100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB2746

 

Introduced , by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-5
35 ILCS 105/3-30  from Ch. 120, par. 439.3-30
35 ILCS 105/3-50  from Ch. 120, par. 439.3-50
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 110/3-5
35 ILCS 110/3-30  from Ch. 120, par. 439.33-30
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 115/3-5
35 ILCS 115/3-30  from Ch. 120, par. 439.103-30
35 ILCS 120/2-5
35 ILCS 120/2-30  from Ch. 120, par. 441-30
35 ILCS 120/2-45  from Ch. 120, par. 441-45

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the exemption for graphic arts machinery and equipment applies for all periods on and after September 1, 2004. Provides that the exemption includes production related tangible personal property beginning on July 1, 2014. Provides that, beginning on July 1, 2014, the manufacturing and assembly exemption also includes production related tangible personal property. Makes changes to the definition of "production related tangible personal property". Provides that the graphic arts exemption and the manufacturing and assembly exemption are each exempt from the Acts' automatic sunset provisions. Effective immediately.


LRB100 06009 HLH 16039 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2746LRB100 06009 HLH 16039 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Sections
53-5, 3-30, and 3-50 as follows:
 
6    (35 ILCS 105/3-5)
7    Sec. 3-5. Exemptions. Use of the following tangible
8personal property is exempt from the tax imposed by this Act:
9    (1) Personal property purchased from a corporation,
10society, association, foundation, institution, or
11organization, other than a limited liability company, that is
12organized and operated as a not-for-profit service enterprise
13for the benefit of persons 65 years of age or older if the
14personal property was not purchased by the enterprise for the
15purpose of resale by the enterprise.
16    (2) Personal property purchased by a not-for-profit
17Illinois county fair association for use in conducting,
18operating, or promoting the county fair.
19    (3) Personal property purchased by a not-for-profit arts or
20cultural organization that establishes, by proof required by
21the Department by rule, that it has received an exemption under
22Section 501(c)(3) of the Internal Revenue Code and that is
23organized and operated primarily for the presentation or

 

 

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1support of arts or cultural programming, activities, or
2services. These organizations include, but are not limited to,
3music and dramatic arts organizations such as symphony
4orchestras and theatrical groups, arts and cultural service
5organizations, local arts councils, visual arts organizations,
6and media arts organizations. On and after the effective date
7of this amendatory Act of the 92nd General Assembly, however,
8an entity otherwise eligible for this exemption shall not make
9tax-free purchases unless it has an active identification
10number issued by the Department.
11    (4) Personal property purchased by a governmental body, by
12a corporation, society, association, foundation, or
13institution organized and operated exclusively for charitable,
14religious, or educational purposes, or by a not-for-profit
15corporation, society, association, foundation, institution, or
16organization that has no compensated officers or employees and
17that is organized and operated primarily for the recreation of
18persons 55 years of age or older. A limited liability company
19may qualify for the exemption under this paragraph only if the
20limited liability company is organized and operated
21exclusively for educational purposes. On and after July 1,
221987, however, no entity otherwise eligible for this exemption
23shall make tax-free purchases unless it has an active exemption
24identification number issued by the Department.
25    (5) Until July 1, 2003, a passenger car that is a
26replacement vehicle to the extent that the purchase price of

 

 

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1the car is subject to the Replacement Vehicle Tax.
2    (6) Until July 1, 2003 and beginning again on September 1,
32004 through August 30, 2014, graphic arts machinery and
4equipment, including repair and replacement parts, both new and
5used, and including that manufactured on special order,
6certified by the purchaser to be used primarily for graphic
7arts production, and including machinery and equipment
8purchased for lease. Equipment includes chemicals or chemicals
9acting as catalysts but only if the chemicals or chemicals
10acting as catalysts effect a direct and immediate change upon a
11graphic arts product. The exemption under this paragraph (6)
12also includes production related tangible personal property,
13as defined in Section 3-30, purchased on or after July 1, 2014.
14It is the intent of the General Assembly that the exemption
15under this paragraph (6) applies continuously for all periods
16on and after September 1, 2004. Any actions taken in reliance
17on the continuation of the exemption under this paragraph are
18hereby validated. The exemption under this paragraph (6) is
19exempt from the provisions of Section 3-90.
20    (7) Farm chemicals.
21    (8) Legal tender, currency, medallions, or gold or silver
22coinage issued by the State of Illinois, the government of the
23United States of America, or the government of any foreign
24country, and bullion.
25    (9) Personal property purchased from a teacher-sponsored
26student organization affiliated with an elementary or

 

 

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1secondary school located in Illinois.
2    (10) A motor vehicle that is used for automobile renting,
3as defined in the Automobile Renting Occupation and Use Tax
4Act.
5    (11) Farm machinery and equipment, both new and used,
6including that manufactured on special order, certified by the
7purchaser to be used primarily for production agriculture or
8State or federal agricultural programs, including individual
9replacement parts for the machinery and equipment, including
10machinery and equipment purchased for lease, and including
11implements of husbandry defined in Section 1-130 of the
12Illinois Vehicle Code, farm machinery and agricultural
13chemical and fertilizer spreaders, and nurse wagons required to
14be registered under Section 3-809 of the Illinois Vehicle Code,
15but excluding other motor vehicles required to be registered
16under the Illinois Vehicle Code. Horticultural polyhouses or
17hoop houses used for propagating, growing, or overwintering
18plants shall be considered farm machinery and equipment under
19this item (11). Agricultural chemical tender tanks and dry
20boxes shall include units sold separately from a motor vehicle
21required to be licensed and units sold mounted on a motor
22vehicle required to be licensed if the selling price of the
23tender is separately stated.
24    Farm machinery and equipment shall include precision
25farming equipment that is installed or purchased to be
26installed on farm machinery and equipment including, but not

 

 

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1limited to, tractors, harvesters, sprayers, planters, seeders,
2or spreaders. Precision farming equipment includes, but is not
3limited to, soil testing sensors, computers, monitors,
4software, global positioning and mapping systems, and other
5such equipment.
6    Farm machinery and equipment also includes computers,
7sensors, software, and related equipment used primarily in the
8computer-assisted operation of production agriculture
9facilities, equipment, and activities such as, but not limited
10to, the collection, monitoring, and correlation of animal and
11crop data for the purpose of formulating animal diets and
12agricultural chemicals. This item (11) is exempt from the
13provisions of Section 3-90.
14    (12) Until June 30, 2013, fuel and petroleum products sold
15to or used by an air common carrier, certified by the carrier
16to be used for consumption, shipment, or storage in the conduct
17of its business as an air common carrier, for a flight destined
18for or returning from a location or locations outside the
19United States without regard to previous or subsequent domestic
20stopovers.
21    Beginning July 1, 2013, fuel and petroleum products sold to
22or used by an air carrier, certified by the carrier to be used
23for consumption, shipment, or storage in the conduct of its
24business as an air common carrier, for a flight that (i) is
25engaged in foreign trade or is engaged in trade between the
26United States and any of its possessions and (ii) transports at

 

 

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1least one individual or package for hire from the city of
2origination to the city of final destination on the same
3aircraft, without regard to a change in the flight number of
4that aircraft.
5    (13) Proceeds of mandatory service charges separately
6stated on customers' bills for the purchase and consumption of
7food and beverages purchased at retail from a retailer, to the
8extent that the proceeds of the service charge are in fact
9turned over as tips or as a substitute for tips to the
10employees who participate directly in preparing, serving,
11hosting or cleaning up the food or beverage function with
12respect to which the service charge is imposed.
13    (14) Until July 1, 2003, oil field exploration, drilling,
14and production equipment, including (i) rigs and parts of rigs,
15rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
16tubular goods, including casing and drill strings, (iii) pumps
17and pump-jack units, (iv) storage tanks and flow lines, (v) any
18individual replacement part for oil field exploration,
19drilling, and production equipment, and (vi) machinery and
20equipment purchased for lease; but excluding motor vehicles
21required to be registered under the Illinois Vehicle Code.
22    (15) Photoprocessing machinery and equipment, including
23repair and replacement parts, both new and used, including that
24manufactured on special order, certified by the purchaser to be
25used primarily for photoprocessing, and including
26photoprocessing machinery and equipment purchased for lease.

 

 

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1    (16) Coal and aggregate exploration, mining, off-highway
2hauling, processing, maintenance, and reclamation equipment,
3including replacement parts and equipment, and including
4equipment purchased for lease, but excluding motor vehicles
5required to be registered under the Illinois Vehicle Code. The
6changes made to this Section by Public Act 97-767 apply on and
7after July 1, 2003, but no claim for credit or refund is
8allowed on or after August 16, 2013 (the effective date of
9Public Act 98-456) for such taxes paid during the period
10beginning July 1, 2003 and ending on August 16, 2013 (the
11effective date of Public Act 98-456).
12    (17) Until July 1, 2003, distillation machinery and
13equipment, sold as a unit or kit, assembled or installed by the
14retailer, certified by the user to be used only for the
15production of ethyl alcohol that will be used for consumption
16as motor fuel or as a component of motor fuel for the personal
17use of the user, and not subject to sale or resale.
18    (18) Manufacturing and assembling machinery and equipment
19used primarily in the process of manufacturing or assembling
20tangible personal property for wholesale or retail sale or
21lease, whether that sale or lease is made directly by the
22manufacturer or by some other person, whether the materials
23used in the process are owned by the manufacturer or some other
24person, or whether that sale or lease is made apart from or as
25an incident to the seller's engaging in the service occupation
26of producing machines, tools, dies, jigs, patterns, gauges, or

 

 

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1other similar items of no commercial value on special order for
2a particular purchaser. The exemption provided by this
3paragraph (18) also includes production related tangible
4personal property, as defined in Section 3-50, purchased on or
5after July 1, 2014. The exemption provided by this paragraph
6(18) does not include machinery and equipment used in (i) the
7generation of electricity for wholesale or retail sale; (ii)
8the generation or treatment of natural or artificial gas for
9wholesale or retail sale that is delivered to customers through
10pipes, pipelines, or mains; or (iii) the treatment of water for
11wholesale or retail sale that is delivered to customers through
12pipes, pipelines, or mains. The provisions of Public Act 98-583
13are declaratory of existing law as to the meaning and scope of
14this exemption. The exemption under this paragraph (6) is
15exempt from the provisions of Section 3-90.
16    (19) Personal property delivered to a purchaser or
17purchaser's donee inside Illinois when the purchase order for
18that personal property was received by a florist located
19outside Illinois who has a florist located inside Illinois
20deliver the personal property.
21    (20) Semen used for artificial insemination of livestock
22for direct agricultural production.
23    (21) Horses, or interests in horses, registered with and
24meeting the requirements of any of the Arabian Horse Club
25Registry of America, Appaloosa Horse Club, American Quarter
26Horse Association, United States Trotting Association, or

 

 

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1Jockey Club, as appropriate, used for purposes of breeding or
2racing for prizes. This item (21) is exempt from the provisions
3of Section 3-90, and the exemption provided for under this item
4(21) applies for all periods beginning May 30, 1995, but no
5claim for credit or refund is allowed on or after January 1,
62008 for such taxes paid during the period beginning May 30,
72000 and ending on January 1, 2008.
8    (22) Computers and communications equipment utilized for
9any hospital purpose and equipment used in the diagnosis,
10analysis, or treatment of hospital patients purchased by a
11lessor who leases the equipment, under a lease of one year or
12longer executed or in effect at the time the lessor would
13otherwise be subject to the tax imposed by this Act, to a
14hospital that has been issued an active tax exemption
15identification number by the Department under Section 1g of the
16Retailers' Occupation Tax Act. If the equipment is leased in a
17manner that does not qualify for this exemption or is used in
18any other non-exempt manner, the lessor shall be liable for the
19tax imposed under this Act or the Service Use Tax Act, as the
20case may be, based on the fair market value of the property at
21the time the non-qualifying use occurs. No lessor shall collect
22or attempt to collect an amount (however designated) that
23purports to reimburse that lessor for the tax imposed by this
24Act or the Service Use Tax Act, as the case may be, if the tax
25has not been paid by the lessor. If a lessor improperly
26collects any such amount from the lessee, the lessee shall have

 

 

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1a legal right to claim a refund of that amount from the lessor.
2If, however, that amount is not refunded to the lessee for any
3reason, the lessor is liable to pay that amount to the
4Department.
5    (23) Personal property purchased by a lessor who leases the
6property, under a lease of one year or longer executed or in
7effect at the time the lessor would otherwise be subject to the
8tax imposed by this Act, to a governmental body that has been
9issued an active sales tax exemption identification number by
10the Department under Section 1g of the Retailers' Occupation
11Tax Act. If the property is leased in a manner that does not
12qualify for this exemption or used in any other non-exempt
13manner, the lessor shall be liable for the tax imposed under
14this Act or the Service Use Tax Act, as the case may be, based
15on the fair market value of the property at the time the
16non-qualifying use occurs. No lessor shall collect or attempt
17to collect an amount (however designated) that purports to
18reimburse that lessor for the tax imposed by this Act or the
19Service Use Tax Act, as the case may be, if the tax has not been
20paid by the lessor. If a lessor improperly collects any such
21amount from the lessee, the lessee shall have a legal right to
22claim a refund of that amount from the lessor. If, however,
23that amount is not refunded to the lessee for any reason, the
24lessor is liable to pay that amount to the Department.
25    (24) Beginning with taxable years ending on or after
26December 31, 1995 and ending with taxable years ending on or

 

 

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1before December 31, 2004, personal property that is donated for
2disaster relief to be used in a State or federally declared
3disaster area in Illinois or bordering Illinois by a
4manufacturer or retailer that is registered in this State to a
5corporation, society, association, foundation, or institution
6that has been issued a sales tax exemption identification
7number by the Department that assists victims of the disaster
8who reside within the declared disaster area.
9    (25) Beginning with taxable years ending on or after
10December 31, 1995 and ending with taxable years ending on or
11before December 31, 2004, personal property that is used in the
12performance of infrastructure repairs in this State, including
13but not limited to municipal roads and streets, access roads,
14bridges, sidewalks, waste disposal systems, water and sewer
15line extensions, water distribution and purification
16facilities, storm water drainage and retention facilities, and
17sewage treatment facilities, resulting from a State or
18federally declared disaster in Illinois or bordering Illinois
19when such repairs are initiated on facilities located in the
20declared disaster area within 6 months after the disaster.
21    (26) Beginning July 1, 1999, game or game birds purchased
22at a "game breeding and hunting preserve area" as that term is
23used in the Wildlife Code. This paragraph is exempt from the
24provisions of Section 3-90.
25    (27) A motor vehicle, as that term is defined in Section
261-146 of the Illinois Vehicle Code, that is donated to a

 

 

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1corporation, limited liability company, society, association,
2foundation, or institution that is determined by the Department
3to be organized and operated exclusively for educational
4purposes. For purposes of this exemption, "a corporation,
5limited liability company, society, association, foundation,
6or institution organized and operated exclusively for
7educational purposes" means all tax-supported public schools,
8private schools that offer systematic instruction in useful
9branches of learning by methods common to public schools and
10that compare favorably in their scope and intensity with the
11course of study presented in tax-supported schools, and
12vocational or technical schools or institutes organized and
13operated exclusively to provide a course of study of not less
14than 6 weeks duration and designed to prepare individuals to
15follow a trade or to pursue a manual, technical, mechanical,
16industrial, business, or commercial occupation.
17    (28) Beginning January 1, 2000, personal property,
18including food, purchased through fundraising events for the
19benefit of a public or private elementary or secondary school,
20a group of those schools, or one or more school districts if
21the events are sponsored by an entity recognized by the school
22district that consists primarily of volunteers and includes
23parents and teachers of the school children. This paragraph
24does not apply to fundraising events (i) for the benefit of
25private home instruction or (ii) for which the fundraising
26entity purchases the personal property sold at the events from

 

 

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1another individual or entity that sold the property for the
2purpose of resale by the fundraising entity and that profits
3from the sale to the fundraising entity. This paragraph is
4exempt from the provisions of Section 3-90.
5    (29) Beginning January 1, 2000 and through December 31,
62001, new or used automatic vending machines that prepare and
7serve hot food and beverages, including coffee, soup, and other
8items, and replacement parts for these machines. Beginning
9January 1, 2002 and through June 30, 2003, machines and parts
10for machines used in commercial, coin-operated amusement and
11vending business if a use or occupation tax is paid on the
12gross receipts derived from the use of the commercial,
13coin-operated amusement and vending machines. This paragraph
14is exempt from the provisions of Section 3-90.
15    (30) Beginning January 1, 2001 and through June 30, 2016,
16food for human consumption that is to be consumed off the
17premises where it is sold (other than alcoholic beverages, soft
18drinks, and food that has been prepared for immediate
19consumption) and prescription and nonprescription medicines,
20drugs, medical appliances, and insulin, urine testing
21materials, syringes, and needles used by diabetics, for human
22use, when purchased for use by a person receiving medical
23assistance under Article V of the Illinois Public Aid Code who
24resides in a licensed long-term care facility, as defined in
25the Nursing Home Care Act, or in a licensed facility as defined
26in the ID/DD Community Care Act, the MC/DD Act, or the

 

 

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1Specialized Mental Health Rehabilitation Act of 2013.
2    (31) Beginning on the effective date of this amendatory Act
3of the 92nd General Assembly, computers and communications
4equipment utilized for any hospital purpose and equipment used
5in the diagnosis, analysis, or treatment of hospital patients
6purchased by a lessor who leases the equipment, under a lease
7of one year or longer executed or in effect at the time the
8lessor would otherwise be subject to the tax imposed by this
9Act, to a hospital that has been issued an active tax exemption
10identification number by the Department under Section 1g of the
11Retailers' Occupation Tax Act. If the equipment is leased in a
12manner that does not qualify for this exemption or is used in
13any other nonexempt manner, the lessor shall be liable for the
14tax imposed under this Act or the Service Use Tax Act, as the
15case may be, based on the fair market value of the property at
16the time the nonqualifying use occurs. No lessor shall collect
17or attempt to collect an amount (however designated) that
18purports to reimburse that lessor for the tax imposed by this
19Act or the Service Use Tax Act, as the case may be, if the tax
20has not been paid by the lessor. If a lessor improperly
21collects any such amount from the lessee, the lessee shall have
22a legal right to claim a refund of that amount from the lessor.
23If, however, that amount is not refunded to the lessee for any
24reason, the lessor is liable to pay that amount to the
25Department. This paragraph is exempt from the provisions of
26Section 3-90.

 

 

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1    (32) Beginning on the effective date of this amendatory Act
2of the 92nd General Assembly, personal property purchased by a
3lessor who leases the property, under a lease of one year or
4longer executed or in effect at the time the lessor would
5otherwise be subject to the tax imposed by this Act, to a
6governmental body that has been issued an active sales tax
7exemption identification number by the Department under
8Section 1g of the Retailers' Occupation Tax Act. If the
9property is leased in a manner that does not qualify for this
10exemption or used in any other nonexempt manner, the lessor
11shall be liable for the tax imposed under this Act or the
12Service Use Tax Act, as the case may be, based on the fair
13market value of the property at the time the nonqualifying use
14occurs. No lessor shall collect or attempt to collect an amount
15(however designated) that purports to reimburse that lessor for
16the tax imposed by this Act or the Service Use Tax Act, as the
17case may be, if the tax has not been paid by the lessor. If a
18lessor improperly collects any such amount from the lessee, the
19lessee shall have a legal right to claim a refund of that
20amount from the lessor. If, however, that amount is not
21refunded to the lessee for any reason, the lessor is liable to
22pay that amount to the Department. This paragraph is exempt
23from the provisions of Section 3-90.
24    (33) On and after July 1, 2003 and through June 30, 2004,
25the use in this State of motor vehicles of the second division
26with a gross vehicle weight in excess of 8,000 pounds and that

 

 

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1are subject to the commercial distribution fee imposed under
2Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
31, 2004 and through June 30, 2005, the use in this State of
4motor vehicles of the second division: (i) with a gross vehicle
5weight rating in excess of 8,000 pounds; (ii) that are subject
6to the commercial distribution fee imposed under Section
73-815.1 of the Illinois Vehicle Code; and (iii) that are
8primarily used for commercial purposes. Through June 30, 2005,
9this exemption applies to repair and replacement parts added
10after the initial purchase of such a motor vehicle if that
11motor vehicle is used in a manner that would qualify for the
12rolling stock exemption otherwise provided for in this Act. For
13purposes of this paragraph, the term "used for commercial
14purposes" means the transportation of persons or property in
15furtherance of any commercial or industrial enterprise,
16whether for-hire or not.
17    (34) Beginning January 1, 2008, tangible personal property
18used in the construction or maintenance of a community water
19supply, as defined under Section 3.145 of the Environmental
20Protection Act, that is operated by a not-for-profit
21corporation that holds a valid water supply permit issued under
22Title IV of the Environmental Protection Act. This paragraph is
23exempt from the provisions of Section 3-90.
24    (35) Beginning January 1, 2010, materials, parts,
25equipment, components, and furnishings incorporated into or
26upon an aircraft as part of the modification, refurbishment,

 

 

HB2746- 17 -LRB100 06009 HLH 16039 b

1completion, replacement, repair, or maintenance of the
2aircraft. This exemption includes consumable supplies used in
3the modification, refurbishment, completion, replacement,
4repair, and maintenance of aircraft, but excludes any
5materials, parts, equipment, components, and consumable
6supplies used in the modification, replacement, repair, and
7maintenance of aircraft engines or power plants, whether such
8engines or power plants are installed or uninstalled upon any
9such aircraft. "Consumable supplies" include, but are not
10limited to, adhesive, tape, sandpaper, general purpose
11lubricants, cleaning solution, latex gloves, and protective
12films. This exemption applies only to the use of qualifying
13tangible personal property by persons who modify, refurbish,
14complete, repair, replace, or maintain aircraft and who (i)
15hold an Air Agency Certificate and are empowered to operate an
16approved repair station by the Federal Aviation
17Administration, (ii) have a Class IV Rating, and (iii) conduct
18operations in accordance with Part 145 of the Federal Aviation
19Regulations. The exemption does not include aircraft operated
20by a commercial air carrier providing scheduled passenger air
21service pursuant to authority issued under Part 121 or Part 129
22of the Federal Aviation Regulations. The changes made to this
23paragraph (35) by Public Act 98-534 are declarative of existing
24law.
25    (36) Tangible personal property purchased by a
26public-facilities corporation, as described in Section

 

 

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111-65-10 of the Illinois Municipal Code, for purposes of
2constructing or furnishing a municipal convention hall, but
3only if the legal title to the municipal convention hall is
4transferred to the municipality without any further
5consideration by or on behalf of the municipality at the time
6of the completion of the municipal convention hall or upon the
7retirement or redemption of any bonds or other debt instruments
8issued by the public-facilities corporation in connection with
9the development of the municipal convention hall. This
10exemption includes existing public-facilities corporations as
11provided in Section 11-65-25 of the Illinois Municipal Code.
12This paragraph is exempt from the provisions of Section 3-90.
13    (37) Beginning January 1, 2017, menstrual pads, tampons,
14and menstrual cups.
15(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
1698-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
171-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
187-29-15; 99-855, eff. 8-19-16.)
 
19    (35 ILCS 105/3-30)  (from Ch. 120, par. 439.3-30)
20    Sec. 3-30. Graphic arts production. For the purposes of
21this Act, "graphic arts production" means the production of
22tangible personal property for wholesale or retail sale or
23lease by means of printing, including ink jet printing, by one
24or more of the processes described in Groups 323110 through
25323122 of Subsector 323, Groups 511110 through 511199 of

 

 

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1Subsector 511, and Group 512230 of Subsector 512 of the North
2American Industry Classification System published by the U.S.
3Office of Management and Budget, 1997 edition. Graphic arts
4production does not include (i) the transfer of images onto
5paper or other tangible personal property by means of
6photocopying or (ii) final printed products in electronic or
7audio form, including the production of software or
8audio-books. For purposes of this Section, persons engaged
9primarily in the business of printing or publishing newspapers
10or magazines that qualify as newsprint and ink, by one or more
11of the processes described in Groups 511110 through 511199 of
12subsector 511 of the North American Industry Classification
13System published by the U.S. Office of Management and Budget,
141997 edition, are deemed to be engaged in graphic arts
15production.
16    For the purposes of the exemption provided in paragraph (6)
17of Section 3-5 of this Act, "production related tangible
18personal property" means all tangible personal property that is
19used or consumed by the purchaser in a graphic arts facility in
20which graphic arts production takes place and includes, without
21limitation, tangible personal property that is purchased for
22incorporation into real estate within a graphic arts production
23facility, supplies and consumables used in a graphic arts
24production facility including fuels, coolants, solvents, oils,
25lubricants, and adhesives, hand tools, protective apparel, and
26fire and safety equipment used or consumed within a

 

 

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1manufacturing facility, and tangible personal property that is
2used or consumed in activities such as research and
3development, preproduction material handling, receiving,
4quality control, inventory control, storage, staging, and
5packaging for shipping and transportation purposes.
6"Production related tangible personal property" does not
7include (i) tangible personal property that is used, within or
8without a graphic arts production facility, in sales,
9purchasing, accounting, fiscal management, marketing,
10personnel recruitment or selection, or landscaping or (ii)
11tangible personal property that is required to be titled or
12registered with a department, agency, or unit of federal,
13State, or local government.
14(Source: P.A. 96-116, eff. 7-31-09.)
 
15    (35 ILCS 105/3-50)  (from Ch. 120, par. 439.3-50)
16    Sec. 3-50. Manufacturing and assembly exemption. The
17manufacturing and assembling machinery and equipment exemption
18includes machinery and equipment that replaces machinery and
19equipment in an existing manufacturing facility as well as
20machinery and equipment that are for use in an expanded or new
21manufacturing facility. The machinery and equipment exemption
22also includes machinery and equipment used in the general
23maintenance or repair of exempt machinery and equipment or for
24in-house manufacture of exempt machinery and equipment. The
25machinery and equipment exemption does not include machinery

 

 

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1and equipment used in (i) the generation of electricity for
2wholesale or retail sale; (ii) the generation or treatment of
3natural or artificial gas for wholesale or retail sale that is
4delivered to customers through pipes, pipelines, or mains; or
5(iii) the treatment of water for wholesale or retail sale that
6is delivered to customers through pipes, pipelines, or mains.
7The provisions of this amendatory Act of the 98th General
8Assembly are declaratory of existing law as to the meaning and
9scope of this exemption. For the purposes of this exemption,
10terms have the following meanings:
11        (1) "Manufacturing process" means the production of an
12    article of tangible personal property, whether the article
13    is a finished product or an article for use in the process
14    of manufacturing or assembling a different article of
15    tangible personal property, by a procedure commonly
16    regarded as manufacturing, processing, fabricating, or
17    refining that changes some existing material into a
18    material with a different form, use, or name. In relation
19    to a recognized integrated business composed of a series of
20    operations that collectively constitute manufacturing, or
21    individually constitute manufacturing operations, the
22    manufacturing process commences with the first operation
23    or stage of production in the series and does not end until
24    the completion of the final product in the last operation
25    or stage of production in the series. For purposes of this
26    exemption, photoprocessing is a manufacturing process of

 

 

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1    tangible personal property for wholesale or retail sale.
2        (2) "Assembling process" means the production of an
3    article of tangible personal property, whether the article
4    is a finished product or an article for use in the process
5    of manufacturing or assembling a different article of
6    tangible personal property, by the combination of existing
7    materials in a manner commonly regarded as assembling that
8    results in an article or material of a different form, use,
9    or name.
10        (3) "Machinery" means major mechanical machines or
11    major components of those machines contributing to a
12    manufacturing or assembling process.
13        (4) "Equipment" includes an independent device or tool
14    separate from machinery but essential to an integrated
15    manufacturing or assembly process; including computers
16    used primarily in a manufacturer's computer assisted
17    design, computer assisted manufacturing (CAD/CAM) system;
18    any subunit or assembly comprising a component of any
19    machinery or auxiliary, adjunct, or attachment parts of
20    machinery, such as tools, dies, jigs, fixtures, patterns,
21    and molds; and any parts that require periodic replacement
22    in the course of normal operation; but does not include
23    hand tools. Equipment includes chemicals or chemicals
24    acting as catalysts but only if the chemicals or chemicals
25    acting as catalysts effect a direct and immediate change
26    upon a product being manufactured or assembled for

 

 

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1    wholesale or retail sale or lease.
2        (5) "Production related tangible personal property"
3    means all tangible personal property that is used or
4    consumed by the purchaser in a manufacturing facility in
5    which a manufacturing process takes place and includes,
6    without limitation, tangible personal property that is
7    purchased for incorporation into real estate within a
8    manufacturing facility, supplies and consumables used in a
9    manufacturing facility, including fuels, coolants,
10    solvents, oils, lubricants, and adhesives, hand tools,
11    protective apparel, and fire and safety equipment used or
12    consumed within a manufacturing facility, and tangible
13    personal property that is used or consumed in activities
14    such as research and development, preproduction material
15    handling, receiving, quality control, inventory control,
16    storage, staging, and packaging for shipping and
17    transportation purposes. "Production related tangible
18    personal property" does not include (i) tangible personal
19    property that is used, within or without a manufacturing
20    facility, in sales, purchasing, accounting, fiscal
21    management, marketing, personnel recruitment or selection,
22    or landscaping or (ii) tangible personal property that is
23    required to be titled or registered with a department,
24    agency, or unit of federal, State, or local government.
25    The manufacturing and assembling machinery and equipment
26exemption includes production related tangible personal

 

 

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1property that is purchased on or after July 1, 2007 and on or
2before June 30, 2008 and on and after July 1, 2014. The
3exemption for production related tangible personal property
4purchased on or after July 1, 2007 and on or before June 30,
52008 is subject to both of the following limitations:
6        (1) The maximum amount of the exemption for any one
7    taxpayer may not exceed 5% of the purchase price of
8    production related tangible personal property that is
9    purchased on or after July 1, 2007 and on or before June
10    30, 2008. A credit under Section 3-85 of this Act may not
11    be earned by the purchase of production related tangible
12    personal property for which an exemption is received under
13    this Section.
14        (2) The maximum aggregate amount of the exemptions for
15    production related tangible personal property purchased on
16    or after July 1, 2007 and on or before June 30, 2008
17    awarded under this Act and the Retailers' Occupation Tax
18    Act to all taxpayers may not exceed $10,000,000. If the
19    claims for the exemption exceed $10,000,000, then the
20    Department shall reduce the amount of the exemption to each
21    taxpayer on a pro rata basis.
22The Department shall may adopt rules to implement and
23administer the exemption for production related tangible
24personal property.
25    The manufacturing and assembling machinery and equipment
26exemption includes the sale of materials to a purchaser who

 

 

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1produces exempted types of machinery, equipment, or tools and
2who rents or leases that machinery, equipment, or tools to a
3manufacturer of tangible personal property. This exemption
4also includes the sale of materials to a purchaser who
5manufactures those materials into an exempted type of
6machinery, equipment, or tools that the purchaser uses himself
7or herself in the manufacturing of tangible personal property.
8This exemption includes the sale of exempted types of machinery
9or equipment to a purchaser who is not the manufacturer, but
10who rents or leases the use of the property to a manufacturer.
11The purchaser of the machinery and equipment who has an active
12resale registration number shall furnish that number to the
13seller at the time of purchase. A user of the machinery,
14equipment, or tools without an active resale registration
15number shall prepare a certificate of exemption for each
16transaction stating facts establishing the exemption for that
17transaction, and that certificate shall be available to the
18Department for inspection or audit. The Department shall
19prescribe the form of the certificate. Informal rulings,
20opinions, or letters issued by the Department in response to an
21inquiry or request for an opinion from any person regarding the
22coverage and applicability of this exemption to specific
23devices shall be published, maintained as a public record, and
24made available for public inspection and copying. If the
25informal ruling, opinion, or letter contains trade secrets or
26other confidential information, where possible, the Department

 

 

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1shall delete that information before publication. Whenever
2informal rulings, opinions, or letters contain a policy of
3general applicability, the Department shall formulate and
4adopt that policy as a rule in accordance with the Illinois
5Administrative Procedure Act.
6(Source: P.A. 98-583, eff. 1-1-14.)
 
7    Section 10. The Service Use Tax Act is amended by changing
8Sections 2, 3-5, and 3-30 as follows:
 
9    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
10    Sec. 2. Definitions.
11    "Use" means the exercise by any person of any right or
12power over tangible personal property incident to the ownership
13of that property, but does not include the sale or use for
14demonstration by him of that property in any form as tangible
15personal property in the regular course of business. "Use" does
16not mean the interim use of tangible personal property nor the
17physical incorporation of tangible personal property, as an
18ingredient or constituent, into other tangible personal
19property, (a) which is sold in the regular course of business
20or (b) which the person incorporating such ingredient or
21constituent therein has undertaken at the time of such purchase
22to cause to be transported in interstate commerce to
23destinations outside the State of Illinois.
24    "Purchased from a serviceman" means the acquisition of the

 

 

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1ownership of, or title to, tangible personal property through a
2sale of service.
3    "Purchaser" means any person who, through a sale of
4service, acquires the ownership of, or title to, any tangible
5personal property.
6    "Cost price" means the consideration paid by the serviceman
7for a purchase valued in money, whether paid in money or
8otherwise, including cash, credits and services, and shall be
9determined without any deduction on account of the supplier's
10cost of the property sold or on account of any other expense
11incurred by the supplier. When a serviceman contracts out part
12or all of the services required in his sale of service, it
13shall be presumed that the cost price to the serviceman of the
14property transferred to him or her by his or her subcontractor
15is equal to 50% of the subcontractor's charges to the
16serviceman in the absence of proof of the consideration paid by
17the subcontractor for the purchase of such property.
18    "Selling price" means the consideration for a sale valued
19in money whether received in money or otherwise, including
20cash, credits and service, and shall be determined without any
21deduction on account of the serviceman's cost of the property
22sold, the cost of materials used, labor or service cost or any
23other expense whatsoever, but does not include interest or
24finance charges which appear as separate items on the bill of
25sale or sales contract nor charges that are added to prices by
26sellers on account of the seller's duty to collect, from the

 

 

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1purchaser, the tax that is imposed by this Act.
2    "Department" means the Department of Revenue.
3    "Person" means any natural individual, firm, partnership,
4association, joint stock company, joint venture, public or
5private corporation, limited liability company, and any
6receiver, executor, trustee, guardian or other representative
7appointed by order of any court.
8    "Sale of service" means any transaction except:
9        (1) a retail sale of tangible personal property taxable
10    under the Retailers' Occupation Tax Act or under the Use
11    Tax Act.
12        (2) a sale of tangible personal property for the
13    purpose of resale made in compliance with Section 2c of the
14    Retailers' Occupation Tax Act.
15        (3) except as hereinafter provided, a sale or transfer
16    of tangible personal property as an incident to the
17    rendering of service for or by any governmental body, or
18    for or by any corporation, society, association,
19    foundation or institution organized and operated
20    exclusively for charitable, religious or educational
21    purposes or any not-for-profit corporation, society,
22    association, foundation, institution or organization which
23    has no compensated officers or employees and which is
24    organized and operated primarily for the recreation of
25    persons 55 years of age or older. A limited liability
26    company may qualify for the exemption under this paragraph

 

 

HB2746- 29 -LRB100 06009 HLH 16039 b

1    only if the limited liability company is organized and
2    operated exclusively for educational purposes.
3        (4) a sale or transfer of tangible personal property as
4    an incident to the rendering of service for interstate
5    carriers for hire for use as rolling stock moving in
6    interstate commerce or by lessors under a lease of one year
7    or longer, executed or in effect at the time of purchase of
8    personal property, to interstate carriers for hire for use
9    as rolling stock moving in interstate commerce so long as
10    so used by such interstate carriers for hire, and equipment
11    operated by a telecommunications provider, licensed as a
12    common carrier by the Federal Communications Commission,
13    which is permanently installed in or affixed to aircraft
14    moving in interstate commerce.
15        (4a) a sale or transfer of tangible personal property
16    as an incident to the rendering of service for owners,
17    lessors, or shippers of tangible personal property which is
18    utilized by interstate carriers for hire for use as rolling
19    stock moving in interstate commerce so long as so used by
20    interstate carriers for hire, and equipment operated by a
21    telecommunications provider, licensed as a common carrier
22    by the Federal Communications Commission, which is
23    permanently installed in or affixed to aircraft moving in
24    interstate commerce.
25        (4a-5) on and after July 1, 2003 and through June 30,
26    2004, a sale or transfer of a motor vehicle of the second

 

 

HB2746- 30 -LRB100 06009 HLH 16039 b

1    division with a gross vehicle weight in excess of 8,000
2    pounds as an incident to the rendering of service if that
3    motor vehicle is subject to the commercial distribution fee
4    imposed under Section 3-815.1 of the Illinois Vehicle Code.
5    Beginning on July 1, 2004 and through June 30, 2005, the
6    use in this State of motor vehicles of the second division:
7    (i) with a gross vehicle weight rating in excess of 8,000
8    pounds; (ii) that are subject to the commercial
9    distribution fee imposed under Section 3-815.1 of the
10    Illinois Vehicle Code; and (iii) that are primarily used
11    for commercial purposes. Through June 30, 2005, this
12    exemption applies to repair and replacement parts added
13    after the initial purchase of such a motor vehicle if that
14    motor vehicle is used in a manner that would qualify for
15    the rolling stock exemption otherwise provided for in this
16    Act. For purposes of this paragraph, "used for commercial
17    purposes" means the transportation of persons or property
18    in furtherance of any commercial or industrial enterprise
19    whether for-hire or not.
20        (5) a sale or transfer of machinery and equipment used
21    primarily in the process of the manufacturing or
22    assembling, either in an existing, an expanded or a new
23    manufacturing facility, of tangible personal property for
24    wholesale or retail sale or lease, whether such sale or
25    lease is made directly by the manufacturer or by some other
26    person, whether the materials used in the process are owned

 

 

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1    by the manufacturer or some other person, or whether such
2    sale or lease is made apart from or as an incident to the
3    seller's engaging in a service occupation and the
4    applicable tax is a Service Use Tax or Service Occupation
5    Tax, rather than Use Tax or Retailers' Occupation Tax. The
6    exemption provided by this paragraph (5) does not include
7    machinery and equipment used in (i) the generation of
8    electricity for wholesale or retail sale; (ii) the
9    generation or treatment of natural or artificial gas for
10    wholesale or retail sale that is delivered to customers
11    through pipes, pipelines, or mains; or (iii) the treatment
12    of water for wholesale or retail sale that is delivered to
13    customers through pipes, pipelines, or mains. The
14    provisions of this amendatory Act of the 98th General
15    Assembly are declaratory of existing law as to the meaning
16    and scope of this exemption. The exemption under this
17    paragraph (5) is exempt from the provisions of Section
18    3-75.
19        (5a) the repairing, reconditioning or remodeling, for
20    a common carrier by rail, of tangible personal property
21    which belongs to such carrier for hire, and as to which
22    such carrier receives the physical possession of the
23    repaired, reconditioned or remodeled item of tangible
24    personal property in Illinois, and which such carrier
25    transports, or shares with another common carrier in the
26    transportation of such property, out of Illinois on a

 

 

HB2746- 32 -LRB100 06009 HLH 16039 b

1    standard uniform bill of lading showing the person who
2    repaired, reconditioned or remodeled the property to a
3    destination outside Illinois, for use outside Illinois.
4        (5b) a sale or transfer of tangible personal property
5    which is produced by the seller thereof on special order in
6    such a way as to have made the applicable tax the Service
7    Occupation Tax or the Service Use Tax, rather than the
8    Retailers' Occupation Tax or the Use Tax, for an interstate
9    carrier by rail which receives the physical possession of
10    such property in Illinois, and which transports such
11    property, or shares with another common carrier in the
12    transportation of such property, out of Illinois on a
13    standard uniform bill of lading showing the seller of the
14    property as the shipper or consignor of such property to a
15    destination outside Illinois, for use outside Illinois.
16        (6) until July 1, 2003, a sale or transfer of
17    distillation machinery and equipment, sold as a unit or kit
18    and assembled or installed by the retailer, which machinery
19    and equipment is certified by the user to be used only for
20    the production of ethyl alcohol that will be used for
21    consumption as motor fuel or as a component of motor fuel
22    for the personal use of such user and not subject to sale
23    or resale.
24        (7) at the election of any serviceman not required to
25    be otherwise registered as a retailer under Section 2a of
26    the Retailers' Occupation Tax Act, made for each fiscal

 

 

HB2746- 33 -LRB100 06009 HLH 16039 b

1    year sales of service in which the aggregate annual cost
2    price of tangible personal property transferred as an
3    incident to the sales of service is less than 35%, or 75%
4    in the case of servicemen transferring prescription drugs
5    or servicemen engaged in graphic arts production, of the
6    aggregate annual total gross receipts from all sales of
7    service. The purchase of such tangible personal property by
8    the serviceman shall be subject to tax under the Retailers'
9    Occupation Tax Act and the Use Tax Act. However, if a
10    primary serviceman who has made the election described in
11    this paragraph subcontracts service work to a secondary
12    serviceman who has also made the election described in this
13    paragraph, the primary serviceman does not incur a Use Tax
14    liability if the secondary serviceman (i) has paid or will
15    pay Use Tax on his or her cost price of any tangible
16    personal property transferred to the primary serviceman
17    and (ii) certifies that fact in writing to the primary
18    serviceman.
19    Tangible personal property transferred incident to the
20completion of a maintenance agreement is exempt from the tax
21imposed pursuant to this Act.
22    Exemption (5) also includes machinery and equipment used in
23the general maintenance or repair of such exempt machinery and
24equipment or for in-house manufacture of exempt machinery and
25equipment. Beginning on July 1, 2014, exemption (5) also
26includes production related tangible personal property, as

 

 

HB2746- 34 -LRB100 06009 HLH 16039 b

1defined in Section 3-50 of the Use Tax Act. The machinery and
2equipment exemption does not include machinery and equipment
3used in (i) the generation of electricity for wholesale or
4retail sale; (ii) the generation or treatment of natural or
5artificial gas for wholesale or retail sale that is delivered
6to customers through pipes, pipelines, or mains; or (iii) the
7treatment of water for wholesale or retail sale that is
8delivered to customers through pipes, pipelines, or mains. The
9provisions of this amendatory Act of the 98th General Assembly
10are declaratory of existing law as to the meaning and scope of
11this exemption. For the purposes of exemption (5), each of
12these terms shall have the following meanings: (1)
13"manufacturing process" shall mean the production of any
14article of tangible personal property, whether such article is
15a finished product or an article for use in the process of
16manufacturing or assembling a different article of tangible
17personal property, by procedures commonly regarded as
18manufacturing, processing, fabricating, or refining which
19changes some existing material or materials into a material
20with a different form, use or name. In relation to a recognized
21integrated business composed of a series of operations which
22collectively constitute manufacturing, or individually
23constitute manufacturing operations, the manufacturing process
24shall be deemed to commence with the first operation or stage
25of production in the series, and shall not be deemed to end
26until the completion of the final product in the last operation

 

 

HB2746- 35 -LRB100 06009 HLH 16039 b

1or stage of production in the series; and further, for purposes
2of exemption (5), photoprocessing is deemed to be a
3manufacturing process of tangible personal property for
4wholesale or retail sale; (2) "assembling process" shall mean
5the production of any article of tangible personal property,
6whether such article is a finished product or an article for
7use in the process of manufacturing or assembling a different
8article of tangible personal property, by the combination of
9existing materials in a manner commonly regarded as assembling
10which results in a material of a different form, use or name;
11(3) "machinery" shall mean major mechanical machines or major
12components of such machines contributing to a manufacturing or
13assembling process; and (4) "equipment" shall include any
14independent device or tool separate from any machinery but
15essential to an integrated manufacturing or assembly process;
16including computers used primarily in a manufacturer's
17computer assisted design, computer assisted manufacturing
18(CAD/CAM) system; or any subunit or assembly comprising a
19component of any machinery or auxiliary, adjunct or attachment
20parts of machinery, such as tools, dies, jigs, fixtures,
21patterns and molds; or any parts which require periodic
22replacement in the course of normal operation; but shall not
23include hand tools. Equipment includes chemicals or chemicals
24acting as catalysts but only if the chemicals or chemicals
25acting as catalysts effect a direct and immediate change upon a
26product being manufactured or assembled for wholesale or retail

 

 

HB2746- 36 -LRB100 06009 HLH 16039 b

1sale or lease. The purchaser of such machinery and equipment
2who has an active resale registration number shall furnish such
3number to the seller at the time of purchase. The user of such
4machinery and equipment and tools without an active resale
5registration number shall prepare a certificate of exemption
6for each transaction stating facts establishing the exemption
7for that transaction, which certificate shall be available to
8the Department for inspection or audit. The Department shall
9prescribe the form of the certificate.
10    Any informal rulings, opinions or letters issued by the
11Department in response to an inquiry or request for any opinion
12from any person regarding the coverage and applicability of
13exemption (5) to specific devices shall be published,
14maintained as a public record, and made available for public
15inspection and copying. If the informal ruling, opinion or
16letter contains trade secrets or other confidential
17information, where possible the Department shall delete such
18information prior to publication. Whenever such informal
19rulings, opinions, or letters contain any policy of general
20applicability, the Department shall formulate and adopt such
21policy as a rule in accordance with the provisions of the
22Illinois Administrative Procedure Act.
23    On and after July 1, 1987, no entity otherwise eligible
24under exemption (3) of this Section shall make tax free
25purchases unless it has an active exemption identification
26number issued by the Department.

 

 

HB2746- 37 -LRB100 06009 HLH 16039 b

1    The purchase, employment and transfer of such tangible
2personal property as newsprint and ink for the primary purpose
3of conveying news (with or without other information) is not a
4purchase, use or sale of service or of tangible personal
5property within the meaning of this Act.
6    "Serviceman" means any person who is engaged in the
7occupation of making sales of service.
8    "Sale at retail" means "sale at retail" as defined in the
9Retailers' Occupation Tax Act.
10    "Supplier" means any person who makes sales of tangible
11personal property to servicemen for the purpose of resale as an
12incident to a sale of service.
13    "Serviceman maintaining a place of business in this State",
14or any like term, means and includes any serviceman:
15        1. having or maintaining within this State, directly or
16    by a subsidiary, an office, distribution house, sales
17    house, warehouse or other place of business, or any agent
18    or other representative operating within this State under
19    the authority of the serviceman or its subsidiary,
20    irrespective of whether such place of business or agent or
21    other representative is located here permanently or
22    temporarily, or whether such serviceman or subsidiary is
23    licensed to do business in this State;
24        1.1. having a contract with a person located in this
25    State under which the person, for a commission or other
26    consideration based on the sale of service by the

 

 

HB2746- 38 -LRB100 06009 HLH 16039 b

1    serviceman, directly or indirectly refers potential
2    customers to the serviceman by providing to the potential
3    customers a promotional code or other mechanism that allows
4    the serviceman to track purchases referred by such persons.
5    Examples of mechanisms that allow the serviceman to track
6    purchases referred by such persons include but are not
7    limited to the use of a link on the person's Internet
8    website, promotional codes distributed through the
9    person's hand-delivered or mailed material, and
10    promotional codes distributed by the person through radio
11    or other broadcast media. The provisions of this paragraph
12    1.1 shall apply only if the cumulative gross receipts from
13    sales of service by the serviceman to customers who are
14    referred to the serviceman by all persons in this State
15    under such contracts exceed $10,000 during the preceding 4
16    quarterly periods ending on the last day of March, June,
17    September, and December; a serviceman meeting the
18    requirements of this paragraph 1.1 shall be presumed to be
19    maintaining a place of business in this State but may rebut
20    this presumption by submitting proof that the referrals or
21    other activities pursued within this State by such persons
22    were not sufficient to meet the nexus standards of the
23    United States Constitution during the preceding 4
24    quarterly periods;
25        1.2. beginning July 1, 2011, having a contract with a
26    person located in this State under which:

 

 

HB2746- 39 -LRB100 06009 HLH 16039 b

1            A. the serviceman sells the same or substantially
2        similar line of services as the person located in this
3        State and does so using an identical or substantially
4        similar name, trade name, or trademark as the person
5        located in this State; and
6            B. the serviceman provides a commission or other
7        consideration to the person located in this State based
8        upon the sale of services by the serviceman.
9    The provisions of this paragraph 1.2 shall apply only if
10    the cumulative gross receipts from sales of service by the
11    serviceman to customers in this State under all such
12    contracts exceed $10,000 during the preceding 4 quarterly
13    periods ending on the last day of March, June, September,
14    and December;
15        2. soliciting orders for tangible personal property by
16    means of a telecommunication or television shopping system
17    (which utilizes toll free numbers) which is intended by the
18    retailer to be broadcast by cable television or other means
19    of broadcasting, to consumers located in this State;
20        3. pursuant to a contract with a broadcaster or
21    publisher located in this State, soliciting orders for
22    tangible personal property by means of advertising which is
23    disseminated primarily to consumers located in this State
24    and only secondarily to bordering jurisdictions;
25        4. soliciting orders for tangible personal property by
26    mail if the solicitations are substantial and recurring and

 

 

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1    if the retailer benefits from any banking, financing, debt
2    collection, telecommunication, or marketing activities
3    occurring in this State or benefits from the location in
4    this State of authorized installation, servicing, or
5    repair facilities;
6        5. being owned or controlled by the same interests
7    which own or control any retailer engaging in business in
8    the same or similar line of business in this State;
9        6. having a franchisee or licensee operating under its
10    trade name if the franchisee or licensee is required to
11    collect the tax under this Section;
12        7. pursuant to a contract with a cable television
13    operator located in this State, soliciting orders for
14    tangible personal property by means of advertising which is
15    transmitted or distributed over a cable television system
16    in this State; or
17        8. engaging in activities in Illinois, which
18    activities in the state in which the supply business
19    engaging in such activities is located would constitute
20    maintaining a place of business in that state.
21(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
 
22    (35 ILCS 110/3-5)
23    Sec. 3-5. Exemptions. Use of the following tangible
24personal property is exempt from the tax imposed by this Act:
25    (1) Personal property purchased from a corporation,

 

 

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1society, association, foundation, institution, or
2organization, other than a limited liability company, that is
3organized and operated as a not-for-profit service enterprise
4for the benefit of persons 65 years of age or older if the
5personal property was not purchased by the enterprise for the
6purpose of resale by the enterprise.
7    (2) Personal property purchased by a non-profit Illinois
8county fair association for use in conducting, operating, or
9promoting the county fair.
10    (3) Personal property purchased by a not-for-profit arts or
11cultural organization that establishes, by proof required by
12the Department by rule, that it has received an exemption under
13Section 501(c)(3) of the Internal Revenue Code and that is
14organized and operated primarily for the presentation or
15support of arts or cultural programming, activities, or
16services. These organizations include, but are not limited to,
17music and dramatic arts organizations such as symphony
18orchestras and theatrical groups, arts and cultural service
19organizations, local arts councils, visual arts organizations,
20and media arts organizations. On and after the effective date
21of this amendatory Act of the 92nd General Assembly, however,
22an entity otherwise eligible for this exemption shall not make
23tax-free purchases unless it has an active identification
24number issued by the Department.
25    (4) Legal tender, currency, medallions, or gold or silver
26coinage issued by the State of Illinois, the government of the

 

 

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1United States of America, or the government of any foreign
2country, and bullion.
3    (5) Until July 1, 2003 and beginning again on September 1,
42004 through August 30, 2014, graphic arts machinery and
5equipment, including repair and replacement parts, both new and
6used, and including that manufactured on special order or
7purchased for lease, certified by the purchaser to be used
8primarily for graphic arts production. Equipment includes
9chemicals or chemicals acting as catalysts but only if the
10chemicals or chemicals acting as catalysts effect a direct and
11immediate change upon a graphic arts product. The exemption
12provided by this paragraph (5) also includes production related
13tangible personal property, as defined in Section 3-30,
14purchased on or after July 1, 2014. It is the intent of the
15General Assembly that the exemption under this paragraph (5)
16applies continuously for all periods on and after September 1,
172004. Any actions taken in reliance on the continuation of the
18exemption under this paragraph are hereby validated. The
19exemption provided by this paragraph (5) is exempt from the
20provisions of Section 3-75.
21    (6) Personal property purchased from a teacher-sponsored
22student organization affiliated with an elementary or
23secondary school located in Illinois.
24    (7) Farm machinery and equipment, both new and used,
25including that manufactured on special order, certified by the
26purchaser to be used primarily for production agriculture or

 

 

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1State or federal agricultural programs, including individual
2replacement parts for the machinery and equipment, including
3machinery and equipment purchased for lease, and including
4implements of husbandry defined in Section 1-130 of the
5Illinois Vehicle Code, farm machinery and agricultural
6chemical and fertilizer spreaders, and nurse wagons required to
7be registered under Section 3-809 of the Illinois Vehicle Code,
8but excluding other motor vehicles required to be registered
9under the Illinois Vehicle Code. Horticultural polyhouses or
10hoop houses used for propagating, growing, or overwintering
11plants shall be considered farm machinery and equipment under
12this item (7). Agricultural chemical tender tanks and dry boxes
13shall include units sold separately from a motor vehicle
14required to be licensed and units sold mounted on a motor
15vehicle required to be licensed if the selling price of the
16tender is separately stated.
17    Farm machinery and equipment shall include precision
18farming equipment that is installed or purchased to be
19installed on farm machinery and equipment including, but not
20limited to, tractors, harvesters, sprayers, planters, seeders,
21or spreaders. Precision farming equipment includes, but is not
22limited to, soil testing sensors, computers, monitors,
23software, global positioning and mapping systems, and other
24such equipment.
25    Farm machinery and equipment also includes computers,
26sensors, software, and related equipment used primarily in the

 

 

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1computer-assisted operation of production agriculture
2facilities, equipment, and activities such as, but not limited
3to, the collection, monitoring, and correlation of animal and
4crop data for the purpose of formulating animal diets and
5agricultural chemicals. This item (7) is exempt from the
6provisions of Section 3-75.
7    (8) Until June 30, 2013, fuel and petroleum products sold
8to or used by an air common carrier, certified by the carrier
9to be used for consumption, shipment, or storage in the conduct
10of its business as an air common carrier, for a flight destined
11for or returning from a location or locations outside the
12United States without regard to previous or subsequent domestic
13stopovers.
14    Beginning July 1, 2013, fuel and petroleum products sold to
15or used by an air carrier, certified by the carrier to be used
16for consumption, shipment, or storage in the conduct of its
17business as an air common carrier, for a flight that (i) is
18engaged in foreign trade or is engaged in trade between the
19United States and any of its possessions and (ii) transports at
20least one individual or package for hire from the city of
21origination to the city of final destination on the same
22aircraft, without regard to a change in the flight number of
23that aircraft.
24    (9) Proceeds of mandatory service charges separately
25stated on customers' bills for the purchase and consumption of
26food and beverages acquired as an incident to the purchase of a

 

 

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1service from a serviceman, to the extent that the proceeds of
2the service charge are in fact turned over as tips or as a
3substitute for tips to the employees who participate directly
4in preparing, serving, hosting or cleaning up the food or
5beverage function with respect to which the service charge is
6imposed.
7    (10) Until July 1, 2003, oil field exploration, drilling,
8and production equipment, including (i) rigs and parts of rigs,
9rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
10tubular goods, including casing and drill strings, (iii) pumps
11and pump-jack units, (iv) storage tanks and flow lines, (v) any
12individual replacement part for oil field exploration,
13drilling, and production equipment, and (vi) machinery and
14equipment purchased for lease; but excluding motor vehicles
15required to be registered under the Illinois Vehicle Code.
16    (11) Proceeds from the sale of photoprocessing machinery
17and equipment, including repair and replacement parts, both new
18and used, including that manufactured on special order,
19certified by the purchaser to be used primarily for
20photoprocessing, and including photoprocessing machinery and
21equipment purchased for lease.
22    (12) Coal and aggregate exploration, mining, off-highway
23hauling, processing, maintenance, and reclamation equipment,
24including replacement parts and equipment, and including
25equipment purchased for lease, but excluding motor vehicles
26required to be registered under the Illinois Vehicle Code. The

 

 

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1changes made to this Section by Public Act 97-767 apply on and
2after July 1, 2003, but no claim for credit or refund is
3allowed on or after August 16, 2013 (the effective date of
4Public Act 98-456) for such taxes paid during the period
5beginning July 1, 2003 and ending on August 16, 2013 (the
6effective date of Public Act 98-456).
7    (13) Semen used for artificial insemination of livestock
8for direct agricultural production.
9    (14) Horses, or interests in horses, registered with and
10meeting the requirements of any of the Arabian Horse Club
11Registry of America, Appaloosa Horse Club, American Quarter
12Horse Association, United States Trotting Association, or
13Jockey Club, as appropriate, used for purposes of breeding or
14racing for prizes. This item (14) is exempt from the provisions
15of Section 3-75, and the exemption provided for under this item
16(14) applies for all periods beginning May 30, 1995, but no
17claim for credit or refund is allowed on or after the effective
18date of this amendatory Act of the 95th General Assembly for
19such taxes paid during the period beginning May 30, 2000 and
20ending on the effective date of this amendatory Act of the 95th
21General Assembly.
22    (15) Computers and communications equipment utilized for
23any hospital purpose and equipment used in the diagnosis,
24analysis, or treatment of hospital patients purchased by a
25lessor who leases the equipment, under a lease of one year or
26longer executed or in effect at the time the lessor would

 

 

HB2746- 47 -LRB100 06009 HLH 16039 b

1otherwise be subject to the tax imposed by this Act, to a
2hospital that has been issued an active tax exemption
3identification number by the Department under Section 1g of the
4Retailers' Occupation Tax Act. If the equipment is leased in a
5manner that does not qualify for this exemption or is used in
6any other non-exempt manner, the lessor shall be liable for the
7tax imposed under this Act or the Use Tax Act, as the case may
8be, based on the fair market value of the property at the time
9the non-qualifying use occurs. No lessor shall collect or
10attempt to collect an amount (however designated) that purports
11to reimburse that lessor for the tax imposed by this Act or the
12Use Tax Act, as the case may be, if the tax has not been paid by
13the lessor. If a lessor improperly collects any such amount
14from the lessee, the lessee shall have a legal right to claim a
15refund of that amount from the lessor. If, however, that amount
16is not refunded to the lessee for any reason, the lessor is
17liable to pay that amount to the Department.
18    (16) Personal property purchased by a lessor who leases the
19property, under a lease of one year or longer executed or in
20effect at the time the lessor would otherwise be subject to the
21tax imposed by this Act, to a governmental body that has been
22issued an active tax exemption identification number by the
23Department under Section 1g of the Retailers' Occupation Tax
24Act. If the property is leased in a manner that does not
25qualify for this exemption or is used in any other non-exempt
26manner, the lessor shall be liable for the tax imposed under

 

 

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1this Act or the Use Tax Act, as the case may be, based on the
2fair market value of the property at the time the
3non-qualifying use occurs. No lessor shall collect or attempt
4to collect an amount (however designated) that purports to
5reimburse that lessor for the tax imposed by this Act or the
6Use Tax Act, as the case may be, if the tax has not been paid by
7the lessor. If a lessor improperly collects any such amount
8from the lessee, the lessee shall have a legal right to claim a
9refund of that amount from the lessor. If, however, that amount
10is not refunded to the lessee for any reason, the lessor is
11liable to pay that amount to the Department.
12    (17) Beginning with taxable years ending on or after
13December 31, 1995 and ending with taxable years ending on or
14before December 31, 2004, personal property that is donated for
15disaster relief to be used in a State or federally declared
16disaster area in Illinois or bordering Illinois by a
17manufacturer or retailer that is registered in this State to a
18corporation, society, association, foundation, or institution
19that has been issued a sales tax exemption identification
20number by the Department that assists victims of the disaster
21who reside within the declared disaster area.
22    (18) Beginning with taxable years ending on or after
23December 31, 1995 and ending with taxable years ending on or
24before December 31, 2004, personal property that is used in the
25performance of infrastructure repairs in this State, including
26but not limited to municipal roads and streets, access roads,

 

 

HB2746- 49 -LRB100 06009 HLH 16039 b

1bridges, sidewalks, waste disposal systems, water and sewer
2line extensions, water distribution and purification
3facilities, storm water drainage and retention facilities, and
4sewage treatment facilities, resulting from a State or
5federally declared disaster in Illinois or bordering Illinois
6when such repairs are initiated on facilities located in the
7declared disaster area within 6 months after the disaster.
8    (19) Beginning July 1, 1999, game or game birds purchased
9at a "game breeding and hunting preserve area" as that term is
10used in the Wildlife Code. This paragraph is exempt from the
11provisions of Section 3-75.
12    (20) A motor vehicle, as that term is defined in Section
131-146 of the Illinois Vehicle Code, that is donated to a
14corporation, limited liability company, society, association,
15foundation, or institution that is determined by the Department
16to be organized and operated exclusively for educational
17purposes. For purposes of this exemption, "a corporation,
18limited liability company, society, association, foundation,
19or institution organized and operated exclusively for
20educational purposes" means all tax-supported public schools,
21private schools that offer systematic instruction in useful
22branches of learning by methods common to public schools and
23that compare favorably in their scope and intensity with the
24course of study presented in tax-supported schools, and
25vocational or technical schools or institutes organized and
26operated exclusively to provide a course of study of not less

 

 

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1than 6 weeks duration and designed to prepare individuals to
2follow a trade or to pursue a manual, technical, mechanical,
3industrial, business, or commercial occupation.
4    (21) Beginning January 1, 2000, personal property,
5including food, purchased through fundraising events for the
6benefit of a public or private elementary or secondary school,
7a group of those schools, or one or more school districts if
8the events are sponsored by an entity recognized by the school
9district that consists primarily of volunteers and includes
10parents and teachers of the school children. This paragraph
11does not apply to fundraising events (i) for the benefit of
12private home instruction or (ii) for which the fundraising
13entity purchases the personal property sold at the events from
14another individual or entity that sold the property for the
15purpose of resale by the fundraising entity and that profits
16from the sale to the fundraising entity. This paragraph is
17exempt from the provisions of Section 3-75.
18    (22) Beginning January 1, 2000 and through December 31,
192001, new or used automatic vending machines that prepare and
20serve hot food and beverages, including coffee, soup, and other
21items, and replacement parts for these machines. Beginning
22January 1, 2002 and through June 30, 2003, machines and parts
23for machines used in commercial, coin-operated amusement and
24vending business if a use or occupation tax is paid on the
25gross receipts derived from the use of the commercial,
26coin-operated amusement and vending machines. This paragraph

 

 

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1is exempt from the provisions of Section 3-75.
2    (23) Beginning August 23, 2001 and through June 30, 2016,
3food for human consumption that is to be consumed off the
4premises where it is sold (other than alcoholic beverages, soft
5drinks, and food that has been prepared for immediate
6consumption) and prescription and nonprescription medicines,
7drugs, medical appliances, and insulin, urine testing
8materials, syringes, and needles used by diabetics, for human
9use, when purchased for use by a person receiving medical
10assistance under Article V of the Illinois Public Aid Code who
11resides in a licensed long-term care facility, as defined in
12the Nursing Home Care Act, or in a licensed facility as defined
13in the ID/DD Community Care Act, the MC/DD Act, or the
14Specialized Mental Health Rehabilitation Act of 2013.
15    (24) Beginning on the effective date of this amendatory Act
16of the 92nd General Assembly, computers and communications
17equipment utilized for any hospital purpose and equipment used
18in the diagnosis, analysis, or treatment of hospital patients
19purchased by a lessor who leases the equipment, under a lease
20of one year or longer executed or in effect at the time the
21lessor would otherwise be subject to the tax imposed by this
22Act, to a hospital that has been issued an active tax exemption
23identification number by the Department under Section 1g of the
24Retailers' Occupation Tax Act. If the equipment is leased in a
25manner that does not qualify for this exemption or is used in
26any other nonexempt manner, the lessor shall be liable for the

 

 

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1tax imposed under this Act or the Use Tax Act, as the case may
2be, based on the fair market value of the property at the time
3the nonqualifying use occurs. No lessor shall collect or
4attempt to collect an amount (however designated) that purports
5to reimburse that lessor for the tax imposed by this Act or the
6Use Tax Act, as the case may be, if the tax has not been paid by
7the lessor. If a lessor improperly collects any such amount
8from the lessee, the lessee shall have a legal right to claim a
9refund of that amount from the lessor. If, however, that amount
10is not refunded to the lessee for any reason, the lessor is
11liable to pay that amount to the Department. This paragraph is
12exempt from the provisions of Section 3-75.
13    (25) Beginning on the effective date of this amendatory Act
14of the 92nd General Assembly, personal property purchased by a
15lessor who leases the property, under a lease of one year or
16longer executed or in effect at the time the lessor would
17otherwise be subject to the tax imposed by this Act, to a
18governmental body that has been issued an active tax exemption
19identification number by the Department under Section 1g of the
20Retailers' Occupation Tax Act. If the property is leased in a
21manner that does not qualify for this exemption or is used in
22any other nonexempt manner, the lessor shall be liable for the
23tax imposed under this Act or the Use Tax Act, as the case may
24be, based on the fair market value of the property at the time
25the nonqualifying use occurs. No lessor shall collect or
26attempt to collect an amount (however designated) that purports

 

 

HB2746- 53 -LRB100 06009 HLH 16039 b

1to reimburse that lessor for the tax imposed by this Act or the
2Use Tax Act, as the case may be, if the tax has not been paid by
3the lessor. If a lessor improperly collects any such amount
4from the lessee, the lessee shall have a legal right to claim a
5refund of that amount from the lessor. If, however, that amount
6is not refunded to the lessee for any reason, the lessor is
7liable to pay that amount to the Department. This paragraph is
8exempt from the provisions of Section 3-75.
9    (26) Beginning January 1, 2008, tangible personal property
10used in the construction or maintenance of a community water
11supply, as defined under Section 3.145 of the Environmental
12Protection Act, that is operated by a not-for-profit
13corporation that holds a valid water supply permit issued under
14Title IV of the Environmental Protection Act. This paragraph is
15exempt from the provisions of Section 3-75.
16    (27) Beginning January 1, 2010, materials, parts,
17equipment, components, and furnishings incorporated into or
18upon an aircraft as part of the modification, refurbishment,
19completion, replacement, repair, or maintenance of the
20aircraft. This exemption includes consumable supplies used in
21the modification, refurbishment, completion, replacement,
22repair, and maintenance of aircraft, but excludes any
23materials, parts, equipment, components, and consumable
24supplies used in the modification, replacement, repair, and
25maintenance of aircraft engines or power plants, whether such
26engines or power plants are installed or uninstalled upon any

 

 

HB2746- 54 -LRB100 06009 HLH 16039 b

1such aircraft. "Consumable supplies" include, but are not
2limited to, adhesive, tape, sandpaper, general purpose
3lubricants, cleaning solution, latex gloves, and protective
4films. This exemption applies only to the use of qualifying
5tangible personal property transferred incident to the
6modification, refurbishment, completion, replacement, repair,
7or maintenance of aircraft by persons who (i) hold an Air
8Agency Certificate and are empowered to operate an approved
9repair station by the Federal Aviation Administration, (ii)
10have a Class IV Rating, and (iii) conduct operations in
11accordance with Part 145 of the Federal Aviation Regulations.
12The exemption does not include aircraft operated by a
13commercial air carrier providing scheduled passenger air
14service pursuant to authority issued under Part 121 or Part 129
15of the Federal Aviation Regulations. The changes made to this
16paragraph (27) by Public Act 98-534 are declarative of existing
17law.
18    (28) Tangible personal property purchased by a
19public-facilities corporation, as described in Section
2011-65-10 of the Illinois Municipal Code, for purposes of
21constructing or furnishing a municipal convention hall, but
22only if the legal title to the municipal convention hall is
23transferred to the municipality without any further
24consideration by or on behalf of the municipality at the time
25of the completion of the municipal convention hall or upon the
26retirement or redemption of any bonds or other debt instruments

 

 

HB2746- 55 -LRB100 06009 HLH 16039 b

1issued by the public-facilities corporation in connection with
2the development of the municipal convention hall. This
3exemption includes existing public-facilities corporations as
4provided in Section 11-65-25 of the Illinois Municipal Code.
5This paragraph is exempt from the provisions of Section 3-75.
6    (29) Beginning January 1, 2017, menstrual pads, tampons,
7and menstrual cups.
8(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
998-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
107-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
 
11    (35 ILCS 110/3-30)  (from Ch. 120, par. 439.33-30)
12    Sec. 3-30. Graphic arts production. For the purposes of
13this Act, "graphic arts production" means the production of
14tangible personal property for wholesale or retail sale or
15lease by means of printing, including ink jet printing, by one
16or more of the processes described in Groups 323110 through
17323122 of Subsector 323, Groups 511110 through 511199 of
18Subsector 511, and Group 512230 of Subsector 512 of the North
19American Industry Classification System published by the U.S.
20Office of Management and Budget, 1997 edition. Graphic arts
21production does not include (i) the transfer of images onto
22paper or other tangible personal property by means of
23photocopying or (ii) final printed products in electronic or
24audio form, including the production of software or
25audio-books. For purposes of this Section, persons engaged

 

 

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1primarily in the business of printing or publishing newspapers
2or magazines that qualify as newsprint and ink, by one or more
3of the processes described in Groups 511110 through 511199 of
4subsector 511 of the North American Industry Classification
5System published by the U.S. Office of Management and Budget,
61997 edition, are deemed to be engaged in graphic arts
7production.
8    For the purposes of the exemption provided in paragraph (5)
9of Section 3-5 of this Act, "production related tangible
10personal property" means all tangible personal property that is
11used or consumed by the purchaser in a graphic arts facility in
12which graphic arts production takes place and includes, without
13limitation, tangible personal property that is purchased for
14incorporation into real estate within a graphic arts production
15facility, supplies and consumables used in a graphic arts
16production facility including fuels, coolants, solvents, oils,
17lubricants, and adhesives, hand tools, protective apparel, and
18fire and safety equipment used or consumed within a
19manufacturing facility, and tangible personal property that is
20used or consumed in activities such as research and
21development, preproduction material handling, receiving,
22quality control, inventory control, storage, staging, and
23packaging for shipping and transportation purposes.
24"Production related tangible personal property" does not
25include (i) tangible personal property that is used, within or
26without a graphic arts production facility, in sales,

 

 

HB2746- 57 -LRB100 06009 HLH 16039 b

1purchasing, accounting, fiscal management, marketing,
2personnel recruitment or selection, or landscaping or (ii)
3tangible personal property that is required to be titled or
4registered with a department, agency, or unit of federal,
5State, or local government.
6(Source: P.A. 96-116, eff. 7-31-09.)
 
7    Section 15. The Service Occupation Tax Act is amended by
8changing Sections 2, 3-5, and 3-30 as follows:
 
9    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
10    Sec. 2. "Transfer" means any transfer of the title to
11property or of the ownership of property whether or not the
12transferor retains title as security for the payment of amounts
13due him from the transferee.
14    "Cost Price" means the consideration paid by the serviceman
15for a purchase valued in money, whether paid in money or
16otherwise, including cash, credits and services, and shall be
17determined without any deduction on account of the supplier's
18cost of the property sold or on account of any other expense
19incurred by the supplier. When a serviceman contracts out part
20or all of the services required in his sale of service, it
21shall be presumed that the cost price to the serviceman of the
22property transferred to him by his or her subcontractor is
23equal to 50% of the subcontractor's charges to the serviceman
24in the absence of proof of the consideration paid by the

 

 

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1subcontractor for the purchase of such property.
2    "Department" means the Department of Revenue.
3    "Person" means any natural individual, firm, partnership,
4association, joint stock company, joint venture, public or
5private corporation, limited liability company, and any
6receiver, executor, trustee, guardian or other representative
7appointed by order of any court.
8    "Sale of Service" means any transaction except:
9    (a) A retail sale of tangible personal property taxable
10under the Retailers' Occupation Tax Act or under the Use Tax
11Act.
12    (b) A sale of tangible personal property for the purpose of
13resale made in compliance with Section 2c of the Retailers'
14Occupation Tax Act.
15    (c) Except as hereinafter provided, a sale or transfer of
16tangible personal property as an incident to the rendering of
17service for or by any governmental body or for or by any
18corporation, society, association, foundation or institution
19organized and operated exclusively for charitable, religious
20or educational purposes or any not-for-profit corporation,
21society, association, foundation, institution or organization
22which has no compensated officers or employees and which is
23organized and operated primarily for the recreation of persons
2455 years of age or older. A limited liability company may
25qualify for the exemption under this paragraph only if the
26limited liability company is organized and operated

 

 

HB2746- 59 -LRB100 06009 HLH 16039 b

1exclusively for educational purposes.
2    (d) A sale or transfer of tangible personal property as an
3incident to the rendering of service for interstate carriers
4for hire for use as rolling stock moving in interstate commerce
5or lessors under leases of one year or longer, executed or in
6effect at the time of purchase, to interstate carriers for hire
7for use as rolling stock moving in interstate commerce, and
8equipment operated by a telecommunications provider, licensed
9as a common carrier by the Federal Communications Commission,
10which is permanently installed in or affixed to aircraft moving
11in interstate commerce.
12    (d-1) A sale or transfer of tangible personal property as
13an incident to the rendering of service for owners, lessors or
14shippers of tangible personal property which is utilized by
15interstate carriers for hire for use as rolling stock moving in
16interstate commerce, and equipment operated by a
17telecommunications provider, licensed as a common carrier by
18the Federal Communications Commission, which is permanently
19installed in or affixed to aircraft moving in interstate
20commerce.
21    (d-1.1) On and after July 1, 2003 and through June 30,
222004, a sale or transfer of a motor vehicle of the second
23division with a gross vehicle weight in excess of 8,000 pounds
24as an incident to the rendering of service if that motor
25vehicle is subject to the commercial distribution fee imposed
26under Section 3-815.1 of the Illinois Vehicle Code. Beginning

 

 

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1on July 1, 2004 and through June 30, 2005, the use in this
2State of motor vehicles of the second division: (i) with a
3gross vehicle weight rating in excess of 8,000 pounds; (ii)
4that are subject to the commercial distribution fee imposed
5under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
6that are primarily used for commercial purposes. Through June
730, 2005, this exemption applies to repair and replacement
8parts added after the initial purchase of such a motor vehicle
9if that motor vehicle is used in a manner that would qualify
10for the rolling stock exemption otherwise provided for in this
11Act. For purposes of this paragraph, "used for commercial
12purposes" means the transportation of persons or property in
13furtherance of any commercial or industrial enterprise whether
14for-hire or not.
15    (d-2) The repairing, reconditioning or remodeling, for a
16common carrier by rail, of tangible personal property which
17belongs to such carrier for hire, and as to which such carrier
18receives the physical possession of the repaired,
19reconditioned or remodeled item of tangible personal property
20in Illinois, and which such carrier transports, or shares with
21another common carrier in the transportation of such property,
22out of Illinois on a standard uniform bill of lading showing
23the person who repaired, reconditioned or remodeled the
24property as the shipper or consignor of such property to a
25destination outside Illinois, for use outside Illinois.
26    (d-3) A sale or transfer of tangible personal property

 

 

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1which is produced by the seller thereof on special order in
2such a way as to have made the applicable tax the Service
3Occupation Tax or the Service Use Tax, rather than the
4Retailers' Occupation Tax or the Use Tax, for an interstate
5carrier by rail which receives the physical possession of such
6property in Illinois, and which transports such property, or
7shares with another common carrier in the transportation of
8such property, out of Illinois on a standard uniform bill of
9lading showing the seller of the property as the shipper or
10consignor of such property to a destination outside Illinois,
11for use outside Illinois.
12    (d-4) Until January 1, 1997, a sale, by a registered
13serviceman paying tax under this Act to the Department, of
14special order printed materials delivered outside Illinois and
15which are not returned to this State, if delivery is made by
16the seller or agent of the seller, including an agent who
17causes the product to be delivered outside Illinois by a common
18carrier or the U.S. postal service.
19    (e) A sale or transfer of machinery and equipment used
20primarily in the process of the manufacturing or assembling,
21either in an existing, an expanded or a new manufacturing
22facility, of tangible personal property for wholesale or retail
23sale or lease, whether such sale or lease is made directly by
24the manufacturer or by some other person, whether the materials
25used in the process are owned by the manufacturer or some other
26person, or whether such sale or lease is made apart from or as

 

 

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1an incident to the seller's engaging in a service occupation
2and the applicable tax is a Service Occupation Tax or Service
3Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
4exemption provided by this paragraph (e) does not include
5machinery and equipment used in (i) the generation of
6electricity for wholesale or retail sale; (ii) the generation
7or treatment of natural or artificial gas for wholesale or
8retail sale that is delivered to customers through pipes,
9pipelines, or mains; or (iii) the treatment of water for
10wholesale or retail sale that is delivered to customers through
11pipes, pipelines, or mains. The provisions of this amendatory
12Act of the 98th General Assembly are declaratory of existing
13law as to the meaning and scope of this exemption. The
14exemption under this subsection (e) is exempt from the
15provisions of Section 3-55.
16    (f) Until July 1, 2003, the sale or transfer of
17distillation machinery and equipment, sold as a unit or kit and
18assembled or installed by the retailer, which machinery and
19equipment is certified by the user to be used only for the
20production of ethyl alcohol that will be used for consumption
21as motor fuel or as a component of motor fuel for the personal
22use of such user and not subject to sale or resale.
23    (g) At the election of any serviceman not required to be
24otherwise registered as a retailer under Section 2a of the
25Retailers' Occupation Tax Act, made for each fiscal year sales
26of service in which the aggregate annual cost price of tangible

 

 

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1personal property transferred as an incident to the sales of
2service is less than 35% (75% in the case of servicemen
3transferring prescription drugs or servicemen engaged in
4graphic arts production) of the aggregate annual total gross
5receipts from all sales of service. The purchase of such
6tangible personal property by the serviceman shall be subject
7to tax under the Retailers' Occupation Tax Act and the Use Tax
8Act. However, if a primary serviceman who has made the election
9described in this paragraph subcontracts service work to a
10secondary serviceman who has also made the election described
11in this paragraph, the primary serviceman does not incur a Use
12Tax liability if the secondary serviceman (i) has paid or will
13pay Use Tax on his or her cost price of any tangible personal
14property transferred to the primary serviceman and (ii)
15certifies that fact in writing to the primary serviceman.
16    Tangible personal property transferred incident to the
17completion of a maintenance agreement is exempt from the tax
18imposed pursuant to this Act.
19    Exemption (e) also includes machinery and equipment used in
20the general maintenance or repair of such exempt machinery and
21equipment or for in-house manufacture of exempt machinery and
22equipment. Beginning on July 1, 2014, exemption (e) also
23includes production related tangible personal property, as
24defined in Section 2-45 of the Retailers' Occupation Tax Act.
25The machinery and equipment exemption does not include
26machinery and equipment used in (i) the generation of

 

 

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1electricity for wholesale or retail sale; (ii) the generation
2or treatment of natural or artificial gas for wholesale or
3retail sale that is delivered to customers through pipes,
4pipelines, or mains; or (iii) the treatment of water for
5wholesale or retail sale that is delivered to customers through
6pipes, pipelines, or mains. The provisions of this amendatory
7Act of the 98th General Assembly are declaratory of existing
8law as to the meaning and scope of this exemption. For the
9purposes of exemption (e), each of these terms shall have the
10following meanings: (1) "manufacturing process" shall mean the
11production of any article of tangible personal property,
12whether such article is a finished product or an article for
13use in the process of manufacturing or assembling a different
14article of tangible personal property, by procedures commonly
15regarded as manufacturing, processing, fabricating, or
16refining which changes some existing material or materials into
17a material with a different form, use or name. In relation to a
18recognized integrated business composed of a series of
19operations which collectively constitute manufacturing, or
20individually constitute manufacturing operations, the
21manufacturing process shall be deemed to commence with the
22first operation or stage of production in the series, and shall
23not be deemed to end until the completion of the final product
24in the last operation or stage of production in the series; and
25further for purposes of exemption (e), photoprocessing is
26deemed to be a manufacturing process of tangible personal

 

 

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1property for wholesale or retail sale; (2) "assembling process"
2shall mean the production of any article of tangible personal
3property, whether such article is a finished product or an
4article for use in the process of manufacturing or assembling a
5different article of tangible personal property, by the
6combination of existing materials in a manner commonly regarded
7as assembling which results in a material of a different form,
8use or name; (3) "machinery" shall mean major mechanical
9machines or major components of such machines contributing to a
10manufacturing or assembling process; and (4) "equipment" shall
11include any independent device or tool separate from any
12machinery but essential to an integrated manufacturing or
13assembly process; including computers used primarily in a
14manufacturer's computer assisted design, computer assisted
15manufacturing (CAD/CAM) system; or any subunit or assembly
16comprising a component of any machinery or auxiliary, adjunct
17or attachment parts of machinery, such as tools, dies, jigs,
18fixtures, patterns and molds; or any parts which require
19periodic replacement in the course of normal operation; but
20shall not include hand tools. Equipment includes chemicals or
21chemicals acting as catalysts but only if the chemicals or
22chemicals acting as catalysts effect a direct and immediate
23change upon a product being manufactured or assembled for
24wholesale or retail sale or lease. The purchaser of such
25machinery and equipment who has an active resale registration
26number shall furnish such number to the seller at the time of

 

 

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1purchase. The purchaser of such machinery and equipment and
2tools without an active resale registration number shall
3furnish to the seller a certificate of exemption for each
4transaction stating facts establishing the exemption for that
5transaction, which certificate shall be available to the
6Department for inspection or audit.
7    Except as provided in Section 2d of this Act, the rolling
8stock exemption applies to rolling stock used by an interstate
9carrier for hire, even just between points in Illinois, if such
10rolling stock transports, for hire, persons whose journeys or
11property whose shipments originate or terminate outside
12Illinois.
13    Any informal rulings, opinions or letters issued by the
14Department in response to an inquiry or request for any opinion
15from any person regarding the coverage and applicability of
16exemption (e) to specific devices shall be published,
17maintained as a public record, and made available for public
18inspection and copying. If the informal ruling, opinion or
19letter contains trade secrets or other confidential
20information, where possible the Department shall delete such
21information prior to publication. Whenever such informal
22rulings, opinions, or letters contain any policy of general
23applicability, the Department shall formulate and adopt such
24policy as a rule in accordance with the provisions of the
25Illinois Administrative Procedure Act.
26    On and after July 1, 1987, no entity otherwise eligible

 

 

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1under exemption (c) of this Section shall make tax free
2purchases unless it has an active exemption identification
3number issued by the Department.
4    "Serviceman" means any person who is engaged in the
5occupation of making sales of service.
6    "Sale at Retail" means "sale at retail" as defined in the
7Retailers' Occupation Tax Act.
8    "Supplier" means any person who makes sales of tangible
9personal property to servicemen for the purpose of resale as an
10incident to a sale of service.
11(Source: P.A. 98-583, eff. 1-1-14.)
 
12    (35 ILCS 115/3-5)
13    Sec. 3-5. Exemptions. The following tangible personal
14property is exempt from the tax imposed by this Act:
15    (1) Personal property sold by a corporation, society,
16association, foundation, institution, or organization, other
17than a limited liability company, that is organized and
18operated as a not-for-profit service enterprise for the benefit
19of persons 65 years of age or older if the personal property
20was not purchased by the enterprise for the purpose of resale
21by the enterprise.
22    (2) Personal property purchased by a not-for-profit
23Illinois county fair association for use in conducting,
24operating, or promoting the county fair.
25    (3) Personal property purchased by any not-for-profit arts

 

 

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1or cultural organization that establishes, by proof required by
2the Department by rule, that it has received an exemption under
3Section 501(c)(3) of the Internal Revenue Code and that is
4organized and operated primarily for the presentation or
5support of arts or cultural programming, activities, or
6services. These organizations include, but are not limited to,
7music and dramatic arts organizations such as symphony
8orchestras and theatrical groups, arts and cultural service
9organizations, local arts councils, visual arts organizations,
10and media arts organizations. On and after the effective date
11of this amendatory Act of the 92nd General Assembly, however,
12an entity otherwise eligible for this exemption shall not make
13tax-free purchases unless it has an active identification
14number issued by the Department.
15    (4) Legal tender, currency, medallions, or gold or silver
16coinage issued by the State of Illinois, the government of the
17United States of America, or the government of any foreign
18country, and bullion.
19    (5) Until July 1, 2003 and beginning again on September 1,
202004 through August 30, 2014, graphic arts machinery and
21equipment, including repair and replacement parts, both new and
22used, and including that manufactured on special order or
23purchased for lease, certified by the purchaser to be used
24primarily for graphic arts production. Equipment includes
25chemicals or chemicals acting as catalysts but only if the
26chemicals or chemicals acting as catalysts effect a direct and

 

 

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1immediate change upon a graphic arts product. The exemption
2provided by this paragraph (5) also includes production related
3tangible personal property, as defined in Section 3-30,
4purchased on or after July 1, 2014. It is the intent of the
5General Assembly that the exemption under this paragraph (5)
6applies continuously for all periods on and after September 1,
72004. Any actions taken in reliance on the continuation of the
8exemption under this paragraph are hereby validated. The
9exemption under this paragraph (5) is exempt from the
10provisions of Section 3-55.
11    (6) Personal property sold by a teacher-sponsored student
12organization affiliated with an elementary or secondary school
13located in Illinois.
14    (7) Farm machinery and equipment, both new and used,
15including that manufactured on special order, certified by the
16purchaser to be used primarily for production agriculture or
17State or federal agricultural programs, including individual
18replacement parts for the machinery and equipment, including
19machinery and equipment purchased for lease, and including
20implements of husbandry defined in Section 1-130 of the
21Illinois Vehicle Code, farm machinery and agricultural
22chemical and fertilizer spreaders, and nurse wagons required to
23be registered under Section 3-809 of the Illinois Vehicle Code,
24but excluding other motor vehicles required to be registered
25under the Illinois Vehicle Code. Horticultural polyhouses or
26hoop houses used for propagating, growing, or overwintering

 

 

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1plants shall be considered farm machinery and equipment under
2this item (7). Agricultural chemical tender tanks and dry boxes
3shall include units sold separately from a motor vehicle
4required to be licensed and units sold mounted on a motor
5vehicle required to be licensed if the selling price of the
6tender is separately stated.
7    Farm machinery and equipment shall include precision
8farming equipment that is installed or purchased to be
9installed on farm machinery and equipment including, but not
10limited to, tractors, harvesters, sprayers, planters, seeders,
11or spreaders. Precision farming equipment includes, but is not
12limited to, soil testing sensors, computers, monitors,
13software, global positioning and mapping systems, and other
14such equipment.
15    Farm machinery and equipment also includes computers,
16sensors, software, and related equipment used primarily in the
17computer-assisted operation of production agriculture
18facilities, equipment, and activities such as, but not limited
19to, the collection, monitoring, and correlation of animal and
20crop data for the purpose of formulating animal diets and
21agricultural chemicals. This item (7) is exempt from the
22provisions of Section 3-55.
23    (8) Until June 30, 2013, fuel and petroleum products sold
24to or used by an air common carrier, certified by the carrier
25to be used for consumption, shipment, or storage in the conduct
26of its business as an air common carrier, for a flight destined

 

 

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1for or returning from a location or locations outside the
2United States without regard to previous or subsequent domestic
3stopovers.
4    Beginning July 1, 2013, fuel and petroleum products sold to
5or used by an air carrier, certified by the carrier to be used
6for consumption, shipment, or storage in the conduct of its
7business as an air common carrier, for a flight that (i) is
8engaged in foreign trade or is engaged in trade between the
9United States and any of its possessions and (ii) transports at
10least one individual or package for hire from the city of
11origination to the city of final destination on the same
12aircraft, without regard to a change in the flight number of
13that aircraft.
14    (9) Proceeds of mandatory service charges separately
15stated on customers' bills for the purchase and consumption of
16food and beverages, to the extent that the proceeds of the
17service charge are in fact turned over as tips or as a
18substitute for tips to the employees who participate directly
19in preparing, serving, hosting or cleaning up the food or
20beverage function with respect to which the service charge is
21imposed.
22    (10) Until July 1, 2003, oil field exploration, drilling,
23and production equipment, including (i) rigs and parts of rigs,
24rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
25tubular goods, including casing and drill strings, (iii) pumps
26and pump-jack units, (iv) storage tanks and flow lines, (v) any

 

 

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1individual replacement part for oil field exploration,
2drilling, and production equipment, and (vi) machinery and
3equipment purchased for lease; but excluding motor vehicles
4required to be registered under the Illinois Vehicle Code.
5    (11) Photoprocessing machinery and equipment, including
6repair and replacement parts, both new and used, including that
7manufactured on special order, certified by the purchaser to be
8used primarily for photoprocessing, and including
9photoprocessing machinery and equipment purchased for lease.
10    (12) Coal and aggregate exploration, mining, off-highway
11hauling, processing, maintenance, and reclamation equipment,
12including replacement parts and equipment, and including
13equipment purchased for lease, but excluding motor vehicles
14required to be registered under the Illinois Vehicle Code. The
15changes made to this Section by Public Act 97-767 apply on and
16after July 1, 2003, but no claim for credit or refund is
17allowed on or after August 16, 2013 (the effective date of
18Public Act 98-456) for such taxes paid during the period
19beginning July 1, 2003 and ending on August 16, 2013 (the
20effective date of Public Act 98-456).
21    (13) Beginning January 1, 1992 and through June 30, 2016,
22food for human consumption that is to be consumed off the
23premises where it is sold (other than alcoholic beverages, soft
24drinks and food that has been prepared for immediate
25consumption) and prescription and non-prescription medicines,
26drugs, medical appliances, and insulin, urine testing

 

 

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1materials, syringes, and needles used by diabetics, for human
2use, when purchased for use by a person receiving medical
3assistance under Article V of the Illinois Public Aid Code who
4resides in a licensed long-term care facility, as defined in
5the Nursing Home Care Act, or in a licensed facility as defined
6in the ID/DD Community Care Act, the MC/DD Act, or the
7Specialized Mental Health Rehabilitation Act of 2013.
8    (14) Semen used for artificial insemination of livestock
9for direct agricultural production.
10    (15) Horses, or interests in horses, registered with and
11meeting the requirements of any of the Arabian Horse Club
12Registry of America, Appaloosa Horse Club, American Quarter
13Horse Association, United States Trotting Association, or
14Jockey Club, as appropriate, used for purposes of breeding or
15racing for prizes. This item (15) is exempt from the provisions
16of Section 3-55, and the exemption provided for under this item
17(15) applies for all periods beginning May 30, 1995, but no
18claim for credit or refund is allowed on or after January 1,
192008 (the effective date of Public Act 95-88) for such taxes
20paid during the period beginning May 30, 2000 and ending on
21January 1, 2008 (the effective date of Public Act 95-88).
22    (16) Computers and communications equipment utilized for
23any hospital purpose and equipment used in the diagnosis,
24analysis, or treatment of hospital patients sold to a lessor
25who leases the equipment, under a lease of one year or longer
26executed or in effect at the time of the purchase, to a

 

 

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1hospital that has been issued an active tax exemption
2identification number by the Department under Section 1g of the
3Retailers' Occupation Tax Act.
4    (17) Personal property sold to a lessor who leases the
5property, under a lease of one year or longer executed or in
6effect at the time of the purchase, to a governmental body that
7has been issued an active tax exemption identification number
8by the Department under Section 1g of the Retailers' Occupation
9Tax Act.
10    (18) Beginning with taxable years ending on or after
11December 31, 1995 and ending with taxable years ending on or
12before December 31, 2004, personal property that is donated for
13disaster relief to be used in a State or federally declared
14disaster area in Illinois or bordering Illinois by a
15manufacturer or retailer that is registered in this State to a
16corporation, society, association, foundation, or institution
17that has been issued a sales tax exemption identification
18number by the Department that assists victims of the disaster
19who reside within the declared disaster area.
20    (19) Beginning with taxable years ending on or after
21December 31, 1995 and ending with taxable years ending on or
22before December 31, 2004, personal property that is used in the
23performance of infrastructure repairs in this State, including
24but not limited to municipal roads and streets, access roads,
25bridges, sidewalks, waste disposal systems, water and sewer
26line extensions, water distribution and purification

 

 

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1facilities, storm water drainage and retention facilities, and
2sewage treatment facilities, resulting from a State or
3federally declared disaster in Illinois or bordering Illinois
4when such repairs are initiated on facilities located in the
5declared disaster area within 6 months after the disaster.
6    (20) Beginning July 1, 1999, game or game birds sold at a
7"game breeding and hunting preserve area" as that term is used
8in the Wildlife Code. This paragraph is exempt from the
9provisions of Section 3-55.
10    (21) A motor vehicle, as that term is defined in Section
111-146 of the Illinois Vehicle Code, that is donated to a
12corporation, limited liability company, society, association,
13foundation, or institution that is determined by the Department
14to be organized and operated exclusively for educational
15purposes. For purposes of this exemption, "a corporation,
16limited liability company, society, association, foundation,
17or institution organized and operated exclusively for
18educational purposes" means all tax-supported public schools,
19private schools that offer systematic instruction in useful
20branches of learning by methods common to public schools and
21that compare favorably in their scope and intensity with the
22course of study presented in tax-supported schools, and
23vocational or technical schools or institutes organized and
24operated exclusively to provide a course of study of not less
25than 6 weeks duration and designed to prepare individuals to
26follow a trade or to pursue a manual, technical, mechanical,

 

 

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1industrial, business, or commercial occupation.
2    (22) Beginning January 1, 2000, personal property,
3including food, purchased through fundraising events for the
4benefit of a public or private elementary or secondary school,
5a group of those schools, or one or more school districts if
6the events are sponsored by an entity recognized by the school
7district that consists primarily of volunteers and includes
8parents and teachers of the school children. This paragraph
9does not apply to fundraising events (i) for the benefit of
10private home instruction or (ii) for which the fundraising
11entity purchases the personal property sold at the events from
12another individual or entity that sold the property for the
13purpose of resale by the fundraising entity and that profits
14from the sale to the fundraising entity. This paragraph is
15exempt from the provisions of Section 3-55.
16    (23) Beginning January 1, 2000 and through December 31,
172001, new or used automatic vending machines that prepare and
18serve hot food and beverages, including coffee, soup, and other
19items, and replacement parts for these machines. Beginning
20January 1, 2002 and through June 30, 2003, machines and parts
21for machines used in commercial, coin-operated amusement and
22vending business if a use or occupation tax is paid on the
23gross receipts derived from the use of the commercial,
24coin-operated amusement and vending machines. This paragraph
25is exempt from the provisions of Section 3-55.
26    (24) Beginning on the effective date of this amendatory Act

 

 

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1of the 92nd General Assembly, computers and communications
2equipment utilized for any hospital purpose and equipment used
3in the diagnosis, analysis, or treatment of hospital patients
4sold to a lessor who leases the equipment, under a lease of one
5year or longer executed or in effect at the time of the
6purchase, to a hospital that has been issued an active tax
7exemption identification number by the Department under
8Section 1g of the Retailers' Occupation Tax Act. This paragraph
9is exempt from the provisions of Section 3-55.
10    (25) Beginning on the effective date of this amendatory Act
11of the 92nd General Assembly, personal property sold to a
12lessor who leases the property, under a lease of one year or
13longer executed or in effect at the time of the purchase, to a
14governmental body that has been issued an active tax exemption
15identification number by the Department under Section 1g of the
16Retailers' Occupation Tax Act. This paragraph is exempt from
17the provisions of Section 3-55.
18    (26) Beginning on January 1, 2002 and through June 30,
192016, tangible personal property purchased from an Illinois
20retailer by a taxpayer engaged in centralized purchasing
21activities in Illinois who will, upon receipt of the property
22in Illinois, temporarily store the property in Illinois (i) for
23the purpose of subsequently transporting it outside this State
24for use or consumption thereafter solely outside this State or
25(ii) for the purpose of being processed, fabricated, or
26manufactured into, attached to, or incorporated into other

 

 

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1tangible personal property to be transported outside this State
2and thereafter used or consumed solely outside this State. The
3Director of Revenue shall, pursuant to rules adopted in
4accordance with the Illinois Administrative Procedure Act,
5issue a permit to any taxpayer in good standing with the
6Department who is eligible for the exemption under this
7paragraph (26). The permit issued under this paragraph (26)
8shall authorize the holder, to the extent and in the manner
9specified in the rules adopted under this Act, to purchase
10tangible personal property from a retailer exempt from the
11taxes imposed by this Act. Taxpayers shall maintain all
12necessary books and records to substantiate the use and
13consumption of all such tangible personal property outside of
14the State of Illinois.
15    (27) Beginning January 1, 2008, tangible personal property
16used in the construction or maintenance of a community water
17supply, as defined under Section 3.145 of the Environmental
18Protection Act, that is operated by a not-for-profit
19corporation that holds a valid water supply permit issued under
20Title IV of the Environmental Protection Act. This paragraph is
21exempt from the provisions of Section 3-55.
22    (28) Tangible personal property sold to a
23public-facilities corporation, as described in Section
2411-65-10 of the Illinois Municipal Code, for purposes of
25constructing or furnishing a municipal convention hall, but
26only if the legal title to the municipal convention hall is

 

 

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1transferred to the municipality without any further
2consideration by or on behalf of the municipality at the time
3of the completion of the municipal convention hall or upon the
4retirement or redemption of any bonds or other debt instruments
5issued by the public-facilities corporation in connection with
6the development of the municipal convention hall. This
7exemption includes existing public-facilities corporations as
8provided in Section 11-65-25 of the Illinois Municipal Code.
9This paragraph is exempt from the provisions of Section 3-55.
10    (29) Beginning January 1, 2010, materials, parts,
11equipment, components, and furnishings incorporated into or
12upon an aircraft as part of the modification, refurbishment,
13completion, replacement, repair, or maintenance of the
14aircraft. This exemption includes consumable supplies used in
15the modification, refurbishment, completion, replacement,
16repair, and maintenance of aircraft, but excludes any
17materials, parts, equipment, components, and consumable
18supplies used in the modification, replacement, repair, and
19maintenance of aircraft engines or power plants, whether such
20engines or power plants are installed or uninstalled upon any
21such aircraft. "Consumable supplies" include, but are not
22limited to, adhesive, tape, sandpaper, general purpose
23lubricants, cleaning solution, latex gloves, and protective
24films. This exemption applies only to the transfer of
25qualifying tangible personal property incident to the
26modification, refurbishment, completion, replacement, repair,

 

 

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1or maintenance of an aircraft by persons who (i) hold an Air
2Agency Certificate and are empowered to operate an approved
3repair station by the Federal Aviation Administration, (ii)
4have a Class IV Rating, and (iii) conduct operations in
5accordance with Part 145 of the Federal Aviation Regulations.
6The exemption does not include aircraft operated by a
7commercial air carrier providing scheduled passenger air
8service pursuant to authority issued under Part 121 or Part 129
9of the Federal Aviation Regulations. The changes made to this
10paragraph (29) by Public Act 98-534 are declarative of existing
11law.
12    (30) Beginning January 1, 2017, menstrual pads, tampons,
13and menstrual cups.
14(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
1598-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
167-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
 
17    (35 ILCS 115/3-30)  (from Ch. 120, par. 439.103-30)
18    Sec. 3-30. Graphic arts production. For purposes of this
19Act, "graphic arts production" means the production of tangible
20personal property for wholesale or retail sale or lease by
21means of printing, including ink jet printing, by one or more
22of the processes described in Groups 323110 through 323122 of
23Subsector 323, Groups 511110 through 511199 of Subsector 511,
24and Group 512230 of Subsector 512 of the North American
25Industry Classification System published by the U.S. Office of

 

 

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1Management and Budget, 1997 edition. Graphic arts production
2does not include (i) the transfer of images onto paper or other
3tangible personal property by means of photocopying or (ii)
4final printed products in electronic or audio form, including
5the production of software or audio-books. For the purpose of
6this Section, persons engaged primarily in the business of
7printing or publishing newspapers or magazines that qualify as
8newsprint and ink, by one or more of the processes described in
9Groups 511110 through 511199 of subsector 511 of the North
10American Industry Classification System published by the U.S.
11Office of Management and Budget, 1997 edition, are deemed to be
12engaged in graphic arts production.
13    For the purposes of the exemption provided in paragraph (5)
14of Section 3-5 of this Act, "production related tangible
15personal property" means all tangible personal property that is
16used or consumed by the purchaser in a graphic arts facility in
17which graphic arts production takes place and includes, without
18limitation, tangible personal property that is purchased for
19incorporation into real estate within a graphic arts production
20facility, supplies and consumables used in a graphic arts
21production facility including fuels, coolants, solvents, oils,
22lubricants, and adhesives, hand tools, protective apparel, and
23fire and safety equipment used or consumed within a
24manufacturing facility, and tangible personal property that is
25used or consumed in activities such as research and
26development, preproduction material handling, receiving,

 

 

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1quality control, inventory control, storage, staging, and
2packaging for shipping and transportation purposes.
3"Production related tangible personal property" does not
4include (i) tangible personal property that is used, within or
5without a graphic arts production facility, in sales,
6purchasing, accounting, fiscal management, marketing,
7personnel recruitment or selection, or landscaping or (ii)
8tangible personal property that is required to be titled or
9registered with a department, agency, or unit of federal,
10State, or local government.
11(Source: P.A. 96-116, eff. 7-31-09.)
 
12    Section 20. The Retailers' Occupation Tax Act is amended by
13changing Sections 2-5, 2-30, and 2-45 as follows:
 
14    (35 ILCS 120/2-5)
15    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
16sale of the following tangible personal property are exempt
17from the tax imposed by this Act:
18    (1) Farm chemicals.
19    (2) Farm machinery and equipment, both new and used,
20including that manufactured on special order, certified by the
21purchaser to be used primarily for production agriculture or
22State or federal agricultural programs, including individual
23replacement parts for the machinery and equipment, including
24machinery and equipment purchased for lease, and including

 

 

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1implements of husbandry defined in Section 1-130 of the
2Illinois Vehicle Code, farm machinery and agricultural
3chemical and fertilizer spreaders, and nurse wagons required to
4be registered under Section 3-809 of the Illinois Vehicle Code,
5but excluding other motor vehicles required to be registered
6under the Illinois Vehicle Code. Horticultural polyhouses or
7hoop houses used for propagating, growing, or overwintering
8plants shall be considered farm machinery and equipment under
9this item (2). Agricultural chemical tender tanks and dry boxes
10shall include units sold separately from a motor vehicle
11required to be licensed and units sold mounted on a motor
12vehicle required to be licensed, if the selling price of the
13tender is separately stated.
14    Farm machinery and equipment shall include precision
15farming equipment that is installed or purchased to be
16installed on farm machinery and equipment including, but not
17limited to, tractors, harvesters, sprayers, planters, seeders,
18or spreaders. Precision farming equipment includes, but is not
19limited to, soil testing sensors, computers, monitors,
20software, global positioning and mapping systems, and other
21such equipment.
22    Farm machinery and equipment also includes computers,
23sensors, software, and related equipment used primarily in the
24computer-assisted operation of production agriculture
25facilities, equipment, and activities such as, but not limited
26to, the collection, monitoring, and correlation of animal and

 

 

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1crop data for the purpose of formulating animal diets and
2agricultural chemicals. This item (2) is exempt from the
3provisions of Section 2-70.
4    (3) Until July 1, 2003, distillation machinery and
5equipment, sold as a unit or kit, assembled or installed by the
6retailer, certified by the user to be used only for the
7production of ethyl alcohol that will be used for consumption
8as motor fuel or as a component of motor fuel for the personal
9use of the user, and not subject to sale or resale.
10    (4) Until July 1, 2003 and beginning again September 1,
112004 through August 30, 2014, graphic arts machinery and
12equipment, including repair and replacement parts, both new and
13used, and including that manufactured on special order or
14purchased for lease, certified by the purchaser to be used
15primarily for graphic arts production. Equipment includes
16chemicals or chemicals acting as catalysts but only if the
17chemicals or chemicals acting as catalysts effect a direct and
18immediate change upon a graphic arts product. The exemption
19provided by this paragraph (4) also includes production related
20tangible personal property, as defined in Section 2-30,
21purchased on or after July 1, 2014. It is the intent of the
22General Assembly that the exemption under this paragraph (4)
23applies continuously for all periods on and after September 1,
242004. Any actions taken in reliance on the continuation of the
25exemption under this paragraph are hereby validated. The
26exemption under this paragraph (4) is exempt from the

 

 

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1provisions of Section 2-70.
2    (5) A motor vehicle that is used for automobile renting, as
3defined in the Automobile Renting Occupation and Use Tax Act.
4This paragraph is exempt from the provisions of Section 2-70.
5    (6) Personal property sold by a teacher-sponsored student
6organization affiliated with an elementary or secondary school
7located in Illinois.
8    (7) Until July 1, 2003, proceeds of that portion of the
9selling price of a passenger car the sale of which is subject
10to the Replacement Vehicle Tax.
11    (8) Personal property sold to an Illinois county fair
12association for use in conducting, operating, or promoting the
13county fair.
14    (9) Personal property sold to a not-for-profit arts or
15cultural organization that establishes, by proof required by
16the Department by rule, that it has received an exemption under
17Section 501(c)(3) of the Internal Revenue Code and that is
18organized and operated primarily for the presentation or
19support of arts or cultural programming, activities, or
20services. These organizations include, but are not limited to,
21music and dramatic arts organizations such as symphony
22orchestras and theatrical groups, arts and cultural service
23organizations, local arts councils, visual arts organizations,
24and media arts organizations. On and after the effective date
25of this amendatory Act of the 92nd General Assembly, however,
26an entity otherwise eligible for this exemption shall not make

 

 

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1tax-free purchases unless it has an active identification
2number issued by the Department.
3    (10) Personal property sold by a corporation, society,
4association, foundation, institution, or organization, other
5than a limited liability company, that is organized and
6operated as a not-for-profit service enterprise for the benefit
7of persons 65 years of age or older if the personal property
8was not purchased by the enterprise for the purpose of resale
9by the enterprise.
10    (11) Personal property sold to a governmental body, to a
11corporation, society, association, foundation, or institution
12organized and operated exclusively for charitable, religious,
13or educational purposes, or to a not-for-profit corporation,
14society, association, foundation, institution, or organization
15that has no compensated officers or employees and that is
16organized and operated primarily for the recreation of persons
1755 years of age or older. A limited liability company may
18qualify for the exemption under this paragraph only if the
19limited liability company is organized and operated
20exclusively for educational purposes. On and after July 1,
211987, however, no entity otherwise eligible for this exemption
22shall make tax-free purchases unless it has an active
23identification number issued by the Department.
24    (12) Tangible personal property sold to interstate
25carriers for hire for use as rolling stock moving in interstate
26commerce or to lessors under leases of one year or longer

 

 

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1executed or in effect at the time of purchase by interstate
2carriers for hire for use as rolling stock moving in interstate
3commerce and equipment operated by a telecommunications
4provider, licensed as a common carrier by the Federal
5Communications Commission, which is permanently installed in
6or affixed to aircraft moving in interstate commerce.
7    (12-5) On and after July 1, 2003 and through June 30, 2004,
8motor vehicles of the second division with a gross vehicle
9weight in excess of 8,000 pounds that are subject to the
10commercial distribution fee imposed under Section 3-815.1 of
11the Illinois Vehicle Code. Beginning on July 1, 2004 and
12through June 30, 2005, the use in this State of motor vehicles
13of the second division: (i) with a gross vehicle weight rating
14in excess of 8,000 pounds; (ii) that are subject to the
15commercial distribution fee imposed under Section 3-815.1 of
16the Illinois Vehicle Code; and (iii) that are primarily used
17for commercial purposes. Through June 30, 2005, this exemption
18applies to repair and replacement parts added after the initial
19purchase of such a motor vehicle if that motor vehicle is used
20in a manner that would qualify for the rolling stock exemption
21otherwise provided for in this Act. For purposes of this
22paragraph, "used for commercial purposes" means the
23transportation of persons or property in furtherance of any
24commercial or industrial enterprise whether for-hire or not.
25    (13) Proceeds from sales to owners, lessors, or shippers of
26tangible personal property that is utilized by interstate

 

 

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1carriers for hire for use as rolling stock moving in interstate
2commerce and equipment operated by a telecommunications
3provider, licensed as a common carrier by the Federal
4Communications Commission, which is permanently installed in
5or affixed to aircraft moving in interstate commerce.
6    (14) Machinery and equipment that will be used by the
7purchaser, or a lessee of the purchaser, primarily in the
8process of manufacturing or assembling tangible personal
9property for wholesale or retail sale or lease, whether the
10sale or lease is made directly by the manufacturer or by some
11other person, whether the materials used in the process are
12owned by the manufacturer or some other person, or whether the
13sale or lease is made apart from or as an incident to the
14seller's engaging in the service occupation of producing
15machines, tools, dies, jigs, patterns, gauges, or other similar
16items of no commercial value on special order for a particular
17purchaser. The exemption provided by this paragraph (14) also
18includes production related tangible personal property, as
19defined in Section 2-45, purchased on or after July 1, 2014.
20The exemption provided by this paragraph (14) does not include
21machinery and equipment used in (i) the generation of
22electricity for wholesale or retail sale; (ii) the generation
23or treatment of natural or artificial gas for wholesale or
24retail sale that is delivered to customers through pipes,
25pipelines, or mains; or (iii) the treatment of water for
26wholesale or retail sale that is delivered to customers through

 

 

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1pipes, pipelines, or mains. The provisions of Public Act 98-583
2are declaratory of existing law as to the meaning and scope of
3this exemption. The exemption provided by this paragraph (14)
4is exempt from the provisions of Section 2-70.
5    (15) Proceeds of mandatory service charges separately
6stated on customers' bills for purchase and consumption of food
7and beverages, to the extent that the proceeds of the service
8charge are in fact turned over as tips or as a substitute for
9tips to the employees who participate directly in preparing,
10serving, hosting or cleaning up the food or beverage function
11with respect to which the service charge is imposed.
12    (16) Petroleum products sold to a purchaser if the seller
13is prohibited by federal law from charging tax to the
14purchaser.
15    (17) Tangible personal property sold to a common carrier by
16rail or motor that receives the physical possession of the
17property in Illinois and that transports the property, or
18shares with another common carrier in the transportation of the
19property, out of Illinois on a standard uniform bill of lading
20showing the seller of the property as the shipper or consignor
21of the property to a destination outside Illinois, for use
22outside Illinois.
23    (18) Legal tender, currency, medallions, or gold or silver
24coinage issued by the State of Illinois, the government of the
25United States of America, or the government of any foreign
26country, and bullion.

 

 

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1    (19) Until July 1 2003, oil field exploration, drilling,
2and production equipment, including (i) rigs and parts of rigs,
3rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
4tubular goods, including casing and drill strings, (iii) pumps
5and pump-jack units, (iv) storage tanks and flow lines, (v) any
6individual replacement part for oil field exploration,
7drilling, and production equipment, and (vi) machinery and
8equipment purchased for lease; but excluding motor vehicles
9required to be registered under the Illinois Vehicle Code.
10    (20) Photoprocessing machinery and equipment, including
11repair and replacement parts, both new and used, including that
12manufactured on special order, certified by the purchaser to be
13used primarily for photoprocessing, and including
14photoprocessing machinery and equipment purchased for lease.
15    (21) Coal and aggregate exploration, mining, off-highway
16hauling, processing, maintenance, and reclamation equipment,
17including replacement parts and equipment, and including
18equipment purchased for lease, but excluding motor vehicles
19required to be registered under the Illinois Vehicle Code. The
20changes made to this Section by Public Act 97-767 apply on and
21after July 1, 2003, but no claim for credit or refund is
22allowed on or after August 16, 2013 (the effective date of
23Public Act 98-456) for such taxes paid during the period
24beginning July 1, 2003 and ending on August 16, 2013 (the
25effective date of Public Act 98-456).
26    (22) Until June 30, 2013, fuel and petroleum products sold

 

 

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1to or used by an air carrier, certified by the carrier to be
2used for consumption, shipment, or storage in the conduct of
3its business as an air common carrier, for a flight destined
4for or returning from a location or locations outside the
5United States without regard to previous or subsequent domestic
6stopovers.
7    Beginning July 1, 2013, fuel and petroleum products sold to
8or used by an air carrier, certified by the carrier to be used
9for consumption, shipment, or storage in the conduct of its
10business as an air common carrier, for a flight that (i) is
11engaged in foreign trade or is engaged in trade between the
12United States and any of its possessions and (ii) transports at
13least one individual or package for hire from the city of
14origination to the city of final destination on the same
15aircraft, without regard to a change in the flight number of
16that aircraft.
17    (23) A transaction in which the purchase order is received
18by a florist who is located outside Illinois, but who has a
19florist located in Illinois deliver the property to the
20purchaser or the purchaser's donee in Illinois.
21    (24) Fuel consumed or used in the operation of ships,
22barges, or vessels that are used primarily in or for the
23transportation of property or the conveyance of persons for
24hire on rivers bordering on this State if the fuel is delivered
25by the seller to the purchaser's barge, ship, or vessel while
26it is afloat upon that bordering river.

 

 

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1    (25) Except as provided in item (25-5) of this Section, a
2motor vehicle sold in this State to a nonresident even though
3the motor vehicle is delivered to the nonresident in this
4State, if the motor vehicle is not to be titled in this State,
5and if a drive-away permit is issued to the motor vehicle as
6provided in Section 3-603 of the Illinois Vehicle Code or if
7the nonresident purchaser has vehicle registration plates to
8transfer to the motor vehicle upon returning to his or her home
9state. The issuance of the drive-away permit or having the
10out-of-state registration plates to be transferred is prima
11facie evidence that the motor vehicle will not be titled in
12this State.
13    (25-5) The exemption under item (25) does not apply if the
14state in which the motor vehicle will be titled does not allow
15a reciprocal exemption for a motor vehicle sold and delivered
16in that state to an Illinois resident but titled in Illinois.
17The tax collected under this Act on the sale of a motor vehicle
18in this State to a resident of another state that does not
19allow a reciprocal exemption shall be imposed at a rate equal
20to the state's rate of tax on taxable property in the state in
21which the purchaser is a resident, except that the tax shall
22not exceed the tax that would otherwise be imposed under this
23Act. At the time of the sale, the purchaser shall execute a
24statement, signed under penalty of perjury, of his or her
25intent to title the vehicle in the state in which the purchaser
26is a resident within 30 days after the sale and of the fact of

 

 

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1the payment to the State of Illinois of tax in an amount
2equivalent to the state's rate of tax on taxable property in
3his or her state of residence and shall submit the statement to
4the appropriate tax collection agency in his or her state of
5residence. In addition, the retailer must retain a signed copy
6of the statement in his or her records. Nothing in this item
7shall be construed to require the removal of the vehicle from
8this state following the filing of an intent to title the
9vehicle in the purchaser's state of residence if the purchaser
10titles the vehicle in his or her state of residence within 30
11days after the date of sale. The tax collected under this Act
12in accordance with this item (25-5) shall be proportionately
13distributed as if the tax were collected at the 6.25% general
14rate imposed under this Act.
15    (25-7) Beginning on July 1, 2007, no tax is imposed under
16this Act on the sale of an aircraft, as defined in Section 3 of
17the Illinois Aeronautics Act, if all of the following
18conditions are met:
19        (1) the aircraft leaves this State within 15 days after
20    the later of either the issuance of the final billing for
21    the sale of the aircraft, or the authorized approval for
22    return to service, completion of the maintenance record
23    entry, and completion of the test flight and ground test
24    for inspection, as required by 14 C.F.R. 91.407;
25        (2) the aircraft is not based or registered in this
26    State after the sale of the aircraft; and

 

 

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1        (3) the seller retains in his or her books and records
2    and provides to the Department a signed and dated
3    certification from the purchaser, on a form prescribed by
4    the Department, certifying that the requirements of this
5    item (25-7) are met. The certificate must also include the
6    name and address of the purchaser, the address of the
7    location where the aircraft is to be titled or registered,
8    the address of the primary physical location of the
9    aircraft, and other information that the Department may
10    reasonably require.
11    For purposes of this item (25-7):
12    "Based in this State" means hangared, stored, or otherwise
13used, excluding post-sale customizations as defined in this
14Section, for 10 or more days in each 12-month period
15immediately following the date of the sale of the aircraft.
16    "Registered in this State" means an aircraft registered
17with the Department of Transportation, Aeronautics Division,
18or titled or registered with the Federal Aviation
19Administration to an address located in this State.
20    This paragraph (25-7) is exempt from the provisions of
21Section 2-70.
22    (26) Semen used for artificial insemination of livestock
23for direct agricultural production.
24    (27) Horses, or interests in horses, registered with and
25meeting the requirements of any of the Arabian Horse Club
26Registry of America, Appaloosa Horse Club, American Quarter

 

 

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1Horse Association, United States Trotting Association, or
2Jockey Club, as appropriate, used for purposes of breeding or
3racing for prizes. This item (27) is exempt from the provisions
4of Section 2-70, and the exemption provided for under this item
5(27) applies for all periods beginning May 30, 1995, but no
6claim for credit or refund is allowed on or after January 1,
72008 (the effective date of Public Act 95-88) for such taxes
8paid during the period beginning May 30, 2000 and ending on
9January 1, 2008 (the effective date of Public Act 95-88).
10    (28) Computers and communications equipment utilized for
11any hospital purpose and equipment used in the diagnosis,
12analysis, or treatment of hospital patients sold to a lessor
13who leases the equipment, under a lease of one year or longer
14executed or in effect at the time of the purchase, to a
15hospital that has been issued an active tax exemption
16identification number by the Department under Section 1g of
17this Act.
18    (29) Personal property sold to a lessor who leases the
19property, under a lease of one year or longer executed or in
20effect at the time of the purchase, to a governmental body that
21has been issued an active tax exemption identification number
22by the Department under Section 1g of this Act.
23    (30) Beginning with taxable years ending on or after
24December 31, 1995 and ending with taxable years ending on or
25before December 31, 2004, personal property that is donated for
26disaster relief to be used in a State or federally declared

 

 

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1disaster area in Illinois or bordering Illinois by a
2manufacturer or retailer that is registered in this State to a
3corporation, society, association, foundation, or institution
4that has been issued a sales tax exemption identification
5number by the Department that assists victims of the disaster
6who reside within the declared disaster area.
7    (31) Beginning with taxable years ending on or after
8December 31, 1995 and ending with taxable years ending on or
9before December 31, 2004, personal property that is used in the
10performance of infrastructure repairs in this State, including
11but not limited to municipal roads and streets, access roads,
12bridges, sidewalks, waste disposal systems, water and sewer
13line extensions, water distribution and purification
14facilities, storm water drainage and retention facilities, and
15sewage treatment facilities, resulting from a State or
16federally declared disaster in Illinois or bordering Illinois
17when such repairs are initiated on facilities located in the
18declared disaster area within 6 months after the disaster.
19    (32) Beginning July 1, 1999, game or game birds sold at a
20"game breeding and hunting preserve area" as that term is used
21in the Wildlife Code. This paragraph is exempt from the
22provisions of Section 2-70.
23    (33) A motor vehicle, as that term is defined in Section
241-146 of the Illinois Vehicle Code, that is donated to a
25corporation, limited liability company, society, association,
26foundation, or institution that is determined by the Department

 

 

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1to be organized and operated exclusively for educational
2purposes. For purposes of this exemption, "a corporation,
3limited liability company, society, association, foundation,
4or institution organized and operated exclusively for
5educational purposes" means all tax-supported public schools,
6private schools that offer systematic instruction in useful
7branches of learning by methods common to public schools and
8that compare favorably in their scope and intensity with the
9course of study presented in tax-supported schools, and
10vocational or technical schools or institutes organized and
11operated exclusively to provide a course of study of not less
12than 6 weeks duration and designed to prepare individuals to
13follow a trade or to pursue a manual, technical, mechanical,
14industrial, business, or commercial occupation.
15    (34) Beginning January 1, 2000, personal property,
16including food, purchased through fundraising events for the
17benefit of a public or private elementary or secondary school,
18a group of those schools, or one or more school districts if
19the events are sponsored by an entity recognized by the school
20district that consists primarily of volunteers and includes
21parents and teachers of the school children. This paragraph
22does not apply to fundraising events (i) for the benefit of
23private home instruction or (ii) for which the fundraising
24entity purchases the personal property sold at the events from
25another individual or entity that sold the property for the
26purpose of resale by the fundraising entity and that profits

 

 

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1from the sale to the fundraising entity. This paragraph is
2exempt from the provisions of Section 2-70.
3    (35) Beginning January 1, 2000 and through December 31,
42001, new or used automatic vending machines that prepare and
5serve hot food and beverages, including coffee, soup, and other
6items, and replacement parts for these machines. Beginning
7January 1, 2002 and through June 30, 2003, machines and parts
8for machines used in commercial, coin-operated amusement and
9vending business if a use or occupation tax is paid on the
10gross receipts derived from the use of the commercial,
11coin-operated amusement and vending machines. This paragraph
12is exempt from the provisions of Section 2-70.
13    (35-5) Beginning August 23, 2001 and through June 30, 2016,
14food for human consumption that is to be consumed off the
15premises where it is sold (other than alcoholic beverages, soft
16drinks, and food that has been prepared for immediate
17consumption) and prescription and nonprescription medicines,
18drugs, medical appliances, and insulin, urine testing
19materials, syringes, and needles used by diabetics, for human
20use, when purchased for use by a person receiving medical
21assistance under Article V of the Illinois Public Aid Code who
22resides in a licensed long-term care facility, as defined in
23the Nursing Home Care Act, or a licensed facility as defined in
24the ID/DD Community Care Act, the MC/DD Act, or the Specialized
25Mental Health Rehabilitation Act of 2013.
26    (36) Beginning August 2, 2001, computers and

 

 

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1communications equipment utilized for any hospital purpose and
2equipment used in the diagnosis, analysis, or treatment of
3hospital patients sold to a lessor who leases the equipment,
4under a lease of one year or longer executed or in effect at
5the time of the purchase, to a hospital that has been issued an
6active tax exemption identification number by the Department
7under Section 1g of this Act. This paragraph is exempt from the
8provisions of Section 2-70.
9    (37) Beginning August 2, 2001, personal property sold to a
10lessor who leases the property, under a lease of one year or
11longer executed or in effect at the time of the purchase, to a
12governmental body that has been issued an active tax exemption
13identification number by the Department under Section 1g of
14this Act. This paragraph is exempt from the provisions of
15Section 2-70.
16    (38) Beginning on January 1, 2002 and through June 30,
172016, tangible personal property purchased from an Illinois
18retailer by a taxpayer engaged in centralized purchasing
19activities in Illinois who will, upon receipt of the property
20in Illinois, temporarily store the property in Illinois (i) for
21the purpose of subsequently transporting it outside this State
22for use or consumption thereafter solely outside this State or
23(ii) for the purpose of being processed, fabricated, or
24manufactured into, attached to, or incorporated into other
25tangible personal property to be transported outside this State
26and thereafter used or consumed solely outside this State. The

 

 

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1Director of Revenue shall, pursuant to rules adopted in
2accordance with the Illinois Administrative Procedure Act,
3issue a permit to any taxpayer in good standing with the
4Department who is eligible for the exemption under this
5paragraph (38). The permit issued under this paragraph (38)
6shall authorize the holder, to the extent and in the manner
7specified in the rules adopted under this Act, to purchase
8tangible personal property from a retailer exempt from the
9taxes imposed by this Act. Taxpayers shall maintain all
10necessary books and records to substantiate the use and
11consumption of all such tangible personal property outside of
12the State of Illinois.
13    (39) Beginning January 1, 2008, tangible personal property
14used in the construction or maintenance of a community water
15supply, as defined under Section 3.145 of the Environmental
16Protection Act, that is operated by a not-for-profit
17corporation that holds a valid water supply permit issued under
18Title IV of the Environmental Protection Act. This paragraph is
19exempt from the provisions of Section 2-70.
20    (40) Beginning January 1, 2010, materials, parts,
21equipment, components, and furnishings incorporated into or
22upon an aircraft as part of the modification, refurbishment,
23completion, replacement, repair, or maintenance of the
24aircraft. This exemption includes consumable supplies used in
25the modification, refurbishment, completion, replacement,
26repair, and maintenance of aircraft, but excludes any

 

 

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1materials, parts, equipment, components, and consumable
2supplies used in the modification, replacement, repair, and
3maintenance of aircraft engines or power plants, whether such
4engines or power plants are installed or uninstalled upon any
5such aircraft. "Consumable supplies" include, but are not
6limited to, adhesive, tape, sandpaper, general purpose
7lubricants, cleaning solution, latex gloves, and protective
8films. This exemption applies only to the sale of qualifying
9tangible personal property to persons who modify, refurbish,
10complete, replace, or maintain an aircraft and who (i) hold an
11Air Agency Certificate and are empowered to operate an approved
12repair station by the Federal Aviation Administration, (ii)
13have a Class IV Rating, and (iii) conduct operations in
14accordance with Part 145 of the Federal Aviation Regulations.
15The exemption does not include aircraft operated by a
16commercial air carrier providing scheduled passenger air
17service pursuant to authority issued under Part 121 or Part 129
18of the Federal Aviation Regulations. The changes made to this
19paragraph (40) by Public Act 98-534 are declarative of existing
20law.
21    (41) Tangible personal property sold to a
22public-facilities corporation, as described in Section
2311-65-10 of the Illinois Municipal Code, for purposes of
24constructing or furnishing a municipal convention hall, but
25only if the legal title to the municipal convention hall is
26transferred to the municipality without any further

 

 

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1consideration by or on behalf of the municipality at the time
2of the completion of the municipal convention hall or upon the
3retirement or redemption of any bonds or other debt instruments
4issued by the public-facilities corporation in connection with
5the development of the municipal convention hall. This
6exemption includes existing public-facilities corporations as
7provided in Section 11-65-25 of the Illinois Municipal Code.
8This paragraph is exempt from the provisions of Section 2-70.
9    (42) Beginning January 1, 2017, menstrual pads, tampons,
10and menstrual cups.
11(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
1298-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
131-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
147-29-15; 99-855, eff. 8-19-16.)
 
15    (35 ILCS 120/2-30)  (from Ch. 120, par. 441-30)
16    Sec. 2-30. Graphic arts production. For purposes of this
17Act, "graphic arts production" means the production of tangible
18personal property for wholesale or retail sale or lease by
19means of printing, including ink jet printing, by one or more
20of the processes described in Groups 323110 through 323122 of
21Subsector 323, Groups 511110 through 511199 of Subsector 511,
22and Group 512230 of Subsector 512 of the North American
23Industry Classification System published by the U.S. Office of
24Management and Budget, 1997 edition. Graphic arts production
25does not include (i) the transfer of images onto paper or other

 

 

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1tangible personal property by means of photocopying or (ii)
2final printed products in electronic or audio form, including
3the production of software or audio-books. For purposes of this
4Section, persons engaged primarily in the business of printing
5or publishing newspapers or magazines that qualify as newsprint
6and ink, by one or more of the processes described in Groups
7511110 through 511199 of subsector 511 of the North American
8Industry Classification System published by the U.S. Office of
9Management and Budget, 1997 edition, are deemed to be engaged
10in graphic arts production.
11    For the purposes of the exemption provided in paragraph (4)
12of Section 2-5 of this Act, "production related tangible
13personal property" means all tangible personal property that is
14used or consumed by the purchaser in a graphic arts facility in
15which graphic arts production takes place and includes, without
16limitation, tangible personal property that is purchased for
17incorporation into real estate within a graphic arts production
18facility, supplies and consumables used in a graphic arts
19production facility including fuels, coolants, solvents, oils,
20lubricants, and adhesives, hand tools, protective apparel, and
21fire and safety equipment used or consumed within a
22manufacturing facility, and tangible personal property that is
23used or consumed in activities such as research and
24development, preproduction material handling, receiving,
25quality control, inventory control, storage, staging, and
26packaging for shipping and transportation purposes.

 

 

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1"Production related tangible personal property" does not
2include (i) tangible personal property that is used, within or
3without a graphic arts production facility, in sales,
4purchasing, accounting, fiscal management, marketing,
5personnel recruitment or selection, or landscaping or (ii)
6tangible personal property that is required to be titled or
7registered with a department, agency, or unit of federal,
8State, or local government.
9(Source: P.A. 96-116, eff. 7-31-09.)
 
10    (35 ILCS 120/2-45)  (from Ch. 120, par. 441-45)
11    Sec. 2-45. Manufacturing and assembly exemption. The
12manufacturing and assembly machinery and equipment exemption
13includes machinery and equipment that replaces machinery and
14equipment in an existing manufacturing facility as well as
15machinery and equipment that are for use in an expanded or new
16manufacturing facility.
17    The machinery and equipment exemption also includes
18machinery and equipment used in the general maintenance or
19repair of exempt machinery and equipment or for in-house
20manufacture of exempt machinery and equipment. The machinery
21and equipment exemption does not include machinery and
22equipment used in (i) the generation of electricity for
23wholesale or retail sale; (ii) the generation or treatment of
24natural or artificial gas for wholesale or retail sale that is
25delivered to customers through pipes, pipelines, or mains; or

 

 

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1(iii) the treatment of water for wholesale or retail sale that
2is delivered to customers through pipes, pipelines, or mains.
3The provisions of this amendatory Act of the 98th General
4Assembly are declaratory of existing law as to the meaning and
5scope of this exemption. For the purposes of this exemption,
6terms have the following meanings:
7        (1) "Manufacturing process" means the production of an
8    article of tangible personal property, whether the article
9    is a finished product or an article for use in the process
10    of manufacturing or assembling a different article of
11    tangible personal property, by a procedure commonly
12    regarded as manufacturing, processing, fabricating, or
13    refining that changes some existing material or materials
14    into a material with a different form, use, or name. In
15    relation to a recognized integrated business composed of a
16    series of operations that collectively constitute
17    manufacturing, or individually constitute manufacturing
18    operations, the manufacturing process commences with the
19    first operation or stage of production in the series and
20    does not end until the completion of the final product in
21    the last operation or stage of production in the series.
22    For purposes of this exemption, photoprocessing is a
23    manufacturing process of tangible personal property for
24    wholesale or retail sale.
25        (2) "Assembling process" means the production of an
26    article of tangible personal property, whether the article

 

 

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1    is a finished product or an article for use in the process
2    of manufacturing or assembling a different article of
3    tangible personal property, by the combination of existing
4    materials in a manner commonly regarded as assembling that
5    results in a material of a different form, use, or name.
6        (3) "Machinery" means major mechanical machines or
7    major components of those machines contributing to a
8    manufacturing or assembling process.
9        (4) "Equipment" includes an independent device or tool
10    separate from machinery but essential to an integrated
11    manufacturing or assembly process; including computers
12    used primarily in a manufacturer's computer assisted
13    design, computer assisted manufacturing (CAD/CAM) system;
14    any subunit or assembly comprising a component of any
15    machinery or auxiliary, adjunct, or attachment parts of
16    machinery, such as tools, dies, jigs, fixtures, patterns,
17    and molds; and any parts that require periodic replacement
18    in the course of normal operation; but does not include
19    hand tools. Equipment includes chemicals or chemicals
20    acting as catalysts but only if the chemicals or chemicals
21    acting as catalysts effect a direct and immediate change
22    upon a product being manufactured or assembled for
23    wholesale or retail sale or lease.
24        (5) "Production related tangible personal property"
25    means all tangible personal property that is used or
26    consumed by the purchaser in a manufacturing facility in

 

 

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1    which a manufacturing process takes place and includes,
2    without limitation, tangible personal property that is
3    purchased for incorporation into real estate within a
4    manufacturing facility, supplies and consumables used in a
5    manufacturing facility including fuels, coolants,
6    solvents, oils, lubricants, and adhesives, hand tools,
7    protective apparel, and fire and safety equipment used or
8    consumed within a manufacturing facility, and tangible
9    personal property that is used or consumed in activities
10    such as research and development, preproduction material
11    handling, receiving, quality control, inventory control,
12    storage, staging, and packaging for shipping and
13    transportation purposes. "Production related tangible
14    personal property" does not include (i) tangible personal
15    property that is used, within or without a manufacturing
16    facility, in sales, purchasing, accounting, fiscal
17    management, marketing, personnel recruitment or selection,
18    or landscaping or (ii) tangible personal property that is
19    required to be titled or registered with a department,
20    agency, or unit of federal, State, or local government.
21    The manufacturing and assembling machinery and equipment
22exemption includes production related tangible personal
23property that is purchased on or after July 1, 2007 and on or
24before June 30, 2008 and on and after July 1, 2014. The
25exemption for production related tangible personal property
26purchased on or after July 1, 2007 and on or before June 30,

 

 

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12008 is subject to both of the following limitations:
2        (1) The maximum amount of the exemption for any one
3    taxpayer may not exceed 5% of the purchase price of
4    production related tangible personal property that is
5    purchased on or after July 1, 2007 and on or before June
6    30, 2008. A credit under Section 3-85 of this Act may not
7    be earned by the purchase of production related tangible
8    personal property for which an exemption is received under
9    this Section.
10        (2) The maximum aggregate amount of the exemptions for
11    production related tangible personal property purchased on
12    or after July 1, 2007 and on or before June 30, 2008
13    awarded under this Act and the Use Tax Act to all taxpayers
14    may not exceed $10,000,000. If the claims for the exemption
15    exceed $10,000,000, then the Department shall reduce the
16    amount of the exemption to each taxpayer on a pro rata
17    basis.
18The Department shall may adopt rules to implement and
19administer the exemption for production related tangible
20personal property.
21    The manufacturing and assembling machinery and equipment
22exemption includes the sale of materials to a purchaser who
23produces exempted types of machinery, equipment, or tools and
24who rents or leases that machinery, equipment, or tools to a
25manufacturer of tangible personal property. This exemption
26also includes the sale of materials to a purchaser who

 

 

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1manufactures those materials into an exempted type of
2machinery, equipment, or tools that the purchaser uses himself
3or herself in the manufacturing of tangible personal property.
4The purchaser of the machinery and equipment who has an active
5resale registration number shall furnish that number to the
6seller at the time of purchase. A purchaser of the machinery,
7equipment, and tools without an active resale registration
8number shall furnish to the seller a certificate of exemption
9for each transaction stating facts establishing the exemption
10for that transaction, and that certificate shall be available
11to the Department for inspection or audit. Informal rulings,
12opinions, or letters issued by the Department in response to an
13inquiry or request for an opinion from any person regarding the
14coverage and applicability of this exemption to specific
15devices shall be published, maintained as a public record, and
16made available for public inspection and copying. If the
17informal ruling, opinion, or letter contains trade secrets or
18other confidential information, where possible, the Department
19shall delete that information before publication. Whenever
20informal rulings, opinions, or letters contain a policy of
21general applicability, the Department shall formulate and
22adopt that policy as a rule in accordance with the Illinois
23Administrative Procedure Act.
24(Source: P.A. 98-583, eff. 1-1-14.)
 
25    Section 99. Effective date. This Act takes effect upon
26becoming law.