101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4840

 

Introduced 2/18/2020, by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/2  from Ch. 120, par. 439.2
35 ILCS 105/3-5
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 110/3-5

    Amends the Use Tax Act and the Service Use Tax Act. Provides that the demonstration use or interim use of tangible personal property purchased for resale is exempt for a period of 18 months after the retailer or serviceman purchases the tangible personal property for resale. Provides that, if the period of demonstration use or interim use exceeds 18 months, the retailer or serviceman shall pay tax on the original cost price. Effective immediately.


LRB101 17685 HLH 67112 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4840LRB101 17685 HLH 67112 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Sections
52 and 3-5 as follows:
 
6    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
7    Sec. 2. Definitions.
8    "Use" means the exercise by any person of any right or
9power over tangible personal property incident to the ownership
10of that property, except that it does not include the sale of
11such property in any form as tangible personal property in the
12regular course of business to the extent that such property is
13not first subjected to a use for which it was purchased;
14provided , and does not include the use of such property by its
15owner for demonstration purposes: Provided that the property
16purchased is deemed to be purchased for the purpose of resale,
17despite first being used, to the extent to which it is resold
18as an ingredient of an intentionally produced product or
19by-product of manufacturing. For any item of tangible personal
20property purchased for resale before January 1, 2021, "use"
21"Use" does not mean the demonstration use or interim use of
22such tangible personal property by a retailer before he sells
23that tangible personal property. If, however, the period of

 

 

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1demonstration use or interim use by the retailer of tangible
2personal property purchased for resale before January 1, 2021,
3other than watercraft or aircraft, extends beyond June 30,
42022, the retailer shall pay on the retailer's original cost
5price the tax imposed by this Act, and no credit for that tax
6is permitted if the tangible personal property is subsequently
7sold by the retailer. For watercraft or aircraft purchased for
8resale before January 1, 2021, For watercraft or aircraft, if
9the period of demonstration use or interim use by the retailer
10exceeds 18 months, the retailer shall pay on the retailer's
11retailers' original cost price the tax imposed by this Act, and
12no credit for that tax is permitted if the watercraft or
13aircraft is subsequently sold by the retailer. "Use" does not
14mean the physical incorporation of tangible personal property,
15to the extent not first subjected to a use for which it was
16purchased, as an ingredient or constituent, into other tangible
17personal property (a) which is sold in the regular course of
18business or (b) which the person incorporating such ingredient
19or constituent therein has undertaken at the time of such
20purchase to cause to be transported in interstate commerce to
21destinations outside the State of Illinois: Provided that the
22property purchased is deemed to be purchased for the purpose of
23resale, despite first being used, to the extent to which it is
24resold as an ingredient of an intentionally produced product or
25by-product of manufacturing.
26    "Watercraft" means a Class 2, Class 3, or Class 4

 

 

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1watercraft as defined in Section 3-2 of the Boat Registration
2and Safety Act, a personal watercraft, or any boat equipped
3with an inboard motor.
4    "Purchase at retail" means the acquisition of the ownership
5of or title to tangible personal property through a sale at
6retail.
7    "Purchaser" means anyone who, through a sale at retail,
8acquires the ownership of tangible personal property for a
9valuable consideration.
10    "Sale at retail" means any transfer of the ownership of or
11title to tangible personal property to a purchaser, for the
12purpose of use, and not for the purpose of resale in any form
13as tangible personal property to the extent not first subjected
14to a use for which it was purchased, for a valuable
15consideration: Provided that the property purchased is deemed
16to be purchased for the purpose of resale, despite first being
17used, to the extent to which it is resold as an ingredient of
18an intentionally produced product or by-product of
19manufacturing. For this purpose, slag produced as an incident
20to manufacturing pig iron or steel and sold is considered to be
21an intentionally produced by-product of manufacturing. "Sale
22at retail" includes any such transfer made for resale unless
23made in compliance with Section 2c of the Retailers' Occupation
24Tax Act, as incorporated by reference into Section 12 of this
25Act. Transactions whereby the possession of the property is
26transferred but the seller retains the title as security for

 

 

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1payment of the selling price are sales.
2    "Sale at retail" shall also be construed to include any
3Illinois florist's sales transaction in which the purchase
4order is received in Illinois by a florist and the sale is for
5use or consumption, but the Illinois florist has a florist in
6another state deliver the property to the purchaser or the
7purchaser's donee in such other state.
8    Nonreusable tangible personal property that is used by
9persons engaged in the business of operating a restaurant,
10cafeteria, or drive-in is a sale for resale when it is
11transferred to customers in the ordinary course of business as
12part of the sale of food or beverages and is used to deliver,
13package, or consume food or beverages, regardless of where
14consumption of the food or beverages occurs. Examples of those
15items include, but are not limited to nonreusable, paper and
16plastic cups, plates, baskets, boxes, sleeves, buckets or other
17containers, utensils, straws, placemats, napkins, doggie bags,
18and wrapping or packaging materials that are transferred to
19customers as part of the sale of food or beverages in the
20ordinary course of business.
21    The purchase, employment and transfer of such tangible
22personal property as newsprint and ink for the primary purpose
23of conveying news (with or without other information) is not a
24purchase, use or sale of tangible personal property.
25    "Selling price" means the consideration for a sale valued
26in money whether received in money or otherwise, including

 

 

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1cash, credits, property other than as hereinafter provided, and
2services, but, prior to January 1, 2020, not including the
3value of or credit given for traded-in tangible personal
4property where the item that is traded-in is of like kind and
5character as that which is being sold; beginning January 1,
62020, "selling price" includes the portion of the value of or
7credit given for traded-in motor vehicles of the First Division
8as defined in Section 1-146 of the Illinois Vehicle Code of
9like kind and character as that which is being sold that
10exceeds $10,000. "Selling price" shall be determined without
11any deduction on account of the cost of the property sold, the
12cost of materials used, labor or service cost or any other
13expense whatsoever, but does not include interest or finance
14charges which appear as separate items on the bill of sale or
15sales contract nor charges that are added to prices by sellers
16on account of the seller's tax liability under the Retailers'
17Occupation Tax Act, or on account of the seller's duty to
18collect, from the purchaser, the tax that is imposed by this
19Act, or, except as otherwise provided with respect to any
20cigarette tax imposed by a home rule unit, on account of the
21seller's tax liability under any local occupation tax
22administered by the Department, or, except as otherwise
23provided with respect to any cigarette tax imposed by a home
24rule unit on account of the seller's duty to collect, from the
25purchasers, the tax that is imposed under any local use tax
26administered by the Department. Effective December 1, 1985,

 

 

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1"selling price" shall include charges that are added to prices
2by sellers on account of the seller's tax liability under the
3Cigarette Tax Act, on account of the seller's duty to collect,
4from the purchaser, the tax imposed under the Cigarette Use Tax
5Act, and on account of the seller's duty to collect, from the
6purchaser, any cigarette tax imposed by a home rule unit.
7    Notwithstanding any law to the contrary, for any motor
8vehicle, as defined in Section 1-146 of the Vehicle Code, that
9is sold on or after January 1, 2015 for the purpose of leasing
10the vehicle for a defined period that is longer than one year
11and (1) is a motor vehicle of the second division that: (A) is
12a self-contained motor vehicle designed or permanently
13converted to provide living quarters for recreational,
14camping, or travel use, with direct walk through access to the
15living quarters from the driver's seat; (B) is of the van
16configuration designed for the transportation of not less than
177 nor more than 16 passengers; or (C) has a gross vehicle
18weight rating of 8,000 pounds or less or (2) is a motor vehicle
19of the first division, "selling price" or "amount of sale"
20means the consideration received by the lessor pursuant to the
21lease contract, including amounts due at lease signing and all
22monthly or other regular payments charged over the term of the
23lease. Also included in the selling price is any amount
24received by the lessor from the lessee for the leased vehicle
25that is not calculated at the time the lease is executed,
26including, but not limited to, excess mileage charges and

 

 

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1charges for excess wear and tear. For sales that occur in
2Illinois, with respect to any amount received by the lessor
3from the lessee for the leased vehicle that is not calculated
4at the time the lease is executed, the lessor who purchased the
5motor vehicle does not incur the tax imposed by the Use Tax Act
6on those amounts, and the retailer who makes the retail sale of
7the motor vehicle to the lessor is not required to collect the
8tax imposed by this Act or to pay the tax imposed by the
9Retailers' Occupation Tax Act on those amounts. However, the
10lessor who purchased the motor vehicle assumes the liability
11for reporting and paying the tax on those amounts directly to
12the Department in the same form (Illinois Retailers' Occupation
13Tax, and local retailers' occupation taxes, if applicable) in
14which the retailer would have reported and paid such tax if the
15retailer had accounted for the tax to the Department. For
16amounts received by the lessor from the lessee that are not
17calculated at the time the lease is executed, the lessor must
18file the return and pay the tax to the Department by the due
19date otherwise required by this Act for returns other than
20transaction returns. If the retailer is entitled under this Act
21to a discount for collecting and remitting the tax imposed
22under this Act to the Department with respect to the sale of
23the motor vehicle to the lessor, then the right to the discount
24provided in this Act shall be transferred to the lessor with
25respect to the tax paid by the lessor for any amount received
26by the lessor from the lessee for the leased vehicle that is

 

 

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1not calculated at the time the lease is executed; provided that
2the discount is only allowed if the return is timely filed and
3for amounts timely paid. The "selling price" of a motor vehicle
4that is sold on or after January 1, 2015 for the purpose of
5leasing for a defined period of longer than one year shall not
6be reduced by the value of or credit given for traded-in
7tangible personal property owned by the lessor, nor shall it be
8reduced by the value of or credit given for traded-in tangible
9personal property owned by the lessee, regardless of whether
10the trade-in value thereof is assigned by the lessee to the
11lessor. In the case of a motor vehicle that is sold for the
12purpose of leasing for a defined period of longer than one
13year, the sale occurs at the time of the delivery of the
14vehicle, regardless of the due date of any lease payments. A
15lessor who incurs a Retailers' Occupation Tax liability on the
16sale of a motor vehicle coming off lease may not take a credit
17against that liability for the Use Tax the lessor paid upon the
18purchase of the motor vehicle (or for any tax the lessor paid
19with respect to any amount received by the lessor from the
20lessee for the leased vehicle that was not calculated at the
21time the lease was executed) if the selling price of the motor
22vehicle at the time of purchase was calculated using the
23definition of "selling price" as defined in this paragraph.
24Notwithstanding any other provision of this Act to the
25contrary, lessors shall file all returns and make all payments
26required under this paragraph to the Department by electronic

 

 

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1means in the manner and form as required by the Department.
2This paragraph does not apply to leases of motor vehicles for
3which, at the time the lease is entered into, the term of the
4lease is not a defined period, including leases with a defined
5initial period with the option to continue the lease on a
6month-to-month or other basis beyond the initial defined
7period.
8    The phrase "like kind and character" shall be liberally
9construed (including but not limited to any form of motor
10vehicle for any form of motor vehicle, or any kind of farm or
11agricultural implement for any other kind of farm or
12agricultural implement), while not including a kind of item
13which, if sold at retail by that retailer, would be exempt from
14retailers' occupation tax and use tax as an isolated or
15occasional sale.
16    "Department" means the Department of Revenue.
17    "Person" means any natural individual, firm, partnership,
18association, joint stock company, joint adventure, public or
19private corporation, limited liability company, or a receiver,
20executor, trustee, guardian or other representative appointed
21by order of any court.
22    "Retailer" means and includes every person engaged in the
23business of making sales at retail as defined in this Section.
24    A person who holds himself or herself out as being engaged
25(or who habitually engages) in selling tangible personal
26property at retail is a retailer hereunder with respect to such

 

 

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1sales (and not primarily in a service occupation)
2notwithstanding the fact that such person designs and produces
3such tangible personal property on special order for the
4purchaser and in such a way as to render the property of value
5only to such purchaser, if such tangible personal property so
6produced on special order serves substantially the same
7function as stock or standard items of tangible personal
8property that are sold at retail.
9    A person whose activities are organized and conducted
10primarily as a not-for-profit service enterprise, and who
11engages in selling tangible personal property at retail
12(whether to the public or merely to members and their guests)
13is a retailer with respect to such transactions, excepting only
14a person organized and operated exclusively for charitable,
15religious or educational purposes either (1), to the extent of
16sales by such person to its members, students, patients or
17inmates of tangible personal property to be used primarily for
18the purposes of such person, or (2), to the extent of sales by
19such person of tangible personal property which is not sold or
20offered for sale by persons organized for profit. The selling
21of school books and school supplies by schools at retail to
22students is not "primarily for the purposes of" the school
23which does such selling. This paragraph does not apply to nor
24subject to taxation occasional dinners, social or similar
25activities of a person organized and operated exclusively for
26charitable, religious or educational purposes, whether or not

 

 

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1such activities are open to the public.
2    A person who is the recipient of a grant or contract under
3Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
4serves meals to participants in the federal Nutrition Program
5for the Elderly in return for contributions established in
6amount by the individual participant pursuant to a schedule of
7suggested fees as provided for in the federal Act is not a
8retailer under this Act with respect to such transactions.
9    Persons who engage in the business of transferring tangible
10personal property upon the redemption of trading stamps are
11retailers hereunder when engaged in such business.
12    The isolated or occasional sale of tangible personal
13property at retail by a person who does not hold himself out as
14being engaged (or who does not habitually engage) in selling
15such tangible personal property at retail or a sale through a
16bulk vending machine does not make such person a retailer
17hereunder. However, any person who is engaged in a business
18which is not subject to the tax imposed by the Retailers'
19Occupation Tax Act because of involving the sale of or a
20contract to sell real estate or a construction contract to
21improve real estate, but who, in the course of conducting such
22business, transfers tangible personal property to users or
23consumers in the finished form in which it was purchased, and
24which does not become real estate, under any provision of a
25construction contract or real estate sale or real estate sales
26agreement entered into with some other person arising out of or

 

 

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1because of such nontaxable business, is a retailer to the
2extent of the value of the tangible personal property so
3transferred. If, in such transaction, a separate charge is made
4for the tangible personal property so transferred, the value of
5such property, for the purposes of this Act, is the amount so
6separately charged, but not less than the cost of such property
7to the transferor; if no separate charge is made, the value of
8such property, for the purposes of this Act, is the cost to the
9transferor of such tangible personal property.
10    "Retailer maintaining a place of business in this State",
11or any like term, means and includes any of the following
12retailers:
13        (1) A retailer having or maintaining within this State,
14    directly or by a subsidiary, an office, distribution house,
15    sales house, warehouse or other place of business, or any
16    agent or other representative operating within this State
17    under the authority of the retailer or its subsidiary,
18    irrespective of whether such place of business or agent or
19    other representative is located here permanently or
20    temporarily, or whether such retailer or subsidiary is
21    licensed to do business in this State. However, the
22    ownership of property that is located at the premises of a
23    printer with which the retailer has contracted for printing
24    and that consists of the final printed product, property
25    that becomes a part of the final printed product, or copy
26    from which the printed product is produced shall not result

 

 

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

 

 

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1    proof that the referrals or other activities pursued within
2    this State by such persons were not sufficient to meet the
3    nexus standards of the United States Constitution during
4    the preceding 4 quarterly periods.
5        (1.2) Beginning July 1, 2011, a retailer having a
6    contract with a person located in this State under which:
7            (A) the retailer sells the same or substantially
8        similar line of products 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 retailer provides a commission or other
13        consideration to the person located in this State based
14        upon the sale of tangible personal property by the
15        retailer.
16        The provisions of this paragraph (1.2) shall apply only
17    if the cumulative gross receipts from sales of tangible
18    personal property by the retailer to customers in this
19    State under all such contracts exceed $10,000 during the
20    preceding 4 quarterly periods ending on the last day of
21    March, June, September, and December.
22        (2) (Blank).
23        (3) (Blank).
24        (4) (Blank).
25        (5) (Blank).
26        (6) (Blank).

 

 

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

 

 

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1    maintaining a place of business in this State and is
2    required to collect and remit the tax imposed under this
3    Act and file returns for the subsequent year. If at the end
4    of a one-year period a retailer that was required to
5    collect and remit the tax imposed under this Act determines
6    that he or she did not meet the threshold in either
7    subparagraph (A) or (B) during the preceding 12-month
8    period, the retailer shall subsequently determine on a
9    quarterly basis, ending on the last day of March, June,
10    September, and December, whether he or she meets the
11    threshold of either subparagraph (A) or (B) for the
12    preceding 12-month period.
13        Beginning January 1, 2020, neither the gross receipts
14    from nor the number of separate transactions for sales of
15    tangible personal property to purchasers in Illinois that a
16    retailer makes through a marketplace facilitator and for
17    which the retailer has received a certification from the
18    marketplace facilitator pursuant to Section 2d of this Act
19    shall be included for purposes of determining whether he or
20    she has met the thresholds of this paragraph (9).
21        (10) Beginning January 1, 2020, a marketplace
22    facilitator that meets a threshold set forth in subsection
23    (b) of Section 2d of this Act.
24    "Bulk vending machine" means a vending machine, containing
25unsorted confections, nuts, toys, or other items designed
26primarily to be used or played with by children which, when a

 

 

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1coin or coins of a denomination not larger than $0.50 are
2inserted, are dispensed in equal portions, at random and
3without selection by the customer.
4(Source: P.A. 100-587, eff. 6-4-18; 101-9, eff. 6-5-19; 101-31,
5eff. 1-1-20; 101-604, eff. 1-1-20.)
 
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
24support of arts or cultural programming, activities, or
25services. These organizations include, but are not limited to,

 

 

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1music and dramatic arts organizations such as symphony
2orchestras and theatrical groups, arts and cultural service
3organizations, local arts councils, visual arts organizations,
4and media arts organizations. On and after July 1, 2001 (the
5effective date of Public Act 92-35), however, an entity
6otherwise eligible for this exemption shall not make tax-free
7purchases unless it has an active identification number issued
8by the Department.
9    (4) Personal property purchased by a governmental body, by
10a corporation, society, association, foundation, or
11institution organized and operated exclusively for charitable,
12religious, or educational purposes, or by a not-for-profit
13corporation, society, association, foundation, institution, or
14organization that has no compensated officers or employees and
15that is organized and operated primarily for the recreation of
16persons 55 years of age or older. A limited liability company
17may qualify for the exemption under this paragraph only if the
18limited liability company is organized and operated
19exclusively for educational purposes. On and after July 1,
201987, however, no entity otherwise eligible for this exemption
21shall make tax-free purchases unless it has an active exemption
22identification number issued by the Department.
23    (5) Until July 1, 2003, a passenger car that is a
24replacement vehicle to the extent that the purchase price of
25the car is subject to the Replacement Vehicle Tax.
26    (6) Until July 1, 2003 and beginning again on September 1,

 

 

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12004 through August 30, 2014, graphic arts machinery and
2equipment, including repair and replacement parts, both new and
3used, and including that manufactured on special order,
4certified by the purchaser to be used primarily for graphic
5arts production, and including machinery and equipment
6purchased for lease. Equipment includes chemicals or chemicals
7acting as catalysts but only if the chemicals or chemicals
8acting as catalysts effect a direct and immediate change upon a
9graphic arts product. Beginning on July 1, 2017, graphic arts
10machinery and equipment is included in the manufacturing and
11assembling machinery and equipment exemption under paragraph
12(18).
13    (7) Farm chemicals.
14    (8) Legal tender, currency, medallions, or gold or silver
15coinage issued by the State of Illinois, the government of the
16United States of America, or the government of any foreign
17country, and bullion.
18    (9) Personal property purchased from a teacher-sponsored
19student organization affiliated with an elementary or
20secondary school located in Illinois.
21    (10) A motor vehicle that is used for automobile renting,
22as defined in the Automobile Renting Occupation and Use Tax
23Act.
24    (11) Farm machinery and equipment, both new and used,
25including that manufactured on special order, certified by the
26purchaser to be used primarily for production agriculture or

 

 

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

 

 

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

 

 

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1extent that the proceeds of the service charge are in fact
2turned over as tips or as a substitute for tips to the
3employees who participate directly in preparing, serving,
4hosting or cleaning up the food or beverage function with
5respect to which the service charge is imposed.
6    (14) Until July 1, 2003, oil field exploration, drilling,
7and production equipment, including (i) rigs and parts of rigs,
8rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
9tubular goods, including casing and drill strings, (iii) pumps
10and pump-jack units, (iv) storage tanks and flow lines, (v) any
11individual replacement part for oil field exploration,
12drilling, and production equipment, and (vi) machinery and
13equipment purchased for lease; but excluding motor vehicles
14required to be registered under the Illinois Vehicle Code.
15    (15) Photoprocessing machinery and equipment, including
16repair and replacement parts, both new and used, including that
17manufactured on special order, certified by the purchaser to be
18used primarily for photoprocessing, and including
19photoprocessing machinery and equipment purchased for lease.
20    (16) Until July 1, 2023, coal and aggregate exploration,
21mining, off-highway hauling, processing, maintenance, and
22reclamation equipment, including replacement parts and
23equipment, and including equipment purchased for lease, but
24excluding motor vehicles required to be registered under the
25Illinois Vehicle Code. The changes made to this Section by
26Public Act 97-767 apply on and after July 1, 2003, but no claim

 

 

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1for credit or refund is allowed on or after August 16, 2013
2(the effective date of Public Act 98-456) for such taxes paid
3during the period beginning July 1, 2003 and ending on August
416, 2013 (the effective date of Public Act 98-456).
5    (17) Until July 1, 2003, distillation machinery and
6equipment, sold as a unit or kit, assembled or installed by the
7retailer, certified by the user to be used only for the
8production of ethyl alcohol that will be used for consumption
9as motor fuel or as a component of motor fuel for the personal
10use of the user, and not subject to sale or resale.
11    (18) Manufacturing and assembling machinery and equipment
12used primarily in the process of manufacturing or assembling
13tangible personal property for wholesale or retail sale or
14lease, whether that sale or lease is made directly by the
15manufacturer or by some other person, whether the materials
16used in the process are owned by the manufacturer or some other
17person, or whether that sale or lease is made apart from or as
18an incident to the seller's engaging in the service occupation
19of producing machines, tools, dies, jigs, patterns, gauges, or
20other similar items of no commercial value on special order for
21a particular purchaser. The exemption provided by this
22paragraph (18) includes production related tangible personal
23property, as defined in Section 3-50, purchased on or after
24July 1, 2019. The exemption provided by this paragraph (18)
25does not include machinery and equipment used in (i) the
26generation of electricity for wholesale or retail sale; (ii)

 

 

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1the generation or treatment of natural or artificial gas for
2wholesale or retail sale that is delivered to customers through
3pipes, pipelines, or mains; or (iii) the treatment of water for
4wholesale or retail sale that is delivered to customers through
5pipes, pipelines, or mains. The provisions of Public Act 98-583
6are declaratory of existing law as to the meaning and scope of
7this exemption. Beginning on July 1, 2017, the exemption
8provided by this paragraph (18) includes, but is not limited
9to, graphic arts machinery and equipment, as defined in
10paragraph (6) of this Section.
11    (19) Personal property delivered to a purchaser or
12purchaser's donee inside Illinois when the purchase order for
13that personal property was received by a florist located
14outside Illinois who has a florist located inside Illinois
15deliver the personal property.
16    (20) Semen used for artificial insemination of livestock
17for direct agricultural production.
18    (21) Horses, or interests in horses, registered with and
19meeting the requirements of any of the Arabian Horse Club
20Registry of America, Appaloosa Horse Club, American Quarter
21Horse Association, United States Trotting Association, or
22Jockey Club, as appropriate, used for purposes of breeding or
23racing for prizes. This item (21) is exempt from the provisions
24of Section 3-90, and the exemption provided for under this item
25(21) applies for all periods beginning May 30, 1995, but no
26claim for credit or refund is allowed on or after January 1,

 

 

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12008 for such taxes paid during the period beginning May 30,
22000 and ending on January 1, 2008.
3    (22) Computers and communications equipment utilized for
4any hospital purpose and equipment used in the diagnosis,
5analysis, or treatment of hospital patients purchased by a
6lessor who leases the equipment, under a lease of one year or
7longer executed or in effect at the time the lessor would
8otherwise be subject to the tax imposed by this Act, to a
9hospital that has been issued an active tax exemption
10identification number by the Department under Section 1g of the
11Retailers' Occupation Tax Act. If the equipment is leased in a
12manner that does not qualify for this exemption or is used in
13any other non-exempt manner, the lessor shall be liable for the
14tax imposed under this Act or the Service Use Tax Act, as the
15case may be, based on the fair market value of the property at
16the time the non-qualifying use occurs. No lessor shall collect
17or attempt to collect an amount (however designated) that
18purports to reimburse that lessor for the tax imposed by this
19Act or the Service Use Tax Act, as the case may be, if the tax
20has not been paid by the lessor. If a lessor improperly
21collects any such amount from the lessee, the lessee shall have
22a legal right to claim a refund of that amount from the lessor.
23If, however, that amount is not refunded to the lessee for any
24reason, the lessor is liable to pay that amount to the
25Department.
26    (23) Personal property purchased by a lessor who leases the

 

 

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1property, under a lease of one year or longer executed or in
2effect at the time the lessor would otherwise be subject to the
3tax imposed by this Act, to a governmental body that has been
4issued an active sales tax exemption identification number by
5the Department under Section 1g of the Retailers' Occupation
6Tax Act. If the property is leased in a manner that does not
7qualify for this exemption or used in any other non-exempt
8manner, the lessor shall be liable for the tax imposed under
9this Act or the Service Use Tax Act, as the case may be, based
10on the fair market value of the property at the time the
11non-qualifying use occurs. No lessor shall collect or attempt
12to collect an amount (however designated) that purports to
13reimburse that lessor for the tax imposed by this Act or the
14Service Use Tax Act, as the case may be, if the tax has not been
15paid by the lessor. If a lessor improperly collects any such
16amount from the lessee, the lessee shall have a legal right to
17claim a refund of that amount from the lessor. If, however,
18that amount is not refunded to the lessee for any reason, the
19lessor is liable to pay that amount to the Department.
20    (24) Beginning with taxable years ending on or after
21December 31, 1995 and ending with taxable years ending on or
22before December 31, 2004, personal property that is donated for
23disaster relief to be used in a State or federally declared
24disaster area in Illinois or bordering Illinois by a
25manufacturer or retailer that is registered in this State to a
26corporation, society, association, foundation, or institution

 

 

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1that has been issued a sales tax exemption identification
2number by the Department that assists victims of the disaster
3who reside within the declared disaster area.
4    (25) Beginning with taxable years ending on or after
5December 31, 1995 and ending with taxable years ending on or
6before December 31, 2004, personal property that is used in the
7performance of infrastructure repairs in this State, including
8but not limited to municipal roads and streets, access roads,
9bridges, sidewalks, waste disposal systems, water and sewer
10line extensions, water distribution and purification
11facilities, storm water drainage and retention facilities, and
12sewage treatment facilities, resulting from a State or
13federally declared disaster in Illinois or bordering Illinois
14when such repairs are initiated on facilities located in the
15declared disaster area within 6 months after the disaster.
16    (26) Beginning July 1, 1999, game or game birds purchased
17at a "game breeding and hunting preserve area" as that term is
18used in the Wildlife Code. This paragraph is exempt from the
19provisions of Section 3-90.
20    (27) A motor vehicle, as that term is defined in Section
211-146 of the Illinois Vehicle Code, that is donated to a
22corporation, limited liability company, society, association,
23foundation, or institution that is determined by the Department
24to be organized and operated exclusively for educational
25purposes. For purposes of this exemption, "a corporation,
26limited liability company, society, association, foundation,

 

 

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1or institution organized and operated exclusively for
2educational purposes" means all tax-supported public schools,
3private schools that offer systematic instruction in useful
4branches of learning by methods common to public schools and
5that compare favorably in their scope and intensity with the
6course of study presented in tax-supported schools, and
7vocational or technical schools or institutes organized and
8operated exclusively to provide a course of study of not less
9than 6 weeks duration and designed to prepare individuals to
10follow a trade or to pursue a manual, technical, mechanical,
11industrial, business, or commercial occupation.
12    (28) Beginning January 1, 2000, personal property,
13including food, purchased through fundraising events for the
14benefit of a public or private elementary or secondary school,
15a group of those schools, or one or more school districts if
16the events are sponsored by an entity recognized by the school
17district that consists primarily of volunteers and includes
18parents and teachers of the school children. This paragraph
19does not apply to fundraising events (i) for the benefit of
20private home instruction or (ii) for which the fundraising
21entity purchases the personal property sold at the events from
22another individual or entity that sold the property for the
23purpose of resale by the fundraising entity and that profits
24from the sale to the fundraising entity. This paragraph is
25exempt from the provisions of Section 3-90.
26    (29) Beginning January 1, 2000 and through December 31,

 

 

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12001, new or used automatic vending machines that prepare and
2serve hot food and beverages, including coffee, soup, and other
3items, and replacement parts for these machines. Beginning
4January 1, 2002 and through June 30, 2003, machines and parts
5for machines used in commercial, coin-operated amusement and
6vending business if a use or occupation tax is paid on the
7gross receipts derived from the use of the commercial,
8coin-operated amusement and vending machines. This paragraph
9is exempt from the provisions of Section 3-90.
10    (30) Beginning January 1, 2001 and through June 30, 2016,
11food for human consumption that is to be consumed off the
12premises where it is sold (other than alcoholic beverages, soft
13drinks, and food that has been prepared for immediate
14consumption) and prescription and nonprescription medicines,
15drugs, medical appliances, and insulin, urine testing
16materials, syringes, and needles used by diabetics, for human
17use, when purchased for use by a person receiving medical
18assistance under Article V of the Illinois Public Aid Code who
19resides in a licensed long-term care facility, as defined in
20the Nursing Home Care Act, or in a licensed facility as defined
21in the ID/DD Community Care Act, the MC/DD Act, or the
22Specialized Mental Health Rehabilitation Act of 2013.
23    (31) Beginning on August 2, 2001 (the effective date of
24Public Act 92-227), computers and communications equipment
25utilized for any hospital purpose and equipment used in the
26diagnosis, analysis, or treatment of hospital patients

 

 

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

 

 

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1that has been issued an active sales tax exemption
2identification number by the Department under Section 1g of the
3Retailers' Occupation Tax Act. If the property is leased in a
4manner that does not qualify for this exemption or used in any
5other nonexempt manner, the lessor shall be liable for the tax
6imposed under this Act or the Service Use Tax Act, as the case
7may be, based on the fair market value of the property at the
8time the nonqualifying use occurs. No lessor shall collect or
9attempt to collect an amount (however designated) that purports
10to reimburse that lessor for the tax imposed by this Act or the
11Service Use Tax Act, as the case may be, if the tax has not been
12paid by the lessor. If a lessor improperly collects any such
13amount from the lessee, the lessee shall have a legal right to
14claim a refund of that amount from the lessor. If, however,
15that amount is not refunded to the lessee for any reason, the
16lessor is liable to pay that amount to the Department. This
17paragraph is exempt from the provisions of Section 3-90.
18    (33) On and after July 1, 2003 and through June 30, 2004,
19the use in this State of motor vehicles of the second division
20with a gross vehicle weight in excess of 8,000 pounds and that
21are subject to the commercial distribution fee imposed under
22Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
231, 2004 and through June 30, 2005, the use in this State of
24motor vehicles of the second division: (i) with a gross vehicle
25weight rating in excess of 8,000 pounds; (ii) that are subject
26to the commercial distribution fee imposed under Section

 

 

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13-815.1 of the Illinois Vehicle Code; and (iii) that are
2primarily used for commercial purposes. Through June 30, 2005,
3this exemption applies to repair and replacement parts added
4after the initial purchase of such a motor vehicle if that
5motor vehicle is used in a manner that would qualify for the
6rolling stock exemption otherwise provided for in this Act. For
7purposes of this paragraph, the term "used for commercial
8purposes" means the transportation of persons or property in
9furtherance of any commercial or industrial enterprise,
10whether for-hire or not.
11    (34) Beginning January 1, 2008, tangible personal property
12used in the construction or maintenance of a community water
13supply, as defined under Section 3.145 of the Environmental
14Protection Act, that is operated by a not-for-profit
15corporation that holds a valid water supply permit issued under
16Title IV of the Environmental Protection Act. This paragraph is
17exempt from the provisions of Section 3-90.
18    (35) Beginning January 1, 2010, materials, parts,
19equipment, components, and furnishings incorporated into or
20upon an aircraft as part of the modification, refurbishment,
21completion, replacement, repair, or maintenance of the
22aircraft. This exemption includes consumable supplies used in
23the modification, refurbishment, completion, replacement,
24repair, and maintenance of aircraft, but excludes any
25materials, parts, equipment, components, and consumable
26supplies used in the modification, replacement, repair, and

 

 

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1maintenance of aircraft engines or power plants, whether such
2engines or power plants are installed or uninstalled upon any
3such aircraft. "Consumable supplies" include, but are not
4limited to, adhesive, tape, sandpaper, general purpose
5lubricants, cleaning solution, latex gloves, and protective
6films. This exemption applies only to the use of qualifying
7tangible personal property by persons who modify, refurbish,
8complete, repair, replace, or maintain aircraft and who (i)
9hold an Air Agency Certificate and are empowered to operate an
10approved repair station by the Federal Aviation
11Administration, (ii) have a Class IV Rating, and (iii) conduct
12operations in accordance with Part 145 of the Federal Aviation
13Regulations. The exemption does not include aircraft operated
14by a commercial air carrier providing scheduled passenger air
15service pursuant to authority issued under Part 121 or Part 129
16of the Federal Aviation Regulations. The changes made to this
17paragraph (35) by Public Act 98-534 are declarative of existing
18law.
19    (36) Tangible personal property purchased by a
20public-facilities corporation, as described in Section
2111-65-10 of the Illinois Municipal Code, for purposes of
22constructing or furnishing a municipal convention hall, but
23only if the legal title to the municipal convention hall is
24transferred to the municipality without any further
25consideration by or on behalf of the municipality at the time
26of the completion of the municipal convention hall or upon the

 

 

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1retirement or redemption of any bonds or other debt instruments
2issued by the public-facilities corporation in connection with
3the development of the municipal convention hall. This
4exemption includes existing public-facilities corporations as
5provided in Section 11-65-25 of the Illinois Municipal Code.
6This paragraph is exempt from the provisions of Section 3-90.
7    (37) Beginning January 1, 2017, menstrual pads, tampons,
8and menstrual cups.
9    (38) Merchandise that is subject to the Rental Purchase
10Agreement Occupation and Use Tax. The purchaser must certify
11that the item is purchased to be rented subject to a rental
12purchase agreement, as defined in the Rental Purchase Agreement
13Act, and provide proof of registration under the Rental
14Purchase Agreement Occupation and Use Tax Act. This paragraph
15is exempt from the provisions of Section 3-90.
16    (39) Tangible personal property purchased by a purchaser
17who is exempt from the tax imposed by this Act by operation of
18federal law. This paragraph is exempt from the provisions of
19Section 3-90.
20    (40) Qualified tangible personal property used in the
21construction or operation of a data center that has been
22granted a certificate of exemption by the Department of
23Commerce and Economic Opportunity, whether that tangible
24personal property is purchased by the owner, operator, or
25tenant of the data center or by a contractor or subcontractor
26of the owner, operator, or tenant. Data centers that would have

 

 

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1qualified for a certificate of exemption prior to January 1,
22020 had Public Act 101-31 this amendatory Act of the 101st
3General Assembly been in effect, may apply for and obtain an
4exemption for subsequent purchases of computer equipment or
5enabling software purchased or leased to upgrade, supplement,
6or replace computer equipment or enabling software purchased or
7leased in the original investment that would have qualified.
8    The Department of Commerce and Economic Opportunity shall
9grant a certificate of exemption under this item (40) to
10qualified data centers as defined by Section 605-1025 of the
11Department of Commerce and Economic Opportunity Law of the
12Civil Administrative Code of Illinois.
13    For the purposes of this item (40):
14        "Data center" means a building or a series of buildings
15    rehabilitated or constructed to house working servers in
16    one physical location or multiple sites within the State of
17    Illinois.
18        "Qualified tangible personal property" means:
19    electrical systems and equipment; climate control and
20    chilling equipment and systems; mechanical systems and
21    equipment; monitoring and secure systems; emergency
22    generators; hardware; computers; servers; data storage
23    devices; network connectivity equipment; racks; cabinets;
24    telecommunications cabling infrastructure; raised floor
25    systems; peripheral components or systems; software;
26    mechanical, electrical, or plumbing systems; battery

 

 

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1    systems; cooling systems and towers; temperature control
2    systems; other cabling; and other data center
3    infrastructure equipment and systems necessary to operate
4    qualified tangible personal property, including fixtures;
5    and component parts of any of the foregoing, including
6    installation, maintenance, repair, refurbishment, and
7    replacement of qualified tangible personal property to
8    generate, transform, transmit, distribute, or manage
9    electricity necessary to operate qualified tangible
10    personal property; and all other tangible personal
11    property that is essential to the operations of a computer
12    data center. The term "qualified tangible personal
13    property" also includes building materials physically
14    incorporated in to the qualifying data center. To document
15    the exemption allowed under this Section, the retailer must
16    obtain from the purchaser a copy of the certificate of
17    eligibility issued by the Department of Commerce and
18    Economic Opportunity.
19    This item (40) is exempt from the provisions of Section
203-90.
21    (41) For any item of tangible personal property purchased
22for resale on or after January 1, 2021, the demonstration use
23or interim use of the tangible personal property by a retailer
24is exempt from the tax imposed by this Act for a period of 18
25months after the retailer purchases the tangible personal
26property for resale. If the period of demonstration use or

 

 

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1interim use by the retailer exceeds 18 months, the retailer
2shall pay tax on the retailer's original cost price the tax
3imposed by this Act, and no credit for that tax is permitted if
4the tangible personal property is subsequently sold by the
5retailer. This item (41) is exempt from the provisions of
6Section 3-90.
7(Source: P.A. 100-22, eff. 7-6-17; 100-437, eff. 1-1-18;
8100-594, eff. 6-29-18; 100-863, eff. 8-14-18; 100-1171, eff.
91-4-19; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19; 101-81, eff.
107-12-19; revised 9-23-19.)
 
11    Section 10. The Service Use Tax Act is amended by changing
12Sections 2 and 3-5 as follows:
 
13    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
14    Sec. 2. Definitions. In this Act:
15    "Use" means the exercise by any person of any right or
16power over tangible personal property incident to the ownership
17of that property, but does not include the sale or use for
18demonstration by him of that property in any form as tangible
19personal property in the regular course of business. "Use" does
20not mean the interim use of tangible personal property nor the
21physical incorporation of tangible personal property, as an
22ingredient or constituent, into other tangible personal
23property, (a) which is sold in the regular course of business
24or (b) which the person incorporating such ingredient or

 

 

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1constituent therein has undertaken at the time of such purchase
2to cause to be transported in interstate commerce to
3destinations outside the State of Illinois. For any item of
4tangible personal property purchased tax-free for resale
5before January 1, 2021, "use" does not mean the demonstration
6use or interim use of such tangible personal property by a
7serviceman before he transfers that tangible personal property
8incident to a sale of service. If, however, the period of
9demonstration use or interim use by the serviceman of tangible
10personal property purchased tax-free for resale before January
111, 2021 extends beyond June 30, 2022, the serviceman shall pay
12on the serviceman's original cost price the tax imposed by this
13Act or the Use Tax Act, and no credit for that tax is permitted
14against any Service Occupation Tax liability incurred by the
15serviceman if the tangible personal property is subsequently
16transferred by the serviceman incident to a sale of service.
17    "Purchased from a serviceman" means the acquisition of the
18ownership of, or title to, tangible personal property through a
19sale of service.
20    "Purchaser" means any person who, through a sale of
21service, acquires the ownership of, or title to, any tangible
22personal property.
23    "Cost price" means the consideration paid by the serviceman
24for a purchase valued in money, whether paid in money or
25otherwise, including cash, credits and services, and shall be
26determined without any deduction on account of the supplier's

 

 

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

 

 

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1    under the Retailers' Occupation Tax Act or under the Use
2    Tax Act.
3        (2) a sale of tangible personal property for the
4    purpose of resale made in compliance with Section 2c of the
5    Retailers' Occupation Tax Act.
6        (3) except as hereinafter provided, a sale or transfer
7    of tangible personal property as an incident to the
8    rendering of service for or by any governmental body, or
9    for or by any corporation, society, association,
10    foundation or institution organized and operated
11    exclusively for charitable, religious or educational
12    purposes or any not-for-profit corporation, society,
13    association, foundation, institution or organization which
14    has no compensated officers or employees and which is
15    organized and operated primarily for the recreation of
16    persons 55 years of age or older. A limited liability
17    company may qualify for the exemption under this paragraph
18    only if the limited liability company is organized and
19    operated exclusively for educational purposes.
20        (4) (blank).
21        (4a) a sale or transfer of tangible personal property
22    as an incident to the rendering of service for owners,
23    lessors, or shippers of tangible personal property which is
24    utilized by interstate carriers for hire for use as rolling
25    stock moving in interstate commerce so long as so used by
26    interstate carriers for hire, and equipment operated by a

 

 

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

 

 

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1    primarily in the process of the manufacturing or
2    assembling, either in an existing, an expanded or a new
3    manufacturing facility, of tangible personal property for
4    wholesale or retail sale or lease, whether such sale or
5    lease is made directly by the manufacturer or by some other
6    person, whether the materials used in the process are owned
7    by the manufacturer or some other person, or whether such
8    sale or lease is made apart from or as an incident to the
9    seller's engaging in a service occupation and the
10    applicable tax is a Service Use Tax or Service Occupation
11    Tax, rather than Use Tax or Retailers' Occupation Tax. The
12    exemption provided by this paragraph (5) includes
13    production related tangible personal property, as defined
14    in Section 3-50 of the Use Tax Act, purchased on or after
15    July 1, 2019. The exemption provided by this paragraph (5)
16    does not include machinery and equipment used in (i) the
17    generation of electricity for wholesale or retail sale;
18    (ii) the generation or treatment of natural or artificial
19    gas for wholesale or retail sale that is delivered to
20    customers through pipes, pipelines, or mains; or (iii) the
21    treatment of water for wholesale or retail sale that is
22    delivered to customers through pipes, pipelines, or mains.
23    The provisions of Public Act 98-583 are declaratory of
24    existing law as to the meaning and scope of this exemption.
25    The exemption under this paragraph (5) is exempt from the
26    provisions of Section 3-75.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1or attachment parts of machinery, such as tools, dies, jigs,
2fixtures, patterns and molds; or any parts which require
3periodic replacement in the course of normal operation; but
4shall not include hand tools. Equipment includes chemicals or
5chemicals acting as catalysts but only if the chemicals or
6chemicals acting as catalysts effect a direct and immediate
7change upon a product being manufactured or assembled for
8wholesale or retail sale or lease. The purchaser of such
9machinery and equipment who has an active resale registration
10number shall furnish such number to the seller at the time of
11purchase. The purchaser of such machinery and equipment and
12tools without an active resale registration number shall
13prepare a certificate of exemption stating facts establishing
14the exemption, which certificate shall be available to the
15Department for inspection or audit. The Department shall
16prescribe the form of the certificate.
17    Any informal rulings, opinions or letters issued by the
18Department in response to an inquiry or request for any opinion
19from any person regarding the coverage and applicability of
20exemption (5) to specific devices shall be published,
21maintained as a public record, and made available for public
22inspection and copying. If the informal ruling, opinion or
23letter contains trade secrets or other confidential
24information, where possible the Department shall delete such
25information prior to publication. Whenever such informal
26rulings, opinions, or letters contain any policy of general

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    and is required to collect and remit the tax imposed under
2    this Act and file returns for the subsequent year. If at
3    the end of a one-year period a serviceman that was required
4    to collect and remit the tax imposed under this Act
5    determines that he or she did not meet the criteria in
6    either subparagraph (A) or (B) during the preceding
7    12-month period, the serviceman subsequently shall
8    determine on a quarterly basis, ending on the last day of
9    March, June, September, and December, whether he or she
10    meets the criteria of either subparagraph (A) or (B) for
11    the preceding 12-month period.
12        Beginning January 1, 2020, neither the gross receipts
13    from nor the number of separate transactions for sales of
14    service to purchasers in Illinois that a serviceman makes
15    through a marketplace facilitator and for which the
16    serviceman has received a certification from the
17    marketplace facilitator pursuant to Section 2d of this Act
18    shall be included for purposes of determining whether he or
19    she has met the thresholds of this paragraph (9).
20        (10) Beginning January 1, 2020, a marketplace
21    facilitator, as defined in Section 2d of this Act.
22(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
23100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article 10,
24Section 10-15, eff. 6-5-19; 101-9, Article 25, Section 25-10,
25eff. 6-5-19; 101-604, eff. 12-13-19.)
 

 

 

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1    (35 ILCS 110/3-5)
2    Sec. 3-5. Exemptions. Use of the following tangible
3personal property is exempt from the tax imposed by this Act:
4    (1) Personal property purchased from a corporation,
5society, association, foundation, institution, or
6organization, other than a limited liability company, that is
7organized and operated as a not-for-profit service enterprise
8for the benefit of persons 65 years of age or older if the
9personal property was not purchased by the enterprise for the
10purpose of resale by the enterprise.
11    (2) Personal property purchased by a non-profit Illinois
12county fair association for use in conducting, operating, or
13promoting the county fair.
14    (3) Personal property purchased by a not-for-profit arts or
15cultural organization that establishes, by proof required by
16the Department by rule, that it has received an exemption under
17Section 501(c)(3) of the Internal Revenue Code and that is
18organized and operated primarily for the presentation or
19support of arts or cultural programming, activities, or
20services. These organizations include, but are not limited to,
21music and dramatic arts organizations such as symphony
22orchestras and theatrical groups, arts and cultural service
23organizations, local arts councils, visual arts organizations,
24and media arts organizations. On and after July 1, 2001 (the
25effective date of Public Act 92-35), however, an entity
26otherwise eligible for this exemption shall not make tax-free

 

 

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1purchases unless it has an active identification number issued
2by the Department.
3    (4) Legal tender, currency, medallions, or gold or silver
4coinage issued by the State of Illinois, the government of the
5United States of America, or the government of any foreign
6country, and bullion.
7    (5) Until July 1, 2003 and beginning again on September 1,
82004 through August 30, 2014, graphic arts machinery and
9equipment, including repair and replacement parts, both new and
10used, and including that manufactured on special order or
11purchased for lease, certified by the purchaser to be used
12primarily for graphic arts production. Equipment includes
13chemicals or chemicals acting as catalysts but only if the
14chemicals or chemicals acting as catalysts effect a direct and
15immediate change upon a graphic arts product. Beginning on July
161, 2017, graphic arts machinery and equipment is included in
17the manufacturing and assembling machinery and equipment
18exemption under Section 2 of this Act.
19    (6) Personal property purchased from a teacher-sponsored
20student organization affiliated with an elementary or
21secondary school located in Illinois.
22    (7) Farm machinery and equipment, both new and used,
23including that manufactured on special order, certified by the
24purchaser to be used primarily for production agriculture or
25State or federal agricultural programs, including individual
26replacement parts for the machinery and equipment, including

 

 

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

 

 

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1to, the collection, monitoring, and correlation of animal and
2crop data for the purpose of formulating animal diets and
3agricultural chemicals. This item (7) is exempt from the
4provisions of Section 3-75.
5    (8) Until June 30, 2013, fuel and petroleum products sold
6to or used by an air common carrier, certified by the carrier
7to be used for consumption, shipment, or storage in the conduct
8of its business as an air common carrier, for a flight destined
9for or returning from a location or locations outside the
10United States without regard to previous or subsequent domestic
11stopovers.
12    Beginning July 1, 2013, fuel and petroleum products sold to
13or used by an air carrier, certified by the carrier to be used
14for consumption, shipment, or storage in the conduct of its
15business as an air common carrier, for a flight that (i) is
16engaged in foreign trade or is engaged in trade between the
17United States and any of its possessions and (ii) transports at
18least one individual or package for hire from the city of
19origination to the city of final destination on the same
20aircraft, without regard to a change in the flight number of
21that aircraft.
22    (9) Proceeds of mandatory service charges separately
23stated on customers' bills for the purchase and consumption of
24food and beverages acquired as an incident to the purchase of a
25service from a serviceman, to the extent that the proceeds of
26the service charge are in fact turned over as tips or as a

 

 

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1substitute for tips to the employees who participate directly
2in preparing, serving, hosting or cleaning up the food or
3beverage function with respect to which the service charge is
4imposed.
5    (10) Until July 1, 2003, oil field exploration, drilling,
6and production equipment, including (i) rigs and parts of rigs,
7rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
8tubular goods, including casing and drill strings, (iii) pumps
9and pump-jack units, (iv) storage tanks and flow lines, (v) any
10individual replacement part for oil field exploration,
11drilling, and production equipment, and (vi) machinery and
12equipment purchased for lease; but excluding motor vehicles
13required to be registered under the Illinois Vehicle Code.
14    (11) Proceeds from the sale of photoprocessing machinery
15and equipment, including repair and replacement parts, both new
16and used, including that manufactured on special order,
17certified by the purchaser to be used primarily for
18photoprocessing, and including photoprocessing machinery and
19equipment purchased for lease.
20    (12) Until July 1, 2023, coal and aggregate exploration,
21mining, off-highway hauling, processing, maintenance, and
22reclamation equipment, including replacement parts and
23equipment, and including equipment purchased for lease, but
24excluding motor vehicles required to be registered under the
25Illinois Vehicle Code. The changes made to this Section by
26Public Act 97-767 apply on and after July 1, 2003, but no claim

 

 

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1for credit or refund is allowed on or after August 16, 2013
2(the effective date of Public Act 98-456) for such taxes paid
3during the period beginning July 1, 2003 and ending on August
416, 2013 (the effective date of Public Act 98-456).
5    (13) Semen used for artificial insemination of livestock
6for direct agricultural production.
7    (14) Horses, or interests in horses, registered with and
8meeting the requirements of any of the Arabian Horse Club
9Registry of America, Appaloosa Horse Club, American Quarter
10Horse Association, United States Trotting Association, or
11Jockey Club, as appropriate, used for purposes of breeding or
12racing for prizes. This item (14) is exempt from the provisions
13of Section 3-75, and the exemption provided for under this item
14(14) applies for all periods beginning May 30, 1995, but no
15claim for credit or refund is allowed on or after January 1,
162008 (the effective date of Public Act 95-88) for such taxes
17paid during the period beginning May 30, 2000 and ending on
18January 1, 2008 (the effective date of Public Act 95-88).
19    (15) Computers and communications equipment utilized for
20any hospital purpose and equipment used in the diagnosis,
21analysis, or treatment of hospital patients purchased by a
22lessor who leases the equipment, under a lease of one year or
23longer executed or in effect at the time the lessor would
24otherwise be subject to the tax imposed by this Act, to a
25hospital that has been issued an active tax exemption
26identification number by the Department under Section 1g of the

 

 

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

 

 

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1to collect an amount (however designated) that purports to
2reimburse that lessor for the tax imposed by this Act or the
3Use Tax Act, as the case may be, if the tax has not been paid by
4the lessor. If a lessor improperly collects any such amount
5from the lessee, the lessee shall have a legal right to claim a
6refund of that amount from the lessor. If, however, that amount
7is not refunded to the lessee for any reason, the lessor is
8liable to pay that amount to the Department.
9    (17) Beginning with taxable years ending on or after
10December 31, 1995 and ending with taxable years ending on or
11before December 31, 2004, personal property that is donated for
12disaster relief to be used in a State or federally declared
13disaster area in Illinois or bordering Illinois by a
14manufacturer or retailer that is registered in this State to a
15corporation, society, association, foundation, or institution
16that has been issued a sales tax exemption identification
17number by the Department that assists victims of the disaster
18who reside within the declared disaster area.
19    (18) Beginning with taxable years ending on or after
20December 31, 1995 and ending with taxable years ending on or
21before December 31, 2004, personal property that is used in the
22performance of infrastructure repairs in this State, including
23but not limited to municipal roads and streets, access roads,
24bridges, sidewalks, waste disposal systems, water and sewer
25line extensions, water distribution and purification
26facilities, storm water drainage and retention facilities, and

 

 

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1sewage treatment facilities, resulting from a State or
2federally declared disaster in Illinois or bordering Illinois
3when such repairs are initiated on facilities located in the
4declared disaster area within 6 months after the disaster.
5    (19) Beginning July 1, 1999, game or game birds purchased
6at a "game breeding and hunting preserve area" as that term is
7used in the Wildlife Code. This paragraph is exempt from the
8provisions of Section 3-75.
9    (20) A motor vehicle, as that term is defined in Section
101-146 of the Illinois Vehicle Code, that is donated to a
11corporation, limited liability company, society, association,
12foundation, or institution that is determined by the Department
13to be organized and operated exclusively for educational
14purposes. For purposes of this exemption, "a corporation,
15limited liability company, society, association, foundation,
16or institution organized and operated exclusively for
17educational purposes" means all tax-supported public schools,
18private schools that offer systematic instruction in useful
19branches of learning by methods common to public schools and
20that compare favorably in their scope and intensity with the
21course of study presented in tax-supported schools, and
22vocational or technical schools or institutes organized and
23operated exclusively to provide a course of study of not less
24than 6 weeks duration and designed to prepare individuals to
25follow a trade or to pursue a manual, technical, mechanical,
26industrial, business, or commercial occupation.

 

 

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1    (21) Beginning January 1, 2000, personal property,
2including food, purchased through fundraising events for the
3benefit of a public or private elementary or secondary school,
4a group of those schools, or one or more school districts if
5the events are sponsored by an entity recognized by the school
6district that consists primarily of volunteers and includes
7parents and teachers of the school children. This paragraph
8does not apply to fundraising events (i) for the benefit of
9private home instruction or (ii) for which the fundraising
10entity purchases the personal property sold at the events from
11another individual or entity that sold the property for the
12purpose of resale by the fundraising entity and that profits
13from the sale to the fundraising entity. This paragraph is
14exempt from the provisions of Section 3-75.
15    (22) Beginning January 1, 2000 and through December 31,
162001, new or used automatic vending machines that prepare and
17serve hot food and beverages, including coffee, soup, and other
18items, and replacement parts for these machines. Beginning
19January 1, 2002 and through June 30, 2003, machines and parts
20for machines used in commercial, coin-operated amusement and
21vending business if a use or occupation tax is paid on the
22gross receipts derived from the use of the commercial,
23coin-operated amusement and vending machines. This paragraph
24is exempt from the provisions of Section 3-75.
25    (23) Beginning August 23, 2001 and through June 30, 2016,
26food for human consumption that is to be consumed off the

 

 

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1premises where it is sold (other than alcoholic beverages, soft
2drinks, and food that has been prepared for immediate
3consumption) and prescription and nonprescription medicines,
4drugs, medical appliances, and insulin, urine testing
5materials, syringes, and needles used by diabetics, for human
6use, when purchased for use by a person receiving medical
7assistance under Article V of the Illinois Public Aid Code who
8resides in a licensed long-term care facility, as defined in
9the Nursing Home Care Act, or in a licensed facility as defined
10in the ID/DD Community Care Act, the MC/DD Act, or the
11Specialized Mental Health Rehabilitation Act of 2013.
12    (24) Beginning on August 2, 2001 (the effective date of
13Public Act 92-227), computers and communications equipment
14utilized for any hospital purpose and equipment used in the
15diagnosis, analysis, or treatment of hospital patients
16purchased by a lessor who leases the equipment, under a lease
17of one year or longer executed or in effect at the time the
18lessor would otherwise be subject to the tax imposed by this
19Act, to a hospital that has been issued an active tax exemption
20identification number by the Department under Section 1g of the
21Retailers' Occupation Tax Act. If the equipment is leased in a
22manner that does not qualify for this exemption or is used in
23any other nonexempt manner, the lessor shall be liable for the
24tax imposed under this Act or the Use Tax Act, as the case may
25be, based on the fair market value of the property at the time
26the nonqualifying use occurs. No lessor shall collect or

 

 

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1attempt to collect an amount (however designated) that purports
2to reimburse that lessor for the tax imposed by this Act or the
3Use Tax Act, as the case may be, if the tax has not been paid by
4the lessor. If a lessor improperly collects any such amount
5from the lessee, the lessee shall have a legal right to claim a
6refund of that amount from the lessor. If, however, that amount
7is not refunded to the lessee for any reason, the lessor is
8liable to pay that amount to the Department. This paragraph is
9exempt from the provisions of Section 3-75.
10    (25) Beginning on August 2, 2001 (the effective date of
11Public Act 92-227), personal property purchased by a lessor who
12leases the property, under a lease of one year or longer
13executed or in effect at the time the lessor would otherwise be
14subject to the tax imposed by this Act, to a governmental body
15that has been issued an active tax exemption identification
16number by the Department under Section 1g of the Retailers'
17Occupation Tax Act. If the property is leased in a manner that
18does not qualify for this exemption or is used in any other
19nonexempt manner, the lessor shall be liable for the tax
20imposed under this Act or the Use Tax Act, as the case may be,
21based on the fair market value of the property at the time the
22nonqualifying use occurs. No lessor shall collect or attempt to
23collect an amount (however designated) that purports to
24reimburse that lessor for the tax imposed by this Act or the
25Use Tax Act, as the case may be, if the tax has not been paid by
26the lessor. If a lessor improperly collects any such amount

 

 

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

 

 

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1films. This exemption applies only to the use of qualifying
2tangible personal property transferred incident to the
3modification, refurbishment, completion, replacement, repair,
4or maintenance of aircraft by persons who (i) hold an Air
5Agency Certificate and are empowered to operate an approved
6repair station by the Federal Aviation Administration, (ii)
7have a Class IV Rating, and (iii) conduct operations in
8accordance with Part 145 of the Federal Aviation Regulations.
9The exemption does not include aircraft operated by a
10commercial air carrier providing scheduled passenger air
11service pursuant to authority issued under Part 121 or Part 129
12of the Federal Aviation Regulations. The changes made to this
13paragraph (27) by Public Act 98-534 are declarative of existing
14law.
15    (28) Tangible personal property purchased by a
16public-facilities corporation, as described in Section
1711-65-10 of the Illinois Municipal Code, for purposes of
18constructing or furnishing a municipal convention hall, but
19only if the legal title to the municipal convention hall is
20transferred to the municipality without any further
21consideration by or on behalf of the municipality at the time
22of the completion of the municipal convention hall or upon the
23retirement or redemption of any bonds or other debt instruments
24issued by the public-facilities corporation in connection with
25the development of the municipal convention hall. This
26exemption includes existing public-facilities corporations as

 

 

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1provided in Section 11-65-25 of the Illinois Municipal Code.
2This paragraph is exempt from the provisions of Section 3-75.
3    (29) Beginning January 1, 2017, menstrual pads, tampons,
4and menstrual cups.
5    (30) Tangible personal property transferred to a purchaser
6who is exempt from the tax imposed by this Act by operation of
7federal law. This paragraph is exempt from the provisions of
8Section 3-75.
9    (31) Qualified tangible personal property used in the
10construction or operation of a data center that has been
11granted a certificate of exemption by the Department of
12Commerce and Economic Opportunity, whether that tangible
13personal property is purchased by the owner, operator, or
14tenant of the data center or by a contractor or subcontractor
15of the owner, operator, or tenant. Data centers that would have
16qualified for a certificate of exemption prior to January 1,
172020 had this amendatory Act of the 101st General Assembly been
18in effect, may apply for and obtain an exemption for subsequent
19purchases of computer equipment or enabling software purchased
20or leased to upgrade, supplement, or replace computer equipment
21or enabling software purchased or leased in the original
22investment that would have qualified.
23    The Department of Commerce and Economic Opportunity shall
24grant a certificate of exemption under this item (31) to
25qualified data centers as defined by Section 605-1025 of the
26Department of Commerce and Economic Opportunity Law of the

 

 

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1Civil Administrative Code of Illinois.
2    For the purposes of this item (31):
3        "Data center" means a building or a series of buildings
4    rehabilitated or constructed to house working servers in
5    one physical location or multiple sites within the State of
6    Illinois.
7        "Qualified tangible personal property" means:
8    electrical systems and equipment; climate control and
9    chilling equipment and systems; mechanical systems and
10    equipment; monitoring and secure systems; emergency
11    generators; hardware; computers; servers; data storage
12    devices; network connectivity equipment; racks; cabinets;
13    telecommunications cabling infrastructure; raised floor
14    systems; peripheral components or systems; software;
15    mechanical, electrical, or plumbing systems; battery
16    systems; cooling systems and towers; temperature control
17    systems; other cabling; and other data center
18    infrastructure equipment and systems necessary to operate
19    qualified tangible personal property, including fixtures;
20    and component parts of any of the foregoing, including
21    installation, maintenance, repair, refurbishment, and
22    replacement of qualified tangible personal property to
23    generate, transform, transmit, distribute, or manage
24    electricity necessary to operate qualified tangible
25    personal property; and all other tangible personal
26    property that is essential to the operations of a computer

 

 

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1    data center. The term "qualified tangible personal
2    property" also includes building materials physically
3    incorporated in to the qualifying data center. To document
4    the exemption allowed under this Section, the retailer must
5    obtain from the purchaser a copy of the certificate of
6    eligibility issued by the Department of Commerce and
7    Economic Opportunity.
8    This item (31) is exempt from the provisions of Section
93-75.
10    (32) For any item of tangible personal property purchased
11tax-free for resale on or after January 1, 2021, the
12demonstration use or interim use of the tangible personal
13property by a serviceman is exempt from the tax imposed by this
14Act or the Use Tax Act for a period of 18 months after the
15serviceman purchases the tangible personal property tax-free
16for resale. If the period of demonstration use or interim use
17by the serviceman exceeds 18 months, the serviceman shall pay
18on the serviceman's original cost price the tax imposed by this
19Act or the Use Tax Act, and no credit for that tax is permitted
20against any Service Occupation Tax liability incurred by the
21serviceman if the tangible personal property is subsequently
22transferred by the serviceman incident to a sale of service.
23This item (32) is exempt from the provisions of Section 3-75.
24(Source: P.A. 100-22, eff. 7-6-17; 100-594, eff. 6-29-18;
25100-1171, eff. 1-4-19; 101-31, eff. 6-28-19; 101-81, eff.
267-12-19.)
 

 

 

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1    Section 99. Effective date. This Act takes effect upon
2becoming law.