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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 Retailers' Occupation Tax Act is amended by
5changing Section 1 as follows:
 
6    (35 ILCS 120/1)  (from Ch. 120, par. 440)
7    Sec. 1. Definitions. "Sale at retail" means any transfer of
8the ownership of or title to tangible personal property to a
9purchaser, for the purpose of use or consumption, and not for
10the purpose of resale in any form as tangible personal property
11to the extent not first subjected to a use for which it was
12purchased, for a valuable consideration: Provided that the
13property purchased is deemed to be purchased for the purpose of
14resale, despite first being used, to the extent to which it is
15resold as an ingredient of an intentionally produced product or
16byproduct of manufacturing. For this purpose, slag produced as
17an incident to manufacturing pig iron or steel and sold is
18considered to be an intentionally produced byproduct of
19manufacturing. Transactions whereby the possession of the
20property is transferred but the seller retains the title as
21security for payment of the selling price shall be deemed to be
22sales.
23    "Sale at retail" shall be construed to include any transfer

 

 

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1of the ownership of or title to tangible personal property to a
2purchaser, for use or consumption by any other person to whom
3such purchaser may transfer the tangible personal property
4without a valuable consideration, and to include any transfer,
5whether made for or without a valuable consideration, for
6resale in any form as tangible personal property unless made in
7compliance with Section 2c of this Act.
8    Sales of tangible personal property, which property, to the
9extent not first subjected to a use for which it was purchased,
10as an ingredient or constituent, goes into and forms a part of
11tangible personal property subsequently the subject of a "Sale
12at retail", are not sales at retail as defined in this Act:
13Provided that the property purchased is deemed to be purchased
14for the purpose of resale, despite first being used, to the
15extent to which it is resold as an ingredient of an
16intentionally produced product or byproduct of manufacturing.
17    "Sale at retail" shall be construed to include any Illinois
18florist's sales transaction in which the purchase order is
19received in Illinois by a florist and the sale is for use or
20consumption, but the Illinois florist has a florist in another
21state deliver the property to the purchaser or the purchaser's
22donee in such other state.
23    Nonreusable tangible personal property that is used by
24persons engaged in the business of operating a restaurant,
25cafeteria, or drive-in is a sale for resale when it is
26transferred to customers in the ordinary course of business as

 

 

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1part of the sale of food or beverages and is used to deliver,
2package, or consume food or beverages, regardless of where
3consumption of the food or beverages occurs. Examples of those
4items include, but are not limited to nonreusable, paper and
5plastic cups, plates, baskets, boxes, sleeves, buckets or other
6containers, utensils, straws, placemats, napkins, doggie bags,
7and wrapping or packaging materials that are transferred to
8customers as part of the sale of food or beverages in the
9ordinary course of business.
10    "Sale at retail" does not include the selling of food at
11retail to students, teachers, or staff, and not to the general
12public, during a school designated breakfast or lunch period,
13on the premises of a public or non-public school serving some
14or all of grades kindergarten through 12 that has an active
15identification number issued by the Department.
16    The purchase, employment and transfer of such tangible
17personal property as newsprint and ink for the primary purpose
18of conveying news (with or without other information) is not a
19purchase, use or sale of tangible personal property.
20    A person whose activities are organized and conducted
21primarily as a not-for-profit service enterprise, and who
22engages in selling tangible personal property at retail
23(whether to the public or merely to members and their guests)
24is engaged in the business of selling tangible personal
25property at retail with respect to such transactions, excepting
26only a person organized and operated exclusively for

 

 

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1charitable, religious or educational purposes either (1), to
2the extent of sales by such person to its members, students,
3patients or inmates of tangible personal property to be used
4primarily for the purposes of such person, or (2), to the
5extent of sales by such person of tangible personal property
6which is not sold or offered for sale by persons organized for
7profit. The selling of school books and school supplies by
8schools at retail to students is not "primarily for the
9purposes of" the school which does such selling. The provisions
10of this paragraph shall not apply to nor subject to taxation
11occasional dinners, socials or similar activities of a person
12organized and operated exclusively for charitable, religious
13or educational purposes, whether or not such activities are
14open to the public.
15    A person who is the recipient of a grant or contract under
16Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
17serves meals to participants in the federal Nutrition Program
18for the Elderly in return for contributions established in
19amount by the individual participant pursuant to a schedule of
20suggested fees as provided for in the federal Act is not
21engaged in the business of selling tangible personal property
22at retail with respect to such transactions.
23    "Purchaser" means anyone who, through a sale at retail,
24acquires the ownership of or title to tangible personal
25property for a valuable consideration.
26    "Reseller of motor fuel" means any person engaged in the

 

 

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1business of selling or delivering or transferring title of
2motor fuel to another person other than for use or consumption.
3No person shall act as a reseller of motor fuel within this
4State without first being registered as a reseller pursuant to
5Section 2c or a retailer pursuant to Section 2a.
6    "Selling price" or the "amount of sale" means the
7consideration for a sale valued in money whether received in
8money or otherwise, including cash, credits, property, other
9than as hereinafter provided, and services, but not including
10the value of or credit given for traded-in tangible personal
11property where the item that is traded-in is of like kind and
12character as that which is being sold, and shall be determined
13without any deduction on account of the cost of the property
14sold, the cost of materials used, labor or service cost or any
15other expense whatsoever, but does not include charges that are
16added to prices by sellers on account of the seller's tax
17liability under this Act, or on account of the seller's duty to
18collect, from the purchaser, the tax that is imposed by the Use
19Tax Act, 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 sellers' 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 the Use Tax Act or to pay the tax imposed by this
9Act on those amounts. However, the lessor who purchased the
10motor vehicle assumes the liability for reporting and paying
11the tax on those amounts directly to the Department in the same
12form (Illinois Retailers' Occupation Tax, and local retailers'
13occupation taxes, if applicable) in which the retailer would
14have reported and paid such tax if the retailer had accounted
15for the tax to the Department. For amounts received by the
16lessor from the lessee that are not calculated at the time the
17lease is executed, the lessor must file the return and pay the
18tax to the Department by the due date otherwise required by
19this Act for returns other than transaction returns. If the
20retailer is entitled under this Act to a discount for
21collecting and remitting the tax imposed under this Act to the
22Department with respect to the sale of the motor vehicle to the
23lessor, then the right to the discount provided in this Act
24shall be transferred to the lessor with respect to the tax paid
25by the lessor for any amount received by the lessor from the
26lessee for the leased vehicle that is not calculated at the

 

 

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

 

 

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1and form as required by the Department. This paragraph does not
2apply to leases of motor vehicles for which, at the time the
3lease is entered into, the term of the lease is not a defined
4period, including leases with a defined initial period with the
5option to continue the lease on a month-to-month or other basis
6beyond the initial defined period.
7    The phrase "like kind and character" shall be liberally
8construed (including but not limited to any form of motor
9vehicle for any form of motor vehicle, or any kind of farm or
10agricultural implement for any other kind of farm or
11agricultural implement), while not including a kind of item
12which, if sold at retail by that retailer, would be exempt from
13retailers' occupation tax and use tax as an isolated or
14occasional sale.
15    "Gross receipts" from the sales of tangible personal
16property at retail means the total selling price or the amount
17of such sales, as hereinbefore defined. In the case of charge
18and time sales, the amount thereof shall be included only as
19and when payments are received by the seller. Receipts or other
20consideration derived by a seller from the sale, transfer or
21assignment of accounts receivable to a wholly owned subsidiary
22will not be deemed payments prior to the time the purchaser
23makes payment on such accounts.
24    "Department" means the Department of Revenue.
25    "Person" means any natural individual, firm, partnership,
26association, joint stock company, joint adventure, public or

 

 

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1private corporation, limited liability company, or a receiver,
2executor, trustee, guardian or other representative appointed
3by order of any court.
4    The isolated or occasional sale of tangible personal
5property at retail by a person who does not hold himself out as
6being engaged (or who does not habitually engage) in selling
7such tangible personal property at retail, or a sale through a
8bulk vending machine, does not constitute engaging in a
9business of selling such tangible personal property at retail
10within the meaning of this Act; provided that any person who is
11engaged in a business which is not subject to the tax imposed
12by this Act because of involving the sale of or a contract to
13sell real estate or a construction contract to improve real
14estate or a construction contract to engineer, install, and
15maintain an integrated system of products, but who, in the
16course of conducting such business, transfers tangible
17personal property to users or consumers in the finished form in
18which it was purchased, and which does not become real estate
19or was not engineered and installed, under any provision of a
20construction contract or real estate sale or real estate sales
21agreement entered into with some other person arising out of or
22because of such nontaxable business, is engaged in the business
23of selling tangible personal property at retail to the extent
24of the value of the tangible personal property so transferred.
25If, in such a transaction, a separate charge is made for the
26tangible personal property so transferred, the value of such

 

 

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1property, for the purpose of this Act, shall be the amount so
2separately charged, but not less than the cost of such property
3to the transferor; if no separate charge is made, the value of
4such property, for the purposes of this Act, is the cost to the
5transferor of such tangible personal property. Construction
6contracts for the improvement of real estate consisting of
7engineering, installation, and maintenance of voice, data,
8video, security, and all telecommunication systems do not
9constitute engaging in a business of selling tangible personal
10property at retail within the meaning of this Act if they are
11sold at one specified contract price.
12    A person who holds himself or herself out as being engaged
13(or who habitually engages) in selling tangible personal
14property at retail is a person engaged in the business of
15selling tangible personal property at retail hereunder with
16respect to such sales (and not primarily in a service
17occupation) notwithstanding the fact that such person designs
18and produces such tangible personal property on special order
19for the purchaser and in such a way as to render the property
20of value only to such purchaser, if such tangible personal
21property so produced on special order serves substantially the
22same function as stock or standard items of tangible personal
23property that are sold at retail.
24    Persons who engage in the business of transferring tangible
25personal property upon the redemption of trading stamps are
26engaged in the business of selling such property at retail and

 

 

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1shall be liable for and shall pay the tax imposed by this Act
2on the basis of the retail value of the property transferred
3upon redemption of such stamps.
4    "Bulk vending machine" means a vending machine, containing
5unsorted confections, nuts, toys, or other items designed
6primarily to be used or played with by children which, when a
7coin or coins of a denomination not larger than $0.50 are
8inserted, are dispensed in equal portions, at random and
9without selection by the customer.
10(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)