchaser, or a lessee of the purchaser, primarily in the 2 process of manufacturing or assembling tangible personal 3 property for wholesale or retail sale or lease, whether the 4 sale or lease is made directly by the manufacturer or by some 5 other person, whether the materials used in the process are 6 owned by the manufacturer or some other person, or whether 7 the sale or lease is made apart from or as an incident to the 8 seller's engaging in the service occupation of producing 9 machines, tools, dies, jigs, patterns, gauges, or other 10 similar items of no commercial value on special order for a 11 particular purchaser. 12 (15) Proceeds of mandatory service charges separately 13 stated on customers' bills for purchase and consumption of 14 food and beverages, to the extent that the proceeds of the 15 service charge are in fact turned over as tips or as a 16 substitute for tips to the employees who participate directly 17 in preparing, serving, hosting or cleaning up the food or 18 beverage function with respect to which the service charge is 19 imposed. 20 (16) Petroleum products sold to a purchaser if the 21 seller is prohibited by federal law from charging tax to the 22 purchaser. 23 (17) Tangible personal property sold to a common carrier 24 by rail or motor that receives the physical possession of the 25 property in Illinois and that transports the property, or 26 shares with another common carrier in the transportation of 27 the property, out of Illinois on a standard uniform bill of 28 lading showing the seller of the property as the shipper or 29 consignor of the property to a destination outside Illinois, 30 for use outside Illinois. 31 (18) Legal tender, currency, medallions, or gold or 32 silver coinage issued by the State of Illinois, the 33 government of the United States of America, or the government 34 of any foreign country, and bullion. HB0542 Enrolled -26- LRB9101956PTpk 1 (19) Oil field exploration, drilling, and production 2 equipment, including (i) rigs and parts of rigs, rotary rigs, 3 cable tool rigs, and workover rigs, (ii) pipe and tubular 4 goods, including casing and drill strings, (iii) pumps and 5 pump-jack units, (iv) storage tanks and flow lines, (v) any 6 individual replacement part for oil field exploration, 7 drilling, and production equipment, and (vi) machinery and 8 equipment purchased for lease; but excluding motor vehicles 9 required to be registered under the Illinois Vehicle Code. 10 (20) Photoprocessing machinery and equipment, including 11 repair and replacement parts, both new and used, including 12 that manufactured on special order, certified by the 13 purchaser to be used primarily for photoprocessing, and 14 including photoprocessing machinery and equipment purchased 15 for lease. 16 (21) Coal exploration, mining, offhighway hauling, 17 processing, maintenance, and reclamation equipment, including 18 replacement parts and equipment, and including equipment 19 purchased for lease, but excluding motor vehicles required to 20 be registered under the Illinois Vehicle Code. 21 (22) Fuel and petroleum products sold to or used by an 22 air carrier, certified by the carrier to be used for 23 consumption, shipment, or storage in the conduct of its 24 business as an air common carrier, for a flight destined for 25 or returning from a location or locations outside the United 26 States without regard to previous or subsequent domestic 27 stopovers. 28 (23) A transaction in which the purchase order is 29 received by a florist who is located outside Illinois, but 30 who has a florist located in Illinois deliver the property to 31 the purchaser or the purchaser's donee in Illinois. 32 (24) Fuel consumed or used in the operation of ships, 33 barges, or vessels that are used primarily in or for the 34 transportation of property or the conveyance of persons for HB0542 Enrolled -27- LRB9101956PTpk 1 hire on rivers bordering on this State if the fuel is 2 delivered by the seller to the purchaser's barge, ship, or 3 vessel while it is afloat upon that bordering river. 4 (25) A motor vehicle sold in this State to a nonresident 5 even though the motor vehicle is delivered to the nonresident 6 in this State, if the motor vehicle is not to be titled in 7 this State, and if a driveaway decal permit is issued to the 8 motor vehicle as provided in Section 3-603 of the Illinois 9 Vehicle Code or if the nonresident purchaser has vehicle 10 registration plates to transfer to the motor vehicle upon 11 returning to his or her home state. The issuance of the 12 driveaway decal permit or having the out-of-state 13 registration plates to be transferred is prima facie evidence 14 that the motor vehicle will not be titled in this State. 15 (26) Semen used for artificial insemination of livestock 16 for direct agricultural production. 17 (27) Horses, or interests in horses, registered with and 18 meeting the requirements of any of the Arabian Horse Club 19 Registry of America, Appaloosa Horse Club, American Quarter 20 Horse Association, United States Trotting Association, or 21 Jockey Club, as appropriate, used for purposes of breeding or 22 racing for prizes. 23 (28) Computers and communications equipment utilized for 24 any hospital purpose and equipment used in the diagnosis, 25 analysis, or treatment of hospital patients sold to a lessor 26 who leases the equipment, under a lease of one year or longer 27 executed or in effect at the time of the purchase, to a 28 hospital that has been issued an active tax exemption 29 identification number by the Department under Section 1g of 30 this Act. 31 (29) Personal property sold to a lessor who leases the 32 property, under a lease of one year or longer executed or in 33 effect at the time of the purchase, to a governmental body 34 that has been issued an active tax exemption identification HB0542 Enrolled -28- LRB9101956PTpk 1 number by the Department under Section 1g of this Act. 2 (30) Beginning with taxable years ending on or after 3 December 31, 1995 and ending with taxable years ending on or 4 before December 31, 2004, personal property that is donated 5 for disaster relief to be used in a State or federally 6 declared disaster area in Illinois or bordering Illinois by a 7 manufacturer or retailer that is registered in this State to 8 a corporation, society, association, foundation, or 9 institution that has been issued a sales tax exemption 10 identification number by the Department that assists victims 11 of the disaster who reside within the declared disaster area. 12 (31) Beginning with taxable years ending on or after 13 December 31, 1995 and ending with taxable years ending on or 14 before December 31, 2004, personal property that is used in 15 the performance of infrastructure repairs in this State, 16 including but not limited to municipal roads and streets, 17 access roads, bridges, sidewalks, waste disposal systems, 18 water and sewer line extensions, water distribution and 19 purification facilities, storm water drainage and retention 20 facilities, and sewage treatment facilities, resulting from a 21 State or federally declared disaster in Illinois or bordering 22 Illinois when such repairs are initiated on facilities 23 located in the declared disaster area within 6 months after 24 the disaster. 25 (32) A motor vehicle, as that term is defined in Section 26 1-146 of the Illinois Vehicle Code, that is donated to a 27 corporation, limited liability company, society, association, 28 foundation, or institution that is determined by the 29 Department to be organized and operated exclusively for 30 educational purposes. For purposes of this exemption, "a 31 corporation, limited liability company, society, association, 32 foundation, or institution organized and operated exclusively 33 for educational purposes" means all tax-supported public 34 schools, private schools that offer systematic instruction in HB0542 Enrolled -29- LRB9101956PTpk 1 useful branches of learning by methods common to public 2 schools and that compare favorably in their scope and 3 intensity with the course of study presented in tax-supported 4 schools, and vocational or technical schools or institutes 5 organized and operated exclusively to provide a course of 6 study of not less than 6 weeks duration and designed to 7 prepare individuals to follow a trade or to pursue a manual, 8 technical, mechanical, industrial, business, or commercial 9 occupation. 10 (33) Beginning January 1, 2000, personal property, 11 including food, purchased through fundraising events for the 12 benefit of a public or private elementary or secondary 13 school, a group of those schools, or one or more school 14 districts if the events are sponsored by an entity recognized 15 by the school district that consists primarily of volunteers 16 and includes parents and teachers of the school children. 17 This paragraph does not apply to fundraising events (i) for 18 the benefit of private home instruction or (ii) for which the 19 fundraising entity purchases the personal property sold at 20 the events from another individual or entity that sold the 21 property for the purpose of resale by the fundraising entity 22 and that profits from the sale to the fundraising entity. 23 This paragraph is exempt from the provisions of Section 2-70. 24 25 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 26 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 27 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-519, 28 eff. 6-1-98; 90-552, eff. 12-12-97; 90-605, eff. 6-30-98; 29 revised 2-10-99.) 30 Section 99. Effective date. This Act takes effect upon 31 becoming law.