Public Act 097-0688
 
SB2194 EnrolledLRB097 10235 HLH 50431 b

    AN ACT concerning revenue.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
ARTICLE 1. CIGARETTE MACHINE OPERATORS' OCCUPATION TAX ACT

 
    Section 1-1. Short title. This Act may be cited as the
Cigarette Machine Operators' Occupation Tax Act.
 
    Section 1-5. Definitions. As used in this Act:
    "Business" means any trade, occupation, activity or
enterprise engaged in for the purpose of selling cigarettes in
this State.
    "Cigarette" means any roll for smoking made wholly or in
part of tobacco, irrespective of size or shape and whether or
not such tobacco is flavored, adulterated or mixed with any
other ingredient, and the wrapper or cover of which is made of
paper or any other substance or material except tobacco.
    "Cigarette machine" means any machine, equipment or device
used to make or fabricate cigarettes.
    "Cigarette machine" shall not include a handheld manually
operated device used by consumers to make roll-your-own
cigarettes for personal consumption.
    "Cigarette machine operator" means any person who is
engaged in the business of operating a cigarette machine in
this State and is licensed by the Department as a cigarette
machine operator under Section 1-15 of this Act.
    "Contraband cigarettes" means:
        (1) cigarettes for which any required federal taxes
    have not been paid;
        (2) cigarettes that do not meet the requirements of
    this Act;
        (3) cigarettes that are made or fabricated by a person
    holding a cigarette machine operator license under Section
    1-15 of this Act and that are in the possession of
    manufacturers, distributors, secondary distributors,
    manufacturer representatives, or retailers, all as defined
    by the Cigarette Tax Act, for the purpose of resale;
        (4) cigarettes that are in the possession of a
    cigarette machine operator and that are made or fabricated
    with cigarette tubes that do not meet the requirements of
    Section 1-30 of this Act;
        (5) cigarettes that are in the possession of an
    individual and that are made or fabricated with cigarette
    tubes that do not meet the requirements of Section 1-30 of
    this Act, unless the cigarettes were made or fabricated by
    an individual for the individual's own use and consumption
    without the aid or use of a cigarette machine in the
    possession of a cigarette machine operator holding a
    license under Section 1-15 of this Act; or
        (6) cigarettes that (i) are made or fabricated by a
    person holding a cigarette machine operator license under
    Section 1-15 of this Act, (ii) are in the possession of a
    person, and (iii) contain tobacco of a brand family and
    manufacturer that are not identified on the State of
    Illinois Directory of Participating Manufacturers or the
    Illinois Directory of Compliant Non-Participating
    Manufacturers maintained by the Office of the Attorney
    General.
    "Department" means the Department of Revenue.
    "Operate or operating a cigarette machine" means to possess
a cigarette machine for the purpose of engaging in the business
of making the cigarette machine available to individuals who
use the cigarette machine to make or fabricate cigarettes for
their own use or consumption, and not for resale. For purposes
of this Act, the cigarette machine is operated by the person
possessing the cigarette machine. For purposes of this Act,
cigarettes made or fabricated by the use of a cigarette machine
in the possession of a cigarette machine operator holding a
license under Section 1-15 of this Act are considered to be
made or fabricated by the person holding the cigarette machine
operator license and not the individual.
    "Original package" means the individual packet, box, or
other container used to contain and convey cigarettes to the
consumer.
    "Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, however formed, limited liability
company, or a receiver, executor, administrator, trustee,
guardian, or other representative appointed by order of any
court.
    "Place of business" means any place where cigarettes are
made or fabricated by a cigarette machine operator holding a
license under Section 1-15 of this Act.
    "Possess or possessing a cigarette machine" means to own,
lease, rent or have on one's premises a cigarette machine for
the purpose of engaging in the business of making the cigarette
machine available to individuals who use the cigarette machine
to make or fabricate cigarettes for their own use or
consumption, and not for resale.
    "Prior continuous compliance taxpayer" means any person
who is licensed under this Act and who, having been a licensee
for a continuous period of 5 years, is determined by the
Department not to have been either delinquent or deficient in
the payment of tax liability during that period or otherwise in
violation of this Act. "Prior continuous compliance taxpayer"
also means any taxpayer who has, as verified by the Department,
continuously complied with the condition of his bond or other
security under provisions of this Act for a period of 5
consecutive years.
    "Retailer" means any person who engages in the making of
transfers of the ownership of, or title to, tobacco or
cigarettes to a purchaser for use or consumption and not for
resale in any form, for a valuable consideration.
    "Sale" means any transfer, exchange, or barter in any
manner or by any means whatsoever for a consideration, and
includes and means all sales made by any person.
 
    Section 1-10. Tax imposed.
    (a) Beginning August 1, 2012, a tax is imposed upon all
persons engaged in the business of operating a cigarette
machine. The tax is imposed at the rate of 99 mills per
cigarette made or fabricated by a cigarette machine possessed
by a cigarette machine operator.
    (b) If, after July 1, 2012, the General Assembly increases
the rate of tax imposed under Section 2 of the Cigarette Tax
Act, then the tax imposed under subsection (a) of this Section
shall be increased by the same amount beginning on the
effective date of the Cigarette Tax increase, but not earlier
than August 1, 2012.
    (c) The tax herein imposed shall be in addition to all
other occupation or privilege taxes imposed by the State of
Illinois or by any municipal corporation or political
subdivision thereof.
    (d) Persons subject to the tax imposed by this Act may
reimburse themselves for their tax liability under this Act by
separately stating such tax, less any credit the machine
operator claims under subsection (b) of Section 1-40 of this
Act on tobacco sold to and used by users of a cigarette machine
to make or fabricate cigarettes, as an additional charge to
users of cigarette machines.
    (e) If any cigarette machine operator collects an amount
(however designated) which purports to reimburse such operator
for his or her cigarette machine operators' occupation tax
liability under this Act with respect to cigarettes that are
not subject to cigarette machine operators' occupation tax
under this Act, or if any cigarette machine operator, in
collecting an amount (however designated) which purports to
reimburse such operator for his or her cigarette machine
operators' occupation tax liability measured by cigarettes
made or fabricated by a cigarette machine that are subject to
tax under this Act, collects more from the customer than the
cigarette machine operators' cigarette machine operators'
occupation tax liability in the transaction, the customer shall
have a legal right to claim a refund of that amount from the
cigarette machine operator. However, if such amount is not
refunded to the customer for any reason, the cigarette machine
operator is liable to pay such amount to the Department.
 
    Section 1-15. Cigarette machine operator license. No
person may engage in the business of operating a cigarette
machine in this State on or after August 1, 2012 without first
having obtained a license from the Department. Application for
a license shall be made to the Department on a form furnished
and prescribed by the Department. Each applicant for a license
under this Section shall furnish the following information to
the Department on a form signed and verified by the applicant
under penalty of perjury:
        (1) the name and address of the applicant;
        (2) the address of the location at which the applicant
    proposes to engage in the business of operating a cigarette
    machine in this State; and
        (3) any other additional information the Department
    may reasonably require.
    The annual license fee payable to the Department for each
cigarette machine operator license is $250. Each applicant for
a license shall pay that fee to the Department at the time of
submitting an application for license to the Department.
    Every applicant who is required to procure a cigarette
machine operator license shall file with his or her application
a joint and several bond. Such bond shall be executed to the
Department of Revenue, with good and sufficient surety or
sureties residing or licensed to do business within the State
of Illinois, in the amount of $2,500, conditioned upon the true
and faithful compliance by the licensee with all of the
provisions of this Act. Such bond, or a reissue thereof, or a
substitute therefore, shall be kept in effect during the entire
period covered by the license. A separate application for
license shall be made, a separate annual license fee paid, and
a separate bond filed, for each place of business at which a
person who is required to procure a cigarette machine operator
license under this Section proposes to engage in business as a
cigarette machine operator in Illinois under this Act.
    The following are ineligible to receive a cigarette machine
operator license under this Act:
        (1) a person who is not of good character and
    reputation in the community in which he resides;
        (2) a person who has been convicted of a felony under
    any federal or State law, if the Department, after
    investigation and a hearing, if requested by the applicant,
    determines that such person has not been sufficiently
    rehabilitated to warrant the public trust;
        (3) a corporation, if any officer, manager, or director
    thereof, or any stockholder or stockholders owning in the
    aggregate more than 5% of the stock of such corporation,
    would not be eligible to receive a license under this Act
    for any reason; or
        (4) a person, or any person who owns more than 15% of
    the ownership interests in an entity or a related party,
    who:
            (A) owes, at the time of application, any
        delinquent cigarette taxes or tobacco taxes that have
        been determined by law to be due and unpaid, unless the
        license applicant has entered into an agreement
        approved by the Department to pay the amount due;
            (B) has had a license under this Act, the Cigarette
        Tax Act, the Cigarette Use Tax Act, or the Tobacco
        Products Tax Act of 1995 revoked within the past 2
        years by the Department for misconduct relating to
        stolen or contraband cigarettes or has been convicted
        of a State or federal crime, punishable by imprisonment
        of one year or more, relating to stolen or contraband
        cigarettes;
            (C) has been found by the Department, after notice
        and a hearing, to have imported or caused to be
        imported into the United States for sale or
        distribution any cigarette in violation of 19 U.S.C.
        1681a;
            (D) has been found by the Department, after notice
        and a hearing, to have imported or caused to be
        imported into the United States for sale or
        distribution, or manufactured for sale or distribution
        in the United States, any cigarette that does not fully
        comply with the Federal Cigarette Labeling and
        Advertising Act (15 U.S.C. 1331, et seq.); or
            (E) has been found by the Department, after notice
        and a hearing, to have made a material false statement
        in the application or has failed to produce records
        required to be maintained by this Act.
     The Department, upon receipt of an application, license
fee, and bond in proper form from a person who is eligible to
receive a cigarette machine operator license under this Act,
shall issue to such applicant a license in a form as prescribed
by the Department. That license shall permit the applicant to
whom it is issued to engage in business as a cigarette machine
operator at the place shown in his or her application. All
licenses issued by the Department under this Section shall be
valid for a period not to exceed one year after issuance unless
sooner revoked, canceled, or suspended as provided in this Act.
No license issued under this Section is transferable or
assignable. Such license shall be conspicuously displayed in
the place of business conducted by the licensee in Illinois
under such license. No cigarette machine operator acquires any
vested interest or compensable property right in a license
issued under this Act.
    A cigarette machine operator shall notify the Department of
any change in the information contained on the application
form, including any change in ownership, and shall do so within
30 days after that change.
    Every prior continuous compliance taxpayer shall be exempt
from all requirements under this Section concerning the
furnishing of bond as a condition precedent to his being
authorized to engage in the business licensed under this Act.
This exemption shall continue for each prior continuous
compliance taxpayer until such time as he may be determined by
the Department to be delinquent in the filing of any returns,
or is determined by the Department (either through the
Department's issuance of a final assessment which has become
final under the Act, or by the taxpayer's filing of a return
which admits tax to be due that is not paid) to be delinquent
or deficient in the paying of any tax under this Act, at which
time that taxpayer shall become subject to the bond
requirements of this Section and, as a condition of being
allowed to continue to engage in the business licensed under
this Act, shall be required to furnish bond to the Department
in such form as provided in this Section. The taxpayer shall
furnish such bond for a period of 2 years, after which, if the
taxpayer has not been delinquent in the filing of any returns,
or delinquent or deficient in the paying of any tax under this
Act, the Department may reinstate that person as a prior
continuance compliance taxpayer. Any taxpayer who fails to pay
an admitted or established liability under this Act may also be
required by the Department to post bond or other acceptable
security with the Department guaranteeing the payment of that
admitted or established liability.
    The Department shall discharge any surety and shall release
and return any bond or security deposited, assigned, pledged,
or otherwise provided to it by a taxpayer under this Section
within 30 days after:
        (1) that taxpayer becomes a prior continuous
    compliance taxpayer; or
        (2) that taxpayer has ceased to collect receipts on
    which he is required to remit tax to the Department, has
    filed a final tax return, and has paid to the Department an
    amount sufficient to discharge his remaining tax liability
    as determined by the Department under this Act. The
    Department shall make a final determination of the
    taxpayer's outstanding tax liability as expeditiously as
    possible after his final tax return has been filed. If the
    Department cannot make the final determination within 45
    days after receiving the final tax return, it shall so
    notify the taxpayer within that period, stating its reasons
    therefore.
    Any person aggrieved by any decision of the Department
under this Section may, within 20 days after receiving notice
of the decision, protest and request a hearing. Upon receiving
a written request for a hearing, the Department shall give
notice to the person requesting the hearing of the time and
place fixed for the hearing and shall hold a hearing in
conformity with the provisions of this Act and then issue its
final administrative decision in the matter to that person. In
the absence of a protest and request for a hearing within 20
days, the Department's decision shall become final without any
further determination being made or notice given.
 
    Section 1-20. Revocation, cancellation, or suspension of
license. The Department may, after notice and hearing as
provided for by this Act, revoke, cancel, or suspend the
license of any cigarette machine operator for the violation of
any provision of this Act, or for noncompliance with the
provisions of this Act, or for any noncompliance with any
lawful rule or regulation promulgated by the Department under
this Act, or because the licensee is determined to be
ineligible for a cigarette machine operator's license for any
one or more of the reasons provided for in Section 1-15 of this
Act.
    Any cigarette machine operator aggrieved by any decision of
the Department under this Section may, within 20 days after
notice of the decision, protest and request a hearing. Upon
receiving a written request for a hearing, the Department shall
give notice in writing to the cigarette machine operator
requesting the hearing that contains a statement of the charges
preferred against the cigarette machine operator and that
states the time and place fixed for the hearing. The Department
shall hold the hearing in conformity with the provisions of
this Act and then issue its final administrative decision in
the matter to the cigarette machine operator. In the absence of
a written protest and request for a hearing within 20 days, the
Department's decision shall become final without any further
determination being made or notice given.
    No license so revoked shall be reissued to any cigarette
machine operator for a period of 6 months after the date of the
final determination of such revocation. No license shall be
reissued at all so long as the person who would receive the
license is ineligible to receive a cigarette machine operator's
license under this Act for any one or more of the reasons
provided for in Section 1-15 of this Act.
    The Department, upon complaint filed in the circuit court,
may, by injunction, restrain any person who fails or refuses to
comply with any of the provisions of this Act from acting as a
cigarette machine operator in this State.
 
    Section 1-25. Restriction on tobacco used in cigarette
machines.
    (a) Only roll-your-own tobacco products of a brand family
and manufacturer identified on the State of Illinois Directory
of Participating Manufacturers or the Illinois Directory of
Compliant Non-Participating Manufacturers maintained by the
Office of the Attorney General may be sold by cigarette machine
operators to customers for use in cigarette machines possessed
by the cigarette machine operator.
    (b) Only roll-your-own tobacco products meeting the
requirements of subsection (a) and purchased at the place of
business of the cigarette machine operator may be used in a
cigarette machine at that location.
 
    Section 1-30. Cigarette tubes used in cigarette machines.
    (a) All cigarette tubes used in cigarette machines in the
possession of cigarette machine operators licensed under
Section 1-15 of this Act shall be constructed of paper of a
type determined by the Attorney General, pursuant to rules
promulgated by the Attorney General under the provisions of the
Administrative Procedure Act, to reduce the likely ignition
propensity of cigarettes made by those tubes.
    (b) A cigarette machine operator is not required to comply
with subsection (a) of this Section until the Attorney General
has promulgated rules implementing subsection (a) and the rules
have become effective. The effective date for such rules shall
be no earlier than January 1, 2014.
 
    Section 1-35. Cigarette machine operators; sale of
cigarettes.
    (a) The cigarette machine operator is responsible for
complying with all State and federal laws and regulations
regarding packaging and labeling of original packages of
cigarettes.
    (b) A person possessing a cigarette machine operator
license may not purchase unstamped cigarettes from an in-State
or out-of-State manufacturer or distributor of cigarettes.
    (c) Cigarettes made or fabricated by a cigarette machine
may not be sold or distributed to, or possessed by,
manufacturers, distributors, secondary distributors,
manufacturer representatives, or retailers, except the
cigarette machine operator.
    (d) A cigarette machine possessed by a cigarette machine
operator shall have a secure meter that counts the number of
cigarettes made or fabricated by the cigarette machine and that
cannot be accessed, altered, or reset by the machine operator,
except for the sole purpose of taking meter readings.
 
    Section 1-40. Returns.
    (a) Cigarette machine operators shall file a return and
remit the tax imposed by Section 1-10 by the 15th day of each
month covering the preceding calendar month. Each such return
shall show: the quantity of cigarettes made or fabricated
during the period covered by the return; the beginning and
ending meter reading for each cigarette machine for the period
covered by the return; the quantity of such cigarettes sold or
otherwise disposed of during the period covered by the return;
the brand family and manufacturer and quantity of tobacco
products used to make or fabricate cigarettes by use of a
cigarette machine; the license number of each distributor from
whom tobacco products are purchased; the type and quantity of
cigarette tubes purchased for use in a cigarette machine; the
type and quantity of cigarette tubes used in a cigarette
machine; and such other information as the Department may
require. Such returns shall be filed on forms prescribed and
furnished by the Department. The Department may promulgate
rules to require that the cigarette machine operator's return
be accompanied by appropriate computer-generated magnetic
media supporting schedule data in the format required by the
Department, unless, as provided by rule, the Department grants
an exception upon petition of a cigarette machine operator.
    Cigarette machine operators shall send a copy of those
returns, together with supporting schedule data, to the
Attorney General's Office by the 15th day of each month for the
period covering the preceding calendar month.
    (b) Cigarette machine operators may take a credit against
any tax due under Section 1-10 of this Act for taxes imposed
and paid under the Tobacco Products Tax Act of 1995 on tobacco
products sold to a customer and used in a rolling machine
located at the cigarette machine operator's place of business.
To be eligible for such credit, the tobacco product must meet
the requirements of subsection (a) of Section 1-25 of this Act.
This subsection (b) is exempt from the provisions of Section
1-155 of this Act.
 
    Section 1-45. Examination and correction of returns.
    (a) As soon as practicable after any return is filed, the
Department shall examine that return and shall correct the
return according to its best judgment and information, which
return so corrected by the Department shall be prima facie
correct and shall be prima facie evidence of the correctness of
the amount of tax due, as shown on the corrected return.
Instead of requiring the cigarette machine operator to file an
amended return, the Department may simply notify the cigarette
machine operator of the correction or corrections it has made.
Proof of the correction by the Department may be made at any
hearing before the Department or in any legal proceeding by a
reproduced copy of the Department's record relating thereto in
the name of the Department under the certificate of the
Director of Revenue. Such reproduced copy shall, without
further proof, be admitted into evidence before the Department
or in any legal proceeding and shall be prima facie proof of
the correctness of the amount of tax due, as shown on the
reproduced copy. If the Department finds that any amount of tax
is due from the cigarette machine operator, the Department
shall issue the cigarette machine operator a notice of tax
liability for the amount of tax claimed by the Department to be
due, together with a penalty in an amount determined in
accordance with Sections 3-3, 3-5 and 3-6 of the Uniform
Penalty and Interest Act. If, in administering the provisions
of this Act, comparison of a return or returns of a cigarette
machine operator with the books, records, and inventories of
such cigarette machine operator discloses a deficiency that
cannot be allocated by the Department to a particular month or
months, the Department shall issue the cigarette machine
operator a notice of tax liability for the amount of tax
claimed by the Department to be due for a given period, but
without any obligation upon the Department to allocate that
deficiency to any particular month or months, together with a
penalty in an amount determined in accordance with Sections
3-3, 3-5, and 3-6 of the Uniform Penalty and Interest Act,
under which circumstances the aforesaid notice of tax liability
shall be prima facie correct and shall be prima facie evidence
of the correctness of the amount of tax due, as shown therein;
and proof of such correctness may be made in accordance with,
and the admissibility of a reproduced copy of such notice of
tax liability shall be governed by, all the provisions of this
Act applicable to corrected returns. If any cigarette machine
operator filing any return dies or becomes a person under legal
disability at any time before the Department issues its notice
of tax liability, such notice shall be issued to the
administrator, executor, or other legal representative of the
cigarette machine operator.
    (b) If, within 60 days after such notice of tax liability,
the cigarette machine operator or his or her legal
representative files a written protest to such notice of tax
liability and requests a hearing thereon, the Department shall
give notice to such cigarette machine operator or legal
representative of the time and place fixed for such hearing,
and shall hold a hearing in conformity with the provisions of
this Act, and pursuant thereto shall issue a final assessment
to such cigarette machine operator or legal representative for
the amount found to be due as a result of such hearing. If a
written protest to the notice of tax liability and a request
for a hearing thereon is not filed within 60 days after such
notice of tax liability, such notice of tax liability shall
become final without the necessity of a final assessment being
issued and shall be deemed to be a final assessment.
    (c) In case of failure to pay the tax, or any portion
thereof, or any penalty provided for in this Act, when due, the
Department may bring suit to recover the amount of such tax, or
portion thereof, or penalty; or, if the taxpayer dies or
becomes incompetent, by filing claim therefore against his or
her estate; provided that no such action with respect to any
tax, or portion thereof, or penalty, shall be instituted more
than 2 years after the cause of action accrues, except with the
consent of the person from whom such tax or penalty is due.
    After the expiration of the period within which the person
assessed may file an action for judicial review under the
Administrative Review Law without such an action being filed, a
certified copy of the final assessment or revised final
assessment of the Department may be filed with the circuit
court of the county in which the taxpayer has his or her
principal place of business, or of Sangamon County in those
cases in which the taxpayer does not have his or her principal
place of business in this State. The certified copy of the
final assessment or revised final assessment shall be
accompanied by a certification which recites facts that are
sufficient to show that the Department complied with the
jurisdictional requirements of the law in arriving at its final
assessment or its revised final assessment and that the
taxpayer had his or her opportunity for an administrative
hearing and for judicial review, whether he or she availed
himself or herself of either or both of these opportunities or
not. If the court is satisfied that the Department complied
with the jurisdictional requirements of the law in arriving at
its final assessment or its revised final assessment and that
the taxpayer had his or her opportunity for an administrative
hearing and for judicial review, whether he or she availed
himself or herself of either or both of these opportunities or
not, the court shall enter judgment in favor of the Department
and against the taxpayer for the amount shown to be due by the
final assessment or the revised final assessment, and such
judgment shall be filed of record in the court. Such judgment
shall bear the rate of interest set in the Uniform Penalty and
Interest Act, but otherwise shall have the same effect as other
judgments. The judgment may be enforced, and all laws
applicable to sales for the enforcement of a judgment shall be
applicable to sales made under such judgments. The Department
shall file the certified copy of its assessment, as herein
provided, with the circuit court within 2 years after such
assessment becomes final except when the taxpayer consents in
writing to an extension of such filing period.
    If, when the cause of action for a proceeding in court
accrues against a person, he or she is out of the State, the
action may be commenced within the times herein limited, after
his or her coming into or returning to the State; and if, after
the cause of action accrues, he or she departs from and remains
out of the State, the time of his or her absence is no part of
the time limited for the commencement of the action; but the
foregoing provisions concerning absence from the State shall
not apply to any case in which, at the time the cause of action
accrues, the party against whom the cause of action accrues is
not a resident of this State. The time within which a court
action is to be commenced by the Department hereunder shall not
run while the taxpayer is a debtor in any proceeding under the
federal Bankruptcy Code nor thereafter until 90 days after the
Department is notified by such debtor of being discharged in
bankruptcy.
    No claim shall be filed against the estate of any deceased
person or a person under legal disability for any tax or
penalty or part of either except in the manner prescribed and
within the time limited by the Probate Act of 1975.
    The remedies provided for herein shall not be exclusive,
but all remedies available to creditors for the collection of
debts shall be available for the collection of any tax or
penalty due hereunder.
    The collection of tax or penalty by any means provided for
herein shall not be a bar to any prosecution under this Act.
    The certificate of the Director of the Department to the
effect that a tax or amount required to be paid by this Act has
not been paid, that a return has not been filed, or that
information has not been supplied pursuant to the provisions of
this Act, shall be prima facie evidence thereof.
    All of the provisions of Sections 5a, 5b, 5c, 5d, 5e, 5f,
5g, 5i and 5j of the Retailers' Occupation Tax Act, which are
not inconsistent with this Act, shall apply, as far as
practicable, to the subject matter of this Act to the same
extent as if such provisions were included herein. References
in such incorporated Sections of the Retailers' Occupation Tax
Act to retailers, to sellers, or to persons engaged in the
business of selling tangible personal property shall mean
cigarette machine operator when used in this Act.
 
    Section 1-50. Failure to file return or pay tax; penalty;
protest.
    In case any person who is required to file a return under
this Act fails to file a return, or files a return and fails to
remit the correct amount of tax, the Department shall determine
the amount of tax due from him according to its best judgment
and information, which amount so fixed by the Department shall
be prima facie correct and shall be prima facie evidence of the
correctness of the amount of tax due, as shown in such
determination. Proof of such determination by the Department
may be made at any hearing before the Department or in any
legal proceeding by a reproduced copy of the Department's
record relating thereto in the name of the Department under the
certificate of the Director of Revenue. Such reproduced copy
shall, without further proof, be admitted into evidence before
the Department or in any legal proceeding and shall be prima
facie proof of the correctness of the amount of tax due, as
shown therein. The Department shall issue such person a notice
of tax liability for the amount of tax claimed by the
Department to be due, together with a penalty in an amount
determined in accordance with Sections 3-3, 3-5 and 3-6 of the
Uniform Penalty and Interest Act. If such person or the legal
representative of such person, within 60 days after such
notice, files a written protest to such notice of tax liability
and requests a hearing thereon, the Department shall give
notice to such person or the legal representative of such
person of the time and place fixed for such hearing and shall
hold a hearing in conformity with the provisions of this Act,
and pursuant thereto shall issue a final assessment to such
person or to the legal representative of such person for the
amount found to be due as a result of such hearing. If a
written protest to the notice of tax liability and a request
for a hearing thereon is not filed within 60 days after such
notice of tax liability, such notice of tax liability shall
become final without the necessity of a final assessment being
issued and shall be deemed to be a final assessment.
 
    Section 1-55. Claims; credit memorandum or refunds. If it
appears, after claim is filed with the Department, that an
amount of tax or penalty has been paid which was not due under
this Act, whether as the result of a mistake of fact or an
error of law, except as hereinafter provided, then the
Department shall issue a credit memorandum or refund to the
person who made the erroneous payment or, if that person has
died or become a person under legal disability, to his or her
legal representative.
    If it is determined that the Department should issue a
credit or refund under this Act, the Department may first apply
the amount thereof against any amount of tax or penalty due
under this Act, the Cigarette Tax Act, the Cigarette Use Tax
Act, or the Tobacco Products Act of 1995 from the person
entitled to that credit or refund. For this purpose, if
proceedings are pending to determine whether or not any tax or
penalty is due under this Act or under the Cigarette Tax Act,
Cigarette Use Tax Act, or the Tobacco Products Act of 1995 from
the person, the Department may withhold issuance of the credit
or refund pending the final disposition of such proceedings and
may apply such credit or refund against any amount found to be
due to the Department under this Act, the Cigarette Tax Act,
the Cigarette Use Tax Act, or the Tobacco Products Act of 1995
as a result of such proceedings. The balance, if any, of the
credit or refund shall be issued to the person entitled
thereto.
    If no tax or penalty is due and no proceeding is pending to
determine whether such taxpayer is indebted to the Department
for the payment of a tax or penalty, the credit memorandum or
refund shall be issued to the claimant; or (in the case of a
credit memorandum) the credit memorandum may be assigned and
set over by the lawful holder thereof, subject to reasonable
rules of the Department, to any other person who is subject to
this Act, the Cigarette Tax Act, the Cigarette Use Tax Act, or
the Tobacco Products Act of 1995, and the amount thereof shall
be applied by the Department against any tax or penalty due or
to become due under this Act, the Cigarette Tax Act, the
Cigarette Use Tax Act, or the Tobacco Products Act of 1995 from
such assignee.
    As to any claim filed hereunder with the Department on and
after each January 1 and July 1, no amount of tax or penalty
erroneously paid (either in total or partial liquidation of a
tax or penalty under this Act) more than 3 years prior to such
January 1 and July 1, respectively, shall be credited or
refunded, except that, if both the Department and the taxpayer
have agreed to an extension of time to issue a notice of tax
liability under this Act, the claim may be filed at any time
prior to the expiration of the period agreed upon.
    Any credit or refund that is allowed under this Act shall
bear interest at the rate and in the manner set forth in the
Uniform Penalty and Interest Act.
    In case the Department determines that the claimant is
entitled to a refund, such refund shall be made only from
appropriations available for that purpose. If it appears
unlikely that the amount appropriated would permit everyone
having a claim allowed during the period covered by such
appropriation to elect to receive a cash refund, the
Department, by rule or regulation, shall provide for the
payment of refunds in hardship cases and shall define what
types of cases qualify as hardship cases.
    The provisions of Sections 6a, 6b, and 6c of the Retailers'
Occupation Tax Act which are not inconsistent with this Act
shall apply, as far as practicable, to the subject matter of
this Act to the same extent as if such provisions were included
herein.
 
    Section 1-60. Investigations and hearings. The Department,
or any officer or employee designated in writing by the
Director thereof, for the purpose of administering and
enforcing the provisions of this Act, may hold investigations
and hearings concerning any matters covered by this Act, and
may examine books, papers, records, or memoranda bearing upon
the sale or other disposition of cigarettes or tobacco products
by a cigarette machine operator, and may issue subpoenas
requiring the attendance of a cigarette machine operator, or
any officer or employee of a cigarette machine operator, or any
person having knowledge of the facts, and may take testimony
and require proof, and may issue subpoenas duces tecum to
compel the production of relevant books, papers, records, and
memoranda, for the information of the Department.
    In the conduct of any investigation or hearing provided for
by this Act, neither the Department, nor any officer or
employee thereof, shall be bound by the technical rules of
evidence, and no informality in the proceedings nor in the
manner of taking testimony shall invalidate any rule, order,
decision, or regulation made, approved, or confirmed by the
Department.
    The Director of Revenue, or any duly authorized officer or
employee of the Department, shall have the power to administer
oaths to such persons required by this Act to give testimony
before the Department.
    The books, papers, records, and memoranda of the
Department, or parts thereof, may be proved in any hearing,
investigation or legal proceeding by a reproduced copy thereof
under the certificate of the Director of Revenue. Such
reproduced copy shall, without further proof, be admitted into
evidence before the Department or in any legal proceeding.
 
    Section 1-65. Testimony and production of documents;
immunity. No person shall be excused from testifying or from
producing any books, papers, records, or memoranda in any
investigation or upon any hearing, when ordered to do so by the
Department or any officer or employee thereof, upon the ground
that the testimony or evidence, documentary or otherwise, may
tend to incriminate him or subject him to a criminal penalty,
but no person shall be prosecuted or subjected to any criminal
penalty for or on account of the subject matter of his or her
testimony or the evidence produced before the Department or an
officer or employee of the Department; provided that such
immunity shall extend only to a natural person who, in
obedience to a subpoena, gives testimony under oath or produces
evidence under oath. No person so testifying shall be exempt
from prosecution and punishment for perjury committed in so
testifying.
 
    Section 1-70. Confidentiality; official purposes. All
information received by the Department from returns or reports
filed under this Act, or from any investigation conducted under
this Act, shall be confidential, except for official purposes,
and any person who divulges any such information in any manner,
except in accordance with a proper judicial order or as
otherwise provided by law, shall be guilty of a Class A
misdemeanor.
    Nothing in this Act prevents the Director of Revenue from
publishing or making available to the public the names and
addresses of persons filing returns or reports under this Act,
or reasonable statistics concerning the operation of the tax by
grouping the contents of returns or reports so that the
information in any individual return or report is not
disclosed.
    Nothing in this Act prevents the Director of Revenue from
divulging to the United States government or the government of
any other state, or any officer or agency thereof, for
exclusively official purposes, information received by the
Department in administering this Act, provided that such other
governmental agency agrees to divulge requested tax
information to the Department.
    The furnishing upon request of the Auditor General, or his
authorized agents, for official use, of returns or reports
filed and information related thereto under this Act is deemed
to be an official purpose within the meaning of this Section.
    The furnishing of financial information to a home rule unit
with a population in excess of 2,000,000 that has imposed a tax
similar to that imposed by this Act under its home rule powers,
upon request of the Chief Executive of the home rule unit, is
an official purpose within the meaning of this Section,
provided the home rule unit agrees in writing to the
requirements of this Section. Information so provided is
subject to all confidentiality provisions of this Section. The
written agreement shall provide for reciprocity, limitations
on access, disclosure, and procedures for requesting
information.
    The Director may make available to any State agency,
including the Illinois Supreme Court, that licenses persons to
engage in any occupation, information that a person licensed by
such agency has failed to file returns under this Act or pay
the tax, penalty, and interest shown therein, or has failed to
pay any final assessment of tax, penalty, or interest due under
this Act or has failed to file reports under this Act. An
assessment is final when all proceedings in court for review of
such assessment have terminated or the time for the taking
thereof has expired without such proceedings being instituted.
    The Director shall make available for public inspection in
the Department's principal office and for publication, at cost,
administrative decisions issued on or after January 1, 2013.
These decisions are to be made available in a manner so that
the following taxpayer or licensee information is not
disclosed:
        (1) The names, addresses, and identification numbers
    of the taxpayer or licensee, related entities, and
    employees.
        (2) At the sole discretion of the Director, trade
    secrets or other confidential information identified as
    such by the taxpayer or licensee no later than 30 days
    after receipt of an administrative decision, by such means
    as the Department shall provide by rule.
    The Director shall determine the appropriate extent of the
deletions allowed in paragraph (2). In the event the taxpayer
or licensee does not submit deletions, the Director shall make
only the deletions specified in paragraph (1).
    The Director shall make available for public inspection and
publication each administrative decision within 180 days after
the issuance of the administrative decision. The term
"administrative decision" has the same meaning as defined in
Section 3-101 of the Code of Civil Procedure. Costs collected
under this Section shall be paid into the Tax Compliance and
Administration Fund.
    Nothing contained in this Act shall prevent the Director
from divulging information to any person pursuant to a request
or authorization made by the taxpayer or licensee or by an
authorized representative of the taxpayer or licensee.
 
    Section 1-75. Records. Every cigarette machine operator
who is required to procure a license under this Act shall keep
within Illinois, at his licensed address: complete and accurate
records of the quantity of such cigarettes made or fabricated;
meter readings for each cigarette machine; the quantity of such
cigarettes sold or otherwise disposed of; the brand family and
manufacturer and quantity of tobacco products purchased and the
brand family and manufacturer and quantity of tobacco products
used to make or fabricate cigarettes by use of a cigarette
machine; the name, address, and license number of each
distributor from whom the cigarette machine operator purchases
tobacco products; the type and quantity of cigarette tubes
purchased for use in a cigarette machine; the type and quantity
of cigarette tubes used in a cigarette machine; and such other
information as the Department may require, and shall preserve
and keep within Illinois at his licensed address all invoices,
bills of lading, sales records, copies of bills of sale,
inventory at the close of each period for which a return is
required of all cigarettes, tobacco products and cigarette
tubes on hand, and other pertinent papers and documents
relating to the manufacture, purchase, sale, or disposition of
cigarettes and tobacco products. All books and records and
other papers and documents that are required by this Act to be
kept shall be kept in the English language, and shall, at all
times during the usual business hours of the day, be subject to
inspection by the Department or its duly authorized agents and
employees. The Department may adopt rules that establish
requirements, including record forms and formats, for records
required to be kept and maintained by taxpayers. For purposes
of this Section, "records" means all data maintained by the
taxpayer, including data on paper, microfilm, microfiche or any
type of machine-sensible data compilation. Those books,
records, papers and documents shall be preserved for a period
of at least 3 years after the date of the documents, or the
date of the entries appearing in the records, unless the
Department, in writing, authorizes their destruction or
disposal at an earlier date. At all times during the usual
business hours of the day, any duly authorized agent or
employee of the Department may enter any place of business of
the cigarette machine operator, without a search warrant, and
inspect the premises and the stock or packages of cigarettes,
tobacco products, cigarette tubes, and the cigarette machines
therein contained, to determine whether any of the provisions
of this Act are being violated. If such agent or employee is
denied free access or is hindered or interfered with in making
such examination as herein provided, the license of the
cigarette machine operator at such premises shall be subject to
revocation by the Department.
 
    Section 1-80. Subpoenas and witnesses; depositions. The
Department, or any officer or employee of the Department
designated in writing by the Director, shall, at its, his, or
her own instance, or on the written request of any cigarette
machine operator or other interested party to the proceeding,
issue subpoenas requiring the attendance of and the giving of
testimony by witnesses, and subpoenas duces tecum requiring the
production of books, papers, records or memoranda. All
subpoenas and subpoenas duces tecum issued under the terms of
this Act may be served by any person of full age. The fees of
witnesses for attendance and travel shall be the same as the
fees of witnesses before the circuit court of this State; such
fees to be paid when the witness is excused from further
attendance. When the witness is subpoenaed at the instance of
the Department or any officer or employee thereof, such fees
shall be paid in the same manner as other expenses of the
Department, and when the witness is subpoenaed at the instance
of any other party to any such proceeding, the cost of service
of the subpoena or subpoena duces tecum and the fee of the
witness shall be borne by the party at whose instance the
witness is summoned. In such case, the Department, in its
discretion, may require a deposit to cover the cost of such
service and witness fees. A subpoena or subpoena duces tecum so
issued shall be served in the same manner as a subpoena or
subpoena duces tecum issued out of a court.
    Any circuit court of this State, upon the application of
the Department or any officer or employee thereof, or upon the
application of any other party to the proceeding, may, in its
discretion, compel the attendance of witnesses, the production
of books, papers, records or memoranda and the giving of
testimony before the Department or any officer or employee
thereof conducting an investigation or holding a hearing
authorized by this Act, by an attachment for contempt, or
otherwise, in the same manner as production of evidence may be
compelled before the court.
    The Department or any officer or employee thereof, or any
other party in an investigation or hearing before the
Department, may cause the depositions of witnesses within the
State to be taken in the manner prescribed by law for like
depositions, or depositions for discovery in civil actions in
courts of this State, and to that end compel the attendance of
witnesses and the production of books, papers, records or
memoranda, in the same manner provided herein.
 
    Section 1-85. Regulations and rules; notice; hearings. The
Department may adopt and enforce such reasonable rules and
regulations relating to the administration and enforcement of
this Act as may be deemed expedient.
    Whenever notice is required by this Act, such notice may be
given by United States certified or registered mail, addressed
to the person concerned at his last known address, and proof of
such mailing shall be sufficient for the purposes of this Act.
Notice of any hearing provided for by this Act shall be so
given not less than 7 days prior to the day fixed for the
hearing.
    Hearings provided for in this Act shall be held:
        (1) in Cook County, if the taxpayer's or licensee's
    principal place of business is in that county;
        (2) at the Department's office nearest the taxpayer's
    or licensee's principal place of business, if the
    taxpayer's or licensee's principal place of business is in
    Illinois but outside Cook County; or
        (3) in Sangamon County, if the taxpayer's or licensee's
    principal place of business is outside Illinois.
    The circuit court of the county wherein the hearing is held
has power to review all final administrative decisions of the
Department in administering this Act. The provisions of the
Administrative Review Law, and all amendments and
modifications thereof, and the rules adopted pursuant thereto,
shall apply to and govern all proceedings for the judicial
review of final administrative decisions of the Department
under this Act. The term "administrative decision" is defined
as in Section 3-101 of the Code of Civil Procedure.
    Service upon the Director of Revenue or Assistant Director
of Revenue of summons issued in any action to review a final
administrative decision shall be service upon the Department.
The Department shall certify the record of its proceedings if
the cigarette machine operator pays to it the sum of 75 per
page of testimony taken before the Department and 25 per page
of all other matters contained in such record, except that
these charges may be waived where the Department is satisfied
that the aggrieved party is an indigent person who cannot
afford to pay such charges. Before the delivery of such record
to the person applying for it, payment of these charges must be
made, and if the record is not paid for within 30 days after
notice that such record is available, the complaint may be
dismissed by the court upon motion of the Department.
    No stay order shall be entered by the circuit court unless
the cigarette machine operator files with the court a bond, in
an amount fixed and approved by the court, to indemnify the
State against all loss and injury which may be sustained by it
on account of the review proceedings and to secure all costs
which may be occasioned by such proceedings.
    Whenever any proceeding provided by this Act is begun
before the Department, either by the Department or by a person
subject to this Act, and such person thereafter dies or becomes
a person under legal disability before such proceeding is
concluded, the legal representative of the deceased person or
of the person under legal disability shall notify the
Department of such death or legal disability. Such legal
representative, as such, shall then be substituted by the
Department for such person. If the legal representative fails
to notify the Department of his or her appointment as such
legal representative, the Department may, upon its own motion,
substitute such legal representative in the proceeding pending
before the Department for the person who died or became a
person under legal disability.
 
    Section 1-90. The Illinois Administrative Procedure Act.
The Illinois Administrative Procedure Act is hereby expressly
adopted and shall apply to all administrative rules and
procedures of the Department of Revenue under this Act, except
that: (1) paragraph (b) of Section 5-10 of the Illinois
Administrative Procedure Act does not apply to final orders,
decisions and opinions of the Department; (2) subparagraph
(a)(ii) of Section 5-10 of the Illinois Administrative
Procedure Act does not apply to forms established by the
Department for use under this Act; and (3) the provisions of
Section 10-45 of the Illinois Administrative Procedure Act
regarding proposals for decision are excluded and not
applicable to the Department under this Act.
 
    Section 1-95. Legal proceedings. All legal proceedings
under this Act, whether civil or criminal, shall be instituted
and prosecuted by the Attorney General or by the State's
Attorney for the county in which an offense under this Act is
committed, and all civil actions may be brought in the name of
the Department of Revenue.
 
    Section 1-100. Arrest and seizure. Any duly authorized
employee of the Department may: arrest without warrant any
person committing in his presence a violation of any of the
provisions of this Act; may without a search warrant inspect
all cigarettes and cigarette machines located in any place of
business; and may seize any contraband cigarettes and any
cigarette machines in which such contraband cigarettes may be
found or may be made, and such packages or cigarette machines
so seized shall be subject to confiscation and forfeiture as
provided in Section 1-105 of this Act.
 
    Section 1-105. Hearings regarding seized cigarettes and
cigarette machines. After seizing any cigarettes or cigarette
machines, as provided in Section 1-100 of this Act, the
Department shall hold a hearing and shall determine whether
such cigarettes, at the time of their seizure by the
Department, were contraband cigarettes, or whether such
cigarette machines, at the time of their seizure by the
Department, contained or made contraband cigarettes. The
Department shall give not less than 7 days' notice of the time
and place of such hearing to the owner of such property, if he
is known, and also to the person in whose possession the
property so taken was found, if such person is known and if
such person in possession is not the owner of said property. In
case neither the owner nor the person in possession of such
property is known, the Department shall cause publication of
the time and place of such hearing to be made at least once in
each week for 3 weeks successively in a newspaper of general
circulation in the county where such hearing is to be held.
    If, as the result of such hearing, the Department
determines that the cigarettes seized were, at the time of
seizure, contraband cigarettes, or that any cigarette machine
at the time of its seizure contained or made contraband
cigarettes, the Department shall enter an order declaring such
cigarettes or such cigarette machine confiscated and forfeited
to the State, and to be held by the Department for disposal as
provided in this Section. The Department shall give notice of
such order to the owner of such property if he is known, and
also to the person in whose possession the property so taken
was found, if such person is known, and if such person in
possession is not the owner of the property. In case neither
the owner nor the person in possession of such property is
known, the Department shall cause publication of such order to
be made at least once in each week for 3 weeks successively in
a newspaper of general circulation in the county where such
hearing was held.
    When any cigarettes or any cigarette machine shall have
been declared forfeited to the State by the Department, as
provided hereunder, and when all proceedings for the judicial
review of the Department's decision have terminated, the
Department shall, to the extent that its decision is sustained
on review, destroy or maintain and use such property in an
undercover capacity.
 
    Section 1-110. Filing of a complaint.
    Whenever any peace officer of the State or any duly
authorized officer or employee of the Department shall have
reason to believe that any violation of this Act has occurred
and that the person so violating the Act has in that person's
possession contraband cigarettes, or any cigarette machine
containing or making contraband cigarettes, he or she may file
or cause to be filed his complaint in writing, verified by
affidavit, with any court within whose jurisdiction the
premises to be searched are situated, stating the facts upon
which such belief is founded, the premises to be searched, and
the property to be seized, and procure a search warrant and
execute the same. Upon the execution of such search warrant,
the peace officer, or officer or employee of the Department,
executing such search warrant shall make due return thereof to
the court issuing the same, together with an inventory of the
property taken thereunder. The court shall thereupon issue
process against the owner of such property if he is known;
otherwise, such process shall be issued against the person in
whose possession the property so taken is found, if such person
is known. In case of inability to serve such process upon the
owner or the person in possession of the property at the time
of its seizure, notice of the proceedings before the court
shall be given as required by the statutes of the State
governing cases of attachment. Upon the return of the process
duly served or upon the posting or publishing of notice made,
as herein provided, the court or jury, if a jury shall be
demanded, shall proceed to determine whether or not such
property so seized was held or possessed in violation of this
Act, or whether, if a cigarette machine has been so seized, it
contained or was making at the time of its seizure contraband
cigarettes. In case of a finding that any cigarette machine so
seized contained or was making at the time of its seizure
contraband cigarettes, judgment shall be entered confiscating
and forfeiting the property to the State and ordering its
delivery to the Department, and, in addition thereto, the court
shall have power to tax and assess the costs of the
proceedings.
    When any cigarettes or any cigarette machine is declared
forfeited to the State by any court, and when such confiscated
and forfeited property is delivered to the Department as
provided in this Act, the Department shall destroy or maintain
and use such property in an undercover capacity.
 
    Section 1-115. False or fraudulent reports. Any person
required by this Act to make, file, render, sign, or verify any
report or return, or any officer, agent, or employee of that
person, who makes any false or fraudulent report or return or
files any false or fraudulent report or return, or who fails to
make such report or return or file such report or return when
due, is guilty of a Class 4 felony.
 
    Section 1-120. Possession of more than 200 contraband
cigarettes; penalty. Any person possessing more than 200
contraband cigarettes is liable to pay, to the Department, for
deposit into the Tax Compliance and Administration Fund, a
penalty of $1 for each such cigarette in excess of 200, unless
reasonable cause can be established by the person upon whom the
penalty is imposed. This penalty is in addition to the taxes
imposed by this Act. Reasonable cause shall be determined in
each situation in accordance with rules adopted by the
Department. The provisions of the Uniform Penalty and Interest
Act do not apply to this Section.
 
    Section 1-125. Possession of not less than 20 and not more
than 200 contraband cigarettes; penalty. Any person possessing
not less than 20 and not more than 200 contraband cigarettes is
liable to pay to the Department, for deposit into the Tax
Compliance and Administration Fund, a penalty of $0.50 for each
such cigarette, unless reasonable cause can be established by
the person upon whom the penalty is imposed. Reasonable cause
shall be determined in each situation in accordance with rules
adopted by the Department. The provisions of the Uniform
Penalty and Interest Act do not apply to this Section.
 
    Section 1-130. Punishment for sale or possession of
contraband cigarettes.
    (a) Possession or sale of 200 or less contraband
cigarettes. Any person who has in his or her possession or
sells 200 or less contraband cigarettes is guilty of a Class A
misdemeanor.
    (b) Possession or sale of more than 200 and not more 1000
contraband cigarettes. Any person who has in his or her
possession or sells more than 200 and not more than 1000
contraband cigarettes is guilty of a Class A misdemeanor for a
first offense and a Class 4 felony for each subsequent offense.
    (c) Possession or sale of more than 1000 contraband
cigarettes. Any person who has in his or her possession or
sells more than 1000 contraband cigarettes is guilty of a Class
4 felony.
 
    Section 1-135. Unlawful operation of cigarette machines.
Whoever operates a cigarette machine without a license is
guilty of a Class 4 felony. Notwithstanding this Section, and
any other provisions of this Act, an individual may own a
cigarette machine for that individual's own use, and not for
the purpose of resale of cigarettes.
 
    Section 1-140. Failure to keep records; penalty. Any person
required by this Act to keep records of any kind, who fails to
keep the required records or falsifies those records, is guilty
of a Class 4 felony.
 
    Section 1-145. Failure to preserve records; penalty. Any
person who fails to safely preserve the records required by
Section 1-75 of this Act for the period of 3 years, as required
by that Section, in such manner as to insure permanency and
accessibility for inspection by the Department, shall be guilty
of a business offense and may be fined up to $5,000.
 
    Section 1-150. Forfeit of bond. If a cigarette machine
operator is convicted of the violation of any of the provisions
of this Act, or if his or her license is revoked and no review
is had of the order or revocation, or if on review thereof the
decision is adverse to the cigarette machine operator, or if a
cigarette machine operator fails to pay an assessment as to
which no judicial review is sought and which has become final,
or pursuant to which, upon review thereof, the circuit court
has entered a judgment that is in favor of the Department and
that has become final, the bond filed pursuant to this Act
shall thereupon be forfeited, and the Department may institute
a suit upon such bond in its own name for the entire amount of
such bond and costs. Such suit upon the bond shall be in
addition to any other remedy provided for herein.
 
    Section 1-155. Sunset of exemptions, credits, and
deductions. The application of every exemption, credit, and
deduction against tax imposed by this Act that becomes law
after the effective date of this Act shall be limited by a
reasonable and appropriate sunset date. A taxpayer is not
entitled to take the exemption, credit, or deduction beginning
on the sunset date and thereafter. If a reasonable and
appropriate sunset date is not specified in the Public Act that
creates the exemption, credit, or deduction, a taxpayer shall
not be entitled to take the exemption, credit, or deduction
beginning 5 years after the effective date of the Public Act
creating the exemption, credit, or deduction and thereafter.
 
    Section 1-160. Distribution of receipts by the Department.
All moneys received by the Department under this Act shall be
deposited into the Healthcare Provider Relief Fund.
 
    Section 1-165. Exemption. Persons who are not operating
cigarette machines as defined in this Act and are engaged in
the business of renting, leasing or selling cigarette machines
to persons are exempt from the provisions of this Act.
 
    Section 1-170. Notice. Any person who distributes or offers
for sale or rent a cigarette machine in this State shall
provide notice to any potential purchaser, lessee, or lessor of
that cigarette machine or any retail space containing a
cigarette machine. The notice shall contain information about
this Act, including: (i) licensure requirements for cigarette
machine operators; (ii) tax collection and remittance duties of
cigarette machine operators; (iii) any product limitations
imposed on cigarette machines by this Act; and (iv) packaging
and labeling requirements.
 
ARTICLE 5. AMENDATORY PROVISIONS

 
    Section 5-5. The Illinois Income Tax Act is amended by
adding Section 223 as follows:
 
    (35 ILCS 5/223 new)
    Sec. 223. Hospital credit.
    (a) For tax years ending on or after December 31, 2012, a
taxpayer that is the owner of a hospital licensed under the
Hospital Licensing Act, but not including an organization that
is exempt from federal income taxes under the Internal Revenue
Code, is entitled to a credit against the taxes imposed under
subsections (a) and (b) of Section 201 of this Act in an amount
equal to the lesser of the amount of real property taxes paid
during the tax year on real property used for hospital purposes
during the prior tax year or the cost of free or discounted
services provided during the tax year pursuant to the
hospital's charitable financial assistance policy, measured at
cost.
    (b) If the taxpayer is a partnership or Subchapter S
corporation, the credit is allowed to the partners or
shareholders in accordance with the determination of income and
distributive share of income under Sections 702 and 704 and
Subchapter S of the Internal Revenue Code. A transfer of this
credit may be made by the taxpayer earning the credit within
one year after the credit is earned in accordance with rules
adopted by the Department. The Department shall prescribe rules
to enforce and administer provisions of this Section. If the
amount of the credit exceeds the tax liability for the year,
then the excess credit may be carried forward and applied to
the tax liability of the 5 taxable years following the excess
credit year. The credit shall be applied to the earliest year
for which there is a tax liability. If there are credits from
more than one tax year that are available to offset a
liability, the earlier credit shall be applied first. In no
event shall a credit under this Section reduce the taxpayer's
liability to less than zero.
 
    Section 5-10. The Use Tax Act is amended by adding Section
3-8 as follows:
 
    (35 ILCS 105/3-8 new)
    Sec. 3-8. Hospital exemption.
    (a) Tangible personal property sold to or used by a
hospital owner that owns one or more hospitals licensed under
the Hospital Licensing Act or operated under the University of
Illinois Hospital Act, or a hospital affiliate that is not
already exempt under another provision of this Act and meets
the criteria for an exemption under this Section, is exempt
from taxation under this Act.
    (b) A hospital owner or hospital affiliate satisfies the
conditions for an exemption under this Section if the value of
qualified services or activities listed in subsection (c) of
this Section for the hospital year equals or exceeds the
relevant hospital entity's estimated property tax liability,
without regard to any property tax exemption granted under
Section 15-86 of the Property Tax Code, for the calendar year
in which exemption or renewal of exemption is sought. For
purposes of making the calculations required by this subsection
(b), if the relevant hospital entity is a hospital owner that
owns more than one hospital, the value of the services or
activities listed in subsection (c) shall be calculated on the
basis of only those services and activities relating to the
hospital that includes the subject property, and the relevant
hospital entity's estimated property tax liability shall be
calculated only with respect to the properties comprising that
hospital. In the case of a multi-state hospital system or
hospital affiliate, the value of the services or activities
listed in subsection (c) shall be calculated on the basis of
only those services and activities that occur in Illinois and
the relevant hospital entity's estimated property tax
liability shall be calculated only with respect to its property
located in Illinois.
    (c) The following services and activities shall be
considered for purposes of making the calculations required by
subsection (b):
        (1) Charity care. Free or discounted services provided
    pursuant to the relevant hospital entity's financial
    assistance policy, measured at cost, including discounts
    provided under the Hospital Uninsured Patient Discount
    Act.
        (2) Health services to low-income and underserved
    individuals. Other unreimbursed costs of the relevant
    hospital entity for providing without charge, paying for,
    or subsidizing goods, activities, or services for the
    purpose of addressing the health of low-income or
    underserved individuals. Those activities or services may
    include, but are not limited to: financial or in-kind
    support to affiliated or unaffiliated hospitals, hospital
    affiliates, community clinics, or programs that treat
    low-income or underserved individuals; paying for or
    subsidizing health care professionals who care for
    low-income or underserved individuals; providing or
    subsidizing outreach or educational services to low-income
    or underserved individuals for disease management and
    prevention; free or subsidized goods, supplies, or
    services needed by low-income or underserved individuals
    because of their medical condition; and prenatal or
    childbirth outreach to low-income or underserved persons.
        (3) Subsidy of State or local governments. Direct or
    indirect financial or in-kind subsidies of State or local
    governments by the relevant hospital entity that pay for or
    subsidize activities or programs related to health care for
    low-income or underserved individuals.
        (4) Support for State health care programs for
    low-income individuals. At the election of the hospital
    applicant for each applicable year, either (A) 10% of
    payments to the relevant hospital entity and any hospital
    affiliate designated by the relevant hospital entity
    (provided that such hospital affiliate's operations
    provide financial or operational support for or receive
    financial or operational support from the relevant
    hospital entity) under Medicaid or other means-tested
    programs, including, but not limited to, General
    Assistance, the Covering ALL KIDS Health Insurance Act, and
    the State Children's Health Insurance Program or (B) the
    amount of subsidy provided by the relevant hospital entity
    and any hospital affiliate designated by the relevant
    hospital entity (provided that such hospital affiliate's
    operations provide financial or operational support for or
    receive financial or operational support from the relevant
    hospital entity) to State or local government in treating
    Medicaid recipients and recipients of means-tested
    programs, including but not limited to General Assistance,
    the Covering ALL KIDS Health Insurance Act, and the State
    Children's Health Insurance Program. The amount of subsidy
    for purpose of this item (4) is calculated in the same
    manner as unreimbursed costs are calculated for Medicaid
    and other means-tested government programs in the Schedule
    H of IRS Form 990 in effect on the effective date of this
    amendatory Act of the 97th General Assembly.
        (5) Dual-eligible subsidy. The amount of subsidy
    provided to government by treating dual-eligible
    Medicare/Medicaid patients. The amount of subsidy for
    purposes of this item (5) is calculated by multiplying the
    relevant hospital entity's unreimbursed costs for
    Medicare, calculated in the same manner as determined in
    the Schedule H of IRS Form 990 in effect on the effective
    date of this amendatory Act of the 97th General Assembly,
    by the relevant hospital entity's ratio of dual-eligible
    patients to total Medicare patients.
        (6) Relief of the burden of government related to
    health care. Except to the extent otherwise taken into
    account in this subsection, the portion of unreimbursed
    costs of the relevant hospital entity attributable to
    providing, paying for, or subsidizing goods, activities,
    or services that relieve the burden of government related
    to health care for low-income individuals. Such activities
    or services shall include, but are not limited to,
    providing emergency, trauma, burn, neonatal, psychiatric,
    rehabilitation, or other special services; providing
    medical education; and conducting medical research or
    training of health care professionals. The portion of those
    unreimbursed costs attributable to benefiting low-income
    individuals shall be determined using the ratio calculated
    by adding the relevant hospital entity's costs
    attributable to charity care, Medicaid, other means-tested
    government programs, disabled Medicare patients under age
    65, and dual-eligible Medicare/Medicaid patients and
    dividing that total by the relevant hospital entity's total
    costs. Such costs for the numerator and denominator shall
    be determined by multiplying gross charges by the cost to
    charge ratio taken from the hospital's most recently filed
    Medicare cost report (CMS 2252-10 Worksheet, Part I). In
    the case of emergency services, the ratio shall be
    calculated using costs (gross charges multiplied by the
    cost to charge ratio taken from the hospital's most
    recently filed Medicare cost report (CMS 2252-10
    Worksheet, Part I)) of patients treated in the relevant
    hospital entity's emergency department.
        (7) Any other activity by the relevant hospital entity
    that the Department determines relieves the burden of
    government or addresses the health of low-income or
    underserved individuals.
    (d) The hospital applicant shall include information in its
exemption application establishing that it satisfies the
requirements of subsection (b). For purposes of making the
calculations required by subsection (b), the hospital
applicant may for each year elect to use either (1) the value
of the services or activities listed in subsection (e) for the
hospital year or (2) the average value of those services or
activities for the 3 fiscal years ending with the hospital
year. If the relevant hospital entity has been in operation for
less than 3 completed fiscal years, then the latter
calculation, if elected, shall be performed on a pro rata
basis.
    (e) For purposes of making the calculations required by
this Section:
        (1) particular services or activities eligible for
    consideration under any of the paragraphs (1) through (7)
    of subsection (c) may not be counted under more than one of
    those paragraphs; and
        (2) the amount of unreimbursed costs and the amount of
    subsidy shall not be reduced by restricted or unrestricted
    payments received by the relevant hospital entity as
    contributions deductible under Section 170(a) of the
    Internal Revenue Code.
    (g) Estimation of Exempt Property Tax Liability. The
estimated property tax liability used for the determination in
subsection (b) shall be calculated as follows:
        (1) "Estimated property tax liability" means the
    estimated dollar amount of property tax that would be owed,
    with respect to the exempt portion of each of the relevant
    hospital entity's properties that are already fully or
    partially exempt, or for which an exemption in whole or in
    part is currently being sought, and then aggregated as
    applicable, as if the exempt portion of those properties
    were subject to tax, calculated with respect to each such
    property by multiplying:
            (A) the lesser of (i) the actual assessed value, if
        any, of the portion of the property for which an
        exemption is sought or (ii) an estimated assessed value
        of the exempt portion of such property as determined in
        item (2) of this subsection (g), by
            (B) the applicable State equalization rate
        (yielding the equalized assessed value), by
            (C) the applicable tax rate.
        (2) The estimated assessed value of the exempt portion
    of the property equals the sum of (i) the estimated fair
    market value of buildings on the property, as determined in
    accordance with subparagraphs (A) and (B) of this item (2),
    multiplied by the applicable assessment factor, and (ii)
    the estimated assessed value of the land portion of the
    property, as determined in accordance with subparagraph
    (C).
            (A) The "estimated fair market value of buildings
        on the property" means the replacement value of any
        exempt portion of buildings on the property, minus
        depreciation, determined utilizing the cost
        replacement method whereby the exempt square footage
        of all such buildings is multiplied by the replacement
        cost per square foot for Class A Average building found
        in the most recent edition of the Marshall & Swift
        Valuation Services Manual, adjusted by any appropriate
        current cost and local multipliers.
            (B) Depreciation, for purposes of calculating the
        estimated fair market value of buildings on the
        property, is applied by utilizing a weighted mean life
        for the buildings based on original construction and
        assuming a 40-year life for hospital buildings and the
        applicable life for other types of buildings as
        specified in the American Hospital Association
        publication "Estimated Useful Lives of Depreciable
        Hospital Assets". In the case of hospital buildings,
        the remaining life is divided by 40 and this ratio is
        multiplied by the replacement cost of the buildings to
        obtain an estimated fair market value of buildings. If
        a hospital building is older than 35 years, a remaining
        life of 5 years for residual value is assumed; and if a
        building is less than 8 years old, a remaining life of
        32 years is assumed.
            (C) The estimated assessed value of the land
        portion of the property shall be determined by
        multiplying (i) the per square foot average of the
        assessed values of three parcels of land (not including
        farm land, and excluding the assessed value of the
        improvements thereon) reasonably comparable to the
        property, by (ii) the number of square feet comprising
        the exempt portion of the property's land square
        footage.
        (3) The assessment factor, State equalization rate,
    and tax rate (including any special factors such as
    Enterprise Zones) used in calculating the estimated
    property tax liability shall be for the most recent year
    that is publicly available from the applicable chief county
    assessment officer or officers at least 90 days before the
    end of the hospital year.
        (4) The method utilized to calculate estimated
    property tax liability for purposes of this Section 15-86
    shall not be utilized for the actual valuation, assessment,
    or taxation of property pursuant to the Property Tax Code.
    (h) For the purpose of this Section, the following terms
shall have the meanings set forth below:
        (1) "Hospital" means any institution, place, building,
    buildings on a campus, or other health care facility
    located in Illinois that is licensed under the Hospital
    Licensing Act and has a hospital owner.
        (2) "Hospital owner" means a not-for-profit
    corporation that is the titleholder of a hospital, or the
    owner of the beneficial interest in an Illinois land trust
    that is the titleholder of a hospital.
        (3) "Hospital affiliate" means any corporation,
    partnership, limited partnership, joint venture, limited
    liability company, association or other organization,
    other than a hospital owner, that directly or indirectly
    controls, is controlled by, or is under common control with
    one or more hospital owners and that supports, is supported
    by, or acts in furtherance of the exempt health care
    purposes of at least one of those hospital owners'
    hospitals.
        (4) "Hospital system" means a hospital and one or more
    other hospitals or hospital affiliates related by common
    control or ownership.
        (5) "Control" relating to hospital owners, hospital
    affiliates, or hospital systems means possession, direct
    or indirect, of the power to direct or cause the direction
    of the management and policies of the entity, whether
    through ownership of assets, membership interest, other
    voting or governance rights, by contract or otherwise.
        (6) "Hospital applicant" means a hospital owner or
    hospital affiliate that files an application for an
    exemption or renewal of exemption under this Section.
        (7) "Relevant hospital entity" means (A) the hospital
    owner, in the case of a hospital applicant that is a
    hospital owner, and (B) at the election of a hospital
    applicant that is a hospital affiliate, either (i) the
    hospital affiliate or (ii) the hospital system to which the
    hospital applicant belongs, including any hospitals or
    hospital affiliates that are related by common control or
    ownership.
        (8) "Subject property" means property used for the
    calculation under subsection (b) of this Section.
        (9) "Hospital year" means the fiscal year of the
    relevant hospital entity, or the fiscal year of one of the
    hospital owners in the hospital system if the relevant
    hospital entity is a hospital system with members with
    different fiscal years, that ends in the year for which the
    exemption is sought.
 
    Section 5-15. The Service Use Tax Act is amended by adding
Section 3-8 as follows:
 
    (35 ILCS 110/3-8 new)
    Sec. 3-8. Hospital exemption.
    (a) Tangible personal property sold to or used by a
hospital owner that owns one or more hospitals licensed under
the Hospital Licensing Act or operated under the University of
Illinois Hospital Act, or a hospital affiliate that is not
already exempt under another provision of this Act and meets
the criteria for an exemption under this Section, is exempt
from taxation under this Act.
    (b) A hospital owner or hospital affiliate satisfies the
conditions for an exemption under this Section if the value of
qualified services or activities listed in subsection (c) of
this Section for the hospital year equals or exceeds the
relevant hospital entity's estimated property tax liability,
without regard to any property tax exemption granted under
Section 15-86 of the Property Tax Code, for the calendar year
in which exemption or renewal of exemption is sought. For
purposes of making the calculations required by this subsection
(b), if the relevant hospital entity is a hospital owner that
owns more than one hospital, the value of the services or
activities listed in subsection (c) shall be calculated on the
basis of only those services and activities relating to the
hospital that includes the subject property, and the relevant
hospital entity's estimated property tax liability shall be
calculated only with respect to the properties comprising that
hospital. In the case of a multi-state hospital system or
hospital affiliate, the value of the services or activities
listed in subsection (c) shall be calculated on the basis of
only those services and activities that occur in Illinois and
the relevant hospital entity's estimated property tax
liability shall be calculated only with respect to its property
located in Illinois.
    (c) The following services and activities shall be
considered for purposes of making the calculations required by
subsection (b):
        (1) Charity care. Free or discounted services provided
    pursuant to the relevant hospital entity's financial
    assistance policy, measured at cost, including discounts
    provided under the Hospital Uninsured Patient Discount
    Act.
        (2) Health services to low-income and underserved
    individuals. Other unreimbursed costs of the relevant
    hospital entity for providing without charge, paying for,
    or subsidizing goods, activities, or services for the
    purpose of addressing the health of low-income or
    underserved individuals. Those activities or services may
    include, but are not limited to: financial or in-kind
    support to affiliated or unaffiliated hospitals, hospital
    affiliates, community clinics, or programs that treat
    low-income or underserved individuals; paying for or
    subsidizing health care professionals who care for
    low-income or underserved individuals; providing or
    subsidizing outreach or educational services to low-income
    or underserved individuals for disease management and
    prevention; free or subsidized goods, supplies, or
    services needed by low-income or underserved individuals
    because of their medical condition; and prenatal or
    childbirth outreach to low-income or underserved persons.
        (3) Subsidy of State or local governments. Direct or
    indirect financial or in-kind subsidies of State or local
    governments by the relevant hospital entity that pay for or
    subsidize activities or programs related to health care for
    low-income or underserved individuals.
        (4) Support for State health care programs for
    low-income individuals. At the election of the hospital
    applicant for each applicable year, either (A) 10% of
    payments to the relevant hospital entity and any hospital
    affiliate designated by the relevant hospital entity
    (provided that such hospital affiliate's operations
    provide financial or operational support for or receive
    financial or operational support from the relevant
    hospital entity) under Medicaid or other means-tested
    programs, including, but not limited to, General
    Assistance, the Covering ALL KIDS Health Insurance Act, and
    the State Children's Health Insurance Program or (B) the
    amount of subsidy provided by the relevant hospital entity
    and any hospital affiliate designated by the relevant
    hospital entity (provided that such hospital affiliate's
    operations provide financial or operational support for or
    receive financial or operational support from the relevant
    hospital entity) to State or local government in treating
    Medicaid recipients and recipients of means-tested
    programs, including but not limited to General Assistance,
    the Covering ALL KIDS Health Insurance Act, and the State
    Children's Health Insurance Program. The amount of subsidy
    for purposes of this item (4) is calculated in the same
    manner as unreimbursed costs are calculated for Medicaid
    and other means-tested government programs in the Schedule
    H of IRS Form 990 in effect on the effective date of this
    amendatory Act of the 97th General Assembly.
        (5) Dual-eligible subsidy. The amount of subsidy
    provided to government by treating dual-eligible
    Medicare/Medicaid patients. The amount of subsidy for
    purposes of this item (5) is calculated by multiplying the
    relevant hospital entity's unreimbursed costs for
    Medicare, calculated in the same manner as determined in
    the Schedule H of IRS Form 990 in effect on the effective
    date of this amendatory Act of the 97th General Assembly,
    by the relevant hospital entity's ratio of dual-eligible
    patients to total Medicare patients.
        (6) Relief of the burden of government related to
    health care. Except to the extent otherwise taken into
    account in this subsection, the portion of unreimbursed
    costs of the relevant hospital entity attributable to
    providing, paying for, or subsidizing goods, activities,
    or services that relieve the burden of government related
    to health care for low-income individuals. Such activities
    or services shall include, but are not limited to,
    providing emergency, trauma, burn, neonatal, psychiatric,
    rehabilitation, or other special services; providing
    medical education; and conducting medical research or
    training of health care professionals. The portion of those
    unreimbursed costs attributable to benefiting low-income
    individuals shall be determined using the ratio calculated
    by adding the relevant hospital entity's costs
    attributable to charity care, Medicaid, other means-tested
    government programs, disabled Medicare patients under age
    65, and dual-eligible Medicare/Medicaid patients and
    dividing that total by the relevant hospital entity's total
    costs. Such costs for the numerator and denominator shall
    be determined by multiplying gross charges by the cost to
    charge ratio taken from the hospital's most recently filed
    Medicare cost report (CMS 2252-10 Worksheet, Part I). In
    the case of emergency services, the ratio shall be
    calculated using costs (gross charges multiplied by the
    cost to charge ratio taken from the hospital's most
    recently filed Medicare cost report (CMS 2252-10
    Worksheet, Part I)) of patients treated in the relevant
    hospital entity's emergency department.
        (7) Any other activity by the relevant hospital entity
    that the Department determines relieves the burden of
    government or addresses the health of low-income or
    underserved individuals.
    (d) The hospital applicant shall include information in its
exemption application establishing that it satisfies the
requirements of subsection (b). For purposes of making the
calculations required by subsection (b), the hospital
applicant may for each year elect to use either (1) the value
of the services or activities listed in subsection (e) for the
hospital year or (2) the average value of those services or
activities for the 3 fiscal years ending with the hospital
year. If the relevant hospital entity has been in operation for
less than 3 completed fiscal years, then the latter
calculation, if elected, shall be performed on a pro rata
basis.
    (e) For purposes of making the calculations required by
this Section:
        (1) particular services or activities eligible for
    consideration under any of the paragraphs (1) through (7)
    of subsection (c) may not be counted under more than one of
    those paragraphs; and
        (2) the amount of unreimbursed costs and the amount of
    subsidy shall not be reduced by restricted or unrestricted
    payments received by the relevant hospital entity as
    contributions deductible under Section 170(a) of the
    Internal Revenue Code.
    (g) Estimation of Exempt Property Tax Liability. The
estimated property tax liability used for the determination in
subsection (b) shall be calculated as follows:
        (1) "Estimated property tax liability" means the
    estimated dollar amount of property tax that would be owed,
    with respect to the exempt portion of each of the relevant
    hospital entity's properties that are already fully or
    partially exempt, or for which an exemption in whole or in
    part is currently being sought, and then aggregated as
    applicable, as if the exempt portion of those properties
    were subject to tax, calculated with respect to each such
    property by multiplying:
            (A) the lesser of (i) the actual assessed value, if
        any, of the portion of the property for which an
        exemption is sought or (ii) an estimated assessed value
        of the exempt portion of such property as determined in
        item (2) of this subsection (g), by
            (B) the applicable State equalization rate
        (yielding the equalized assessed value), by
            (C) the applicable tax rate.
        (2) The estimated assessed value of the exempt portion
    of the property equals the sum of (i) the estimated fair
    market value of buildings on the property, as determined in
    accordance with subparagraphs (A) and (B) of this item (2),
    multiplied by the applicable assessment factor, and (ii)
    the estimated assessed value of the land portion of the
    property, as determined in accordance with subparagraph
    (C).
            (A) The "estimated fair market value of buildings
        on the property" means the replacement value of any
        exempt portion of buildings on the property, minus
        depreciation, determined utilizing the cost
        replacement method whereby the exempt square footage
        of all such buildings is multiplied by the replacement
        cost per square foot for Class A Average building found
        in the most recent edition of the Marshall & Swift
        Valuation Services Manual, adjusted by any appropriate
        current cost and local multipliers.
            (B) Depreciation, for purposes of calculating the
        estimated fair market value of buildings on the
        property, is applied by utilizing a weighted mean life
        for the buildings based on original construction and
        assuming a 40-year life for hospital buildings and the
        applicable life for other types of buildings as
        specified in the American Hospital Association
        publication "Estimated Useful Lives of Depreciable
        Hospital Assets". In the case of hospital buildings,
        the remaining life is divided by 40 and this ratio is
        multiplied by the replacement cost of the buildings to
        obtain an estimated fair market value of buildings. If
        a hospital building is older than 35 years, a remaining
        life of 5 years for residual value is assumed; and if a
        building is less than 8 years old, a remaining life of
        32 years is assumed.
            (C) The estimated assessed value of the land
        portion of the property shall be determined by
        multiplying (i) the per square foot average of the
        assessed values of three parcels of land (not including
        farm land, and excluding the assessed value of the
        improvements thereon) reasonably comparable to the
        property, by (ii) the number of square feet comprising
        the exempt portion of the property's land square
        footage.
        (3) The assessment factor, State equalization rate,
    and tax rate (including any special factors such as
    Enterprise Zones) used in calculating the estimated
    property tax liability shall be for the most recent year
    that is publicly available from the applicable chief county
    assessment officer or officers at least 90 days before the
    end of the hospital year.
        (4) The method utilized to calculate estimated
    property tax liability for purposes of this Section 15-86
    shall not be utilized for the actual valuation, assessment,
    or taxation of property pursuant to the Property Tax Code.
    (h) For the purpose of this Section, the following terms
shall have the meanings set forth below:
        (1) "Hospital" means any institution, place, building,
    buildings on a campus, or other health care facility
    located in Illinois that is licensed under the Hospital
    Licensing Act and has a hospital owner.
        (2) "Hospital owner" means a not-for-profit
    corporation that is the titleholder of a hospital, or the
    owner of the beneficial interest in an Illinois land trust
    that is the titleholder of a hospital.
        (3) "Hospital affiliate" means any corporation,
    partnership, limited partnership, joint venture, limited
    liability company, association or other organization,
    other than a hospital owner, that directly or indirectly
    controls, is controlled by, or is under common control with
    one or more hospital owners and that supports, is supported
    by, or acts in furtherance of the exempt health care
    purposes of at least one of those hospital owners'
    hospitals.
        (4) "Hospital system" means a hospital and one or more
    other hospitals or hospital affiliates related by common
    control or ownership.
        (5) "Control" relating to hospital owners, hospital
    affiliates, or hospital systems means possession, direct
    or indirect, of the power to direct or cause the direction
    of the management and policies of the entity, whether
    through ownership of assets, membership interest, other
    voting or governance rights, by contract or otherwise.
        (6) "Hospital applicant" means a hospital owner or
    hospital affiliate that files an application for an
    exemption or renewal of exemption under this Section.
        (7) "Relevant hospital entity" means (A) the hospital
    owner, in the case of a hospital applicant that is a
    hospital owner, and (B) at the election of a hospital
    applicant that is a hospital affiliate, either (i) the
    hospital affiliate or (ii) the hospital system to which the
    hospital applicant belongs, including any hospitals or
    hospital affiliates that are related by common control or
    ownership.
        (8) "Subject property" means property used for the
    calculation under subsection (b) of this Section.
        (9) "Hospital year" means the fiscal year of the
    relevant hospital entity, or the fiscal year of one of the
    hospital owners in the hospital system if the relevant
    hospital entity is a hospital system with members with
    different fiscal years, that ends in the year for which the
    exemption is sought.
 
    Section 5-20. The Service Occupation Tax Act is amended by
adding Section 3-8 as follows:
 
    (35 ILCS 115/3-8 new)
    Sec. 3-8. Hospital exemption.
    (a) Tangible personal property sold to or used by a
hospital owner that owns one or more hospitals licensed under
the Hospital Licensing Act or operated under the University of
Illinois Hospital Act, or a hospital affiliate that is not
already exempt under another provision of this Act and meets
the criteria for an exemption under this Section, is exempt
from taxation under this Act.
    (b) A hospital owner or hospital affiliate satisfies the
conditions for an exemption under this Section if the value of
qualified services or activities listed in subsection (c) of
this Section for the hospital year equals or exceeds the
relevant hospital entity's estimated property tax liability,
without regard to any property tax exemption granted under
Section 15-86 of the Property Tax Code, for the calendar year
in which exemption or renewal of exemption is sought. For
purposes of making the calculations required by this subsection
(b), if the relevant hospital entity is a hospital owner that
owns more than one hospital, the value of the services or
activities listed in subsection (c) shall be calculated on the
basis of only those services and activities relating to the
hospital that includes the subject property, and the relevant
hospital entity's estimated property tax liability shall be
calculated only with respect to the properties comprising that
hospital. In the case of a multi-state hospital system or
hospital affiliate, the value of the services or activities
listed in subsection (c) shall be calculated on the basis of
only those services and activities that occur in Illinois and
the relevant hospital entity's estimated property tax
liability shall be calculated only with respect to its property
located in Illinois.
    (c) The following services and activities shall be
considered for purposes of making the calculations required by
subsection (b):
        (1) Charity care. Free or discounted services provided
    pursuant to the relevant hospital entity's financial
    assistance policy, measured at cost, including discounts
    provided under the Hospital Uninsured Patient Discount
    Act.
        (2) Health services to low-income and underserved
    individuals. Other unreimbursed costs of the relevant
    hospital entity for providing without charge, paying for,
    or subsidizing goods, activities, or services for the
    purpose of addressing the health of low-income or
    underserved individuals. Those activities or services may
    include, but are not limited to: financial or in-kind
    support to affiliated or unaffiliated hospitals, hospital
    affiliates, community clinics, or programs that treat
    low-income or underserved individuals; paying for or
    subsidizing health care professionals who care for
    low-income or underserved individuals; providing or
    subsidizing outreach or educational services to low-income
    or underserved individuals for disease management and
    prevention; free or subsidized goods, supplies, or
    services needed by low-income or underserved individuals
    because of their medical condition; and prenatal or
    childbirth outreach to low-income or underserved persons.
        (3) Subsidy of State or local governments. Direct or
    indirect financial or in-kind subsidies of State or local
    governments by the relevant hospital entity that pay for or
    subsidize activities or programs related to health care for
    low-income or underserved individuals.
        (4) Support for State health care programs for
    low-income individuals. At the election of the hospital
    applicant for each applicable year, either (A) 10% of
    payments to the relevant hospital entity and any hospital
    affiliate designated by the relevant hospital entity
    (provided that such hospital affiliate's operations
    provide financial or operational support for or receive
    financial or operational support from the relevant
    hospital entity) under Medicaid or other means-tested
    programs, including, but not limited to, General
    Assistance, the Covering ALL KIDS Health Insurance Act, and
    the State Children's Health Insurance Program or (B) the
    amount of subsidy provided by the relevant hospital entity
    and any hospital affiliate designated by the relevant
    hospital entity (provided that such hospital affiliate's
    operations provide financial or operational support for or
    receive financial or operational support from the relevant
    hospital entity) to State or local government in treating
    Medicaid recipients and recipients of means-tested
    programs, including but not limited to General Assistance,
    the Covering ALL KIDS Health Insurance Act, and the State
    Children's Health Insurance Program. The amount of subsidy
    for purposes of this item (4) is calculated in the same
    manner as unreimbursed costs are calculated for Medicaid
    and other means-tested government programs in the Schedule
    H of IRS Form 990 in effect on the effective date of this
    amendatory Act of the 97th General Assembly.
        (5) Dual-eligible subsidy. The amount of subsidy
    provided to government by treating dual-eligible
    Medicare/Medicaid patients. The amount of subsidy for
    purposes of this item (5) is calculated by multiplying the
    relevant hospital entity's unreimbursed costs for
    Medicare, calculated in the same manner as determined in
    the Schedule H of IRS Form 990 in effect on the effective
    date of this amendatory Act of the 97th General Assembly,
    by the relevant hospital entity's ratio of dual-eligible
    patients to total Medicare patients.
        (6) Relief of the burden of government related to
    health care. Except to the extent otherwise taken into
    account in this subsection, the portion of unreimbursed
    costs of the relevant hospital entity attributable to
    providing, paying for, or subsidizing goods, activities,
    or services that relieve the burden of government related
    to health care for low-income individuals. Such activities
    or services shall include, but are not limited to,
    providing emergency, trauma, burn, neonatal, psychiatric,
    rehabilitation, or other special services; providing
    medical education; and conducting medical research or
    training of health care professionals. The portion of those
    unreimbursed costs attributable to benefiting low-income
    individuals shall be determined using the ratio calculated
    by adding the relevant hospital entity's costs
    attributable to charity care, Medicaid, other means-tested
    government programs, disabled Medicare patients under age
    65, and dual-eligible Medicare/Medicaid patients and
    dividing that total by the relevant hospital entity's total
    costs. Such costs for the numerator and denominator shall
    be determined by multiplying gross charges by the cost to
    charge ratio taken from the hospital's most recently filed
    Medicare cost report (CMS 2252-10 Worksheet, Part I). In
    the case of emergency services, the ratio shall be
    calculated using costs (gross charges multiplied by the
    cost to charge ratio taken from the hospital's most
    recently filed Medicare cost report (CMS 2252-10
    Worksheet, Part I)) of patients treated in the relevant
    hospital entity's emergency department.
        (7) Any other activity by the relevant hospital entity
    that the Department determines relieves the burden of
    government or addresses the health of low-income or
    underserved individuals.
    (d) The hospital applicant shall include information in its
exemption application establishing that it satisfies the
requirements of subsection (b). For purposes of making the
calculations required by subsection (b), the hospital
applicant may for each year elect to use either (1) the value
of the services or activities listed in subsection (e) for the
hospital year or (2) the average value of those services or
activities for the 3 fiscal years ending with the hospital
year. If the relevant hospital entity has been in operation for
less than 3 completed fiscal years, then the latter
calculation, if elected, shall be performed on a pro rata
basis.
    (e) For purposes of making the calculations required by
this Section:
        (1) particular services or activities eligible for
    consideration under any of the paragraphs (1) through (7)
    of subsection (c) may not be counted under more than one of
    those paragraphs; and
        (2) the amount of unreimbursed costs and the amount of
    subsidy shall not be reduced by restricted or unrestricted
    payments received by the relevant hospital entity as
    contributions deductible under Section 170(a) of the
    Internal Revenue Code.
    (g) Estimation of Exempt Property Tax Liability. The
estimated property tax liability used for the determination in
subsection (b) shall be calculated as follows:
        (1) "Estimated property tax liability" means the
    estimated dollar amount of property tax that would be owed,
    with respect to the exempt portion of each of the relevant
    hospital entity's properties that are already fully or
    partially exempt, or for which an exemption in whole or in
    part is currently being sought, and then aggregated as
    applicable, as if the exempt portion of those properties
    were subject to tax, calculated with respect to each such
    property by multiplying:
            (A) the lesser of (i) the actual assessed value, if
        any, of the portion of the property for which an
        exemption is sought or (ii) an estimated assessed value
        of the exempt portion of such property as determined in
        item (2) of this subsection (g), by
            (B) the applicable State equalization rate
        (yielding the equalized assessed value), by
            (C) the applicable tax rate.
        (2) The estimated assessed value of the exempt portion
    of the property equals the sum of (i) the estimated fair
    market value of buildings on the property, as determined in
    accordance with subparagraphs (A) and (B) of this item (2),
    multiplied by the applicable assessment factor, and (ii)
    the estimated assessed value of the land portion of the
    property, as determined in accordance with subparagraph
    (C).
            (A) The "estimated fair market value of buildings
        on the property" means the replacement value of any
        exempt portion of buildings on the property, minus
        depreciation, determined utilizing the cost
        replacement method whereby the exempt square footage
        of all such buildings is multiplied by the replacement
        cost per square foot for Class A Average building found
        in the most recent edition of the Marshall & Swift
        Valuation Services Manual, adjusted by any appropriate
        current cost and local multipliers.
            (B) Depreciation, for purposes of calculating the
        estimated fair market value of buildings on the
        property, is applied by utilizing a weighted mean life
        for the buildings based on original construction and
        assuming a 40-year life for hospital buildings and the
        applicable life for other types of buildings as
        specified in the American Hospital Association
        publication "Estimated Useful Lives of Depreciable
        Hospital Assets". In the case of hospital buildings,
        the remaining life is divided by 40 and this ratio is
        multiplied by the replacement cost of the buildings to
        obtain an estimated fair market value of buildings. If
        a hospital building is older than 35 years, a remaining
        life of 5 years for residual value is assumed; and if a
        building is less than 8 years old, a remaining life of
        32 years is assumed.
            (C) The estimated assessed value of the land
        portion of the property shall be determined by
        multiplying (i) the per square foot average of the
        assessed values of three parcels of land (not including
        farm land, and excluding the assessed value of the
        improvements thereon) reasonably comparable to the
        property, by (ii) the number of square feet comprising
        the exempt portion of the property's land square
        footage.
        (3) The assessment factor, State equalization rate,
    and tax rate (including any special factors such as
    Enterprise Zones) used in calculating the estimated
    property tax liability shall be for the most recent year
    that is publicly available from the applicable chief county
    assessment officer or officers at least 90 days before the
    end of the hospital year.
        (4) The method utilized to calculate estimated
    property tax liability for purposes of this Section 15-86
    shall not be utilized for the actual valuation, assessment,
    or taxation of property pursuant to the Property Tax Code.
    (h) For the purpose of this Section, the following terms
shall have the meanings set forth below:
        (1) "Hospital" means any institution, place, building,
    buildings on a campus, or other health care facility
    located in Illinois that is licensed under the Hospital
    Licensing Act and has a hospital owner.
        (2) "Hospital owner" means a not-for-profit
    corporation that is the titleholder of a hospital, or the
    owner of the beneficial interest in an Illinois land trust
    that is the titleholder of a hospital.
        (3) "Hospital affiliate" means any corporation,
    partnership, limited partnership, joint venture, limited
    liability company, association or other organization,
    other than a hospital owner, that directly or indirectly
    controls, is controlled by, or is under common control with
    one or more hospital owners and that supports, is supported
    by, or acts in furtherance of the exempt health care
    purposes of at least one of those hospital owners'
    hospitals.
        (4) "Hospital system" means a hospital and one or more
    other hospitals or hospital affiliates related by common
    control or ownership.
        (5) "Control" relating to hospital owners, hospital
    affiliates, or hospital systems means possession, direct
    or indirect, of the power to direct or cause the direction
    of the management and policies of the entity, whether
    through ownership of assets, membership interest, other
    voting or governance rights, by contract or otherwise.
        (6) "Hospital applicant" means a hospital owner or
    hospital affiliate that files an application for an
    exemption or renewal of exemption under this Section.
        (7) "Relevant hospital entity" means (A) the hospital
    owner, in the case of a hospital applicant that is a
    hospital owner, and (B) at the election of a hospital
    applicant that is a hospital affiliate, either (i) the
    hospital affiliate or (ii) the hospital system to which the
    hospital applicant belongs, including any hospitals or
    hospital affiliates that are related by common control or
    ownership.
        (8) "Subject property" means property used for the
    calculation under subsection (b) of this Section.
        (9) "Hospital year" means the fiscal year of the
    relevant hospital entity, or the fiscal year of one of the
    hospital owners in the hospital system if the relevant
    hospital entity is a hospital system with members with
    different fiscal years, that ends in the year for which the
    exemption is sought.
 
    Section 5-25. The Retailers' Occupation Tax Act is amended
by adding Section 2-9 as follows:
 
    (35 ILCS 120/2-9 new)
    Sec. 2-9. Hospital exemption.
    (a) Tangible personal property sold to or used by a
hospital owner that owns one or more hospitals licensed under
the Hospital Licensing Act or operated under the University of
Illinois Hospital Act, or a hospital affiliate that is not
already exempt under another provision of this Act and meets
the criteria for an exemption under this Section, is exempt
from taxation under this Act.
    (b) A hospital owner or hospital affiliate satisfies the
conditions for an exemption under this Section if the value of
qualified services or activities listed in subsection (c) of
this Section for the hospital year equals or exceeds the
relevant hospital entity's estimated property tax liability,
without regard to any property tax exemption granted under
Section 15-86 of the Property Tax Code, for the calendar year
in which exemption or renewal of exemption is sought. For
purposes of making the calculations required by this subsection
(b), if the relevant hospital entity is a hospital owner that
owns more than one hospital, the value of the services or
activities listed in subsection (c) shall be calculated on the
basis of only those services and activities relating to the
hospital that includes the subject property, and the relevant
hospital entity's estimated property tax liability shall be
calculated only with respect to the properties comprising that
hospital. In the case of a multi-state hospital system or
hospital affiliate, the value of the services or activities
listed in subsection (c) shall be calculated on the basis of
only those services and activities that occur in Illinois and
the relevant hospital entity's estimated property tax
liability shall be calculated only with respect to its property
located in Illinois.
    (c) The following services and activities shall be
considered for purposes of making the calculations required by
subsection (b):
        (1) Charity care. Free or discounted services provided
    pursuant to the relevant hospital entity's financial
    assistance policy, measured at cost, including discounts
    provided under the Hospital Uninsured Patient Discount
    Act.
        (2) Health services to low-income and underserved
    individuals. Other unreimbursed costs of the relevant
    hospital entity for providing without charge, paying for,
    or subsidizing goods, activities, or services for the
    purpose of addressing the health of low-income or
    underserved individuals. Those activities or services may
    include, but are not limited to: financial or in-kind
    support to affiliated or unaffiliated hospitals, hospital
    affiliates, community clinics, or programs that treat
    low-income or underserved individuals; paying for or
    subsidizing health care professionals who care for
    low-income or underserved individuals; providing or
    subsidizing outreach or educational services to low-income
    or underserved individuals for disease management and
    prevention; free or subsidized goods, supplies, or
    services needed by low-income or underserved individuals
    because of their medical condition; and prenatal or
    childbirth outreach to low-income or underserved persons.
        (3) Subsidy of State or local governments. Direct or
    indirect financial or in-kind subsidies of State or local
    governments by the relevant hospital entity that pay for or
    subsidize activities or programs related to health care for
    low-income or underserved individuals.
        (4) Support for State health care programs for
    low-income individuals. At the election of the hospital
    applicant for each applicable year, either (A) 10% of
    payments to the relevant hospital entity and any hospital
    affiliate designated by the relevant hospital entity
    (provided that such hospital affiliate's operations
    provide financial or operational support for or receive
    financial or operational support from the relevant
    hospital entity) under Medicaid or other means-tested
    programs, including, but not limited to, General
    Assistance, the Covering ALL KIDS Health Insurance Act, and
    the State Children's Health Insurance Program or (B) the
    amount of subsidy provided by the relevant hospital entity
    and any hospital affiliate designated by the relevant
    hospital entity (provided that such hospital affiliate's
    operations provide financial or operational support for or
    receive financial or operational support from the relevant
    hospital entity) to State or local government in treating
    Medicaid recipients and recipients of means-tested
    programs, including but not limited to General Assistance,
    the Covering ALL KIDS Health Insurance Act, and the State
    Children's Health Insurance Program. The amount of subsidy
    for purposes of this item (4) is calculated in the same
    manner as unreimbursed costs are calculated for Medicaid
    and other means-tested government programs in the Schedule
    H of IRS Form 990 in effect on the effective date of this
    amendatory Act of the 97th General Assembly.
        (5) Dual-eligible subsidy. The amount of subsidy
    provided to government by treating dual-eligible
    Medicare/Medicaid patients. The amount of subsidy for
    purposes of this item (5) is calculated by multiplying the
    relevant hospital entity's unreimbursed costs for
    Medicare, calculated in the same manner as determined in
    the Schedule H of IRS Form 990 in effect on the effective
    date of this amendatory Act of the 97th General Assembly,
    by the relevant hospital entity's ratio of dual-eligible
    patients to total Medicare patients.
        (6) Relief of the burden of government related to
    health care. Except to the extent otherwise taken into
    account in this subsection, the portion of unreimbursed
    costs of the relevant hospital entity attributable to
    providing, paying for, or subsidizing goods, activities,
    or services that relieve the burden of government related
    to health care for low-income individuals. Such activities
    or services shall include, but are not limited to,
    providing emergency, trauma, burn, neonatal, psychiatric,
    rehabilitation, or other special services; providing
    medical education; and conducting medical research or
    training of health care professionals. The portion of those
    unreimbursed costs attributable to benefiting low-income
    individuals shall be determined using the ratio calculated
    by adding the relevant hospital entity's costs
    attributable to charity care, Medicaid, other means-tested
    government programs, disabled Medicare patients under age
    65, and dual-eligible Medicare/Medicaid patients and
    dividing that total by the relevant hospital entity's total
    costs. Such costs for the numerator and denominator shall
    be determined by multiplying gross charges by the cost to
    charge ratio taken from the hospital's most recently filed
    Medicare cost report (CMS 2252-10 Worksheet, Part I). In
    the case of emergency services, the ratio shall be
    calculated using costs (gross charges multiplied by the
    cost to charge ratio taken from the hospital's most
    recently filed Medicare cost report (CMS 2252-10
    Worksheet, Part I)) of patients treated in the relevant
    hospital entity's emergency department.
        (7) Any other activity by the relevant hospital entity
    that the Department determines relieves the burden of
    government or addresses the health of low-income or
    underserved individuals.
    (d) The hospital applicant shall include information in its
exemption application establishing that it satisfies the
requirements of subsection (b). For purposes of making the
calculations required by subsection (b), the hospital
applicant may for each year elect to use either (1) the value
of the services or activities listed in subsection (e) for the
hospital year or (2) the average value of those services or
activities for the 3 fiscal years ending with the hospital
year. If the relevant hospital entity has been in operation for
less than 3 completed fiscal years, then the latter
calculation, if elected, shall be performed on a pro rata
basis.
    (e) For purposes of making the calculations required by
this Section:
        (1) particular services or activities eligible for
    consideration under any of the paragraphs (1) through (7)
    of subsection (c) may not be counted under more than one of
    those paragraphs; and
        (2) the amount of unreimbursed costs and the amount of
    subsidy shall not be reduced by restricted or unrestricted
    payments received by the relevant hospital entity as
    contributions deductible under Section 170(a) of the
    Internal Revenue Code.
    (g) Estimation of Exempt Property Tax Liability. The
estimated property tax liability used for the determination in
subsection (b) shall be calculated as follows:
        (1) "Estimated property tax liability" means the
    estimated dollar amount of property tax that would be owed,
    with respect to the exempt portion of each of the relevant
    hospital entity's properties that are already fully or
    partially exempt, or for which an exemption in whole or in
    part is currently being sought, and then aggregated as
    applicable, as if the exempt portion of those properties
    were subject to tax, calculated with respect to each such
    property by multiplying:
            (A) the lesser of (i) the actual assessed value, if
        any, of the portion of the property for which an
        exemption is sought or (ii) an estimated assessed value
        of the exempt portion of such property as determined in
        item (2) of this subsection (g), by
            (B) the applicable State equalization rate
        (yielding the equalized assessed value), by
            (C) the applicable tax rate.
        (2) The estimated assessed value of the exempt portion
    of the property equals the sum of (i) the estimated fair
    market value of buildings on the property, as determined in
    accordance with subparagraphs (A) and (B) of this item (2),
    multiplied by the applicable assessment factor, and (ii)
    the estimated assessed value of the land portion of the
    property, as determined in accordance with subparagraph
    (C).
            (A) The "estimated fair market value of buildings
        on the property" means the replacement value of any
        exempt portion of buildings on the property, minus
        depreciation, determined utilizing the cost
        replacement method whereby the exempt square footage
        of all such buildings is multiplied by the replacement
        cost per square foot for Class A Average building found
        in the most recent edition of the Marshall & Swift
        Valuation Services Manual, adjusted by any appropriate
        current cost and local multipliers.
            (B) Depreciation, for purposes of calculating the
        estimated fair market value of buildings on the
        property, is applied by utilizing a weighted mean life
        for the buildings based on original construction and
        assuming a 40-year life for hospital buildings and the
        applicable life for other types of buildings as
        specified in the American Hospital Association
        publication "Estimated Useful Lives of Depreciable
        Hospital Assets". In the case of hospital buildings,
        the remaining life is divided by 40 and this ratio is
        multiplied by the replacement cost of the buildings to
        obtain an estimated fair market value of buildings. If
        a hospital building is older than 35 years, a remaining
        life of 5 years for residual value is assumed; and if a
        building is less than 8 years old, a remaining life of
        32 years is assumed.
            (C) The estimated assessed value of the land
        portion of the property shall be determined by
        multiplying (i) the per square foot average of the
        assessed values of three parcels of land (not including
        farm land, and excluding the assessed value of the
        improvements thereon) reasonably comparable to the
        property, by (ii) the number of square feet comprising
        the exempt portion of the property's land square
        footage.
        (3) The assessment factor, State equalization rate,
    and tax rate (including any special factors such as
    Enterprise Zones) used in calculating the estimated
    property tax liability shall be for the most recent year
    that is publicly available from the applicable chief county
    assessment officer or officers at least 90 days before the
    end of the hospital year.
        (4) The method utilized to calculate estimated
    property tax liability for purposes of this Section 15-86
    shall not be utilized for the actual valuation, assessment,
    or taxation of property pursuant to the Property Tax Code.
    (h) For the purpose of this Section, the following terms
shall have the meanings set forth below:
        (1) "Hospital" means any institution, place, building,
    buildings on a campus, or other health care facility
    located in Illinois that is licensed under the Hospital
    Licensing Act and has a hospital owner.
        (2) "Hospital owner" means a not-for-profit
    corporation that is the titleholder of a hospital, or the
    owner of the beneficial interest in an Illinois land trust
    that is the titleholder of a hospital.
        (3) "Hospital affiliate" means any corporation,
    partnership, limited partnership, joint venture, limited
    liability company, association or other organization,
    other than a hospital owner, that directly or indirectly
    controls, is controlled by, or is under common control with
    one or more hospital owners and that supports, is supported
    by, or acts in furtherance of the exempt health care
    purposes of at least one of those hospital owners'
    hospitals.
        (4) "Hospital system" means a hospital and one or more
    other hospitals or hospital affiliates related by common
    control or ownership.
        (5) "Control" relating to hospital owners, hospital
    affiliates, or hospital systems means possession, direct
    or indirect, of the power to direct or cause the direction
    of the management and policies of the entity, whether
    through ownership of assets, membership interest, other
    voting or governance rights, by contract or otherwise.
        (6) "Hospital applicant" means a hospital owner or
    hospital affiliate that files an application for an
    exemption or renewal of exemption under this Section.
        (7) "Relevant hospital entity" means (A) the hospital
    owner, in the case of a hospital applicant that is a
    hospital owner, and (B) at the election of a hospital
    applicant that is a hospital affiliate, either (i) the
    hospital affiliate or (ii) the hospital system to which the
    hospital applicant belongs, including any hospitals or
    hospital affiliates that are related by common control or
    ownership.
        (8) "Subject property" means property used for the
    calculation under subsection (b) of this Section.
        (9) "Hospital year" means the fiscal year of the
    relevant hospital entity, or the fiscal year of one of the
    hospital owners in the hospital system if the relevant
    hospital entity is a hospital system with members with
    different fiscal years, that ends in the year for which the
    exemption is sought.
 
    Section 5-30. The Cigarette Tax Act is amended by changing
Sections 1 and 2 as follows:
 
    (35 ILCS 130/1)  (from Ch. 120, par. 453.1)
    Sec. 1. For the purposes of this Act:
    "Brand Style" means a variety of cigarettes distinguished
by the tobacco used, tar and nicotine content, flavoring used,
size of the cigarette, filtration on the cigarette or
packaging.
    Until July 1, 2012, "cigarette" "Cigarette", means any roll
for smoking made wholly or in part of tobacco irrespective of
size or shape and whether or not such tobacco is flavored,
adulterated or mixed with any other ingredient, and the wrapper
or cover of which is made of paper or any other substance or
material except tobacco.
    "Cigarette", beginning on and after July 1, 2012, means any
roll for smoking made wholly or in part of tobacco irrespective
of size or shape and whether or not such tobacco is flavored,
adulterated, or mixed with any other ingredient, and the
wrapper or cover of which is made of paper.
    "Cigarette", beginning on and after July 1, 2012, also
shall mean: Any roll for smoking made wholly or in part of
tobacco labeled as anything other than a cigarette or not
bearing a label, if it meets two or more of the following
criteria:
        (a) the product is sold in packs similar to cigarettes;
        (b) the product is available for sale in cartons of ten
    packs;
        (c) the product is sold in soft packs, hard packs,
    flip-top boxes, clam shells, or other cigarette-type
    boxes;
        (d) the product is of a length and diameter similar to
    commercially manufactured cigarettes;
        (e) the product has a cellulose acetate or other
    integrated filter;
        (f) the product is marketed or advertised to consumers
    as a cigarette or cigarette substitute; or
        (g) other evidence that the product fits within the
    definition of cigarette.
    "Contraband cigarettes" means:
        (a) cigarettes that do not bear a required tax stamp
    under this Act;
        (b) cigarettes for which any required federal taxes
    have not been paid;
        (c) cigarettes that bear a counterfeit tax stamp;
        (d) cigarettes that are manufactured, fabricated,
    assembled, processed, packaged, or labeled by any person
    other than (i) the owner of the trademark rights in the
    cigarette brand or (ii) a person that is directly or
    indirectly authorized by such owner;
        (e) cigarettes imported into the United States, or
    otherwise distributed, in violation of the federal
    Imported Cigarette Compliance Act of 2000 (Title IV of
    Public Law 106-476);
        (f) cigarettes that have false manufacturing labels;
        (g) cigarettes identified in Section 3-10(a)(1) of
    this Act; or
        (h) cigarettes that are improperly tax stamped,
    including cigarettes that bear a tax stamp of another state
    or taxing jurisdiction; or .
        (i) cigarettes made or fabricated by a person holding a
    cigarette machine operator license under Section 1-20 of
    the Cigarette Machine Operators' Occupation Tax Act in the
    possession of manufacturers, distributors, secondary
    distributors, manufacturer representatives or other
    retailers for the purpose of resale, regardless of whether
    the tax has been paid on such cigarettes.
    "Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, however formed, limited liability
company, or a receiver, executor, administrator, trustee,
guardian or other representative appointed by order of any
court.
    "Prior Continuous Compliance Taxpayer" means any person
who is licensed under this Act and who, having been a licensee
for a continuous period of 5 years, is determined by the
Department not to have been either delinquent or deficient in
the payment of tax liability during that period or otherwise in
violation of this Act. Also, any taxpayer who has, as verified
by the Department, continuously complied with the condition of
his bond or other security under provisions of this Act for a
period of 5 consecutive years shall be considered to be a
"Prior continuous compliance taxpayer". In calculating the
consecutive period of time described herein for qualification
as a "prior continuous compliance taxpayer", a consecutive
period of time of qualifying compliance immediately prior to
the effective date of this amendatory Act of 1987 shall be
credited to any licensee who became licensed on or before the
effective date of this amendatory Act of 1987.
    "Department" means the Department of Revenue.
    "Sale" means any transfer, exchange or barter in any manner
or by any means whatsoever for a consideration, and includes
and means all sales made by any person.
    "Original Package" means the individual packet, box or
other container whatsoever used to contain and to convey
cigarettes to the consumer.
    "Distributor" means any and each of the following:
        (1) Any person engaged in the business of selling
    cigarettes in this State who brings or causes to be brought
    into this State from without this State any original
    packages of cigarettes, on which original packages there is
    no authorized evidence underneath a sealed transparent
    wrapper showing that the tax liability imposed by this Act
    has been paid or assumed by the out-of-State seller of such
    cigarettes, for sale or other disposition in the course of
    such business.
        (2) Any person who makes, manufactures or fabricates
    cigarettes in this State for sale in this State, except a
    person who makes, manufactures or fabricates cigarettes as
    a part of a correctional industries program for sale to
    residents incarcerated in penal institutions or resident
    patients of a State-operated mental health facility.
        (3) Any person who makes, manufactures or fabricates
    cigarettes outside this State, which cigarettes are placed
    in original packages contained in sealed transparent
    wrappers, for delivery or shipment into this State, and who
    elects to qualify and is accepted by the Department as a
    distributor under Section 4b of this Act.
    "Place of business" shall mean and include any place where
cigarettes are sold or where cigarettes are manufactured,
stored or kept for the purpose of sale or consumption,
including any vessel, vehicle, airplane, train or vending
machine.
    "Manufacturer representative" means a director, officer,
or employee of a manufacturer who has obtained authority from
the Department under Section 4f to maintain representatives in
Illinois that provide or sell original packages of cigarettes
made, manufactured, or fabricated by the manufacturer to
retailers in compliance with Section 4f of this Act to promote
cigarettes made, manufactured, or fabricated by the
manufacturer.
    "Business" means any trade, occupation, activity or
enterprise engaged in for the purpose of selling cigarettes in
this State.
    "Retailer" means any person who engages in the making of
transfers of the ownership of, or title to, cigarettes to a
purchaser for use or consumption and not for resale in any
form, for a valuable consideration. "Retailer" does not include
a person:
        (1) who transfers to residents incarcerated in penal
    institutions or resident patients of a State-operated
    mental health facility ownership of cigarettes made,
    manufactured, or fabricated as part of a correctional
    industries program; or
        (2) who transfers cigarettes to a not-for-profit
    research institution that conducts tests concerning the
    health effects of tobacco products and who does not offer
    the cigarettes for resale.
    "Retailer" shall be construed to include any person who
engages in the making of transfers of the ownership of, or
title to, cigarettes to a purchaser, for use or consumption by
any other person to whom such purchaser may transfer the
cigarettes without a valuable consideration, except a person
who transfers to residents incarcerated in penal institutions
or resident patients of a State-operated mental health facility
ownership of cigarettes made, manufactured or fabricated as
part of a correctional industries program.
    "Secondary distributor" means any person engaged in the
business of selling cigarettes who purchases stamped original
packages of cigarettes from a licensed distributor under this
Act or the Cigarette Use Tax Act, sells 75% or more of those
cigarettes to retailers for resale, and maintains an
established business where a substantial stock of cigarettes is
available to retailers for resale.
    "Stamp" or "stamps" mean the indicia required to be affixed
on a pack of cigarettes that evidence payment of the tax on
cigarettes under Section 2 of this Act.
    "Related party" means any person that is associated with
any other person because he or she:
        (a) is an officer or director of a business; or
        (b) is legally recognized as a partner in business.
(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
97-587, eff. 8-26-11.)
 
    (35 ILCS 130/2)  (from Ch. 120, par. 453.2)
    Sec. 2. Tax imposed; rate; collection, payment, and
distribution; discount.
    (a) A tax is imposed upon any person engaged in business as
a retailer of cigarettes in this State at the rate of 5 1/2
mills per cigarette sold, or otherwise disposed of in the
course of such business in this State. In addition to any other
tax imposed by this Act, a tax is imposed upon any person
engaged in business as a retailer of cigarettes in this State
at a rate of 1/2 mill per cigarette sold or otherwise disposed
of in the course of such business in this State on and after
January 1, 1947, and shall be paid into the Metropolitan Fair
and Exposition Authority Reconstruction Fund or as otherwise
provided in Section 29. On and after December 1, 1985, in
addition to any other tax imposed by this Act, a tax is imposed
upon any person engaged in business as a retailer of cigarettes
in this State at a rate of 4 mills per cigarette sold or
otherwise disposed of in the course of such business in this
State. Of the additional tax imposed by this amendatory Act of
1985, $9,000,000 of the moneys received by the Department of
Revenue pursuant to this Act shall be paid each month into the
Common School Fund. On and after the effective date of this
amendatory Act of 1989, in addition to any other tax imposed by
this Act, a tax is imposed upon any person engaged in business
as a retailer of cigarettes at the rate of 5 mills per
cigarette sold or otherwise disposed of in the course of such
business in this State. On and after the effective date of this
amendatory Act of 1993, in addition to any other tax imposed by
this Act, a tax is imposed upon any person engaged in business
as a retailer of cigarettes at the rate of 7 mills per
cigarette sold or otherwise disposed of in the course of such
business in this State. On and after December 15, 1997, in
addition to any other tax imposed by this Act, a tax is imposed
upon any person engaged in business as a retailer of cigarettes
at the rate of 7 mills per cigarette sold or otherwise disposed
of in the course of such business of this State. All of the
moneys received by the Department of Revenue pursuant to this
Act and the Cigarette Use Tax Act from the additional taxes
imposed by this amendatory Act of 1997, shall be paid each
month into the Common School Fund. On and after July 1, 2002,
in addition to any other tax imposed by this Act, a tax is
imposed upon any person engaged in business as a retailer of
cigarettes at the rate of 20.0 mills per cigarette sold or
otherwise disposed of in the course of such business in this
State. Beginning on June 24, 2012, in addition to any other tax
imposed by this Act, a tax is imposed upon any person engaged
in business as a retailer of cigarettes at the rate of 50 mills
per cigarette sold or otherwise disposed of in the course of
such business in this State. All moneys received by the
Department of Revenue under this Act and the Cigarette Use Tax
Act from the additional taxes imposed by this amendatory Act of
the 97th General Assembly shall be paid each month into the
Healthcare Provider Relief Fund. The payment of such taxes
shall be evidenced by a stamp affixed to each original package
of cigarettes, or an authorized substitute for such stamp
imprinted on each original package of such cigarettes
underneath the sealed transparent outside wrapper of such
original package, as hereinafter provided. However, such taxes
are not imposed upon any activity in such business in
interstate commerce or otherwise, which activity may not under
the Constitution and statutes of the United States be made the
subject of taxation by this State.
    Beginning on the effective date of this amendatory Act of
the 92nd General Assembly and through June 30, 2006, all of the
moneys received by the Department of Revenue pursuant to this
Act and the Cigarette Use Tax Act, other than the moneys that
are dedicated to the Common School Fund, shall be distributed
each month as follows: first, there shall be paid into the
General Revenue Fund an amount which, when added to the amount
paid into the Common School Fund for that month, equals
$33,300,000, except that in the month of August of 2004, this
amount shall equal $83,300,000; then, from the moneys
remaining, if any amounts required to be paid into the General
Revenue Fund in previous months remain unpaid, those amounts
shall be paid into the General Revenue Fund; then, beginning on
April 1, 2003, from the moneys remaining, $5,000,000 per month
shall be paid into the School Infrastructure Fund; then, if any
amounts required to be paid into the School Infrastructure Fund
in previous months remain unpaid, those amounts shall be paid
into the School Infrastructure Fund; then the moneys remaining,
if any, shall be paid into the Long-Term Care Provider Fund. To
the extent that more than $25,000,000 has been paid into the
General Revenue Fund and Common School Fund per month for the
period of July 1, 1993 through the effective date of this
amendatory Act of 1994 from combined receipts of the Cigarette
Tax Act and the Cigarette Use Tax Act, notwithstanding the
distribution provided in this Section, the Department of
Revenue is hereby directed to adjust the distribution provided
in this Section to increase the next monthly payments to the
Long Term Care Provider Fund by the amount paid to the General
Revenue Fund and Common School Fund in excess of $25,000,000
per month and to decrease the next monthly payments to the
General Revenue Fund and Common School Fund by that same excess
amount.
    Beginning on July 1, 2006, all of the moneys received by
the Department of Revenue pursuant to this Act and the
Cigarette Use Tax Act, other than the moneys that are dedicated
to the Common School Fund and, beginning on the effective date
of this amendatory Act of the 97th General Assembly, other than
the moneys from the additional taxes imposed by this amendatory
Act of the 97th General Assembly that must be paid each month
into the Healthcare Provider Relief Fund, shall be distributed
each month as follows: first, there shall be paid into the
General Revenue Fund an amount that, when added to the amount
paid into the Common School Fund for that month, equals
$29,200,000; then, from the moneys remaining, if any amounts
required to be paid into the General Revenue Fund in previous
months remain unpaid, those amounts shall be paid into the
General Revenue Fund; then from the moneys remaining,
$5,000,000 per month shall be paid into the School
Infrastructure Fund; then, if any amounts required to be paid
into the School Infrastructure Fund in previous months remain
unpaid, those amounts shall be paid into the School
Infrastructure Fund; then the moneys remaining, if any, shall
be paid into the Long-Term Care Provider Fund.
    When any tax imposed herein terminates or has terminated,
distributors who have bought stamps while such tax was in
effect and who therefore paid such tax, but who can show, to
the Department's satisfaction, that they sold the cigarettes to
which they affixed such stamps after such tax had terminated
and did not recover the tax or its equivalent from purchasers,
shall be allowed by the Department to take credit for such
absorbed tax against subsequent tax stamp purchases from the
Department by such distributor.
    The impact of the tax levied by this Act is imposed upon
the retailer and shall be prepaid or pre-collected by the
distributor for the purpose of convenience and facility only,
and the amount of the tax shall be added to the price of the
cigarettes sold by such distributor. Collection of the tax
shall be evidenced by a stamp or stamps affixed to each
original package of cigarettes, as hereinafter provided.
    Each distributor shall collect the tax from the retailer at
or before the time of the sale, shall affix the stamps as
hereinafter required, and shall remit the tax collected from
retailers to the Department, as hereinafter provided. Any
distributor who fails to properly collect and pay the tax
imposed by this Act shall be liable for the tax. Any
distributor having cigarettes to which stamps have been affixed
in his possession for sale on the effective date of this
amendatory Act of 1989 shall not be required to pay the
additional tax imposed by this amendatory Act of 1989 on such
stamped cigarettes. Any distributor having cigarettes to which
stamps have been affixed in his or her possession for sale at
12:01 a.m. on the effective date of this amendatory Act of
1993, is required to pay the additional tax imposed by this
amendatory Act of 1993 on such stamped cigarettes. This
payment, less the discount provided in subsection (b), shall be
due when the distributor first makes a purchase of cigarette
tax stamps after the effective date of this amendatory Act of
1993, or on the first due date of a return under this Act after
the effective date of this amendatory Act of 1993, whichever
occurs first. Any distributor having cigarettes to which stamps
have been affixed in his possession for sale on December 15,
1997 shall not be required to pay the additional tax imposed by
this amendatory Act of 1997 on such stamped cigarettes.
    Any distributor having cigarettes to which stamps have been
affixed in his or her possession for sale on July 1, 2002 shall
not be required to pay the additional tax imposed by this
amendatory Act of the 92nd General Assembly on those stamped
cigarettes.
    Any retailer having cigarettes in his or her possession on
June 24, 2012 to which tax stamps have been affixed is not
required to pay the additional tax that begins on June 24, 2012
imposed by this amendatory Act of the 97th General Assembly on
those stamped cigarettes. Any distributor having cigarettes in
his or her possession on June 24, 2012 to which tax stamps have
been affixed, and any distributor having stamps in his or her
possession on June 24, 2012 that have not been affixed to
packages of cigarettes before June 24, 2012, is required to pay
the additional tax that begins on June 24, 2012 imposed by this
amendatory Act of the 97th General Assembly to the extent the
calendar year 2012 average monthly volume of cigarette stamps
in the distributor's possession exceeds the average monthly
volume of cigarette stamps purchased by the distributor in
calendar year 2011. This payment, less the discount provided in
subsection (b), is due when the distributor first makes a
purchase of cigarette stamps on or after June 24, 2012 or on
the first due date of a return under this Act occurring on or
after June 24, 2012, whichever occurs first. Those distributors
may elect to pay the additional tax on packages of cigarettes
to which stamps have been affixed and on any stamps in the
distributor's possession that have not been affixed to packages
of cigarettes over a period not to exceed 12 months from the
due date of the additional tax by notifying the Department in
writing. The first payment for distributors making such
election is due when the distributor first makes a purchase of
cigarette tax stamps on or after June 24, 2012 or on the first
due date of a return under this Act occurring on or after June
24, 2012, whichever occurs first. Distributors making such an
election are not entitled to take the discount provided in
subsection (b) on such payments.
    Distributors making sales of cigarettes to secondary
distributors shall add the amount of the tax to the price of
the cigarettes sold by the distributors. Secondary
distributors making sales of cigarettes to retailers shall
include the amount of the tax in the price of the cigarettes
sold to retailers. The amount of tax shall not be less than the
amount of taxes imposed by the State and all local
jurisdictions. The amount of local taxes shall be calculated
based on the location of the retailer's place of business shown
on the retailer's certificate of registration or
sub-registration issued to the retailer pursuant to Section 2a
of the Retailers' Occupation Tax Act. The original packages of
cigarettes sold to the retailer shall bear all the required
stamps, or other indicia, for the taxes included in the price
of cigarettes.
    The amount of the Cigarette Tax imposed by this Act shall
be separately stated, apart from the price of the goods, by
distributors, manufacturer representatives, secondary
distributors, and retailers, in all bills and sales invoices.
    (b) The distributor shall be required to collect the taxes
provided under paragraph (a) hereof, and, to cover the costs of
such collection, shall be allowed a discount during any year
commencing July 1st and ending the following June 30th in
accordance with the schedule set out hereinbelow, which
discount shall be allowed at the time of purchase of the stamps
when purchase is required by this Act, or at the time when the
tax is remitted to the Department without the purchase of
stamps from the Department when that method of paying the tax
is required or authorized by this Act. Prior to December 1,
1985, a discount equal to 1 2/3% of the amount of the tax up to
and including the first $700,000 paid hereunder by such
distributor to the Department during any such year; 1 1/3% of
the next $700,000 of tax or any part thereof, paid hereunder by
such distributor to the Department during any such year; 1% of
the next $700,000 of tax, or any part thereof, paid hereunder
by such distributor to the Department during any such year, and
2/3 of 1% of the amount of any additional tax paid hereunder by
such distributor to the Department during any such year shall
apply. On and after December 1, 1985, a discount equal to 1.75%
of the amount of the tax payable under this Act up to and
including the first $3,000,000 paid hereunder by such
distributor to the Department during any such year and 1.5% of
the amount of any additional tax paid hereunder by such
distributor to the Department during any such year shall apply.
    Two or more distributors that use a common means of
affixing revenue tax stamps or that are owned or controlled by
the same interests shall be treated as a single distributor for
the purpose of computing the discount.
    (c) The taxes herein imposed are in addition to all other
occupation or privilege taxes imposed by the State of Illinois,
or by any political subdivision thereof, or by any municipal
corporation.
(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
    Section 5-45. The Cigarette Use Tax Act is amended by
changing Sections 1 and 2 as follows:
 
    (35 ILCS 135/1)  (from Ch. 120, par. 453.31)
    Sec. 1. For the purpose of this Act, unless otherwise
required by the context:
    "Use" means the exercise by any person of any right or
power over cigarettes incident to the ownership or possession
thereof, other than the making of a sale thereof in the course
of engaging in a business of selling cigarettes and shall
include the keeping or retention of cigarettes for use, except
that "use" does not include the use of cigarettes by a
not-for-profit research institution conducting tests
concerning the health effects of tobacco products, provided the
cigarettes are not offered for resale.
    "Brand Style" means a variety of cigarettes distinguished
by the tobacco used, tar and nicotine content, flavoring used,
size of the cigarette, filtration on the cigarette or
packaging.
    Until July 1, 2012, "cigarette" "Cigarette" means any roll
for smoking made wholly or in part of tobacco irrespective of
size or shape and whether or not such tobacco is flavored,
adulterated or mixed with any other ingredient, and the wrapper
or cover of which is made of paper or any other substance or
material except tobacco.
    "Cigarette", beginning on and after July 1, 2012, means any
roll for smoking made wholly or in part of tobacco irrespective
of size or shape and whether or not such tobacco is flavored,
adulterated or mixed with any other ingredient, and the wrapper
or cover of which is made of paper.
    "Cigarette", beginning on and after July 1, 2012, also
shall mean: Any roll for smoking made wholly or in part of
tobacco labeled as anything other than a cigarette or not
bearing a label, if it meets two or more of the following
criteria:
        (a) the product is sold in packs similar to cigarettes;
        (b) the product is available for sale in cartons of ten
    packs;
        (c) the product is sold in soft packs, hard packs,
    flip-top boxes, clam shells, or other cigarette-type
    boxes;
        (d) the product is of a length and diameter similar to
    commercially manufactured cigarettes;
        (e) the product has a cellulose acetate or other
    integrated filter;
        (f) the product is marketed or advertised to consumers
    as a cigarette or cigarette substitute; or
        (g) other evidence that the product fits within the
    definition of cigarette.
    "Contraband cigarettes" means:
        (a) cigarettes that do not bear a required tax stamp
    under this Act;
        (b) cigarettes for which any required federal taxes
    have not been paid;
        (c) cigarettes that bear a counterfeit tax stamp;
        (d) cigarettes that are manufactured, fabricated,
    assembled, processed, packaged, or labeled by any person
    other than (i) the owner of the trademark rights in the
    cigarette brand or (ii) a person that is directly or
    indirectly authorized by such owner;
        (e) cigarettes imported into the United States, or
    otherwise distributed, in violation of the federal
    Imported Cigarette Compliance Act of 2000 (Title IV of
    Public Law 106-476);
        (f) cigarettes that have false manufacturing labels;
        (g) cigarettes identified in Section 3-10(a)(1) of
    this Act; or
        (h) cigarettes that are improperly tax stamped,
    including cigarettes that bear a tax stamp of another state
    or taxing jurisdiction; or .
        (i) cigarettes made or fabricated by a person holding a
    cigarette machine operator license under Section 1-20 of
    the Cigarette Machine Operators' Occupation Tax Act in the
    possession of manufacturers, distributors, secondary
    distributors, manufacturer representatives or other
    retailers for the purpose of resale, regardless of whether
    the tax has been paid on such cigarettes.
    "Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, however formed, limited liability
company, or a receiver, executor, administrator, trustee,
guardian or other representative appointed by order of any
court.
    "Department" means the Department of Revenue.
    "Sale" means any transfer, exchange or barter in any manner
or by any means whatsoever for a consideration, and includes
and means all sales made by any person.
    "Original Package" means the individual packet, box or
other container whatsoever used to contain and to convey
cigarettes to the consumer.
    "Distributor" means any and each of the following:
        a. Any person engaged in the business of selling
    cigarettes in this State who brings or causes to be brought
    into this State from without this State any original
    packages of cigarettes, on which original packages there is
    no authorized evidence underneath a sealed transparent
    wrapper showing that the tax liability imposed by this Act
    has been paid or assumed by the out-of-State seller of such
    cigarettes, for sale in the course of such business.
        b. Any person who makes, manufactures or fabricates
    cigarettes in this State for sale, except a person who
    makes, manufactures or fabricates cigarettes for sale to
    residents incarcerated in penal institutions or resident
    patients or a State-operated mental health facility.
        c. Any person who makes, manufactures or fabricates
    cigarettes outside this State, which cigarettes are placed
    in original packages contained in sealed transparent
    wrappers, for delivery or shipment into this State, and who
    elects to qualify and is accepted by the Department as a
    distributor under Section 7 of this Act.
    "Distributor" does not include any person who transfers
cigarettes to a not-for-profit research institution that
conducts tests concerning the health effects of tobacco
products and who does not offer the cigarettes for resale.
    "Distributor maintaining a place of business in this
State", or any like term, means any distributor having or
maintaining within this State, directly or by a subsidiary, an
office, distribution house, sales house, warehouse or other
place of business, or any agent operating within this State
under the authority of the distributor or its subsidiary,
irrespective of whether such place of business or agent is
located here permanently or temporarily, or whether such
distributor or subsidiary is licensed to transact business
within this State.
    "Business" means any trade, occupation, activity or
enterprise engaged in or conducted in this State for the
purpose of selling cigarettes.
    "Prior Continuous Compliance Taxpayer" means any person
who is licensed under this Act and who, having been a licensee
for a continuous period of 5 years, is determined by the
Department not to have been either delinquent or deficient in
the payment of tax liability during that period or otherwise in
violation of this Act. Also, any taxpayer who has, as verified
by the Department, continuously complied with the condition of
his bond or other security under provisions of this Act of a
period of 5 consecutive years shall be considered to be a
"prior continuous compliance taxpayer". In calculating the
consecutive period of time described herein for qualification
as a "prior continuous compliance taxpayer", a consecutive
period of time of qualifying compliance immediately prior to
the effective date of this amendatory Act of 1987 shall be
credited to any licensee who became licensed on or before the
effective date of this amendatory Act of 1987.
    "Secondary distributor" means any person engaged in the
business of selling cigarettes who purchases stamped original
packages of cigarettes from a licensed distributor under this
Act or the Cigarette Tax Act, sells 75% or more of those
cigarettes to retailers for resale, and maintains an
established business where a substantial stock of cigarettes is
available to retailers for resale.
    "Secondary distributor maintaining a place of business in
this State", or any like term, means any secondary distributor
having or maintaining within this State, directly or by a
subsidiary, an office, distribution house, sales house,
warehouse, or other place of business, or any agent operating
within this State under the authority of the secondary
distributor or its subsidiary, irrespective of whether such
place of business or agent is located here permanently or
temporarily, or whether such secondary distributor or
subsidiary is licensed to transact business within this State.
    "Stamp" or "stamps" mean the indicia required to be affixed
on a pack of cigarettes that evidence payment of the tax on
cigarettes under Section 2 of this Act.
    "Related party" means any person that is associated with
any other person because he or she:
        (a) is an officer or director of a business; or
        (b) is legally recognized as a partner in business.
(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
96-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
 
    (35 ILCS 135/2)  (from Ch. 120, par. 453.32)
    Sec. 2. A tax is imposed upon the privilege of using
cigarettes in this State, at the rate of 6 mills per cigarette
so used. On and after December 1, 1985, in addition to any
other tax imposed by this Act, a tax is imposed upon the
privilege of using cigarettes in this State at a rate of 4
mills per cigarette so used. On and after the effective date of
this amendatory Act of 1989, in addition to any other tax
imposed by this Act, a tax is imposed upon the privilege of
using cigarettes in this State at the rate of 5 mills per
cigarette so used. On and after the effective date of this
amendatory Act of 1993, in addition to any other tax imposed by
this Act, a tax is imposed upon the privilege of using
cigarettes in this State at a rate of 7 mills per cigarette so
used. On and after December 15, 1997, in addition to any other
tax imposed by this Act, a tax is imposed upon the privilege of
using cigarettes in this State at a rate of 7 mills per
cigarette so used. On and after July 1, 2002, in addition to
any other tax imposed by this Act, a tax is imposed upon the
privilege of using cigarettes in this State at a rate of 20.0
mills per cigarette so used. Beginning on June 24, 2012, in
addition to any other tax imposed by this Act, a tax is imposed
upon the privilege of using cigarettes in this State at a rate
of 50 mills per cigarette so used. The taxes herein imposed
shall be in addition to all other occupation or privilege taxes
imposed by the State of Illinois or by any political
subdivision thereof or by any municipal corporation.
    When any tax imposed herein terminates or has terminated,
distributors who have bought stamps while such tax was in
effect and who therefore paid such tax, but who can show, to
the Department's satisfaction, that they sold the cigarettes to
which they affixed such stamps after such tax had terminated
and did not recover the tax or its equivalent from purchasers,
shall be allowed by the Department to take credit for such
absorbed tax against subsequent tax stamp purchases from the
Department by such distributors.
    When the word "tax" is used in this Act, it shall include
any tax or tax rate imposed by this Act and shall mean the
singular of "tax" or the plural "taxes" as the context may
require.
    Any distributor having cigarettes to which stamps have been
affixed in his possession for sale on the effective date of
this amendatory Act of 1989 shall not be required to pay the
additional tax imposed by this amendatory Act of 1989 on such
stamped cigarettes. Any distributor having cigarettes to which
stamps have been affixed in his or her possession for sale at
12:01 a.m. on the effective date of this amendatory Act of
1993, is required to pay the additional tax imposed by this
amendatory Act of 1993 on such stamped cigarettes. This payment
shall be due when the distributor first makes a purchase of
cigarette tax stamps after the effective date of this
amendatory Act of 1993, or on the first due date of a return
under this Act after the effective date of this amendatory Act
of 1993, whichever occurs first. Once a distributor tenders
payment of the additional tax to the Department, the
distributor may purchase stamps from the Department. Any
distributor having cigarettes to which stamps have been affixed
in his possession for sale on December 15, 1997 shall not be
required to pay the additional tax imposed by this amendatory
Act of 1997 on such stamped cigarettes.
    Any distributor having cigarettes to which stamps have been
affixed in his or her possession for sale on July 1, 2002 shall
not be required to pay the additional tax imposed by this
amendatory Act of the 92nd General Assembly on those stamped
cigarettes.
    Any retailer having cigarettes in his or her possession on
June 24, 2012 to which tax stamps have been affixed is not
required to pay the additional tax that begins on June 24, 2012
imposed by this amendatory Act of the 97th General Assembly on
those stamped cigarettes. Any distributor having cigarettes in
his or her possession on June 24, 2012 to which tax stamps have
been affixed, and any distributor having stamps in his or her
possession on June 24, 2012 that have not been affixed to
packages of cigarettes before June 24, 2012, is required to pay
the additional tax that begins on June 24, 2012 imposed by this
amendatory Act of the 97th General Assembly to the extent the
calendar year 2012 average monthly volume of cigarette stamps
in the distributor's possession exceeds the average monthly
volume of cigarette stamps purchased by the distributor in
calendar year 2011. This payment, less the discount provided in
Section 3, is due when the distributor first makes a purchase
of cigarette stamps on or after June 24, 2012 or on the first
due date of a return under this Act occurring on or after June
24, 2012, whichever occurs first. Those distributors may elect
to pay the additional tax on packages of cigarettes to which
stamps have been affixed and on any stamps in the distributor's
possession that have not been affixed to packages of cigarettes
over a period not to exceed 12 months from the due date of the
additional tax by notifying the Department in writing. The
first payment for distributors making such election is due when
the distributor first makes a purchase of cigarette tax stamps
on or after June 24, 2012 or on the first due date of a return
under this Act occurring on or after June 24, 2012, whichever
occurs first. Distributors making such an election are not
entitled to take the discount provided in Section 3 on such
payments.
(Source: P.A. 92-536, eff. 6-6-02.)
 
    Section 5-50. The Tobacco Products Tax Act of 1995 is
amended by changing Sections 10-5, 10-10, and 10-30 as follows:
 
    (35 ILCS 143/10-5)
    Sec. 10-5. Definitions. For purposes of this Act:
    "Business" means any trade, occupation, activity, or
enterprise engaged in, at any location whatsoever, for the
purpose of selling tobacco products.
    "Cigarette" has the meaning ascribed to the term in Section
1 of the Cigarette Tax Act.
    "Correctional Industries program" means a program run by a
State penal institution in which residents of the penal
institution produce tobacco products for sale to persons
incarcerated in penal institutions or resident patients of a
State operated mental health facility.
    "Department" means the Illinois Department of Revenue.
    "Distributor" means any of the following:
        (1) Any manufacturer or wholesaler in this State
    engaged in the business of selling tobacco products who
    sells, exchanges, or distributes tobacco products to
    retailers or consumers in this State.
        (2) Any manufacturer or wholesaler engaged in the
    business of selling tobacco products from without this
    State who sells, exchanges, distributes, ships, or
    transports tobacco products to retailers or consumers
    located in this State, so long as that manufacturer or
    wholesaler has or maintains within this State, directly or
    by subsidiary, an office, sales house, or other place of
    business, or any agent or other representative operating
    within this State under the authority of the person or
    subsidiary, irrespective of whether the place of business
    or agent or other representative is located here
    permanently or temporarily.
        (3) Any retailer who receives tobacco products on which
    the tax has not been or will not be paid by another
    distributor.
    "Distributor" does not include any person, wherever
resident or located, who makes, manufactures, or fabricates
tobacco products as part of a Correctional Industries program
for sale to residents incarcerated in penal institutions or
resident patients of a State operated mental health facility.
    "Manufacturer" means any person, wherever resident or
located, who manufactures and sells tobacco products, except a
person who makes, manufactures, or fabricates tobacco products
as a part of a Correctional Industries program for sale to
persons incarcerated in penal institutions or resident
patients of a State operated mental health facility.
    Beginning on January 1, 2013, "moist snuff" means any
finely cut, ground, or powdered tobacco that is not intended to
be smoked, but shall not include any finely cut, ground, or
powdered tobacco that is intended to be placed in the nasal
cavity.
    "Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, limited
liability company, or public or private corporation, however
formed, or a receiver, executor, administrator, trustee,
conservator, or other representative appointed by order of any
court.
    "Place of business" means and includes any place where
tobacco products are sold or where tobacco products are
manufactured, stored, or kept for the purpose of sale or
consumption, including any vessel, vehicle, airplane, train,
or vending machine.
    "Retailer" means any person in this State engaged in the
business of selling tobacco products to consumers in this
State, regardless of quantity or number of sales.
    "Sale" means any transfer, exchange, or barter in any
manner or by any means whatsoever for a consideration and
includes all sales made by persons.
    "Tobacco products" means any cigars; cheroots; stogies;
periques; granulated, plug cut, crimp cut, ready rubbed, and
other smoking tobacco; snuff (including moist snuff) or snuff
flour; cavendish; plug and twist tobacco; fine-cut and other
chewing tobaccos; shorts; refuse scraps, clippings, cuttings,
and sweeping of tobacco; and other kinds and forms of tobacco,
prepared in such manner as to be suitable for chewing or
smoking in a pipe or otherwise, or both for chewing and
smoking; but does not include cigarettes or tobacco purchased
for the manufacture of cigarettes by cigarette distributors and
manufacturers defined in the Cigarette Tax Act and persons who
make, manufacture, or fabricate cigarettes as a part of a
Correctional Industries program for sale to residents
incarcerated in penal institutions or resident patients of a
State operated mental health facility.
    "Wholesale price" means the established list price for
which a manufacturer sells tobacco products to a distributor,
before the allowance of any discount, trade allowance, rebate,
or other reduction. In the absence of such an established list
price, the manufacturer's invoice price at which the
manufacturer sells the tobacco product to unaffiliated
distributors, before any discounts, trade allowances, rebates,
or other reductions, shall be presumed to be the wholesale
price.
    "Wholesaler" means any person, wherever resident or
located, engaged in the business of selling tobacco products to
others for the purpose of resale.
(Source: P.A. 92-231, eff. 8-2-01.)
 
    (35 ILCS 143/10-10)
    Sec. 10-10. Tax imposed. On the first day of the third
month after the month in which this Act becomes law, a tax is
imposed on any person engaged in business as a distributor of
tobacco products, as defined in Section 10-5, at the rate of
(i) 18% of the wholesale price of tobacco products sold or
otherwise disposed of to retailers or consumers located in this
State prior to July 1, 2012 and (ii) 36% of the wholesale price
of tobacco products sold or otherwise disposed of to retailers
or consumers located in this State beginning on July 1, 2012;
except that, beginning on January 1, 2013, the tax on moist
snuff shall be imposed at a rate of $0.30 per ounce, and a
proportionate tax at the like rate on all fractional parts of
an ounce, sold or otherwise disposed of to retailers or
consumers located in this State. The tax is in addition to all
other occupation or privilege taxes imposed by the State of
Illinois, by any political subdivision thereof, or by any
municipal corporation. However, the tax is not imposed upon any
activity in that business in interstate commerce or otherwise,
to the extent to which that activity may not, under the
Constitution and Statutes of the United States, be made the
subject of taxation by this State. The tax is also not imposed
on sales made to the United States or any entity thereof.
    Beginning on January 1, 2013, the tax rate imposed per
ounce of moist snuff may not exceed 15% of the tax imposed upon
a package of 20 cigarettes pursuant to the Cigarette Tax Act.
    All moneys received by the Department under this Act from
sales occurring prior to July 1, 2012 shall be paid into the
Long-Term Care Provider Fund of the State Treasury. Of the
moneys received by the Department from sales occurring on or
after July 1, 2012, 50% shall be paid into the Long-Term Care
Provider Fund and 50% shall be paid into the Healthcare
Provider Relief Fund.
(Source: P.A. 92-231, eff. 8-2-01.)
 
    (35 ILCS 143/10-30)
    Sec. 10-30. Returns. Every distributor shall, on or before
the 15th day of each month, file a return with the Department
covering the preceding calendar month. The return shall
disclose the wholesale price for all tobacco products and the
quantity of moist snuff sold or otherwise disposed of and other
information that the Department may reasonably require. The
return shall be filed upon a form prescribed and furnished by
the Department.
    At the time when any return of any distributor is due to be
filed with the Department, the distributor shall also remit to
the Department the tax liability that the distributor has
incurred for transactions occurring in the preceding calendar
month.
(Source: P.A. 89-21, eff. 6-6-95.)
 
    Section 5-55. The Property Tax Code is amended by changing
Section 15-10 and by adding Section 15-86 as follows:
 
    (35 ILCS 200/15-10)
    Sec. 15-10. Exempt property; procedures for certification.
    (a) All property granted an exemption by the Department
pursuant to the requirements of Section 15-5 and described in
the Sections following Section 15-30 and preceding Section
16-5, to the extent therein limited, is exempt from taxation.
In order to maintain that exempt status, the titleholder or the
owner of the beneficial interest of any property that is exempt
must file with the chief county assessment officer, on or
before January 31 of each year (May 31 in the case of property
exempted by Section 15-170), an affidavit stating whether there
has been any change in the ownership or use of the property, or
the status of the owner-resident, the satisfaction by a
relevant hospital entity of the condition for an exemption
under Section 15-86, or that a disabled veteran who qualifies
under Section 15-165 owned and used the property as of January
1 of that year. The nature of any change shall be stated in the
affidavit. Failure to file an affidavit shall, in the
discretion of the assessment officer, constitute cause to
terminate the exemption of that property, notwithstanding any
other provision of this Code. Owners of 5 or more such exempt
parcels within a county may file a single annual affidavit in
lieu of an affidavit for each parcel. The assessment officer,
upon request, shall furnish an affidavit form to the owners, in
which the owner may state whether there has been any change in
the ownership or use of the property or status of the owner or
resident as of January 1 of that year. The owner of 5 or more
exempt parcels shall list all the properties giving the same
information for each parcel as required of owners who file
individual affidavits.
    (b) However, titleholders or owners of the beneficial
interest in any property exempted under any of the following
provisions are not required to submit an annual filing under
this Section:
        (1) Section 15-45 (burial grounds) in counties of less
    than 3,000,000 inhabitants and owned by a not-for-profit
    organization.
        (2) Section 15-40.
        (3) Section 15-50 (United States property).
    (c) If there is a change in use or ownership, however,
notice must be filed pursuant to Section 15-20.
    (d) An application for homestead exemptions shall be filed
as provided in Section 15-170 (senior citizens homestead
exemption), Section 15-172 (senior citizens assessment freeze
homestead exemption), and Sections 15-175 (general homestead
exemption), 15-176 (general alternative homestead exemption),
and 15-177 (long-time occupant homestead exemption),
respectively.
    (e) For purposes of determining satisfaction of the
condition for an exemption under Section 15-86:
        (1) The "year for which exemption is sought" is the
    year prior to the year in which the affidavit is due.
        (2) The "hospital year" is the fiscal year of the
    relevant hospital entity, or the fiscal year of one of the
    hospitals in the hospital system if the relevant hospital
    entity is a hospital system with members with different
    fiscal years, that ends in the year prior to the year in
    which the affidavit is due. However, if that fiscal year
    ends 3 months or less before the date on which the
    affidavit is due, the relevant hospital entity shall file
    an interim affidavit based on the currently available
    information, and shall file a supplemental affidavit
    within 90 days of date on which the application was due, if
    the information in the relevant hospital entity's audited
    financial statements changes the interim affidavit's
    statement concerning the entity's compliance with the
    calculation required by Section 15-86.
        (3) The affidavit shall be accompanied by an exhibit
    prepared by the relevant hospital entity showing (A) the
    value of the relevant hospital entity's services and
    activities, if any, under items (1) through (7) of
    subsection (e) of Section 15-86, stated separately for each
    item, and (B) the value relating to the relevant hospital
    entity's estimated property tax liability under paragraphs
    (A), (B), and (C) of item (1) of subsection (g) of Section
    15-86; under paragraphs (A), (B), and (C) of item (2) of
    subsection (g) of Section 15-86; and under item (3) of
    subsection (g) of Section 15-86.
(Source: P.A. 95-644, eff. 10-12-07.)
 
    (35 ILCS 200/15-86 new)
    Sec. 15-86. Exemptions related to access to hospital and
health care services by low-income and underserved
individuals.
    (a) The General Assembly finds:
        (1) Despite the Supreme Court's decision in Provena
    Covenant Medical Center v. Dept. of Revenue, 236 Ill.2d
    368, there is considerable uncertainty surrounding the
    test for charitable property tax exemption, especially
    regarding the application of a quantitative or monetary
    threshold. In Provena, the Department stated that the
    primary basis for its decision was the hospital's
    inadequate amount of charitable activity, but the
    Department has not articulated what constitutes an
    adequate amount of charitable activity. After Provena, the
    Department denied property tax exemption applications of 3
    more hospitals, and, on the effective date of this
    amendatory Act of the 97th General Assembly, at least 20
    other hospitals are awaiting rulings on applications for
    property tax exemption.
        (2) In Provena, two Illinois Supreme Court justices
    opined that "setting a monetary or quantum standard is a
    complex decision which should be left to our legislature,
    should it so choose". The Appellate Court in Provena
    stated: "The language we use in the State of Illinois to
    determine whether real property is used for a charitable
    purpose has its genesis in our 1870 Constitution. It is
    obvious that such language may be difficult to apply to the
    modern face of our nation's health care delivery systems".
    The court noted the many significant changes in the health
    care system since that time, but concluded that taking
    these changes into account is a matter of public policy,
    and "it is the legislature's job, not ours, to make public
    policy".
        (3) It is essential to ensure that tax exemption law
    relating to hospitals accounts for the complexities of the
    modern health care delivery system. Health care is moving
    beyond the walls of the hospital. In addition to treating
    individual patients, hospitals are assuming responsibility
    for improving the health status of communities and
    populations. Low-income and underserved communities
    benefit disproportionately by these activities.
        (4) The Supreme Court has explained that: "the
    fundamental ground upon which all exemptions in favor of
    charitable institutions are based is the benefit conferred
    upon the public by them, and a consequent relief, to some
    extent, of the burden upon the state to care for and
    advance the interests of its citizens". Hospitals relieve
    the burden of government in many ways, but most
    significantly through their participation in and
    substantial financial subsidization of the Illinois
    Medicaid program, which could not operate without the
    participation and partnership of Illinois hospitals.
        (5) Working with the Illinois hospital community and
    other interested parties, the General Assembly has
    developed a comprehensive combination of related
    legislation that addresses hospital property tax
    exemption, significantly increases access to free health
    care for indigent persons, and strengthens the Medical
    Assistance program. It is the intent of the General
    Assembly to establish a new category of ownership for
    charitable property tax exemption to be applied to
    not-for-profit hospitals and hospital affiliates in lieu
    of the existing ownership category of "institutions of
    public charity". It is also the intent of the General
    Assembly to establish quantifiable standards for the
    issuance of charitable exemptions for such property. It is
    not the intent of the General Assembly to declare any
    property exempt ipso facto, but rather to establish
    criteria to be applied to the facts on a case-by-case
    basis.
    (b) For the purpose of this Section and Section 15-10, the
following terms shall have the meanings set forth below:
        (1) "Hospital" means any institution, place, building,
    buildings on a campus, or other health care facility
    located in Illinois that is licensed under the Hospital
    Licensing Act and has a hospital owner.
        (2) "Hospital owner" means a not-for-profit
    corporation that is the titleholder of a hospital, or the
    owner of the beneficial interest in an Illinois land trust
    that is the titleholder of a hospital.
        (3) "Hospital affiliate" means any corporation,
    partnership, limited partnership, joint venture, limited
    liability company, association or other organization,
    other than a hospital owner, that directly or indirectly
    controls, is controlled by, or is under common control with
    one or more hospital owners and that supports, is supported
    by, or acts in furtherance of the exempt health care
    purposes of at least one of those hospital owners'
    hospitals.
        (4) "Hospital system" means a hospital and one or more
    other hospitals or hospital affiliates related by common
    control or ownership.
        (5) "Control" relating to hospital owners, hospital
    affiliates, or hospital systems means possession, direct
    or indirect, of the power to direct or cause the direction
    of the management and policies of the entity, whether
    through ownership of assets, membership interest, other
    voting or governance rights, by contract or otherwise.
        (6) "Hospital applicant" means a hospital owner or
    hospital affiliate that files an application for a property
    tax exemption pursuant to Section 15-5 and this Section.
        (7) "Relevant hospital entity" means (A) the hospital
    owner, in the case of a hospital applicant that is a
    hospital owner, and (B) at the election of a hospital
    applicant that is a hospital affiliate, either (i) the
    hospital affiliate or (ii) the hospital system to which the
    hospital applicant belongs, including any hospitals or
    hospital affiliates that are related by common control or
    ownership.
        (8) "Subject property" means property for which a
    hospital applicant files an application for an exemption
    pursuant to Section 15-5 and this Section.
        (9) "Hospital year" means the fiscal year of the
    relevant hospital entity, or the fiscal year of one of the
    hospital owners in the hospital system if the relevant
    hospital entity is a hospital system with members with
    different fiscal years, that ends in the year for which the
    exemption is sought.
    (c) A hospital applicant satisfies the conditions for an
exemption under this Section with respect to the subject
property, and shall be issued a charitable exemption for that
property, if the value of services or activities listed in
subsection (e) for the hospital year equals or exceeds the
relevant hospital entity's estimated property tax liability,
as determined under subsection (g), for the year for which
exemption is sought. For purposes of making the calculations
required by this subsection (c), if the relevant hospital
entity is a hospital owner that owns more than one hospital,
the value of the services or activities listed in subsection
(e) shall be calculated on the basis of only those services and
activities relating to the hospital that includes the subject
property, and the relevant hospital entity's estimated
property tax liability shall be calculated only with respect to
the properties comprising that hospital. In the case of a
multi-state hospital system or hospital affiliate, the value of
the services or activities listed in subsection (e) shall be
calculated on the basis of only those services and activities
that occur in Illinois and the relevant hospital entity's
estimated property tax liability shall be calculated only with
respect to its property located in Illinois.
    Notwithstanding any other provisions of this Act, any
parcel or portion thereof, that is owned by a for-profit entity
whether part of the hospital system or not, or that is leased,
licensed or operated by a for-profit entity regardless of
whether healthcare services are provided on that parcel shall
not qualify for exemption. If a parcel has both exempt and
non-exempt uses, an exemption may be granted for the qualifying
portion of that parcel. In the case of parking lots and common
areas serving both exempt and non-exempt uses those parcels or
portions thereof may qualify for an exemption in proportion to
the amount of qualifying use.
    (d) The hospital applicant shall include information in its
exemption application establishing that it satisfies the
requirements of subsection (c). For purposes of making the
calculations required by subsection (c), the hospital
applicant may for each year elect to use either (1) the value
of the services or activities listed in subsection (e) for the
hospital year or (2) the average value of those services or
activities for the 3 fiscal years ending with the hospital
year. If the relevant hospital entity has been in operation for
less than 3 completed fiscal years, then the latter
calculation, if elected, shall be performed on a pro rata
basis.
    (e) Services that address the health care needs of
low-income or underserved individuals or relieve the burden of
government with regard to health care services. The following
services and activities shall be considered for purposes of
making the calculations required by subsection (c):
        (1) Charity care. Free or discounted services provided
    pursuant to the relevant hospital entity's financial
    assistance policy, measured at cost, including discounts
    provided under the Hospital Uninsured Patient Discount
    Act.
        (2) Health services to low-income and underserved
    individuals. Other unreimbursed costs of the relevant
    hospital entity for providing without charge, paying for,
    or subsidizing goods, activities, or services for the
    purpose of addressing the health of low-income or
    underserved individuals. Those activities or services may
    include, but are not limited to: financial or in-kind
    support to affiliated or unaffiliated hospitals, hospital
    affiliates, community clinics, or programs that treat
    low-income or underserved individuals; paying for or
    subsidizing health care professionals who care for
    low-income or underserved individuals; providing or
    subsidizing outreach or educational services to low-income
    or underserved individuals for disease management and
    prevention; free or subsidized goods, supplies, or
    services needed by low-income or underserved individuals
    because of their medical condition; and prenatal or
    childbirth outreach to low-income or underserved persons.
        (3) Subsidy of State or local governments. Direct or
    indirect financial or in-kind subsidies of State or local
    governments by the relevant hospital entity that pay for or
    subsidize activities or programs related to health care for
    low-income or underserved individuals.
        (4) Support for State health care programs for
    low-income individuals. At the election of the hospital
    applicant for each applicable year, either (A) 10% of
    payments to the relevant hospital entity and any hospital
    affiliate designated by the relevant hospital entity
    (provided that such hospital affiliate's operations
    provide financial or operational support for or receive
    financial or operational support from the relevant
    hospital entity) under Medicaid or other means-tested
    programs, including, but not limited to, General
    Assistance, the Covering ALL KIDS Health Insurance Act, and
    the State Children's Health Insurance Program or (B) the
    amount of subsidy provided by the relevant hospital entity
    and any hospital affiliate designated by the relevant
    hospital entity (provided that such hospital affiliate's
    operations provide financial or operational support for or
    receive financial or operational support from the relevant
    hospital entity) to State or local government in treating
    Medicaid recipients and recipients of means-tested
    programs, including but not limited to General Assistance,
    the Covering ALL KIDS Health Insurance Act, and the State
    Children's Health Insurance Program. The amount of subsidy
    for purposes of this item (4) is calculated in the same
    manner as unreimbursed costs are calculated for Medicaid
    and other means-tested government programs in the Schedule
    H of IRS Form 990 in effect on the effective date of this
    amendatory Act of the 97th General Assembly; provided,
    however, that in any event unreimbursed costs shall be net
    of fee-for-services payments, payments pursuant to an
    assessment, quarterly payments, and all other payments
    included on the schedule H of the IRS form 990.
        (5) Dual-eligible subsidy. The amount of subsidy
    provided to government by treating dual-eligible
    Medicare/Medicaid patients. The amount of subsidy for
    purposes of this item (5) is calculated by multiplying the
    relevant hospital entity's unreimbursed costs for
    Medicare, calculated in the same manner as determined in
    the Schedule H of IRS Form 990 in effect on the effective
    date of this amendatory Act of the 97th General Assembly,
    by the relevant hospital entity's ratio of dual-eligible
    patients to total Medicare patients.
        (6) Relief of the burden of government related to
    health care of low-income individuals. Except to the extent
    otherwise taken into account in this subsection, the
    portion of unreimbursed costs of the relevant hospital
    entity attributable to providing, paying for, or
    subsidizing goods, activities, or services that relieve
    the burden of government related to health care for
    low-income individuals. Such activities or services shall
    include, but are not limited to, providing emergency,
    trauma, burn, neonatal, psychiatric, rehabilitation, or
    other special services; providing medical education; and
    conducting medical research or training of health care
    professionals. The portion of those unreimbursed costs
    attributable to benefiting low-income individuals shall be
    determined using the ratio calculated by adding the
    relevant hospital entity's costs attributable to charity
    care, Medicaid, other means-tested government programs,
    disabled Medicare patients under age 65, and dual-eligible
    Medicare/Medicaid patients and dividing that total by the
    relevant hospital entity's total costs. Such costs for the
    numerator and denominator shall be determined by
    multiplying gross charges by the cost to charge ratio taken
    from the hospitals' most recently filed Medicare cost
    report (CMS 2252-10 Worksheet C, Part I). In the case of
    emergency services, the ratio shall be calculated using
    costs (gross charges multiplied by the cost to charge ratio
    taken from the hospitals' most recently filed Medicare cost
    report (CMS 2252-10 Worksheet C, Part I)) of patients
    treated in the relevant hospital entity's emergency
    department.
        (7) Any other activity by the relevant hospital entity
    that the Department determines relieves the burden of
    government or addresses the health of low-income or
    underserved individuals.
    (f) For purposes of making the calculations required by
subsections (c) and (e):
        (1) particular services or activities eligible for
    consideration under any of the paragraphs (1) through (7)
    of subsection (e) may not be counted under more than one of
    those paragraphs; and
        (2) the amount of unreimbursed costs and the amount of
    subsidy shall not be reduced by restricted or unrestricted
    payments received by the relevant hospital entity as
    contributions deductible under Section 170(a) of the
    Internal Revenue Code.
    (g) Estimation of Exempt Property Tax Liability. The
estimated property tax liability used for the determination in
subsection (c) shall be calculated as follows:
        (1) "Estimated property tax liability" means the
    estimated dollar amount of property tax that would be owed,
    with respect to the exempt portion of each of the relevant
    hospital entity's properties that are already fully or
    partially exempt, or for which an exemption in whole or in
    part is currently being sought, and then aggregated as
    applicable, as if the exempt portion of those properties
    were subject to tax, calculated with respect to each such
    property by multiplying:
            (A) the lesser of (i) the actual assessed value, if
        any, of the portion of the property for which an
        exemption is sought or (ii) an estimated assessed value
        of the exempt portion of such property as determined in
        item (2) of this subsection (g), by:
            (B) the applicable State equalization rate
        (yielding the equalized assessed value), by
            (C) the applicable tax rate.
        (2) The estimated assessed value of the exempt portion
    of the property equals the sum of (i) the estimated fair
    market value of buildings on the property, as determined in
    accordance with subparagraphs (A) and (B) of this item (2),
    multiplied by the applicable assessment factor, and (ii)
    the estimated assessed value of the land portion of the
    property, as determined in accordance with subparagraph
    (C).
            (A) The "estimated fair market value of buildings
        on the property" means the replacement value of any
        exempt portion of buildings on the property, minus
        depreciation, determined utilizing the cost
        replacement method whereby the exempt square footage
        of all such buildings is multiplied by the replacement
        cost per square foot for Class A Average building found
        in the most recent edition of the Marshall & Swift
        Valuation Services Manual, adjusted by any appropriate
        current cost and local multipliers.
            (B) Depreciation, for purposes of calculating the
        estimated fair market value of buildings on the
        property, is applied by utilizing a weighted mean life
        for the buildings based on original construction and
        assuming a 40-year life for hospital buildings and the
        applicable life for other types of buildings as
        specified in the American Hospital Association
        publication "Estimated Useful Lives of Depreciable
        Hospital Assets". In the case of hospital buildings,
        the remaining life is divided by 40 and this ratio is
        multiplied by the replacement cost of the buildings to
        obtain an estimated fair market value of buildings. If
        a hospital building is older than 35 years, a remaining
        life of 5 years for residual value is assumed; and if a
        building is less than 8 years old, a remaining life of
        32 years is assumed.
            (C) The estimated assessed value of the land
        portion of the property shall be determined by
        multiplying (i) the per square foot average of the
        assessed values of three parcels of land (not including
        farm land, and excluding the assessed value of the
        improvements thereon) reasonably comparable to the
        property, by (ii) the number of square feet comprising
        the exempt portion of the property's land square
        footage.
        (3) The assessment factor, State equalization rate,
    and tax rate (including any special factors such as
    Enterprise Zones) used in calculating the estimated
    property tax liability shall be for the most recent year
    that is publicly available from the applicable chief county
    assessment officer or officers at least 90 days before the
    end of the hospital year.
        (4) The method utilized to calculate estimated
    property tax liability for purposes of this Section 15-86
    shall not be utilized for the actual valuation, assessment,
    or taxation of property pursuant to the Property Tax Code.
    (h) Application. Each hospital applicant applying for a
property tax exemption pursuant to Section 15-5 and this
Section shall use an application form provided by the
Department. The application form shall specify the records
required in support of the application and those records shall
be submitted to the Department with the application form. Each
application or affidavit shall contain a verification by the
Chief Executive Officer of the hospital applicant under oath or
affirmation stating that each statement in the application or
affidavit and each document submitted with the application or
affidavit are true and correct. The records submitted with the
application pursuant to this Section shall include an exhibit
prepared by the relevant hospital entity showing (A) the value
of the relevant hospital entity's services and activities, if
any, under paragraphs (1) through (7) of subsection (e) of this
Section stated separately for each paragraph, and (B) the value
relating to the relevant hospital entity's estimated property
tax liability under subsections (g)(1)(A), (B), and (C),
subsections (g)(2)(A), (B), and (C), and subsection (g)(3) of
this Section stated separately for each item. Such exhibit will
be made available to the public by the chief county assessment
officer. Nothing in this Section shall be construed as limiting
the Attorney General's authority under the Illinois False
Claims Act.
    (i) Nothing in this Section shall be construed to limit the
ability of otherwise eligible hospitals, hospital owners,
hospital affiliates, or hospital systems to obtain or maintain
property tax exemptions pursuant to a provision of the Property
Tax Code other than this Section.
 
    Section 5-60. The Illinois Public Aid Code is amended by
changing Sections 5A-1, 5A-2, 5A-4, 5A-5, 5A-8, 5A-10, 5A-13,
and 5A-14 and by adding Sections 5A-12.4 and 5A-15 as follows:
 
    (305 ILCS 5/5A-1)  (from Ch. 23, par. 5A-1)
    Sec. 5A-1. Definitions. As used in this Article, unless
the context requires otherwise:
    "Adjusted gross hospital revenue" shall be determined
separately for inpatient and outpatient services for each
hospital conducted, operated or maintained by a hospital
provider, and means the hospital provider's total gross
revenues less: (i) gross revenue attributable to non-hospital
based services including home dialysis services, durable
medical equipment, ambulance services, outpatient clinics and
any other non-hospital based services as determined by the
Illinois Department by rule; and (ii) gross revenues
attributable to the routine services provided to persons
receiving skilled or intermediate long-term care services
within the meaning of Title XVIII or XIX of the Social Security
Act; and (iii) Medicare gross revenue (excluding the Medicare
gross revenue attributable to clauses (i) and (ii) of this
paragraph and the Medicare gross revenue attributable to the
routine services provided to patients in a psychiatric
hospital, a rehabilitation hospital, a distinct part
psychiatric unit, a distinct part rehabilitation unit, or swing
beds). Adjusted gross hospital revenue shall be determined
using the most recent data available from each hospital's 2003
Medicare cost report as contained in the Healthcare Cost Report
Information System file, for the quarter ending on December 31,
2004, without regard to any subsequent adjustments or changes
to such data. If a hospital's 2003 Medicare cost report is not
contained in the Healthcare Cost Report Information System, the
hospital provider shall furnish such cost report or the data
necessary to determine its adjusted gross hospital revenue as
required by rule by the Illinois Department.
    "Fund" means the Hospital Provider Fund.
    "Hospital" means an institution, place, building, or
agency located in this State that is subject to licensure by
the Illinois Department of Public Health under the Hospital
Licensing Act, whether public or private and whether organized
for profit or not-for-profit.
    "Hospital provider" means a person licensed by the
Department of Public Health to conduct, operate, or maintain a
hospital, regardless of whether the person is a Medicaid
provider. For purposes of this paragraph, "person" means any
political subdivision of the State, municipal corporation,
individual, firm, partnership, corporation, company, limited
liability company, association, joint stock association, or
trust, or a receiver, executor, trustee, guardian, or other
representative appointed by order of any court.
    "Medicare bed days" means, for each hospital, the sum of
the number of days that each bed was occupied by a patient who
was covered by Title XVIII of the Social Security Act,
excluding days attributable to the routine services provided to
persons receiving skilled or intermediate long term care
services. Medicare bed days shall be computed separately for
each hospital operated or maintained by a hospital provider.
    "Occupied bed days" means the sum of the number of days
that each bed was occupied by a patient for all beds, excluding
days attributable to the routine services provided to persons
receiving skilled or intermediate long term care services.
Occupied bed days shall be computed separately for each
hospital operated or maintained by a hospital provider.
    "Outpatient gross revenue" means, for each hospital, its
total gross charges attributed to outpatient services as
reported on the Medicare cost report at Worksheet C, Part I,
Column 7, line 101, less the sum of lines 45, 60, 63, 64, 65,
66, 67, and 68 (and any subsets of those lines).
    "Proration factor" means a fraction, the numerator of which
is 53 and the denominator of which is 365.
(Source: P.A. 94-242, eff. 7-18-05; 95-859, eff. 8-19-08.)
 
    (305 ILCS 5/5A-2)  (from Ch. 23, par. 5A-2)
    (Section scheduled to be repealed on July 1, 2014)
    Sec. 5A-2. Assessment.
    (a) Subject to Sections 5A-3 and 5A-10, an annual
assessment on inpatient services is imposed on each hospital
provider in an amount equal to the hospital's occupied bed days
multiplied by $84.19 multiplied by the proration factor for
State fiscal year 2004 and the hospital's occupied bed days
multiplied by $84.19 for State fiscal year 2005.
    For State fiscal years 2004 and 2005, the Department of
Healthcare and Family Services shall use the number of occupied
bed days as reported by each hospital on the Annual Survey of
Hospitals conducted by the Department of Public Health to
calculate the hospital's annual assessment. If the sum of a
hospital's occupied bed days is not reported on the Annual
Survey of Hospitals or if there are data errors in the reported
sum of a hospital's occupied bed days as determined by the
Department of Healthcare and Family Services (formerly
Department of Public Aid), then the Department of Healthcare
and Family Services may obtain the sum of occupied bed days
from any source available, including, but not limited to,
records maintained by the hospital provider, which may be
inspected at all times during business hours of the day by the
Department of Healthcare and Family Services or its duly
authorized agents and employees.
    Subject to Sections 5A-3 and 5A-10, for the privilege of
engaging in the occupation of hospital provider, beginning
August 1, 2005, an annual assessment is imposed on each
hospital provider for State fiscal years 2006, 2007, and 2008,
in an amount equal to 2.5835% of the hospital provider's
adjusted gross hospital revenue for inpatient services and
2.5835% of the hospital provider's adjusted gross hospital
revenue for outpatient services. If the hospital provider's
adjusted gross hospital revenue is not available, then the
Illinois Department may obtain the hospital provider's
adjusted gross hospital revenue from any source available,
including, but not limited to, records maintained by the
hospital provider, which may be inspected at all times during
business hours of the day by the Illinois Department or its
duly authorized agents and employees.
    Subject to Sections 5A-3 and 5A-10, for State fiscal years
2009 through 2014, and from July 1, 2014 through December 31,
2014, an annual assessment on inpatient services is imposed on
each hospital provider in an amount equal to $218.38 multiplied
by the difference of the hospital's occupied bed days less the
hospital's Medicare bed days.
    For State fiscal years 2009 through 2014, and after a
hospital's occupied bed days and Medicare bed days shall be
determined using the most recent data available from each
hospital's 2005 Medicare cost report as contained in the
Healthcare Cost Report Information System file, for the quarter
ending on December 31, 2006, without regard to any subsequent
adjustments or changes to such data. If a hospital's 2005
Medicare cost report is not contained in the Healthcare Cost
Report Information System, then the Illinois Department may
obtain the hospital provider's occupied bed days and Medicare
bed days from any source available, including, but not limited
to, records maintained by the hospital provider, which may be
inspected at all times during business hours of the day by the
Illinois Department or its duly authorized agents and
employees.
    (b) (Blank).
    (b-5) Subject to Sections 5A-3 and 5A-10, for State fiscal
years 2013 through 2014, and July 1, 2014 through December 31,
2014, an annual assessment on outpatient services is imposed on
each hospital provider in an amount equal to .008766 multiplied
by the hospital's outpatient gross revenue.
    For State fiscal years 2013 through 2014, and July 1, 2014
through December 31, 2014, a hospital's outpatient gross
revenue shall be determined using the most recent data
available from each hospital's 2009 Medicare cost report as
contained in the Healthcare Cost Report Information System
file, for the quarter ending on June 30, 2011, without regard
to any subsequent adjustments or changes to such data. If a
hospital's 2009 Medicare cost report is not contained in the
Healthcare Cost Report Information System, then the Department
may obtain the hospital provider's outpatient gross revenue
from any source available, including, but not limited to,
records maintained by the hospital provider, which may be
inspected at all times during business hours of the day by the
Department or its duly authorized agents and employees.
    (c) (Blank).
    (d) Notwithstanding any of the other provisions of this
Section, the Department is authorized, during this 94th General
Assembly, to adopt rules to reduce the rate of any annual
assessment imposed under this Section, as authorized by Section
5-46.2 of the Illinois Administrative Procedure Act.
    (e) Notwithstanding any other provision of this Section,
any plan providing for an assessment on a hospital provider as
a permissible tax under Title XIX of the federal Social
Security Act and Medicaid-eligible payments to hospital
providers from the revenues derived from that assessment shall
be reviewed by the Illinois Department of Healthcare and Family
Services, as the Single State Medicaid Agency required by
federal law, to determine whether those assessments and
hospital provider payments meet federal Medicaid standards. If
the Department determines that the elements of the plan may
meet federal Medicaid standards and a related State Medicaid
Plan Amendment is prepared in a manner and form suitable for
submission, that State Plan Amendment shall be submitted in a
timely manner for review by the Centers for Medicare and
Medicaid Services of the United States Department of Health and
Human Services and subject to approval by the Centers for
Medicare and Medicaid Services of the United States Department
of Health and Human Services. No such plan shall become
effective without approval by the Illinois General Assembly by
the enactment into law of related legislation. Notwithstanding
any other provision of this Section, the Department is
authorized to adopt rules to reduce the rate of any annual
assessment imposed under this Section. Any such rules may be
adopted by the Department under Section 5-50 of the Illinois
Administrative Procedure Act.
(Source: P.A. 95-859, eff. 8-19-08; 96-1530, eff. 2-16-11.)
 
    (305 ILCS 5/5A-4)  (from Ch. 23, par. 5A-4)
    Sec. 5A-4. Payment of assessment; penalty.
    (a) The annual assessment imposed by Section 5A-2 for State
fiscal year 2004 shall be due and payable on June 18 of the
year. The assessment imposed by Section 5A-2 for State fiscal
year 2005 shall be due and payable in quarterly installments,
each equalling one-fourth of the assessment for the year, on
July 19, October 19, January 18, and April 19 of the year. The
assessment imposed by Section 5A-2 for State fiscal years 2006
through 2008 shall be due and payable in quarterly
installments, each equaling one-fourth of the assessment for
the year, on the fourteenth State business day of September,
December, March, and May. Except as provided in subsection
(a-5) of this Section, the assessment imposed by Section 5A-2
for State fiscal year 2009 and each subsequent State fiscal
year shall be due and payable in monthly installments, each
equaling one-twelfth of the assessment for the year, on the
fourteenth State business day of each month. No installment
payment of an assessment imposed by Section 5A-2 shall be due
and payable, however, until after the Comptroller has issued
the payments required under this Article : (i) the Department
notifies the hospital provider, in writing, that the payment
methodologies to hospitals required under Section 5A-12,
Section 5A-12.1, or Section 5A-12.2, whichever is applicable
for that fiscal year, have been approved by the Centers for
Medicare and Medicaid Services of the U.S. Department of Health
and Human Services and the waiver under 42 CFR 433.68 for the
assessment imposed by Section 5A-2, if necessary, has been
granted by the Centers for Medicare and Medicaid Services of
the U.S. Department of Health and Human Services; and (ii) the
Comptroller has issued the payments required under Section
5A-12, Section 5A-12.1, or Section 5A-12.2, whichever is
applicable for that fiscal year. Upon notification to the
Department of approval of the payment methodologies required
under Section 5A-12, Section 5A-12.1, or Section 5A-12.2,
whichever is applicable for that fiscal year, and the waiver
granted under 42 CFR 433.68, all installments otherwise due
under Section 5A-2 prior to the date of notification shall be
due and payable to the Department upon written direction from
the Department and issuance by the Comptroller of the payments
required under Section 5A-12.1 or Section 5A-12.2, whichever is
applicable for that fiscal year.
    Except as provided in subsection (a-5) of this Section, the
assessment imposed by subsection (b-5) of Section 5A-2 for
State fiscal year 2013 and each subsequent State fiscal year
shall be due and payable in monthly installments, each equaling
one-twelfth of the assessment for the year, on the 14th State
business day of each month. No installment payment of an
assessment imposed by subsection (b-5) of Section 5A-2 shall be
due and payable, however, until after: (i) the Department
notifies the hospital provider, in writing, that the payment
methodologies to hospitals required under Section 5A-12.4,
have been approved by the Centers for Medicare and Medicaid
Services of the U.S. Department of Health and Human Services,
and the waiver under 42 CFR 433.68 for the assessment imposed
by subsection (b-5) of Section 5A-2, if necessary, has been
granted by the Centers for Medicare and Medicaid Services of
the U.S. Department of Health and Human Services; and (ii) the
Comptroller has issued the payments required under Section
5A-12.4. Upon notification to the Department of approval of the
payment methodologies required under Section 5A-12.4 and the
waiver granted under 42 CFR 433.68, if necessary, all
installments otherwise due under subsection (b-5) of Section
5A-2 prior to the date of notification shall be due and payable
to the Department upon written direction from the Department
and issuance by the Comptroller of the payments required under
Section 5A-12.4.
    (a-5) The Illinois Department may, for the purpose of
maximizing federal revenue, accelerate the schedule upon which
assessment installments are due and payable by hospitals with a
payment ratio greater than or equal to one. Such acceleration
of due dates for payment of the assessment may be made only in
conjunction with a corresponding acceleration in access
payments identified in Section 5A-12.2 or Section 5A-12.4 to
the same hospitals. For the purposes of this subsection (a-5),
a hospital's payment ratio is defined as the quotient obtained
by dividing the total payments for the State fiscal year, as
authorized under Section 5A-12.2 or Section 5A-12.4, by the
total assessment for the State fiscal year imposed under
Section 5A-2 or subsection (b-5) of Section 5A-2.
    (b) The Illinois Department is authorized to establish
delayed payment schedules for hospital providers that are
unable to make installment payments when due under this Section
due to financial difficulties, as determined by the Illinois
Department.
    (c) If a hospital provider fails to pay the full amount of
an installment when due (including any extensions granted under
subsection (b)), there shall, unless waived by the Illinois
Department for reasonable cause, be added to the assessment
imposed by Section 5A-2 a penalty assessment equal to the
lesser of (i) 5% of the amount of the installment not paid on
or before the due date plus 5% of the portion thereof remaining
unpaid on the last day of each 30-day period thereafter or (ii)
100% of the installment amount not paid on or before the due
date. For purposes of this subsection, payments will be
credited first to unpaid installment amounts (rather than to
penalty or interest), beginning with the most delinquent
installments.
    (d) Any assessment amount that is due and payable to the
Illinois Department more frequently than once per calendar
quarter shall be remitted to the Illinois Department by the
hospital provider by means of electronic funds transfer. The
Illinois Department may provide for remittance by other means
if (i) the amount due is less than $10,000 or (ii) electronic
funds transfer is unavailable for this purpose.
(Source: P.A. 95-331, eff. 8-21-07; 95-859, eff. 8-19-08;
96-821, eff. 11-20-09.)
 
    (305 ILCS 5/5A-5)  (from Ch. 23, par. 5A-5)
    Sec. 5A-5. Notice; penalty; maintenance of records.
    (a) The Illinois Department of Healthcare and Family
Services shall send a notice of assessment to every hospital
provider subject to assessment under this Article. The notice
of assessment shall notify the hospital of its assessment and
shall be sent after receipt by the Department of notification
from the Centers for Medicare and Medicaid Services of the U.S.
Department of Health and Human Services that the payment
methodologies required under this Article Section 5A-12,
Section 5A-12.1, or Section 5A-12.2, whichever is applicable
for that fiscal year, and, if necessary, the waiver granted
under 42 CFR 433.68 have been approved. The notice shall be on
a form prepared by the Illinois Department and shall state the
following:
        (1) The name of the hospital provider.
        (2) The address of the hospital provider's principal
    place of business from which the provider engages in the
    occupation of hospital provider in this State, and the name
    and address of each hospital operated, conducted, or
    maintained by the provider in this State.
        (3) The occupied bed days, occupied bed days less
    Medicare days, or adjusted gross hospital revenue, or
    outpatient gross revenue of the hospital provider
    (whichever is applicable), the amount of assessment
    imposed under Section 5A-2 for the State fiscal year for
    which the notice is sent, and the amount of each
    installment to be paid during the State fiscal year.
        (4) (Blank).
        (5) Other reasonable information as determined by the
    Illinois Department.
    (b) If a hospital provider conducts, operates, or maintains
more than one hospital licensed by the Illinois Department of
Public Health, the provider shall pay the assessment for each
hospital separately.
    (c) Notwithstanding any other provision in this Article, in
the case of a person who ceases to conduct, operate, or
maintain a hospital in respect of which the person is subject
to assessment under this Article as a hospital provider, the
assessment for the State fiscal year in which the cessation
occurs shall be adjusted by multiplying the assessment computed
under Section 5A-2 by a fraction, the numerator of which is the
number of days in the year during which the provider conducts,
operates, or maintains the hospital and the denominator of
which is 365. Immediately upon ceasing to conduct, operate, or
maintain a hospital, the person shall pay the assessment for
the year as so adjusted (to the extent not previously paid).
    (d) Notwithstanding any other provision in this Article, a
provider who commences conducting, operating, or maintaining a
hospital, upon notice by the Illinois Department, shall pay the
assessment computed under Section 5A-2 and subsection (e) in
installments on the due dates stated in the notice and on the
regular installment due dates for the State fiscal year
occurring after the due dates of the initial notice.
    (e) Notwithstanding any other provision in this Article,
for State fiscal years 2004 and 2005, in the case of a hospital
provider that did not conduct, operate, or maintain a hospital
throughout calendar year 2001, the assessment for that State
fiscal year shall be computed on the basis of hypothetical
occupied bed days for the full calendar year as determined by
the Illinois Department. Notwithstanding any other provision
in this Article, for State fiscal years 2006 through 2008, in
the case of a hospital provider that did not conduct, operate,
or maintain a hospital in 2003, the assessment for that State
fiscal year shall be computed on the basis of hypothetical
adjusted gross hospital revenue for the hospital's first full
fiscal year as determined by the Illinois Department (which may
be based on annualization of the provider's actual revenues for
a portion of the year, or revenues of a comparable hospital for
the year, including revenues realized by a prior provider of
the same hospital during the year). Notwithstanding any other
provision in this Article, for State fiscal years 2009 through
2014, in the case of a hospital provider that did not conduct,
operate, or maintain a hospital in 2005, the assessment for
that State fiscal year shall be computed on the basis of
hypothetical occupied bed days for the full calendar year as
determined by the Illinois Department. Notwithstanding any
other provision in this Article, for State fiscal years 2013
through 2014, and for July 1, 2014 through December 31, 2014,
in the case of a hospital provider that did not conduct,
operate, or maintain a hospital in 2009, the assessment under
subsection (b-5) of Section 5A-2 for that State fiscal year
shall be computed on the basis of hypothetical gross outpatient
revenue for the full calendar year as determined by the
Illinois Department.
    (f) Every hospital provider subject to assessment under
this Article shall keep sufficient records to permit the
determination of adjusted gross hospital revenue for the
hospital's fiscal year. All such records shall be kept in the
English language and shall, at all times during regular
business hours of the day, be subject to inspection by the
Illinois Department or its duly authorized agents and
employees.
    (g) The Illinois Department may, by rule, provide a
hospital provider a reasonable opportunity to request a
clarification or correction of any clerical or computational
errors contained in the calculation of its assessment, but such
corrections shall not extend to updating the cost report
information used to calculate the assessment.
    (h) (Blank).
(Source: P.A. 95-331, eff. 8-21-07; 95-859, eff. 8-19-08;
96-1530, eff. 2-16-11.)
 
    (305 ILCS 5/5A-8)  (from Ch. 23, par. 5A-8)
    Sec. 5A-8. Hospital Provider Fund.
    (a) There is created in the State Treasury the Hospital
Provider Fund. Interest earned by the Fund shall be credited to
the Fund. The Fund shall not be used to replace any moneys
appropriated to the Medicaid program by the General Assembly.
    (b) The Fund is created for the purpose of receiving moneys
in accordance with Section 5A-6 and disbursing moneys only for
the following purposes, notwithstanding any other provision of
law:
        (1) For making payments to hospitals as required under
    Articles V, V-A, VI, and XIV of this Code, under the
    Children's Health Insurance Program Act, under the
    Covering ALL KIDS Health Insurance Act, and under the Long
    Term Acute Care Hospital Quality Improvement Transfer
    Program Senior Citizens and Disabled Persons Property Tax
    Relief and Pharmaceutical Assistance Act.
        (2) For the reimbursement of moneys collected by the
    Illinois Department from hospitals or hospital providers
    through error or mistake in performing the activities
    authorized under this Article and Article V of this Code.
        (3) For payment of administrative expenses incurred by
    the Illinois Department or its agent in performing the
    activities authorized by this Code, under the Children's
    Health Insurance Program Act, under the Covering ALL KIDS
    Health Insurance Act, and under the Long Term Acute Care
    Hospital Quality Improvement Transfer Program Act.
    Article.
        (4) For payments of any amounts which are reimbursable
    to the federal government for payments from this Fund which
    are required to be paid by State warrant.
        (5) For making transfers, as those transfers are
    authorized in the proceedings authorizing debt under the
    Short Term Borrowing Act, but transfers made under this
    paragraph (5) shall not exceed the principal amount of debt
    issued in anticipation of the receipt by the State of
    moneys to be deposited into the Fund.
        (6) For making transfers to any other fund in the State
    treasury, but transfers made under this paragraph (6) shall
    not exceed the amount transferred previously from that
    other fund into the Hospital Provider Fund.
        (6.5) For making transfers to the Healthcare Provider
    Relief Fund, except that transfers made under this
    paragraph (6.5) shall not exceed $60,000,000 in the
    aggregate.
        (7) For making transfers not exceeding the following
    amounts, in State fiscal years 2013 and 2014, to the
    following designated funds:
            Health and Human Services Medicaid Trust
                Fund..............................$20,000,000
            Long-Term Care Provider Fund..........$30,000,000
            General Revenue Fund.................$80,000,000.
    Transfers under this paragraph shall be made within 7 days
    after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4.
        (7.1) For making transfers not exceeding the following
    amounts, in State fiscal year 2015, to the following
    designated funds:
            Health and Human Services Medicaid Trust
                 Fund..............................$10,000,000
            Long-Term Care Provider Fund..........$15,000,000
            General Revenue Fund.................$40,000,000.
    Transfers under this paragraph shall be made within 7 days
    after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4. For State fiscal years 2004 and 2005 for making
    transfers to the Health and Human Services Medicaid Trust
    Fund, including 20% of the moneys received from hospital
    providers under Section 5A-4 and transferred into the
    Hospital Provider Fund under Section 5A-6. For State fiscal
    year 2006 for making transfers to the Health and Human
    Services Medicaid Trust Fund of up to $130,000,000 per year
    of the moneys received from hospital providers under
    Section 5A-4 and transferred into the Hospital Provider
    Fund under Section 5A-6. Transfers under this paragraph
    shall be made within 7 days after the payments have been
    received pursuant to the schedule of payments provided in
    subsection (a) of Section 5A-4.
        (7.5) (Blank). For State fiscal year 2007 for making
    transfers of the moneys received from hospital providers
    under Section 5A-4 and transferred into the Hospital
    Provider Fund under Section 5A-6 to the designated funds
    not exceeding the following amounts in that State fiscal
    year:
        Health and Human Services
            Medicaid Trust Fund................. $20,000,000
        Long-Term Care Provider Fund............ $30,000,000
        General Revenue Fund................... $80,000,000.
        Transfers under this paragraph shall be made within 7
    days after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4.
        (7.8) (Blank). For State fiscal year 2008, for making
    transfers of the moneys received from hospital providers
    under Section 5A-4 and transferred into the Hospital
    Provider Fund under Section 5A-6 to the designated funds
    not exceeding the following amounts in that State fiscal
    year:
        Health and Human Services
            Medicaid Trust Fund...................$40,000,000
        Long-Term Care Provider Fund..............$60,000,000
        General Revenue Fund....................$160,000,000.
        Transfers under this paragraph shall be made within 7
    days after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4.
        (7.9) (Blank). For State fiscal years 2009 through
    2014, for making transfers of the moneys received from
    hospital providers under Section 5A-4 and transferred into
    the Hospital Provider Fund under Section 5A-6 to the
    designated funds not exceeding the following amounts in
    that State fiscal year:
        Health and Human Services
            Medicaid Trust Fund...................$20,000,000
        Long Term Care Provider Fund..............$30,000,000
        General Revenue Fund.....................$80,000,000.
        Except as provided under this paragraph, transfers
    under this paragraph shall be made within 7 business days
    after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4. For State fiscal year 2009, transfers to the General
    Revenue Fund under this paragraph shall be made on or
    before June 30, 2009, as sufficient funds become available
    in the Hospital Provider Fund to both make the transfers
    and continue hospital payments.
        (7.10) For State fiscal years 2013 and 2014, for making
    transfers of the moneys resulting from the assessment under
    subsection (b-5) of Section 5A-2 and received from hospital
    providers under Section 5A-4 and transferred into the
    Hospital Provider Fund under Section 5A-6 to the designated
    funds not exceeding the following amounts in that State
    fiscal year:
            Health Care Provider Relief Fund......$50,000,000
        Transfers under this paragraph shall be made within 7
    days after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4.
        (7.11) For State fiscal year 2015, for making transfers
    of the moneys resulting from the assessment under
    subsection (b-5) of Section 5A-2 and received from hospital
    providers under Section 5A-4 and transferred into the
    Hospital Provider Fund under Section 5A-6 to the designated
    funds not exceeding the following amounts in that State
    fiscal year:
            Health Care Provider Relief Fund......$25,000,000
        Transfers under this paragraph shall be made within 7
    days after the payments have been received pursuant to the
    schedule of payments provided in subsection (a) of Section
    5A-4.
        (8) For making refunds to hospital providers pursuant
    to Section 5A-10.
    Disbursements from the Fund, other than transfers
authorized under paragraphs (5) and (6) of this subsection,
shall be by warrants drawn by the State Comptroller upon
receipt of vouchers duly executed and certified by the Illinois
Department.
    (c) The Fund shall consist of the following:
        (1) All moneys collected or received by the Illinois
    Department from the hospital provider assessment imposed
    by this Article.
        (2) All federal matching funds received by the Illinois
    Department as a result of expenditures made by the Illinois
    Department that are attributable to moneys deposited in the
    Fund.
        (3) Any interest or penalty levied in conjunction with
    the administration of this Article.
        (4) Moneys transferred from another fund in the State
    treasury.
        (5) All other moneys received for the Fund from any
    other source, including interest earned thereon.
    (d) (Blank).
(Source: P.A. 95-707, eff. 1-11-08; 95-859, eff. 8-19-08; 96-3,
eff. 2-27-09; 96-45, eff. 7-15-09; 96-821, eff. 11-20-09;
96-1530, eff. 2-16-11.)
 
    (305 ILCS 5/5A-10)  (from Ch. 23, par. 5A-10)
    Sec. 5A-10. Applicability.
    (a) The assessment imposed by subsection (a) of Section
5A-2 shall not take effect or shall cease to be imposed, and
any moneys remaining in the Fund shall be refunded to hospital
providers in proportion to the amounts paid by them, if:
        (1) The payments to hospitals required under this
    Article are not eligible for federal matching funds under
    Title XIX or XXI of the Social Security Act; The sum of the
    appropriations for State fiscal years 2004 and 2005 from
    the General Revenue Fund for hospital payments under the
    medical assistance program is less than $4,500,000,000 or
    the appropriation for each of State fiscal years 2006, 2007
    and 2008 from the General Revenue Fund for hospital
    payments under the medical assistance program is less than
    $2,500,000,000 increased annually to reflect any increase
    in the number of recipients, or the annual appropriation
    for State fiscal years 2009, 2010, 2011, 2013, and 2014,
    from the General Revenue Fund combined with the Hospital
    Provider Fund as authorized in Section 5A-8 for hospital
    payments under the medical assistance program, is less than
    the amount appropriated for State fiscal year 2009,
    adjusted annually to reflect any change in the number of
    recipients, excluding State fiscal year 2009 supplemental
    appropriations made necessary by the enactment of the
    American Recovery and Reinvestment Act of 2009; or
        (2) For State fiscal years prior to State fiscal year
    2009, the Department of Healthcare and Family Services
    (formerly Department of Public Aid) makes changes in its
    rules that reduce the hospital inpatient or outpatient
    payment rates, including adjustment payment rates, in
    effect on October 1, 2004, except for hospitals described
    in subsection (b) of Section 5A-3 and except for changes in
    the methodology for calculating outlier payments to
    hospitals for exceptionally costly stays, so long as those
    changes do not reduce aggregate expenditures below the
    amount expended in State fiscal year 2005 for such
    services; or
        (2) (2.1) For State fiscal years 2009 through 2014, and
    July 1, 2014 through December 31, 2014, the Department of
    Healthcare and Family Services adopts any administrative
    rule change to reduce payment rates or alters any payment
    methodology that reduces any payment rates made to
    operating hospitals under the approved Title XIX or Title
    XXI State plan in effect January 1, 2008 except for:
            (A) any changes for hospitals described in
        subsection (b) of Section 5A-3; or
            (B) any rates for payments made under this Article
        V-A; or
            (C) any changes proposed in State plan amendment
        transmittal numbers 08-01, 08-02, 08-04, 08-06, and
        08-07; or
            (D) in relation to any admissions on or after
        January 1, 2011, a modification in the methodology for
        calculating outlier payments to hospitals for
        exceptionally costly stays, for hospitals reimbursed
        under the diagnosis-related grouping methodology in
        effect on July 1, 2011; provided that the Department
        shall be limited to one such modification during the
        36-month period after the effective date of this
        amendatory Act of the 96th General Assembly; or
        (3) The payments to hospitals required under Section
    5A-12 or Section 5A-12.2 are changed or are not eligible
    for federal matching funds under Title XIX or XXI of the
    Social Security Act.
    (b) The assessment imposed by Section 5A-2 shall not take
effect or shall cease to be imposed, and the Department's
obligation to make payments shall immediately cease, if the
assessment is determined to be an impermissible tax under Title
XIX of the Social Security Act. Moneys in the Hospital Provider
Fund derived from assessments imposed prior thereto shall be
disbursed in accordance with Section 5A-8 to the extent federal
financial participation is not reduced due to the
impermissibility of the assessments, and any remaining moneys
shall be refunded to hospital providers in proportion to the
amounts paid by them.
    (c) The assessments imposed by subsection (b-5) of Section
5A-2 shall not take effect or shall cease to be imposed, the
Department's obligation to make payments shall immediately
cease, and any moneys remaining in the Fund shall be refunded
to hospital providers in proportion to the amounts paid by
them, if the payments to hospitals required under Section
5A-12.4 are not eligible for federal matching funds under Title
XIX of the Social Security Act.
    (d) The assessments imposed by Section 5A-2 shall not take
effect or shall cease to be imposed, the Department's
obligation to make payments shall immediately cease, and any
moneys remaining in the Fund shall be refunded to hospital
providers in proportion to the amounts paid by them, if:
        (1) for State fiscal years 2013 through 2014, and July
    1, 2014 through December 31, 2014, the Department reduces
    any payment rates to hospitals as in effect on May 1, 2012,
    or alters any payment methodology as in effect on May 1,
    2012, that has the effect of reducing payment rates to
    hospitals, except for any changes affecting hospitals
    authorized in Senate Bill 2840 of the 97th General Assembly
    in the form in which it becomes law, and except for any
    changes authorized under Section 5A-15; or
        (2) for State fiscal years 2013 through 2014, and July
    1, 2014 through December 31, 2014, the Department reduces
    any supplemental payments made to hospitals below the
    amounts paid for services provided in State fiscal year
    2011 as implemented by administrative rules adopted and in
    effect on or prior to June 30, 2011, except for any changes
    affecting hospitals authorized in Senate Bill 2840 of the
    97th General Assembly in the form in which it becomes law,
    and except for any changes authorized under Section 5A-15.
(Source: P.A. 96-8, eff. 4-28-09; 96-1530, eff. 2-16-11; 97-72,
eff. 7-1-11; 97-74, eff. 6-30-11.)
 
    (305 ILCS 5/5A-12.4 new)
    Sec. 5A-12.4. Hospital access improvement payments on or
after July 1, 2012.
    (a) Hospital access improvement payments. To preserve and
improve access to hospital services, for hospital and physician
services rendered on or after July 1, 2012, the Illinois
Department shall, except for hospitals described in subsection
(b) of Section 5A-3, make payments to hospitals as set forth in
this Section. These payments shall be paid in 12 equal
installments on or before the 7th State business day of each
month, except that no payment shall be due within 100 days
after the later of the date of notification of federal approval
of the payment methodologies required under this Section or any
waiver required under 42 CFR 433.68, at which time the sum of
amounts required under this Section prior to the date of
notification is due and payable. Payments under this Section
are not due and payable, however, until (i) the methodologies
described in this Section are approved by the federal
government in an appropriate State Plan amendment and (ii) the
assessment imposed under subsection (b-5) of Section 5A-2 of
this Article is determined to be a permissible tax under Title
XIX of the Social Security Act. The Illinois Department shall
take all actions necessary to implement the payments under this
Section effective July 1, 2012, including but not limited to
providing public notice pursuant to federal requirements, the
filing of a State Plan amendment, and the adoption of
administrative rules.
    (a-5) Accelerated schedule. The Illinois Department may,
when practicable, accelerate the schedule upon which payments
authorized under this Section are made.
    (b) Magnet and perinatal hospital adjustment. In addition
to rates paid for inpatient hospital services, the Department
shall pay to each Illinois general acute care hospital that, as
of August 25, 2011, was recognized as a Magnet hospital by the
American Nurses Credentialing Center and that, as of September
14, 2011, was designated as a level III perinatal center
amounts as follows:
        (1) For hospitals with a case mix index equal to or
    greater than the 80th percentile of case mix indices for
    all Illinois hospitals, $470 for each Medicaid general
    acute care inpatient day of care provided by the hospital
    during State fiscal year 2009.
        (2) For all other hospitals, $170 for each Medicaid
    general acute care inpatient day of care provided by the
    hospital during State fiscal year 2009.
    (c) Trauma level II adjustment. In addition to rates paid
for inpatient hospital services, the Department shall pay to
each Illinois general acute care hospital that, as of July 1,
2011, was designated as a level II trauma center amounts as
follows:
        (1) For hospitals with a case mix index equal to or
    greater than the 50th percentile of case mix indices for
    all Illinois hospitals, $470 for each Medicaid general
    acute care inpatient day of care provided by the hospital
    during State fiscal year 2009.
        (2) For all other hospitals, $170 for each Medicaid
    general acute care inpatient day of care provided by the
    hospital during State fiscal year 2009.
        (3) For the purposes of this adjustment, hospitals
    located in the same city that alternate their trauma center
    designation as defined in 89 Ill. Adm. Code 148.295(a)(2)
    shall have the adjustment provided under this Section
    divided between the 2 hospitals.
    (d) Dual-eligible adjustment. In addition to rates paid for
inpatient services, the Department shall pay each Illinois
general acute care hospital that had a ratio of crossover days
to total inpatient days for programs under Title XIX of the
Social Security Act administered by the Department (utilizing
information from 2009 paid claims) greater than 50%, and a case
mix index equal to or greater than the 75th percentile of case
mix indices for all Illinois hospitals, a rate of $400 for each
Medicaid inpatient day during State fiscal year 2009 including
crossover days.
    (e) Medicaid volume adjustment. In addition to rates paid
for inpatient hospital services, the Department shall pay to
each Illinois general acute care hospital that provided more
than 10,000 Medicaid inpatient days of care in State fiscal
year 2009, has a Medicaid inpatient utilization rate of at
least 29.05% as calculated by the Department for the Rate Year
2011 Disproportionate Share determination, and is not eligible
for Medicaid Percentage Adjustment payments in rate year 2011
an amount equal to $135 for each Medicaid inpatient day of care
provided during State fiscal year 2009.
    (f) Outpatient service adjustment. In addition to the rates
paid for outpatient hospital services, the Department shall pay
each Illinois hospital an amount at least equal to $100
multiplied by the hospital's outpatient ambulatory procedure
listing services (excluding categories 3B and 3C) and by the
hospital's end stage renal disease treatment services provided
for State fiscal year 2009.
    (g) Ambulatory service adjustment.
        (1) In addition to the rates paid for outpatient
    hospital services provided in the emergency department,
    the Department shall pay each Illinois hospital an amount
    equal to $105 multiplied by the hospital's outpatient
    ambulatory procedure listing services for categories 3A,
    3B, and 3C for State fiscal year 2009.
        (2) In addition to the rates paid for outpatient
    hospital services, the Department shall pay each Illinois
    freestanding psychiatric hospital an amount equal to $200
    multiplied by the hospital's ambulatory procedure listing
    services for category 5A for State fiscal year 2009.
    (h) Specialty hospital adjustment. In addition to the rates
paid for outpatient hospital services, the Department shall pay
each Illinois long term acute care hospital and each Illinois
hospital devoted exclusively to the treatment of cancer, an
amount equal to $700 multiplied by the hospital's outpatient
ambulatory procedure listing services and by the hospital's end
stage renal disease treatment services (including services
provided to individuals eligible for both Medicaid and
Medicare) provided for State fiscal year 2009.
    (h-1) ER Safety Net Payments. In addition to rates paid for
outpatient services, the Department shall pay to each Illinois
general acute care hospital with an emergency room ratio equal
to or greater than 55%, that is not eligible for Medicaid
percentage adjustments payments in rate year 2011, with a case
mix index equal to or greater than the 20th percentile, and
that is not designated as a trauma center by the Illinois
Department of Public Health on July 1, 2011, as follows:
        (1) Each hospital with an emergency room ratio equal to
    or greater than 74% shall receive a rate of $225 for each
    outpatient ambulatory procedure listing and end-stage
    renal disease treatment service provided for State fiscal
    year 2009.
        (2) For all other hospitals, $65 shall be paid for each
    outpatient ambulatory procedure listing and end-stage
    renal disease treatment service provided for State fiscal
    year 2009.
    (i) Physician supplemental adjustment. In addition to the
rates paid for physician services, the Department shall make an
adjustment payment for services provided by physicians as
follows:
        (1) Physician services eligible for the adjustment
    payment are those provided by physicians employed by or who
    have a contract to provide services to patients of the
    following hospitals: (i) Illinois general acute care
    hospitals that provided at least 17,000 Medicaid inpatient
    days of care in State fiscal year 2009 and are eligible for
    Medicaid Percentage Adjustment Payments in rate year 2011;
    and (ii) Illinois freestanding children's hospitals, as
    defined in 89 Ill. Adm. Code 149.50(c)(3)(A).
        (2) The amount of the adjustment for each eligible
    hospital under this subsection (i) shall be determined by
    rule by the Department to spend a total pool of at least
    $6,960,000 annually. This pool shall be allocated among the
    eligible hospitals based on the difference between the
    upper payment limit for what could have been paid under
    Medicaid for physician services provided during State
    fiscal year 2009 by physicians employed by or who had a
    contract with the hospital and the amount that was paid
    under Medicaid for such services, provided however, that in
    no event shall physicians at any individual hospital
    collectively receive an annual, aggregate adjustment in
    excess of $435,000, except that any amount that is not
    distributed to a hospital because of the upper payment
    limit shall be reallocated among the remaining eligible
    hospitals that are below the upper payment limitation, on a
    proportionate basis.
    (i-5) For any children's hospital which did not charge for
its services during the base period, the Department shall use
data supplied by the hospital to determine payments using
similar methodologies for freestanding children's hospitals
under this Section or Section 12.2.
    (j) For purposes of this Section, a hospital that is
enrolled to provide Medicaid services during State fiscal year
2009 shall have its utilization and associated reimbursements
annualized prior to the payment calculations being performed
under this Section.
    (k) For purposes of this Section, the terms "Medicaid
days", "ambulatory procedure listing services", and
"ambulatory procedure listing payments" do not include any
days, charges, or services for which Medicare or a managed care
organization reimbursed on a capitated basis was liable for
payment, except where explicitly stated otherwise in this
Section.
    (l) Definitions. Unless the context requires otherwise or
unless provided otherwise in this Section, the terms used in
this Section for qualifying criteria and payment calculations
shall have the same meanings as those terms have been given in
the Illinois Department's administrative rules as in effect on
October 1, 2011. Other terms shall be defined by the Illinois
Department by rule.
    As used in this Section, unless the context requires
otherwise:
    "Case mix index" means, for a given hospital, the sum of
the per admission (DRG) relative weighting factors in effect on
January 1, 2005, for all general acute care admissions for
State fiscal year 2009, excluding Medicare crossover
admissions and transplant admissions reimbursed under 89 Ill.
Adm. Code 148.82, divided by the total number of general acute
care admissions for State fiscal year 2009, excluding Medicare
crossover admissions and transplant admissions reimbursed
under 89 Ill. Adm. Code 148.82.
    "Emergency room ratio" means, for a given hospital, a
fraction, the denominator of which is the number of the
hospital's outpatient ambulatory procedure listing and
end-stage renal disease treatment services provided for State
fiscal year 2009 and the numerator of which is the hospital's
outpatient ambulatory procedure listing services for
categories 3A, 3B, and 3C for State fiscal year 2009.
    "Medicaid inpatient day" means, for a given hospital, the
sum of days of inpatient hospital days provided to recipients
of medical assistance under Title XIX of the federal Social
Security Act, excluding days for individuals eligible for
Medicare under Title XVIII of that Act (Medicaid/Medicare
crossover days), as tabulated from the Department's paid claims
data for admissions occurring during State fiscal year 2009
that was adjudicated by the Department through June 30, 2010.
    "Outpatient ambulatory procedure listing services" means,
for a given hospital, ambulatory procedure listing services, as
described in 89 Ill. Adm. Code 148.140(b), provided to
recipients of medical assistance under Title XIX of the federal
Social Security Act, excluding services for individuals
eligible for Medicare under Title XVIII of the Act
(Medicaid/Medicare crossover days), as tabulated from the
Department's paid claims data for services occurring in State
fiscal year 2009 that were adjudicated by the Department
through September 2, 2010.
    "Outpatient end-stage renal disease treatment services"
means, for a given hospital, the services, as described in 89
Ill. Adm. Code 148.140(c), provided to recipients of medical
assistance under Title XIX of the federal Social Security Act,
excluding payments for individuals eligible for Medicare under
Title XVIII of the Act (Medicaid/Medicare crossover days), as
tabulated from the Department's paid claims data for services
occurring in State fiscal year 2009 that were adjudicated by
the Department through September 2, 2010.
    (m) The Department may adjust payments made under this
Section 5A-12.4 to comply with federal law or regulations
regarding hospital-specific payment limitations on
government-owned or government-operated hospitals.
    (n) Notwithstanding any of the other provisions of this
Section, the Department is authorized to adopt rules that
change the hospital access improvement payments specified in
this Section, but only to the extent necessary to conform to
any federally approved amendment to the Title XIX State plan.
Any such rules shall be adopted by the Department as authorized
by Section 5-50 of the Illinois Administrative Procedure Act.
Notwithstanding any other provision of law, any changes
implemented as a result of this subsection (n) shall be given
retroactive effect so that they shall be deemed to have taken
effect as of the effective date of this Section.
    (o) The Department of Healthcare and Family Services must
submit a State Medicaid Plan Amendment to the Centers of
Medicare and Medicaid Services to implement the payments under
this Section within 30 days of the effective date of this Act.
 
    (305 ILCS 5/5A-13)
    Sec. 5A-13. Emergency rulemaking.
    (a) The Department of Healthcare and Family Services
(formerly Department of Public Aid) may adopt rules necessary
to implement this amendatory Act of the 94th General Assembly
through the use of emergency rulemaking in accordance with
Section 5-45 of the Illinois Administrative Procedure Act. For
purposes of that Act, the General Assembly finds that the
adoption of rules to implement this amendatory Act of the 94th
General Assembly is deemed an emergency and necessary for the
public interest, safety, and welfare.
    (b) The Department of Healthcare and Family Services may
adopt rules necessary to implement this amendatory Act of the
97th General Assembly through the use of emergency rulemaking
in accordance with Section 5-45 of the Illinois Administrative
Procedure Act. For purposes of that Act, the General Assembly
finds that the adoption of rules to implement this amendatory
Act of the 97th General Assembly is deemed an emergency and
necessary for the public interest, safety, and welfare.
(Source: P.A. 94-242, eff. 7-18-05; 95-331, eff. 8-21-07.)
 
    (305 ILCS 5/5A-14)
    Sec. 5A-14. Repeal of assessments and disbursements.
    (a) Section 5A-2 is repealed on January 1, 2015 July 1,
2014.
    (b) Section 5A-12 is repealed on July 1, 2005.
    (c) Section 5A-12.1 is repealed on July 1, 2008.
    (d) Section 5A-12.2 and Section 5A-12.4 are is repealed on
January 1, 2015 July 1, 2014.
    (e) Section 5A-12.3 is repealed on July 1, 2011.
(Source: P.A. 95-859, eff. 8-19-08; 96-821, eff. 11-20-09;
96-1530, eff. 2-16-11.)
 
    (305 ILCS 5/5A-15 new)
    Sec. 5A-15. Protection of federal revenue.
    (a) If the federal Centers for Medicare and Medicaid
Services finds that any federal upper payment limit applicable
to the payments under this Article is exceeded then:
        (1) the payments under this Article that exceed the
    applicable federal upper payment limit shall be reduced
    uniformly to the extent necessary to comply with the
    applicable federal upper payment limit; and
        (2) any assessment rate imposed under this Article
    shall be reduced such that the aggregate assessment is
    reduced by the same percentage reduction applied in
    paragraph (1); and
        (3) any transfers from the Hospital Provider Fund under
    Section 5A-8 shall be reduced by the same percentage
    reduction applied in paragraph (1).
    (b) Any payment reductions made under the authority granted
in this Section are exempt from the requirements and actions
under Section 5A-10.
 
    Section 5-65. The Cigarette Fire Safety Standard Act is
amended by adding Section 65 as follows:
 
    (425 ILCS 8/65 new)
    Sec. 65. Cigarette Machine Operators. Cigarettes made or
fabricated by cigarette machine operators possessing valid
licenses under Section 20 of the Cigarette Machine Operators'
Occupation Tax Act are exempt from the provisions of this Act.
 
ARTICLE 99. APPLICABILITY, SEVERABILITY, AND EFFECTIVE DATE

 
    Section 90. Applicability. The changes made by this
amendatory Act of the 97th General Assembly to the Property Tax
Code, the Illinois Income Tax Act, the Use Tax Act, the Service
Occupation Tax Act, and the Retailers' Occupation Tax Act shall
apply to: (1) all decisions by the Department on or after the
effective date of this amendatory Act of the 97th General
Assembly regarding entitlement or continued entitlement by
hospitals, hospital owners, hospital affiliates, or hospital
systems to charitable property tax exemptions; (2) all
applications for property tax exemption filed by hospitals,
hospital owners, hospital affiliates, or hospital systems on or
after the effective date of this amendatory Act of the 97th
General Assembly; (3) all applications for property tax
exemption filed by hospitals, hospital owners, hospital
affiliates, or hospital systems that have either not been
decided by the Department before the effective date of this
amendatory Act of the 97th General Assembly, or for which any
such Department decisions are not final and non-appealable as
of that date; (4) all decisions by the Department, on or after
the effective date of this amendatory Act of the 97th General
Assembly, regarding entitlement by hospitals, hospital owners
or hospital affiliates to an exemption or renewal of exemption
from the Use Tax Act, the Service Use Tax Act, the Service
Occupation Tax Act, and the Retailers' Occupation Tax Act; (5)
all applications for exemption or renewal of exemption from the
Use Tax Act, the Service Use Tax Act, the Service Occupation
Tax Act, and the Retailers' Occupation Tax Act filed by
hospitals, hospital owners or hospital affiliates on or after
the effective date of this amendatory Act of the 97th General
Assembly; and (6) all applications for exemption or renewal of
exemption from the Use Tax Act, the Service Use Tax Act, the
Service Occupation Tax Act, and the Retailers' Occupation Tax
Act filed by hospitals, hospital owners, or hospital affiliates
that have either not been decided by the Department before the
effective date of this amendatory Act of the 97th General
Assembly or for which any such Department decisions are not
final and non-appealable as of that date.
 
    Section 95. No acceleration or delay. Where this Act makes
changes in a statute that is represented in this Act by text
that is not yet or no longer in effect (for example, a Section
represented by multiple versions), the use of that text does
not accelerate or delay the taking effect of (i) the changes
made by this Act or (ii) provisions derived from any other
Public Act.
 
    Section 97. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.