101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2300

 

Introduced , by Rep. Bob Morgan

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-5
35 ILCS 105/3-50  from Ch. 120, par. 439.3-50
35 ILCS 105/3-85
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 110/3-70
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 115/9  from Ch. 120, par. 439.109
35 ILCS 120/2-5
35 ILCS 120/2-45  from Ch. 120, par. 441-45
35 ILCS 120/3  from Ch. 120, par. 442

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the manufacturing and assembling machinery and equipment exemption includes production related tangible personal property. Provides that a Manufacturer's Purchase Credit may not be taken on or after July 1, 2019. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2300LRB101 07228 HLH 52266 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 10. The Use Tax Act is amended by changing Sections
53-5, 3-50, and 3-85 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 July 1, 2001 (the
7effective date of Public Act 92-35), however, an entity
8otherwise eligible for this exemption shall not make tax-free
9purchases unless it has an active identification number issued
10by 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. Beginning on July 1, 2017, graphic arts
12machinery and equipment is included in the manufacturing and
13assembling machinery and equipment exemption under paragraph
14(18).
15    (7) Farm chemicals.
16    (8) Legal tender, currency, medallions, or gold or silver
17coinage issued by the State of Illinois, the government of the
18United States of America, or the government of any foreign
19country, and bullion.
20    (9) Personal property purchased from a teacher-sponsored
21student organization affiliated with an elementary or
22secondary school located in Illinois.
23    (10) A motor vehicle that is used for automobile renting,
24as defined in the Automobile Renting Occupation and Use Tax
25Act.
26    (11) Farm machinery and equipment, both new and used,

 

 

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

 

 

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1    Farm machinery and equipment also includes computers,
2sensors, software, and related equipment used primarily in the
3computer-assisted operation of production agriculture
4facilities, equipment, and activities such as, but not limited
5to, the collection, monitoring, and correlation of animal and
6crop data for the purpose of formulating animal diets and
7agricultural chemicals. This item (11) is exempt from the
8provisions of Section 3-90.
9    (12) Until June 30, 2013, fuel and petroleum products sold
10to or used by an air common carrier, certified by the carrier
11to be used for consumption, shipment, or storage in the conduct
12of its business as an air common carrier, for a flight destined
13for or returning from a location or locations outside the
14United States without regard to previous or subsequent domestic
15stopovers.
16    Beginning July 1, 2013, fuel and petroleum products sold to
17or used by an air carrier, certified by the carrier to be used
18for consumption, shipment, or storage in the conduct of its
19business as an air common carrier, for a flight that (i) is
20engaged in foreign trade or is engaged in trade between the
21United States and any of its possessions and (ii) transports at
22least one individual or package for hire from the city of
23origination to the city of final destination on the same
24aircraft, without regard to a change in the flight number of
25that aircraft.
26    (13) Proceeds of mandatory service charges separately

 

 

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1stated on customers' bills for the purchase and consumption of
2food and beverages purchased at retail from a retailer, to the
3extent that the proceeds of the service charge are in fact
4turned over as tips or as a substitute for tips to the
5employees who participate directly in preparing, serving,
6hosting or cleaning up the food or beverage function with
7respect to which the service charge is imposed.
8    (14) Until July 1, 2003, oil field exploration, drilling,
9and production equipment, including (i) rigs and parts of rigs,
10rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
11tubular goods, including casing and drill strings, (iii) pumps
12and pump-jack units, (iv) storage tanks and flow lines, (v) any
13individual replacement part for oil field exploration,
14drilling, and production equipment, and (vi) machinery and
15equipment purchased for lease; but excluding motor vehicles
16required to be registered under the Illinois Vehicle Code.
17    (15) Photoprocessing machinery and equipment, including
18repair and replacement parts, both new and used, including that
19manufactured on special order, certified by the purchaser to be
20used primarily for photoprocessing, and including
21photoprocessing machinery and equipment purchased for lease.
22    (16) Until July 1, 2023, coal and aggregate exploration,
23mining, off-highway hauling, processing, maintenance, and
24reclamation equipment, including replacement parts and
25equipment, and including equipment purchased for lease, but
26excluding motor vehicles required to be registered under the

 

 

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1Illinois Vehicle Code. The changes made to this Section by
2Public Act 97-767 apply on and after July 1, 2003, but no claim
3for credit or refund is allowed on or after August 16, 2013
4(the effective date of Public Act 98-456) for such taxes paid
5during the period beginning July 1, 2003 and ending on August
616, 2013 (the effective date of Public Act 98-456).
7    (17) Until July 1, 2003, distillation machinery and
8equipment, sold as a unit or kit, assembled or installed by the
9retailer, certified by the user to be used only for the
10production of ethyl alcohol that will be used for consumption
11as motor fuel or as a component of motor fuel for the personal
12use of the user, and not subject to sale or resale.
13    (18) Manufacturing and assembling machinery and equipment
14used primarily in the process of manufacturing or assembling
15tangible personal property for wholesale or retail sale or
16lease, whether that sale or lease is made directly by the
17manufacturer or by some other person, whether the materials
18used in the process are owned by the manufacturer or some other
19person, or whether that sale or lease is made apart from or as
20an incident to the seller's engaging in the service occupation
21of producing machines, tools, dies, jigs, patterns, gauges, or
22other similar items of no commercial value on special order for
23a particular purchaser. The exemption provided by this
24paragraph (18) does not include machinery and equipment used in
25(i) the generation of electricity for wholesale or retail sale;
26(ii) the generation or treatment of natural or artificial gas

 

 

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1for wholesale or retail sale that is delivered to customers
2through pipes, pipelines, or mains; or (iii) the treatment of
3water for wholesale or retail sale that is delivered to
4customers through pipes, pipelines, or mains. The provisions of
5Public Act 98-583 are declaratory of existing law as to the
6meaning and scope of this exemption. Beginning on July 1, 2017,
7the exemption provided by this paragraph (18) includes, but is
8not limited to, graphic arts machinery and equipment, as
9defined in paragraph (6) of this Section. Beginning on July 1,
102019, the exemption provided by this paragraph (18) includes,
11but is not limited to, production related tangible personal
12property, as defined in Section 3-50.
13    (19) Personal property delivered to a purchaser or
14purchaser's donee inside Illinois when the purchase order for
15that personal property was received by a florist located
16outside Illinois who has a florist located inside Illinois
17deliver the personal property.
18    (20) Semen used for artificial insemination of livestock
19for direct agricultural production.
20    (21) Horses, or interests in horses, registered with and
21meeting the requirements of any of the Arabian Horse Club
22Registry of America, Appaloosa Horse Club, American Quarter
23Horse Association, United States Trotting Association, or
24Jockey Club, as appropriate, used for purposes of breeding or
25racing for prizes. This item (21) is exempt from the provisions
26of Section 3-90, and the exemption provided for under this item

 

 

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1(21) applies for all periods beginning May 30, 1995, but no
2claim for credit or refund is allowed on or after January 1,
32008 for such taxes paid during the period beginning May 30,
42000 and ending on January 1, 2008.
5    (22) Computers and communications equipment utilized for
6any hospital purpose and equipment used in the diagnosis,
7analysis, or treatment of hospital patients purchased by a
8lessor who leases the equipment, under a lease of one year or
9longer executed or in effect at the time the lessor would
10otherwise be subject to the tax imposed by this Act, to a
11hospital that has been issued an active tax exemption
12identification number by the Department under Section 1g of the
13Retailers' Occupation Tax Act. If the equipment is leased in a
14manner that does not qualify for this exemption or is used in
15any other non-exempt manner, the lessor shall be liable for the
16tax imposed under this Act or the Service Use Tax Act, as the
17case may be, based on the fair market value of the property at
18the time the non-qualifying use occurs. No lessor shall collect
19or attempt to collect an amount (however designated) that
20purports to reimburse that lessor for the tax imposed by this
21Act or the Service Use Tax Act, as the case may be, if the tax
22has not been paid by the lessor. If a lessor improperly
23collects any such amount from the lessee, the lessee shall have
24a legal right to claim a refund of that amount from the lessor.
25If, however, that amount is not refunded to the lessee for any
26reason, the lessor is liable to pay that amount to the

 

 

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

 

 

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1manufacturer or retailer that is registered in this State to a
2corporation, society, association, foundation, or institution
3that has been issued a sales tax exemption identification
4number by the Department that assists victims of the disaster
5who reside within the declared disaster area.
6    (25) Beginning with taxable years ending on or after
7December 31, 1995 and ending with taxable years ending on or
8before December 31, 2004, personal property that is used in the
9performance of infrastructure repairs in this State, including
10but not limited to municipal roads and streets, access roads,
11bridges, sidewalks, waste disposal systems, water and sewer
12line extensions, water distribution and purification
13facilities, storm water drainage and retention facilities, and
14sewage treatment facilities, resulting from a State or
15federally declared disaster in Illinois or bordering Illinois
16when such repairs are initiated on facilities located in the
17declared disaster area within 6 months after the disaster.
18    (26) Beginning July 1, 1999, game or game birds purchased
19at a "game breeding and hunting preserve area" as that term is
20used in the Wildlife Code. This paragraph is exempt from the
21provisions of Section 3-90.
22    (27) A motor vehicle, as that term is defined in Section
231-146 of the Illinois Vehicle Code, that is donated to a
24corporation, limited liability company, society, association,
25foundation, or institution that is determined by the Department
26to be organized and operated exclusively for educational

 

 

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

 

 

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1exempt from the provisions of Section 3-90.
2    (29) Beginning January 1, 2000 and through December 31,
32001, new or used automatic vending machines that prepare and
4serve hot food and beverages, including coffee, soup, and other
5items, and replacement parts for these machines. Beginning
6January 1, 2002 and through June 30, 2003, machines and parts
7for machines used in commercial, coin-operated amusement and
8vending business if a use or occupation tax is paid on the
9gross receipts derived from the use of the commercial,
10coin-operated amusement and vending machines. This paragraph
11is exempt from the provisions of Section 3-90.
12    (30) Beginning January 1, 2001 and through June 30, 2016,
13food for human consumption that is to be consumed off the
14premises where it is sold (other than alcoholic beverages, soft
15drinks, and food that has been prepared for immediate
16consumption) and prescription and nonprescription medicines,
17drugs, medical appliances, and insulin, urine testing
18materials, syringes, and needles used by diabetics, for human
19use, when purchased for use by a person receiving medical
20assistance under Article V of the Illinois Public Aid Code who
21resides in a licensed long-term care facility, as defined in
22the Nursing Home Care Act, or in a licensed facility as defined
23in the ID/DD Community Care Act, the MC/DD Act, or the
24Specialized Mental Health Rehabilitation Act of 2013.
25    (31) Beginning on August 2, 2001 (the effective date of
26Public Act 92-227), computers and communications equipment

 

 

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1utilized for any hospital purpose and equipment used in the
2diagnosis, analysis, or treatment of hospital patients
3purchased by a lessor who leases the equipment, under a lease
4of one year or longer executed or in effect at the time the
5lessor would otherwise be subject to the tax imposed by this
6Act, to a hospital that has been issued an active tax exemption
7identification number by the Department under Section 1g of the
8Retailers' Occupation Tax Act. If the equipment is leased in a
9manner that does not qualify for this exemption or is used in
10any other nonexempt manner, the lessor shall be liable for the
11tax imposed under this Act or the Service Use Tax Act, as the
12case may be, based on the fair market value of the property at
13the time the nonqualifying use occurs. No lessor shall collect
14or attempt to collect an amount (however designated) that
15purports to reimburse that lessor for the tax imposed by this
16Act or the Service Use Tax Act, as the case may be, if the tax
17has not been paid by the lessor. If a lessor improperly
18collects any such amount from the lessee, the lessee shall have
19a legal right to claim a refund of that amount from the lessor.
20If, however, that amount is not refunded to the lessee for any
21reason, the lessor is liable to pay that amount to the
22Department. This paragraph is exempt from the provisions of
23Section 3-90.
24    (32) Beginning on August 2, 2001 (the effective date of
25Public Act 92-227), personal property purchased by a lessor who
26leases the property, under a lease of one year or longer

 

 

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1executed or in effect at the time the lessor would otherwise be
2subject to the tax imposed by this Act, to a governmental body
3that has been issued an active sales tax exemption
4identification number by the Department under Section 1g of the
5Retailers' Occupation Tax Act. If the property is leased in a
6manner that does not qualify for this exemption or used in any
7other nonexempt manner, the lessor shall be liable for the tax
8imposed under this Act or the Service Use Tax Act, as the case
9may be, based on the fair market value of the property at the
10time the nonqualifying use occurs. No lessor shall collect or
11attempt to collect an amount (however designated) that purports
12to reimburse that lessor for the tax imposed by this Act or the
13Service Use Tax Act, as the case may be, if the tax has not been
14paid by the lessor. If a lessor improperly collects any such
15amount from the lessee, the lessee shall have a legal right to
16claim a refund of that amount from the lessor. If, however,
17that amount is not refunded to the lessee for any reason, the
18lessor is liable to pay that amount to the Department. This
19paragraph is exempt from the provisions of Section 3-90.
20    (33) On and after July 1, 2003 and through June 30, 2004,
21the use in this State of motor vehicles of the second division
22with a gross vehicle weight in excess of 8,000 pounds and that
23are subject to the commercial distribution fee imposed under
24Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
251, 2004 and through June 30, 2005, the use in this State of
26motor vehicles of the second division: (i) with a gross vehicle

 

 

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1weight rating in excess of 8,000 pounds; (ii) that are subject
2to the commercial distribution fee imposed under Section
33-815.1 of the Illinois Vehicle Code; and (iii) that are
4primarily used for commercial purposes. Through June 30, 2005,
5this exemption applies to repair and replacement parts added
6after the initial purchase of such a motor vehicle if that
7motor vehicle is used in a manner that would qualify for the
8rolling stock exemption otherwise provided for in this Act. For
9purposes of this paragraph, the term "used for commercial
10purposes" means the transportation of persons or property in
11furtherance of any commercial or industrial enterprise,
12whether for-hire or not.
13    (34) 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 3-90.
20    (35) 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 use of qualifying
9tangible personal property by persons who modify, refurbish,
10complete, repair, replace, or maintain aircraft and who (i)
11hold an Air Agency Certificate and are empowered to operate an
12approved repair station by the Federal Aviation
13Administration, (ii) have a Class IV Rating, and (iii) conduct
14operations in accordance with Part 145 of the Federal Aviation
15Regulations. The exemption does not include aircraft operated
16by a commercial 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 (35) by Public Act 98-534 are declarative of existing
20law.
21    (36) Tangible personal property purchased by 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 3-90.
9    (37) Beginning January 1, 2017, menstrual pads, tampons,
10and menstrual cups.
11    (38) Merchandise that is subject to the Rental Purchase
12Agreement Occupation and Use Tax. The purchaser must certify
13that the item is purchased to be rented subject to a rental
14purchase agreement, as defined in the Rental Purchase Agreement
15Act, and provide proof of registration under the Rental
16Purchase Agreement Occupation and Use Tax Act. This paragraph
17is exempt from the provisions of Section 3-90.
18    (39) Tangible personal property purchased by a purchaser
19who is exempt from the tax imposed by this Act by operation of
20federal law. This paragraph is exempt from the provisions of
21Section 3-90.
22(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
23100-22, eff. 7-6-17; 100-437, eff. 1-1-18; 100-594, eff.
246-29-18; 100-863, eff. 8-14-18; 100-1171, eff. 1-4-19; revised
251-8-19.)
 

 

 

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1    (35 ILCS 105/3-50)  (from Ch. 120, par. 439.3-50)
2    Sec. 3-50. Manufacturing and assembly exemption. The
3manufacturing and assembling machinery and equipment exemption
4includes machinery and equipment that replaces machinery and
5equipment in an existing manufacturing facility as well as
6machinery and equipment that are for use in an expanded or new
7manufacturing facility. The machinery and equipment exemption
8also includes machinery and equipment used in the general
9maintenance or repair of exempt machinery and equipment or for
10in-house manufacture of exempt machinery and equipment.
11Beginning on July 1, 2017, the manufacturing and assembling
12machinery and equipment exemption also includes graphic arts
13machinery and equipment, as defined in paragraph (6) of Section
143-5. Beginning on July 1, 2019, the manufacturing and
15assembling machinery and equipment exemption also includes
16production related tangible personal property, as defined in
17this Section. The machinery and equipment exemption does not
18include machinery and equipment used in (i) the generation of
19electricity for wholesale or retail sale; (ii) the generation
20or treatment of natural or artificial gas for wholesale or
21retail sale that is delivered to customers through pipes,
22pipelines, or mains; or (iii) the treatment of water for
23wholesale or retail sale that is delivered to customers through
24pipes, pipelines, or mains. The provisions of this amendatory
25Act of the 98th General Assembly are declaratory of existing
26law as to the meaning and scope of this exemption. For the

 

 

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1purposes of this exemption, terms have the following meanings:
2        (1) "Manufacturing 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 a procedure commonly
7    regarded as manufacturing, processing, fabricating, or
8    refining that changes some existing material into a
9    material with a different form, use, or name. In relation
10    to a recognized integrated business composed of a series of
11    operations that collectively constitute manufacturing, or
12    individually constitute manufacturing operations, the
13    manufacturing process commences with the first operation
14    or stage of production in the series and does not end until
15    the completion of the final product in the last operation
16    or stage of production in the series. For purposes of this
17    exemption, photoprocessing is a manufacturing process of
18    tangible personal property for wholesale or retail sale.
19        (2) "Assembling process" means the production of an
20    article of tangible personal property, whether the article
21    is a finished product or an article for use in the process
22    of manufacturing or assembling a different article of
23    tangible personal property, by the combination of existing
24    materials in a manner commonly regarded as assembling that
25    results in an article or material of a different form, use,
26    or name.

 

 

HB2300- 21 -LRB101 07228 HLH 52266 b

1        (3) "Machinery" means major mechanical machines or
2    major components of those machines contributing to a
3    manufacturing or assembling process.
4        (4) "Equipment" includes an independent device or tool
5    separate from machinery but essential to an integrated
6    manufacturing or assembly process; including computers
7    used primarily in a manufacturer's computer assisted
8    design, computer assisted manufacturing (CAD/CAM) system;
9    any subunit or assembly comprising a component of any
10    machinery or auxiliary, adjunct, or attachment parts of
11    machinery, such as tools, dies, jigs, fixtures, patterns,
12    and molds; and any parts that require periodic replacement
13    in the course of normal operation; but does not include
14    hand tools. Equipment includes chemicals or chemicals
15    acting as catalysts but only if the chemicals or chemicals
16    acting as catalysts effect a direct and immediate change
17    upon a product being manufactured or assembled for
18    wholesale or retail sale or lease.
19        (5) "Production related tangible personal property"
20    means all tangible personal property that is used or
21    consumed by the purchaser in a manufacturing facility in
22    which a manufacturing process described in Section 2-45 of
23    the Retailers' Occupation Tax Act takes place, including
24    and includes, without limitation, tangible personal
25    property that is purchased for incorporation into real
26    estate within a manufacturing facility and including, but

 

 

HB2300- 22 -LRB101 07228 HLH 52266 b

1    not limited to, tangible personal property that is used or
2    consumed in activities such as research and development,
3    preproduction material handling, receiving, quality
4    control, inventory control, storage, staging, and
5    packaging for shipping and transportation purposes.
6    Tangible personal property used or consumed by the
7    purchaser for research and development is considered
8    "production related tangible personal property" regardless
9    of use within or without a manufacturing facility.
10    "Production related tangible personal property" does not
11    include (i) tangible personal property that is used, within
12    or without a manufacturing facility, in sales, purchasing,
13    accounting, fiscal management, marketing, personnel
14    recruitment or selection, or landscaping or (ii) tangible
15    personal property that is required to be titled or
16    registered with a department, agency, or unit of federal,
17    State, or local government.
18    The manufacturing and assembling machinery and equipment
19exemption includes production related tangible personal
20property that is purchased on or after July 1, 2007 and on or
21before June 30, 2008. The exemption for production related
22tangible personal property is subject to both of the following
23limitations:
24        (1) The maximum amount of the exemption for any one
25    taxpayer may not exceed 5% of the purchase price of
26    production related tangible personal property that is

 

 

HB2300- 23 -LRB101 07228 HLH 52266 b

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

 

 

HB2300- 24 -LRB101 07228 HLH 52266 b

1The purchaser of the machinery and equipment who has an active
2resale registration number shall furnish that number to the
3seller at the time of purchase. A user of the machinery,
4equipment, or tools without an active resale registration
5number shall prepare a certificate of exemption for each
6transaction stating facts establishing the exemption for that
7transaction, and that certificate shall be available to the
8Department for inspection or audit. The Department shall
9prescribe the form of the certificate. Informal rulings,
10opinions, or letters issued by the Department in response to an
11inquiry or request for an opinion from any person regarding the
12coverage and applicability of this exemption to specific
13devices shall be published, maintained as a public record, and
14made available for public inspection and copying. If the
15informal ruling, opinion, or letter contains trade secrets or
16other confidential information, where possible, the Department
17shall delete that information before publication. Whenever
18informal rulings, opinions, or letters contain a policy of
19general applicability, the Department shall formulate and
20adopt that policy as a rule in accordance with the Illinois
21Administrative Procedure Act.
22    The manufacturing and assembling machinery and equipment
23exemption is exempt from the provisions of Section 3-90.
24(Source: P.A. 100-22, eff. 7-6-17.)
 
25    (35 ILCS 105/3-85)

 

 

HB2300- 25 -LRB101 07228 HLH 52266 b

1    Sec. 3-85. Manufacturer's Purchase Credit. For purchases
2of machinery and equipment made on and after January 1, 1995
3through June 30, 2003, and on and after September 1, 2004
4through August 30, 2014, a purchaser of manufacturing machinery
5and equipment that qualifies for the exemption provided by
6paragraph (18) of Section 3-5 of this Act earns a credit in an
7amount equal to a fixed percentage of the tax which would have
8been incurred under this Act on those purchases. For purchases
9of graphic arts machinery and equipment made on or after July
101, 1996 and through June 30, 2003, and on and after September
111, 2004 through August 30, 2014, a purchaser of graphic arts
12machinery and equipment that qualifies for the exemption
13provided by paragraph (6) of Section 3-5 of this Act earns a
14credit in an amount equal to a fixed percentage of the tax that
15would have been incurred under this Act on those purchases. The
16credit earned for purchases of manufacturing machinery and
17equipment or graphic arts machinery and equipment shall be
18referred to as the Manufacturer's Purchase Credit. A graphic
19arts producer is a person engaged in graphic arts production as
20defined in Section 2-30 of the Retailers' Occupation Tax Act.
21Beginning July 1, 1996, all references in this Section to
22manufacturers or manufacturing shall also be deemed to refer to
23graphic arts producers or graphic arts production.
24    The amount of credit shall be a percentage of the tax that
25would have been incurred on the purchase of manufacturing
26machinery and equipment or graphic arts machinery and equipment

 

 

HB2300- 26 -LRB101 07228 HLH 52266 b

1if the exemptions provided by paragraph (6) or paragraph (18)
2of Section 3-5 of this Act had not been applicable. The
3percentage shall be as follows:
4        (1) 15% for purchases made on or before June 30, 1995.
5        (2) 25% for purchases made after June 30, 1995, and on
6    or before June 30, 1996.
7        (3) 40% for purchases made after June 30, 1996, and on
8    or before June 30, 1997.
9        (4) 50% for purchases made on or after July 1, 1997.
10    (a) Manufacturer's Purchase Credit earned prior to July 1,
112003. This subsection (a) applies to Manufacturer's Purchase
12Credit earned prior to July 1, 2003. A purchaser of production
13related tangible personal property desiring to use the
14Manufacturer's Purchase Credit shall certify to the seller
15prior to October 1, 2003 that the purchaser is satisfying all
16or part of the liability under the Use Tax Act or the Service
17Use Tax Act that is due on the purchase of the production
18related tangible personal property by use of Manufacturer's
19Purchase Credit. The Manufacturer's Purchase Credit
20certification must be dated and shall include the name and
21address of the purchaser, the purchaser's registration number,
22if registered, the credit being applied, and a statement that
23the State Use Tax or Service Use Tax liability is being
24satisfied with the manufacturer's or graphic arts producer's
25accumulated purchase credit. Certification may be incorporated
26into the manufacturer's or graphic arts producer's purchase

 

 

HB2300- 27 -LRB101 07228 HLH 52266 b

1order. Manufacturer's Purchase Credit certification provided
2by the manufacturer or graphic arts producer prior to October
31, 2003 may be used to satisfy the retailer's or serviceman's
4liability under the Retailers' Occupation Tax Act or Service
5Occupation Tax Act for the credit claimed, not to exceed 6.25%
6of the receipts subject to tax from a qualifying purchase, but
7only if the retailer or serviceman reports the Manufacturer's
8Purchase Credit claimed as required by the Department. A
9Manufacturer's Purchase Credit reported on any original or
10amended return filed under this Act after October 20, 2003
11shall be disallowed. The Manufacturer's Purchase Credit earned
12by purchase of exempt manufacturing machinery and equipment or
13graphic arts machinery and equipment is a non-transferable
14credit. A manufacturer or graphic arts producer that enters
15into a contract involving the installation of tangible personal
16property into real estate within a manufacturing or graphic
17arts production facility may, prior to October 1, 2003,
18authorize a construction contractor to utilize credit
19accumulated by the manufacturer or graphic arts producer to
20purchase the tangible personal property. A manufacturer or
21graphic arts producer intending to use accumulated credit to
22purchase such tangible personal property shall execute a
23written contract authorizing the contractor to utilize a
24specified dollar amount of credit. The contractor shall
25furnish, prior to October 1, 2003, the supplier with the
26manufacturer's or graphic arts producer's name, registration

 

 

HB2300- 28 -LRB101 07228 HLH 52266 b

1or resale number, and a statement that a specific amount of the
2Use Tax or Service Use Tax liability, not to exceed 6.25% of
3the selling price, is being satisfied with the credit. The
4manufacturer or graphic arts producer shall remain liable to
5timely report all information required by the annual Report of
6Manufacturer's Purchase Credit Used for all credit utilized by
7a construction contractor.
8    No Manufacturer's Purchase Credit earned prior to July 1,
92003 may be used after October 1, 2003. The Manufacturer's
10Purchase Credit may be used to satisfy liability under the Use
11Tax Act or the Service Use Tax Act due on the purchase of
12production related tangible personal property (including
13purchases by a manufacturer, by a graphic arts producer, or by
14a lessor who rents or leases the use of the property to a
15manufacturer or graphic arts producer) that does not otherwise
16qualify for the manufacturing machinery and equipment
17exemption or the graphic arts machinery and equipment
18exemption. "Production related tangible personal property"
19means (i) all tangible personal property used or consumed by
20the purchaser in a manufacturing facility in which a
21manufacturing process described in Section 2-45 of the
22Retailers' Occupation Tax Act takes place, including tangible
23personal property purchased for incorporation into real estate
24within a manufacturing facility and including, but not limited
25to, tangible personal property used or consumed in activities
26such as preproduction material handling, receiving, quality

 

 

HB2300- 29 -LRB101 07228 HLH 52266 b

1control, inventory control, storage, staging, and packaging
2for shipping and transportation purposes; (ii) all tangible
3personal property used or consumed by the purchaser in a
4graphic arts facility in which graphic arts production as
5described in Section 2-30 of the Retailers' Occupation Tax Act
6takes place, including tangible personal property purchased
7for incorporation into real estate within a graphic arts
8facility and including, but not limited to, all tangible
9personal property used or consumed in activities such as
10graphic arts preliminary or pre-press production,
11pre-production material handling, receiving, quality control,
12inventory control, storage, staging, sorting, labeling,
13mailing, tying, wrapping, and packaging; and (iii) all tangible
14personal property used or consumed by the purchaser for
15research and development. "Production related tangible
16personal property" does not include (i) tangible personal
17property used, within or without a manufacturing facility, in
18sales, purchasing, accounting, fiscal management, marketing,
19personnel recruitment or selection, or landscaping or (ii)
20tangible personal property required to be titled or registered
21with a department, agency, or unit of federal, state, or local
22government. The Manufacturer's Purchase Credit may be used,
23prior to October 1, 2003, to satisfy the tax arising either
24from the purchase of machinery and equipment on or after
25January 1, 1995 for which the exemption provided by paragraph
26(18) of Section 3-5 of this Act was erroneously claimed, or the

 

 

HB2300- 30 -LRB101 07228 HLH 52266 b

1purchase of machinery and equipment on or after July 1, 1996
2for which the exemption provided by paragraph (6) of Section
33-5 of this Act was erroneously claimed, but not in
4satisfaction of penalty, if any, and interest for failure to
5pay the tax when due. A purchaser of production related
6tangible personal property who is required to pay Illinois Use
7Tax or Service Use Tax on the purchase directly to the
8Department may, prior to October 1, 2003, utilize the
9Manufacturer's Purchase Credit in satisfaction of the tax
10arising from that purchase, but not in satisfaction of penalty
11and interest. A purchaser who uses the Manufacturer's Purchase
12Credit to purchase property which is later determined not to be
13production related tangible personal property may be liable for
14tax, penalty, and interest on the purchase of that property as
15of the date of purchase but shall be entitled to use the
16disallowed Manufacturer's Purchase Credit, so long as it has
17not expired and is used prior to October 1, 2003, on qualifying
18purchases of production related tangible personal property not
19previously subject to credit usage. The Manufacturer's
20Purchase Credit earned by a manufacturer or graphic arts
21producer expires the last day of the second calendar year
22following the calendar year in which the credit arose. No
23Manufacturer's Purchase Credit may be used after September 30,
242003 regardless of when that credit was earned.
25    A purchaser earning Manufacturer's Purchase Credit shall
26sign and file an annual Report of Manufacturer's Purchase

 

 

HB2300- 31 -LRB101 07228 HLH 52266 b

1Credit Earned for each calendar year no later than the last day
2of the sixth month following the calendar year in which a
3Manufacturer's Purchase Credit is earned. A Report of
4Manufacturer's Purchase Credit Earned shall be filed on forms
5as prescribed or approved by the Department and shall state,
6for each month of the calendar year: (i) the total purchase
7price of all purchases of exempt manufacturing or graphic arts
8machinery on which the credit was earned; (ii) the total State
9Use Tax or Service Use Tax which would have been due on those
10items; (iii) the percentage used to calculate the amount of
11credit earned; (iv) the amount of credit earned; and (v) such
12other information as the Department may reasonably require. A
13purchaser earning Manufacturer's Purchase Credit shall
14maintain records which identify, as to each purchase of
15manufacturing or graphic arts machinery and equipment on which
16the purchaser earned Manufacturer's Purchase Credit, the
17vendor (including, if applicable, either the vendor's
18registration number or Federal Employer Identification
19Number), the purchase price, and the amount of Manufacturer's
20Purchase Credit earned on each purchase.
21    A purchaser using Manufacturer's Purchase Credit shall
22sign and file an annual Report of Manufacturer's Purchase
23Credit Used for each calendar year no later than the last day
24of the sixth month following the calendar year in which a
25Manufacturer's Purchase Credit is used. A Report of
26Manufacturer's Purchase Credit Used shall be filed on forms as

 

 

HB2300- 32 -LRB101 07228 HLH 52266 b

1prescribed or approved by the Department and shall state, for
2each month of the calendar year: (i) the total purchase price
3of production related tangible personal property purchased
4from Illinois suppliers; (ii) the total purchase price of
5production related tangible personal property purchased from
6out-of-state suppliers; (iii) the total amount of credit used
7during such month; and (iv) such other information as the
8Department may reasonably require. A purchaser using
9Manufacturer's Purchase Credit shall maintain records that
10identify, as to each purchase of production related tangible
11personal property on which the purchaser used Manufacturer's
12Purchase Credit, the vendor (including, if applicable, either
13the vendor's registration number or Federal Employer
14Identification Number), the purchase price, and the amount of
15Manufacturer's Purchase Credit used on each purchase.
16    No annual report shall be filed before May 1, 1996 or after
17June 30, 2004. A purchaser that fails to file an annual Report
18of Manufacturer's Purchase Credit Earned or an annual Report of
19Manufacturer's Purchase Credit Used by the last day of the
20sixth month following the end of the calendar year shall
21forfeit all Manufacturer's Purchase Credit for that calendar
22year unless it establishes that its failure to file was due to
23reasonable cause. Manufacturer's Purchase Credit reports may
24be amended to report and claim credit on qualifying purchases
25not previously reported at any time before the credit would
26have expired, unless both the Department and the purchaser have

 

 

HB2300- 33 -LRB101 07228 HLH 52266 b

1agreed to an extension of the statute of limitations for the
2issuance of a notice of tax liability as provided in Section 4
3of the Retailers' Occupation Tax Act. If the time for
4assessment or refund has been extended, then amended reports
5for a calendar year may be filed at any time prior to the date
6to which the statute of limitations for the calendar year or
7portion thereof has been extended. No Manufacturer's Purchase
8Credit report filed with the Department for periods prior to
9January 1, 1995 shall be approved. Manufacturer's Purchase
10Credit claimed on an amended report may be used, until October
111, 2003, to satisfy tax liability under the Use Tax Act or the
12Service Use Tax Act (i) on qualifying purchases of production
13related tangible personal property made after the date the
14amended report is filed or (ii) assessed by the Department on
15qualifying purchases of production related tangible personal
16property made in the case of manufacturers on or after January
171, 1995, or in the case of graphic arts producers on or after
18July 1, 1996.
19    If the purchaser is not the manufacturer or a graphic arts
20producer, but rents or leases the use of the property to a
21manufacturer or graphic arts producer, the purchaser may earn,
22report, and use Manufacturer's Purchase Credit in the same
23manner as a manufacturer or graphic arts producer.
24    A purchaser shall not be entitled to any Manufacturer's
25Purchase Credit for a purchase that is required to be reported
26and is not timely reported as provided in this Section. A

 

 

HB2300- 34 -LRB101 07228 HLH 52266 b

1purchaser remains liable for (i) any tax that was satisfied by
2use of a Manufacturer's Purchase Credit, as of the date of
3purchase, if that use is not timely reported as required in
4this Section and (ii) for any applicable penalties and interest
5for failing to pay the tax when due. No Manufacturer's Purchase
6Credit may be used after September 30, 2003 to satisfy any tax
7liability imposed under this Act, including any audit
8liability.
9    (b) Manufacturer's Purchase Credit earned on and after
10September 1, 2004 and through June 30, 2019. This subsection
11(b) applies to Manufacturer's Purchase Credit earned on and
12after September 1, 2004 and through June 30, 2019. No
13Manufacturer's Purchase Credit may be used after July 1, 2019
14to satisfy any tax liability incurred on purchases of
15production related tangible personal property made on or before
16July 1, 2019 or to satisfy any audit liability established on
17or after July 1, 2019. Manufacturer's Purchase Credit earned on
18or after September 1, 2004 may only be used to satisfy the Use
19Tax or Service Use Tax liability incurred on production related
20tangible personal property purchased on or after September 1,
212004. A purchaser of production related tangible personal
22property desiring to use the Manufacturer's Purchase Credit
23shall certify to the seller that the purchaser is satisfying
24all or part of the liability under the Use Tax Act or the
25Service Use Tax Act that is due on the purchase of the
26production related tangible personal property by use of

 

 

HB2300- 35 -LRB101 07228 HLH 52266 b

1Manufacturer's Purchase Credit. The Manufacturer's Purchase
2Credit certification must be dated and shall include the name
3and address of the purchaser, the purchaser's registration
4number, if registered, the credit being applied, and a
5statement that the State Use Tax or Service Use Tax liability
6is being satisfied with the manufacturer's or graphic arts
7producer's accumulated purchase credit. Certification may be
8incorporated into the manufacturer's or graphic arts
9producer's purchase order. Manufacturer's Purchase Credit
10certification provided by the manufacturer or graphic arts
11producer may be used to satisfy the retailer's or serviceman's
12liability under the Retailers' Occupation Tax Act or Service
13Occupation Tax Act for the credit claimed, not to exceed 6.25%
14of the receipts subject to tax from a qualifying purchase, but
15only if the retailer or serviceman reports the Manufacturer's
16Purchase Credit claimed as required by the Department. The
17Manufacturer's Purchase Credit earned by purchase of exempt
18manufacturing machinery and equipment or graphic arts
19machinery and equipment is a non-transferable credit. A
20manufacturer or graphic arts producer that enters into a
21contract involving the installation of tangible personal
22property into real estate within a manufacturing or graphic
23arts production facility may, on or after September 1, 2004,
24authorize a construction contractor to utilize credit
25accumulated by the manufacturer or graphic arts producer to
26purchase the tangible personal property. A manufacturer or

 

 

HB2300- 36 -LRB101 07228 HLH 52266 b

1graphic arts producer intending to use accumulated credit to
2purchase such tangible personal property shall execute a
3written contract authorizing the contractor to utilize a
4specified dollar amount of credit. The contractor shall furnish
5the supplier with the manufacturer's or graphic arts producer's
6name, registration or resale number, and a statement that a
7specific amount of the Use Tax or Service Use Tax liability,
8not to exceed 6.25% of the selling price, is being satisfied
9with the credit. The manufacturer or graphic arts producer
10shall remain liable to timely report all information required
11by the annual Report of Manufacturer's Purchase Credit Used for
12all credit utilized by a construction contractor.
13    The Manufacturer's Purchase Credit may be used to satisfy
14liability under the Use Tax Act or the Service Use Tax Act due
15on the purchase, made on or after September 1, 2004, of
16production related tangible personal property (including
17purchases by a manufacturer, by a graphic arts producer, or by
18a lessor who rents or leases the use of the property to a
19manufacturer or graphic arts producer) that does not otherwise
20qualify for the manufacturing machinery and equipment
21exemption or the graphic arts machinery and equipment
22exemption. "Production related tangible personal property"
23means (i) all tangible personal property used or consumed by
24the purchaser in a manufacturing facility in which a
25manufacturing process described in Section 2-45 of the
26Retailers' Occupation Tax Act takes place, including tangible

 

 

HB2300- 37 -LRB101 07228 HLH 52266 b

1personal property purchased for incorporation into real estate
2within a manufacturing facility and including, but not limited
3to, tangible personal property used or consumed in activities
4such as preproduction material handling, receiving, quality
5control, inventory control, storage, staging, and packaging
6for shipping and transportation purposes; (ii) all tangible
7personal property used or consumed by the purchaser in a
8graphic arts facility in which graphic arts production as
9described in Section 2-30 of the Retailers' Occupation Tax Act
10takes place, including tangible personal property purchased
11for incorporation into real estate within a graphic arts
12facility and including, but not limited to, all tangible
13personal property used or consumed in activities such as
14graphic arts preliminary or pre-press production,
15pre-production material handling, receiving, quality control,
16inventory control, storage, staging, sorting, labeling,
17mailing, tying, wrapping, and packaging; and (iii) all tangible
18personal property used or consumed by the purchaser for
19research and development. "Production related tangible
20personal property" does not include (i) tangible personal
21property used, within or without a manufacturing facility, in
22sales, purchasing, accounting, fiscal management, marketing,
23personnel recruitment or selection, or landscaping or (ii)
24tangible personal property required to be titled or registered
25with a department, agency, or unit of federal, state, or local
26government. The Manufacturer's Purchase Credit may be used to

 

 

HB2300- 38 -LRB101 07228 HLH 52266 b

1satisfy the tax arising either from the purchase of machinery
2and equipment on or after September 1, 2004 for which the
3exemption provided by paragraph (18) of Section 3-5 of this Act
4was erroneously claimed, or the purchase of machinery and
5equipment on or after September 1, 2004 for which the exemption
6provided by paragraph (6) of Section 3-5 of this Act was
7erroneously claimed, but not in satisfaction of penalty, if
8any, and interest for failure to pay the tax when due. A
9purchaser of production related tangible personal property
10that is purchased on or after September 1, 2004 who is required
11to pay Illinois Use Tax or Service Use Tax on the purchase
12directly to the Department may utilize the Manufacturer's
13Purchase Credit in satisfaction of the tax arising from that
14purchase, but not in satisfaction of penalty and interest. A
15purchaser who uses the Manufacturer's Purchase Credit to
16purchase property on and after September 1, 2004 which is later
17determined not to be production related tangible personal
18property may be liable for tax, penalty, and interest on the
19purchase of that property as of the date of purchase but shall
20be entitled to use the disallowed Manufacturer's Purchase
21Credit, so long as it has not expired and is used on qualifying
22purchases of production related tangible personal property not
23previously subject to credit usage. The Manufacturer's
24Purchase Credit earned by a manufacturer or graphic arts
25producer expires the last day of the second calendar year
26following the calendar year in which the credit arose. A

 

 

HB2300- 39 -LRB101 07228 HLH 52266 b

1purchaser earning Manufacturer's Purchase Credit shall sign
2and file an annual Report of Manufacturer's Purchase Credit
3Earned for each calendar year no later than the last day of the
4sixth month following the calendar year in which a
5Manufacturer's Purchase Credit is earned. A Report of
6Manufacturer's Purchase Credit Earned shall be filed on forms
7as prescribed or approved by the Department and shall state,
8for each month of the calendar year: (i) the total purchase
9price of all purchases of exempt manufacturing or graphic arts
10machinery on which the credit was earned; (ii) the total State
11Use Tax or Service Use Tax which would have been due on those
12items; (iii) the percentage used to calculate the amount of
13credit earned; (iv) the amount of credit earned; and (v) such
14other information as the Department may reasonably require. A
15purchaser earning Manufacturer's Purchase Credit shall
16maintain records which identify, as to each purchase of
17manufacturing or graphic arts machinery and equipment on which
18the purchaser earned Manufacturer's Purchase Credit, the
19vendor (including, if applicable, either the vendor's
20registration number or Federal Employer Identification
21Number), the purchase price, and the amount of Manufacturer's
22Purchase Credit earned on each purchase. A purchaser using
23Manufacturer's Purchase Credit shall sign and file an annual
24Report of Manufacturer's Purchase Credit Used for each calendar
25year no later than the last day of the sixth month following
26the calendar year in which a Manufacturer's Purchase Credit is

 

 

HB2300- 40 -LRB101 07228 HLH 52266 b

1used. A Report of Manufacturer's Purchase Credit Used shall be
2filed on forms as prescribed or approved by the Department and
3shall state, for each month of the calendar year: (i) the total
4purchase price of production related tangible personal
5property purchased from Illinois suppliers; (ii) the total
6purchase price of production related tangible personal
7property purchased from out-of-state suppliers; (iii) the
8total amount of credit used during such month; and (iv) such
9other information as the Department may reasonably require. A
10purchaser using Manufacturer's Purchase Credit shall maintain
11records that identify, as to each purchase of production
12related tangible personal property on which the purchaser used
13Manufacturer's Purchase Credit, the vendor (including, if
14applicable, either the vendor's registration number or Federal
15Employer Identification Number), the purchase price, and the
16amount of Manufacturer's Purchase Credit used on each purchase.
17    A purchaser that fails to file an annual Report of
18Manufacturer's Purchase Credit Earned or an annual Report of
19Manufacturer's Purchase Credit Used by the last day of the
20sixth month following the end of the calendar year shall
21forfeit all Manufacturer's Purchase Credit for that calendar
22year unless it establishes that its failure to file was due to
23reasonable cause. Manufacturer's Purchase Credit reports may
24be amended to report and claim credit on qualifying purchases
25not previously reported at any time before the credit would
26have expired, unless both the Department and the purchaser have

 

 

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1agreed to an extension of the statute of limitations for the
2issuance of a notice of tax liability as provided in Section 4
3of the Retailers' Occupation Tax Act. If the time for
4assessment or refund has been extended, then amended reports
5for a calendar year may be filed at any time prior to the date
6to which the statute of limitations for the calendar year or
7portion thereof has been extended. Manufacturer's Purchase
8Credit claimed on an amended report may be used to satisfy tax
9liability under the Use Tax Act or the Service Use Tax Act (i)
10on qualifying purchases of production related tangible
11personal property made after the date the amended report is
12filed or (ii) assessed by the Department on qualifying
13production related tangible personal property purchased on or
14after September 1, 2004. If the purchaser is not the
15manufacturer or a graphic arts producer, but rents or leases
16the use of the property to a manufacturer or graphic arts
17producer, the purchaser may earn, report, and use
18Manufacturer's Purchase Credit in the same manner as a
19manufacturer or graphic arts producer. A purchaser shall not be
20entitled to any Manufacturer's Purchase Credit for a purchase
21that is required to be reported and is not timely reported as
22provided in this Section. A purchaser remains liable for (i)
23any tax that was satisfied by use of a Manufacturer's Purchase
24Credit, as of the date of purchase, if that use is not timely
25reported as required in this Section and (ii) for any
26applicable penalties and interest for failing to pay the tax

 

 

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1when due.
2(Source: P.A. 96-116, eff. 7-31-09.)
 
3    Section 15. The Service Use Tax Act is amended by changing
4Sections 2 and 3-70 as follows:
 
5    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
6    Sec. 2. Definitions. In this Act:
7    "Use" means the exercise by any person of any right or
8power over tangible personal property incident to the ownership
9of that property, but does not include the sale or use for
10demonstration by him of that property in any form as tangible
11personal property in the regular course of business. "Use" does
12not mean the interim use of tangible personal property nor the
13physical incorporation of tangible personal property, as an
14ingredient or constituent, into other tangible personal
15property, (a) which is sold in the regular course of business
16or (b) which the person incorporating such ingredient or
17constituent therein has undertaken at the time of such purchase
18to cause to be transported in interstate commerce to
19destinations outside the State of Illinois.
20    "Purchased from a serviceman" means the acquisition of the
21ownership of, or title to, tangible personal property through a
22sale of service.
23    "Purchaser" means any person who, through a sale of
24service, acquires the ownership of, or title to, any tangible

 

 

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

 

 

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

 

 

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1    as an incident to the rendering of service for owners,
2    lessors, or shippers of tangible personal property which is
3    utilized by interstate carriers for hire for use as rolling
4    stock moving in interstate commerce so long as so used by
5    interstate carriers for hire, and equipment operated by a
6    telecommunications provider, licensed as a common carrier
7    by the Federal Communications Commission, which is
8    permanently installed in or affixed to aircraft moving in
9    interstate commerce.
10        (4a-5) on and after July 1, 2003 and through June 30,
11    2004, a sale or transfer of a motor vehicle of the second
12    division with a gross vehicle weight in excess of 8,000
13    pounds as an incident to the rendering of service if that
14    motor vehicle is subject to the commercial distribution fee
15    imposed under Section 3-815.1 of the Illinois Vehicle Code.
16    Beginning on July 1, 2004 and through June 30, 2005, the
17    use in this State of motor vehicles of the second division:
18    (i) with a gross vehicle weight rating in excess of 8,000
19    pounds; (ii) that are subject to the commercial
20    distribution fee imposed under Section 3-815.1 of the
21    Illinois Vehicle Code; and (iii) that are primarily used
22    for commercial purposes. Through June 30, 2005, this
23    exemption applies to repair and replacement parts added
24    after the initial purchase of such a motor vehicle if that
25    motor vehicle is used in a manner that would qualify for
26    the rolling stock exemption otherwise provided for in this

 

 

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1    Act. For purposes of this paragraph, "used for commercial
2    purposes" means the transportation of persons or property
3    in furtherance of any commercial or industrial enterprise
4    whether for-hire or not.
5        (5) a sale or transfer of machinery and equipment used
6    primarily in the process of the manufacturing or
7    assembling, either in an existing, an expanded or a new
8    manufacturing facility, of tangible personal property for
9    wholesale or retail sale or lease, whether such sale or
10    lease is made directly by the manufacturer or by some other
11    person, whether the materials used in the process are owned
12    by the manufacturer or some other person, or whether such
13    sale or lease is made apart from or as an incident to the
14    seller's engaging in a service occupation and the
15    applicable tax is a Service Use Tax or Service Occupation
16    Tax, rather than Use Tax or Retailers' Occupation Tax. The
17    exemption provided by this paragraph (5) does not include
18    machinery and equipment used in (i) the generation of
19    electricity for wholesale or retail sale; (ii) the
20    generation or treatment of natural or artificial gas for
21    wholesale or retail sale that is delivered to customers
22    through pipes, pipelines, or mains; or (iii) the treatment
23    of water for wholesale or retail sale that is delivered to
24    customers through pipes, pipelines, or mains. The
25    provisions of Public Act 98-583 are declaratory of existing
26    law as to the meaning and scope of this exemption. The

 

 

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1    exemption under this paragraph (5) is exempt from the
2    provisions of Section 3-75.
3        (5a) the repairing, reconditioning or remodeling, for
4    a common carrier by rail, of tangible personal property
5    which belongs to such carrier for hire, and as to which
6    such carrier receives the physical possession of the
7    repaired, reconditioned or remodeled item of tangible
8    personal property in Illinois, and which such carrier
9    transports, or shares with another common carrier in the
10    transportation of such property, out of Illinois on a
11    standard uniform bill of lading showing the person who
12    repaired, reconditioned or remodeled the property to a
13    destination outside Illinois, for use outside Illinois.
14        (5b) a sale or transfer of tangible personal property
15    which is produced by the seller thereof on special order in
16    such a way as to have made the applicable tax the Service
17    Occupation Tax or the Service Use Tax, rather than the
18    Retailers' Occupation Tax or the Use Tax, for an interstate
19    carrier by rail which receives the physical possession of
20    such property in Illinois, and which transports such
21    property, or shares with another common carrier in the
22    transportation of such property, out of Illinois on a
23    standard uniform bill of lading showing the seller of the
24    property as the shipper or consignor of such property to a
25    destination outside Illinois, for use outside Illinois.
26        (6) until July 1, 2003, a sale or transfer of

 

 

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1    distillation machinery and equipment, sold as a unit or kit
2    and assembled or installed by the retailer, which machinery
3    and equipment is certified by the user to be used only for
4    the production of ethyl alcohol that will be used for
5    consumption as motor fuel or as a component of motor fuel
6    for the personal use of such user and not subject to sale
7    or resale.
8        (7) at the election of any serviceman not required to
9    be otherwise registered as a retailer under Section 2a of
10    the Retailers' Occupation Tax Act, made for each fiscal
11    year sales of service in which the aggregate annual cost
12    price of tangible personal property transferred as an
13    incident to the sales of service is less than 35%, or 75%
14    in the case of servicemen transferring prescription drugs
15    or servicemen engaged in graphic arts production, of the
16    aggregate annual total gross receipts from all sales of
17    service. The purchase of such tangible personal property by
18    the serviceman shall be subject to tax under the Retailers'
19    Occupation Tax Act and the Use Tax Act. However, if a
20    primary serviceman who has made the election described in
21    this paragraph subcontracts service work to a secondary
22    serviceman who has also made the election described in this
23    paragraph, the primary serviceman does not incur a Use Tax
24    liability if the secondary serviceman (i) has paid or will
25    pay Use Tax on his or her cost price of any tangible
26    personal property transferred to the primary serviceman

 

 

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1    and (ii) certifies that fact in writing to the primary
2    serviceman.
3    Tangible personal property transferred incident to the
4completion of a maintenance agreement is exempt from the tax
5imposed pursuant to this Act.
6    Exemption (5) also includes machinery and equipment used in
7the general maintenance or repair of such exempt machinery and
8equipment or for in-house manufacture of exempt machinery and
9equipment. On and after July 1, 2017, exemption (5) also
10includes graphic arts machinery and equipment, as defined in
11paragraph (5) of Section 3-5. On and after July 1, 2019,
12exemption (5) also includes production related tangible
13personal property, as defined in this Section. The machinery
14and equipment exemption does not include machinery and
15equipment used in (i) the generation of electricity for
16wholesale or retail sale; (ii) the generation or treatment of
17natural or artificial gas for wholesale or retail sale that is
18delivered to customers through pipes, pipelines, or mains; or
19(iii) the treatment of water for wholesale or retail sale that
20is delivered to customers through pipes, pipelines, or mains.
21The provisions of Public Act 98-583 are declaratory of existing
22law as to the meaning and scope of this exemption. For the
23purposes of exemption (5), each of these terms shall have the
24following meanings: (1) "manufacturing process" shall mean the
25production of any article of tangible personal property,
26whether such article is a finished product or an article for

 

 

HB2300- 50 -LRB101 07228 HLH 52266 b

1use in the process of manufacturing or assembling a different
2article of tangible personal property, by procedures commonly
3regarded as manufacturing, processing, fabricating, or
4refining which changes some existing material or materials into
5a material with a different form, use or name. In relation to a
6recognized integrated business composed of a series of
7operations which collectively constitute manufacturing, or
8individually constitute manufacturing operations, the
9manufacturing process shall be deemed to commence with the
10first operation or stage of production in the series, and shall
11not be deemed to end until the completion of the final product
12in the last operation or stage of production in the series; and
13further, for purposes of exemption (5), photoprocessing is
14deemed to be a manufacturing process of tangible personal
15property for wholesale or retail sale; (2) "assembling process"
16shall mean the production of any article of tangible personal
17property, whether such article is a finished product or an
18article for use in the process of manufacturing or assembling a
19different article of tangible personal property, by the
20combination of existing materials in a manner commonly regarded
21as assembling which results in a material of a different form,
22use or name; (3) "machinery" shall mean major mechanical
23machines or major components of such machines contributing to a
24manufacturing or assembling process; and (4) "equipment" shall
25include any independent device or tool separate from any
26machinery but essential to an integrated manufacturing or

 

 

HB2300- 51 -LRB101 07228 HLH 52266 b

1assembly process; including computers used primarily in a
2manufacturer's computer assisted design, computer assisted
3manufacturing (CAD/CAM) system; or any subunit or assembly
4comprising a component of any machinery or auxiliary, adjunct
5or attachment parts of machinery, such as tools, dies, jigs,
6fixtures, patterns and molds; or any parts which require
7periodic replacement in the course of normal operation; but
8shall not include hand tools; "equipment" . 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 product being manufactured or assembled
12for wholesale or retail sale or lease; and (5) "production
13related tangible personal property" means all tangible
14personal property that is used or consumed by the purchaser in
15a manufacturing facility in which a manufacturing process
16described in Section 2-45 of the Retailers' Occupation Tax Act
17takes place, including tangible personal property that is
18purchased for incorporation into real estate within a
19manufacturing facility, and including, but not limited to,
20tangible personal property that is used or consumed in
21activities such as preproduction material handling, receiving,
22quality control, inventory control, storage, staging,
23packaging for shipping and transportation purposes, and all
24tangible personal property used or consumed by the purchaser
25for research and development; "production related tangible
26personal property" does not include (i) tangible personal

 

 

HB2300- 52 -LRB101 07228 HLH 52266 b

1property that is used, within or without a manufacturing
2facility, in sales, purchasing, accounting, fiscal management,
3marketing, personnel recruitment or selection, or landscaping,
4or (ii) tangible personal property that is required to be
5titled or registered with a department, agency, or unit of
6federal, State, or local government. The purchaser of such
7machinery and equipment who has an active resale registration
8number shall furnish such number to the seller at the time of
9purchase. The user of such machinery and equipment and tools
10without an active resale registration number shall prepare a
11certificate of exemption for each transaction stating facts
12establishing the exemption for that transaction, which
13certificate shall be available to the Department for inspection
14or audit. The Department shall prescribe the form of the
15certificate.
16    Any informal rulings, opinions or letters issued by the
17Department in response to an inquiry or request for any opinion
18from any person regarding the coverage and applicability of
19exemption (5) to specific devices shall be published,
20maintained as a public record, and made available for public
21inspection and copying. If the informal ruling, opinion or
22letter contains trade secrets or other confidential
23information, where possible the Department shall delete such
24information prior to publication. Whenever such informal
25rulings, opinions, or letters contain any policy of general
26applicability, the Department shall formulate and adopt such

 

 

HB2300- 53 -LRB101 07228 HLH 52266 b

1policy as a rule in accordance with the provisions of the
2Illinois Administrative Procedure Act.
3    On and after July 1, 1987, no entity otherwise eligible
4under exemption (3) of this Section shall make tax-free
5purchases unless it has an active exemption identification
6number issued by the Department.
7    The purchase, employment and transfer of such tangible
8personal property as newsprint and ink for the primary purpose
9of conveying news (with or without other information) is not a
10purchase, use or sale of service or of tangible personal
11property within the meaning of this Act.
12    "Serviceman" means any person who is engaged in the
13occupation of making sales of service.
14    "Sale at retail" means "sale at retail" as defined in the
15Retailers' Occupation Tax Act.
16    "Supplier" means any person who makes sales of tangible
17personal property to servicemen for the purpose of resale as an
18incident to a sale of service.
19    "Serviceman maintaining a place of business in this State",
20or any like term, means and includes any serviceman:
21        (1) having or maintaining within this State, directly
22    or by a subsidiary, an office, distribution house, sales
23    house, warehouse or other place of business, or any agent
24    or other representative operating within this State under
25    the authority of the serviceman or its subsidiary,
26    irrespective of whether such place of business or agent or

 

 

HB2300- 54 -LRB101 07228 HLH 52266 b

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

 

 

HB2300- 55 -LRB101 07228 HLH 52266 b

1    referrals or other activities pursued within this State by
2    such persons were not sufficient to meet the nexus
3    standards of the United States Constitution during the
4    preceding 4 quarterly periods;
5        (1.2) beginning July 1, 2011, having a contract with a
6    person located in this State under which:
7            (A) the serviceman sells the same or substantially
8        similar line of services as the person located in this
9        State and does so using an identical or substantially
10        similar name, trade name, or trademark as the person
11        located in this State; and
12            (B) the serviceman provides a commission or other
13        consideration to the person located in this State based
14        upon the sale of services by the serviceman.
15    The provisions of this paragraph (1.2) shall apply only if
16    the cumulative gross receipts from sales of service by the
17    serviceman to customers in this State under all such
18    contracts exceed $10,000 during the preceding 4 quarterly
19    periods ending on the last day of March, June, September,
20    and December;
21        (2) soliciting orders for tangible personal property
22    by means of a telecommunication or television shopping
23    system (which utilizes toll free numbers) which is intended
24    by the retailer to be broadcast by cable television or
25    other means of broadcasting, to consumers located in this
26    State;

 

 

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1        (3) pursuant to a contract with a broadcaster or
2    publisher located in this State, soliciting orders for
3    tangible personal property by means of advertising which is
4    disseminated primarily to consumers located in this State
5    and only secondarily to bordering jurisdictions;
6        (4) soliciting orders for tangible personal property
7    by mail if the solicitations are substantial and recurring
8    and if the retailer benefits from any banking, financing,
9    debt collection, telecommunication, or marketing
10    activities occurring in this State or benefits from the
11    location in this State of authorized installation,
12    servicing, or repair facilities;
13        (5) being owned or controlled by the same interests
14    which own or control any retailer engaging in business in
15    the same or similar line of business in this State;
16        (6) having a franchisee or licensee operating under its
17    trade name if the franchisee or licensee is required to
18    collect the tax under this Section;
19        (7) pursuant to a contract with a cable television
20    operator located in this State, soliciting orders for
21    tangible personal property by means of advertising which is
22    transmitted or distributed over a cable television system
23    in this State;
24        (8) engaging in activities in Illinois, which
25    activities in the state in which the supply business
26    engaging in such activities is located would constitute

 

 

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1    maintaining a place of business in that state; or
2        (9) beginning October 1, 2018, making sales of service
3    to purchasers in Illinois from outside of Illinois if:
4            (A) the cumulative gross receipts from sales of
5        service to purchasers in Illinois are $100,000 or more;
6        or
7            (B) the serviceman enters into 200 or more separate
8        transactions for sales of service to purchasers in
9        Illinois.
10        The serviceman shall determine on a quarterly basis,
11    ending on the last day of March, June, September, and
12    December, whether he or she meets the criteria of either
13    subparagraph (A) or (B) of this paragraph (9) for the
14    preceding 12-month period. If the serviceman meets the
15    criteria of either subparagraph (A) or (B) for a 12-month
16    period, he or she is considered a serviceman maintaining a
17    place of business in this State and is required to collect
18    and remit the tax imposed under this Act and file returns
19    for one year. At the end of that one-year period, the
20    serviceman shall determine whether the serviceman met the
21    criteria of either subparagraph (A) or (B) during the
22    preceding 12-month period. If the serviceman met the
23    criteria in either subparagraph (A) or (B) for the
24    preceding 12-month period, he or she is considered a
25    serviceman maintaining a place of business in this State
26    and is required to collect and remit the tax imposed under

 

 

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1    this Act and file returns for the subsequent year. If at
2    the end of a one-year period a serviceman that was required
3    to collect and remit the tax imposed under this Act
4    determines that he or she did not meet the criteria in
5    either subparagraph (A) or (B) during the preceding
6    12-month period, the serviceman subsequently shall
7    determine on a quarterly basis, ending on the last day of
8    March, June, September, and December, whether he or she
9    meets the criteria of either subparagraph (A) or (B) for
10    the preceding 12-month period.
11(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
12100-587, eff. 6-4-18; 100-863, eff. 8-14-18.)
 
13    (35 ILCS 110/3-70)
14    Sec. 3-70. Manufacturer's Purchase Credit. For purchases
15of machinery and equipment made on and after January 1, 1995
16and through June 30, 2003, and on and after September 1, 2004
17through August 30, 2014, a purchaser of manufacturing machinery
18and equipment that qualifies for the exemption provided by
19Section 2 of this Act earns a credit in an amount equal to a
20fixed percentage of the tax which would have been incurred
21under this Act on those purchases. For purchases of graphic
22arts machinery and equipment made on or after July 1, 1996
23through June 30, 2003, and on and after September 1, 2004
24through August 30, 2014, a purchase of graphic arts machinery
25and equipment that qualifies for the exemption provided by

 

 

HB2300- 59 -LRB101 07228 HLH 52266 b

1paragraph (5) of Section 3-5 of this Act earns a credit in an
2amount equal to a fixed percentage of the tax that would have
3been incurred under this Act on those purchases. The credit
4earned for the purchase of manufacturing machinery and
5equipment and graphic arts machinery and equipment shall be
6referred to as the Manufacturer's Purchase Credit. A graphic
7arts producer is a person engaged in graphic arts production as
8defined in Section 3-30 of the Service Occupation Tax Act.
9Beginning July 1, 1996, all references in this Section to
10manufacturers or manufacturing shall also refer to graphic arts
11producers or graphic arts production.
12    The amount of credit shall be a percentage of the tax that
13would have been incurred on the purchase of the manufacturing
14machinery and equipment or graphic arts machinery and equipment
15if the exemptions provided by Section 2 or paragraph (5) of
16Section 3-5 of this Act had not been applicable.
17    All purchases prior to October 1, 2003 and on and after
18September 1, 2004 and through July 30, 2019 of manufacturing
19machinery and equipment and graphic arts machinery and
20equipment that qualify for the exemptions provided by paragraph
21(5) of Section 2 or paragraph (5) of Section 3-5 of this Act
22qualify for the credit without regard to whether the serviceman
23elected, or could have elected, under paragraph (7) of Section
242 of this Act to exclude the transaction from this Act. If the
25serviceman's billing to the service customer separately states
26a selling price for the exempt manufacturing machinery or

 

 

HB2300- 60 -LRB101 07228 HLH 52266 b

1equipment or the exempt graphic arts machinery and equipment,
2the credit shall be calculated, as otherwise provided herein,
3based on that selling price. If the serviceman's billing does
4not separately state a selling price for the exempt
5manufacturing machinery and equipment or the exempt graphic
6arts machinery and equipment, the credit shall be calculated,
7as otherwise provided herein, based on 50% of the entire
8billing. If the serviceman contracts to design, develop, and
9produce special order manufacturing machinery and equipment or
10special order graphic arts machinery and equipment, and the
11billing does not separately state a selling price for such
12special order machinery and equipment, the credit shall be
13calculated, as otherwise provided herein, based on 50% of the
14entire billing. The provisions of this paragraph are effective
15for purchases made on or after January 1, 1995.
16    The percentage shall be as follows:
17        (1) 15% for purchases made on or before June 30, 1995.
18        (2) 25% for purchases made after June 30, 1995, and on
19    or before June 30, 1996.
20        (3) 40% for purchases made after June 30, 1996, and on
21    or before June 30, 1997.
22        (4) 50% for purchases made on or after July 1, 1997.
23    (a) Manufacturer's Purchase Credit earned prior to July 1,
242003. This subsection (a) applies to Manufacturer's Purchase
25Credit earned prior to July 1, 2003. A purchaser of production
26related tangible personal property desiring to use the

 

 

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1Manufacturer's Purchase Credit shall certify to the seller
2prior to October 1, 2003 that the purchaser is satisfying all
3or part of the liability under the Use Tax Act or the Service
4Use Tax Act that is due on the purchase of the production
5related tangible personal property by use of a Manufacturer's
6Purchase Credit. The Manufacturer's Purchase Credit
7certification must be dated and shall include the name and
8address of the purchaser, the purchaser's registration number,
9if registered, the credit being applied, and a statement that
10the State Use Tax or Service Use Tax liability is being
11satisfied with the manufacturer's or graphic arts producer's
12accumulated purchase credit. Certification may be incorporated
13into the manufacturer's or graphic arts producer's purchase
14order. Manufacturer's Purchase Credit certification provided
15by the manufacturer or graphic arts producer prior to October
161, 2003 may be used to satisfy the retailer's or serviceman's
17liability under the Retailers' Occupation Tax Act or Service
18Occupation Tax Act for the credit claimed, not to exceed 6.25%
19of the receipts subject to tax from a qualifying purchase, but
20only if the retailer or serviceman reports the Manufacturer's
21Purchase Credit claimed as required by the Department. A
22Manufacturer's Purchase Credit reported on any original or
23amended return filed under this Act after October 20, 2003
24shall be disallowed. The Manufacturer's Purchase Credit earned
25by purchase of exempt manufacturing machinery and equipment or
26graphic arts machinery and equipment is a non-transferable

 

 

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1credit. A manufacturer or graphic arts producer that enters
2into a contract involving the installation of tangible personal
3property into real estate within a manufacturing or graphic
4arts production facility, prior to October 1, 2003, may
5authorize a construction contractor to utilize credit
6accumulated by the manufacturer or graphic arts producer to
7purchase the tangible personal property. A manufacturer or
8graphic arts producer intending to use accumulated credit to
9purchase such tangible personal property shall execute a
10written contract authorizing the contractor to utilize a
11specified dollar amount of credit. The contractor shall
12furnish, prior to October 1, 2003, the supplier with the
13manufacturer's or graphic arts producer's name, registration
14or resale number, and a statement that a specific amount of the
15Use Tax or Service Use Tax liability, not to exceed 6.25% of
16the selling price, is being satisfied with the credit. The
17manufacturer or graphic arts producer shall remain liable to
18timely report all information required by the annual Report of
19Manufacturer's Purchase Credit Used for credit utilized by a
20construction contractor.
21    No Manufacturer's Purchase Credit earned prior to July 1,
222003 may be used after October 1, 2003. The Manufacturer's
23Purchase Credit may be used to satisfy liability under the Use
24Tax Act or the Service Use Tax Act due on the purchase of
25production related tangible personal property (including
26purchases by a manufacturer, by a graphic arts producer, or a

 

 

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1lessor who rents or leases the use of the property to a
2manufacturer or graphic arts producer) that does not otherwise
3qualify for the manufacturing machinery and equipment
4exemption or the graphic arts machinery and equipment
5exemption. "Production related tangible personal property"
6means (i) all tangible personal property used or consumed by
7the purchaser in a manufacturing facility in which a
8manufacturing process described in Section 2-45 of the
9Retailers' Occupation Tax Act takes place, including tangible
10personal property purchased for incorporation into real estate
11within a manufacturing facility and including, but not limited
12to, tangible personal property used or consumed in activities
13such as pre-production material handling, receiving, quality
14control, inventory control, storage, staging, and packaging
15for shipping and transportation purposes; (ii) all tangible
16personal property used or consumed by the purchaser in a
17graphic arts facility in which graphic arts production as
18described in Section 2-30 of the Retailers' Occupation Tax Act
19takes place, including tangible personal property purchased
20for incorporation into real estate within a graphic arts
21facility and including, but not limited to, all tangible
22personal property used or consumed in activities such as
23graphic arts preliminary or pre-press production,
24pre-production material handling, receiving, quality control,
25inventory control, storage, staging, sorting, labeling,
26mailing, tying, wrapping, and packaging; and (iii) all tangible

 

 

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1personal property used or consumed by the purchaser for
2research and development. "Production related tangible
3personal property" does not include (i) tangible personal
4property used, within or without a manufacturing or graphic
5arts facility, in sales, purchasing, accounting, fiscal
6management, marketing, personnel recruitment or selection, or
7landscaping or (ii) tangible personal property required to be
8titled or registered with a department, agency, or unit of
9federal, state, or local government. The Manufacturer's
10Purchase Credit may be used, prior to October 1, 2003, to
11satisfy the tax arising either from the purchase of machinery
12and equipment on or after January 1, 1995 for which the
13manufacturing machinery and equipment exemption provided by
14Section 2 of this Act was erroneously claimed, or the purchase
15of machinery and equipment on or after July 1, 1996 for which
16the exemption provided by paragraph (5) of Section 3-5 of this
17Act was erroneously claimed, but not in satisfaction of
18penalty, if any, and interest for failure to pay the tax when
19due. A purchaser of production related tangible personal
20property who is required to pay Illinois Use Tax or Service Use
21Tax on the purchase directly to the Department may, prior to
22October 1, 2003, utilize the Manufacturer's Purchase Credit in
23satisfaction of the tax arising from that purchase, but not in
24satisfaction of penalty and interest. A purchaser who uses the
25Manufacturer's Purchase Credit to purchase property which is
26later determined not to be production related tangible personal

 

 

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1property may be liable for tax, penalty, and interest on the
2purchase of that property as of the date of purchase but shall
3be entitled to use the disallowed Manufacturer's Purchase
4Credit, so long as it has not expired and is used prior to
5October 1, 2003, on qualifying purchases of production related
6tangible personal property not previously subject to credit
7usage. The Manufacturer's Purchase Credit earned by a
8manufacturer or graphic arts producer expires the last day of
9the second calendar year following the calendar year in which
10the credit arose. No Manufacturer's Purchase Credit may be used
11after September 30, 2003 regardless of when that credit was
12earned.
13    A purchaser earning Manufacturer's Purchase Credit shall
14sign and file an annual Report of Manufacturer's Purchase
15Credit Earned for each calendar year no later than the last day
16of the sixth month following the calendar year in which a
17Manufacturer's Purchase Credit is earned. A Report of
18Manufacturer's Purchase Credit Earned shall be filed on forms
19as prescribed or approved by the Department and shall state,
20for each month of the calendar year: (i) the total purchase
21price of all purchases of exempt manufacturing or graphic arts
22machinery on which the credit was earned; (ii) the total State
23Use Tax or Service Use Tax which would have been due on those
24items; (iii) the percentage used to calculate the amount of
25credit earned; (iv) the amount of credit earned; and (v) such
26other information as the Department may reasonably require. A

 

 

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1purchaser earning Manufacturer's Purchase Credit shall
2maintain records which identify, as to each purchase of
3manufacturing or graphic arts machinery and equipment on which
4the purchaser earned Manufacturer's Purchase Credit, the
5vendor (including, if applicable, either the vendor's
6registration number or Federal Employer Identification
7Number), the purchase price, and the amount of Manufacturer's
8Purchase Credit earned on each purchase.
9    A purchaser using Manufacturer's Purchase Credit shall
10sign and file an annual Report of Manufacturer's Purchase
11Credit Used for each calendar year no later than the last day
12of the sixth month following the calendar year in which a
13Manufacturer's Purchase Credit is used. A Report of
14Manufacturer's Purchase Credit Used shall be filed on forms as
15prescribed or approved by the Department and shall state, for
16each month of the calendar year: (i) the total purchase price
17of production related tangible personal property purchased
18from Illinois suppliers; (ii) the total purchase price of
19production related tangible personal property purchased from
20out-of-state suppliers; (iii) the total amount of credit used
21during such month; and (iv) such other information as the
22Department may reasonably require. A purchaser using
23Manufacturer's Purchase Credit shall maintain records that
24identify, as to each purchase of production related tangible
25personal property on which the purchaser used Manufacturer's
26Purchase Credit, the vendor (including, if applicable, either

 

 

HB2300- 67 -LRB101 07228 HLH 52266 b

1the vendor's registration number or Federal Employer
2Identification Number), the purchase price, and the amount of
3Manufacturer's Purchase Credit used on each purchase.
4    No annual report shall be filed before May 1, 1996 or after
5June 30, 2004. A purchaser that fails to file an annual Report
6of Manufacturer's Purchase Credit Earned or an annual Report of
7Manufacturer's Purchase Credit Used by the last day of the
8sixth month following the end of the calendar year shall
9forfeit all Manufacturer's Purchase Credit for that calendar
10year unless it establishes that its failure to file was due to
11reasonable cause. Manufacturer's Purchase Credit reports may
12be amended to report and claim credit on qualifying purchases
13not previously reported at any time before the credit would
14have expired, unless both the Department and the purchaser have
15agreed to an extension of the statute of limitations for the
16issuance of a notice of tax liability as provided in Section 4
17of the Retailers' Occupation Tax Act. If the time for
18assessment or refund has been extended, then amended reports
19for a calendar year may be filed at any time prior to the date
20to which the statute of limitations for the calendar year or
21portion thereof has been extended. No Manufacturer's Purchase
22Credit report filed with the Department for periods prior to
23January 1, 1995 shall be approved. Manufacturer's Purchase
24Credit claimed on an amended report may be used, prior to
25October 1, 2003, to satisfy tax liability under the Use Tax Act
26or the Service Use Tax Act (i) on qualifying purchases of

 

 

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1production related tangible personal property made after the
2date the amended report is filed or (ii) assessed by the
3Department on qualifying purchases of production related
4tangible personal property made in the case of manufacturers on
5or after January 1, 1995, or in the case of graphic arts
6producers on or after July 1, 1996.
7    If the purchaser is not the manufacturer or a graphic arts
8producer, but rents or leases the use of the property to a
9manufacturer or a graphic arts producer, the purchaser may
10earn, report, and use Manufacturer's Purchase Credit in the
11same manner as a manufacturer or graphic arts producer.
12    A purchaser shall not be entitled to any Manufacturer's
13Purchase Credit for a purchase that is required to be reported
14and is not timely reported as provided in this Section. A
15purchaser remains liable for (i) any tax that was satisfied by
16use of a Manufacturer's Purchase Credit, as of the date of
17purchase, if that use is not timely reported as required in
18this Section and (ii) for any applicable penalties and interest
19for failing to pay the tax when due. No Manufacturer's Purchase
20Credit may be used after September 30, 2003 to satisfy any tax
21liability imposed under this Act, including any audit
22liability.
23    (b) Manufacturer's Purchase Credit earned on and after
24September 1, 2004 and through July 30, 2019. This subsection
25(b) applies to Manufacturer's Purchase Credit earned on or
26after September 1, 2004 and through July 30, 2019.

 

 

HB2300- 69 -LRB101 07228 HLH 52266 b

1Manufacturer's Purchase Credit earned on or after September 1,
22004 and through July 30, 2019 may only be used to satisfy the
3Use Tax or Service Use Tax liability incurred on production
4related tangible personal property purchased on or after
5September 1, 2004 and through July 30, 2019. A purchaser of
6production related tangible personal property desiring to use
7the Manufacturer's Purchase Credit shall certify to the seller
8that the purchaser is satisfying all or part of the liability
9under the Use Tax Act or the Service Use Tax Act that is due on
10the purchase of the production related tangible personal
11property by use of a Manufacturer's Purchase Credit. The
12Manufacturer's Purchase Credit certification must be dated and
13shall include the name and address of the purchaser, the
14purchaser's registration number, if registered, the credit
15being applied, and a statement that the State Use Tax or
16Service Use Tax liability is being satisfied with the
17manufacturer's or graphic arts producer's accumulated purchase
18credit. Certification may be incorporated into the
19manufacturer's or graphic arts producer's purchase order.
20Manufacturer's Purchase Credit certification provided by the
21manufacturer or graphic arts producer may be used to satisfy
22the retailer's or serviceman's liability under the Retailers'
23Occupation Tax Act or Service Occupation Tax Act for the credit
24claimed, not to exceed 6.25% of the receipts subject to tax
25from a qualifying purchase, but only if the retailer or
26serviceman reports the Manufacturer's Purchase Credit claimed

 

 

HB2300- 70 -LRB101 07228 HLH 52266 b

1as required by the Department. The Manufacturer's Purchase
2Credit earned by purchase of exempt manufacturing machinery and
3equipment or graphic arts machinery and equipment is a
4non-transferable credit. A manufacturer or graphic arts
5producer that enters into a contract involving the installation
6of tangible personal property into real estate within a
7manufacturing or graphic arts production facility may, on or
8after September 1, 2004, authorize a construction contractor to
9utilize credit accumulated by the manufacturer or graphic arts
10producer to purchase the tangible personal property. A
11manufacturer or graphic arts producer intending to use
12accumulated credit to purchase such tangible personal property
13shall execute a written contract authorizing the contractor to
14utilize a specified dollar amount of credit. The contractor
15shall furnish the supplier with the manufacturer's or graphic
16arts producer's name, registration or resale number, and a
17statement that a specific amount of the Use Tax or Service Use
18Tax liability, not to exceed 6.25% of the selling price, is
19being satisfied with the credit. The manufacturer or graphic
20arts producer shall remain liable to timely report all
21information required by the annual Report of Manufacturer's
22Purchase Credit Used for credit utilized by a construction
23contractor.
24    The Manufacturer's Purchase Credit may be used to satisfy
25liability under the Use Tax Act or the Service Use Tax Act due
26on the purchase, made on or after September 1, 2004, of

 

 

HB2300- 71 -LRB101 07228 HLH 52266 b

1production related tangible personal property (including
2purchases by a manufacturer, by a graphic arts producer, or a
3lessor who rents or leases the use of the property to a
4manufacturer or graphic arts producer) that does not otherwise
5qualify for the manufacturing machinery and equipment
6exemption or the graphic arts machinery and equipment
7exemption. "Production related tangible personal property"
8means (i) all tangible personal property used or consumed by
9the purchaser in a manufacturing facility in which a
10manufacturing process described in Section 2-45 of the
11Retailers' Occupation Tax Act takes place, including tangible
12personal property purchased for incorporation into real estate
13within a manufacturing facility and including, but not limited
14to, tangible personal property used or consumed in activities
15such as pre-production material handling, receiving, quality
16control, inventory control, storage, staging, and packaging
17for shipping and transportation purposes; (ii) all tangible
18personal property used or consumed by the purchaser in a
19graphic arts facility in which graphic arts production as
20described in Section 2-30 of the Retailers' Occupation Tax Act
21takes place, including tangible personal property purchased
22for incorporation into real estate within a graphic arts
23facility and including, but not limited to, all tangible
24personal property used or consumed in activities such as
25graphic arts preliminary or pre-press production,
26pre-production material handling, receiving, quality control,

 

 

HB2300- 72 -LRB101 07228 HLH 52266 b

1inventory control, storage, staging, sorting, labeling,
2mailing, tying, wrapping, and packaging; and (iii) all tangible
3personal property used or consumed by the purchaser for
4research and development. "Production related tangible
5personal property" does not include (i) tangible personal
6property used, within or without a manufacturing or graphic
7arts facility, in sales, purchasing, accounting, fiscal
8management, marketing, personnel recruitment or selection, or
9landscaping or (ii) tangible personal property required to be
10titled or registered with a department, agency, or unit of
11federal, state, or local government. The Manufacturer's
12Purchase Credit may be used to satisfy the tax arising either
13from the purchase of machinery and equipment on or after
14September 1, 2004 for which the manufacturing machinery and
15equipment exemption provided by Section 2 of this Act was
16erroneously claimed, or the purchase of machinery and equipment
17on or after September 1, 2004 for which the exemption provided
18by paragraph (5) of Section 3-5 of this Act was erroneously
19claimed, but not in satisfaction of penalty, if any, and
20interest for failure to pay the tax when due. A purchaser of
21production related tangible personal property that is
22purchased on or after September 1, 2004 who is required to pay
23Illinois Use Tax or Service Use Tax on the purchase directly to
24the Department may utilize the Manufacturer's Purchase Credit
25in satisfaction of the tax arising from that purchase, but not
26in satisfaction of penalty and interest. A purchaser who uses

 

 

HB2300- 73 -LRB101 07228 HLH 52266 b

1the Manufacturer's Purchase Credit to purchase property on and
2after September 1, 2004 which is later determined not to be
3production related tangible personal property may be liable for
4tax, penalty, and interest on the purchase of that property as
5of the date of purchase but shall be entitled to use the
6disallowed Manufacturer's Purchase Credit, so long as it has
7not expired, on qualifying purchases of production related
8tangible personal property not previously subject to credit
9usage. The Manufacturer's Purchase Credit earned by a
10manufacturer or graphic arts producer expires the last day of
11the second calendar year following the calendar year in which
12the credit arose.
13    A purchaser earning Manufacturer's Purchase Credit shall
14sign and file an annual Report of Manufacturer's Purchase
15Credit Earned for each calendar year no later than the last day
16of the sixth month following the calendar year in which a
17Manufacturer's Purchase Credit is earned. A Report of
18Manufacturer's Purchase Credit Earned shall be filed on forms
19as prescribed or approved by the Department and shall state,
20for each month of the calendar year: (i) the total purchase
21price of all purchases of exempt manufacturing or graphic arts
22machinery on which the credit was earned; (ii) the total State
23Use Tax or Service Use Tax which would have been due on those
24items; (iii) the percentage used to calculate the amount of
25credit earned; (iv) the amount of credit earned; and (v) such
26other information as the Department may reasonably require. A

 

 

HB2300- 74 -LRB101 07228 HLH 52266 b

1purchaser earning Manufacturer's Purchase Credit shall
2maintain records which identify, as to each purchase of
3manufacturing or graphic arts machinery and equipment on which
4the purchaser earned Manufacturer's Purchase Credit, the
5vendor (including, if applicable, either the vendor's
6registration number or Federal Employer Identification
7Number), the purchase price, and the amount of Manufacturer's
8Purchase Credit earned on each purchase.
9    A purchaser using Manufacturer's Purchase Credit shall
10sign and file an annual Report of Manufacturer's Purchase
11Credit Used for each calendar year no later than the last day
12of the sixth month following the calendar year in which a
13Manufacturer's Purchase Credit is used. A Report of
14Manufacturer's Purchase Credit Used shall be filed on forms as
15prescribed or approved by the Department and shall state, for
16each month of the calendar year: (i) the total purchase price
17of production related tangible personal property purchased
18from Illinois suppliers; (ii) the total purchase price of
19production related tangible personal property purchased from
20out-of-state suppliers; (iii) the total amount of credit used
21during such month; and (iv) such other information as the
22Department may reasonably require. A purchaser using
23Manufacturer's Purchase Credit shall maintain records that
24identify, as to each purchase of production related tangible
25personal property on which the purchaser used Manufacturer's
26Purchase Credit, the vendor (including, if applicable, either

 

 

HB2300- 75 -LRB101 07228 HLH 52266 b

1the vendor's registration number or Federal Employer
2Identification Number), the purchase price, and the amount of
3Manufacturer's Purchase Credit used on each purchase.
4    A purchaser that fails to file an annual Report of
5Manufacturer's Purchase Credit Earned or an annual Report of
6Manufacturer's Purchase Credit Used by the last day of the
7sixth month following the end of the calendar year shall
8forfeit all Manufacturer's Purchase Credit for that calendar
9year unless it establishes that its failure to file was due to
10reasonable cause. Manufacturer's Purchase Credit reports may
11be amended to report and claim credit on qualifying purchases
12not previously reported at any time before the credit would
13have expired, unless both the Department and the purchaser have
14agreed to an extension of the statute of limitations for the
15issuance of a notice of tax liability as provided in Section 4
16of the Retailers' Occupation Tax Act. If the time for
17assessment or refund has been extended, then amended reports
18for a calendar year may be filed at any time prior to the date
19to which the statute of limitations for the calendar year or
20portion thereof has been extended. Manufacturer's Purchase
21Credit claimed on an amended report may be used to satisfy tax
22liability under the Use Tax Act or the Service Use Tax Act (i)
23on qualifying purchases of production related tangible
24personal property made after the date the amended report is
25filed or (ii) assessed by the Department on qualifying
26production related tangible personal property purchased on or

 

 

HB2300- 76 -LRB101 07228 HLH 52266 b

1after September 1, 2004.
2    If the purchaser is not the manufacturer or a graphic arts
3producer, but rents or leases the use of the property to a
4manufacturer or a graphic arts producer, the purchaser may
5earn, report, and use Manufacturer's Purchase Credit in the
6same manner as a manufacturer or graphic arts producer. A
7purchaser shall not be entitled to any Manufacturer's Purchase
8Credit for a purchase that is required to be reported and is
9not timely reported as provided in this Section. A purchaser
10remains liable for (i) any tax that was satisfied by use of a
11Manufacturer's Purchase Credit, as of the date of purchase, if
12that use is not timely reported as required in this Section and
13(ii) for any applicable penalties and interest for failing to
14pay the tax when due.
15(Source: P.A. 96-116, eff. 7-31-09.)
 
16    Section 20. The Service Occupation Tax Act is amended by
17changing Sections 2 and 9 as follows:
 
18    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
19    Sec. 2. In this Act:
20    "Transfer" means any transfer of the title to property or
21of the ownership of property whether or not the transferor
22retains title as security for the payment of amounts due him
23from the transferee.
24    "Cost Price" means the consideration paid by the serviceman

 

 

HB2300- 77 -LRB101 07228 HLH 52266 b

1for a purchase valued in money, whether paid in money or
2otherwise, including cash, credits and services, and shall be
3determined without any deduction on account of the supplier's
4cost of the property sold or on account of any other expense
5incurred by the supplier. When a serviceman contracts out part
6or all of the services required in his sale of service, it
7shall be presumed that the cost price to the serviceman of the
8property transferred to him by his or her subcontractor is
9equal to 50% of the subcontractor's charges to the serviceman
10in the absence of proof of the consideration paid by the
11subcontractor for the purchase of such property.
12    "Department" means the Department of Revenue.
13    "Person" means any natural individual, firm, partnership,
14association, joint stock company, joint venture, public or
15private corporation, limited liability company, and any
16receiver, executor, trustee, guardian or other representative
17appointed by order of any court.
18    "Sale of Service" means any transaction except:
19    (a) A retail sale of tangible personal property taxable
20under the Retailers' Occupation Tax Act or under the Use Tax
21Act.
22    (b) A sale of tangible personal property for the purpose of
23resale made in compliance with Section 2c of the Retailers'
24Occupation Tax Act.
25    (c) Except as hereinafter provided, a sale or transfer of
26tangible personal property as an incident to the rendering of

 

 

HB2300- 78 -LRB101 07228 HLH 52266 b

1service for or by any governmental body or for or by any
2corporation, society, association, foundation or institution
3organized and operated exclusively for charitable, religious
4or educational purposes or any not-for-profit corporation,
5society, association, foundation, institution or organization
6which has no compensated officers or employees and which is
7organized and operated primarily for the recreation of persons
855 years of age or older. A limited liability company may
9qualify for the exemption under this paragraph only if the
10limited liability company is organized and operated
11exclusively for educational purposes.
12    (d) (Blank).
13    (d-1) A sale or transfer of tangible personal property as
14an incident to the rendering of service for owners, lessors or
15shippers of tangible personal property which is utilized by
16interstate carriers for hire for use as rolling stock moving in
17interstate commerce, and equipment operated by a
18telecommunications provider, licensed as a common carrier by
19the Federal Communications Commission, which is permanently
20installed in or affixed to aircraft moving in interstate
21commerce.
22    (d-1.1) On and after July 1, 2003 and through June 30,
232004, a sale or transfer of a motor vehicle of the second
24division with a gross vehicle weight in excess of 8,000 pounds
25as an incident to the rendering of service if that motor
26vehicle is subject to the commercial distribution fee imposed

 

 

HB2300- 79 -LRB101 07228 HLH 52266 b

1under Section 3-815.1 of the Illinois Vehicle Code. Beginning
2on July 1, 2004 and through June 30, 2005, the use in this
3State of motor vehicles of the second division: (i) with a
4gross vehicle weight rating in excess of 8,000 pounds; (ii)
5that are subject to the commercial distribution fee imposed
6under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
7that are primarily used for commercial purposes. Through June
830, 2005, this exemption applies to repair and replacement
9parts added after the initial purchase of such a motor vehicle
10if that motor vehicle is used in a manner that would qualify
11for the rolling stock exemption otherwise provided for in this
12Act. For purposes of this paragraph, "used for commercial
13purposes" means the transportation of persons or property in
14furtherance of any commercial or industrial enterprise whether
15for-hire or not.
16    (d-2) The repairing, reconditioning or remodeling, for a
17common carrier by rail, of tangible personal property which
18belongs to such carrier for hire, and as to which such carrier
19receives the physical possession of the repaired,
20reconditioned or remodeled item of tangible personal property
21in Illinois, and which such carrier transports, or shares with
22another common carrier in the transportation of such property,
23out of Illinois on a standard uniform bill of lading showing
24the person who repaired, reconditioned or remodeled the
25property as the shipper or consignor of such property to a
26destination outside Illinois, for use outside Illinois.

 

 

HB2300- 80 -LRB101 07228 HLH 52266 b

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

 

 

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1person, or whether such sale or lease is made apart from or as
2an incident to the seller's engaging in a service occupation
3and the applicable tax is a Service Occupation Tax or Service
4Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
5exemption provided by this paragraph (e) does not include
6machinery and equipment used in (i) the generation of
7electricity for wholesale or retail sale; (ii) the generation
8or treatment of natural or artificial gas for wholesale or
9retail sale that is delivered to customers through pipes,
10pipelines, 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 subsection (e) is
15exempt from the provisions of Section 3-75.
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. On and after July 1, 2017, exemption (e) also
23includes graphic arts machinery and equipment, as defined in
24paragraph (5) of Section 3-5. On and after July 1, 2019,
25exemption (e) also includes production related tangible
26personal property, as defined in this Section. The machinery

 

 

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1and equipment exemption does not include machinery and
2equipment used in (i) the generation of electricity for
3wholesale or retail sale; (ii) the generation or treatment of
4natural or artificial gas for wholesale or retail sale that is
5delivered to customers through pipes, pipelines, or mains; or
6(iii) the treatment of water for wholesale or retail sale that
7is delivered to customers through pipes, pipelines, or mains.
8The provisions of Public Act 98-583 are declaratory of existing
9law as to the meaning and scope of this exemption. For the
10purposes of exemption (e), each of these terms shall have the
11following meanings: (1) "manufacturing process" shall mean the
12production of any article of tangible personal property,
13whether such article is a finished product or an article for
14use in the process of manufacturing or assembling a different
15article of tangible personal property, by procedures commonly
16regarded as manufacturing, processing, fabricating, or
17refining which changes some existing material or materials into
18a material with a different form, use or name. In relation to a
19recognized integrated business composed of a series of
20operations which collectively constitute manufacturing, or
21individually constitute manufacturing operations, the
22manufacturing process shall be deemed to commence with the
23first operation or stage of production in the series, and shall
24not be deemed to end until the completion of the final product
25in the last operation or stage of production in the series; and
26further for purposes of exemption (e), photoprocessing is

 

 

HB2300- 84 -LRB101 07228 HLH 52266 b

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

 

 

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1personal property that is used or consumed by the purchaser in
2a manufacturing facility in which a manufacturing process
3described in Section 2-45 of the Retailers' Occupation Tax Act
4takes place, including tangible personal property that is
5purchased for incorporation into real estate within a
6manufacturing facility, and including, but not limited to,
7tangible personal property that is used or consumed in
8activities such as preproduction material handling, receiving,
9quality control, inventory control, storage, staging,
10packaging for shipping and transportation purposes, and all
11tangible personal property used or consumed by the purchaser
12for research and development; "production related tangible
13personal property" does not include (i) tangible personal
14property that is used, within or without a manufacturing
15facility, in sales, purchasing, accounting, fiscal management,
16marketing, personnel recruitment or selection, or landscaping,
17or (ii) tangible personal property that is required to be
18titled or registered with a department, agency, or unit of
19federal, State, or local government. The purchaser of such
20machinery and equipment who has an active resale registration
21number shall furnish such number to the seller at the time of
22purchase. The purchaser of such machinery and equipment and
23tools without an active resale registration number shall
24furnish to the seller a certificate of exemption for each
25transaction stating facts establishing the exemption for that
26transaction, which certificate shall be available to the

 

 

HB2300- 86 -LRB101 07228 HLH 52266 b

1Department for inspection or audit.
2    Except as provided in Section 2d of this Act, the rolling
3stock exemption applies to rolling stock used by an interstate
4carrier for hire, even just between points in Illinois, if such
5rolling stock transports, for hire, persons whose journeys or
6property whose shipments originate or terminate outside
7Illinois.
8    Any informal rulings, opinions or letters issued by the
9Department in response to an inquiry or request for any opinion
10from any person regarding the coverage and applicability of
11exemption (e) to specific devices shall be published,
12maintained as a public record, and made available for public
13inspection and copying. If the informal ruling, opinion or
14letter contains trade secrets or other confidential
15information, where possible the Department shall delete such
16information prior to publication. Whenever such informal
17rulings, opinions, or letters contain any policy of general
18applicability, the Department shall formulate and adopt such
19policy as a rule in accordance with the provisions of the
20Illinois Administrative Procedure Act.
21    On and after July 1, 1987, no entity otherwise eligible
22under exemption (c) of this Section shall make tax-free
23purchases unless it has an active exemption identification
24number issued by the Department.
25    "Serviceman" means any person who is engaged in the
26occupation of making sales of service.

 

 

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1    "Sale at Retail" means "sale at retail" as defined in the
2Retailers' Occupation Tax Act.
3    "Supplier" means any person who makes sales of tangible
4personal property to servicemen for the purpose of resale as an
5incident to a sale of service.
6(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
7100-863, eff. 8-14-18.)
 
8    (35 ILCS 115/9)  (from Ch. 120, par. 439.109)
9    Sec. 9. Each serviceman required or authorized to collect
10the tax herein imposed shall pay to the Department the amount
11of such tax at the time when he is required to file his return
12for the period during which such tax was collectible, less a
13discount of 2.1% prior to January 1, 1990, and 1.75% on and
14after January 1, 1990, or $5 per calendar year, whichever is
15greater, which is allowed to reimburse the serviceman for
16expenses incurred in collecting the tax, keeping records,
17preparing and filing returns, remitting the tax and supplying
18data to the Department on request. The discount allowed under
19this Section is allowed only for returns that are filed in the
20manner required by this Act. The Department may disallow the
21discount for servicemen whose certificate of registration is
22revoked at the time the return is filed, but only if the
23Department's decision to revoke the certificate of
24registration has become final.
25    Where such tangible personal property is sold under a

 

 

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1conditional sales contract, or under any other form of sale
2wherein the payment of the principal sum, or a part thereof, is
3extended beyond the close of the period for which the return is
4filed, the serviceman, in collecting the tax may collect, for
5each tax return period, only the tax applicable to the part of
6the selling price actually received during such tax return
7period.
8    Except as provided hereinafter in this Section, on or
9before the twentieth day of each calendar month, such
10serviceman shall file a return for the preceding calendar month
11in accordance with reasonable rules and regulations to be
12promulgated by the Department of Revenue. Such return shall be
13filed on a form prescribed by the Department and shall contain
14such information as the Department may reasonably require. On
15and after January 1, 2018, with respect to servicemen whose
16annual gross receipts average $20,000 or more, all returns
17required to be filed pursuant to this Act shall be filed
18electronically. Servicemen who demonstrate that they do not
19have access to the Internet or demonstrate hardship in filing
20electronically may petition the Department to waive the
21electronic filing requirement.
22    The Department may require returns to be filed on a
23quarterly basis. If so required, a return for each calendar
24quarter shall be filed on or before the twentieth day of the
25calendar month following the end of such calendar quarter. The
26taxpayer shall also file a return with the Department for each

 

 

HB2300- 89 -LRB101 07228 HLH 52266 b

1of the first two months of each calendar quarter, on or before
2the twentieth day of the following calendar month, stating:
3        1. The name of the seller;
4        2. The address of the principal place of business from
5    which he engages in business as a serviceman in this State;
6        3. The total amount of taxable receipts received by him
7    during the preceding calendar month, including receipts
8    from charge and time sales, but less all deductions allowed
9    by law;
10        4. The amount of credit provided in Section 2d of this
11    Act;
12        5. The amount of tax due;
13        5-5. The signature of the taxpayer; and
14        6. Such other reasonable information as the Department
15    may require.
16    If a taxpayer fails to sign a return within 30 days after
17the proper notice and demand for signature by the Department,
18the return shall be considered valid and any amount shown to be
19due on the return shall be deemed assessed.
20    Prior to October 1, 2003, and on and after September 1,
212004 and through June 30, 2019, a serviceman may accept a
22Manufacturer's Purchase Credit certification from a purchaser
23in satisfaction of Service Use Tax as provided in Section 3-70
24of the Service Use Tax Act if the purchaser provides the
25appropriate documentation as required by Section 3-70 of the
26Service Use Tax Act. A Manufacturer's Purchase Credit

 

 

HB2300- 90 -LRB101 07228 HLH 52266 b

1certification, accepted prior to October 1, 2003 or on or after
2September 1, 2004 and through June 30, 2019 by a serviceman as
3provided in Section 3-70 of the Service Use Tax Act, may be
4used by that serviceman through June 30, 2019 to satisfy
5Service Occupation Tax liability in the amount claimed in the
6certification, not to exceed 6.25% of the receipts subject to
7tax from a qualifying purchase. A Manufacturer's Purchase
8Credit reported on any original or amended return filed under
9this Act after October 20, 2003 for reporting periods prior to
10September 1, 2004 shall be disallowed. A Manufacturer's
11Purchase Credit reported on any original or amended return
12filed under this Act after June 30, 2019 shall be disallowed.
13Manufacturer's Purchase Credit reported on annual returns due
14on or after January 1, 2005 will be disallowed for periods
15prior to September 1, 2004. A Manufacturer's Purchase Credit
16reported on an annual return due on or after January 1, 2020
17shall be disallowed for periods on and after July 1, 2019. No
18Manufacturer's Purchase Credit may be used after September 30,
192003 through August 31, 2004 or after June 30, 2019 to satisfy
20any tax liability imposed under this Act, including any audit
21liability.
22    If the serviceman's average monthly tax liability to the
23Department does not exceed $200, the Department may authorize
24his returns to be filed on a quarter annual basis, with the
25return for January, February and March of a given year being
26due by April 20 of such year; with the return for April, May

 

 

HB2300- 91 -LRB101 07228 HLH 52266 b

1and June of a given year being due by July 20 of such year; with
2the return for July, August and September of a given year being
3due by October 20 of such year, and with the return for
4October, November and December of a given year being due by
5January 20 of the following year.
6    If the serviceman's average monthly tax liability to the
7Department does not exceed $50, the Department may authorize
8his returns to be filed on an annual basis, with the return for
9a given year being due by January 20 of the following year.
10    Such quarter annual and annual returns, as to form and
11substance, shall be subject to the same requirements as monthly
12returns.
13    Notwithstanding any other provision in this Act concerning
14the time within which a serviceman may file his return, in the
15case of any serviceman who ceases to engage in a kind of
16business which makes him responsible for filing returns under
17this Act, such serviceman shall file a final return under this
18Act with the Department not more than 1 month after
19discontinuing such business.
20    Beginning October 1, 1993, a taxpayer who has an average
21monthly tax liability of $150,000 or more shall make all
22payments required by rules of the Department by electronic
23funds transfer. Beginning October 1, 1994, a taxpayer who has
24an average monthly tax liability of $100,000 or more shall make
25all payments required by rules of the Department by electronic
26funds transfer. Beginning October 1, 1995, a taxpayer who has

 

 

HB2300- 92 -LRB101 07228 HLH 52266 b

1an average monthly tax liability of $50,000 or more shall make
2all payments required by rules of the Department by electronic
3funds transfer. Beginning October 1, 2000, a taxpayer who has
4an annual tax liability of $200,000 or more shall make all
5payments required by rules of the Department by electronic
6funds transfer. The term "annual tax liability" shall be the
7sum of the taxpayer's liabilities under this Act, and under all
8other State and local occupation and use tax laws administered
9by the Department, for the immediately preceding calendar year.
10The term "average monthly tax liability" means the sum of the
11taxpayer's liabilities under this Act, and under all other
12State and local occupation and use tax laws administered by the
13Department, for the immediately preceding calendar year
14divided by 12. Beginning on October 1, 2002, a taxpayer who has
15a tax liability in the amount set forth in subsection (b) of
16Section 2505-210 of the Department of Revenue Law shall make
17all payments required by rules of the Department by electronic
18funds transfer.
19    Before August 1 of each year beginning in 1993, the
20Department shall notify all taxpayers required to make payments
21by electronic funds transfer. All taxpayers required to make
22payments by electronic funds transfer shall make those payments
23for a minimum of one year beginning on October 1.
24    Any taxpayer not required to make payments by electronic
25funds transfer may make payments by electronic funds transfer
26with the permission of the Department.

 

 

HB2300- 93 -LRB101 07228 HLH 52266 b

1    All taxpayers required to make payment by electronic funds
2transfer and any taxpayers authorized to voluntarily make
3payments by electronic funds transfer shall make those payments
4in the manner authorized by the Department.
5    The Department shall adopt such rules as are necessary to
6effectuate a program of electronic funds transfer and the
7requirements of this Section.
8    Where a serviceman collects the tax with respect to the
9selling price of tangible personal property which he sells and
10the purchaser thereafter returns such tangible personal
11property and the serviceman refunds the selling price thereof
12to the purchaser, such serviceman shall also refund, to the
13purchaser, the tax so collected from the purchaser. When filing
14his return for the period in which he refunds such tax to the
15purchaser, the serviceman may deduct the amount of the tax so
16refunded by him to the purchaser from any other Service
17Occupation Tax, Service Use Tax, Retailers' Occupation Tax or
18Use Tax which such serviceman may be required to pay or remit
19to the Department, as shown by such return, provided that the
20amount of the tax to be deducted shall previously have been
21remitted to the Department by such serviceman. If the
22serviceman shall not previously have remitted the amount of
23such tax to the Department, he shall be entitled to no
24deduction hereunder upon refunding such tax to the purchaser.
25    If experience indicates such action to be practicable, the
26Department may prescribe and furnish a combination or joint

 

 

HB2300- 94 -LRB101 07228 HLH 52266 b

1return which will enable servicemen, who are required to file
2returns hereunder and also under the Retailers' Occupation Tax
3Act, the Use Tax Act or the Service Use Tax Act, to furnish all
4the return information required by all said Acts on the one
5form.
6    Where the serviceman has more than one business registered
7with the Department under separate registrations hereunder,
8such serviceman shall file separate returns for each registered
9business.
10    Beginning January 1, 1990, each month the Department shall
11pay into the Local Government Tax Fund the revenue realized for
12the preceding month from the 1% tax imposed under this Act.
13    Beginning January 1, 1990, each month the Department shall
14pay into the County and Mass Transit District Fund 4% of the
15revenue realized for the preceding month from the 6.25% general
16rate.
17    Beginning August 1, 2000, each month the Department shall
18pay into the County and Mass Transit District Fund 20% of the
19net revenue realized for the preceding month from the 1.25%
20rate on the selling price of motor fuel and gasohol.
21    Beginning January 1, 1990, each month the Department shall
22pay into the Local Government Tax Fund 16% of the revenue
23realized for the preceding month from the 6.25% general rate on
24transfers of tangible personal property.
25    Beginning August 1, 2000, each month the Department shall
26pay into the Local Government Tax Fund 80% of the net revenue

 

 

HB2300- 95 -LRB101 07228 HLH 52266 b

1realized for the preceding month from the 1.25% rate on the
2selling price of motor fuel and gasohol.
3    Beginning October 1, 2009, each month the Department shall
4pay into the Capital Projects Fund an amount that is equal to
5an amount estimated by the Department to represent 80% of the
6net revenue realized for the preceding month from the sale of
7candy, grooming and hygiene products, and soft drinks that had
8been taxed at a rate of 1% prior to September 1, 2009 but that
9are now taxed at 6.25%.
10    Beginning July 1, 2013, each month the Department shall pay
11into the Underground Storage Tank Fund from the proceeds
12collected under this Act, the Use Tax Act, the Service Use Tax
13Act, and the Retailers' Occupation Tax Act an amount equal to
14the average monthly deficit in the Underground Storage Tank
15Fund during the prior year, as certified annually by the
16Illinois Environmental Protection Agency, but the total
17payment into the Underground Storage Tank Fund under this Act,
18the Use Tax Act, the Service Use Tax Act, and the Retailers'
19Occupation Tax Act shall not exceed $18,000,000 in any State
20fiscal year. As used in this paragraph, the "average monthly
21deficit" shall be equal to the difference between the average
22monthly claims for payment by the fund and the average monthly
23revenues deposited into the fund, excluding payments made
24pursuant to this paragraph.
25    Beginning July 1, 2015, of the remainder of the moneys
26received by the Department under the Use Tax Act, the Service

 

 

HB2300- 96 -LRB101 07228 HLH 52266 b

1Use Tax Act, this Act, and the Retailers' Occupation Tax Act,
2each month the Department shall deposit $500,000 into the State
3Crime Laboratory Fund.
4    Of the remainder of the moneys received by the Department
5pursuant to this Act, (a) 1.75% thereof shall be paid into the
6Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
7and after July 1, 1989, 3.8% thereof shall be paid into the
8Build Illinois Fund; provided, however, that if in any fiscal
9year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
10may be, of the moneys received by the Department and required
11to be paid into the Build Illinois Fund pursuant to Section 3
12of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
13Act, Section 9 of the Service Use Tax Act, and Section 9 of the
14Service Occupation Tax Act, such Acts being hereinafter called
15the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
16may be, of moneys being hereinafter called the "Tax Act
17Amount", and (2) the amount transferred to the Build Illinois
18Fund from the State and Local Sales Tax Reform Fund shall be
19less than the Annual Specified Amount (as defined in Section 3
20of the Retailers' Occupation Tax Act), an amount equal to the
21difference shall be immediately paid into the Build Illinois
22Fund from other moneys received by the Department pursuant to
23the Tax Acts; and further provided, that if on the last
24business day of any month the sum of (1) the Tax Act Amount
25required to be deposited into the Build Illinois Account in the
26Build Illinois Fund during such month and (2) the amount

 

 

HB2300- 97 -LRB101 07228 HLH 52266 b

1transferred during such month to the Build Illinois Fund from
2the State and Local Sales Tax Reform Fund shall have been less
3than 1/12 of the Annual Specified Amount, an amount equal to
4the difference shall be immediately paid into the Build
5Illinois Fund from other moneys received by the Department
6pursuant to the Tax Acts; and, further provided, that in no
7event shall the payments required under the preceding proviso
8result in aggregate payments into the Build Illinois Fund
9pursuant to this clause (b) for any fiscal year in excess of
10the greater of (i) the Tax Act Amount or (ii) the Annual
11Specified Amount for such fiscal year; and, further provided,
12that the amounts payable into the Build Illinois Fund under
13this clause (b) shall be payable only until such time as the
14aggregate amount on deposit under each trust indenture securing
15Bonds issued and outstanding pursuant to the Build Illinois
16Bond Act is sufficient, taking into account any future
17investment income, to fully provide, in accordance with such
18indenture, for the defeasance of or the payment of the
19principal of, premium, if any, and interest on the Bonds
20secured by such indenture and on any Bonds expected to be
21issued thereafter and all fees and costs payable with respect
22thereto, all as certified by the Director of the Bureau of the
23Budget (now Governor's Office of Management and Budget). If on
24the last business day of any month in which Bonds are
25outstanding pursuant to the Build Illinois Bond Act, the
26aggregate of the moneys deposited in the Build Illinois Bond

 

 

HB2300- 98 -LRB101 07228 HLH 52266 b

1Account in the Build Illinois Fund in such month shall be less
2than the amount required to be transferred in such month from
3the Build Illinois Bond Account to the Build Illinois Bond
4Retirement and Interest Fund pursuant to Section 13 of the
5Build Illinois Bond Act, an amount equal to such deficiency
6shall be immediately paid from other moneys received by the
7Department pursuant to the Tax Acts to the Build Illinois Fund;
8provided, however, that any amounts paid to the Build Illinois
9Fund in any fiscal year pursuant to this sentence shall be
10deemed to constitute payments pursuant to clause (b) of the
11preceding sentence and shall reduce the amount otherwise
12payable for such fiscal year pursuant to clause (b) of the
13preceding sentence. The moneys received by the Department
14pursuant to this Act and required to be deposited into the
15Build Illinois Fund are subject to the pledge, claim and charge
16set forth in Section 12 of the Build Illinois Bond Act.
17    Subject to payment of amounts into the Build Illinois Fund
18as provided in the preceding paragraph or in any amendment
19thereto hereafter enacted, the following specified monthly
20installment of the amount requested in the certificate of the
21Chairman of the Metropolitan Pier and Exposition Authority
22provided under Section 8.25f of the State Finance Act, but not
23in excess of the sums designated as "Total Deposit", shall be
24deposited in the aggregate from collections under Section 9 of
25the Use Tax Act, Section 9 of the Service Use Tax Act, Section
269 of the Service Occupation Tax Act, and Section 3 of the

 

 

HB2300- 99 -LRB101 07228 HLH 52266 b

1Retailers' Occupation Tax Act into the McCormick Place
2Expansion Project Fund in the specified fiscal years.
3Fiscal YearTotal Deposit
41993         $0
51994 53,000,000
61995 58,000,000
71996 61,000,000
81997 64,000,000
91998 68,000,000
101999 71,000,000
112000 75,000,000
122001 80,000,000
132002 93,000,000
142003 99,000,000
152004103,000,000
162005108,000,000
172006113,000,000
182007119,000,000
192008126,000,000
202009132,000,000
212010139,000,000
222011146,000,000
232012153,000,000
242013161,000,000
252014170,000,000

 

 

HB2300- 100 -LRB101 07228 HLH 52266 b

12015179,000,000
22016189,000,000
32017199,000,000
42018210,000,000
52019221,000,000
62020233,000,000
72021246,000,000
82022260,000,000
92023275,000,000
102024 275,000,000
112025 275,000,000
122026 279,000,000
132027 292,000,000
142028 307,000,000
152029 322,000,000
162030 338,000,000
172031 350,000,000
182032 350,000,000
19and
20each fiscal year
21thereafter that bonds
22are outstanding under
23Section 13.2 of the
24Metropolitan Pier and
25Exposition Authority Act,
26but not after fiscal year 2060.

 

 

HB2300- 101 -LRB101 07228 HLH 52266 b

1    Beginning July 20, 1993 and in each month of each fiscal
2year thereafter, one-eighth of the amount requested in the
3certificate of the Chairman of the Metropolitan Pier and
4Exposition Authority for that fiscal year, less the amount
5deposited into the McCormick Place Expansion Project Fund by
6the State Treasurer in the respective month under subsection
7(g) of Section 13 of the Metropolitan Pier and Exposition
8Authority Act, plus cumulative deficiencies in the deposits
9required under this Section for previous months and years,
10shall be deposited into the McCormick Place Expansion Project
11Fund, until the full amount requested for the fiscal year, but
12not in excess of the amount specified above as "Total Deposit",
13has been deposited.
14    Subject to payment of amounts into the Build Illinois Fund
15and the McCormick Place Expansion Project Fund pursuant to the
16preceding paragraphs or in any amendments thereto hereafter
17enacted, beginning July 1, 1993 and ending on September 30,
182013, the Department shall each month pay into the Illinois Tax
19Increment Fund 0.27% of 80% of the net revenue realized for the
20preceding month from the 6.25% general rate on the selling
21price of tangible personal property.
22    Subject to payment of amounts into the Build Illinois Fund
23and the McCormick Place Expansion Project Fund pursuant to the
24preceding paragraphs or in any amendments thereto hereafter
25enacted, beginning with the receipt of the first report of
26taxes paid by an eligible business and continuing for a 25-year

 

 

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1period, the Department shall each month pay into the Energy
2Infrastructure Fund 80% of the net revenue realized from the
36.25% general rate on the selling price of Illinois-mined coal
4that was sold to an eligible business. For purposes of this
5paragraph, the term "eligible business" means a new electric
6generating facility certified pursuant to Section 605-332 of
7the Department of Commerce and Economic Opportunity Law of the
8Civil Administrative Code of Illinois.
9    Subject to payment of amounts into the Build Illinois Fund,
10the McCormick Place Expansion Project Fund, the Illinois Tax
11Increment Fund, and the Energy Infrastructure Fund pursuant to
12the preceding paragraphs or in any amendments to this Section
13hereafter enacted, beginning on the first day of the first
14calendar month to occur on or after August 26, 2014 (the
15effective date of Public Act 98-1098), each month, from the
16collections made under Section 9 of the Use Tax Act, Section 9
17of the Service Use Tax Act, Section 9 of the Service Occupation
18Tax Act, and Section 3 of the Retailers' Occupation Tax Act,
19the Department shall pay into the Tax Compliance and
20Administration Fund, to be used, subject to appropriation, to
21fund additional auditors and compliance personnel at the
22Department of Revenue, an amount equal to 1/12 of 5% of 80% of
23the cash receipts collected during the preceding fiscal year by
24the Audit Bureau of the Department under the Use Tax Act, the
25Service Use Tax Act, the Service Occupation Tax Act, the
26Retailers' Occupation Tax Act, and associated local occupation

 

 

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1and use taxes administered by the Department.
2    Subject to payments of amounts into the Build Illinois
3Fund, the McCormick Place Expansion Project Fund, the Illinois
4Tax Increment Fund, the Energy Infrastructure Fund, and the Tax
5Compliance and Administration Fund as provided in this Section,
6beginning on July 1, 2018 the Department shall pay each month
7into the Downstate Public Transportation Fund the moneys
8required to be so paid under Section 2-3 of the Downstate
9Public Transportation Act.
10    Of the remainder of the moneys received by the Department
11pursuant to this Act, 75% shall be paid into the General
12Revenue Fund of the State Treasury and 25% shall be reserved in
13a special account and used only for the transfer to the Common
14School Fund as part of the monthly transfer from the General
15Revenue Fund in accordance with Section 8a of the State Finance
16Act.
17    The Department may, upon separate written notice to a
18taxpayer, require the taxpayer to prepare and file with the
19Department on a form prescribed by the Department within not
20less than 60 days after receipt of the notice an annual
21information return for the tax year specified in the notice.
22Such annual return to the Department shall include a statement
23of gross receipts as shown by the taxpayer's last Federal
24income tax return. If the total receipts of the business as
25reported in the Federal income tax return do not agree with the
26gross receipts reported to the Department of Revenue for the

 

 

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1same period, the taxpayer shall attach to his annual return a
2schedule showing a reconciliation of the 2 amounts and the
3reasons for the difference. The taxpayer's annual return to the
4Department shall also disclose the cost of goods sold by the
5taxpayer during the year covered by such return, opening and
6closing inventories of such goods for such year, cost of goods
7used from stock or taken from stock and given away by the
8taxpayer during such year, pay roll information of the
9taxpayer's business during such year and any additional
10reasonable information which the Department deems would be
11helpful in determining the accuracy of the monthly, quarterly
12or annual returns filed by such taxpayer as hereinbefore
13provided for in this Section.
14    If the annual information return required by this Section
15is not filed when and as required, the taxpayer shall be liable
16as follows:
17        (i) Until January 1, 1994, the taxpayer shall be liable
18    for a penalty equal to 1/6 of 1% of the tax due from such
19    taxpayer under this Act during the period to be covered by
20    the annual return for each month or fraction of a month
21    until such return is filed as required, the penalty to be
22    assessed and collected in the same manner as any other
23    penalty provided for in this Act.
24        (ii) On and after January 1, 1994, the taxpayer shall
25    be liable for a penalty as described in Section 3-4 of the
26    Uniform Penalty and Interest Act.

 

 

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1    The chief executive officer, proprietor, owner or highest
2ranking manager shall sign the annual return to certify the
3accuracy of the information contained therein. Any person who
4willfully signs the annual return containing false or
5inaccurate information shall be guilty of perjury and punished
6accordingly. The annual return form prescribed by the
7Department shall include a warning that the person signing the
8return may be liable for perjury.
9    The foregoing portion of this Section concerning the filing
10of an annual information return shall not apply to a serviceman
11who is not required to file an income tax return with the
12United States Government.
13    As soon as possible after the first day of each month, upon
14certification of the Department of Revenue, the Comptroller
15shall order transferred and the Treasurer shall transfer from
16the General Revenue Fund to the Motor Fuel Tax Fund an amount
17equal to 1.7% of 80% of the net revenue realized under this Act
18for the second preceding month. Beginning April 1, 2000, this
19transfer is no longer required and shall not be made.
20    Net revenue realized for a month shall be the revenue
21collected by the State pursuant to this Act, less the amount
22paid out during that month as refunds to taxpayers for
23overpayment of liability.
24    For greater simplicity of administration, it shall be
25permissible for manufacturers, importers and wholesalers whose
26products are sold by numerous servicemen in Illinois, and who

 

 

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1wish to do so, to assume the responsibility for accounting and
2paying to the Department all tax accruing under this Act with
3respect to such sales, if the servicemen who are affected do
4not make written objection to the Department to this
5arrangement.
6(Source: P.A. 99-352, eff. 8-12-15; 99-858, eff. 8-19-16;
7100-303, eff. 8-24-17; 100-363, eff. 7-1-18; 100-863, eff.
88-14-18; 100-1171, eff. 1-4-19.)
 
9    Section 25. The Retailers' Occupation Tax Act is amended by
10changing Sections 2-5, 2-45, and 3 as follows:
 
11    (35 ILCS 120/2-5)
12    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
13sale of the following tangible personal property are exempt
14from the tax imposed by this Act:
15        (1) Farm chemicals.
16        (2) Farm machinery and equipment, both new and used,
17    including that manufactured on special order, certified by
18    the purchaser to be used primarily for production
19    agriculture or State or federal agricultural programs,
20    including individual replacement parts for the machinery
21    and equipment, including machinery and equipment purchased
22    for lease, and including implements of husbandry defined in
23    Section 1-130 of the Illinois Vehicle Code, farm machinery
24    and agricultural chemical and fertilizer spreaders, and

 

 

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

 

 

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1    from the provisions of Section 2-70.
2        (3) Until July 1, 2003, distillation machinery and
3    equipment, sold as a unit or kit, assembled or installed by
4    the retailer, certified by the user to be used only for the
5    production of ethyl alcohol that will be used for
6    consumption as motor fuel or as a component of motor fuel
7    for the personal use of the user, and not subject to sale
8    or resale.
9        (4) Until July 1, 2003 and beginning again September 1,
10    2004 through August 30, 2014, graphic arts machinery and
11    equipment, including repair and replacement parts, both
12    new and used, and including that manufactured on special
13    order or purchased for lease, certified by the purchaser to
14    be used primarily for graphic arts production. Equipment
15    includes chemicals or chemicals acting as catalysts but
16    only if the chemicals or chemicals acting as catalysts
17    effect a direct and immediate change upon a graphic arts
18    product. Beginning on July 1, 2017, graphic arts machinery
19    and equipment is included in the manufacturing and
20    assembling machinery and equipment exemption under
21    paragraph (14).
22        (5) A motor vehicle that is used for automobile
23    renting, as defined in the Automobile Renting Occupation
24    and Use Tax Act. This paragraph is exempt from the
25    provisions of Section 2-70.
26        (6) Personal property sold by a teacher-sponsored

 

 

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1    student organization affiliated with an elementary or
2    secondary school located in Illinois.
3        (7) Until July 1, 2003, proceeds of that portion of the
4    selling price of a passenger car the sale of which is
5    subject to the Replacement Vehicle Tax.
6        (8) Personal property sold to an Illinois county fair
7    association for use in conducting, operating, or promoting
8    the county fair.
9        (9) Personal property sold to a not-for-profit arts or
10    cultural organization that establishes, by proof required
11    by the Department by rule, that it has received an
12    exemption under Section 501(c)(3) of the Internal Revenue
13    Code and that is organized and operated primarily for the
14    presentation or support of arts or cultural programming,
15    activities, or services. These organizations include, but
16    are not limited to, music and dramatic arts organizations
17    such as symphony orchestras and theatrical groups, arts and
18    cultural service organizations, local arts councils,
19    visual arts organizations, and media arts organizations.
20    On and after July 1, 2001 (the effective date of Public Act
21    92-35), however, an entity otherwise eligible for this
22    exemption shall not make tax-free purchases unless it has
23    an active identification number issued by the Department.
24        (10) Personal property sold by a corporation, society,
25    association, foundation, institution, or organization,
26    other than a limited liability company, that is organized

 

 

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1    and operated as a not-for-profit service enterprise for the
2    benefit of persons 65 years of age or older if the personal
3    property was not purchased by the enterprise for the
4    purpose of resale by the enterprise.
5        (11) Personal property sold to a governmental body, to
6    a corporation, society, association, foundation, or
7    institution organized and operated exclusively for
8    charitable, religious, or educational purposes, or to a
9    not-for-profit corporation, society, association,
10    foundation, institution, or organization that has no
11    compensated officers or employees and that is organized and
12    operated primarily for the recreation of persons 55 years
13    of age or older. A limited liability company may qualify
14    for the exemption under this paragraph only if the limited
15    liability company is organized and operated exclusively
16    for educational purposes. On and after July 1, 1987,
17    however, no entity otherwise eligible for this exemption
18    shall make tax-free purchases unless it has an active
19    identification number issued by the Department.
20        (12) (Blank).
21        (12-5) On and after July 1, 2003 and through June 30,
22    2004, motor vehicles of the second division with a gross
23    vehicle weight in excess of 8,000 pounds that are subject
24    to the commercial distribution fee imposed under Section
25    3-815.1 of the Illinois Vehicle Code. Beginning on July 1,
26    2004 and through June 30, 2005, the use in this State of

 

 

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

 

 

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1    sale or lease is made directly by the manufacturer or by
2    some other person, whether the materials used in the
3    process are owned by the manufacturer or some other person,
4    or whether the sale or lease is made apart from or as an
5    incident to the seller's engaging in the service occupation
6    of producing machines, tools, dies, jigs, patterns,
7    gauges, or other similar items of no commercial value on
8    special order for a particular purchaser. The exemption
9    provided by this paragraph (14) does not include machinery
10    and equipment used in (i) the generation of electricity for
11    wholesale or retail sale; (ii) the generation or treatment
12    of natural or artificial gas for wholesale or retail sale
13    that is delivered to customers through pipes, pipelines, or
14    mains; or (iii) the treatment of water for wholesale or
15    retail sale that is delivered to customers through pipes,
16    pipelines, or mains. The provisions of Public Act 98-583
17    are declaratory of existing law as to the meaning and scope
18    of this exemption. Beginning on July 1, 2017, the exemption
19    provided by this paragraph (14) includes, but is not
20    limited to, graphic arts machinery and equipment, as
21    defined in paragraph (4) of this Section. Beginning on July
22    1, 2019, manufacturing and assembling machinery and
23    equipment includes production related tangible personal
24    property, as defined in Section 2-45 of this Act. The
25    exemption provided by this paragraph (14) is exempt from
26    the provisions of Section 2-70.

 

 

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1        (15) Proceeds of mandatory service charges separately
2    stated on customers' bills for purchase and consumption of
3    food and beverages, to the extent that the proceeds of the
4    service charge are in fact turned over as tips or as a
5    substitute for tips to the employees who participate
6    directly in preparing, serving, hosting or cleaning up the
7    food or beverage function with respect to which the service
8    charge is imposed.
9        (16) Tangible personal property sold to a purchaser if
10    the purchaser is exempt from use tax by operation of
11    federal law. This paragraph is exempt from the provisions
12    of Section 2-70.
13        (17) Tangible personal property sold to a common
14    carrier by rail or motor that receives the physical
15    possession of the property in Illinois and that transports
16    the property, or shares with another common carrier in the
17    transportation of the property, out of Illinois on a
18    standard uniform bill of lading showing the seller of the
19    property as the shipper or consignor of the property to a
20    destination outside Illinois, for use outside Illinois.
21        (18) Legal tender, currency, medallions, or gold or
22    silver coinage issued by the State of Illinois, the
23    government of the United States of America, or the
24    government of any foreign country, and bullion.
25        (19) Until July 1, 2003, oil field exploration,
26    drilling, and production equipment, including (i) rigs and

 

 

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1    parts of rigs, rotary rigs, cable tool rigs, and workover
2    rigs, (ii) pipe and tubular goods, including casing and
3    drill strings, (iii) pumps and pump-jack units, (iv)
4    storage tanks and flow lines, (v) any individual
5    replacement part for oil field exploration, drilling, and
6    production equipment, and (vi) machinery and equipment
7    purchased for lease; but excluding motor vehicles required
8    to be registered under the Illinois Vehicle Code.
9        (20) Photoprocessing machinery and equipment,
10    including repair and replacement parts, both new and used,
11    including that manufactured on special order, certified by
12    the purchaser to be used primarily for photoprocessing, and
13    including photoprocessing machinery and equipment
14    purchased for lease.
15        (21) Until July 1, 2023, coal and aggregate
16    exploration, mining, off-highway hauling, processing,
17    maintenance, and reclamation equipment, including
18    replacement parts and equipment, and including equipment
19    purchased for lease, but excluding motor vehicles required
20    to be registered under the Illinois Vehicle Code. The
21    changes made to this Section by Public Act 97-767 apply on
22    and after July 1, 2003, but no claim for credit or refund
23    is allowed on or after August 16, 2013 (the effective date
24    of Public Act 98-456) for such taxes paid during the period
25    beginning July 1, 2003 and ending on August 16, 2013 (the
26    effective date of Public Act 98-456).

 

 

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1        (22) Until June 30, 2013, fuel and petroleum products
2    sold to or used by an air carrier, certified by the carrier
3    to be used for consumption, shipment, or storage in the
4    conduct of its business as an air common carrier, for a
5    flight destined for or returning from a location or
6    locations outside the United States without regard to
7    previous or subsequent domestic stopovers.
8        Beginning July 1, 2013, fuel and petroleum products
9    sold to or used by an air carrier, certified by the carrier
10    to be used for consumption, shipment, or storage in the
11    conduct of its business as an air common carrier, for a
12    flight that (i) is engaged in foreign trade or is engaged
13    in trade between the United States and any of its
14    possessions and (ii) transports at least one individual or
15    package for hire from the city of origination to the city
16    of final destination on the same aircraft, without regard
17    to a change in the flight number of that aircraft.
18        (23) A transaction in which the purchase order is
19    received by a florist who is located outside Illinois, but
20    who has a florist located in Illinois deliver the property
21    to the purchaser or the purchaser's donee in Illinois.
22        (24) Fuel consumed or used in the operation of ships,
23    barges, or vessels that are used primarily in or for the
24    transportation of property or the conveyance of persons for
25    hire on rivers bordering on this State if the fuel is
26    delivered by the seller to the purchaser's barge, ship, or

 

 

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

 

 

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1    title the vehicle in the state in which the purchaser is a
2    resident within 30 days after the sale and of the fact of
3    the payment to the State of Illinois of tax in an amount
4    equivalent to the state's rate of tax on taxable property
5    in his or her state of residence and shall submit the
6    statement to the appropriate tax collection agency in his
7    or her state of residence. In addition, the retailer must
8    retain a signed copy of the statement in his or her
9    records. Nothing in this item shall be construed to require
10    the removal of the vehicle from this state following the
11    filing of an intent to title the vehicle in the purchaser's
12    state of residence if the purchaser titles the vehicle in
13    his or her state of residence within 30 days after the date
14    of sale. The tax collected under this Act in accordance
15    with this item (25-5) shall be proportionately distributed
16    as if the tax were collected at the 6.25% general rate
17    imposed under this Act.
18        (25-7) Beginning on July 1, 2007, no tax is imposed
19    under this Act on the sale of an aircraft, as defined in
20    Section 3 of the Illinois Aeronautics Act, if all of the
21    following conditions are met:
22            (1) the aircraft leaves this State within 15 days
23        after the later of either the issuance of the final
24        billing for the sale of the aircraft, or the authorized
25        approval for return to service, completion of the
26        maintenance record entry, and completion of the test

 

 

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1        flight and ground test for inspection, as required by
2        14 C.F.R. 91.407;
3            (2) the aircraft is not based or registered in this
4        State after the sale of the aircraft; and
5            (3) the seller retains in his or her books and
6        records and provides to the Department a signed and
7        dated certification from the purchaser, on a form
8        prescribed by the Department, certifying that the
9        requirements of this item (25-7) are met. The
10        certificate must also include the name and address of
11        the purchaser, the address of the location where the
12        aircraft is to be titled or registered, the address of
13        the primary physical location of the aircraft, and
14        other information that the Department may reasonably
15        require.
16        For purposes of this item (25-7):
17        "Based in this State" means hangared, stored, or
18    otherwise used, excluding post-sale customizations as
19    defined in this Section, for 10 or more days in each
20    12-month period immediately following the date of the sale
21    of the aircraft.
22        "Registered in this State" means an aircraft
23    registered with the Department of Transportation,
24    Aeronautics Division, or titled or registered with the
25    Federal Aviation Administration to an address located in
26    this State.

 

 

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1        This paragraph (25-7) is exempt from the provisions of
2    Section 2-70.
3        (26) Semen used for artificial insemination of
4    livestock for direct agricultural production.
5        (27) Horses, or interests in horses, registered with
6    and meeting the requirements of any of the Arabian Horse
7    Club Registry of America, Appaloosa Horse Club, American
8    Quarter Horse Association, United States Trotting
9    Association, or Jockey Club, as appropriate, used for
10    purposes of breeding or racing for prizes. This item (27)
11    is exempt from the provisions of Section 2-70, and the
12    exemption provided for under this item (27) applies for all
13    periods beginning May 30, 1995, but no claim for credit or
14    refund is allowed on or after January 1, 2008 (the
15    effective date of Public Act 95-88) for such taxes paid
16    during the period beginning May 30, 2000 and ending on
17    January 1, 2008 (the effective date of Public Act 95-88).
18        (28) Computers and communications equipment utilized
19    for any hospital purpose and equipment used in the
20    diagnosis, analysis, or treatment of hospital patients
21    sold to a lessor who leases the equipment, under a lease of
22    one year or longer executed or in effect at the time of the
23    purchase, to a hospital that has been issued an active tax
24    exemption identification number by the Department under
25    Section 1g of this Act.
26        (29) Personal property sold to a lessor who leases the

 

 

HB2300- 120 -LRB101 07228 HLH 52266 b

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

 

 

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1    Illinois or bordering Illinois when such repairs are
2    initiated on facilities located in the declared disaster
3    area within 6 months after the disaster.
4        (32) Beginning July 1, 1999, game or game birds sold at
5    a "game breeding and hunting preserve area" as that term is
6    used in the Wildlife Code. This paragraph is exempt from
7    the provisions of Section 2-70.
8        (33) A motor vehicle, as that term is defined in
9    Section 1-146 of the Illinois Vehicle Code, that is donated
10    to a corporation, limited liability company, society,
11    association, foundation, or institution that is determined
12    by the Department to be organized and operated exclusively
13    for educational purposes. For purposes of this exemption,
14    "a corporation, limited liability company, society,
15    association, foundation, or institution organized and
16    operated exclusively for educational purposes" means all
17    tax-supported public schools, private schools that offer
18    systematic instruction in useful branches of learning by
19    methods common to public schools and that compare favorably
20    in their scope and intensity with the course of study
21    presented in tax-supported schools, and vocational or
22    technical schools or institutes organized and operated
23    exclusively to provide a course of study of not less than 6
24    weeks duration and designed to prepare individuals to
25    follow a trade or to pursue a manual, technical,
26    mechanical, industrial, business, or commercial

 

 

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1    occupation.
2        (34) Beginning January 1, 2000, personal property,
3    including food, purchased through fundraising events for
4    the benefit of a public or private elementary or secondary
5    school, a group of those schools, or one or more school
6    districts if the events are sponsored by an entity
7    recognized by the school district that consists primarily
8    of volunteers and includes parents and teachers of the
9    school children. This paragraph does not apply to
10    fundraising events (i) for the benefit of private home
11    instruction or (ii) for which the fundraising entity
12    purchases the personal property sold at the events from
13    another individual or entity that sold the property for the
14    purpose of resale by the fundraising entity and that
15    profits from the sale to the fundraising entity. This
16    paragraph is exempt from the provisions of Section 2-70.
17        (35) Beginning January 1, 2000 and through December 31,
18    2001, new or used automatic vending machines that prepare
19    and serve hot food and beverages, including coffee, soup,
20    and other items, and replacement parts for these machines.
21    Beginning January 1, 2002 and through June 30, 2003,
22    machines and parts for machines used in commercial,
23    coin-operated amusement and vending business if a use or
24    occupation tax is paid on the gross receipts derived from
25    the use of the commercial, coin-operated amusement and
26    vending machines. This paragraph is exempt from the

 

 

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1    provisions of Section 2-70.
2        (35-5) Beginning August 23, 2001 and through June 30,
3    2016, food for human consumption that is to be consumed off
4    the premises where it is sold (other than alcoholic
5    beverages, soft drinks, and food that has been prepared for
6    immediate consumption) and prescription and
7    nonprescription medicines, drugs, medical appliances, and
8    insulin, urine testing materials, syringes, and needles
9    used by diabetics, for human use, when purchased for use by
10    a person receiving medical assistance under Article V of
11    the Illinois Public Aid Code who resides in a licensed
12    long-term care facility, as defined in the Nursing Home
13    Care Act, or a licensed facility as defined in the ID/DD
14    Community Care Act, the MC/DD Act, or the Specialized
15    Mental Health Rehabilitation Act of 2013.
16        (36) Beginning August 2, 2001, computers and
17    communications equipment utilized for any hospital purpose
18    and equipment used in the diagnosis, analysis, or treatment
19    of hospital patients sold to a lessor who leases the
20    equipment, under a lease of one year or longer executed or
21    in effect at the time of the purchase, to a hospital that
22    has been issued an active tax exemption identification
23    number by the Department under Section 1g of this Act. This
24    paragraph is exempt from the provisions of Section 2-70.
25        (37) Beginning August 2, 2001, personal property sold
26    to a lessor who leases the property, under a lease of one

 

 

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1    year or longer executed or in effect at the time of the
2    purchase, to a governmental body that has been issued an
3    active tax exemption identification number by the
4    Department under Section 1g of this Act. This paragraph is
5    exempt from the provisions of Section 2-70.
6        (38) Beginning on January 1, 2002 and through June 30,
7    2016, tangible personal property purchased from an
8    Illinois retailer by a taxpayer engaged in centralized
9    purchasing activities in Illinois who will, upon receipt of
10    the property in Illinois, temporarily store the property in
11    Illinois (i) for the purpose of subsequently transporting
12    it outside this State for use or consumption thereafter
13    solely outside this State or (ii) for the purpose of being
14    processed, fabricated, or manufactured into, attached to,
15    or incorporated into other tangible personal property to be
16    transported outside this State and thereafter used or
17    consumed solely outside this State. The Director of Revenue
18    shall, pursuant to rules adopted in accordance with the
19    Illinois Administrative Procedure Act, issue a permit to
20    any taxpayer in good standing with the Department who is
21    eligible for the exemption under this paragraph (38). The
22    permit issued under this paragraph (38) shall authorize the
23    holder, to the extent and in the manner specified in the
24    rules adopted under this Act, to purchase tangible personal
25    property from a retailer exempt from the taxes imposed by
26    this Act. Taxpayers shall maintain all necessary books and

 

 

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1    records to substantiate the use and consumption of all such
2    tangible personal property outside of the State of
3    Illinois.
4        (39) Beginning January 1, 2008, tangible personal
5    property used in the construction or maintenance of a
6    community water supply, as defined under Section 3.145 of
7    the Environmental Protection Act, that is operated by a
8    not-for-profit corporation that holds a valid water supply
9    permit issued under Title IV of the Environmental
10    Protection Act. This paragraph is exempt from the
11    provisions of Section 2-70.
12        (40) Beginning January 1, 2010, materials, parts,
13    equipment, components, and furnishings incorporated into
14    or upon an aircraft as part of the modification,
15    refurbishment, completion, replacement, repair, or
16    maintenance of the aircraft. This exemption includes
17    consumable supplies used in the modification,
18    refurbishment, completion, replacement, repair, and
19    maintenance of aircraft, but excludes any materials,
20    parts, equipment, components, and consumable supplies used
21    in the modification, replacement, repair, and maintenance
22    of aircraft engines or power plants, whether such engines
23    or power plants are installed or uninstalled upon any such
24    aircraft. "Consumable supplies" include, but are not
25    limited to, adhesive, tape, sandpaper, general purpose
26    lubricants, cleaning solution, latex gloves, and

 

 

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1    protective films. This exemption applies only to the sale
2    of qualifying tangible personal property to persons who
3    modify, refurbish, complete, replace, or maintain an
4    aircraft and who (i) hold an Air Agency Certificate and are
5    empowered to operate an approved repair station by the
6    Federal Aviation Administration, (ii) have a Class IV
7    Rating, and (iii) conduct operations in accordance with
8    Part 145 of the Federal Aviation Regulations. The exemption
9    does not include aircraft operated by a commercial air
10    carrier providing scheduled passenger air service pursuant
11    to authority issued under Part 121 or Part 129 of the
12    Federal Aviation Regulations. The changes made to this
13    paragraph (40) by Public Act 98-534 are declarative of
14    existing law.
15        (41) Tangible personal property sold to a
16    public-facilities corporation, as described in Section
17    11-65-10 of the Illinois Municipal Code, for purposes of
18    constructing or furnishing a municipal convention hall,
19    but only if the legal title to the municipal convention
20    hall is transferred to the municipality without any further
21    consideration by or on behalf of the municipality at the
22    time of the completion of the municipal convention hall or
23    upon the retirement or redemption of any bonds or other
24    debt instruments issued by the public-facilities
25    corporation in connection with the development of the
26    municipal convention hall. This exemption includes

 

 

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1    existing public-facilities corporations as provided in
2    Section 11-65-25 of the Illinois Municipal Code. This
3    paragraph is exempt from the provisions of Section 2-70.
4        (42) Beginning January 1, 2017, menstrual pads,
5    tampons, and menstrual cups.
6        (43) Merchandise that is subject to the Rental Purchase
7    Agreement Occupation and Use Tax. The purchaser must
8    certify that the item is purchased to be rented subject to
9    a rental purchase agreement, as defined in the Rental
10    Purchase Agreement Act, and provide proof of registration
11    under the Rental Purchase Agreement Occupation and Use Tax
12    Act. This paragraph is exempt from the provisions of
13    Section 2-70.
14(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
15100-22, eff. 7-6-17; 100-321, eff. 8-24-17; 100-437, eff.
161-1-18; 100-594, eff. 6-29-18; 100-863, eff. 8-14-18;
17100-1171, eff. 1-4-19; revised 1-8-19.)
 
18    (35 ILCS 120/2-45)  (from Ch. 120, par. 441-45)
19    Sec. 2-45. Manufacturing and assembly exemption. The
20manufacturing and assembly machinery and equipment exemption
21includes machinery and equipment that replaces machinery and
22equipment in an existing manufacturing facility as well as
23machinery and equipment that are for use in an expanded or new
24manufacturing facility.
25    The machinery and equipment exemption also includes

 

 

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1machinery and equipment used in the general maintenance or
2repair of exempt machinery and equipment or for in-house
3manufacture of exempt machinery and equipment. Beginning on
4July 1, 2017, the manufacturing and assembling machinery and
5equipment exemption also includes graphic arts machinery and
6equipment, as defined in paragraph (4) of Section 2-5.
7Beginning on July 1, 2019, the manufacturing and assembling
8machinery and equipment exemption also includes production
9related tangible personal property, as defined in this Section.
10The machinery and equipment exemption does not include
11machinery and equipment used in (i) the generation of
12electricity for wholesale or retail sale; (ii) the generation
13or treatment of natural or artificial gas for wholesale or
14retail sale that is delivered to customers through pipes,
15pipelines, or mains; or (iii) the treatment of water for
16wholesale or retail sale that is delivered to customers through
17pipes, pipelines, or mains. The provisions of this amendatory
18Act of the 98th General Assembly are declaratory of existing
19law as to the meaning and scope of this exemption. For the
20purposes of this exemption, terms have the following meanings:
21        (1) "Manufacturing process" means the production of an
22    article of tangible personal property, whether the article
23    is a finished product or an article for use in the process
24    of manufacturing or assembling a different article of
25    tangible personal property, by a procedure commonly
26    regarded as manufacturing, processing, fabricating, or

 

 

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1    refining that changes some existing material or materials
2    into a material with a different form, use, or name. In
3    relation to a recognized integrated business composed of a
4    series of operations that collectively constitute
5    manufacturing, or individually constitute manufacturing
6    operations, the manufacturing process commences with the
7    first operation or stage of production in the series and
8    does not end until the completion of the final product in
9    the last operation or stage of production in the series.
10    For purposes of this exemption, photoprocessing is a
11    manufacturing process of tangible personal property for
12    wholesale or retail sale.
13        (2) "Assembling process" means the production of an
14    article of tangible personal property, whether the article
15    is a finished product or an article for use in the process
16    of manufacturing or assembling a different article of
17    tangible personal property, by the combination of existing
18    materials in a manner commonly regarded as assembling that
19    results in a material of a different form, use, or name.
20        (3) "Machinery" means major mechanical machines or
21    major components of those machines contributing to a
22    manufacturing or assembling process.
23        (4) "Equipment" includes an independent device or tool
24    separate from machinery but essential to an integrated
25    manufacturing or assembly process; including computers
26    used primarily in a manufacturer's computer assisted

 

 

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1    design, computer assisted manufacturing (CAD/CAM) system;
2    any subunit or assembly comprising a component of any
3    machinery or auxiliary, adjunct, or attachment parts of
4    machinery, such as tools, dies, jigs, fixtures, patterns,
5    and molds; and any parts that require periodic replacement
6    in the course of normal operation; but does not include
7    hand tools. Equipment includes chemicals or chemicals
8    acting as catalysts but only if the chemicals or chemicals
9    acting as catalysts effect a direct and immediate change
10    upon a product being manufactured or assembled for
11    wholesale or retail sale or lease.
12        (5) "Production related tangible personal property"
13    means all tangible personal property that is used or
14    consumed by the purchaser in a manufacturing facility in
15    which a manufacturing process takes place, including and
16    includes, without limitation, tangible personal property
17    that is purchased for incorporation into real estate within
18    a manufacturing facility and including, but not limited to,
19    tangible personal property that is used or consumed in
20    activities such as research and development, preproduction
21    material handling, receiving, quality control, inventory
22    control, storage, staging, and packaging for shipping and
23    transportation purposes. Tangible personal property used
24    or consumed by the purchaser for research and development
25    is considered "production related tangible personal
26    property" regardless of use within or without a

 

 

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1    manufacturing facility. "Production related tangible
2    personal property" does not include (i) tangible personal
3    property that is used, within or without a manufacturing
4    facility, in sales, purchasing, accounting, fiscal
5    management, marketing, personnel recruitment or selection,
6    or landscaping or (ii) tangible personal property that is
7    required to be titled or registered with a department,
8    agency, or unit of federal, State, or local government.
9    The manufacturing and assembling machinery and equipment
10exemption includes production related tangible personal
11property that is purchased on or after July 1, 2007 and on or
12before June 30, 2008. The exemption for production related
13tangible personal property is subject to both of the following
14limitations:
15        (1) The maximum amount of the exemption for any one
16    taxpayer may not exceed 5% of the purchase price of
17    production related tangible personal property that is
18    purchased on or after July 1, 2007 and on or before June
19    30, 2008. A credit under Section 3-85 of this Act may not
20    be earned by the purchase of production related tangible
21    personal property for which an exemption is received under
22    this Section.
23        (2) The maximum aggregate amount of the exemptions for
24    production related tangible personal property awarded
25    under this Act and the Use Tax Act to all taxpayers may not
26    exceed $10,000,000. If the claims for the exemption exceed

 

 

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1    $10,000,000, then the Department shall reduce the amount of
2    the exemption to each taxpayer on a pro rata basis.
3The Department may adopt rules to implement and administer the
4exemption for production related tangible personal property.
5    The manufacturing and assembling machinery and equipment
6exemption includes the sale of materials to a purchaser who
7produces exempted types of machinery, equipment, or tools and
8who rents or leases that machinery, equipment, or tools to a
9manufacturer of tangible personal property. This exemption
10also includes the sale of materials to a purchaser who
11manufactures those materials into an exempted type of
12machinery, equipment, or tools that the purchaser uses himself
13or herself in the manufacturing of tangible personal property.
14The purchaser of the machinery and equipment who has an active
15resale registration number shall furnish that number to the
16seller at the time of purchase. A purchaser of the machinery,
17equipment, and tools without an active resale registration
18number shall furnish to the seller a certificate of exemption
19for each transaction stating facts establishing the exemption
20for that transaction, and that certificate shall be available
21to the Department for inspection or audit. Informal rulings,
22opinions, or letters issued by the Department in response to an
23inquiry or request for an opinion from any person regarding the
24coverage and applicability of this exemption to specific
25devices shall be published, maintained as a public record, and
26made available for public inspection and copying. If the

 

 

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1informal ruling, opinion, or letter contains trade secrets or
2other confidential information, where possible, the Department
3shall delete that information before publication. Whenever
4informal rulings, opinions, or letters contain a policy of
5general applicability, the Department shall formulate and
6adopt that policy as a rule in accordance with the Illinois
7Administrative Procedure Act.
8    The manufacturing and assembling machinery and equipment
9exemption is exempt from the provisions of Section 2-70.
10(Source: P.A. 100-22, eff. 7-6-17.)
 
11    (35 ILCS 120/3)  (from Ch. 120, par. 442)
12    Sec. 3. Except as provided in this Section, on or before
13the twentieth day of each calendar month, every person engaged
14in the business of selling tangible personal property at retail
15in this State during the preceding calendar month shall file a
16return with the Department, stating:
17        1. The name of the seller;
18        2. His residence address and the address of his
19    principal place of business and the address of the
20    principal place of business (if that is a different
21    address) from which he engages in the business of selling
22    tangible personal property at retail in this State;
23        3. Total amount of receipts received by him during the
24    preceding calendar month or quarter, as the case may be,
25    from sales of tangible personal property, and from services

 

 

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1    furnished, by him during such preceding calendar month or
2    quarter;
3        4. Total amount received by him during the preceding
4    calendar month or quarter on charge and time sales of
5    tangible personal property, and from services furnished,
6    by him prior to the month or quarter for which the return
7    is filed;
8        5. Deductions allowed by law;
9        6. Gross receipts which were received by him during the
10    preceding calendar month or quarter and upon the basis of
11    which the tax is imposed;
12        7. The amount of credit provided in Section 2d of this
13    Act;
14        8. The amount of tax due;
15        9. The signature of the taxpayer; and
16        10. Such other reasonable information as the
17    Department may require.
18    On and after January 1, 2018, except for returns for motor
19vehicles, watercraft, aircraft, and trailers that are required
20to be registered with an agency of this State, with respect to
21retailers whose annual gross receipts average $20,000 or more,
22all returns required to be filed pursuant to this Act shall be
23filed electronically. Retailers who demonstrate that they do
24not have access to the Internet or demonstrate hardship in
25filing electronically may petition the Department to waive the
26electronic filing requirement.

 

 

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1    If a taxpayer fails to sign a return within 30 days after
2the proper notice and demand for signature by the Department,
3the return shall be considered valid and any amount shown to be
4due on the return shall be deemed assessed.
5    Each return shall be accompanied by the statement of
6prepaid tax issued pursuant to Section 2e for which credit is
7claimed.
8    Prior to October 1, 2003, and on and after September 1,
92004 and through June 30, 2019, a retailer may accept a
10Manufacturer's Purchase Credit certification from a purchaser
11in satisfaction of Use Tax as provided in Section 3-85 of the
12Use Tax Act if the purchaser provides the appropriate
13documentation as required by Section 3-85 of the Use Tax Act. A
14Manufacturer's Purchase Credit certification, accepted by a
15retailer prior to October 1, 2003 and on and after September 1,
162004 and through June 30, 2019, as provided in Section 3-85 of
17the Use Tax Act, may be used through June 30, 2019 by that
18retailer to satisfy Retailers' Occupation Tax liability in the
19amount claimed in the certification, not to exceed 6.25% of the
20receipts subject to tax from a qualifying purchase. A
21Manufacturer's Purchase Credit reported on any original or
22amended return filed under this Act after October 20, 2003 for
23reporting periods prior to September 1, 2004 shall be
24disallowed. A Manufacturer's Purchaser Credit reported on any
25original or amended return filed under this Act after June 30,
262019 shall be disallowed. Manufacturer's Purchaser Credit

 

 

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1reported on annual returns due on or after January 1, 2005 will
2be disallowed for periods prior to September 1, 2004. A
3Manufacturer's Purchase Credit reported on an annual return due
4on or after January 1, 2020 shall be disallowed for periods on
5and after July 1, 2019. No Manufacturer's Purchase Credit may
6be used after September 30, 2003 through August 31, 2004, or
7after June 30, 2019, to satisfy any tax liability imposed under
8this Act, including any audit liability.
9    The Department may require returns to be filed on a
10quarterly basis. If so required, a return for each calendar
11quarter shall be filed on or before the twentieth day of the
12calendar month following the end of such calendar quarter. The
13taxpayer shall also file a return with the Department for each
14of the first two months of each calendar quarter, on or before
15the twentieth day of the following calendar month, stating:
16        1. The name of the seller;
17        2. The address of the principal place of business from
18    which he engages in the business of selling tangible
19    personal property at retail in this State;
20        3. The total amount of taxable receipts received by him
21    during the preceding calendar month from sales of tangible
22    personal property by him during such preceding calendar
23    month, including receipts from charge and time sales, but
24    less all deductions allowed by law;
25        4. The amount of credit provided in Section 2d of this
26    Act;

 

 

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1        5. The amount of tax due; and
2        6. Such other reasonable information as the Department
3    may require.
4    Beginning on October 1, 2003, any person who is not a
5licensed distributor, importing distributor, or manufacturer,
6as defined in the Liquor Control Act of 1934, but is engaged in
7the business of selling, at retail, alcoholic liquor shall file
8a statement with the Department of Revenue, in a format and at
9a time prescribed by the Department, showing the total amount
10paid for alcoholic liquor purchased during the preceding month
11and such other information as is reasonably required by the
12Department. The Department may adopt rules to require that this
13statement be filed in an electronic or telephonic format. Such
14rules may provide for exceptions from the filing requirements
15of this paragraph. For the purposes of this paragraph, the term
16"alcoholic liquor" shall have the meaning prescribed in the
17Liquor Control Act of 1934.
18    Beginning on October 1, 2003, every distributor, importing
19distributor, and manufacturer of alcoholic liquor as defined in
20the Liquor Control Act of 1934, shall file a statement with the
21Department of Revenue, no later than the 10th day of the month
22for the preceding month during which transactions occurred, by
23electronic means, showing the total amount of gross receipts
24from the sale of alcoholic liquor sold or distributed during
25the preceding month to purchasers; identifying the purchaser to
26whom it was sold or distributed; the purchaser's tax

 

 

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1registration number; and such other information reasonably
2required by the Department. A distributor, importing
3distributor, or manufacturer of alcoholic liquor must
4personally deliver, mail, or provide by electronic means to
5each retailer listed on the monthly statement a report
6containing a cumulative total of that distributor's, importing
7distributor's, or manufacturer's total sales of alcoholic
8liquor to that retailer no later than the 10th day of the month
9for the preceding month during which the transaction occurred.
10The distributor, importing distributor, or manufacturer shall
11notify the retailer as to the method by which the distributor,
12importing distributor, or manufacturer will provide the sales
13information. If the retailer is unable to receive the sales
14information by electronic means, the distributor, importing
15distributor, or manufacturer shall furnish the sales
16information by personal delivery or by mail. For purposes of
17this paragraph, the term "electronic means" includes, but is
18not limited to, the use of a secure Internet website, e-mail,
19or facsimile.
20    If a total amount of less than $1 is payable, refundable or
21creditable, such amount shall be disregarded if it is less than
2250 cents and shall be increased to $1 if it is 50 cents or more.
23    Beginning October 1, 1993, a taxpayer who has an average
24monthly tax liability of $150,000 or more shall make all
25payments required by rules of the Department by electronic
26funds transfer. Beginning October 1, 1994, a taxpayer who has

 

 

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1an average monthly tax liability of $100,000 or more shall make
2all payments required by rules of the Department by electronic
3funds transfer. Beginning October 1, 1995, a taxpayer who has
4an average monthly tax liability of $50,000 or more shall make
5all payments required by rules of the Department by electronic
6funds transfer. Beginning October 1, 2000, a taxpayer who has
7an annual tax liability of $200,000 or more shall make all
8payments required by rules of the Department by electronic
9funds transfer. The term "annual tax liability" shall be the
10sum of the taxpayer's liabilities under this Act, and under all
11other State and local occupation and use tax laws administered
12by the Department, for the immediately preceding calendar year.
13The term "average monthly tax liability" shall be the sum of
14the taxpayer's liabilities under this Act, and under all other
15State and local occupation and use tax laws administered by the
16Department, for the immediately preceding calendar year
17divided by 12. Beginning on October 1, 2002, a taxpayer who has
18a tax liability in the amount set forth in subsection (b) of
19Section 2505-210 of the Department of Revenue Law shall make
20all payments required by rules of the Department by electronic
21funds transfer.
22    Before August 1 of each year beginning in 1993, the
23Department shall notify all taxpayers required to make payments
24by electronic funds transfer. All taxpayers required to make
25payments by electronic funds transfer shall make those payments
26for a minimum of one year beginning on October 1.

 

 

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1    Any taxpayer not required to make payments by electronic
2funds transfer may make payments by electronic funds transfer
3with the permission of the Department.
4    All taxpayers required to make payment by electronic funds
5transfer and any taxpayers authorized to voluntarily make
6payments by electronic funds transfer shall make those payments
7in the manner authorized by the Department.
8    The Department shall adopt such rules as are necessary to
9effectuate a program of electronic funds transfer and the
10requirements of this Section.
11    Any amount which is required to be shown or reported on any
12return or other document under this Act shall, if such amount
13is not a whole-dollar amount, be increased to the nearest
14whole-dollar amount in any case where the fractional part of a
15dollar is 50 cents or more, and decreased to the nearest
16whole-dollar amount where the fractional part of a dollar is
17less than 50 cents.
18    If the retailer is otherwise required to file a monthly
19return and if the retailer's average monthly tax liability to
20the Department does not exceed $200, the Department may
21authorize his returns to be filed on a quarter annual basis,
22with the return for January, February and March of a given year
23being due by April 20 of such year; with the return for April,
24May and June of a given year being due by July 20 of such year;
25with the return for July, August and September of a given year
26being due by October 20 of such year, and with the return for

 

 

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1October, November and December of a given year being due by
2January 20 of the following year.
3    If the retailer is otherwise required to file a monthly or
4quarterly return and if the retailer's average monthly tax
5liability with the Department does not exceed $50, the
6Department may authorize his returns to be filed on an annual
7basis, with the return for a given year being due by January 20
8of the following year.
9    Such quarter annual and annual returns, as to form and
10substance, shall be subject to the same requirements as monthly
11returns.
12    Notwithstanding any other provision in this Act concerning
13the time within which a retailer may file his return, in the
14case of any retailer who ceases to engage in a kind of business
15which makes him responsible for filing returns under this Act,
16such retailer shall file a final return under this Act with the
17Department not more than one month after discontinuing such
18business.
19    Where the same person has more than one business registered
20with the Department under separate registrations under this
21Act, such person may not file each return that is due as a
22single return covering all such registered businesses, but
23shall file separate returns for each such registered business.
24    In addition, with respect to motor vehicles, watercraft,
25aircraft, and trailers that are required to be registered with
26an agency of this State, except as otherwise provided in this

 

 

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1Section, every retailer selling this kind of tangible personal
2property shall file, with the Department, upon a form to be
3prescribed and supplied by the Department, a separate return
4for each such item of tangible personal property which the
5retailer sells, except that if, in the same transaction, (i) a
6retailer of aircraft, watercraft, motor vehicles or trailers
7transfers more than one aircraft, watercraft, motor vehicle or
8trailer to another aircraft, watercraft, motor vehicle
9retailer or trailer retailer for the purpose of resale or (ii)
10a retailer of aircraft, watercraft, motor vehicles, or trailers
11transfers more than one aircraft, watercraft, motor vehicle, or
12trailer to a purchaser for use as a qualifying rolling stock as
13provided in Section 2-5 of this Act, then that seller may
14report the transfer of all aircraft, watercraft, motor vehicles
15or trailers involved in that transaction to the Department on
16the same uniform invoice-transaction reporting return form.
17For purposes of this Section, "watercraft" means a Class 2,
18Class 3, or Class 4 watercraft as defined in Section 3-2 of the
19Boat Registration and Safety Act, a personal watercraft, or any
20boat equipped with an inboard motor.
21    In addition, with respect to motor vehicles, watercraft,
22aircraft, and trailers that are required to be registered with
23an agency of this State, every person who is engaged in the
24business of leasing or renting such items and who, in
25connection with such business, sells any such item to a
26retailer for the purpose of resale is, notwithstanding any

 

 

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1other provision of this Section to the contrary, authorized to
2meet the return-filing requirement of this Act by reporting the
3transfer of all the aircraft, watercraft, motor vehicles, or
4trailers transferred for resale during a month to the
5Department on the same uniform invoice-transaction reporting
6return form on or before the 20th of the month following the
7month in which the transfer takes place. Notwithstanding any
8other provision of this Act to the contrary, all returns filed
9under this paragraph must be filed by electronic means in the
10manner and form as required by the Department.
11    Any retailer who sells only motor vehicles, watercraft,
12aircraft, or trailers that are required to be registered with
13an agency of this State, so that all retailers' occupation tax
14liability is required to be reported, and is reported, on such
15transaction reporting returns and who is not otherwise required
16to file monthly or quarterly returns, need not file monthly or
17quarterly returns. However, those retailers shall be required
18to file returns on an annual basis.
19    The transaction reporting return, in the case of motor
20vehicles or trailers that are required to be registered with an
21agency of this State, shall be the same document as the Uniform
22Invoice referred to in Section 5-402 of the Illinois Vehicle
23Code and must show the name and address of the seller; the name
24and address of the purchaser; the amount of the selling price
25including the amount allowed by the retailer for traded-in
26property, if any; the amount allowed by the retailer for the

 

 

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1traded-in tangible personal property, if any, to the extent to
2which Section 1 of this Act allows an exemption for the value
3of traded-in property; the balance payable after deducting such
4trade-in allowance from the total selling price; the amount of
5tax due from the retailer with respect to such transaction; the
6amount of tax collected from the purchaser by the retailer on
7such transaction (or satisfactory evidence that such tax is not
8due in that particular instance, if that is claimed to be the
9fact); the place and date of the sale; a sufficient
10identification of the property sold; such other information as
11is required in Section 5-402 of the Illinois Vehicle Code, and
12such other information as the Department may reasonably
13require.
14    The transaction reporting return in the case of watercraft
15or aircraft must show the name and address of the seller; the
16name and address of the purchaser; the amount of the selling
17price including the amount allowed by the retailer for
18traded-in property, if any; the amount allowed by the retailer
19for the traded-in tangible personal property, if any, to the
20extent to which Section 1 of this Act allows an exemption for
21the value of traded-in property; the balance payable after
22deducting such trade-in allowance from the total selling price;
23the amount of tax due from the retailer with respect to such
24transaction; the amount of tax collected from the purchaser by
25the retailer on such transaction (or satisfactory evidence that
26such tax is not due in that particular instance, if that is

 

 

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1claimed to be the fact); the place and date of the sale, a
2sufficient identification of the property sold, and such other
3information as the Department may reasonably require.
4    Such transaction reporting return shall be filed not later
5than 20 days after the day of delivery of the item that is
6being sold, but may be filed by the retailer at any time sooner
7than that if he chooses to do so. The transaction reporting
8return and tax remittance or proof of exemption from the
9Illinois use tax may be transmitted to the Department by way of
10the State agency with which, or State officer with whom the
11tangible personal property must be titled or registered (if
12titling or registration is required) if the Department and such
13agency or State officer determine that this procedure will
14expedite the processing of applications for title or
15registration.
16    With each such transaction reporting return, the retailer
17shall remit the proper amount of tax due (or shall submit
18satisfactory evidence that the sale is not taxable if that is
19the case), to the Department or its agents, whereupon the
20Department shall issue, in the purchaser's name, a use tax
21receipt (or a certificate of exemption if the Department is
22satisfied that the particular sale is tax exempt) which such
23purchaser may submit to the agency with which, or State officer
24with whom, he must title or register the tangible personal
25property that is involved (if titling or registration is
26required) in support of such purchaser's application for an

 

 

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1Illinois certificate or other evidence of title or registration
2to such tangible personal property.
3    No retailer's failure or refusal to remit tax under this
4Act precludes a user, who has paid the proper tax to the
5retailer, from obtaining his certificate of title or other
6evidence of title or registration (if titling or registration
7is required) upon satisfying the Department that such user has
8paid the proper tax (if tax is due) to the retailer. The
9Department shall adopt appropriate rules to carry out the
10mandate of this paragraph.
11    If the user who would otherwise pay tax to the retailer
12wants the transaction reporting return filed and the payment of
13the tax or proof of exemption made to the Department before the
14retailer is willing to take these actions and such user has not
15paid the tax to the retailer, such user may certify to the fact
16of such delay by the retailer and may (upon the Department
17being satisfied of the truth of such certification) transmit
18the information required by the transaction reporting return
19and the remittance for tax or proof of exemption directly to
20the Department and obtain his tax receipt or exemption
21determination, in which event the transaction reporting return
22and tax remittance (if a tax payment was required) shall be
23credited by the Department to the proper retailer's account
24with the Department, but without the 2.1% or 1.75% discount
25provided for in this Section being allowed. When the user pays
26the tax directly to the Department, he shall pay the tax in the

 

 

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1same amount and in the same form in which it would be remitted
2if the tax had been remitted to the Department by the retailer.
3    Refunds made by the seller during the preceding return
4period to purchasers, on account of tangible personal property
5returned to the seller, shall be allowed as a deduction under
6subdivision 5 of his monthly or quarterly return, as the case
7may be, in case the seller had theretofore included the
8receipts from the sale of such tangible personal property in a
9return filed by him and had paid the tax imposed by this Act
10with respect to such receipts.
11    Where the seller is a corporation, the return filed on
12behalf of such corporation shall be signed by the president,
13vice-president, secretary or treasurer or by the properly
14accredited agent of such corporation.
15    Where the seller is a limited liability company, the return
16filed on behalf of the limited liability company shall be
17signed by a manager, member, or properly accredited agent of
18the limited liability company.
19    Except as provided in this Section, the retailer filing the
20return under this Section shall, at the time of filing such
21return, pay to the Department the amount of tax imposed by this
22Act less a discount of 2.1% prior to January 1, 1990 and 1.75%
23on and after January 1, 1990, or $5 per calendar year,
24whichever is greater, which is allowed to reimburse the
25retailer for the expenses incurred in keeping records,
26preparing and filing returns, remitting the tax and supplying

 

 

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1data to the Department on request. Any prepayment made pursuant
2to Section 2d of this Act shall be included in the amount on
3which such 2.1% or 1.75% discount is computed. In the case of
4retailers who report and pay the tax on a transaction by
5transaction basis, as provided in this Section, such discount
6shall be taken with each such tax remittance instead of when
7such retailer files his periodic return. The discount allowed
8under this Section is allowed only for returns that are filed
9in the manner required by this Act. The Department may disallow
10the discount for retailers whose certificate of registration is
11revoked at the time the return is filed, but only if the
12Department's decision to revoke the certificate of
13registration has become final.
14    Before October 1, 2000, if the taxpayer's average monthly
15tax liability to the Department under this Act, the Use Tax
16Act, the Service Occupation Tax Act, and the Service Use Tax
17Act, excluding any liability for prepaid sales tax to be
18remitted in accordance with Section 2d of this Act, was $10,000
19or more during the preceding 4 complete calendar quarters, he
20shall file a return with the Department each month by the 20th
21day of the month next following the month during which such tax
22liability is incurred and shall make payments to the Department
23on or before the 7th, 15th, 22nd and last day of the month
24during which such liability is incurred. On and after October
251, 2000, if the taxpayer's average monthly tax liability to the
26Department under this Act, the Use Tax Act, the Service

 

 

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1Occupation Tax Act, and the Service Use Tax Act, excluding any
2liability for prepaid sales tax to be remitted in accordance
3with Section 2d of this Act, was $20,000 or more during the
4preceding 4 complete calendar quarters, he shall file a return
5with the Department each month by the 20th day of the month
6next following the month during which such tax liability is
7incurred and shall make payment to the Department on or before
8the 7th, 15th, 22nd and last day of the month during which such
9liability is incurred. If the month during which such tax
10liability is incurred began prior to January 1, 1985, each
11payment shall be in an amount equal to 1/4 of the taxpayer's
12actual liability for the month or an amount set by the
13Department not to exceed 1/4 of the average monthly liability
14of the taxpayer to the Department for the preceding 4 complete
15calendar quarters (excluding the month of highest liability and
16the month of lowest liability in such 4 quarter period). If the
17month during which such tax liability is incurred begins on or
18after January 1, 1985 and prior to January 1, 1987, each
19payment shall be in an amount equal to 22.5% of the taxpayer's
20actual liability for the month or 27.5% of the taxpayer's
21liability for the same calendar month of the preceding year. If
22the month during which such tax liability is incurred begins on
23or after January 1, 1987 and prior to January 1, 1988, each
24payment shall be in an amount equal to 22.5% of the taxpayer's
25actual liability for the month or 26.25% of the taxpayer's
26liability for the same calendar month of the preceding year. If

 

 

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1the month during which such tax liability is incurred begins on
2or after January 1, 1988, and prior to January 1, 1989, or
3begins on or after January 1, 1996, each payment shall be in an
4amount equal to 22.5% of the taxpayer's actual liability for
5the month or 25% of the taxpayer's liability for the same
6calendar month of the preceding year. If the month during which
7such tax liability is incurred begins on or after January 1,
81989, and prior to January 1, 1996, each payment shall be in an
9amount equal to 22.5% of the taxpayer's actual liability for
10the month or 25% of the taxpayer's liability for the same
11calendar month of the preceding year or 100% of the taxpayer's
12actual liability for the quarter monthly reporting period. The
13amount of such quarter monthly payments shall be credited
14against the final tax liability of the taxpayer's return for
15that month. Before October 1, 2000, once applicable, the
16requirement of the making of quarter monthly payments to the
17Department by taxpayers having an average monthly tax liability
18of $10,000 or more as determined in the manner provided above
19shall continue until such taxpayer's average monthly liability
20to the Department during the preceding 4 complete calendar
21quarters (excluding the month of highest liability and the
22month of lowest liability) is less than $9,000, or until such
23taxpayer's average monthly liability to the Department as
24computed for each calendar quarter of the 4 preceding complete
25calendar quarter period is less than $10,000. However, if a
26taxpayer can show the Department that a substantial change in

 

 

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1the taxpayer's business has occurred which causes the taxpayer
2to anticipate that his average monthly tax liability for the
3reasonably foreseeable future will fall below the $10,000
4threshold stated above, then such taxpayer may petition the
5Department for a change in such taxpayer's reporting status. On
6and after October 1, 2000, once applicable, the requirement of
7the making of quarter monthly payments to the Department by
8taxpayers having an average monthly tax liability of $20,000 or
9more as determined in the manner provided above shall continue
10until such taxpayer's average monthly liability to the
11Department during the preceding 4 complete calendar quarters
12(excluding the month of highest liability and the month of
13lowest liability) is less than $19,000 or until such taxpayer's
14average monthly liability to the Department as computed for
15each calendar quarter of the 4 preceding complete calendar
16quarter period is less than $20,000. However, if a taxpayer can
17show the Department that a substantial change in the taxpayer's
18business has occurred which causes the taxpayer to anticipate
19that his average monthly tax liability for the reasonably
20foreseeable future will fall below the $20,000 threshold stated
21above, then such taxpayer may petition the Department for a
22change in such taxpayer's reporting status. The Department
23shall change such taxpayer's reporting status unless it finds
24that such change is seasonal in nature and not likely to be
25long term. If any such quarter monthly payment is not paid at
26the time or in the amount required by this Section, then the

 

 

HB2300- 152 -LRB101 07228 HLH 52266 b

1taxpayer shall be liable for penalties and interest on the
2difference between the minimum amount due as a payment and the
3amount of such quarter monthly payment actually and timely
4paid, except insofar as the taxpayer has previously made
5payments for that month to the Department in excess of the
6minimum payments previously due as provided in this Section.
7The Department shall make reasonable rules and regulations to
8govern the quarter monthly payment amount and quarter monthly
9payment dates for taxpayers who file on other than a calendar
10monthly basis.
11    The provisions of this paragraph apply before October 1,
122001. Without regard to whether a taxpayer is required to make
13quarter monthly payments as specified above, any taxpayer who
14is required by Section 2d of this Act to collect and remit
15prepaid taxes and has collected prepaid taxes which average in
16excess of $25,000 per month during the preceding 2 complete
17calendar quarters, shall file a return with the Department as
18required by Section 2f and shall make payments to the
19Department on or before the 7th, 15th, 22nd and last day of the
20month during which such liability is incurred. If the month
21during which such tax liability is incurred began prior to
22September 1, 1985 (the effective date of Public Act 84-221),
23each payment shall be in an amount not less than 22.5% of the
24taxpayer's actual liability under Section 2d. If the month
25during which such tax liability is incurred begins on or after
26January 1, 1986, each payment shall be in an amount equal to

 

 

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122.5% of the taxpayer's actual liability for the month or 27.5%
2of the taxpayer's liability for the same calendar month of the
3preceding calendar year. If the month during which such tax
4liability is incurred begins on or after January 1, 1987, each
5payment shall be in an amount equal to 22.5% of the taxpayer's
6actual liability for the month or 26.25% of the taxpayer's
7liability for the same calendar month of the preceding year.
8The amount of such quarter monthly payments shall be credited
9against the final tax liability of the taxpayer's return for
10that month filed under this Section or Section 2f, as the case
11may be. Once applicable, the requirement of the making of
12quarter monthly payments to the Department pursuant to this
13paragraph shall continue until such taxpayer's average monthly
14prepaid tax collections during the preceding 2 complete
15calendar quarters is $25,000 or less. If any such quarter
16monthly payment is not paid at the time or in the amount
17required, the taxpayer shall be liable for penalties and
18interest on such difference, except insofar as the taxpayer has
19previously made payments for that month in excess of the
20minimum payments previously due.
21    The provisions of this paragraph apply on and after October
221, 2001. Without regard to whether a taxpayer is required to
23make quarter monthly payments as specified above, any taxpayer
24who is required by Section 2d of this Act to collect and remit
25prepaid taxes and has collected prepaid taxes that average in
26excess of $20,000 per month during the preceding 4 complete

 

 

HB2300- 154 -LRB101 07228 HLH 52266 b

1calendar quarters shall file a return with the Department as
2required by Section 2f and shall make payments to the
3Department on or before the 7th, 15th, 22nd and last day of the
4month during which the liability is incurred. Each payment
5shall be in an amount equal to 22.5% of the taxpayer's actual
6liability for the month or 25% of the taxpayer's liability for
7the same calendar month of the preceding year. The amount of
8the quarter monthly payments shall be credited against the
9final tax liability of the taxpayer's return for that month
10filed under this Section or Section 2f, as the case may be.
11Once applicable, the requirement of the making of quarter
12monthly payments to the Department pursuant to this paragraph
13shall continue until the taxpayer's average monthly prepaid tax
14collections during the preceding 4 complete calendar quarters
15(excluding the month of highest liability and the month of
16lowest liability) is less than $19,000 or until such taxpayer's
17average monthly liability to the Department as computed for
18each calendar quarter of the 4 preceding complete calendar
19quarters is less than $20,000. If any such quarter monthly
20payment is not paid at the time or in the amount required, the
21taxpayer shall be liable for penalties and interest on such
22difference, except insofar as the taxpayer has previously made
23payments for that month in excess of the minimum payments
24previously due.
25    If any payment provided for in this Section exceeds the
26taxpayer's liabilities under this Act, the Use Tax Act, the

 

 

HB2300- 155 -LRB101 07228 HLH 52266 b

1Service Occupation Tax Act and the Service Use Tax Act, as
2shown on an original monthly return, the Department shall, if
3requested by the taxpayer, issue to the taxpayer a credit
4memorandum no later than 30 days after the date of payment. The
5credit evidenced by such credit memorandum may be assigned by
6the taxpayer to a similar taxpayer under this Act, the Use Tax
7Act, the Service Occupation Tax Act or the Service Use Tax Act,
8in accordance with reasonable rules and regulations to be
9prescribed by the Department. If no such request is made, the
10taxpayer may credit such excess payment against tax liability
11subsequently to be remitted to the Department under this Act,
12the Use Tax Act, the Service Occupation Tax Act or the Service
13Use Tax Act, in accordance with reasonable rules and
14regulations prescribed by the Department. If the Department
15subsequently determined that all or any part of the credit
16taken was not actually due to the taxpayer, the taxpayer's 2.1%
17and 1.75% vendor's discount shall be reduced by 2.1% or 1.75%
18of the difference between the credit taken and that actually
19due, and that taxpayer shall be liable for penalties and
20interest on such difference.
21    If a retailer of motor fuel is entitled to a credit under
22Section 2d of this Act which exceeds the taxpayer's liability
23to the Department under this Act for the month which the
24taxpayer is filing a return, the Department shall issue the
25taxpayer a credit memorandum for the excess.
26    Beginning January 1, 1990, each month the Department shall

 

 

HB2300- 156 -LRB101 07228 HLH 52266 b

1pay into the Local Government Tax Fund, a special fund in the
2State treasury which is hereby created, the net revenue
3realized for the preceding month from the 1% tax imposed under
4this Act.
5    Beginning January 1, 1990, each month the Department shall
6pay into the County and Mass Transit District Fund, a special
7fund in the State treasury which is hereby created, 4% of the
8net revenue realized for the preceding month from the 6.25%
9general rate.
10    Beginning August 1, 2000, each month the Department shall
11pay into the County and Mass Transit District Fund 20% of the
12net revenue realized for the preceding month from the 1.25%
13rate on the selling price of motor fuel and gasohol. Beginning
14September 1, 2010, each month the Department shall pay into the
15County and Mass Transit District Fund 20% of the net revenue
16realized for the preceding month from the 1.25% rate on the
17selling price of sales tax holiday items.
18    Beginning January 1, 1990, each month the Department shall
19pay into the Local Government Tax Fund 16% of the net revenue
20realized for the preceding month from the 6.25% general rate on
21the selling price of tangible personal property.
22    Beginning August 1, 2000, each month the Department shall
23pay into the Local Government Tax Fund 80% of the net revenue
24realized for the preceding month from the 1.25% rate on the
25selling price of motor fuel and gasohol. Beginning September 1,
262010, each month the Department shall pay into the Local

 

 

HB2300- 157 -LRB101 07228 HLH 52266 b

1Government Tax Fund 80% of the net revenue realized for the
2preceding month from the 1.25% rate on the selling price of
3sales tax holiday items.
4    Beginning October 1, 2009, each month the Department shall
5pay into the Capital Projects Fund an amount that is equal to
6an amount estimated by the Department to represent 80% of the
7net revenue realized for the preceding month from the sale of
8candy, grooming and hygiene products, and soft drinks that had
9been taxed at a rate of 1% prior to September 1, 2009 but that
10are now taxed at 6.25%.
11    Beginning July 1, 2011, each month the Department shall pay
12into the Clean Air Act Permit Fund 80% of the net revenue
13realized for the preceding month from the 6.25% general rate on
14the selling price of sorbents used in Illinois in the process
15of sorbent injection as used to comply with the Environmental
16Protection Act or the federal Clean Air Act, but the total
17payment into the Clean Air Act Permit Fund under this Act and
18the Use Tax Act shall not exceed $2,000,000 in any fiscal year.
19    Beginning July 1, 2013, each month the Department shall pay
20into the Underground Storage Tank Fund from the proceeds
21collected under this Act, the Use Tax Act, the Service Use Tax
22Act, and the Service Occupation Tax Act an amount equal to the
23average monthly deficit in the Underground Storage Tank Fund
24during the prior year, as certified annually by the Illinois
25Environmental Protection Agency, but the total payment into the
26Underground Storage Tank Fund under this Act, the Use Tax Act,

 

 

HB2300- 158 -LRB101 07228 HLH 52266 b

1the Service Use Tax Act, and the Service Occupation Tax Act
2shall not exceed $18,000,000 in any State fiscal year. As used
3in this paragraph, the "average monthly deficit" shall be equal
4to the difference between the average monthly claims for
5payment by the fund and the average monthly revenues deposited
6into the fund, excluding payments made pursuant to this
7paragraph.
8    Beginning July 1, 2015, of the remainder of the moneys
9received by the Department under the Use Tax Act, the Service
10Use Tax Act, the Service Occupation Tax Act, and this Act, each
11month the Department shall deposit $500,000 into the State
12Crime Laboratory Fund.
13    Of the remainder of the moneys received by the Department
14pursuant to this Act, (a) 1.75% thereof shall be paid into the
15Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
16and after July 1, 1989, 3.8% thereof shall be paid into the
17Build Illinois Fund; provided, however, that if in any fiscal
18year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
19may be, of the moneys received by the Department and required
20to be paid into the Build Illinois Fund pursuant to this Act,
21Section 9 of the Use Tax Act, Section 9 of the Service Use Tax
22Act, and Section 9 of the Service Occupation Tax Act, such Acts
23being hereinafter called the "Tax Acts" and such aggregate of
242.2% or 3.8%, as the case may be, of moneys being hereinafter
25called the "Tax Act Amount", and (2) the amount transferred to
26the Build Illinois Fund from the State and Local Sales Tax

 

 

HB2300- 159 -LRB101 07228 HLH 52266 b

1Reform Fund shall be less than the Annual Specified Amount (as
2hereinafter defined), an amount equal to the difference shall
3be immediately paid into the Build Illinois Fund from other
4moneys received by the Department pursuant to the Tax Acts; the
5"Annual Specified Amount" means the amounts specified below for
6fiscal years 1986 through 1993:
7Fiscal YearAnnual Specified Amount
81986$54,800,000
91987$76,650,000
101988$80,480,000
111989$88,510,000
121990$115,330,000
131991$145,470,000
141992$182,730,000
151993$206,520,000;
16and means the Certified Annual Debt Service Requirement (as
17defined in Section 13 of the Build Illinois Bond Act) or the
18Tax Act Amount, whichever is greater, for fiscal year 1994 and
19each fiscal year thereafter; and further provided, that if on
20the last business day of any month the sum of (1) the Tax Act
21Amount required to be deposited into the Build Illinois Bond
22Account in the Build Illinois Fund during such month and (2)
23the amount transferred to the Build Illinois Fund from the
24State and Local Sales Tax Reform Fund shall have been less than
251/12 of the Annual Specified Amount, an amount equal to the
26difference shall be immediately paid into the Build Illinois

 

 

HB2300- 160 -LRB101 07228 HLH 52266 b

1Fund from other moneys received by the Department pursuant to
2the Tax Acts; and, further provided, that in no event shall the
3payments required under the preceding proviso result in
4aggregate payments into the Build Illinois Fund pursuant to
5this clause (b) for any fiscal year in excess of the greater of
6(i) the Tax Act Amount or (ii) the Annual Specified Amount for
7such fiscal year. The amounts payable into the Build Illinois
8Fund under clause (b) of the first sentence in this paragraph
9shall be payable only until such time as the aggregate amount
10on deposit under each trust indenture securing Bonds issued and
11outstanding pursuant to the Build Illinois Bond Act is
12sufficient, taking into account any future investment income,
13to fully provide, in accordance with such indenture, for the
14defeasance of or the payment of the principal of, premium, if
15any, and interest on the Bonds secured by such indenture and on
16any Bonds expected to be issued thereafter and all fees and
17costs payable with respect thereto, all as certified by the
18Director of the Bureau of the Budget (now Governor's Office of
19Management and Budget). If on the last business day of any
20month in which Bonds are outstanding pursuant to the Build
21Illinois Bond Act, the aggregate of moneys deposited in the
22Build Illinois Bond Account in the Build Illinois Fund in such
23month shall be less than the amount required to be transferred
24in such month from the Build Illinois Bond Account to the Build
25Illinois Bond Retirement and Interest Fund pursuant to Section
2613 of the Build Illinois Bond Act, an amount equal to such

 

 

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1deficiency shall be immediately paid from other moneys received
2by the Department pursuant to the Tax Acts to the Build
3Illinois Fund; provided, however, that any amounts paid to the
4Build Illinois Fund in any fiscal year pursuant to this
5sentence shall be deemed to constitute payments pursuant to
6clause (b) of the first sentence of this paragraph and shall
7reduce the amount otherwise payable for such fiscal year
8pursuant to that clause (b). The moneys received by the
9Department pursuant to this Act and required to be deposited
10into the Build Illinois Fund are subject to the pledge, claim
11and charge set forth in Section 12 of the Build Illinois Bond
12Act.
13    Subject to payment of amounts into the Build Illinois Fund
14as provided in the preceding paragraph or in any amendment
15thereto hereafter enacted, the following specified monthly
16installment of the amount requested in the certificate of the
17Chairman of the Metropolitan Pier and Exposition Authority
18provided under Section 8.25f of the State Finance Act, but not
19in excess of sums designated as "Total Deposit", shall be
20deposited in the aggregate from collections under Section 9 of
21the Use Tax Act, Section 9 of the Service Use Tax Act, Section
229 of the Service Occupation Tax Act, and Section 3 of the
23Retailers' Occupation Tax Act into the McCormick Place
24Expansion Project Fund in the specified fiscal years.
25Fiscal YearTotal Deposit

 

 

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11993         $0
21994 53,000,000
31995 58,000,000
41996 61,000,000
51997 64,000,000
61998 68,000,000
71999 71,000,000
82000 75,000,000
92001 80,000,000
102002 93,000,000
112003 99,000,000
122004103,000,000
132005108,000,000
142006113,000,000
152007119,000,000
162008126,000,000
172009132,000,000
182010139,000,000
192011146,000,000
202012153,000,000
212013161,000,000
222014170,000,000
232015179,000,000
242016189,000,000
252017199,000,000
262018210,000,000

 

 

HB2300- 163 -LRB101 07228 HLH 52266 b

12019221,000,000
22020233,000,000
32021246,000,000
42022260,000,000
52023275,000,000
62024 275,000,000
72025 275,000,000
82026 279,000,000
92027 292,000,000
102028 307,000,000
112029 322,000,000
122030 338,000,000
132031 350,000,000
142032 350,000,000
15and
16each fiscal year
17thereafter that bonds
18are outstanding under
19Section 13.2 of the
20Metropolitan Pier and
21Exposition Authority Act,
22but not after fiscal year 2060.
23    Beginning July 20, 1993 and in each month of each fiscal
24year thereafter, one-eighth of the amount requested in the
25certificate of the Chairman of the Metropolitan Pier and
26Exposition Authority for that fiscal year, less the amount

 

 

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1deposited into the McCormick Place Expansion Project Fund by
2the State Treasurer in the respective month under subsection
3(g) of Section 13 of the Metropolitan Pier and Exposition
4Authority Act, plus cumulative deficiencies in the deposits
5required under this Section for previous months and years,
6shall be deposited into the McCormick Place Expansion Project
7Fund, until the full amount requested for the fiscal year, but
8not in excess of the amount specified above as "Total Deposit",
9has been deposited.
10    Subject to payment of amounts into the Build Illinois Fund
11and the McCormick Place Expansion Project Fund pursuant to the
12preceding paragraphs or in any amendments thereto hereafter
13enacted, beginning July 1, 1993 and ending on September 30,
142013, the Department shall each month pay into the Illinois Tax
15Increment Fund 0.27% of 80% of the net revenue realized for the
16preceding month from the 6.25% general rate on the selling
17price of tangible personal property.
18    Subject to payment of amounts into the Build Illinois Fund
19and the McCormick Place Expansion Project Fund pursuant to the
20preceding paragraphs or in any amendments thereto hereafter
21enacted, beginning with the receipt of the first report of
22taxes paid by an eligible business and continuing for a 25-year
23period, the Department shall each month pay into the Energy
24Infrastructure Fund 80% of the net revenue realized from the
256.25% general rate on the selling price of Illinois-mined coal
26that was sold to an eligible business. For purposes of this

 

 

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1paragraph, the term "eligible business" means a new electric
2generating facility certified pursuant to Section 605-332 of
3the Department of Commerce and Economic Opportunity Law of the
4Civil Administrative Code of Illinois.
5    Subject to payment of amounts into the Build Illinois Fund,
6the McCormick Place Expansion Project Fund, the Illinois Tax
7Increment Fund, and the Energy Infrastructure Fund pursuant to
8the preceding paragraphs or in any amendments to this Section
9hereafter enacted, beginning on the first day of the first
10calendar month to occur on or after August 26, 2014 (the
11effective date of Public Act 98-1098), each month, from the
12collections made under Section 9 of the Use Tax Act, Section 9
13of the Service Use Tax Act, Section 9 of the Service Occupation
14Tax Act, and Section 3 of the Retailers' Occupation Tax Act,
15the Department shall pay into the Tax Compliance and
16Administration Fund, to be used, subject to appropriation, to
17fund additional auditors and compliance personnel at the
18Department of Revenue, an amount equal to 1/12 of 5% of 80% of
19the cash receipts collected during the preceding fiscal year by
20the Audit Bureau of the Department under the Use Tax Act, the
21Service Use Tax Act, the Service Occupation Tax Act, the
22Retailers' Occupation Tax Act, and associated local occupation
23and use taxes administered by the Department.
24    Subject to payments of amounts into the Build Illinois
25Fund, the McCormick Place Expansion Project Fund, the Illinois
26Tax Increment Fund, the Energy Infrastructure Fund, and the Tax

 

 

HB2300- 166 -LRB101 07228 HLH 52266 b

1Compliance and Administration Fund as provided in this Section,
2beginning on July 1, 2018 the Department shall pay each month
3into the Downstate Public Transportation Fund the moneys
4required to be so paid under Section 2-3 of the Downstate
5Public Transportation Act.
6    Of the remainder of the moneys received by the Department
7pursuant to this Act, 75% thereof shall be paid into the State
8Treasury and 25% shall be reserved in a special account and
9used only for the transfer to the Common School Fund as part of
10the monthly transfer from the General Revenue Fund in
11accordance with Section 8a of the State Finance Act.
12    The Department may, upon separate written notice to a
13taxpayer, require the taxpayer to prepare and file with the
14Department on a form prescribed by the Department within not
15less than 60 days after receipt of the notice an annual
16information return for the tax year specified in the notice.
17Such annual return to the Department shall include a statement
18of gross receipts as shown by the retailer's last Federal
19income tax return. If the total receipts of the business as
20reported in the Federal income tax return do not agree with the
21gross receipts reported to the Department of Revenue for the
22same period, the retailer shall attach to his annual return a
23schedule showing a reconciliation of the 2 amounts and the
24reasons for the difference. The retailer's annual return to the
25Department shall also disclose the cost of goods sold by the
26retailer during the year covered by such return, opening and

 

 

HB2300- 167 -LRB101 07228 HLH 52266 b

1closing inventories of such goods for such year, costs of goods
2used from stock or taken from stock and given away by the
3retailer during such year, payroll information of the
4retailer's business during such year and any additional
5reasonable information which the Department deems would be
6helpful in determining the accuracy of the monthly, quarterly
7or annual returns filed by such retailer as provided for in
8this Section.
9    If the annual information return required by this Section
10is not filed when and as required, the taxpayer shall be liable
11as follows:
12        (i) Until January 1, 1994, the taxpayer shall be liable
13    for a penalty equal to 1/6 of 1% of the tax due from such
14    taxpayer under this Act during the period to be covered by
15    the annual return for each month or fraction of a month
16    until such return is filed as required, the penalty to be
17    assessed and collected in the same manner as any other
18    penalty provided for in this Act.
19        (ii) On and after January 1, 1994, the taxpayer shall
20    be liable for a penalty as described in Section 3-4 of the
21    Uniform Penalty and Interest Act.
22    The chief executive officer, proprietor, owner or highest
23ranking manager shall sign the annual return to certify the
24accuracy of the information contained therein. Any person who
25willfully signs the annual return containing false or
26inaccurate information shall be guilty of perjury and punished

 

 

HB2300- 168 -LRB101 07228 HLH 52266 b

1accordingly. The annual return form prescribed by the
2Department shall include a warning that the person signing the
3return may be liable for perjury.
4    The provisions of this Section concerning the filing of an
5annual information return do not apply to a retailer who is not
6required to file an income tax return with the United States
7Government.
8    As soon as possible after the first day of each month, upon
9certification of the Department of Revenue, the Comptroller
10shall order transferred and the Treasurer shall transfer from
11the General Revenue Fund to the Motor Fuel Tax Fund an amount
12equal to 1.7% of 80% of the net revenue realized under this Act
13for the second preceding month. Beginning April 1, 2000, this
14transfer is no longer required and shall not be made.
15    Net revenue realized for a month shall be the revenue
16collected by the State pursuant to this Act, less the amount
17paid out during that month as refunds to taxpayers for
18overpayment of liability.
19    For greater simplicity of administration, manufacturers,
20importers and wholesalers whose products are sold at retail in
21Illinois by numerous retailers, and who wish to do so, may
22assume the responsibility for accounting and paying to the
23Department all tax accruing under this Act with respect to such
24sales, if the retailers who are affected do not make written
25objection to the Department to this arrangement.
26    Any person who promotes, organizes, provides retail

 

 

HB2300- 169 -LRB101 07228 HLH 52266 b

1selling space for concessionaires or other types of sellers at
2the Illinois State Fair, DuQuoin State Fair, county fairs,
3local fairs, art shows, flea markets and similar exhibitions or
4events, including any transient merchant as defined by Section
52 of the Transient Merchant Act of 1987, is required to file a
6report with the Department providing the name of the merchant's
7business, the name of the person or persons engaged in
8merchant's business, the permanent address and Illinois
9Retailers Occupation Tax Registration Number of the merchant,
10the dates and location of the event and other reasonable
11information that the Department may require. The report must be
12filed not later than the 20th day of the month next following
13the month during which the event with retail sales was held.
14Any person who fails to file a report required by this Section
15commits a business offense and is subject to a fine not to
16exceed $250.
17    Any person engaged in the business of selling tangible
18personal property at retail as a concessionaire or other type
19of seller at the Illinois State Fair, county fairs, art shows,
20flea markets and similar exhibitions or events, or any
21transient merchants, as defined by Section 2 of the Transient
22Merchant Act of 1987, may be required to make a daily report of
23the amount of such sales to the Department and to make a daily
24payment of the full amount of tax due. The Department shall
25impose this requirement when it finds that there is a
26significant risk of loss of revenue to the State at such an

 

 

HB2300- 170 -LRB101 07228 HLH 52266 b

1exhibition or event. Such a finding shall be based on evidence
2that a substantial number of concessionaires or other sellers
3who are not residents of Illinois will be engaging in the
4business of selling tangible personal property at retail at the
5exhibition or event, or other evidence of a significant risk of
6loss of revenue to the State. The Department shall notify
7concessionaires and other sellers affected by the imposition of
8this requirement. In the absence of notification by the
9Department, the concessionaires and other sellers shall file
10their returns as otherwise required in this Section.
11(Source: P.A. 99-352, eff. 8-12-15; 99-858, eff. 8-19-16;
1299-933, eff. 1-27-17; 100-303, eff. 8-24-17; 100-363, eff.
137-1-18; 100-863, eff. 8-14-18; 100-1171, eff. 1-4-19.)
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.