102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2229

 

Introduced 2/26/2021, by Sen. Doris Turner

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 500/1-10
35 ILCS 5/201
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
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 115/3-5
35 ILCS 120/1  from Ch. 120, par. 440
35 ILCS 120/2-5

    Amends the Illinois Procurement Code. Provides that the Code does not apply to the leasing of State-owned facilities by a wireless carrier. Amends the Illinois Income Tax Act. Creates credit for the cost of equipment and materials used in the business of providing broadband services in Illinois. Provides that the credit does not apply to equipment and materials placed in service after December 31, 2024. Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act to exempt equipment and materials used to provide broadband services in Illinois from taxation under the Acts. Defines terms. Effective immediately.


LRB102 16908 HLH 22320 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2229LRB102 16908 HLH 22320 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 1. Short title. This Act may be cited as the
5Illinois Broadband Investment Act.
 
6    Section 3. The Illinois Procurement Code is amended by
7changing Section 1-10 as follows:
 
8    (30 ILCS 500/1-10)
9    Sec. 1-10. Application.
10    (a) This Code applies only to procurements for which
11bidders, offerors, potential contractors, or contractors were
12first solicited on or after July 1, 1998. This Code shall not
13be construed to affect or impair any contract, or any
14provision of a contract, entered into based on a solicitation
15prior to the implementation date of this Code as described in
16Article 99, including, but not limited to, any covenant
17entered into with respect to any revenue bonds or similar
18instruments. All procurements for which contracts are
19solicited between the effective date of Articles 50 and 99 and
20July 1, 1998 shall be substantially in accordance with this
21Code and its intent.
22    (b) This Code shall apply regardless of the source of the

 

 

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1funds with which the contracts are paid, including federal
2assistance moneys. This Code shall not apply to:
3        (1) Contracts between the State and its political
4    subdivisions or other governments, or between State
5    governmental bodies, except as specifically provided in
6    this Code.
7        (2) Grants, except for the filing requirements of
8    Section 20-80.
9        (3) Purchase of care, except as provided in Section
10    5-30.6 of the Illinois Public Aid Code and this Section.
11        (4) Hiring of an individual as employee and not as an
12    independent contractor, whether pursuant to an employment
13    code or policy or by contract directly with that
14    individual.
15        (5) Collective bargaining contracts.
16        (6) Purchase of real estate, except that notice of
17    this type of contract with a value of more than $25,000
18    must be published in the Procurement Bulletin within 10
19    calendar days after the deed is recorded in the county of
20    jurisdiction. The notice shall identify the real estate
21    purchased, the names of all parties to the contract, the
22    value of the contract, and the effective date of the
23    contract.
24        (7) Contracts necessary to prepare for anticipated
25    litigation, enforcement actions, or investigations,
26    provided that the chief legal counsel to the Governor

 

 

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1    shall give his or her prior approval when the procuring
2    agency is one subject to the jurisdiction of the Governor,
3    and provided that the chief legal counsel of any other
4    procuring entity subject to this Code shall give his or
5    her prior approval when the procuring entity is not one
6    subject to the jurisdiction of the Governor.
7        (8) (Blank).
8        (9) Procurement expenditures by the Illinois
9    Conservation Foundation when only private funds are used.
10        (10) (Blank).
11        (11) Public-private agreements entered into according
12    to the procurement requirements of Section 20 of the
13    Public-Private Partnerships for Transportation Act and
14    design-build agreements entered into according to the
15    procurement requirements of Section 25 of the
16    Public-Private Partnerships for Transportation Act.
17        (12) Contracts for legal, financial, and other
18    professional and artistic services entered into on or
19    before December 31, 2018 by the Illinois Finance Authority
20    in which the State of Illinois is not obligated. Such
21    contracts shall be awarded through a competitive process
22    authorized by the Board of the Illinois Finance Authority
23    and are subject to Sections 5-30, 20-160, 50-13, 50-20,
24    50-35, and 50-37 of this Code, as well as the final
25    approval by the Board of the Illinois Finance Authority of
26    the terms of the contract.

 

 

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1        (13) Contracts for services, commodities, and
2    equipment to support the delivery of timely forensic
3    science services in consultation with and subject to the
4    approval of the Chief Procurement Officer as provided in
5    subsection (d) of Section 5-4-3a of the Unified Code of
6    Corrections, except for the requirements of Sections
7    20-60, 20-65, 20-70, and 20-160 and Article 50 of this
8    Code; however, the Chief Procurement Officer may, in
9    writing with justification, waive any certification
10    required under Article 50 of this Code. For any contracts
11    for services which are currently provided by members of a
12    collective bargaining agreement, the applicable terms of
13    the collective bargaining agreement concerning
14    subcontracting shall be followed.
15        On and after January 1, 2019, this paragraph (13),
16    except for this sentence, is inoperative.
17        (14) Contracts for participation expenditures required
18    by a domestic or international trade show or exhibition of
19    an exhibitor, member, or sponsor.
20        (15) Contracts with a railroad or utility that
21    requires the State to reimburse the railroad or utilities
22    for the relocation of utilities for construction or other
23    public purpose. Contracts included within this paragraph
24    (15) shall include, but not be limited to, those
25    associated with: relocations, crossings, installations,
26    and maintenance. For the purposes of this paragraph (15),

 

 

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1    "railroad" means any form of non-highway ground
2    transportation that runs on rails or electromagnetic
3    guideways and "utility" means: (1) public utilities as
4    defined in Section 3-105 of the Public Utilities Act, (2)
5    telecommunications carriers as defined in Section 13-202
6    of the Public Utilities Act, (3) electric cooperatives as
7    defined in Section 3.4 of the Electric Supplier Act, (4)
8    telephone or telecommunications cooperatives as defined in
9    Section 13-212 of the Public Utilities Act, (5) rural
10    water or waste water systems with 10,000 connections or
11    less, (6) a holder as defined in Section 21-201 of the
12    Public Utilities Act, and (7) municipalities owning or
13    operating utility systems consisting of public utilities
14    as that term is defined in Section 11-117-2 of the
15    Illinois Municipal Code.
16        (16) Procurement expenditures necessary for the
17    Department of Public Health to provide the delivery of
18    timely newborn screening services in accordance with the
19    Newborn Metabolic Screening Act.
20        (17) Procurement expenditures necessary for the
21    Department of Agriculture, the Department of Financial and
22    Professional Regulation, the Department of Human Services,
23    and the Department of Public Health to implement the
24    Compassionate Use of Medical Cannabis Program and Opioid
25    Alternative Pilot Program requirements and ensure access
26    to medical cannabis for patients with debilitating medical

 

 

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1    conditions in accordance with the Compassionate Use of
2    Medical Cannabis Program Act.
3        (18) This Code does not apply to any procurements
4    necessary for the Department of Agriculture, the
5    Department of Financial and Professional Regulation, the
6    Department of Human Services, the Department of Commerce
7    and Economic Opportunity, and the Department of Public
8    Health to implement the Cannabis Regulation and Tax Act if
9    the applicable agency has made a good faith determination
10    that it is necessary and appropriate for the expenditure
11    to fall within this exemption and if the process is
12    conducted in a manner substantially in accordance with the
13    requirements of Sections 20-160, 25-60, 30-22, 50-5,
14    50-10, 50-10.5, 50-12, 50-13, 50-15, 50-20, 50-21, 50-35,
15    50-36, 50-37, 50-38, and 50-50 of this Code; however, for
16    Section 50-35, compliance applies only to contracts or
17    subcontracts over $100,000. Notice of each contract
18    entered into under this paragraph (18) that is related to
19    the procurement of goods and services identified in
20    paragraph (1) through (9) of this subsection shall be
21    published in the Procurement Bulletin within 14 calendar
22    days after contract execution. The Chief Procurement
23    Officer shall prescribe the form and content of the
24    notice. Each agency shall provide the Chief Procurement
25    Officer, on a monthly basis, in the form and content
26    prescribed by the Chief Procurement Officer, a report of

 

 

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1    contracts that are related to the procurement of goods and
2    services identified in this subsection. At a minimum, this
3    report shall include the name of the contractor, a
4    description of the supply or service provided, the total
5    amount of the contract, the term of the contract, and the
6    exception to this Code utilized. A copy of any or all of
7    these contracts shall be made available to the Chief
8    Procurement Officer immediately upon request. The Chief
9    Procurement Officer shall submit a report to the Governor
10    and General Assembly no later than November 1 of each year
11    that includes, at a minimum, an annual summary of the
12    monthly information reported to the Chief Procurement
13    Officer. This exemption becomes inoperative 5 years after
14    June 25, 2019 (the effective date of Public Act 101-27)
15    this amendatory Act of the 101st General Assembly.
16    Notwithstanding any other provision of law, for contracts
17entered into on or after October 1, 2017 under an exemption
18provided in any paragraph of this subsection (b), except
19paragraph (1), (2), or (5), each State agency shall post to the
20appropriate procurement bulletin the name of the contractor, a
21description of the supply or service provided, the total
22amount of the contract, the term of the contract, and the
23exception to the Code utilized. The chief procurement officer
24shall submit a report to the Governor and General Assembly no
25later than November 1 of each year that shall include, at a
26minimum, an annual summary of the monthly information reported

 

 

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1to the chief procurement officer.
2    (c) This Code does not apply to the electric power
3procurement process provided for under Section 1-75 of the
4Illinois Power Agency Act and Section 16-111.5 of the Public
5Utilities Act.
6    (d) Except for Section 20-160 and Article 50 of this Code,
7and as expressly required by Section 9.1 of the Illinois
8Lottery Law, the provisions of this Code do not apply to the
9procurement process provided for under Section 9.1 of the
10Illinois Lottery Law.
11    (e) This Code does not apply to the process used by the
12Capital Development Board to retain a person or entity to
13assist the Capital Development Board with its duties related
14to the determination of costs of a clean coal SNG brownfield
15facility, as defined by Section 1-10 of the Illinois Power
16Agency Act, as required in subsection (h-3) of Section 9-220
17of the Public Utilities Act, including calculating the range
18of capital costs, the range of operating and maintenance
19costs, or the sequestration costs or monitoring the
20construction of clean coal SNG brownfield facility for the
21full duration of construction.
22    (f) (Blank).
23    (g) (Blank).
24    (g-5) This Code does not apply to the leasing of
25State-owned facilities by a wireless carrier, as defined in
26Section 2 of the Emergency Telephone System Act.

 

 

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1    (h) This Code does not apply to the process to procure or
2contracts entered into in accordance with Sections 11-5.2 and
311-5.3 of the Illinois Public Aid Code.
4    (i) Each chief procurement officer may access records
5necessary to review whether a contract, purchase, or other
6expenditure is or is not subject to the provisions of this
7Code, unless such records would be subject to attorney-client
8privilege.
9    (j) This Code does not apply to the process used by the
10Capital Development Board to retain an artist or work or works
11of art as required in Section 14 of the Capital Development
12Board Act.
13    (k) This Code does not apply to the process to procure
14contracts, or contracts entered into, by the State Board of
15Elections or the State Electoral Board for hearing officers
16appointed pursuant to the Election Code.
17    (l) This Code does not apply to the processes used by the
18Illinois Student Assistance Commission to procure supplies and
19services paid for from the private funds of the Illinois
20Prepaid Tuition Fund. As used in this subsection (l), "private
21funds" means funds derived from deposits paid into the
22Illinois Prepaid Tuition Trust Fund and the earnings thereon.
23(Source: P.A. 100-43, eff. 8-9-17; 100-580, eff. 3-12-18;
24100-757, eff. 8-10-18; 100-1114, eff. 8-28-18; 101-27, eff.
256-25-19; 101-81, eff. 7-12-19; 101-363, eff. 8-9-19; revised
269-17-19.)
 

 

 

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1    Section 5. The Illinois Income Tax Act is amended by
2changing Section 201 as follows:
 
3    (35 ILCS 5/201)
4    (Text of Section without the changes made by P.A. 101-8,
5which did not take effect (see Section 99 of P.A. 101-8))
6    Sec. 201. Tax imposed.
7    (a) In general. A tax measured by net income is hereby
8imposed on every individual, corporation, trust and estate for
9each taxable year ending after July 31, 1969 on the privilege
10of earning or receiving income in or as a resident of this
11State. Such tax shall be in addition to all other occupation or
12privilege taxes imposed by this State or by any municipal
13corporation or political subdivision thereof.
14    (b) Rates. The tax imposed by subsection (a) of this
15Section shall be determined as follows, except as adjusted by
16subsection (d-1):
17        (1) In the case of an individual, trust or estate, for
18    taxable years ending prior to July 1, 1989, an amount
19    equal to 2 1/2% of the taxpayer's net income for the
20    taxable year.
21        (2) In the case of an individual, trust or estate, for
22    taxable years beginning prior to July 1, 1989 and ending
23    after June 30, 1989, an amount equal to the sum of (i) 2
24    1/2% of the taxpayer's net income for the period prior to

 

 

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1    July 1, 1989, as calculated under Section 202.3, and (ii)
2    3% of the taxpayer's net income for the period after June
3    30, 1989, as calculated under Section 202.3.
4        (3) In the case of an individual, trust or estate, for
5    taxable years beginning after June 30, 1989, and ending
6    prior to January 1, 2011, an amount equal to 3% of the
7    taxpayer's net income for the taxable year.
8        (4) In the case of an individual, trust, or estate,
9    for taxable years beginning prior to January 1, 2011, and
10    ending after December 31, 2010, an amount equal to the sum
11    of (i) 3% of the taxpayer's net income for the period prior
12    to January 1, 2011, as calculated under Section 202.5, and
13    (ii) 5% of the taxpayer's net income for the period after
14    December 31, 2010, as calculated under Section 202.5.
15        (5) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after January 1, 2011,
17    and ending prior to January 1, 2015, an amount equal to 5%
18    of the taxpayer's net income for the taxable year.
19        (5.1) In the case of an individual, trust, or estate,
20    for taxable years beginning prior to January 1, 2015, and
21    ending after December 31, 2014, an amount equal to the sum
22    of (i) 5% of the taxpayer's net income for the period prior
23    to January 1, 2015, as calculated under Section 202.5, and
24    (ii) 3.75% of the taxpayer's net income for the period
25    after December 31, 2014, as calculated under Section
26    202.5.

 

 

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1        (5.2) In the case of an individual, trust, or estate,
2    for taxable years beginning on or after January 1, 2015,
3    and ending prior to July 1, 2017, an amount equal to 3.75%
4    of the taxpayer's net income for the taxable year.
5        (5.3) In the case of an individual, trust, or estate,
6    for taxable years beginning prior to July 1, 2017, and
7    ending after June 30, 2017, an amount equal to the sum of
8    (i) 3.75% of the taxpayer's net income for the period
9    prior to July 1, 2017, as calculated under Section 202.5,
10    and (ii) 4.95% of the taxpayer's net income for the period
11    after June 30, 2017, as calculated under Section 202.5.
12        (5.4) In the case of an individual, trust, or estate,
13    for taxable years beginning on or after July 1, 2017, an
14    amount equal to 4.95% of the taxpayer's net income for the
15    taxable year.
16        (6) In the case of a corporation, for taxable years
17    ending prior to July 1, 1989, an amount equal to 4% of the
18    taxpayer's net income for the taxable year.
19        (7) In the case of a corporation, for taxable years
20    beginning prior to July 1, 1989 and ending after June 30,
21    1989, an amount equal to the sum of (i) 4% of the
22    taxpayer's net income for the period prior to July 1,
23    1989, as calculated under Section 202.3, and (ii) 4.8% of
24    the taxpayer's net income for the period after June 30,
25    1989, as calculated under Section 202.3.
26        (8) In the case of a corporation, for taxable years

 

 

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1    beginning after June 30, 1989, and ending prior to January
2    1, 2011, an amount equal to 4.8% of the taxpayer's net
3    income for the taxable year.
4        (9) In the case of a corporation, for taxable years
5    beginning prior to January 1, 2011, and ending after
6    December 31, 2010, an amount equal to the sum of (i) 4.8%
7    of the taxpayer's net income for the period prior to
8    January 1, 2011, as calculated under Section 202.5, and
9    (ii) 7% of the taxpayer's net income for the period after
10    December 31, 2010, as calculated under Section 202.5.
11        (10) In the case of a corporation, for taxable years
12    beginning on or after January 1, 2011, and ending prior to
13    January 1, 2015, an amount equal to 7% of the taxpayer's
14    net income for the taxable year.
15        (11) In the case of a corporation, for taxable years
16    beginning prior to January 1, 2015, and ending after
17    December 31, 2014, an amount equal to the sum of (i) 7% of
18    the taxpayer's net income for the period prior to January
19    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
20    of the taxpayer's net income for the period after December
21    31, 2014, as calculated under Section 202.5.
22        (12) In the case of a corporation, for taxable years
23    beginning on or after January 1, 2015, and ending prior to
24    July 1, 2017, an amount equal to 5.25% of the taxpayer's
25    net income for the taxable year.
26        (13) In the case of a corporation, for taxable years

 

 

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1    beginning prior to July 1, 2017, and ending after June 30,
2    2017, an amount equal to the sum of (i) 5.25% of the
3    taxpayer's net income for the period prior to July 1,
4    2017, as calculated under Section 202.5, and (ii) 7% of
5    the taxpayer's net income for the period after June 30,
6    2017, as calculated under Section 202.5.
7        (14) In the case of a corporation, for taxable years
8    beginning on or after July 1, 2017, an amount equal to 7%
9    of the taxpayer's net income for the taxable year.
10    The rates under this subsection (b) are subject to the
11provisions of Section 201.5.
12    (b-5) Surcharge; sale or exchange of assets, properties,
13and intangibles of organization gaming licensees. For each of
14taxable years 2019 through 2027, a surcharge is imposed on all
15taxpayers on income arising from the sale or exchange of
16capital assets, depreciable business property, real property
17used in the trade or business, and Section 197 intangibles (i)
18of an organization licensee under the Illinois Horse Racing
19Act of 1975 and (ii) of an organization gaming licensee under
20the Illinois Gambling Act. The amount of the surcharge is
21equal to the amount of federal income tax liability for the
22taxable year attributable to those sales and exchanges. The
23surcharge imposed shall not apply if:
24        (1) the organization gaming license, organization
25    license, or racetrack property is transferred as a result
26    of any of the following:

 

 

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1            (A) bankruptcy, a receivership, or a debt
2        adjustment initiated by or against the initial
3        licensee or the substantial owners of the initial
4        licensee;
5            (B) cancellation, revocation, or termination of
6        any such license by the Illinois Gaming Board or the
7        Illinois Racing Board;
8            (C) a determination by the Illinois Gaming Board
9        that transfer of the license is in the best interests
10        of Illinois gaming;
11            (D) the death of an owner of the equity interest in
12        a licensee;
13            (E) the acquisition of a controlling interest in
14        the stock or substantially all of the assets of a
15        publicly traded company;
16            (F) a transfer by a parent company to a wholly
17        owned subsidiary; or
18            (G) the transfer or sale to or by one person to
19        another person where both persons were initial owners
20        of the license when the license was issued; or
21        (2) the controlling interest in the organization
22    gaming license, organization license, or racetrack
23    property is transferred in a transaction to lineal
24    descendants in which no gain or loss is recognized or as a
25    result of a transaction in accordance with Section 351 of
26    the Internal Revenue Code in which no gain or loss is

 

 

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1    recognized; or
2        (3) live horse racing was not conducted in 2010 at a
3    racetrack located within 3 miles of the Mississippi River
4    under a license issued pursuant to the Illinois Horse
5    Racing Act of 1975.
6    The transfer of an organization gaming license,
7organization license, or racetrack property by a person other
8than the initial licensee to receive the organization gaming
9license is not subject to a surcharge. The Department shall
10adopt rules necessary to implement and administer this
11subsection.
12    (c) Personal Property Tax Replacement Income Tax.
13Beginning on July 1, 1979 and thereafter, in addition to such
14income tax, there is also hereby imposed the Personal Property
15Tax Replacement Income Tax measured by net income on every
16corporation (including Subchapter S corporations), partnership
17and trust, for each taxable year ending after June 30, 1979.
18Such taxes are imposed on the privilege of earning or
19receiving income in or as a resident of this State. The
20Personal Property Tax Replacement Income Tax shall be in
21addition to the income tax imposed by subsections (a) and (b)
22of this Section and in addition to all other occupation or
23privilege taxes imposed by this State or by any municipal
24corporation or political subdivision thereof.
25    (d) Additional Personal Property Tax Replacement Income
26Tax Rates. The personal property tax replacement income tax

 

 

SB2229- 17 -LRB102 16908 HLH 22320 b

1imposed by this subsection and subsection (c) of this Section
2in the case of a corporation, other than a Subchapter S
3corporation and except as adjusted by subsection (d-1), shall
4be an additional amount equal to 2.85% of such taxpayer's net
5income for the taxable year, except that beginning on January
61, 1981, and thereafter, the rate of 2.85% specified in this
7subsection shall be reduced to 2.5%, and in the case of a
8partnership, trust or a Subchapter S corporation shall be an
9additional amount equal to 1.5% of such taxpayer's net income
10for the taxable year.
11    (d-1) Rate reduction for certain foreign insurers. In the
12case of a foreign insurer, as defined by Section 35A-5 of the
13Illinois Insurance Code, whose state or country of domicile
14imposes on insurers domiciled in Illinois a retaliatory tax
15(excluding any insurer whose premiums from reinsurance assumed
16are 50% or more of its total insurance premiums as determined
17under paragraph (2) of subsection (b) of Section 304, except
18that for purposes of this determination premiums from
19reinsurance do not include premiums from inter-affiliate
20reinsurance arrangements), beginning with taxable years ending
21on or after December 31, 1999, the sum of the rates of tax
22imposed by subsections (b) and (d) shall be reduced (but not
23increased) to the rate at which the total amount of tax imposed
24under this Act, net of all credits allowed under this Act,
25shall equal (i) the total amount of tax that would be imposed
26on the foreign insurer's net income allocable to Illinois for

 

 

SB2229- 18 -LRB102 16908 HLH 22320 b

1the taxable year by such foreign insurer's state or country of
2domicile if that net income were subject to all income taxes
3and taxes measured by net income imposed by such foreign
4insurer's state or country of domicile, net of all credits
5allowed or (ii) a rate of zero if no such tax is imposed on
6such income by the foreign insurer's state of domicile. For
7the purposes of this subsection (d-1), an inter-affiliate
8includes a mutual insurer under common management.
9        (1) For the purposes of subsection (d-1), in no event
10    shall the sum of the rates of tax imposed by subsections
11    (b) and (d) be reduced below the rate at which the sum of:
12            (A) the total amount of tax imposed on such
13        foreign insurer under this Act for a taxable year, net
14        of all credits allowed under this Act, plus
15            (B) the privilege tax imposed by Section 409 of
16        the Illinois Insurance Code, the fire insurance
17        company tax imposed by Section 12 of the Fire
18        Investigation Act, and the fire department taxes
19        imposed under Section 11-10-1 of the Illinois
20        Municipal Code,
21    equals 1.25% for taxable years ending prior to December
22    31, 2003, or 1.75% for taxable years ending on or after
23    December 31, 2003, of the net taxable premiums written for
24    the taxable year, as described by subsection (1) of
25    Section 409 of the Illinois Insurance Code. This paragraph
26    will in no event increase the rates imposed under

 

 

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1    subsections (b) and (d).
2        (2) Any reduction in the rates of tax imposed by this
3    subsection shall be applied first against the rates
4    imposed by subsection (b) and only after the tax imposed
5    by subsection (a) net of all credits allowed under this
6    Section other than the credit allowed under subsection (i)
7    has been reduced to zero, against the rates imposed by
8    subsection (d).
9    This subsection (d-1) is exempt from the provisions of
10Section 250.
11    (e) Investment credit. A taxpayer shall be allowed a
12credit against the Personal Property Tax Replacement Income
13Tax for investment in qualified property.
14        (1) A taxpayer shall be allowed a credit equal to .5%
15    of the basis of qualified property placed in service
16    during the taxable year, provided such property is placed
17    in service on or after July 1, 1984. There shall be allowed
18    an additional credit equal to .5% of the basis of
19    qualified property placed in service during the taxable
20    year, provided such property is placed in service on or
21    after July 1, 1986, and the taxpayer's base employment
22    within Illinois has increased by 1% or more over the
23    preceding year as determined by the taxpayer's employment
24    records filed with the Illinois Department of Employment
25    Security. Taxpayers who are new to Illinois shall be
26    deemed to have met the 1% growth in base employment for the

 

 

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1    first year in which they file employment records with the
2    Illinois Department of Employment Security. The provisions
3    added to this Section by Public Act 85-1200 (and restored
4    by Public Act 87-895) shall be construed as declaratory of
5    existing law and not as a new enactment. If, in any year,
6    the increase in base employment within Illinois over the
7    preceding year is less than 1%, the additional credit
8    shall be limited to that percentage times a fraction, the
9    numerator of which is .5% and the denominator of which is
10    1%, but shall not exceed .5%. The investment credit shall
11    not be allowed to the extent that it would reduce a
12    taxpayer's liability in any tax year below zero, nor may
13    any credit for qualified property be allowed for any year
14    other than the year in which the property was placed in
15    service in Illinois. For tax years ending on or after
16    December 31, 1987, and on or before December 31, 1988, the
17    credit shall be allowed for the tax year in which the
18    property is placed in service, or, if the amount of the
19    credit exceeds the tax liability for that year, whether it
20    exceeds the original liability or the liability as later
21    amended, such excess may be carried forward and applied to
22    the tax liability of the 5 taxable years following the
23    excess credit years if the taxpayer (i) makes investments
24    which cause the creation of a minimum of 2,000 full-time
25    equivalent jobs in Illinois, (ii) is located in an
26    enterprise zone established pursuant to the Illinois

 

 

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1    Enterprise Zone Act and (iii) is certified by the
2    Department of Commerce and Community Affairs (now
3    Department of Commerce and Economic Opportunity) as
4    complying with the requirements specified in clause (i)
5    and (ii) by July 1, 1986. The Department of Commerce and
6    Community Affairs (now Department of Commerce and Economic
7    Opportunity) shall notify the Department of Revenue of all
8    such certifications immediately. For tax years ending
9    after December 31, 1988, the credit shall be allowed for
10    the tax year in which the property is placed in service,
11    or, if the amount of the credit exceeds the tax liability
12    for that year, whether it exceeds the original liability
13    or the liability as later amended, such excess may be
14    carried forward and applied to the tax liability of the 5
15    taxable years following the excess credit years. The
16    credit shall be applied to the earliest year for which
17    there is a liability. If there is credit from more than one
18    tax year that is available to offset a liability, earlier
19    credit shall be applied first.
20        (2) The term "qualified property" means property
21    which:
22            (A) is tangible, whether new or used, including
23        buildings and structural components of buildings and
24        signs that are real property, but not including land
25        or improvements to real property that are not a
26        structural component of a building such as

 

 

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1        landscaping, sewer lines, local access roads, fencing,
2        parking lots, and other appurtenances;
3            (B) is depreciable pursuant to Section 167 of the
4        Internal Revenue Code, except that "3-year property"
5        as defined in Section 168(c)(2)(A) of that Code is not
6        eligible for the credit provided by this subsection
7        (e);
8            (C) is acquired by purchase as defined in Section
9        179(d) of the Internal Revenue Code;
10            (D) is used in Illinois by a taxpayer who is
11        primarily engaged in manufacturing, or in mining coal
12        or fluorite, or in retailing, or was placed in service
13        on or after July 1, 2006 in a River Edge Redevelopment
14        Zone established pursuant to the River Edge
15        Redevelopment Zone Act; and
16            (E) has not previously been used in Illinois in
17        such a manner and by such a person as would qualify for
18        the credit provided by this subsection (e) or
19        subsection (f).
20        (3) For purposes of this subsection (e),
21    "manufacturing" means the material staging and production
22    of tangible personal property by procedures commonly
23    regarded as manufacturing, processing, fabrication, or
24    assembling which changes some existing material into new
25    shapes, new qualities, or new combinations. For purposes
26    of this subsection (e) the term "mining" shall have the

 

 

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1    same meaning as the term "mining" in Section 613(c) of the
2    Internal Revenue Code. For purposes of this subsection
3    (e), the term "retailing" means the sale of tangible
4    personal property for use or consumption and not for
5    resale, or services rendered in conjunction with the sale
6    of tangible personal property for use or consumption and
7    not for resale. For purposes of this subsection (e),
8    "tangible personal property" has the same meaning as when
9    that term is used in the Retailers' Occupation Tax Act,
10    and, for taxable years ending after December 31, 2008,
11    does not include the generation, transmission, or
12    distribution of electricity.
13        (4) The basis of qualified property shall be the basis
14    used to compute the depreciation deduction for federal
15    income tax purposes.
16        (5) If the basis of the property for federal income
17    tax depreciation purposes is increased after it has been
18    placed in service in Illinois by the taxpayer, the amount
19    of such increase shall be deemed property placed in
20    service on the date of such increase in basis.
21        (6) The term "placed in service" shall have the same
22    meaning as under Section 46 of the Internal Revenue Code.
23        (7) If during any taxable year, any property ceases to
24    be qualified property in the hands of the taxpayer within
25    48 months after being placed in service, or the situs of
26    any qualified property is moved outside Illinois within 48

 

 

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1    months after being placed in service, the Personal
2    Property Tax Replacement Income Tax for such taxable year
3    shall be increased. Such increase shall be determined by
4    (i) recomputing the investment credit which would have
5    been allowed for the year in which credit for such
6    property was originally allowed by eliminating such
7    property from such computation and, (ii) subtracting such
8    recomputed credit from the amount of credit previously
9    allowed. For the purposes of this paragraph (7), a
10    reduction of the basis of qualified property resulting
11    from a redetermination of the purchase price shall be
12    deemed a disposition of qualified property to the extent
13    of such reduction.
14        (8) Unless the investment credit is extended by law,
15    the basis of qualified property shall not include costs
16    incurred after December 31, 2018, except for costs
17    incurred pursuant to a binding contract entered into on or
18    before December 31, 2018.
19        (9) Each taxable year ending before December 31, 2000,
20    a partnership may elect to pass through to its partners
21    the credits to which the partnership is entitled under
22    this subsection (e) for the taxable year. A partner may
23    use the credit allocated to him or her under this
24    paragraph only against the tax imposed in subsections (c)
25    and (d) of this Section. If the partnership makes that
26    election, those credits shall be allocated among the

 

 

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1    partners in the partnership in accordance with the rules
2    set forth in Section 704(b) of the Internal Revenue Code,
3    and the rules promulgated under that Section, and the
4    allocated amount of the credits shall be allowed to the
5    partners for that taxable year. The partnership shall make
6    this election on its Personal Property Tax Replacement
7    Income Tax return for that taxable year. The election to
8    pass through the credits shall be irrevocable.
9        For taxable years ending on or after December 31,
10    2000, a partner that qualifies its partnership for a
11    subtraction under subparagraph (I) of paragraph (2) of
12    subsection (d) of Section 203 or a shareholder that
13    qualifies a Subchapter S corporation for a subtraction
14    under subparagraph (S) of paragraph (2) of subsection (b)
15    of Section 203 shall be allowed a credit under this
16    subsection (e) equal to its share of the credit earned
17    under this subsection (e) during the taxable year by the
18    partnership or Subchapter S corporation, determined in
19    accordance with the determination of income and
20    distributive share of income under Sections 702 and 704
21    and Subchapter S of the Internal Revenue Code. This
22    paragraph is exempt from the provisions of Section 250.
23    (f) Investment credit; Enterprise Zone; River Edge
24Redevelopment Zone.
25        (1) A taxpayer shall be allowed a credit against the
26    tax imposed by subsections (a) and (b) of this Section for

 

 

SB2229- 26 -LRB102 16908 HLH 22320 b

1    investment in qualified property which is placed in
2    service in an Enterprise Zone created pursuant to the
3    Illinois Enterprise Zone Act or, for property placed in
4    service on or after July 1, 2006, a River Edge
5    Redevelopment Zone established pursuant to the River Edge
6    Redevelopment Zone Act. For partners, shareholders of
7    Subchapter S corporations, and owners of limited liability
8    companies, if the liability company is treated as a
9    partnership for purposes of federal and State income
10    taxation, there shall be allowed a credit under this
11    subsection (f) to be determined in accordance with the
12    determination of income and distributive share of income
13    under Sections 702 and 704 and Subchapter S of the
14    Internal Revenue Code. The credit shall be .5% of the
15    basis for such property. The credit shall be available
16    only in the taxable year in which the property is placed in
17    service in the Enterprise Zone or River Edge Redevelopment
18    Zone and shall not be allowed to the extent that it would
19    reduce a taxpayer's liability for the tax imposed by
20    subsections (a) and (b) of this Section to below zero. For
21    tax years ending on or after December 31, 1985, the credit
22    shall be allowed for the tax year in which the property is
23    placed in service, or, if the amount of the credit exceeds
24    the tax liability for that year, whether it exceeds the
25    original liability or the liability as later amended, such
26    excess may be carried forward and applied to the tax

 

 

SB2229- 27 -LRB102 16908 HLH 22320 b

1    liability of the 5 taxable years following the excess
2    credit year. The credit shall be applied to the earliest
3    year for which there is a liability. If there is credit
4    from more than one tax year that is available to offset a
5    liability, the credit accruing first in time shall be
6    applied first.
7        (2) The term qualified property means property which:
8            (A) is tangible, whether new or used, including
9        buildings and structural components of buildings;
10            (B) is depreciable pursuant to Section 167 of the
11        Internal Revenue Code, except that "3-year property"
12        as defined in Section 168(c)(2)(A) of that Code is not
13        eligible for the credit provided by this subsection
14        (f);
15            (C) is acquired by purchase as defined in Section
16        179(d) of the Internal Revenue Code;
17            (D) is used in the Enterprise Zone or River Edge
18        Redevelopment Zone by the taxpayer; and
19            (E) has not been previously used in Illinois in
20        such a manner and by such a person as would qualify for
21        the credit provided by this subsection (f) or
22        subsection (e).
23        (3) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (4) If the basis of the property for federal income

 

 

SB2229- 28 -LRB102 16908 HLH 22320 b

1    tax depreciation purposes is increased after it has been
2    placed in service in the Enterprise Zone or River Edge
3    Redevelopment Zone by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    date of such increase in basis.
6        (5) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (6) If during any taxable year, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside the Enterprise
12    Zone or River Edge Redevelopment Zone within 48 months
13    after being placed in service, the tax imposed under
14    subsections (a) and (b) of this Section for such taxable
15    year shall be increased. Such increase shall be determined
16    by (i) recomputing the investment credit which would have
17    been allowed for the year in which credit for such
18    property was originally allowed by eliminating such
19    property from such computation, and (ii) subtracting such
20    recomputed credit from the amount of credit previously
21    allowed. For the purposes of this paragraph (6), a
22    reduction of the basis of qualified property resulting
23    from a redetermination of the purchase price shall be
24    deemed a disposition of qualified property to the extent
25    of such reduction.
26        (7) There shall be allowed an additional credit equal

 

 

SB2229- 29 -LRB102 16908 HLH 22320 b

1    to 0.5% of the basis of qualified property placed in
2    service during the taxable year in a River Edge
3    Redevelopment Zone, provided such property is placed in
4    service on or after July 1, 2006, and the taxpayer's base
5    employment within Illinois has increased by 1% or more
6    over the preceding year as determined by the taxpayer's
7    employment records filed with the Illinois Department of
8    Employment Security. Taxpayers who are new to Illinois
9    shall be deemed to have met the 1% growth in base
10    employment for the first year in which they file
11    employment records with the Illinois Department of
12    Employment Security. If, in any year, the increase in base
13    employment within Illinois over the preceding year is less
14    than 1%, the additional credit shall be limited to that
15    percentage times a fraction, the numerator of which is
16    0.5% and the denominator of which is 1%, but shall not
17    exceed 0.5%.
18        (8) For taxable years beginning on or after January 1,
19    2021, there shall be allowed an Enterprise Zone
20    construction jobs credit against the taxes imposed under
21    subsections (a) and (b) of this Section as provided in
22    Section 13 of the Illinois Enterprise Zone Act.
23        The credit or credits may not reduce the taxpayer's
24    liability to less than zero. If the amount of the credit or
25    credits exceeds the taxpayer's liability, the excess may
26    be carried forward and applied against the taxpayer's

 

 

SB2229- 30 -LRB102 16908 HLH 22320 b

1    liability in succeeding calendar years in the same manner
2    provided under paragraph (4) of Section 211 of this Act.
3    The credit or credits shall be applied to the earliest
4    year for which there is a tax liability. If there are
5    credits from more than one taxable year that are available
6    to offset a liability, the earlier credit shall be applied
7    first.
8        For partners, shareholders of Subchapter S
9    corporations, and owners of limited liability companies,
10    if the liability company is treated as a partnership for
11    the purposes of federal and State income taxation, there
12    shall be allowed a credit under this Section to be
13    determined in accordance with the determination of income
14    and distributive share of income under Sections 702 and
15    704 and Subchapter S of the Internal Revenue Code.
16        The total aggregate amount of credits awarded under
17    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
18    this amendatory Act of the 101st General Assembly) shall
19    not exceed $20,000,000 in any State fiscal year.
20        This paragraph (8) is exempt from the provisions of
21    Section 250.
22    (g) (Blank).
23    (h) Investment credit; High Impact Business.
24        (1) Subject to subsections (b) and (b-5) of Section
25    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
26    be allowed a credit against the tax imposed by subsections

 

 

SB2229- 31 -LRB102 16908 HLH 22320 b

1    (a) and (b) of this Section for investment in qualified
2    property which is placed in service by a Department of
3    Commerce and Economic Opportunity designated High Impact
4    Business. The credit shall be .5% of the basis for such
5    property. The credit shall not be available (i) until the
6    minimum investments in qualified property set forth in
7    subdivision (a)(3)(A) of Section 5.5 of the Illinois
8    Enterprise Zone Act have been satisfied or (ii) until the
9    time authorized in subsection (b-5) of the Illinois
10    Enterprise Zone Act for entities designated as High Impact
11    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
12    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
13    Act, and shall not be allowed to the extent that it would
14    reduce a taxpayer's liability for the tax imposed by
15    subsections (a) and (b) of this Section to below zero. The
16    credit applicable to such investments shall be taken in
17    the taxable year in which such investments have been
18    completed. The credit for additional investments beyond
19    the minimum investment by a designated high impact
20    business authorized under subdivision (a)(3)(A) of Section
21    5.5 of the Illinois Enterprise Zone Act shall be available
22    only in the taxable year in which the property is placed in
23    service and shall not be allowed to the extent that it
24    would reduce a taxpayer's liability for the tax imposed by
25    subsections (a) and (b) of this Section to below zero. For
26    tax years ending on or after December 31, 1987, the credit

 

 

SB2229- 32 -LRB102 16908 HLH 22320 b

1    shall be allowed for the tax year in which the property is
2    placed in service, or, if the amount of the credit exceeds
3    the tax liability for that year, whether it exceeds the
4    original liability or the liability as later amended, such
5    excess may be carried forward and applied to the tax
6    liability of the 5 taxable years following the excess
7    credit year. The credit shall be applied to the earliest
8    year for which there is a liability. If there is credit
9    from more than one tax year that is available to offset a
10    liability, the credit accruing first in time shall be
11    applied first.
12        Changes made in this subdivision (h)(1) by Public Act
13    88-670 restore changes made by Public Act 85-1182 and
14    reflect existing law.
15        (2) The term qualified property means property which:
16            (A) is tangible, whether new or used, including
17        buildings and structural components of buildings;
18            (B) is depreciable pursuant to Section 167 of the
19        Internal Revenue Code, except that "3-year property"
20        as defined in Section 168(c)(2)(A) of that Code is not
21        eligible for the credit provided by this subsection
22        (h);
23            (C) is acquired by purchase as defined in Section
24        179(d) of the Internal Revenue Code; and
25            (D) is not eligible for the Enterprise Zone
26        Investment Credit provided by subsection (f) of this

 

 

SB2229- 33 -LRB102 16908 HLH 22320 b

1        Section.
2        (3) The basis of qualified property shall be the basis
3    used to compute the depreciation deduction for federal
4    income tax purposes.
5        (4) If the basis of the property for federal income
6    tax depreciation purposes is increased after it has been
7    placed in service in a federally designated Foreign Trade
8    Zone or Sub-Zone located in Illinois by the taxpayer, the
9    amount of such increase shall be deemed property placed in
10    service on the date of such increase in basis.
11        (5) The term "placed in service" shall have the same
12    meaning as under Section 46 of the Internal Revenue Code.
13        (6) If during any taxable year ending on or before
14    December 31, 1996, any property ceases to be qualified
15    property in the hands of the taxpayer within 48 months
16    after being placed in service, or the situs of any
17    qualified property is moved outside Illinois within 48
18    months after being placed in service, the tax imposed
19    under subsections (a) and (b) of this Section for such
20    taxable year shall be increased. Such increase shall be
21    determined by (i) recomputing the investment credit which
22    would have been allowed for the year in which credit for
23    such property was originally allowed by eliminating such
24    property from such computation, and (ii) subtracting such
25    recomputed credit from the amount of credit previously
26    allowed. For the purposes of this paragraph (6), a

 

 

SB2229- 34 -LRB102 16908 HLH 22320 b

1    reduction of the basis of qualified property resulting
2    from a redetermination of the purchase price shall be
3    deemed a disposition of qualified property to the extent
4    of such reduction.
5        (7) Beginning with tax years ending after December 31,
6    1996, if a taxpayer qualifies for the credit under this
7    subsection (h) and thereby is granted a tax abatement and
8    the taxpayer relocates its entire facility in violation of
9    the explicit terms and length of the contract under
10    Section 18-183 of the Property Tax Code, the tax imposed
11    under subsections (a) and (b) of this Section shall be
12    increased for the taxable year in which the taxpayer
13    relocated its facility by an amount equal to the amount of
14    credit received by the taxpayer under this subsection (h).
15    (h-5) High Impact Business construction constructions jobs
16credit. For taxable years beginning on or after January 1,
172021, there shall also be allowed a High Impact Business
18construction jobs credit against the tax imposed under
19subsections (a) and (b) of this Section as provided in
20subsections (i) and (j) of Section 5.5 of the Illinois
21Enterprise Zone Act.
22    The credit or credits may not reduce the taxpayer's
23liability to less than zero. If the amount of the credit or
24credits exceeds the taxpayer's liability, the excess may be
25carried forward and applied against the taxpayer's liability
26in succeeding calendar years in the manner provided under

 

 

SB2229- 35 -LRB102 16908 HLH 22320 b

1paragraph (4) of Section 211 of this Act. The credit or credits
2shall be applied to the earliest year for which there is a tax
3liability. If there are credits from more than one taxable
4year that are available to offset a liability, the earlier
5credit shall be applied first.
6    For partners, shareholders of Subchapter S corporations,
7and owners of limited liability companies, if the liability
8company is treated as a partnership for the purposes of
9federal and State income taxation, there shall be allowed a
10credit under this Section to be determined in accordance with
11the determination of income and distributive share of income
12under Sections 702 and 704 and Subchapter S of the Internal
13Revenue Code.
14    The total aggregate amount of credits awarded under the
15Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
16amendatory Act of the 101st General Assembly) shall not exceed
17$20,000,000 in any State fiscal year.
18    This subsection (h-5) is exempt from the provisions of
19Section 250.
20    (i) Credit for Personal Property Tax Replacement Income
21Tax. For tax years ending prior to December 31, 2003, a credit
22shall be allowed against the tax imposed by subsections (a)
23and (b) of this Section for the tax imposed by subsections (c)
24and (d) of this Section. This credit shall be computed by
25multiplying the tax imposed by subsections (c) and (d) of this
26Section by a fraction, the numerator of which is base income

 

 

SB2229- 36 -LRB102 16908 HLH 22320 b

1allocable to Illinois and the denominator of which is Illinois
2base income, and further multiplying the product by the tax
3rate imposed by subsections (a) and (b) of this Section.
4    Any credit earned on or after December 31, 1986 under this
5subsection which is unused in the year the credit is computed
6because it exceeds the tax liability imposed by subsections
7(a) and (b) for that year (whether it exceeds the original
8liability or the liability as later amended) may be carried
9forward and applied to the tax liability imposed by
10subsections (a) and (b) of the 5 taxable years following the
11excess credit year, provided that no credit may be carried
12forward to any year ending on or after December 31, 2003. This
13credit shall be applied first to the earliest year for which
14there is a liability. If there is a credit under this
15subsection from more than one tax year that is available to
16offset a liability the earliest credit arising under this
17subsection shall be applied first.
18    If, during any taxable year ending on or after December
1931, 1986, the tax imposed by subsections (c) and (d) of this
20Section for which a taxpayer has claimed a credit under this
21subsection (i) is reduced, the amount of credit for such tax
22shall also be reduced. Such reduction shall be determined by
23recomputing the credit to take into account the reduced tax
24imposed by subsections (c) and (d). If any portion of the
25reduced amount of credit has been carried to a different
26taxable year, an amended return shall be filed for such

 

 

SB2229- 37 -LRB102 16908 HLH 22320 b

1taxable year to reduce the amount of credit claimed.
2    (j) Training expense credit. Beginning with tax years
3ending on or after December 31, 1986 and prior to December 31,
42003, a taxpayer shall be allowed a credit against the tax
5imposed by subsections (a) and (b) under this Section for all
6amounts paid or accrued, on behalf of all persons employed by
7the taxpayer in Illinois or Illinois residents employed
8outside of Illinois by a taxpayer, for educational or
9vocational training in semi-technical or technical fields or
10semi-skilled or skilled fields, which were deducted from gross
11income in the computation of taxable income. The credit
12against the tax imposed by subsections (a) and (b) shall be
131.6% of such training expenses. For partners, shareholders of
14subchapter S corporations, and owners of limited liability
15companies, if the liability company is treated as a
16partnership for purposes of federal and State income taxation,
17there shall be allowed a credit under this subsection (j) to be
18determined in accordance with the determination of income and
19distributive share of income under Sections 702 and 704 and
20subchapter S of the Internal Revenue Code.
21    Any credit allowed under this subsection which is unused
22in the year the credit is earned may be carried forward to each
23of the 5 taxable years following the year for which the credit
24is first computed until it is used. This credit shall be
25applied first to the earliest year for which there is a
26liability. If there is a credit under this subsection from

 

 

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1more than one tax year that is available to offset a liability,
2the earliest credit arising under this subsection shall be
3applied first. No carryforward credit may be claimed in any
4tax year ending on or after December 31, 2003.
5    (k) Research and development credit. For tax years ending
6after July 1, 1990 and prior to December 31, 2003, and
7beginning again for tax years ending on or after December 31,
82004, and ending prior to January 1, 2027, a taxpayer shall be
9allowed a credit against the tax imposed by subsections (a)
10and (b) of this Section for increasing research activities in
11this State. The credit allowed against the tax imposed by
12subsections (a) and (b) shall be equal to 6 1/2% of the
13qualifying expenditures for increasing research activities in
14this State. For partners, shareholders of subchapter S
15corporations, and owners of limited liability companies, if
16the liability company is treated as a partnership for purposes
17of federal and State income taxation, there shall be allowed a
18credit under this subsection to be determined in accordance
19with the determination of income and distributive share of
20income under Sections 702 and 704 and subchapter S of the
21Internal Revenue Code.
22    For purposes of this subsection, "qualifying expenditures"
23means the qualifying expenditures as defined for the federal
24credit for increasing research activities which would be
25allowable under Section 41 of the Internal Revenue Code and
26which are conducted in this State, "qualifying expenditures

 

 

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1for increasing research activities in this State" means the
2excess of qualifying expenditures for the taxable year in
3which incurred over qualifying expenditures for the base
4period, "qualifying expenditures for the base period" means
5the average of the qualifying expenditures for each year in
6the base period, and "base period" means the 3 taxable years
7immediately preceding the taxable year for which the
8determination is being made.
9    Any credit in excess of the tax liability for the taxable
10year may be carried forward. A taxpayer may elect to have the
11unused credit shown on its final completed return carried over
12as a credit against the tax liability for the following 5
13taxable years or until it has been fully used, whichever
14occurs first; provided that no credit earned in a tax year
15ending prior to December 31, 2003 may be carried forward to any
16year ending on or after December 31, 2003.
17    If an unused credit is carried forward to a given year from
182 or more earlier years, that credit arising in the earliest
19year will be applied first against the tax liability for the
20given year. If a tax liability for the given year still
21remains, the credit from the next earliest year will then be
22applied, and so on, until all credits have been used or no tax
23liability for the given year remains. Any remaining unused
24credit or credits then will be carried forward to the next
25following year in which a tax liability is incurred, except
26that no credit can be carried forward to a year which is more

 

 

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1than 5 years after the year in which the expense for which the
2credit is given was incurred.
3    No inference shall be drawn from Public Act 91-644 this
4amendatory Act of the 91st General Assembly in construing this
5Section for taxable years beginning before January 1, 1999.
6    It is the intent of the General Assembly that the research
7and development credit under this subsection (k) shall apply
8continuously for all tax years ending on or after December 31,
92004 and ending prior to January 1, 2027, including, but not
10limited to, the period beginning on January 1, 2016 and ending
11on July 6, 2017 (the effective date of Public Act 100-22) this
12amendatory Act of the 100th General Assembly. All actions
13taken in reliance on the continuation of the credit under this
14subsection (k) by any taxpayer are hereby validated.
15    (l) Environmental Remediation Tax Credit.
16        (i) For tax years ending after December 31, 1997 and
17    on or before December 31, 2001, a taxpayer shall be
18    allowed a credit against the tax imposed by subsections
19    (a) and (b) of this Section for certain amounts paid for
20    unreimbursed eligible remediation costs, as specified in
21    this subsection. For purposes of this Section,
22    "unreimbursed eligible remediation costs" means costs
23    approved by the Illinois Environmental Protection Agency
24    ("Agency") under Section 58.14 of the Environmental
25    Protection Act that were paid in performing environmental
26    remediation at a site for which a No Further Remediation

 

 

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1    Letter was issued by the Agency and recorded under Section
2    58.10 of the Environmental Protection Act. The credit must
3    be claimed for the taxable year in which Agency approval
4    of the eligible remediation costs is granted. The credit
5    is not available to any taxpayer if the taxpayer or any
6    related party caused or contributed to, in any material
7    respect, a release of regulated substances on, in, or
8    under the site that was identified and addressed by the
9    remedial action pursuant to the Site Remediation Program
10    of the Environmental Protection Act. After the Pollution
11    Control Board rules are adopted pursuant to the Illinois
12    Administrative Procedure Act for the administration and
13    enforcement of Section 58.9 of the Environmental
14    Protection Act, determinations as to credit availability
15    for purposes of this Section shall be made consistent with
16    those rules. For purposes of this Section, "taxpayer"
17    includes a person whose tax attributes the taxpayer has
18    succeeded to under Section 381 of the Internal Revenue
19    Code and "related party" includes the persons disallowed a
20    deduction for losses by paragraphs (b), (c), and (f)(1) of
21    Section 267 of the Internal Revenue Code by virtue of
22    being a related taxpayer, as well as any of its partners.
23    The credit allowed against the tax imposed by subsections
24    (a) and (b) shall be equal to 25% of the unreimbursed
25    eligible remediation costs in excess of $100,000 per site,
26    except that the $100,000 threshold shall not apply to any

 

 

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1    site contained in an enterprise zone as determined by the
2    Department of Commerce and Community Affairs (now
3    Department of Commerce and Economic Opportunity). The
4    total credit allowed shall not exceed $40,000 per year
5    with a maximum total of $150,000 per site. For partners
6    and shareholders of subchapter S corporations, there shall
7    be allowed a credit under this subsection to be determined
8    in accordance with the determination of income and
9    distributive share of income under Sections 702 and 704
10    and subchapter S of the Internal Revenue Code.
11        (ii) A credit allowed under this subsection that is
12    unused in the year the credit is earned may be carried
13    forward to each of the 5 taxable years following the year
14    for which the credit is first earned until it is used. The
15    term "unused credit" does not include any amounts of
16    unreimbursed eligible remediation costs in excess of the
17    maximum credit per site authorized under paragraph (i).
18    This credit shall be applied first to the earliest year
19    for which there is a liability. If there is a credit under
20    this subsection from more than one tax year that is
21    available to offset a liability, the earliest credit
22    arising under this subsection shall be applied first. A
23    credit allowed under this subsection may be sold to a
24    buyer as part of a sale of all or part of the remediation
25    site for which the credit was granted. The purchaser of a
26    remediation site and the tax credit shall succeed to the

 

 

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1    unused credit and remaining carry-forward period of the
2    seller. To perfect the transfer, the assignor shall record
3    the transfer in the chain of title for the site and provide
4    written notice to the Director of the Illinois Department
5    of Revenue of the assignor's intent to sell the
6    remediation site and the amount of the tax credit to be
7    transferred as a portion of the sale. In no event may a
8    credit be transferred to any taxpayer if the taxpayer or a
9    related party would not be eligible under the provisions
10    of subsection (i).
11        (iii) For purposes of this Section, the term "site"
12    shall have the same meaning as under Section 58.2 of the
13    Environmental Protection Act.
14    (m) Education expense credit. Beginning with tax years
15ending after December 31, 1999, a taxpayer who is the
16custodian of one or more qualifying pupils shall be allowed a
17credit against the tax imposed by subsections (a) and (b) of
18this Section for qualified education expenses incurred on
19behalf of the qualifying pupils. The credit shall be equal to
2025% of qualified education expenses, but in no event may the
21total credit under this subsection claimed by a family that is
22the custodian of qualifying pupils exceed (i) $500 for tax
23years ending prior to December 31, 2017, and (ii) $750 for tax
24years ending on or after December 31, 2017. In no event shall a
25credit under this subsection reduce the taxpayer's liability
26under this Act to less than zero. Notwithstanding any other

 

 

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1provision of law, for taxable years beginning on or after
2January 1, 2017, no taxpayer may claim a credit under this
3subsection (m) if the taxpayer's adjusted gross income for the
4taxable year exceeds (i) $500,000, in the case of spouses
5filing a joint federal tax return or (ii) $250,000, in the case
6of all other taxpayers. This subsection is exempt from the
7provisions of Section 250 of this Act.
8    For purposes of this subsection:
9    "Qualifying pupils" means individuals who (i) are
10residents of the State of Illinois, (ii) are under the age of
1121 at the close of the school year for which a credit is
12sought, and (iii) during the school year for which a credit is
13sought were full-time pupils enrolled in a kindergarten
14through twelfth grade education program at any school, as
15defined in this subsection.
16    "Qualified education expense" means the amount incurred on
17behalf of a qualifying pupil in excess of $250 for tuition,
18book fees, and lab fees at the school in which the pupil is
19enrolled during the regular school year.
20    "School" means any public or nonpublic elementary or
21secondary school in Illinois that is in compliance with Title
22VI of the Civil Rights Act of 1964 and attendance at which
23satisfies the requirements of Section 26-1 of the School Code,
24except that nothing shall be construed to require a child to
25attend any particular public or nonpublic school to qualify
26for the credit under this Section.

 

 

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1    "Custodian" means, with respect to qualifying pupils, an
2Illinois resident who is a parent, the parents, a legal
3guardian, or the legal guardians of the qualifying pupils.
4    (n) River Edge Redevelopment Zone site remediation tax
5credit.
6        (i) For tax years ending on or after December 31,
7    2006, a taxpayer shall be allowed a credit against the tax
8    imposed by subsections (a) and (b) of this Section for
9    certain amounts paid for unreimbursed eligible remediation
10    costs, as specified in this subsection. For purposes of
11    this Section, "unreimbursed eligible remediation costs"
12    means costs approved by the Illinois Environmental
13    Protection Agency ("Agency") under Section 58.14a of the
14    Environmental Protection Act that were paid in performing
15    environmental remediation at a site within a River Edge
16    Redevelopment Zone for which a No Further Remediation
17    Letter was issued by the Agency and recorded under Section
18    58.10 of the Environmental Protection Act. The credit must
19    be claimed for the taxable year in which Agency approval
20    of the eligible remediation costs is granted. The credit
21    is not available to any taxpayer if the taxpayer or any
22    related party caused or contributed to, in any material
23    respect, a release of regulated substances on, in, or
24    under the site that was identified and addressed by the
25    remedial action pursuant to the Site Remediation Program
26    of the Environmental Protection Act. Determinations as to

 

 

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1    credit availability for purposes of this Section shall be
2    made consistent with rules adopted by the Pollution
3    Control Board pursuant to the Illinois Administrative
4    Procedure Act for the administration and enforcement of
5    Section 58.9 of the Environmental Protection Act. For
6    purposes of this Section, "taxpayer" includes a person
7    whose tax attributes the taxpayer has succeeded to under
8    Section 381 of the Internal Revenue Code and "related
9    party" includes the persons disallowed a deduction for
10    losses by paragraphs (b), (c), and (f)(1) of Section 267
11    of the Internal Revenue Code by virtue of being a related
12    taxpayer, as well as any of its partners. The credit
13    allowed against the tax imposed by subsections (a) and (b)
14    shall be equal to 25% of the unreimbursed eligible
15    remediation costs in excess of $100,000 per site.
16        (ii) A credit allowed under this subsection that is
17    unused in the year the credit is earned may be carried
18    forward to each of the 5 taxable years following the year
19    for which the credit is first earned until it is used. This
20    credit shall be applied first to the earliest year for
21    which there is a liability. If there is a credit under this
22    subsection from more than one tax year that is available
23    to offset a liability, the earliest credit arising under
24    this subsection shall be applied first. A credit allowed
25    under this subsection may be sold to a buyer as part of a
26    sale of all or part of the remediation site for which the

 

 

SB2229- 47 -LRB102 16908 HLH 22320 b

1    credit was granted. The purchaser of a remediation site
2    and the tax credit shall succeed to the unused credit and
3    remaining carry-forward period of the seller. To perfect
4    the transfer, the assignor shall record the transfer in
5    the chain of title for the site and provide written notice
6    to the Director of the Illinois Department of Revenue of
7    the assignor's intent to sell the remediation site and the
8    amount of the tax credit to be transferred as a portion of
9    the sale. In no event may a credit be transferred to any
10    taxpayer if the taxpayer or a related party would not be
11    eligible under the provisions of subsection (i).
12        (iii) For purposes of this Section, the term "site"
13    shall have the same meaning as under Section 58.2 of the
14    Environmental Protection Act.
15    (o) For each of taxable years during the Compassionate Use
16of Medical Cannabis Program, a surcharge is imposed on all
17taxpayers on income arising from the sale or exchange of
18capital assets, depreciable business property, real property
19used in the trade or business, and Section 197 intangibles of
20an organization registrant under the Compassionate Use of
21Medical Cannabis Program Act. The amount of the surcharge is
22equal to the amount of federal income tax liability for the
23taxable year attributable to those sales and exchanges. The
24surcharge imposed does not apply if:
25        (1) the medical cannabis cultivation center
26    registration, medical cannabis dispensary registration, or

 

 

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1    the property of a registration is transferred as a result
2    of any of the following:
3            (A) bankruptcy, a receivership, or a debt
4        adjustment initiated by or against the initial
5        registration or the substantial owners of the initial
6        registration;
7            (B) cancellation, revocation, or termination of
8        any registration by the Illinois Department of Public
9        Health;
10            (C) a determination by the Illinois Department of
11        Public Health that transfer of the registration is in
12        the best interests of Illinois qualifying patients as
13        defined by the Compassionate Use of Medical Cannabis
14        Program Act;
15            (D) the death of an owner of the equity interest in
16        a registrant;
17            (E) the acquisition of a controlling interest in
18        the stock or substantially all of the assets of a
19        publicly traded company;
20            (F) a transfer by a parent company to a wholly
21        owned subsidiary; or
22            (G) the transfer or sale to or by one person to
23        another person where both persons were initial owners
24        of the registration when the registration was issued;
25        or
26        (2) the cannabis cultivation center registration,

 

 

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1    medical cannabis dispensary registration, or the
2    controlling interest in a registrant's property is
3    transferred in a transaction to lineal descendants in
4    which no gain or loss is recognized or as a result of a
5    transaction in accordance with Section 351 of the Internal
6    Revenue Code in which no gain or loss is recognized.
7    (p) A taxpayer shall be allowed an annual credit against
8the tax imposed by subsections (a) and (b) of this Section of
9an amount equal to 15% of the cost of equipment and materials
10incorporated into or used in the business of providing
11broadband services in this State during that year. Such annual
12credits shall be allowed commencing with the taxable year in
13which such property is placed in service and continue for 9
14consecutive years thereafter. The aggregate credit established
15by this subsection taken in any one tax year shall be limited
16to an amount not greater than 50% of the taxpayer's tax
17liability under subsections (a) and (b) of this Section;
18provided, however, that any tax credit claimed under this
19subsection but not used in any taxable year may be carried
20forward for 10 consecutive years from the close of the tax year
21in which the credits were earned. The maximum aggregate amount
22of credits that may be claimed under this subsection shall not
23exceed the original investment made by the taxpayer in the
24qualifying equipment.
25    For purposes this subsection: (i) "broadband service"
26means a service provided by wireline or wireless means capable

 

 

SB2229- 50 -LRB102 16908 HLH 22320 b

1of delivering high-speed internet access at speeds of at least
210 megabits per second of download speed and one megabit per
3second of upload speed; and (ii) "equipment, and materials
4incorporated into or used in the business of providing
5broadband services", means all equipment and materials
6machinery, software, or other tangible personal property that
7is used in whole or in part in producing, broadcasting,
8distributing, sending, receiving, storing, transmitting,
9retransmitting, amplifying, switching, or routing broadband
10services, including the monitoring, testing, maintaining,
11enabling, or facilitating of such equipment, machinery,
12software, or other infrastructure. Such property includes, but
13is not limited to, wires, cables including fiber optic cables,
14antennas, poles, switches, routers, amplifiers, rectifiers,
15repeaters, receivers, multiplexers, duplexers, transmitters,
16power equipment, backup power equipment, diagnostic equipment,
17storage devices, modems, and other general central office
18equipment, such as channel cards, frames, and cabinets.
19(Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19; 101-31,
20eff. 6-28-19; 101-207, eff. 8-2-19; 101-363, eff. 8-9-19;
21revised 11-18-20.)
 
22    (Text of Section with the changes made by P.A. 101-8,
23which did not take effect (see Section 99 of P.A. 101-8))
24    Sec. 201. Tax imposed.
25    (a) In general. A tax measured by net income is hereby

 

 

SB2229- 51 -LRB102 16908 HLH 22320 b

1imposed on every individual, corporation, trust and estate for
2each taxable year ending after July 31, 1969 on the privilege
3of earning or receiving income in or as a resident of this
4State. Such tax shall be in addition to all other occupation or
5privilege taxes imposed by this State or by any municipal
6corporation or political subdivision thereof.
7    (b) Rates. The tax imposed by subsection (a) of this
8Section shall be determined as follows, except as adjusted by
9subsection (d-1):
10        (1) In the case of an individual, trust or estate, for
11    taxable years ending prior to July 1, 1989, an amount
12    equal to 2 1/2% of the taxpayer's net income for the
13    taxable year.
14        (2) In the case of an individual, trust or estate, for
15    taxable years beginning prior to July 1, 1989 and ending
16    after June 30, 1989, an amount equal to the sum of (i) 2
17    1/2% of the taxpayer's net income for the period prior to
18    July 1, 1989, as calculated under Section 202.3, and (ii)
19    3% of the taxpayer's net income for the period after June
20    30, 1989, as calculated under Section 202.3.
21        (3) In the case of an individual, trust or estate, for
22    taxable years beginning after June 30, 1989, and ending
23    prior to January 1, 2011, an amount equal to 3% of the
24    taxpayer's net income for the taxable year.
25        (4) In the case of an individual, trust, or estate,
26    for taxable years beginning prior to January 1, 2011, and

 

 

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1    ending after December 31, 2010, an amount equal to the sum
2    of (i) 3% of the taxpayer's net income for the period prior
3    to January 1, 2011, as calculated under Section 202.5, and
4    (ii) 5% of the taxpayer's net income for the period after
5    December 31, 2010, as calculated under Section 202.5.
6        (5) In the case of an individual, trust, or estate,
7    for taxable years beginning on or after January 1, 2011,
8    and ending prior to January 1, 2015, an amount equal to 5%
9    of the taxpayer's net income for the taxable year.
10        (5.1) In the case of an individual, trust, or estate,
11    for taxable years beginning prior to January 1, 2015, and
12    ending after December 31, 2014, an amount equal to the sum
13    of (i) 5% of the taxpayer's net income for the period prior
14    to January 1, 2015, as calculated under Section 202.5, and
15    (ii) 3.75% of the taxpayer's net income for the period
16    after December 31, 2014, as calculated under Section
17    202.5.
18        (5.2) In the case of an individual, trust, or estate,
19    for taxable years beginning on or after January 1, 2015,
20    and ending prior to July 1, 2017, an amount equal to 3.75%
21    of the taxpayer's net income for the taxable year.
22        (5.3) In the case of an individual, trust, or estate,
23    for taxable years beginning prior to July 1, 2017, and
24    ending after June 30, 2017, an amount equal to the sum of
25    (i) 3.75% of the taxpayer's net income for the period
26    prior to July 1, 2017, as calculated under Section 202.5,

 

 

SB2229- 53 -LRB102 16908 HLH 22320 b

1    and (ii) 4.95% of the taxpayer's net income for the period
2    after June 30, 2017, as calculated under Section 202.5.
3        (5.4) In the case of an individual, trust, or estate,
4    for taxable years beginning on or after July 1, 2017 and
5    beginning prior to January 1, 2021, an amount equal to
6    4.95% of the taxpayer's net income for the taxable year.
7        (5.5) In the case of an individual, trust, or estate,
8    for taxable years beginning on or after January 1, 2021,
9    an amount calculated under the rate structure set forth in
10    Section 201.1.
11        (6) In the case of a corporation, for taxable years
12    ending prior to July 1, 1989, an amount equal to 4% of the
13    taxpayer's net income for the taxable year.
14        (7) In the case of a corporation, for taxable years
15    beginning prior to July 1, 1989 and ending after June 30,
16    1989, an amount equal to the sum of (i) 4% of the
17    taxpayer's net income for the period prior to July 1,
18    1989, as calculated under Section 202.3, and (ii) 4.8% of
19    the taxpayer's net income for the period after June 30,
20    1989, as calculated under Section 202.3.
21        (8) In the case of a corporation, for taxable years
22    beginning after June 30, 1989, and ending prior to January
23    1, 2011, an amount equal to 4.8% of the taxpayer's net
24    income for the taxable year.
25        (9) In the case of a corporation, for taxable years
26    beginning prior to January 1, 2011, and ending after

 

 

SB2229- 54 -LRB102 16908 HLH 22320 b

1    December 31, 2010, an amount equal to the sum of (i) 4.8%
2    of the taxpayer's net income for the period prior to
3    January 1, 2011, as calculated under Section 202.5, and
4    (ii) 7% of the taxpayer's net income for the period after
5    December 31, 2010, as calculated under Section 202.5.
6        (10) In the case of a corporation, for taxable years
7    beginning on or after January 1, 2011, and ending prior to
8    January 1, 2015, an amount equal to 7% of the taxpayer's
9    net income for the taxable year.
10        (11) In the case of a corporation, for taxable years
11    beginning prior to January 1, 2015, and ending after
12    December 31, 2014, an amount equal to the sum of (i) 7% of
13    the taxpayer's net income for the period prior to January
14    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
15    of the taxpayer's net income for the period after December
16    31, 2014, as calculated under Section 202.5.
17        (12) In the case of a corporation, for taxable years
18    beginning on or after January 1, 2015, and ending prior to
19    July 1, 2017, an amount equal to 5.25% of the taxpayer's
20    net income for the taxable year.
21        (13) In the case of a corporation, for taxable years
22    beginning prior to July 1, 2017, and ending after June 30,
23    2017, an amount equal to the sum of (i) 5.25% of the
24    taxpayer's net income for the period prior to July 1,
25    2017, as calculated under Section 202.5, and (ii) 7% of
26    the taxpayer's net income for the period after June 30,

 

 

SB2229- 55 -LRB102 16908 HLH 22320 b

1    2017, as calculated under Section 202.5.
2        (14) In the case of a corporation, for taxable years
3    beginning on or after July 1, 2017 and beginning prior to
4    January 1, 2021, an amount equal to 7% of the taxpayer's
5    net income for the taxable year.
6        (15) In the case of a corporation, for taxable years
7    beginning on or after January 1, 2021, an amount equal to
8    7.99% of the taxpayer's net income for the taxable year.
9    The rates under this subsection (b) are subject to the
10provisions of Section 201.5.
11    (b-5) Surcharge; sale or exchange of assets, properties,
12and intangibles of organization gaming licensees. For each of
13taxable years 2019 through 2027, a surcharge is imposed on all
14taxpayers on income arising from the sale or exchange of
15capital assets, depreciable business property, real property
16used in the trade or business, and Section 197 intangibles (i)
17of an organization licensee under the Illinois Horse Racing
18Act of 1975 and (ii) of an organization gaming licensee under
19the Illinois Gambling Act. The amount of the surcharge is
20equal to the amount of federal income tax liability for the
21taxable year attributable to those sales and exchanges. The
22surcharge imposed shall not apply if:
23        (1) the organization gaming license, organization
24    license, or racetrack property is transferred as a result
25    of any of the following:
26            (A) bankruptcy, a receivership, or a debt

 

 

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1        adjustment initiated by or against the initial
2        licensee or the substantial owners of the initial
3        licensee;
4            (B) cancellation, revocation, or termination of
5        any such license by the Illinois Gaming Board or the
6        Illinois Racing Board;
7            (C) a determination by the Illinois Gaming Board
8        that transfer of the license is in the best interests
9        of Illinois gaming;
10            (D) the death of an owner of the equity interest in
11        a licensee;
12            (E) the acquisition of a controlling interest in
13        the stock or substantially all of the assets of a
14        publicly traded company;
15            (F) a transfer by a parent company to a wholly
16        owned subsidiary; or
17            (G) the transfer or sale to or by one person to
18        another person where both persons were initial owners
19        of the license when the license was issued; or
20        (2) the controlling interest in the organization
21    gaming license, organization license, or racetrack
22    property is transferred in a transaction to lineal
23    descendants in which no gain or loss is recognized or as a
24    result of a transaction in accordance with Section 351 of
25    the Internal Revenue Code in which no gain or loss is
26    recognized; or

 

 

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1        (3) live horse racing was not conducted in 2010 at a
2    racetrack located within 3 miles of the Mississippi River
3    under a license issued pursuant to the Illinois Horse
4    Racing Act of 1975.
5    The transfer of an organization gaming license,
6organization license, or racetrack property by a person other
7than the initial licensee to receive the organization gaming
8license is not subject to a surcharge. The Department shall
9adopt rules necessary to implement and administer this
10subsection.
11    (c) Personal Property Tax Replacement Income Tax.
12Beginning on July 1, 1979 and thereafter, in addition to such
13income tax, there is also hereby imposed the Personal Property
14Tax Replacement Income Tax measured by net income on every
15corporation (including Subchapter S corporations), partnership
16and trust, for each taxable year ending after June 30, 1979.
17Such taxes are imposed on the privilege of earning or
18receiving income in or as a resident of this State. The
19Personal Property Tax Replacement Income Tax shall be in
20addition to the income tax imposed by subsections (a) and (b)
21of this Section and in addition to all other occupation or
22privilege taxes imposed by this State or by any municipal
23corporation or political subdivision thereof.
24    (d) Additional Personal Property Tax Replacement Income
25Tax Rates. The personal property tax replacement income tax
26imposed by this subsection and subsection (c) of this Section

 

 

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1in the case of a corporation, other than a Subchapter S
2corporation and except as adjusted by subsection (d-1), shall
3be an additional amount equal to 2.85% of such taxpayer's net
4income for the taxable year, except that beginning on January
51, 1981, and thereafter, the rate of 2.85% specified in this
6subsection shall be reduced to 2.5%, and in the case of a
7partnership, trust or a Subchapter S corporation shall be an
8additional amount equal to 1.5% of such taxpayer's net income
9for the taxable year.
10    (d-1) Rate reduction for certain foreign insurers. In the
11case of a foreign insurer, as defined by Section 35A-5 of the
12Illinois Insurance Code, whose state or country of domicile
13imposes on insurers domiciled in Illinois a retaliatory tax
14(excluding any insurer whose premiums from reinsurance assumed
15are 50% or more of its total insurance premiums as determined
16under paragraph (2) of subsection (b) of Section 304, except
17that for purposes of this determination premiums from
18reinsurance do not include premiums from inter-affiliate
19reinsurance arrangements), beginning with taxable years ending
20on or after December 31, 1999, the sum of the rates of tax
21imposed by subsections (b) and (d) shall be reduced (but not
22increased) to the rate at which the total amount of tax imposed
23under this Act, net of all credits allowed under this Act,
24shall equal (i) the total amount of tax that would be imposed
25on the foreign insurer's net income allocable to Illinois for
26the taxable year by such foreign insurer's state or country of

 

 

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1domicile if that net income were subject to all income taxes
2and taxes measured by net income imposed by such foreign
3insurer's state or country of domicile, net of all credits
4allowed or (ii) a rate of zero if no such tax is imposed on
5such income by the foreign insurer's state of domicile. For
6the purposes of this subsection (d-1), an inter-affiliate
7includes a mutual insurer under common management.
8        (1) For the purposes of subsection (d-1), in no event
9    shall the sum of the rates of tax imposed by subsections
10    (b) and (d) be reduced below the rate at which the sum of:
11            (A) the total amount of tax imposed on such
12        foreign insurer under this Act for a taxable year, net
13        of all credits allowed under this Act, plus
14            (B) the privilege tax imposed by Section 409 of
15        the Illinois Insurance Code, the fire insurance
16        company tax imposed by Section 12 of the Fire
17        Investigation Act, and the fire department taxes
18        imposed under Section 11-10-1 of the Illinois
19        Municipal Code,
20    equals 1.25% for taxable years ending prior to December
21    31, 2003, or 1.75% for taxable years ending on or after
22    December 31, 2003, of the net taxable premiums written for
23    the taxable year, as described by subsection (1) of
24    Section 409 of the Illinois Insurance Code. This paragraph
25    will in no event increase the rates imposed under
26    subsections (b) and (d).

 

 

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1        (2) Any reduction in the rates of tax imposed by this
2    subsection shall be applied first against the rates
3    imposed by subsection (b) and only after the tax imposed
4    by subsection (a) net of all credits allowed under this
5    Section other than the credit allowed under subsection (i)
6    has been reduced to zero, against the rates imposed by
7    subsection (d).
8    This subsection (d-1) is exempt from the provisions of
9Section 250.
10    (e) Investment credit. A taxpayer shall be allowed a
11credit against the Personal Property Tax Replacement Income
12Tax for investment in qualified property.
13        (1) A taxpayer shall be allowed a credit equal to .5%
14    of the basis of qualified property placed in service
15    during the taxable year, provided such property is placed
16    in service on or after July 1, 1984. There shall be allowed
17    an additional credit equal to .5% of the basis of
18    qualified property placed in service during the taxable
19    year, provided such property is placed in service on or
20    after July 1, 1986, and the taxpayer's base employment
21    within Illinois has increased by 1% or more over the
22    preceding year as determined by the taxpayer's employment
23    records filed with the Illinois Department of Employment
24    Security. Taxpayers who are new to Illinois shall be
25    deemed to have met the 1% growth in base employment for the
26    first year in which they file employment records with the

 

 

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1    Illinois Department of Employment Security. The provisions
2    added to this Section by Public Act 85-1200 (and restored
3    by Public Act 87-895) shall be construed as declaratory of
4    existing law and not as a new enactment. If, in any year,
5    the increase in base employment within Illinois over the
6    preceding year is less than 1%, the additional credit
7    shall be limited to that percentage times a fraction, the
8    numerator of which is .5% and the denominator of which is
9    1%, but shall not exceed .5%. The investment credit shall
10    not be allowed to the extent that it would reduce a
11    taxpayer's liability in any tax year below zero, nor may
12    any credit for qualified property be allowed for any year
13    other than the year in which the property was placed in
14    service in Illinois. For tax years ending on or after
15    December 31, 1987, and on or before December 31, 1988, the
16    credit shall be allowed for the tax year in which the
17    property is placed in service, or, if the amount of the
18    credit exceeds the tax liability for that year, whether it
19    exceeds the original liability or the liability as later
20    amended, such excess may be carried forward and applied to
21    the tax liability of the 5 taxable years following the
22    excess credit years if the taxpayer (i) makes investments
23    which cause the creation of a minimum of 2,000 full-time
24    equivalent jobs in Illinois, (ii) is located in an
25    enterprise zone established pursuant to the Illinois
26    Enterprise Zone Act and (iii) is certified by the

 

 

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1    Department of Commerce and Community Affairs (now
2    Department of Commerce and Economic Opportunity) as
3    complying with the requirements specified in clause (i)
4    and (ii) by July 1, 1986. The Department of Commerce and
5    Community Affairs (now Department of Commerce and Economic
6    Opportunity) shall notify the Department of Revenue of all
7    such certifications immediately. For tax years ending
8    after December 31, 1988, the credit shall be allowed for
9    the tax year in which the property is placed in service,
10    or, if the amount of the credit exceeds the tax liability
11    for that year, whether it exceeds the original liability
12    or the liability as later amended, such excess may be
13    carried forward and applied to the tax liability of the 5
14    taxable years following the excess credit years. The
15    credit shall be applied to the earliest year for which
16    there is a liability. If there is credit from more than one
17    tax year that is available to offset a liability, earlier
18    credit shall be applied first.
19        (2) The term "qualified property" means property
20    which:
21            (A) is tangible, whether new or used, including
22        buildings and structural components of buildings and
23        signs that are real property, but not including land
24        or improvements to real property that are not a
25        structural component of a building such as
26        landscaping, sewer lines, local access roads, fencing,

 

 

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1        parking lots, and other appurtenances;
2            (B) is depreciable pursuant to Section 167 of the
3        Internal Revenue Code, except that "3-year property"
4        as defined in Section 168(c)(2)(A) of that Code is not
5        eligible for the credit provided by this subsection
6        (e);
7            (C) is acquired by purchase as defined in Section
8        179(d) of the Internal Revenue Code;
9            (D) is used in Illinois by a taxpayer who is
10        primarily engaged in manufacturing, or in mining coal
11        or fluorite, or in retailing, or was placed in service
12        on or after July 1, 2006 in a River Edge Redevelopment
13        Zone established pursuant to the River Edge
14        Redevelopment Zone Act; and
15            (E) has not previously been used in Illinois in
16        such a manner and by such a person as would qualify for
17        the credit provided by this subsection (e) or
18        subsection (f).
19        (3) For purposes of this subsection (e),
20    "manufacturing" means the material staging and production
21    of tangible personal property by procedures commonly
22    regarded as manufacturing, processing, fabrication, or
23    assembling which changes some existing material into new
24    shapes, new qualities, or new combinations. For purposes
25    of this subsection (e) the term "mining" shall have the
26    same meaning as the term "mining" in Section 613(c) of the

 

 

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1    Internal Revenue Code. For purposes of this subsection
2    (e), the term "retailing" means the sale of tangible
3    personal property for use or consumption and not for
4    resale, or services rendered in conjunction with the sale
5    of tangible personal property for use or consumption and
6    not for resale. For purposes of this subsection (e),
7    "tangible personal property" has the same meaning as when
8    that term is used in the Retailers' Occupation Tax Act,
9    and, for taxable years ending after December 31, 2008,
10    does not include the generation, transmission, or
11    distribution of electricity.
12        (4) The basis of qualified property shall be the basis
13    used to compute the depreciation deduction for federal
14    income tax purposes.
15        (5) If the basis of the property for federal income
16    tax depreciation purposes is increased after it has been
17    placed in service in Illinois by the taxpayer, the amount
18    of such increase shall be deemed property placed in
19    service on the date of such increase in basis.
20        (6) The term "placed in service" shall have the same
21    meaning as under Section 46 of the Internal Revenue Code.
22        (7) If during any taxable year, any property ceases to
23    be qualified property in the hands of the taxpayer within
24    48 months after being placed in service, or the situs of
25    any qualified property is moved outside Illinois within 48
26    months after being placed in service, the Personal

 

 

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1    Property Tax Replacement Income Tax for such taxable year
2    shall be increased. Such increase shall be determined by
3    (i) recomputing the investment credit which would have
4    been allowed for the year in which credit for such
5    property was originally allowed by eliminating such
6    property from such computation and, (ii) subtracting such
7    recomputed credit from the amount of credit previously
8    allowed. For the purposes of this paragraph (7), a
9    reduction of the basis of qualified property resulting
10    from a redetermination of the purchase price shall be
11    deemed a disposition of qualified property to the extent
12    of such reduction.
13        (8) Unless the investment credit is extended by law,
14    the basis of qualified property shall not include costs
15    incurred after December 31, 2018, except for costs
16    incurred pursuant to a binding contract entered into on or
17    before December 31, 2018.
18        (9) Each taxable year ending before December 31, 2000,
19    a partnership may elect to pass through to its partners
20    the credits to which the partnership is entitled under
21    this subsection (e) for the taxable year. A partner may
22    use the credit allocated to him or her under this
23    paragraph only against the tax imposed in subsections (c)
24    and (d) of this Section. If the partnership makes that
25    election, those credits shall be allocated among the
26    partners in the partnership in accordance with the rules

 

 

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1    set forth in Section 704(b) of the Internal Revenue Code,
2    and the rules promulgated under that Section, and the
3    allocated amount of the credits shall be allowed to the
4    partners for that taxable year. The partnership shall make
5    this election on its Personal Property Tax Replacement
6    Income Tax return for that taxable year. The election to
7    pass through the credits shall be irrevocable.
8        For taxable years ending on or after December 31,
9    2000, a partner that qualifies its partnership for a
10    subtraction under subparagraph (I) of paragraph (2) of
11    subsection (d) of Section 203 or a shareholder that
12    qualifies a Subchapter S corporation for a subtraction
13    under subparagraph (S) of paragraph (2) of subsection (b)
14    of Section 203 shall be allowed a credit under this
15    subsection (e) equal to its share of the credit earned
16    under this subsection (e) during the taxable year by the
17    partnership or Subchapter S corporation, determined in
18    accordance with the determination of income and
19    distributive share of income under Sections 702 and 704
20    and Subchapter S of the Internal Revenue Code. This
21    paragraph is exempt from the provisions of Section 250.
22    (f) Investment credit; Enterprise Zone; River Edge
23Redevelopment Zone.
24        (1) A taxpayer shall be allowed a credit against the
25    tax imposed by subsections (a) and (b) of this Section for
26    investment in qualified property which is placed in

 

 

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1    service in an Enterprise Zone created pursuant to the
2    Illinois Enterprise Zone Act or, for property placed in
3    service on or after July 1, 2006, a River Edge
4    Redevelopment Zone established pursuant to the River Edge
5    Redevelopment Zone Act. For partners, shareholders of
6    Subchapter S corporations, and owners of limited liability
7    companies, if the liability company is treated as a
8    partnership for purposes of federal and State income
9    taxation, there shall be allowed a credit under this
10    subsection (f) to be determined in accordance with the
11    determination of income and distributive share of income
12    under Sections 702 and 704 and Subchapter S of the
13    Internal Revenue Code. The credit shall be .5% of the
14    basis for such property. The credit shall be available
15    only in the taxable year in which the property is placed in
16    service in the Enterprise Zone or River Edge Redevelopment
17    Zone and shall not be allowed to the extent that it would
18    reduce a taxpayer's liability for the tax imposed by
19    subsections (a) and (b) of this Section to below zero. For
20    tax years ending on or after December 31, 1985, the credit
21    shall be allowed for the tax year in which the property is
22    placed in service, or, if the amount of the credit exceeds
23    the tax liability for that year, whether it exceeds the
24    original liability or the liability as later amended, such
25    excess may be carried forward and applied to the tax
26    liability of the 5 taxable years following the excess

 

 

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1    credit year. The credit shall be applied to the earliest
2    year for which there is a liability. If there is credit
3    from more than one tax year that is available to offset a
4    liability, the credit accruing first in time shall be
5    applied first.
6        (2) The term qualified property means property which:
7            (A) is tangible, whether new or used, including
8        buildings and structural components of buildings;
9            (B) is depreciable pursuant to Section 167 of the
10        Internal Revenue Code, except that "3-year property"
11        as defined in Section 168(c)(2)(A) of that Code is not
12        eligible for the credit provided by this subsection
13        (f);
14            (C) is acquired by purchase as defined in Section
15        179(d) of the Internal Revenue Code;
16            (D) is used in the Enterprise Zone or River Edge
17        Redevelopment Zone by the taxpayer; and
18            (E) has not been previously used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (f) or
21        subsection (e).
22        (3) The basis of qualified property shall be the basis
23    used to compute the depreciation deduction for federal
24    income tax purposes.
25        (4) If the basis of the property for federal income
26    tax depreciation purposes is increased after it has been

 

 

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1    placed in service in the Enterprise Zone or River Edge
2    Redevelopment Zone by the taxpayer, the amount of such
3    increase shall be deemed property placed in service on the
4    date of such increase in basis.
5        (5) The term "placed in service" shall have the same
6    meaning as under Section 46 of the Internal Revenue Code.
7        (6) If during any taxable year, any property ceases to
8    be qualified property in the hands of the taxpayer within
9    48 months after being placed in service, or the situs of
10    any qualified property is moved outside the Enterprise
11    Zone or River Edge Redevelopment Zone within 48 months
12    after being placed in service, the tax imposed under
13    subsections (a) and (b) of this Section for such taxable
14    year shall be increased. Such increase shall be determined
15    by (i) recomputing the investment credit which would have
16    been allowed for the year in which credit for such
17    property was originally allowed by eliminating such
18    property from such computation, and (ii) subtracting such
19    recomputed credit from the amount of credit previously
20    allowed. For the purposes of this paragraph (6), a
21    reduction of the basis of qualified property resulting
22    from a redetermination of the purchase price shall be
23    deemed a disposition of qualified property to the extent
24    of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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1    service during the taxable year in a River Edge
2    Redevelopment Zone, provided such property is placed in
3    service on or after July 1, 2006, and the taxpayer's base
4    employment within Illinois has increased by 1% or more
5    over the preceding year as determined by the taxpayer's
6    employment records filed with the Illinois Department of
7    Employment Security. Taxpayers who are new to Illinois
8    shall be deemed to have met the 1% growth in base
9    employment for the first year in which they file
10    employment records with the Illinois Department of
11    Employment Security. If, in any year, the increase in base
12    employment within Illinois over the preceding year is less
13    than 1%, the additional credit shall be limited to that
14    percentage times a fraction, the numerator of which is
15    0.5% and the denominator of which is 1%, but shall not
16    exceed 0.5%.
17        (8) For taxable years beginning on or after January 1,
18    2021, there shall be allowed an Enterprise Zone
19    construction jobs credit against the taxes imposed under
20    subsections (a) and (b) of this Section as provided in
21    Section 13 of the Illinois Enterprise Zone Act.
22        The credit or credits may not reduce the taxpayer's
23    liability to less than zero. If the amount of the credit or
24    credits exceeds the taxpayer's liability, the excess may
25    be carried forward and applied against the taxpayer's
26    liability in succeeding calendar years in the same manner

 

 

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1    provided under paragraph (4) of Section 211 of this Act.
2    The credit or credits shall be applied to the earliest
3    year for which there is a tax liability. If there are
4    credits from more than one taxable year that are available
5    to offset a liability, the earlier credit shall be applied
6    first.
7        For partners, shareholders of Subchapter S
8    corporations, and owners of limited liability companies,
9    if the liability company is treated as a partnership for
10    the purposes of federal and State income taxation, there
11    shall be allowed a credit under this Section to be
12    determined in accordance with the determination of income
13    and distributive share of income under Sections 702 and
14    704 and Subchapter S of the Internal Revenue Code.
15        The total aggregate amount of credits awarded under
16    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
17    this amendatory Act of the 101st General Assembly) shall
18    not exceed $20,000,000 in any State fiscal year.
19        This paragraph (8) is exempt from the provisions of
20    Section 250.
21    (g) (Blank).
22    (h) Investment credit; High Impact Business.
23        (1) Subject to subsections (b) and (b-5) of Section
24    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
25    be allowed a credit against the tax imposed by subsections
26    (a) and (b) of this Section for investment in qualified

 

 

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1    property which is placed in service by a Department of
2    Commerce and Economic Opportunity designated High Impact
3    Business. The credit shall be .5% of the basis for such
4    property. The credit shall not be available (i) until the
5    minimum investments in qualified property set forth in
6    subdivision (a)(3)(A) of Section 5.5 of the Illinois
7    Enterprise Zone Act have been satisfied or (ii) until the
8    time authorized in subsection (b-5) of the Illinois
9    Enterprise Zone Act for entities designated as High Impact
10    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
11    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
12    Act, and shall not be allowed to the extent that it would
13    reduce a taxpayer's liability for the tax imposed by
14    subsections (a) and (b) of this Section to below zero. The
15    credit applicable to such investments shall be taken in
16    the taxable year in which such investments have been
17    completed. The credit for additional investments beyond
18    the minimum investment by a designated high impact
19    business authorized under subdivision (a)(3)(A) of Section
20    5.5 of the Illinois Enterprise Zone Act shall be available
21    only in the taxable year in which the property is placed in
22    service and shall not be allowed to the extent that it
23    would reduce a taxpayer's liability for the tax imposed by
24    subsections (a) and (b) of this Section to below zero. For
25    tax years ending on or after December 31, 1987, the credit
26    shall be allowed for the tax year in which the property is

 

 

SB2229- 73 -LRB102 16908 HLH 22320 b

1    placed in service, or, if the amount of the credit exceeds
2    the tax liability for that year, whether it exceeds the
3    original liability or the liability as later amended, such
4    excess may be carried forward and applied to the tax
5    liability of the 5 taxable years following the excess
6    credit year. The credit shall be applied to the earliest
7    year for which there is a liability. If there is credit
8    from more than one tax year that is available to offset a
9    liability, the credit accruing first in time shall be
10    applied first.
11        Changes made in this subdivision (h)(1) by Public Act
12    88-670 restore changes made by Public Act 85-1182 and
13    reflect existing law.
14        (2) The term qualified property means property which:
15            (A) is tangible, whether new or used, including
16        buildings and structural components of buildings;
17            (B) is depreciable pursuant to Section 167 of the
18        Internal Revenue Code, except that "3-year property"
19        as defined in Section 168(c)(2)(A) of that Code is not
20        eligible for the credit provided by this subsection
21        (h);
22            (C) is acquired by purchase as defined in Section
23        179(d) of the Internal Revenue Code; and
24            (D) is not eligible for the Enterprise Zone
25        Investment Credit provided by subsection (f) of this
26        Section.

 

 

SB2229- 74 -LRB102 16908 HLH 22320 b

1        (3) The basis of qualified property shall be the basis
2    used to compute the depreciation deduction for federal
3    income tax purposes.
4        (4) If the basis of the property for federal income
5    tax depreciation purposes is increased after it has been
6    placed in service in a federally designated Foreign Trade
7    Zone or Sub-Zone located in Illinois by the taxpayer, the
8    amount of such increase shall be deemed property placed in
9    service on the date of such increase in basis.
10        (5) The term "placed in service" shall have the same
11    meaning as under Section 46 of the Internal Revenue Code.
12        (6) If during any taxable year ending on or before
13    December 31, 1996, any property ceases to be qualified
14    property in the hands of the taxpayer within 48 months
15    after being placed in service, or the situs of any
16    qualified property is moved outside Illinois within 48
17    months after being placed in service, the tax imposed
18    under subsections (a) and (b) of this Section for such
19    taxable year shall be increased. Such increase shall be
20    determined by (i) recomputing the investment credit which
21    would have been allowed for the year in which credit for
22    such property was originally allowed by eliminating such
23    property from such computation, and (ii) subtracting such
24    recomputed credit from the amount of credit previously
25    allowed. For the purposes of this paragraph (6), a
26    reduction of the basis of qualified property resulting

 

 

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1    from a redetermination of the purchase price shall be
2    deemed a disposition of qualified property to the extent
3    of such reduction.
4        (7) Beginning with tax years ending after December 31,
5    1996, if a taxpayer qualifies for the credit under this
6    subsection (h) and thereby is granted a tax abatement and
7    the taxpayer relocates its entire facility in violation of
8    the explicit terms and length of the contract under
9    Section 18-183 of the Property Tax Code, the tax imposed
10    under subsections (a) and (b) of this Section shall be
11    increased for the taxable year in which the taxpayer
12    relocated its facility by an amount equal to the amount of
13    credit received by the taxpayer under this subsection (h).
14    (h-5) High Impact Business construction constructions jobs
15credit. For taxable years beginning on or after January 1,
162021, there shall also be allowed a High Impact Business
17construction jobs credit against the tax imposed under
18subsections (a) and (b) of this Section as provided in
19subsections (i) and (j) of Section 5.5 of the Illinois
20Enterprise Zone Act.
21    The credit or credits may not reduce the taxpayer's
22liability to less than zero. If the amount of the credit or
23credits exceeds the taxpayer's liability, the excess may be
24carried forward and applied against the taxpayer's liability
25in succeeding calendar years in the manner provided under
26paragraph (4) of Section 211 of this Act. The credit or credits

 

 

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1shall be applied to the earliest year for which there is a tax
2liability. If there are credits from more than one taxable
3year that are available to offset a liability, the earlier
4credit shall be applied first.
5    For partners, shareholders of Subchapter S corporations,
6and owners of limited liability companies, if the liability
7company is treated as a partnership for the purposes of
8federal and State income taxation, there shall be allowed a
9credit under this Section to be determined in accordance with
10the determination of income and distributive share of income
11under Sections 702 and 704 and Subchapter S of the Internal
12Revenue Code.
13    The total aggregate amount of credits awarded under the
14Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
15amendatory Act of the 101st General Assembly) shall not exceed
16$20,000,000 in any State fiscal year.
17    This subsection (h-5) is exempt from the provisions of
18Section 250.
19    (i) Credit for Personal Property Tax Replacement Income
20Tax. For tax years ending prior to December 31, 2003, a credit
21shall be allowed against the tax imposed by subsections (a)
22and (b) of this Section for the tax imposed by subsections (c)
23and (d) of this Section. This credit shall be computed by
24multiplying the tax imposed by subsections (c) and (d) of this
25Section by a fraction, the numerator of which is base income
26allocable to Illinois and the denominator of which is Illinois

 

 

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1base income, and further multiplying the product by the tax
2rate imposed by subsections (a) and (b) of this Section.
3    Any credit earned on or after December 31, 1986 under this
4subsection which is unused in the year the credit is computed
5because it exceeds the tax liability imposed by subsections
6(a) and (b) for that year (whether it exceeds the original
7liability or the liability as later amended) may be carried
8forward and applied to the tax liability imposed by
9subsections (a) and (b) of the 5 taxable years following the
10excess credit year, provided that no credit may be carried
11forward to any year ending on or after December 31, 2003. This
12credit shall be applied first to the earliest year for which
13there is a liability. If there is a credit under this
14subsection from more than one tax year that is available to
15offset a liability the earliest credit arising under this
16subsection shall be applied first.
17    If, during any taxable year ending on or after December
1831, 1986, the tax imposed by subsections (c) and (d) of this
19Section for which a taxpayer has claimed a credit under this
20subsection (i) is reduced, the amount of credit for such tax
21shall also be reduced. Such reduction shall be determined by
22recomputing the credit to take into account the reduced tax
23imposed by subsections (c) and (d). If any portion of the
24reduced amount of credit has been carried to a different
25taxable year, an amended return shall be filed for such
26taxable year to reduce the amount of credit claimed.

 

 

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1    (j) Training expense credit. Beginning with tax years
2ending on or after December 31, 1986 and prior to December 31,
32003, a taxpayer shall be allowed a credit against the tax
4imposed by subsections (a) and (b) under this Section for all
5amounts paid or accrued, on behalf of all persons employed by
6the taxpayer in Illinois or Illinois residents employed
7outside of Illinois by a taxpayer, for educational or
8vocational training in semi-technical or technical fields or
9semi-skilled or skilled fields, which were deducted from gross
10income in the computation of taxable income. The credit
11against the tax imposed by subsections (a) and (b) shall be
121.6% of such training expenses. For partners, shareholders of
13subchapter S corporations, and owners of limited liability
14companies, if the liability company is treated as a
15partnership for purposes of federal and State income taxation,
16there shall be allowed a credit under this subsection (j) to be
17determined in accordance with the determination of income and
18distributive share of income under Sections 702 and 704 and
19subchapter S of the Internal Revenue Code.
20    Any credit allowed under this subsection which is unused
21in the year the credit is earned may be carried forward to each
22of the 5 taxable years following the year for which the credit
23is first computed until it is used. This credit shall be
24applied first to the earliest year for which there is a
25liability. If there is a credit under this subsection from
26more than one tax year that is available to offset a liability,

 

 

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1the earliest credit arising under this subsection shall be
2applied first. No carryforward credit may be claimed in any
3tax year ending on or after December 31, 2003.
4    (k) Research and development credit. For tax years ending
5after July 1, 1990 and prior to December 31, 2003, and
6beginning again for tax years ending on or after December 31,
72004, and ending prior to January 1, 2027, a taxpayer shall be
8allowed a credit against the tax imposed by subsections (a)
9and (b) of this Section for increasing research activities in
10this State. The credit allowed against the tax imposed by
11subsections (a) and (b) shall be equal to 6 1/2% of the
12qualifying expenditures for increasing research activities in
13this State. For partners, shareholders of subchapter S
14corporations, and owners of limited liability companies, if
15the liability company is treated as a partnership for purposes
16of federal and State income taxation, there shall be allowed a
17credit under this subsection to be determined in accordance
18with the determination of income and distributive share of
19income under Sections 702 and 704 and subchapter S of the
20Internal Revenue Code.
21    For purposes of this subsection, "qualifying expenditures"
22means the qualifying expenditures as defined for the federal
23credit for increasing research activities which would be
24allowable under Section 41 of the Internal Revenue Code and
25which are conducted in this State, "qualifying expenditures
26for increasing research activities in this State" means the

 

 

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1excess of qualifying expenditures for the taxable year in
2which incurred over qualifying expenditures for the base
3period, "qualifying expenditures for the base period" means
4the average of the qualifying expenditures for each year in
5the base period, and "base period" means the 3 taxable years
6immediately preceding the taxable year for which the
7determination is being made.
8    Any credit in excess of the tax liability for the taxable
9year may be carried forward. A taxpayer may elect to have the
10unused credit shown on its final completed return carried over
11as a credit against the tax liability for the following 5
12taxable years or until it has been fully used, whichever
13occurs first; provided that no credit earned in a tax year
14ending prior to December 31, 2003 may be carried forward to any
15year ending on or after December 31, 2003.
16    If an unused credit is carried forward to a given year from
172 or more earlier years, that credit arising in the earliest
18year will be applied first against the tax liability for the
19given year. If a tax liability for the given year still
20remains, the credit from the next earliest year will then be
21applied, and so on, until all credits have been used or no tax
22liability for the given year remains. Any remaining unused
23credit or credits then will be carried forward to the next
24following year in which a tax liability is incurred, except
25that no credit can be carried forward to a year which is more
26than 5 years after the year in which the expense for which the

 

 

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1credit is given was incurred.
2    No inference shall be drawn from Public Act 91-644 this
3amendatory Act of the 91st General Assembly in construing this
4Section for taxable years beginning before January 1, 1999.
5    It is the intent of the General Assembly that the research
6and development credit under this subsection (k) shall apply
7continuously for all tax years ending on or after December 31,
82004 and ending prior to January 1, 2027, including, but not
9limited to, the period beginning on January 1, 2016 and ending
10on July 6, 2017 (the effective date of Public Act 100-22) this
11amendatory Act of the 100th General Assembly. All actions
12taken in reliance on the continuation of the credit under this
13subsection (k) by any taxpayer are hereby validated.
14    (l) Environmental Remediation Tax Credit.
15        (i) For tax years ending after December 31, 1997 and
16    on or before December 31, 2001, a taxpayer shall be
17    allowed a credit against the tax imposed by subsections
18    (a) and (b) of this Section for certain amounts paid for
19    unreimbursed eligible remediation costs, as specified in
20    this subsection. For purposes of this Section,
21    "unreimbursed eligible remediation costs" means costs
22    approved by the Illinois Environmental Protection Agency
23    ("Agency") under Section 58.14 of the Environmental
24    Protection Act that were paid in performing environmental
25    remediation at a site for which a No Further Remediation
26    Letter was issued by the Agency and recorded under Section

 

 

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1    58.10 of the Environmental Protection Act. The credit must
2    be claimed for the taxable year in which Agency approval
3    of the eligible remediation costs is granted. The credit
4    is not available to any taxpayer if the taxpayer or any
5    related party caused or contributed to, in any material
6    respect, a release of regulated substances on, in, or
7    under the site that was identified and addressed by the
8    remedial action pursuant to the Site Remediation Program
9    of the Environmental Protection Act. After the Pollution
10    Control Board rules are adopted pursuant to the Illinois
11    Administrative Procedure Act for the administration and
12    enforcement of Section 58.9 of the Environmental
13    Protection Act, determinations as to credit availability
14    for purposes of this Section shall be made consistent with
15    those rules. For purposes of this Section, "taxpayer"
16    includes a person whose tax attributes the taxpayer has
17    succeeded to under Section 381 of the Internal Revenue
18    Code and "related party" includes the persons disallowed a
19    deduction for losses by paragraphs (b), (c), and (f)(1) of
20    Section 267 of the Internal Revenue Code by virtue of
21    being a related taxpayer, as well as any of its partners.
22    The credit allowed against the tax imposed by subsections
23    (a) and (b) shall be equal to 25% of the unreimbursed
24    eligible remediation costs in excess of $100,000 per site,
25    except that the $100,000 threshold shall not apply to any
26    site contained in an enterprise zone as determined by the

 

 

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1    Department of Commerce and Community Affairs (now
2    Department of Commerce and Economic Opportunity). The
3    total credit allowed shall not exceed $40,000 per year
4    with a maximum total of $150,000 per site. For partners
5    and shareholders of subchapter S corporations, there shall
6    be allowed a credit under this subsection to be determined
7    in accordance with the determination of income and
8    distributive share of income under Sections 702 and 704
9    and subchapter S of the Internal Revenue Code.
10        (ii) A credit allowed under this subsection that is
11    unused in the year the credit is earned may be carried
12    forward to each of the 5 taxable years following the year
13    for which the credit is first earned until it is used. The
14    term "unused credit" does not include any amounts of
15    unreimbursed eligible remediation costs in excess of the
16    maximum credit per site authorized under paragraph (i).
17    This credit shall be applied first to the earliest year
18    for which there is a liability. If there is a credit under
19    this subsection from more than one tax year that is
20    available to offset a liability, the earliest credit
21    arising under this subsection shall be applied first. A
22    credit allowed under this subsection may be sold to a
23    buyer as part of a sale of all or part of the remediation
24    site for which the credit was granted. The purchaser of a
25    remediation site and the tax credit shall succeed to the
26    unused credit and remaining carry-forward period of the

 

 

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1    seller. To perfect the transfer, the assignor shall record
2    the transfer in the chain of title for the site and provide
3    written notice to the Director of the Illinois Department
4    of Revenue of the assignor's intent to sell the
5    remediation site and the amount of the tax credit to be
6    transferred as a portion of the sale. In no event may a
7    credit be transferred to any taxpayer if the taxpayer or a
8    related party would not be eligible under the provisions
9    of subsection (i).
10        (iii) For purposes of this Section, the term "site"
11    shall have the same meaning as under Section 58.2 of the
12    Environmental Protection Act.
13    (m) Education expense credit. Beginning with tax years
14ending after December 31, 1999, a taxpayer who is the
15custodian of one or more qualifying pupils shall be allowed a
16credit against the tax imposed by subsections (a) and (b) of
17this Section for qualified education expenses incurred on
18behalf of the qualifying pupils. The credit shall be equal to
1925% of qualified education expenses, but in no event may the
20total credit under this subsection claimed by a family that is
21the custodian of qualifying pupils exceed (i) $500 for tax
22years ending prior to December 31, 2017, and (ii) $750 for tax
23years ending on or after December 31, 2017. In no event shall a
24credit under this subsection reduce the taxpayer's liability
25under this Act to less than zero. Notwithstanding any other
26provision of law, for taxable years beginning on or after

 

 

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1January 1, 2017, no taxpayer may claim a credit under this
2subsection (m) if the taxpayer's adjusted gross income for the
3taxable year exceeds (i) $500,000, in the case of spouses
4filing a joint federal tax return or (ii) $250,000, in the case
5of all other taxpayers. This subsection is exempt from the
6provisions of Section 250 of this Act.
7    For purposes of this subsection:
8    "Qualifying pupils" means individuals who (i) are
9residents of the State of Illinois, (ii) are under the age of
1021 at the close of the school year for which a credit is
11sought, and (iii) during the school year for which a credit is
12sought were full-time pupils enrolled in a kindergarten
13through twelfth grade education program at any school, as
14defined in this subsection.
15    "Qualified education expense" means the amount incurred on
16behalf of a qualifying pupil in excess of $250 for tuition,
17book fees, and lab fees at the school in which the pupil is
18enrolled during the regular school year.
19    "School" means any public or nonpublic elementary or
20secondary school in Illinois that is in compliance with Title
21VI of the Civil Rights Act of 1964 and attendance at which
22satisfies the requirements of Section 26-1 of the School Code,
23except that nothing shall be construed to require a child to
24attend any particular public or nonpublic school to qualify
25for the credit under this Section.
26    "Custodian" means, with respect to qualifying pupils, an

 

 

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1Illinois resident who is a parent, the parents, a legal
2guardian, or the legal guardians of the qualifying pupils.
3    (n) River Edge Redevelopment Zone site remediation tax
4credit.
5        (i) For tax years ending on or after December 31,
6    2006, a taxpayer shall be allowed a credit against the tax
7    imposed by subsections (a) and (b) of this Section for
8    certain amounts paid for unreimbursed eligible remediation
9    costs, as specified in this subsection. For purposes of
10    this Section, "unreimbursed eligible remediation costs"
11    means costs approved by the Illinois Environmental
12    Protection Agency ("Agency") under Section 58.14a of the
13    Environmental Protection Act that were paid in performing
14    environmental remediation at a site within a River Edge
15    Redevelopment Zone for which a No Further Remediation
16    Letter was issued by the Agency and recorded under Section
17    58.10 of the Environmental Protection Act. The credit must
18    be claimed for the taxable year in which Agency approval
19    of the eligible remediation costs is granted. The credit
20    is not available to any taxpayer if the taxpayer or any
21    related party caused or contributed to, in any material
22    respect, a release of regulated substances on, in, or
23    under the site that was identified and addressed by the
24    remedial action pursuant to the Site Remediation Program
25    of the Environmental Protection Act. Determinations as to
26    credit availability for purposes of this Section shall be

 

 

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1    made consistent with rules adopted by the Pollution
2    Control Board pursuant to the Illinois Administrative
3    Procedure Act for the administration and enforcement of
4    Section 58.9 of the Environmental Protection Act. For
5    purposes of this Section, "taxpayer" includes a person
6    whose tax attributes the taxpayer has succeeded to under
7    Section 381 of the Internal Revenue Code and "related
8    party" includes the persons disallowed a deduction for
9    losses by paragraphs (b), (c), and (f)(1) of Section 267
10    of the Internal Revenue Code by virtue of being a related
11    taxpayer, as well as any of its partners. The credit
12    allowed against the tax imposed by subsections (a) and (b)
13    shall be equal to 25% of the unreimbursed eligible
14    remediation costs in excess of $100,000 per site.
15        (ii) A credit allowed under this subsection that is
16    unused in the year the credit is earned may be carried
17    forward to each of the 5 taxable years following the year
18    for which the credit is first earned until it is used. This
19    credit shall be applied first to the earliest year for
20    which there is a liability. If there is a credit under this
21    subsection from more than one tax year that is available
22    to offset a liability, the earliest credit arising under
23    this subsection shall be applied first. A credit allowed
24    under this subsection may be sold to a buyer as part of a
25    sale of all or part of the remediation site for which the
26    credit was granted. The purchaser of a remediation site

 

 

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1    and the tax credit shall succeed to the unused credit and
2    remaining carry-forward period of the seller. To perfect
3    the transfer, the assignor shall record the transfer in
4    the chain of title for the site and provide written notice
5    to the Director of the Illinois Department of Revenue of
6    the assignor's intent to sell the remediation site and the
7    amount of the tax credit to be transferred as a portion of
8    the sale. In no event may a credit be transferred to any
9    taxpayer if the taxpayer or a related party would not be
10    eligible under the provisions of subsection (i).
11        (iii) For purposes of this Section, the term "site"
12    shall have the same meaning as under Section 58.2 of the
13    Environmental Protection Act.
14    (o) For each of taxable years during the Compassionate Use
15of Medical Cannabis Program, a surcharge is imposed on all
16taxpayers on income arising from the sale or exchange of
17capital assets, depreciable business property, real property
18used in the trade or business, and Section 197 intangibles of
19an organization registrant under the Compassionate Use of
20Medical Cannabis Program Act. The amount of the surcharge is
21equal to the amount of federal income tax liability for the
22taxable year attributable to those sales and exchanges. The
23surcharge imposed does not apply if:
24        (1) the medical cannabis cultivation center
25    registration, medical cannabis dispensary registration, or
26    the property of a registration is transferred as a result

 

 

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1    of any of the following:
2            (A) bankruptcy, a receivership, or a debt
3        adjustment initiated by or against the initial
4        registration or the substantial owners of the initial
5        registration;
6            (B) cancellation, revocation, or termination of
7        any registration by the Illinois Department of Public
8        Health;
9            (C) a determination by the Illinois Department of
10        Public Health that transfer of the registration is in
11        the best interests of Illinois qualifying patients as
12        defined by the Compassionate Use of Medical Cannabis
13        Program Act;
14            (D) the death of an owner of the equity interest in
15        a registrant;
16            (E) the acquisition of a controlling interest in
17        the stock or substantially all of the assets of a
18        publicly traded company;
19            (F) a transfer by a parent company to a wholly
20        owned subsidiary; or
21            (G) the transfer or sale to or by one person to
22        another person where both persons were initial owners
23        of the registration when the registration was issued;
24        or
25        (2) the cannabis cultivation center registration,
26    medical cannabis dispensary registration, or the

 

 

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1    controlling interest in a registrant's property is
2    transferred in a transaction to lineal descendants in
3    which no gain or loss is recognized or as a result of a
4    transaction in accordance with Section 351 of the Internal
5    Revenue Code in which no gain or loss is recognized.
6    (p) A taxpayer shall be allowed an annual credit against
7the tax imposed by subsections (a) and (b) of this Section of
8an amount equal to 15% of the cost of equipment and materials
9incorporated into or used in the business of providing
10broadband services in this State during that year. Such annual
11credits shall be allowed commencing with the taxable year in
12which such property is placed in service and continue for 9
13consecutive years thereafter. The aggregate credit established
14by this subsection taken in any one tax year shall be limited
15to an amount not greater than 50% of the taxpayer's tax
16liability under subsections (a) and (b) of this Section;
17provided, however, that any tax credit claimed under this
18subsection but not used in any taxable year may be carried
19forward for 10 consecutive years from the close of the tax year
20in which the credits were earned. The maximum aggregate amount
21of credits that may be claimed under this subsection shall not
22exceed the original investment made by the taxpayer in the
23qualifying equipment.
24    For purposes this subsection: (i) "broadband service"
25means a service provided by wireline or wireless means capable
26of delivering high-speed internet access at speeds of at least

 

 

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110 megabits per second of download speed and one megabit per
2second of upload speed; and (ii) "equipment, and materials
3incorporated into or used in the business of providing
4broadband services", means all equipment and materials
5machinery, software, or other tangible personal property that
6is used in whole or in part in producing, broadcasting,
7distributing, sending, receiving, storing, transmitting,
8retransmitting, amplifying, switching, or routing broadband
9services, including the monitoring, testing, maintaining,
10enabling, or facilitating of such equipment, machinery,
11software, or other infrastructure. Such property includes, but
12is not limited to, wires, cables including fiber optic cables,
13antennas, poles, switches, routers, amplifiers, rectifiers,
14repeaters, receivers, multiplexers, duplexers, transmitters,
15power equipment, backup power equipment, diagnostic equipment,
16storage devices, modems, and other general central office
17equipment, such as channel cards, frames, and cabinets.
18(Source: P.A. 100-22, eff. 7-6-17; 101-8, see Section 99 for
19effective date; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
20101-207, eff. 8-2-19; 101-363, eff. 8-9-19; revised 11-18-20.)
 
21    Section 10. The Use Tax Act is amended by changing
22Sections 2 and 3-5 as follows:
 
23    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
24    Sec. 2. Definitions.

 

 

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1    "Broadband service" means a service provided by wireline
2or wireless means capable of delivering high-speed internet
3access at speeds of at least 10 megabits per second of download
4speed and one megabit per second of upload speed.
5    "Use" means the exercise by any person of any right or
6power over tangible personal property incident to the
7ownership of that property, except that it does not include
8the sale of such property in any form as tangible personal
9property in the regular course of business to the extent that
10such property is not first subjected to a use for which it was
11purchased, and does not include the use of such property by its
12owner for demonstration purposes: Provided that the property
13purchased is deemed to be purchased for the purpose of resale,
14despite first being used, to the extent to which it is resold
15as an ingredient of an intentionally produced product or
16by-product of manufacturing. "Use" does not mean the
17demonstration use or interim use of tangible personal property
18by a retailer before he sells that tangible personal property.
19For watercraft or aircraft, if the period of demonstration use
20or interim use by the retailer exceeds 18 months, the retailer
21shall pay on the retailers' original cost price the tax
22imposed by this Act, and no credit for that tax is permitted if
23the watercraft or aircraft is subsequently sold by the
24retailer. "Use" does not mean the physical incorporation of
25tangible personal property, to the extent not first subjected
26to a use for which it was purchased, as an ingredient or

 

 

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1constituent, into other tangible personal property (a) which
2is sold in the regular course of business or (b) which the
3person incorporating such ingredient or constituent therein
4has undertaken at the time of such purchase to cause to be
5transported in interstate commerce to destinations outside the
6State of Illinois: Provided that the property purchased is
7deemed to be purchased for the purpose of resale, despite
8first being used, to the extent to which it is resold as an
9ingredient of an intentionally produced product or by-product
10of manufacturing.
11    "Watercraft" means a Class 2, Class 3, or Class 4
12watercraft as defined in Section 3-2 of the Boat Registration
13and Safety Act, a personal watercraft, or any boat equipped
14with an inboard motor.
15    "Purchase at retail" means the acquisition of the
16ownership of or title to tangible personal property through a
17sale at retail.
18    "Purchaser" means anyone who, through a sale at retail,
19acquires the ownership of tangible personal property for a
20valuable consideration.
21    "Sale at retail" means any transfer of the ownership of or
22title to tangible personal property to a purchaser, for the
23purpose of use, and not for the purpose of resale in any form
24as tangible personal property to the extent not first
25subjected to a use for which it was purchased, for a valuable
26consideration: Provided that the property purchased is deemed

 

 

SB2229- 94 -LRB102 16908 HLH 22320 b

1to be purchased for the purpose of resale, despite first being
2used, to the extent to which it is resold as an ingredient of
3an intentionally produced product or by-product of
4manufacturing. For this purpose, slag produced as an incident
5to manufacturing pig iron or steel and sold is considered to be
6an intentionally produced by-product of manufacturing. "Sale
7at retail" includes any such transfer made for resale unless
8made in compliance with Section 2c of the Retailers'
9Occupation Tax Act, as incorporated by reference into Section
1012 of this Act. Transactions whereby the possession of the
11property is transferred but the seller retains the title as
12security for payment of the selling price are sales.
13    "Sale at retail" shall also be construed to include any
14Illinois florist's sales transaction in which the purchase
15order is received in Illinois by a florist and the sale is for
16use or consumption, but the Illinois florist has a florist in
17another state deliver the property to the purchaser or the
18purchaser's donee in such other state.
19    Nonreusable tangible personal property that is used by
20persons engaged in the business of operating a restaurant,
21cafeteria, or drive-in is a sale for resale when it is
22transferred to customers in the ordinary course of business as
23part of the sale of food or beverages and is used to deliver,
24package, or consume food or beverages, regardless of where
25consumption of the food or beverages occurs. Examples of those
26items include, but are not limited to nonreusable, paper and

 

 

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1plastic cups, plates, baskets, boxes, sleeves, buckets or
2other containers, utensils, straws, placemats, napkins, doggie
3bags, and wrapping or packaging materials that are transferred
4to customers as part of the sale of food or beverages in the
5ordinary course of business.
6    The purchase, employment and transfer of such tangible
7personal property as newsprint and ink for the primary purpose
8of conveying news (with or without other information) is not a
9purchase, use or sale of tangible personal property.
10    "Selling price" means the consideration for a sale valued
11in money whether received in money or otherwise, including
12cash, credits, property other than as hereinafter provided,
13and services, but, prior to January 1, 2020, not including the
14value of or credit given for traded-in tangible personal
15property where the item that is traded-in is of like kind and
16character as that which is being sold; beginning January 1,
172020, "selling price" includes the portion of the value of or
18credit given for traded-in motor vehicles of the First
19Division as defined in Section 1-146 of the Illinois Vehicle
20Code of like kind and character as that which is being sold
21that exceeds $10,000. "Selling price" shall be determined
22without any deduction on account of the cost of the property
23sold, the cost of materials used, labor or service cost or any
24other expense whatsoever, but does not include interest or
25finance charges which appear as separate items on the bill of
26sale or sales contract nor charges that are added to prices by

 

 

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1sellers on account of the seller's tax liability under the
2Retailers' Occupation Tax Act, or on account of the seller's
3duty to collect, from the purchaser, the tax that is imposed by
4this Act, or, except as otherwise provided with respect to any
5cigarette tax imposed by a home rule unit, on account of the
6seller's tax liability under any local occupation tax
7administered by the Department, or, except as otherwise
8provided with respect to any cigarette tax imposed by a home
9rule unit on account of the seller's duty to collect, from the
10purchasers, the tax that is imposed under any local use tax
11administered by the Department. Effective December 1, 1985,
12"selling price" shall include charges that are added to prices
13by sellers on account of the seller's tax liability under the
14Cigarette Tax Act, on account of the seller's duty to collect,
15from the purchaser, the tax imposed under the Cigarette Use
16Tax Act, and on account of the seller's duty to collect, from
17the purchaser, any cigarette tax imposed by a home rule unit.
18    Notwithstanding any law to the contrary, for any motor
19vehicle, as defined in Section 1-146 of the Vehicle Code, that
20is sold on or after January 1, 2015 for the purpose of leasing
21the vehicle for a defined period that is longer than one year
22and (1) is a motor vehicle of the second division that: (A) is
23a self-contained motor vehicle designed or permanently
24converted to provide living quarters for recreational,
25camping, or travel use, with direct walk through access to the
26living quarters from the driver's seat; (B) is of the van

 

 

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1configuration designed for the transportation of not less than
27 nor more than 16 passengers; or (C) has a gross vehicle
3weight rating of 8,000 pounds or less or (2) is a motor vehicle
4of the first division, "selling price" or "amount of sale"
5means the consideration received by the lessor pursuant to the
6lease contract, including amounts due at lease signing and all
7monthly or other regular payments charged over the term of the
8lease. Also included in the selling price is any amount
9received by the lessor from the lessee for the leased vehicle
10that is not calculated at the time the lease is executed,
11including, but not limited to, excess mileage charges and
12charges for excess wear and tear. For sales that occur in
13Illinois, with respect to any amount received by the lessor
14from the lessee for the leased vehicle that is not calculated
15at the time the lease is executed, the lessor who purchased the
16motor vehicle does not incur the tax imposed by the Use Tax Act
17on those amounts, and the retailer who makes the retail sale of
18the motor vehicle to the lessor is not required to collect the
19tax imposed by this Act or to pay the tax imposed by the
20Retailers' Occupation Tax Act on those amounts. However, the
21lessor who purchased the motor vehicle assumes the liability
22for reporting and paying the tax on those amounts directly to
23the Department in the same form (Illinois Retailers'
24Occupation Tax, and local retailers' occupation taxes, if
25applicable) in which the retailer would have reported and paid
26such tax if the retailer had accounted for the tax to the

 

 

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1Department. For amounts received by the lessor from the lessee
2that are not calculated at the time the lease is executed, the
3lessor must file the return and pay the tax to the Department
4by the due date otherwise required by this Act for returns
5other than transaction returns. If the retailer is entitled
6under this Act to a discount for collecting and remitting the
7tax imposed under this Act to the Department with respect to
8the sale of the motor vehicle to the lessor, then the right to
9the discount provided in this Act shall be transferred to the
10lessor with respect to the tax paid by the lessor for any
11amount received by the lessor from the lessee for the leased
12vehicle that is not calculated at the time the lease is
13executed; provided that the discount is only allowed if the
14return is timely filed and for amounts timely paid. The
15"selling price" of a motor vehicle that is sold on or after
16January 1, 2015 for the purpose of leasing for a defined period
17of longer than one year shall not be reduced by the value of or
18credit given for traded-in tangible personal property owned by
19the lessor, nor shall it be reduced by the value of or credit
20given for traded-in tangible personal property owned by the
21lessee, regardless of whether the trade-in value thereof is
22assigned by the lessee to the lessor. In the case of a motor
23vehicle that is sold for the purpose of leasing for a defined
24period of longer than one year, the sale occurs at the time of
25the delivery of the vehicle, regardless of the due date of any
26lease payments. A lessor who incurs a Retailers' Occupation

 

 

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1Tax liability on the sale of a motor vehicle coming off lease
2may not take a credit against that liability for the Use Tax
3the lessor paid upon the purchase of the motor vehicle (or for
4any tax the lessor paid with respect to any amount received by
5the lessor from the lessee for the leased vehicle that was not
6calculated at the time the lease was executed) if the selling
7price of the motor vehicle at the time of purchase was
8calculated using the definition of "selling price" as defined
9in this paragraph. Notwithstanding any other provision of this
10Act to the contrary, lessors shall file all returns and make
11all payments required under this paragraph to the Department
12by electronic means in the manner and form as required by the
13Department. This paragraph does not apply to leases of motor
14vehicles for which, at the time the lease is entered into, the
15term of the lease is not a defined period, including leases
16with a defined initial period with the option to continue the
17lease on a month-to-month or other basis beyond the initial
18defined period.
19    The phrase "like kind and character" shall be liberally
20construed (including but not limited to any form of motor
21vehicle for any form of motor vehicle, or any kind of farm or
22agricultural implement for any other kind of farm or
23agricultural implement), while not including a kind of item
24which, if sold at retail by that retailer, would be exempt from
25retailers' occupation tax and use tax as an isolated or
26occasional sale.

 

 

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1    "Department" means the Department of Revenue.
2    "Person" means any natural individual, firm, partnership,
3association, joint stock company, joint adventure, public or
4private corporation, limited liability company, or a receiver,
5executor, trustee, guardian or other representative appointed
6by order of any court.
7    "Retailer" means and includes every person engaged in the
8business of making sales at retail as defined in this Section.
9    A person who holds himself or herself out as being engaged
10(or who habitually engages) in selling tangible personal
11property at retail is a retailer hereunder with respect to
12such sales (and not primarily in a service occupation)
13notwithstanding the fact that such person designs and produces
14such tangible personal property on special order for the
15purchaser and in such a way as to render the property of value
16only to such purchaser, if such tangible personal property so
17produced on special order serves substantially the same
18function as stock or standard items of tangible personal
19property that are sold at retail.
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 a retailer with respect to such transactions, excepting
25only a person organized and operated exclusively for
26charitable, religious or educational purposes either (1), to

 

 

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1the extent of sales by such person to its members, students,
2patients or inmates of tangible personal property to be used
3primarily for the purposes of such person, or (2), to the
4extent of sales by such person of tangible personal property
5which is not sold or offered for sale by persons organized for
6profit. The selling of school books and school supplies by
7schools at retail to students is not "primarily for the
8purposes of" the school which does such selling. This
9paragraph does not apply to nor subject to taxation occasional
10dinners, social or similar activities of a person organized
11and operated exclusively for charitable, religious or
12educational purposes, whether or not such activities are open
13to the public.
14    A person who is the recipient of a grant or contract under
15Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
16serves meals to participants in the federal Nutrition Program
17for the Elderly in return for contributions established in
18amount by the individual participant pursuant to a schedule of
19suggested fees as provided for in the federal Act is not a
20retailer under this Act with respect to such transactions.
21    Persons who engage in the business of transferring
22tangible personal property upon the redemption of trading
23stamps are retailers hereunder when engaged in such business.
24    The isolated or occasional sale of tangible personal
25property at retail by a person who does not hold himself out as
26being engaged (or who does not habitually engage) in selling

 

 

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1such tangible personal property at retail or a sale through a
2bulk vending machine does not make such person a retailer
3hereunder. However, any person who is engaged in a business
4which is not subject to the tax imposed by the Retailers'
5Occupation Tax Act because of involving the sale of or a
6contract to sell real estate or a construction contract to
7improve real estate, but who, in the course of conducting such
8business, transfers tangible personal property to users or
9consumers in the finished form in which it was purchased, and
10which does not become real estate, under any provision of a
11construction contract or real estate sale or real estate sales
12agreement entered into with some other person arising out of
13or because of such nontaxable business, is a retailer to the
14extent of the value of the tangible personal property so
15transferred. If, in such transaction, a separate charge is
16made for the tangible personal property so transferred, the
17value of such property, for the purposes of this Act, is the
18amount so separately charged, but not less than the cost of
19such property to the transferor; if no separate charge is
20made, the value of such property, for the purposes of this Act,
21is the cost to the transferor of such tangible personal
22property.
23    "Retailer maintaining a place of business in this State",
24or any like term, means and includes any of the following
25retailers:
26        (1) A retailer having or maintaining within this

 

 

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1    State, directly or by a subsidiary, an office,
2    distribution house, sales house, warehouse or other place
3    of business, or any agent or other representative
4    operating within this State under the authority of the
5    retailer or its subsidiary, irrespective of whether such
6    place of business or agent or other representative is
7    located here permanently or temporarily, or whether such
8    retailer or subsidiary is licensed to do business in this
9    State. However, the ownership of property that is located
10    at the premises of a printer with which the retailer has
11    contracted for printing and that consists of the final
12    printed product, property that becomes a part of the final
13    printed product, or copy from which the printed product is
14    produced shall not result in the retailer being deemed to
15    have or maintain an office, distribution house, sales
16    house, warehouse, or other place of business within this
17    State.
18        (1.1) A retailer having a contract with a person
19    located in this State under which the person, for a
20    commission or other consideration based upon the sale of
21    tangible personal property by the retailer, directly or
22    indirectly refers potential customers to the retailer by
23    providing to the potential customers a promotional code or
24    other mechanism that allows the retailer to track
25    purchases referred by such persons. Examples of mechanisms
26    that allow the retailer to track purchases referred by

 

 

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1    such persons include but are not limited to the use of a
2    link on the person's Internet website, promotional codes
3    distributed through the person's hand-delivered or mailed
4    material, and promotional codes distributed by the person
5    through radio or other broadcast media. The provisions of
6    this paragraph (1.1) shall apply only if the cumulative
7    gross receipts from sales of tangible personal property by
8    the retailer to customers who are referred to the retailer
9    by all persons in this State under such contracts exceed
10    $10,000 during the preceding 4 quarterly periods ending on
11    the last day of March, June, September, and December. A
12    retailer meeting the requirements of this paragraph (1.1)
13    shall be presumed to be maintaining a place of business in
14    this State but may rebut this presumption by submitting
15    proof that the referrals or other activities pursued
16    within this State by such persons were not sufficient to
17    meet the nexus standards of the United States Constitution
18    during the preceding 4 quarterly periods.
19        (1.2) Beginning July 1, 2011, a retailer having a
20    contract with a person located in this State under which:
21            (A) the retailer sells the same or substantially
22        similar line of products as the person located in this
23        State and does so using an identical or substantially
24        similar name, trade name, or trademark as the person
25        located in this State; and
26            (B) the retailer provides a commission or other

 

 

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1        consideration to the person located in this State
2        based upon the sale of tangible personal property by
3        the retailer.
4        The provisions of this paragraph (1.2) shall apply
5    only if the cumulative gross receipts from sales of
6    tangible personal property by the retailer to customers in
7    this State under all such contracts exceed $10,000 during
8    the preceding 4 quarterly periods ending on the last day
9    of March, June, September, and December.
10        (2) (Blank).
11        (3) (Blank).
12        (4) (Blank).
13        (5) (Blank).
14        (6) (Blank).
15        (7) (Blank).
16        (8) (Blank).
17        (9) Beginning October 1, 2018, a retailer making sales
18    of tangible personal property to purchasers in Illinois
19    from outside of Illinois if:
20            (A) the cumulative gross receipts from sales of
21        tangible personal property to purchasers in Illinois
22        are $100,000 or more; or
23            (B) the retailer enters into 200 or more separate
24        transactions for the sale of tangible personal
25        property to purchasers in Illinois.
26        The retailer shall determine on a quarterly basis,

 

 

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1    ending on the last day of March, June, September, and
2    December, whether he or she meets the criteria of either
3    subparagraph (A) or (B) of this paragraph (9) for the
4    preceding 12-month period. If the retailer meets the
5    threshold of either subparagraph (A) or (B) for a 12-month
6    period, he or she is considered a retailer maintaining a
7    place of business in this State and is required to collect
8    and remit the tax imposed under this Act and file returns
9    for one year. At the end of that one-year period, the
10    retailer shall determine whether he or she met the
11    threshold of either subparagraph (A) or (B) during the
12    preceding 12-month period. If the retailer met the
13    criteria in either subparagraph (A) or (B) for the
14    preceding 12-month period, he or she is considered a
15    retailer maintaining a place of business in this State and
16    is required to collect and remit the tax imposed under
17    this Act and file returns for the subsequent year. If at
18    the end of a one-year period a retailer that was required
19    to collect and remit the tax imposed under this Act
20    determines that he or she did not meet the threshold in
21    either subparagraph (A) or (B) during the preceding
22    12-month period, the retailer shall subsequently determine
23    on a quarterly basis, ending on the last day of March,
24    June, September, and December, whether he or she meets the
25    threshold of either subparagraph (A) or (B) for the
26    preceding 12-month period.

 

 

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1        Beginning January 1, 2020, neither the gross receipts
2    from nor the number of separate transactions for sales of
3    tangible personal property to purchasers in Illinois that
4    a retailer makes through a marketplace facilitator and for
5    which the retailer has received a certification from the
6    marketplace facilitator pursuant to Section 2d of this Act
7    shall be included for purposes of determining whether he
8    or she has met the thresholds of this paragraph (9).
9        (10) Beginning January 1, 2020, a marketplace
10    facilitator that meets a threshold set forth in subsection
11    (b) of Section 2d of this Act.
12    "Bulk vending machine" means a vending machine, containing
13unsorted confections, nuts, toys, or other items designed
14primarily to be used or played with by children which, when a
15coin or coins of a denomination not larger than $0.50 are
16inserted, are dispensed in equal portions, at random and
17without selection by the customer.
18(Source: P.A. 100-587, eff. 6-4-18; 101-9, eff. 6-5-19;
19101-31, eff. 1-1-20; 101-604, eff. 1-1-20.)
 
20    (35 ILCS 105/3-5)
21    Sec. 3-5. Exemptions. Use of the following tangible
22personal property is exempt from the tax imposed by this Act:
23    (1) Personal property purchased from a corporation,
24society, association, foundation, institution, or
25organization, other than a limited liability company, that is

 

 

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

 

 

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1corporation, society, association, foundation, institution, or
2organization that has no compensated officers or employees and
3that is organized and operated primarily for the recreation of
4persons 55 years of age or older. A limited liability company
5may qualify for the exemption under this paragraph only if the
6limited liability company is organized and operated
7exclusively for educational purposes. On and after July 1,
81987, however, no entity otherwise eligible for this exemption
9shall make tax-free purchases unless it has an active
10exemption identification number issued by the Department.
11    (5) Until July 1, 2003, a passenger car that is a
12replacement vehicle to the extent that the purchase price of
13the car is subject to the Replacement Vehicle Tax.
14    (6) Until July 1, 2003 and beginning again on September 1,
152004 through August 30, 2014, graphic arts machinery and
16equipment, including repair and replacement parts, both new
17and used, and including that manufactured on special order,
18certified by the purchaser to be used primarily for graphic
19arts production, and including machinery and equipment
20purchased for lease. Equipment includes chemicals or chemicals
21acting as catalysts but only if the chemicals or chemicals
22acting as catalysts effect a direct and immediate change upon
23a graphic arts product. Beginning on July 1, 2017, graphic
24arts machinery and equipment is included in the manufacturing
25and assembling machinery and equipment exemption under
26paragraph (18).

 

 

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1    (7) Farm chemicals.
2    (8) Legal tender, currency, medallions, or gold or silver
3coinage issued by the State of Illinois, the government of the
4United States of America, or the government of any foreign
5country, and bullion.
6    (9) Personal property purchased from a teacher-sponsored
7student organization affiliated with an elementary or
8secondary school located in Illinois.
9    (10) A motor vehicle that is used for automobile renting,
10as defined in the Automobile Renting Occupation and Use Tax
11Act.
12    (11) Farm machinery and equipment, both new and used,
13including that manufactured on special order, certified by the
14purchaser to be used primarily for production agriculture or
15State or federal agricultural programs, including individual
16replacement parts for the machinery and equipment, including
17machinery and equipment purchased for lease, and including
18implements of husbandry defined in Section 1-130 of the
19Illinois Vehicle Code, farm machinery and agricultural
20chemical and fertilizer spreaders, and nurse wagons required
21to be registered under Section 3-809 of the Illinois Vehicle
22Code, but excluding other motor vehicles required to be
23registered under the Illinois Vehicle Code. Horticultural
24polyhouses or hoop houses used for propagating, growing, or
25overwintering plants shall be considered farm machinery and
26equipment under this item (11). Agricultural chemical tender

 

 

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1tanks and dry boxes shall include units sold separately from a
2motor vehicle required to be licensed and units sold mounted
3on a motor vehicle required to be licensed if the selling price
4of the tender is separately stated.
5    Farm machinery and equipment shall include precision
6farming equipment that is installed or purchased to be
7installed on farm machinery and equipment including, but not
8limited to, tractors, harvesters, sprayers, planters, seeders,
9or spreaders. Precision farming equipment includes, but is not
10limited to, soil testing sensors, computers, monitors,
11software, global positioning and mapping systems, and other
12such equipment.
13    Farm machinery and equipment also includes computers,
14sensors, software, and related equipment used primarily in the
15computer-assisted operation of production agriculture
16facilities, equipment, and activities such as, but not limited
17to, the collection, monitoring, and correlation of animal and
18crop data for the purpose of formulating animal diets and
19agricultural chemicals. This item (11) is exempt from the
20provisions of Section 3-90.
21    (12) Until June 30, 2013, fuel and petroleum products sold
22to or used by an air common carrier, certified by the carrier
23to be used for consumption, shipment, or storage in the
24conduct of its business as an air common carrier, for a flight
25destined for or returning from a location or locations outside
26the United States without regard to previous or subsequent

 

 

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

 

 

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1machinery and equipment purchased for lease; but excluding
2motor vehicles required to be registered under the Illinois
3Vehicle Code.
4    (15) Photoprocessing machinery and equipment, including
5repair and replacement parts, both new and used, including
6that manufactured on special order, certified by the purchaser
7to be used primarily for photoprocessing, and including
8photoprocessing machinery and equipment purchased for lease.
9    (16) Until July 1, 2023, coal and aggregate exploration,
10mining, off-highway hauling, processing, maintenance, and
11reclamation equipment, including replacement parts and
12equipment, and including equipment purchased for lease, but
13excluding motor vehicles required to be registered under the
14Illinois Vehicle Code. The changes made to this Section by
15Public Act 97-767 apply on and after July 1, 2003, but no claim
16for credit or refund is allowed on or after August 16, 2013
17(the effective date of Public Act 98-456) for such taxes paid
18during the period beginning July 1, 2003 and ending on August
1916, 2013 (the effective date of Public Act 98-456).
20    (17) Until July 1, 2003, distillation machinery and
21equipment, sold as a unit or kit, assembled or installed by the
22retailer, certified by the user to be used only for the
23production of ethyl alcohol that will be used for consumption
24as motor fuel or as a component of motor fuel for the personal
25use of the user, and not subject to sale or resale.
26    (18) Manufacturing and assembling machinery and equipment

 

 

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1used primarily in the process of manufacturing or assembling
2tangible personal property for wholesale or retail sale or
3lease, whether that sale or lease is made directly by the
4manufacturer or by some other person, whether the materials
5used in the process are owned by the manufacturer or some other
6person, or whether that sale or lease is made apart from or as
7an incident to the seller's engaging in the service occupation
8of producing machines, tools, dies, jigs, patterns, gauges, or
9other similar items of no commercial value on special order
10for a particular purchaser. The exemption provided by this
11paragraph (18) includes production related tangible personal
12property, as defined in Section 3-50, purchased on or after
13July 1, 2019. The exemption provided by this paragraph (18)
14does not include machinery and equipment used in (i) the
15generation of electricity for wholesale or retail sale; (ii)
16the generation or treatment of natural or artificial gas for
17wholesale or retail sale that is delivered to customers
18through pipes, pipelines, or mains; or (iii) the treatment of
19water for wholesale or retail sale that is delivered to
20customers through pipes, pipelines, or mains. The provisions
21of Public Act 98-583 are declaratory of existing law as to the
22meaning and scope of this exemption. Beginning on July 1,
232017, the exemption provided by this paragraph (18) includes,
24but is not limited to, graphic arts machinery and equipment,
25as defined in paragraph (6) of this Section.
26    (19) Personal property delivered to a purchaser or

 

 

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1purchaser's donee inside Illinois when the purchase order for
2that personal property was received by a florist located
3outside Illinois who has a florist located inside Illinois
4deliver the personal property.
5    (20) Semen used for artificial insemination of livestock
6for direct agricultural production.
7    (21) 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 (21) is exempt from the
13provisions of Section 3-90, and the exemption provided for
14under this item (21) applies for all periods beginning May 30,
151995, but no claim for credit or refund is allowed on or after
16January 1, 2008 for such taxes paid during the period
17beginning May 30, 2000 and ending on January 1, 2008.
18    (22) Computers and communications equipment utilized for
19any hospital purpose and equipment used in the diagnosis,
20analysis, or treatment of hospital patients purchased by a
21lessor who leases the equipment, under a lease of one year or
22longer executed or in effect at the time the lessor would
23otherwise be subject to the tax imposed by this Act, to a
24hospital that has been issued an active tax exemption
25identification number by the Department under Section 1g of
26the Retailers' Occupation Tax Act. If the equipment is leased

 

 

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

 

 

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

 

 

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1purification facilities, storm water drainage and retention
2facilities, and sewage treatment facilities, resulting from a
3State or federally declared disaster in Illinois or bordering
4Illinois when such repairs are initiated on facilities located
5in the declared disaster area within 6 months after the
6disaster.
7    (26) Beginning July 1, 1999, game or game birds purchased
8at a "game breeding and hunting preserve area" as that term is
9used in the Wildlife Code. This paragraph is exempt from the
10provisions of Section 3-90.
11    (27) A motor vehicle, as that term is defined in Section
121-146 of the Illinois Vehicle Code, that is donated to a
13corporation, limited liability company, society, association,
14foundation, or institution that is determined by the
15Department to be organized and operated exclusively for
16educational purposes. For purposes of this exemption, "a
17corporation, limited liability company, society, association,
18foundation, or institution organized and operated exclusively
19for educational purposes" means all tax-supported public
20schools, private schools that offer systematic instruction in
21useful branches of learning by methods common to public
22schools and that compare favorably in their scope and
23intensity with the course of study presented in tax-supported
24schools, and vocational or technical schools or institutes
25organized and operated exclusively to provide a course of
26study of not less than 6 weeks duration and designed to prepare

 

 

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1individuals to follow a trade or to pursue a manual,
2technical, mechanical, industrial, business, or commercial
3occupation.
4    (28) Beginning January 1, 2000, personal property,
5including food, purchased through fundraising events for the
6benefit of a public or private elementary or secondary school,
7a group of those schools, or one or more school districts if
8the events are sponsored by an entity recognized by the school
9district that consists primarily of volunteers and includes
10parents and teachers of the school children. This paragraph
11does not apply to fundraising events (i) for the benefit of
12private home instruction or (ii) for which the fundraising
13entity purchases the personal property sold at the events from
14another individual or entity that sold the property for the
15purpose of resale by the fundraising entity and that profits
16from the sale to the fundraising entity. This paragraph is
17exempt from the provisions of Section 3-90.
18    (29) Beginning January 1, 2000 and through December 31,
192001, new or used automatic vending machines that prepare and
20serve hot food and beverages, including coffee, soup, and
21other items, and replacement parts for these machines.
22Beginning January 1, 2002 and through June 30, 2003, machines
23and parts for machines used in commercial, coin-operated
24amusement and vending business if a use or occupation tax is
25paid on the gross receipts derived from the use of the
26commercial, coin-operated amusement and vending machines. This

 

 

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1paragraph is exempt from the provisions of Section 3-90.
2    (30) Beginning January 1, 2001 and through June 30, 2016,
3food for human consumption that is to be consumed off the
4premises where it is sold (other than alcoholic beverages,
5soft drinks, and food that has been prepared for immediate
6consumption) and prescription and nonprescription medicines,
7drugs, medical appliances, and insulin, urine testing
8materials, syringes, and needles used by diabetics, for human
9use, when purchased for use by a person receiving medical
10assistance under Article V of the Illinois Public Aid Code who
11resides in a licensed long-term care facility, as defined in
12the Nursing Home Care Act, or in a licensed facility as defined
13in the ID/DD Community Care Act, the MC/DD Act, or the
14Specialized Mental Health Rehabilitation Act of 2013.
15    (31) Beginning on August 2, 2001 (the effective date of
16Public Act 92-227), computers and communications equipment
17utilized for any hospital purpose and equipment used in the
18diagnosis, analysis, or treatment of hospital patients
19purchased by a lessor who leases the equipment, under a lease
20of one year or longer executed or in effect at the time the
21lessor would otherwise be subject to the tax imposed by this
22Act, to a hospital that has been issued an active tax exemption
23identification number by the Department under Section 1g of
24the Retailers' Occupation Tax Act. If the equipment is leased
25in a manner that does not qualify for this exemption or is used
26in any other nonexempt manner, the lessor shall be liable for

 

 

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

 

 

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1or attempt to collect an amount (however designated) that
2purports to reimburse that lessor for the tax imposed by this
3Act or the Service Use Tax Act, as the case may be, if the tax
4has not been paid by the lessor. If a lessor improperly
5collects any such amount from the lessee, the lessee shall
6have a legal right to claim a refund of that amount from the
7lessor. If, however, that amount is not refunded to the lessee
8for any reason, the lessor is liable to pay that amount to the
9Department. This paragraph is exempt from the provisions of
10Section 3-90.
11    (33) On and after July 1, 2003 and through June 30, 2004,
12the use in this State of motor vehicles of the second division
13with a gross vehicle weight in excess of 8,000 pounds and that
14are subject to the commercial distribution fee imposed under
15Section 3-815.1 of the Illinois Vehicle Code. Beginning on
16July 1, 2004 and through June 30, 2005, the use in this State
17of motor vehicles of the second division: (i) with a gross
18vehicle weight rating in excess of 8,000 pounds; (ii) that are
19subject to the commercial distribution fee imposed under
20Section 3-815.1 of the Illinois Vehicle Code; and (iii) that
21are primarily used for commercial purposes. Through June 30,
222005, this exemption applies to repair and replacement parts
23added after the initial purchase of such a motor vehicle if
24that motor vehicle is used in a manner that would qualify for
25the rolling stock exemption otherwise provided for in this
26Act. For purposes of this paragraph, the term "used for

 

 

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1commercial purposes" means the transportation of persons or
2property in furtherance of any commercial or industrial
3enterprise, whether for-hire or not.
4    (34) Beginning January 1, 2008, tangible personal property
5used in the construction or maintenance of a community water
6supply, as defined under Section 3.145 of the Environmental
7Protection Act, that is operated by a not-for-profit
8corporation that holds a valid water supply permit issued
9under Title IV of the Environmental Protection Act. This
10paragraph is exempt from the provisions of Section 3-90.
11    (35) Beginning January 1, 2010 and continuing through
12December 31, 2024, materials, parts, equipment, components,
13and furnishings incorporated into or upon an aircraft as part
14of the modification, refurbishment, completion, replacement,
15repair, or maintenance of the aircraft. This exemption
16includes consumable supplies used in the modification,
17refurbishment, completion, replacement, repair, and
18maintenance of aircraft, but excludes any materials, parts,
19equipment, components, and consumable supplies used in the
20modification, replacement, repair, and maintenance of aircraft
21engines or power plants, whether such engines or power plants
22are installed or uninstalled upon any such aircraft.
23"Consumable supplies" include, but are not limited to,
24adhesive, tape, sandpaper, general purpose lubricants,
25cleaning solution, latex gloves, and protective films. This
26exemption applies only to the use of qualifying tangible

 

 

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1personal property by persons who modify, refurbish, complete,
2repair, replace, or maintain aircraft and who (i) hold an Air
3Agency Certificate and are empowered to operate an approved
4repair station by the Federal Aviation Administration, (ii)
5have a Class IV Rating, and (iii) conduct operations in
6accordance with Part 145 of the Federal Aviation Regulations.
7The exemption does not include aircraft operated by a
8commercial air carrier providing scheduled passenger air
9service pursuant to authority issued under Part 121 or Part
10129 of the Federal Aviation Regulations. The changes made to
11this paragraph (35) by Public Act 98-534 are declarative of
12existing law. It is the intent of the General Assembly that the
13exemption under this paragraph (35) applies continuously from
14January 1, 2010 through December 31, 2024; however, no claim
15for credit or refund is allowed for taxes paid as a result of
16the disallowance of this exemption on or after January 1, 2015
17and prior to the effective date of this amendatory Act of the
18101st General Assembly.
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
2instruments issued by the public-facilities corporation in
3connection with the development of the municipal convention
4hall. This exemption includes existing public-facilities
5corporations as provided in Section 11-65-25 of the Illinois
6Municipal Code. This paragraph is exempt from the provisions
7of Section 3-90.
8    (37) Beginning January 1, 2017, menstrual pads, tampons,
9and menstrual cups.
10    (38) Merchandise that is subject to the Rental Purchase
11Agreement Occupation and Use Tax. The purchaser must certify
12that the item is purchased to be rented subject to a rental
13purchase agreement, as defined in the Rental Purchase
14Agreement Act, and provide proof of registration under the
15Rental Purchase Agreement Occupation and Use Tax Act. This
16paragraph is exempt from the provisions of Section 3-90.
17    (39) Tangible personal property purchased by a purchaser
18who is exempt from the tax imposed by this Act by operation of
19federal law. This paragraph is exempt from the provisions of
20Section 3-90.
21    (40) Qualified tangible personal property used in the
22construction or operation of a data center that has been
23granted a certificate of exemption by the Department of
24Commerce and Economic Opportunity, whether that tangible
25personal property is purchased by the owner, operator, or
26tenant of the data center or by a contractor or subcontractor

 

 

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1of the owner, operator, or tenant. Data centers that would
2have qualified for a certificate of exemption prior to January
31, 2020 had Public Act 101-31 been in effect may apply for and
4obtain an exemption for subsequent purchases of computer
5equipment or enabling software purchased or leased to upgrade,
6supplement, or replace computer equipment or enabling software
7purchased or leased in the original investment that would have
8qualified.
9    The Department of Commerce and Economic Opportunity shall
10grant a certificate of exemption under this item (40) to
11qualified data centers as defined by Section 605-1025 of the
12Department of Commerce and Economic Opportunity Law of the
13Civil Administrative Code of Illinois.
14    For the purposes of this item (40):
15        "Data center" means a building or a series of
16    buildings rehabilitated or constructed to house working
17    servers in one physical location or multiple sites within
18    the State of Illinois.
19        "Qualified tangible personal property" means:
20    electrical systems and equipment; climate control and
21    chilling equipment and systems; mechanical systems and
22    equipment; monitoring and secure systems; emergency
23    generators; hardware; computers; servers; data storage
24    devices; network connectivity equipment; racks; cabinets;
25    telecommunications cabling infrastructure; raised floor
26    systems; peripheral components or systems; software;

 

 

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1    mechanical, electrical, or plumbing systems; battery
2    systems; cooling systems and towers; temperature control
3    systems; other cabling; and other data center
4    infrastructure equipment and systems necessary to operate
5    qualified tangible personal property, including fixtures;
6    and component parts of any of the foregoing, including
7    installation, maintenance, repair, refurbishment, and
8    replacement of qualified tangible personal property to
9    generate, transform, transmit, distribute, or manage
10    electricity necessary to operate qualified tangible
11    personal property; and all other tangible personal
12    property that is essential to the operations of a computer
13    data center. The term "qualified tangible personal
14    property" also includes building materials physically
15    incorporated in to the qualifying data center. To document
16    the exemption allowed under this Section, the retailer
17    must obtain from the purchaser a copy of the certificate
18    of eligibility issued by the Department of Commerce and
19    Economic Opportunity.
20    This item (40) is exempt from the provisions of Section
213-90.
22    (41) Until December 31, 2024, equipment and materials
23incorporated into or used in the business of providing
24broadband services, including all equipment and materials,
25machinery, software, or other tangible personal property that
26is used in whole or in part in producing, broadcasting,

 

 

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1distributing, sending, receiving, storing, transmitting,
2retransmitting, amplifying, switching, or routing broadband
3services, including the monitoring, testing, maintaining,
4enabling, or facilitating of such equipment, machinery,
5software, or other infrastructure. Such property includes, but
6is not limited to, wires, cables including fiber optic cables,
7antennas, poles, switches, routers, amplifiers, rectifiers,
8repeaters, receivers, multiplexers, duplexers, transmitters,
9power equipment, backup power equipment, diagnostic equipment,
10storage devices, modems, and other general central office
11equipment, such as channel cards, frames, and cabinets.
12(Source: P.A. 100-22, eff. 7-6-17; 100-437, eff. 1-1-18;
13100-594, eff. 6-29-18; 100-863, eff. 8-14-18; 100-1171, eff.
141-4-19; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19; 101-81, eff.
157-12-19; 101-629, eff. 2-5-20.)
 
16    Section 15. The Service Use Tax Act is amended by changing
17Sections 2 and 3-5 as follows:
 
18    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
19    Sec. 2. Definitions. In this Act:
20    "Broadband service" means a service provided by wireline
21or wireless means capable of delivering high-speed internet
22access at speeds of at least 10 megabits per second of download
23speed and one megabit per second of upload speed.
24    "Use" means the exercise by any person of any right or

 

 

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1power over tangible personal property incident to the
2ownership of that property, but does not include the sale or
3use for demonstration by him of that property in any form as
4tangible personal property in the regular course of business.
5"Use" does not mean the interim use of tangible personal
6property nor the physical incorporation of tangible personal
7property, as an ingredient or constituent, into other tangible
8personal property, (a) which is sold in the regular course of
9business or (b) which the person incorporating such ingredient
10or constituent therein has undertaken at the time of such
11purchase to cause to be transported in interstate commerce to
12destinations outside the State of Illinois.
13    "Purchased from a serviceman" means the acquisition of the
14ownership of, or title to, tangible personal property through
15a sale of service.
16    "Purchaser" means any person who, through a sale of
17service, acquires the ownership of, or title to, any tangible
18personal property.
19    "Cost price" means the consideration paid by the
20serviceman for a purchase valued in money, whether paid in
21money or otherwise, including cash, credits and services, and
22shall be determined without any deduction on account of the
23supplier's cost of the property sold or on account of any other
24expense incurred by the supplier. When a serviceman contracts
25out part or all of the services required in his sale of
26service, it shall be presumed that the cost price to the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    this Act and file returns for the subsequent year. If at
2    the end of a one-year period a serviceman that was
3    required to collect and remit the tax imposed under this
4    Act determines that he or she did not meet the criteria in
5    either subparagraph (A) or (B) during the preceding
6    12-month period, the serviceman subsequently shall
7    determine on a quarterly basis, ending on the last day of
8    March, June, September, and December, whether he or she
9    meets the criteria of either subparagraph (A) or (B) for
10    the preceding 12-month period.
11        Beginning January 1, 2020, neither the gross receipts
12    from nor the number of separate transactions for sales of
13    service to purchasers in Illinois that a serviceman makes
14    through a marketplace facilitator and for which the
15    serviceman has received a certification from the
16    marketplace facilitator pursuant to Section 2d of this Act
17    shall be included for purposes of determining whether he
18    or she has met the thresholds of this paragraph (9).
19        (10) Beginning January 1, 2020, a marketplace
20    facilitator, as defined in Section 2d of this Act.
21(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
22100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article
2310, Section 10-15, eff. 6-5-19; 101-9, Article 25, Section
2425-10, eff. 6-5-19; 101-604, eff. 12-13-19.)
 
25    (35 ILCS 110/3-5)

 

 

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

 

 

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1by the Department.
2    (4) Legal tender, currency, medallions, or gold or silver
3coinage issued by the State of Illinois, the government of the
4United States of America, or the government of any foreign
5country, and bullion.
6    (5) Until July 1, 2003 and beginning again on September 1,
72004 through August 30, 2014, graphic arts machinery and
8equipment, including repair and replacement parts, both new
9and used, and including that manufactured on special order or
10purchased for lease, certified by the purchaser to be used
11primarily for graphic arts production. Equipment includes
12chemicals or chemicals acting as catalysts but only if the
13chemicals or chemicals acting as catalysts effect a direct and
14immediate change upon a graphic arts product. Beginning on
15July 1, 2017, graphic arts machinery and equipment is included
16in the manufacturing and assembling machinery and equipment
17exemption under Section 2 of this Act.
18    (6) Personal property purchased from a teacher-sponsored
19student organization affiliated with an elementary or
20secondary school located in Illinois.
21    (7) Farm machinery and equipment, both new and used,
22including that manufactured on special order, certified by the
23purchaser to be used primarily for production agriculture or
24State or federal agricultural programs, including individual
25replacement parts for the machinery and equipment, including
26machinery and equipment purchased for lease, and including

 

 

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

 

 

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

 

 

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1in preparing, serving, hosting or cleaning up the food or
2beverage function with respect to which the service charge is
3imposed.
4    (10) Until July 1, 2003, oil field exploration, drilling,
5and production equipment, including (i) rigs and parts of
6rigs, rotary rigs, cable tool rigs, and workover rigs, (ii)
7pipe and tubular goods, including casing and drill strings,
8(iii) pumps and pump-jack units, (iv) storage tanks and flow
9lines, (v) any individual replacement part for oil field
10exploration, drilling, and production equipment, and (vi)
11machinery and equipment purchased for lease; but excluding
12motor vehicles required to be registered under the Illinois
13Vehicle Code.
14    (11) Proceeds from the sale of photoprocessing machinery
15and equipment, including repair and replacement parts, both
16new and 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
13provisions of Section 3-75, and the exemption provided for
14under this item (14) applies for all periods beginning May 30,
151995, but no claim for credit or refund is allowed on or after
16January 1, 2008 (the effective date of Public Act 95-88) for
17such taxes paid during the period beginning May 30, 2000 and
18ending on January 1, 2008 (the effective date of Public Act
1995-88).
20    (15) Computers and communications equipment utilized for
21any hospital purpose and equipment used in the diagnosis,
22analysis, or treatment of hospital patients purchased by a
23lessor who leases the equipment, under a lease of one year or
24longer executed or in effect at the time the lessor would
25otherwise be subject to the tax imposed by this Act, to a
26hospital that has been issued an active tax exemption

 

 

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

 

 

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

 

 

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1water and sewer line extensions, water distribution and
2purification facilities, storm water drainage and retention
3facilities, and sewage treatment facilities, resulting from a
4State or federally declared disaster in Illinois or bordering
5Illinois when such repairs are initiated on facilities located
6in the declared disaster area within 6 months after the
7disaster.
8    (19) Beginning July 1, 1999, game or game birds purchased
9at a "game breeding and hunting preserve area" as that term is
10used in the Wildlife Code. This paragraph is exempt from the
11provisions of Section 3-75.
12    (20) A motor vehicle, as that term is defined in Section
131-146 of the Illinois Vehicle Code, that is donated to a
14corporation, limited liability company, society, association,
15foundation, or institution that is determined by the
16Department to be organized and operated exclusively for
17educational purposes. For purposes of this exemption, "a
18corporation, limited liability company, society, association,
19foundation, or institution organized and operated exclusively
20for educational purposes" means all tax-supported public
21schools, private schools that offer systematic instruction in
22useful branches of learning by methods common to public
23schools and that compare favorably in their scope and
24intensity with the course of study presented in tax-supported
25schools, and vocational or technical schools or institutes
26organized and operated exclusively to provide a course of

 

 

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1study of not less than 6 weeks duration and designed to prepare
2individuals to follow a trade or to pursue a manual,
3technical, mechanical, industrial, business, or commercial
4occupation.
5    (21) Beginning January 1, 2000, personal property,
6including food, purchased through fundraising events for the
7benefit of a public or private elementary or secondary school,
8a group of those schools, or one or more school districts if
9the events are sponsored by an entity recognized by the school
10district that consists primarily of volunteers and includes
11parents and teachers of the school children. This paragraph
12does not apply to fundraising events (i) for the benefit of
13private home instruction or (ii) for which the fundraising
14entity purchases the personal property sold at the events from
15another individual or entity that sold the property for the
16purpose of resale by the fundraising entity and that profits
17from the sale to the fundraising entity. This paragraph is
18exempt from the provisions of Section 3-75.
19    (22) Beginning January 1, 2000 and through December 31,
202001, new or used automatic vending machines that prepare and
21serve hot food and beverages, including coffee, soup, and
22other items, and replacement parts for these machines.
23Beginning January 1, 2002 and through June 30, 2003, machines
24and parts for machines used in commercial, coin-operated
25amusement and vending business if a use or occupation tax is
26paid on the gross receipts derived from the use of the

 

 

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1commercial, coin-operated amusement and vending machines. This
2paragraph is exempt from the provisions of Section 3-75.
3    (23) Beginning August 23, 2001 and through June 30, 2016,
4food for human consumption that is to be consumed off the
5premises where it is sold (other than alcoholic beverages,
6soft drinks, and food that has been prepared for immediate
7consumption) and prescription and nonprescription medicines,
8drugs, medical appliances, and insulin, urine testing
9materials, syringes, and needles used by diabetics, for human
10use, when purchased for use by a person receiving medical
11assistance under Article V of the Illinois Public Aid Code who
12resides in a licensed long-term care facility, as defined in
13the Nursing Home Care Act, or in a licensed facility as defined
14in the ID/DD Community Care Act, the MC/DD Act, or the
15Specialized Mental Health Rehabilitation Act of 2013.
16    (24) Beginning on August 2, 2001 (the effective date of
17Public Act 92-227), computers and communications equipment
18utilized for any hospital purpose and equipment used in the
19diagnosis, analysis, or treatment of hospital patients
20purchased by a lessor who leases the equipment, under a lease
21of one year or longer executed or in effect at the time the
22lessor would otherwise be subject to the tax imposed by this
23Act, to a hospital that has been issued an active tax exemption
24identification number by the Department under Section 1g of
25the Retailers' Occupation Tax Act. If the equipment is leased
26in a manner that does not qualify for this exemption or is used

 

 

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

 

 

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1nonqualifying use occurs. No lessor shall collect or attempt
2to collect an amount (however designated) that purports to
3reimburse that lessor for the tax imposed by this Act or the
4Use Tax Act, as the case may be, if the tax has not been paid
5by the lessor. If a lessor improperly collects any such amount
6from the lessee, the lessee shall have a legal right to claim a
7refund of that amount from the lessor. If, however, that
8amount is not refunded to the lessee for any reason, the lessor
9is liable to pay that amount to the Department. This paragraph
10is exempt from the provisions of Section 3-75.
11    (26) 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
16under Title IV of the Environmental Protection Act. This
17paragraph is exempt from the provisions of Section 3-75.
18    (27) Beginning January 1, 2010 and continuing through
19December 31, 2024, materials, parts, equipment, components,
20and furnishings incorporated into or upon an aircraft as part
21of the modification, refurbishment, completion, replacement,
22repair, or maintenance of the aircraft. This exemption
23includes consumable supplies used in the modification,
24refurbishment, completion, replacement, repair, and
25maintenance of aircraft, but excludes any materials, parts,
26equipment, components, and consumable supplies used in the

 

 

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1modification, replacement, repair, and maintenance of aircraft
2engines or power plants, whether such engines or power plants
3are installed or uninstalled upon any such aircraft.
4"Consumable supplies" include, but are not limited to,
5adhesive, tape, sandpaper, general purpose lubricants,
6cleaning solution, latex gloves, and protective films. This
7exemption applies only to the use of qualifying tangible
8personal property transferred incident to the modification,
9refurbishment, completion, replacement, repair, or maintenance
10of aircraft by persons who (i) hold an Air Agency Certificate
11and are empowered to operate an approved repair station by the
12Federal Aviation Administration, (ii) have a Class IV Rating,
13and (iii) conduct operations in accordance with Part 145 of
14the Federal Aviation Regulations. The exemption does not
15include aircraft operated by a commercial air carrier
16providing scheduled passenger air service pursuant to
17authority issued under Part 121 or Part 129 of the Federal
18Aviation Regulations. The changes made to this paragraph (27)
19by Public Act 98-534 are declarative of existing law. It is the
20intent of the General Assembly that the exemption under this
21paragraph (27) applies continuously from January 1, 2010
22through December 31, 2024; however, no claim for credit or
23refund is allowed for taxes paid as a result of the
24disallowance of this exemption on or after January 1, 2015 and
25prior to the effective date of this amendatory Act of the 101st
26General Assembly.

 

 

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1    (28) Tangible personal property purchased by a
2public-facilities corporation, as described in Section
311-65-10 of the Illinois Municipal Code, for purposes of
4constructing or furnishing a municipal convention hall, but
5only if the legal title to the municipal convention hall is
6transferred to the municipality without any further
7consideration by or on behalf of the municipality at the time
8of the completion of the municipal convention hall or upon the
9retirement or redemption of any bonds or other debt
10instruments issued by the public-facilities corporation in
11connection with the development of the municipal convention
12hall. This exemption includes existing public-facilities
13corporations as provided in Section 11-65-25 of the Illinois
14Municipal Code. This paragraph is exempt from the provisions
15of Section 3-75.
16    (29) Beginning January 1, 2017, menstrual pads, tampons,
17and menstrual cups.
18    (30) Tangible personal property transferred to a purchaser
19who is exempt from the tax imposed by this Act by operation of
20federal law. This paragraph is exempt from the provisions of
21Section 3-75.
22    (31) Qualified tangible personal property used in the
23construction or operation of a data center that has been
24granted a certificate of exemption by the Department of
25Commerce and Economic Opportunity, whether that tangible
26personal property is purchased by the owner, operator, or

 

 

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1tenant of the data center or by a contractor or subcontractor
2of the owner, operator, or tenant. Data centers that would
3have qualified for a certificate of exemption prior to January
41, 2020 had this amendatory Act of the 101st General Assembly
5been in effect, may apply for and obtain an exemption for
6subsequent purchases of computer equipment or enabling
7software purchased or leased to upgrade, supplement, or
8replace computer equipment or enabling software purchased or
9leased in the original investment that would have qualified.
10    The Department of Commerce and Economic Opportunity shall
11grant a certificate of exemption under this item (31) to
12qualified data centers as defined by Section 605-1025 of the
13Department of Commerce and Economic Opportunity Law of the
14Civil Administrative Code of Illinois.
15    For the purposes of this item (31):
16        "Data center" means a building or a series of
17    buildings rehabilitated or constructed to house working
18    servers in one physical location or multiple sites within
19    the State of Illinois.
20        "Qualified tangible personal property" means:
21    electrical systems and equipment; climate control and
22    chilling equipment and systems; mechanical systems and
23    equipment; monitoring and secure systems; emergency
24    generators; hardware; computers; servers; data storage
25    devices; network connectivity equipment; racks; cabinets;
26    telecommunications cabling infrastructure; raised floor

 

 

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1    systems; peripheral components or systems; software;
2    mechanical, electrical, or plumbing systems; battery
3    systems; cooling systems and towers; temperature control
4    systems; other cabling; and other data center
5    infrastructure equipment and systems necessary to operate
6    qualified tangible personal property, including fixtures;
7    and component parts of any of the foregoing, including
8    installation, maintenance, repair, refurbishment, and
9    replacement of qualified tangible personal property to
10    generate, transform, transmit, distribute, or manage
11    electricity necessary to operate qualified tangible
12    personal property; and all other tangible personal
13    property that is essential to the operations of a computer
14    data center. The term "qualified tangible personal
15    property" also includes building materials physically
16    incorporated in to the qualifying data center. To document
17    the exemption allowed under this Section, the retailer
18    must obtain from the purchaser a copy of the certificate
19    of eligibility issued by the Department of Commerce and
20    Economic Opportunity.
21    This item (31) is exempt from the provisions of Section
223-75.
23    (32) Until December 31, 2024, equipment and materials
24incorporated into or used in the business of providing
25broadband services, including all equipment and materials,
26machinery, software, or other tangible personal property that

 

 

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1is used in whole or in part in producing, broadcasting,
2distributing, sending, receiving, storing, transmitting,
3retransmitting, amplifying, switching, or routing broadband
4services, including the monitoring, testing, maintaining,
5enabling, or facilitating of such equipment, machinery,
6software, or other infrastructure. Such property includes, but
7is not limited to, wires, cables including fiber optic cables,
8antennas, poles, switches, routers, amplifiers, rectifiers,
9repeaters, receivers, multiplexers, duplexers, transmitters,
10power equipment, backup power equipment, diagnostic equipment,
11storage devices, modems, and other general central office
12equipment, such as channel cards, frames, and cabinets.
13(Source: P.A. 100-22, eff. 7-6-17; 100-594, eff. 6-29-18;
14100-1171, eff. 1-4-19; 101-31, eff. 6-28-19; 101-81, eff.
157-12-19; 101-629, eff. 2-5-20.)
 
16    Section 20. The Service Occupation Tax Act is amended by
17changing Sections 2 and 3-5 as follows:
 
18    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
19    Sec. 2. In this Act:
20    "Broadband service" means a service provided by wireline
21or wireless means capable of delivering high-speed internet
22access at speeds of at least 10 megabits per second of download
23speed and one megabit per second of upload speed.
24    "Transfer" means any transfer of the title to property or

 

 

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1of the ownership of property whether or not the transferor
2retains title as security for the payment of amounts due him
3from the transferee.
4    "Cost Price" means the consideration paid by the
5serviceman for a purchase valued in money, whether paid in
6money or otherwise, including cash, credits and services, and
7shall be determined without any deduction on account of the
8supplier's cost of the property sold or on account of any other
9expense incurred by the supplier. When a serviceman contracts
10out part or all of the services required in his sale of
11service, it shall be presumed that the cost price to the
12serviceman of the property transferred to him by his or her
13subcontractor is equal to 50% of the subcontractor's charges
14to the serviceman in the absence of proof of the consideration
15paid by the subcontractor for the purchase of such property.
16    "Department" means the Department of Revenue.
17    "Person" means any natural individual, firm, partnership,
18association, joint stock company, joint venture, public or
19private corporation, limited liability company, and any
20receiver, executor, trustee, guardian or other representative
21appointed by order of any court.
22    "Sale of Service" means any transaction except:
23    (a) A retail sale of tangible personal property taxable
24under the Retailers' Occupation Tax Act or under the Use Tax
25Act.
26    (b) A sale of tangible personal property for the purpose

 

 

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1of resale made in compliance with Section 2c of the Retailers'
2Occupation Tax Act.
3    (c) Except as hereinafter provided, a sale or transfer of
4tangible personal property as an incident to the rendering of
5service for or by any governmental body or for or by any
6corporation, society, association, foundation or institution
7organized and operated exclusively for charitable, religious
8or educational purposes or any not-for-profit corporation,
9society, association, foundation, institution or organization
10which has no compensated officers or employees and which is
11organized and operated primarily for the recreation of persons
1255 years of age or older. A limited liability company may
13qualify for the exemption under this paragraph only if the
14limited liability company is organized and operated
15exclusively for educational purposes.
16    (d) (Blank).
17    (d-1) A sale or transfer of tangible personal property as
18an incident to the rendering of service for owners, lessors or
19shippers of tangible personal property which is utilized by
20interstate carriers for hire for use as rolling stock moving
21in interstate commerce, and equipment operated by a
22telecommunications provider, licensed as a common carrier by
23the Federal Communications Commission, which is permanently
24installed in or affixed to aircraft moving in interstate
25commerce.
26    (d-1.1) On and after July 1, 2003 and through June 30,

 

 

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12004, a sale or transfer of a motor vehicle of the second
2division with a gross vehicle weight in excess of 8,000 pounds
3as an incident to the rendering of service if that motor
4vehicle is subject to the commercial distribution fee imposed
5under Section 3-815.1 of the Illinois Vehicle Code. Beginning
6on July 1, 2004 and through June 30, 2005, the use in this
7State of motor vehicles of the second division: (i) with a
8gross vehicle weight rating in excess of 8,000 pounds; (ii)
9that are subject to the commercial distribution fee imposed
10under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
11that are primarily used for commercial purposes. Through June
1230, 2005, this exemption applies to repair and replacement
13parts added after the initial purchase of such a motor vehicle
14if that motor vehicle is used in a manner that would qualify
15for the rolling stock exemption otherwise provided for in this
16Act. For purposes of this paragraph, "used for commercial
17purposes" means the transportation of persons or property in
18furtherance of any commercial or industrial enterprise whether
19for-hire or not.
20    (d-2) The repairing, reconditioning or remodeling, for a
21common carrier by rail, of tangible personal property which
22belongs to such carrier for hire, and as to which such carrier
23receives the physical possession of the repaired,
24reconditioned or remodeled item of tangible personal property
25in Illinois, and which such carrier transports, or shares with
26another common carrier in the transportation of such property,

 

 

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

 

 

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1facility, of tangible personal property for wholesale or
2retail sale or lease, whether such sale or lease is made
3directly by the manufacturer or by some other person, whether
4the materials used in the process are owned by the
5manufacturer or some other person, or whether such sale or
6lease is made apart from or as an incident to the seller's
7engaging in a service occupation and the applicable tax is a
8Service Occupation Tax or Service Use Tax, rather than
9Retailers' Occupation Tax or Use Tax. The exemption provided
10by this paragraph (e) includes production related tangible
11personal property, as defined in Section 3-50 of the Use Tax
12Act, purchased on or after July 1, 2019. The exemption
13provided by this paragraph (e) does not include machinery and
14equipment used in (i) the generation of electricity for
15wholesale or retail sale; (ii) the generation or treatment of
16natural or artificial gas for wholesale or retail sale that is
17delivered to customers through pipes, pipelines, or mains; or
18(iii) the treatment of water for wholesale or retail sale that
19is delivered to customers through pipes, pipelines, or mains.
20The provisions of Public Act 98-583 are declaratory of
21existing law as to the meaning and scope of this exemption. The
22exemption under this subsection (e) is exempt from the
23provisions of Section 3-75.
24    (f) Until July 1, 2003, the sale or transfer of
25distillation machinery and equipment, sold as a unit or kit
26and assembled or installed by the retailer, which machinery

 

 

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

 

 

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

 

 

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

 

 

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1molds; or any parts which require periodic replacement in the
2course of normal operation; but shall not include hand tools.
3Equipment includes chemicals or chemicals acting as catalysts
4but only if the chemicals or chemicals acting as catalysts
5effect a direct and immediate change upon a product being
6manufactured or assembled for wholesale or retail sale or
7lease. The purchaser of such machinery and equipment who has
8an active resale registration number shall furnish such number
9to the seller at the time of purchase. The purchaser of such
10machinery and equipment and tools without an active resale
11registration number shall furnish to the seller a certificate
12of exemption stating facts establishing the exemption, which
13certificate shall be available to the Department for
14inspection or audit.
15    Except as provided in Section 2d of this Act, the rolling
16stock exemption applies to rolling stock used by an interstate
17carrier for hire, even just between points in Illinois, if
18such rolling stock transports, for hire, persons whose
19journeys or property whose shipments originate or terminate
20outside Illinois.
21    Any informal rulings, opinions or letters issued by the
22Department in response to an inquiry or request for any
23opinion from any person regarding the coverage and
24applicability of exemption (e) to specific devices shall be
25published, maintained as a public record, and made available
26for public inspection and copying. If the informal ruling,

 

 

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1opinion or letter contains trade secrets or other confidential
2information, where possible the Department shall delete such
3information prior to publication. Whenever such informal
4rulings, opinions, or letters contain any policy of general
5applicability, the Department shall formulate and adopt such
6policy as a rule in accordance with the provisions of the
7Illinois Administrative Procedure Act.
8    On and after July 1, 1987, no entity otherwise eligible
9under exemption (c) of this Section shall make tax-free
10purchases unless it has an active exemption identification
11number issued by the Department.
12    "Serviceman" means any person who is engaged in the
13occupation of making sales of service.
14    "Sale at Retail" means "sale at retail" as defined in the
15Retailers' Occupation Tax Act.
16    "Supplier" means any person who makes sales of tangible
17personal property to servicemen for the purpose of resale as
18an incident to a sale of service.
19(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
20100-863, eff. 8-14-18; 101-9, eff. 6-5-19; 101-604, eff.
2112-13-19.)
 
22    (35 ILCS 115/3-5)
23    Sec. 3-5. Exemptions. The following tangible personal
24property is exempt from the tax imposed by this Act:
25    (1) Personal property sold by a corporation, society,

 

 

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

 

 

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1United States of America, or the government of any foreign
2country, and bullion.
3    (5) Until July 1, 2003 and beginning again on September 1,
42004 through August 30, 2014, graphic arts machinery and
5equipment, including repair and replacement parts, both new
6and used, and including that manufactured on special order or
7purchased for lease, certified by the purchaser to be used
8primarily for graphic arts production. Equipment includes
9chemicals or chemicals acting as catalysts but only if the
10chemicals or chemicals acting as catalysts effect a direct and
11immediate change upon a graphic arts product. Beginning on
12July 1, 2017, graphic arts machinery and equipment is included
13in the manufacturing and assembling machinery and equipment
14exemption under Section 2 of this Act.
15    (6) Personal property sold by a teacher-sponsored student
16organization affiliated with an elementary or secondary school
17located in Illinois.
18    (7) Farm machinery and equipment, both new and used,
19including that manufactured on special order, certified by the
20purchaser to be used primarily for production agriculture or
21State or federal agricultural programs, including individual
22replacement parts for the machinery and equipment, including
23machinery and equipment purchased for lease, and including
24implements of husbandry defined in Section 1-130 of the
25Illinois Vehicle Code, farm machinery and agricultural
26chemical and fertilizer spreaders, and nurse wagons required

 

 

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1to be registered under Section 3-809 of the Illinois Vehicle
2Code, but excluding other motor vehicles required to be
3registered under the Illinois Vehicle Code. Horticultural
4polyhouses or hoop houses used for propagating, growing, or
5overwintering plants shall be considered farm machinery and
6equipment under this item (7). Agricultural chemical tender
7tanks and dry boxes shall include units sold separately from a
8motor vehicle required to be licensed and units sold mounted
9on a motor vehicle required to be licensed if the selling price
10of the tender is separately stated.
11    Farm machinery and equipment shall include precision
12farming equipment that is installed or purchased to be
13installed on farm machinery and equipment including, but not
14limited to, tractors, harvesters, sprayers, planters, seeders,
15or spreaders. Precision farming equipment includes, but is not
16limited to, soil testing sensors, computers, monitors,
17software, global positioning and mapping systems, and other
18such equipment.
19    Farm machinery and equipment also includes computers,
20sensors, software, and related equipment used primarily in the
21computer-assisted operation of production agriculture
22facilities, equipment, and activities such as, but not limited
23to, the collection, monitoring, and correlation of animal and
24crop data for the purpose of formulating animal diets and
25agricultural chemicals. This item (7) is exempt from the
26provisions of Section 3-55.

 

 

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1    (8) Until June 30, 2013, fuel and petroleum products sold
2to or used by an air common carrier, certified by the carrier
3to be used for consumption, shipment, or storage in the
4conduct of its business as an air common carrier, for a flight
5destined for or returning from a location or locations outside
6the United States without regard to previous or subsequent
7domestic stopovers.
8    Beginning July 1, 2013, fuel and petroleum products sold
9to or used by an air carrier, certified by the carrier to be
10used for consumption, shipment, or storage in the conduct of
11its business as an air common carrier, for a flight that (i) is
12engaged in foreign trade or is engaged in trade between the
13United States and any of its possessions and (ii) transports
14at least one individual or package for hire from the city of
15origination to the city of final destination on the same
16aircraft, without regard to a change in the flight number of
17that aircraft.
18    (9) Proceeds of mandatory service charges separately
19stated on customers' bills for the purchase and consumption of
20food and beverages, to the extent that the proceeds of the
21service charge are in fact turned over as tips or as a
22substitute for tips to the employees who participate directly
23in preparing, serving, hosting or cleaning up the food or
24beverage function with respect to which the service charge is
25imposed.
26    (10) Until July 1, 2003, oil field exploration, drilling,

 

 

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1and production equipment, including (i) rigs and parts of
2rigs, rotary rigs, cable tool rigs, and workover rigs, (ii)
3pipe and tubular goods, including casing and drill strings,
4(iii) pumps and pump-jack units, (iv) storage tanks and flow
5lines, (v) any individual replacement part for oil field
6exploration, drilling, and production equipment, and (vi)
7machinery and equipment purchased for lease; but excluding
8motor vehicles required to be registered under the Illinois
9Vehicle Code.
10    (11) Photoprocessing machinery and equipment, including
11repair and replacement parts, both new and used, including
12that manufactured on special order, certified by the purchaser
13to be used primarily for photoprocessing, and including
14photoprocessing machinery and equipment purchased for lease.
15    (12) Until July 1, 2023, coal and aggregate exploration,
16mining, off-highway hauling, processing, maintenance, and
17reclamation equipment, including replacement parts and
18equipment, and including equipment purchased for lease, but
19excluding motor vehicles required to be registered under the
20Illinois Vehicle Code. The changes made to this Section by
21Public Act 97-767 apply on and after July 1, 2003, but no claim
22for credit or refund is allowed on or after August 16, 2013
23(the effective date of Public Act 98-456) for such taxes paid
24during the period beginning July 1, 2003 and ending on August
2516, 2013 (the effective date of Public Act 98-456).
26    (13) Beginning January 1, 1992 and through June 30, 2016,

 

 

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1food for human consumption that is to be consumed off the
2premises where it is sold (other than alcoholic beverages,
3soft drinks and food that has been prepared for immediate
4consumption) and prescription and non-prescription medicines,
5drugs, medical appliances, and insulin, urine testing
6materials, syringes, and needles used by diabetics, for human
7use, when purchased for use by a person receiving medical
8assistance under Article V of the Illinois Public Aid Code who
9resides in a licensed long-term care facility, as defined in
10the Nursing Home Care Act, or in a licensed facility as defined
11in the ID/DD Community Care Act, the MC/DD Act, or the
12Specialized Mental Health Rehabilitation Act of 2013.
13    (14) Semen used for artificial insemination of livestock
14for direct agricultural production.
15    (15) Horses, or interests in horses, registered with and
16meeting the requirements of any of the Arabian Horse Club
17Registry of America, Appaloosa Horse Club, American Quarter
18Horse Association, United States Trotting Association, or
19Jockey Club, as appropriate, used for purposes of breeding or
20racing for prizes. This item (15) is exempt from the
21provisions of Section 3-55, and the exemption provided for
22under this item (15) applies for all periods beginning May 30,
231995, but no claim for credit or refund is allowed on or after
24January 1, 2008 (the effective date of Public Act 95-88) for
25such taxes paid during the period beginning May 30, 2000 and
26ending on January 1, 2008 (the effective date of Public Act

 

 

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195-88).
2    (16) Computers and communications equipment utilized for
3any hospital purpose and equipment used in the diagnosis,
4analysis, or treatment of hospital patients sold to a lessor
5who leases the equipment, under a lease of one year or longer
6executed or in effect at the time of the purchase, to a
7hospital that has been issued an active tax exemption
8identification number by the Department under Section 1g of
9the Retailers' Occupation Tax Act.
10    (17) Personal property sold to a lessor who leases the
11property, under a lease of one year or longer executed or in
12effect at the time of the purchase, to a governmental body that
13has been issued an active tax exemption identification number
14by the Department under Section 1g of the Retailers'
15Occupation Tax Act.
16    (18) Beginning with taxable years ending on or after
17December 31, 1995 and ending with taxable years ending on or
18before December 31, 2004, personal property that is donated
19for disaster relief to be used in a State or federally declared
20disaster area in Illinois or bordering Illinois by a
21manufacturer or retailer that is registered in this State to a
22corporation, society, association, foundation, or institution
23that has been issued a sales tax exemption identification
24number by the Department that assists victims of the disaster
25who reside within the declared disaster area.
26    (19) Beginning with taxable years ending on or after

 

 

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1December 31, 1995 and ending with taxable years ending on or
2before December 31, 2004, personal property that is used in
3the performance of infrastructure repairs in this State,
4including but not limited to municipal roads and streets,
5access roads, bridges, sidewalks, waste disposal systems,
6water and sewer line extensions, water distribution and
7purification facilities, storm water drainage and retention
8facilities, and sewage treatment facilities, resulting from a
9State or federally declared disaster in Illinois or bordering
10Illinois when such repairs are initiated on facilities located
11in the declared disaster area within 6 months after the
12disaster.
13    (20) Beginning July 1, 1999, game or game birds sold at a
14"game breeding and hunting preserve area" as that term is used
15in the Wildlife Code. This paragraph is exempt from the
16provisions of Section 3-55.
17    (21) A motor vehicle, as that term is defined in Section
181-146 of the Illinois Vehicle Code, that is donated to a
19corporation, limited liability company, society, association,
20foundation, or institution that is determined by the
21Department to be organized and operated exclusively for
22educational purposes. For purposes of this exemption, "a
23corporation, limited liability company, society, association,
24foundation, or institution organized and operated exclusively
25for educational purposes" means all tax-supported public
26schools, private schools that offer systematic instruction in

 

 

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1useful branches of learning by methods common to public
2schools and that compare favorably in their scope and
3intensity with the course of study presented in tax-supported
4schools, and vocational or technical schools or institutes
5organized and operated exclusively to provide a course of
6study of not less than 6 weeks duration and designed to prepare
7individuals to follow a trade or to pursue a manual,
8technical, mechanical, industrial, business, or commercial
9occupation.
10    (22) Beginning January 1, 2000, personal property,
11including food, purchased through fundraising events for the
12benefit of a public or private elementary or secondary school,
13a group of those schools, or one or more school districts if
14the events are sponsored by an entity recognized by the school
15district that consists primarily of volunteers and includes
16parents and teachers of the school children. This paragraph
17does not apply to fundraising events (i) for the benefit of
18private home instruction or (ii) for which the fundraising
19entity purchases the personal property sold at the events from
20another individual or entity that sold the property for the
21purpose of resale by the fundraising entity and that profits
22from the sale to the fundraising entity. This paragraph is
23exempt from the provisions of Section 3-55.
24    (23) Beginning January 1, 2000 and through December 31,
252001, new or used automatic vending machines that prepare and
26serve hot food and beverages, including coffee, soup, and

 

 

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1other items, and replacement parts for these machines.
2Beginning January 1, 2002 and through June 30, 2003, machines
3and parts for machines used in commercial, coin-operated
4amusement and vending business if a use or occupation tax is
5paid on the gross receipts derived from the use of the
6commercial, coin-operated amusement and vending machines. This
7paragraph is exempt from the provisions of Section 3-55.
8    (24) Beginning on August 2, 2001 (the effective date of
9Public Act 92-227), computers and communications equipment
10utilized for any hospital purpose and equipment used in the
11diagnosis, analysis, or treatment of hospital patients sold to
12a lessor who leases the equipment, under a lease of one year or
13longer executed or in effect at the time of the purchase, to a
14hospital that has been issued an active tax exemption
15identification number by the Department under Section 1g of
16the Retailers' Occupation Tax Act. This paragraph is exempt
17from the provisions of Section 3-55.
18    (25) Beginning on August 2, 2001 (the effective date of
19Public Act 92-227), personal property sold to a lessor who
20leases the property, under a lease of one year or longer
21executed or in effect at the time of the purchase, to a
22governmental body that has been issued an active tax exemption
23identification number by the Department under Section 1g of
24the Retailers' Occupation Tax Act. This paragraph is exempt
25from the provisions of Section 3-55.
26    (26) Beginning on January 1, 2002 and through June 30,

 

 

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12016, tangible personal property purchased from an Illinois
2retailer by a taxpayer engaged in centralized purchasing
3activities in Illinois who will, upon receipt of the property
4in Illinois, temporarily store the property in Illinois (i)
5for the purpose of subsequently transporting it outside this
6State for use or consumption thereafter solely outside this
7State or (ii) for the purpose of being processed, fabricated,
8or manufactured into, attached to, or incorporated into other
9tangible personal property to be transported outside this
10State and thereafter used or consumed solely outside this
11State. The Director of Revenue shall, pursuant to rules
12adopted in accordance with the Illinois Administrative
13Procedure Act, issue a permit to any taxpayer in good standing
14with the Department who is eligible for the exemption under
15this paragraph (26). The permit issued under this paragraph
16(26) shall authorize the holder, to the extent and in the
17manner specified in the rules adopted under this Act, to
18purchase tangible personal property from a retailer exempt
19from the taxes imposed by this Act. Taxpayers shall maintain
20all necessary books and records to substantiate the use and
21consumption of all such tangible personal property outside of
22the State of Illinois.
23    (27) Beginning January 1, 2008, tangible personal property
24used in the construction or maintenance of a community water
25supply, as defined under Section 3.145 of the Environmental
26Protection Act, that is operated by a not-for-profit

 

 

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1corporation that holds a valid water supply permit issued
2under Title IV of the Environmental Protection Act. This
3paragraph is exempt from the provisions of Section 3-55.
4    (28) Tangible personal property sold to a
5public-facilities corporation, as described in Section
611-65-10 of the Illinois Municipal Code, for purposes of
7constructing or furnishing a municipal convention hall, but
8only if the legal title to the municipal convention hall is
9transferred to the municipality without any further
10consideration by or on behalf of the municipality at the time
11of the completion of the municipal convention hall or upon the
12retirement or redemption of any bonds or other debt
13instruments issued by the public-facilities corporation in
14connection with the development of the municipal convention
15hall. This exemption includes existing public-facilities
16corporations as provided in Section 11-65-25 of the Illinois
17Municipal Code. This paragraph is exempt from the provisions
18of Section 3-55.
19    (29) Beginning January 1, 2010 and continuing through
20December 31, 2024, materials, parts, equipment, components,
21and furnishings incorporated into or upon an aircraft as part
22of the modification, refurbishment, completion, replacement,
23repair, or maintenance of the aircraft. This exemption
24includes consumable supplies used in the modification,
25refurbishment, completion, replacement, repair, and
26maintenance of aircraft, but excludes any materials, parts,

 

 

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1equipment, components, and consumable supplies used in the
2modification, replacement, repair, and maintenance of aircraft
3engines or power plants, whether such engines or power plants
4are installed or uninstalled upon any such aircraft.
5"Consumable supplies" include, but are not limited to,
6adhesive, tape, sandpaper, general purpose lubricants,
7cleaning solution, latex gloves, and protective films. This
8exemption applies only to the transfer of qualifying tangible
9personal property incident to the modification, refurbishment,
10completion, replacement, repair, or maintenance of an aircraft
11by persons who (i) hold an Air Agency Certificate and are
12empowered to operate an approved repair station by the Federal
13Aviation Administration, (ii) have a Class IV Rating, and
14(iii) conduct operations in accordance with Part 145 of the
15Federal Aviation Regulations. The exemption does not include
16aircraft operated by a commercial air carrier providing
17scheduled passenger air service pursuant to authority issued
18under Part 121 or Part 129 of the Federal Aviation
19Regulations. The changes made to this paragraph (29) by Public
20Act 98-534 are declarative of existing law. It is the intent of
21the General Assembly that the exemption under this paragraph
22(29) applies continuously from January 1, 2010 through
23December 31, 2024; however, no claim for credit or refund is
24allowed for taxes paid as a result of the disallowance of this
25exemption on or after January 1, 2015 and prior to the
26effective date of this amendatory Act of the 101st General

 

 

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1Assembly.
2    (30) Beginning January 1, 2017, menstrual pads, tampons,
3and menstrual cups.
4    (31) Tangible personal property transferred to a purchaser
5who is exempt from tax by operation of federal law. This
6paragraph is exempt from the provisions of Section 3-55.
7    (32) Qualified tangible personal property used in the
8construction or operation of a data center that has been
9granted a certificate of exemption by the Department of
10Commerce and Economic Opportunity, whether that tangible
11personal property is purchased by the owner, operator, or
12tenant of the data center or by a contractor or subcontractor
13of the owner, operator, or tenant. Data centers that would
14have qualified for a certificate of exemption prior to January
151, 2020 had this amendatory Act of the 101st General Assembly
16been in effect, may apply for and obtain an exemption for
17subsequent purchases of computer equipment or enabling
18software purchased or leased to upgrade, supplement, or
19replace computer equipment or enabling software purchased or
20leased in the original investment that would have qualified.
21    The Department of Commerce and Economic Opportunity shall
22grant a certificate of exemption under this item (32) to
23qualified data centers as defined by Section 605-1025 of the
24Department of Commerce and Economic Opportunity Law of the
25Civil Administrative Code of Illinois.
26    For the purposes of this item (32):

 

 

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

 

 

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1    incorporated in to the qualifying data center. To document
2    the exemption allowed under this Section, the retailer
3    must obtain from the purchaser a copy of the certificate
4    of eligibility issued by the Department of Commerce and
5    Economic Opportunity.
6    This item (32) is exempt from the provisions of Section
73-55.
8    (33) Until December 31, 2024, equipment and materials
9incorporated into or used in the business of providing
10broadband services, including all equipment and materials,
11machinery, software, or other tangible personal property that
12is used in whole or in part in producing, broadcasting,
13distributing, sending, receiving, storing, transmitting,
14retransmitting, amplifying, switching, or routing broadband
15services, including the monitoring, testing, maintaining,
16enabling, or facilitating of such equipment, machinery,
17software, or other infrastructure. Such property includes, but
18is not limited to, wires, cables including fiber optic cables,
19antennas, poles, switches, routers, amplifiers, rectifiers,
20repeaters, receivers, multiplexers, duplexers, transmitters,
21power equipment, backup power equipment, diagnostic equipment,
22storage devices, modems, and other general central office
23equipment, such as channel cards, frames, and cabinets.
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; 101-629, eff. 2-5-20.)
 

 

 

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1    Section 25. The Retailers' Occupation Tax Act is amended
2by changing Sections 1 and 2-5 as follows:
 
3    (35 ILCS 120/1)  (from Ch. 120, par. 440)
4    Sec. 1. Definitions. As used in this Act:
5    "Broadband service" means a service provided by wireline
6or wireless means capable of delivering high-speed internet
7access at speeds of at least 10 megabits per second of download
8speed and one megabit per second of upload speed.
9"Sale at retail" means any transfer of the ownership of or
10title to tangible personal property to a purchaser, for the
11purpose of use or consumption, and not for the purpose of
12resale in any form as tangible personal property to the extent
13not first subjected to a use for which it was purchased, for a
14valuable consideration: Provided that the property purchased
15is deemed to be purchased for the purpose of resale, despite
16first being used, to the extent to which it is resold as an
17ingredient of an intentionally produced product or byproduct
18of manufacturing. For this purpose, slag produced as an
19incident to manufacturing pig iron or steel and sold is
20considered to be an intentionally produced byproduct of
21manufacturing. Transactions whereby the possession of the
22property is transferred but the seller retains the title as
23security for payment of the selling price shall be deemed to be
24sales.

 

 

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

 

 

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1persons engaged in the business of operating a restaurant,
2cafeteria, or drive-in is a sale for resale when it is
3transferred to customers in the ordinary course of business as
4part of the sale of food or beverages and is used to deliver,
5package, or consume food or beverages, regardless of where
6consumption of the food or beverages occurs. Examples of those
7items include, but are not limited to nonreusable, paper and
8plastic cups, plates, baskets, boxes, sleeves, buckets or
9other containers, utensils, straws, placemats, napkins, doggie
10bags, and wrapping or packaging materials that are transferred
11to customers as part of the sale of food or beverages in the
12ordinary course of business.
13    The purchase, employment and transfer of such tangible
14personal property as newsprint and ink for the primary purpose
15of conveying news (with or without other information) is not a
16purchase, use or sale of tangible personal property.
17    A person whose activities are organized and conducted
18primarily as a not-for-profit service enterprise, and who
19engages in selling tangible personal property at retail
20(whether to the public or merely to members and their guests)
21is engaged in the business of selling tangible personal
22property at retail with respect to such transactions,
23excepting only a person organized and operated exclusively for
24charitable, religious or educational purposes either (1), to
25the extent of sales by such person to its members, students,
26patients or inmates of tangible personal property to be used

 

 

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1primarily for the purposes of such person, or (2), to the
2extent of sales by such person of tangible personal property
3which is not sold or offered for sale by persons organized for
4profit. The selling of school books and school supplies by
5schools at retail to students is not "primarily for the
6purposes of" the school which does such selling. The
7provisions of this paragraph shall not apply to nor subject to
8taxation occasional dinners, socials or similar activities of
9a person organized and operated exclusively for charitable,
10religious or educational purposes, whether or not such
11activities are open to the public.
12    A person who is the recipient of a grant or contract under
13Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
14serves meals to participants in the federal Nutrition Program
15for the Elderly in return for contributions established in
16amount by the individual participant pursuant to a schedule of
17suggested fees as provided for in the federal Act is not
18engaged in the business of selling tangible personal property
19at retail with respect to such transactions.
20    "Purchaser" means anyone who, through a sale at retail,
21acquires the ownership of or title to tangible personal
22property for a valuable consideration.
23    "Reseller of motor fuel" means any person engaged in the
24business of selling or delivering or transferring title of
25motor fuel to another person other than for use or
26consumption. No person shall act as a reseller of motor fuel

 

 

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1within this State without first being registered as a reseller
2pursuant to Section 2c or a retailer pursuant to Section 2a.
3    "Selling price" or the "amount of sale" means the
4consideration for a sale valued in money whether received in
5money or otherwise, including cash, credits, property, other
6than as hereinafter provided, and services, but, prior to
7January 1, 2020, not including the value of or credit given for
8traded-in tangible personal property where the item that is
9traded-in is of like kind and character as that which is being
10sold; beginning January 1, 2020, "selling price" includes the
11portion of the value of or credit given for traded-in motor
12vehicles of the First Division as defined in Section 1-146 of
13the Illinois Vehicle Code of like kind and character as that
14which is being sold that exceeds $10,000. "Selling price"
15shall be determined without any deduction on account of the
16cost of the property sold, the cost of materials used, labor or
17service cost or any other expense whatsoever, but does not
18include charges that are added to prices by sellers on account
19of the seller's tax liability under this Act, or on account of
20the seller's duty to collect, from the purchaser, the tax that
21is imposed by the Use Tax Act, or, except as otherwise provided
22with respect to any cigarette tax imposed by a home rule unit,
23on account of the seller's tax liability under any local
24occupation tax administered by the Department, or, except as
25otherwise provided with respect to any cigarette tax imposed
26by a home rule unit on account of the seller's duty to collect,

 

 

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1from the purchasers, the tax that is imposed under any local
2use tax administered by the Department. Effective December 1,
31985, "selling price" shall include charges that are added to
4prices by sellers on account of the seller's tax liability
5under the Cigarette Tax Act, on account of the sellers' duty to
6collect, from the purchaser, the tax imposed under the
7Cigarette Use Tax Act, and on account of the seller's duty to
8collect, from the purchaser, any cigarette tax imposed by a
9home rule unit.
10    Notwithstanding any law to the contrary, for any motor
11vehicle, as defined in Section 1-146 of the Vehicle Code, that
12is sold on or after January 1, 2015 for the purpose of leasing
13the vehicle for a defined period that is longer than one year
14and (1) is a motor vehicle of the second division that: (A) is
15a self-contained motor vehicle designed or permanently
16converted to provide living quarters for recreational,
17camping, or travel use, with direct walk through access to the
18living quarters from the driver's seat; (B) is of the van
19configuration designed for the transportation of not less than
207 nor more than 16 passengers; or (C) has a gross vehicle
21weight rating of 8,000 pounds or less or (2) is a motor vehicle
22of the first division, "selling price" or "amount of sale"
23means the consideration received by the lessor pursuant to the
24lease contract, including amounts due at lease signing and all
25monthly or other regular payments charged over the term of the
26lease. Also included in the selling price is any amount

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1same function as stock or standard items of tangible personal
2property that are sold at retail.
3    Persons who engage in the business of transferring
4tangible personal property upon the redemption of trading
5stamps are engaged in the business of selling such property at
6retail and shall be liable for and shall pay the tax imposed by
7this Act on the basis of the retail value of the property
8transferred upon redemption of such stamps.
9    "Bulk vending machine" means a vending machine, containing
10unsorted confections, nuts, toys, or other items designed
11primarily to be used or played with by children which, when a
12coin or coins of a denomination not larger than $0.50 are
13inserted, are dispensed in equal portions, at random and
14without selection by the customer.
15    "Remote retailer" means a retailer that does not maintain
16within this State, directly or by a subsidiary, an office,
17distribution house, sales house, warehouse or other place of
18business, or any agent or other representative operating
19within this State under the authority of the retailer or its
20subsidiary, irrespective of whether such place of business or
21agent is located here permanently or temporarily or whether
22such retailer or subsidiary is licensed to do business in this
23State.
24    "Marketplace" means a physical or electronic place, forum,
25platform, application, or other method by which a marketplace
26seller sells or offers to sell items.

 

 

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1    "Marketplace facilitator" means a person who, pursuant to
2an agreement with an unrelated third-party marketplace seller,
3directly or indirectly through one or more affiliates
4facilitates a retail sale by an unrelated third party
5marketplace seller by:
6        (1) listing or advertising for sale by the marketplace
7    seller in a marketplace, tangible personal property that
8    is subject to tax under this Act; and
9        (2) either directly or indirectly, through agreements
10    or arrangements with third parties, collecting payment
11    from the customer and transmitting that payment to the
12    marketplace seller regardless of whether the marketplace
13    facilitator receives compensation or other consideration
14    in exchange for its services.
15    A person who provides advertising services, including
16listing products for sale, is not considered a marketplace
17facilitator, so long as the advertising service platform or
18forum does not engage, directly or indirectly through one or
19more affiliated persons, in the activities described in
20paragraph (2) of this definition of "marketplace facilitator".
21    "Marketplace seller" means a person that makes sales
22through a marketplace operated by an unrelated third party
23marketplace facilitator.
24(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 1-1-20.)
 
25    (35 ILCS 120/2-5)

 

 

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1    Sec. 2-5. Exemptions. Gross receipts from proceeds from
2the sale of the following tangible personal property are
3exempt from the tax imposed by this Act:
4        (1) Farm chemicals.
5        (2) Farm machinery and equipment, both new and used,
6    including that manufactured on special order, certified by
7    the purchaser to be used primarily for production
8    agriculture or State or federal agricultural programs,
9    including individual replacement parts for the machinery
10    and equipment, including machinery and equipment purchased
11    for lease, and including implements of husbandry defined
12    in Section 1-130 of the Illinois Vehicle Code, farm
13    machinery and agricultural chemical and fertilizer
14    spreaders, and nurse wagons required to be registered
15    under Section 3-809 of the Illinois Vehicle Code, but
16    excluding other motor vehicles required to be registered
17    under the Illinois Vehicle Code. Horticultural polyhouses
18    or hoop houses used for propagating, growing, or
19    overwintering plants shall be considered farm machinery
20    and equipment under this item (2). Agricultural chemical
21    tender tanks and dry boxes shall include units sold
22    separately from a motor vehicle required to be licensed
23    and units sold mounted on a motor vehicle required to be
24    licensed, if the selling price of the tender is separately
25    stated.
26        Farm machinery and equipment shall include precision

 

 

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1    farming equipment that is installed or purchased to be
2    installed on farm machinery and equipment including, but
3    not limited to, tractors, harvesters, sprayers, planters,
4    seeders, or spreaders. Precision farming equipment
5    includes, but is not limited to, soil testing sensors,
6    computers, monitors, software, global positioning and
7    mapping systems, and other such equipment.
8        Farm machinery and equipment also includes computers,
9    sensors, software, and related equipment used primarily in
10    the computer-assisted operation of production agriculture
11    facilities, equipment, and activities such as, but not
12    limited to, the collection, monitoring, and correlation of
13    animal and crop data for the purpose of formulating animal
14    diets and agricultural chemicals. This item (2) is exempt
15    from the provisions of Section 2-70.
16        (3) Until July 1, 2003, distillation machinery and
17    equipment, sold as a unit or kit, assembled or installed
18    by the retailer, certified by the user to be used only for
19    the production of ethyl alcohol that will be used for
20    consumption as motor fuel or as a component of motor fuel
21    for the personal use of the user, and not subject to sale
22    or resale.
23        (4) Until July 1, 2003 and beginning again September
24    1, 2004 through August 30, 2014, graphic arts machinery
25    and equipment, including repair and replacement parts,
26    both new and used, and including that manufactured on

 

 

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1    special order or purchased for lease, certified by the
2    purchaser to be used primarily for graphic arts
3    production. Equipment includes chemicals or chemicals
4    acting as catalysts but only if the chemicals or chemicals
5    acting as catalysts effect a direct and immediate change
6    upon a graphic arts product. Beginning on July 1, 2017,
7    graphic arts machinery and equipment is included in the
8    manufacturing and assembling machinery and equipment
9    exemption under paragraph (14).
10        (5) A motor vehicle that is used for automobile
11    renting, as defined in the Automobile Renting Occupation
12    and Use Tax Act. This paragraph is exempt from the
13    provisions of Section 2-70.
14        (6) Personal property sold by a teacher-sponsored
15    student organization affiliated with an elementary or
16    secondary school located in Illinois.
17        (7) Until July 1, 2003, proceeds of that portion of
18    the selling price of a passenger car the sale of which is
19    subject to the Replacement Vehicle Tax.
20        (8) Personal property sold to an Illinois county fair
21    association for use in conducting, operating, or promoting
22    the county fair.
23        (9) Personal property sold to a not-for-profit arts or
24    cultural organization that establishes, by proof required
25    by the Department by rule, that it has received an
26    exemption under Section 501(c)(3) of the Internal Revenue

 

 

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1    Code and that is organized and operated primarily for the
2    presentation or support of arts or cultural programming,
3    activities, or services. These organizations include, but
4    are not limited to, music and dramatic arts organizations
5    such as symphony orchestras and theatrical groups, arts
6    and cultural service organizations, local arts councils,
7    visual arts organizations, and media arts organizations.
8    On and after July 1, 2001 (the effective date of Public Act
9    92-35), however, an entity otherwise eligible for this
10    exemption shall not make tax-free purchases unless it has
11    an active identification number issued by the Department.
12        (10) Personal property sold by a corporation, society,
13    association, foundation, institution, or organization,
14    other than a limited liability company, that is organized
15    and operated as a not-for-profit service enterprise for
16    the benefit of persons 65 years of age or older if the
17    personal property was not purchased by the enterprise for
18    the purpose of resale by the enterprise.
19        (11) Personal property sold to a governmental body, to
20    a corporation, society, association, foundation, or
21    institution organized and operated exclusively for
22    charitable, religious, or educational purposes, or to a
23    not-for-profit corporation, society, association,
24    foundation, institution, or organization that has no
25    compensated officers or employees and that is organized
26    and operated primarily for the recreation of persons 55

 

 

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1    years of age or older. A limited liability company may
2    qualify for the exemption under this paragraph only if the
3    limited liability company is organized and operated
4    exclusively for educational purposes. On and after July 1,
5    1987, however, no entity otherwise eligible for this
6    exemption shall make tax-free purchases unless it has an
7    active identification number issued by the Department.
8        (12) (Blank).
9        (12-5) On and after July 1, 2003 and through June 30,
10    2004, motor vehicles of the second division with a gross
11    vehicle weight in excess of 8,000 pounds that are subject
12    to the commercial distribution fee imposed under Section
13    3-815.1 of the Illinois Vehicle Code. Beginning on July 1,
14    2004 and through June 30, 2005, the use in this State of
15    motor vehicles of the second division: (i) with a gross
16    vehicle weight rating in excess of 8,000 pounds; (ii) that
17    are subject to the commercial distribution fee imposed
18    under Section 3-815.1 of the Illinois Vehicle Code; and
19    (iii) that are primarily used for commercial purposes.
20    Through June 30, 2005, this exemption applies to repair
21    and replacement parts added after the initial purchase of
22    such a motor vehicle if that motor vehicle is used in a
23    manner that would qualify for the rolling stock exemption
24    otherwise provided for in this Act. For purposes of this
25    paragraph, "used for commercial purposes" means the
26    transportation of persons or property in furtherance of

 

 

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

 

 

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1    wholesale or retail sale that is delivered to customers
2    through pipes, pipelines, or mains; or (iii) the treatment
3    of water for wholesale or retail sale that is delivered to
4    customers through pipes, pipelines, or mains. The
5    provisions of Public Act 98-583 are declaratory of
6    existing law as to the meaning and scope of this
7    exemption. Beginning on July 1, 2017, the exemption
8    provided by this paragraph (14) includes, but is not
9    limited to, graphic arts machinery and equipment, as
10    defined in paragraph (4) of this Section.
11        (15) Proceeds of mandatory service charges separately
12    stated on customers' bills for purchase and consumption of
13    food and beverages, to the extent that the proceeds of the
14    service charge are in fact turned over as tips or as a
15    substitute for tips to the employees who participate
16    directly in preparing, serving, hosting or cleaning up the
17    food or beverage function with respect to which the
18    service charge is imposed.
19        (16) Tangible personal property sold to a purchaser if
20    the purchaser is exempt from use tax by operation of
21    federal law. This paragraph is exempt from the provisions
22    of Section 2-70.
23        (17) Tangible personal property sold to a common
24    carrier by rail or motor that receives the physical
25    possession of the property in Illinois and that transports
26    the property, or shares with another common carrier in the

 

 

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1    transportation of the property, out of Illinois on a
2    standard uniform bill of lading showing the seller of the
3    property as the shipper or consignor of the property to a
4    destination outside Illinois, for use outside Illinois.
5        (18) Legal tender, currency, medallions, or gold or
6    silver coinage issued by the State of Illinois, the
7    government of the United States of America, or the
8    government of any foreign country, and bullion.
9        (19) Until July 1, 2003, oil field exploration,
10    drilling, and production equipment, including (i) rigs and
11    parts of rigs, rotary rigs, cable tool rigs, and workover
12    rigs, (ii) pipe and tubular goods, including casing and
13    drill strings, (iii) pumps and pump-jack units, (iv)
14    storage tanks and flow lines, (v) any individual
15    replacement part for oil field exploration, drilling, and
16    production equipment, and (vi) machinery and equipment
17    purchased for lease; but excluding motor vehicles required
18    to be registered under the Illinois Vehicle Code.
19        (20) Photoprocessing machinery and equipment,
20    including repair and replacement parts, both new and used,
21    including that manufactured on special order, certified by
22    the purchaser to be used primarily for photoprocessing,
23    and including photoprocessing machinery and equipment
24    purchased for lease.
25        (21) Until July 1, 2023, coal and aggregate
26    exploration, mining, off-highway hauling, processing,

 

 

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1    maintenance, and reclamation equipment, including
2    replacement parts and equipment, and including equipment
3    purchased for lease, but excluding motor vehicles required
4    to be registered under the Illinois Vehicle Code. The
5    changes made to this Section by Public Act 97-767 apply on
6    and after July 1, 2003, but no claim for credit or refund
7    is allowed on or after August 16, 2013 (the effective date
8    of Public Act 98-456) for such taxes paid during the
9    period beginning July 1, 2003 and ending on August 16,
10    2013 (the effective date of Public Act 98-456).
11        (22) Until June 30, 2013, fuel and petroleum products
12    sold to or used by an air carrier, certified by the carrier
13    to be used for consumption, shipment, or storage in the
14    conduct of its business as an air common carrier, for a
15    flight destined for or returning from a location or
16    locations outside the United States without regard to
17    previous or subsequent domestic stopovers.
18        Beginning July 1, 2013, fuel and petroleum products
19    sold to or used by an air carrier, certified by the carrier
20    to be used for consumption, shipment, or storage in the
21    conduct of its business as an air common carrier, for a
22    flight that (i) is engaged in foreign trade or is engaged
23    in trade between the United States and any of its
24    possessions and (ii) transports at least one individual or
25    package for hire from the city of origination to the city
26    of final destination on the same aircraft, without regard

 

 

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1    to a change in the flight number of that aircraft.
2        (23) A transaction in which the purchase order is
3    received by a florist who is located outside Illinois, but
4    who has a florist located in Illinois deliver the property
5    to the purchaser or the purchaser's donee in Illinois.
6        (24) Fuel consumed or used in the operation of ships,
7    barges, or vessels that are used primarily in or for the
8    transportation of property or the conveyance of persons
9    for hire on rivers bordering on this State if the fuel is
10    delivered by the seller to the purchaser's barge, ship, or
11    vessel while it is afloat upon that bordering river.
12        (25) Except as provided in item (25-5) of this
13    Section, a motor vehicle sold in this State to a
14    nonresident even though the motor vehicle is delivered to
15    the nonresident in this State, if the motor vehicle is not
16    to be titled in this State, and if a drive-away permit is
17    issued to the motor vehicle as provided in Section 3-603
18    of the Illinois Vehicle Code or if the nonresident
19    purchaser has vehicle registration plates to transfer to
20    the motor vehicle upon returning to his or her home state.
21    The issuance of the drive-away permit or having the
22    out-of-state registration plates to be transferred is
23    prima facie evidence that the motor vehicle will not be
24    titled in this State.
25        (25-5) The exemption under item (25) does not apply if
26    the state in which the motor vehicle will be titled does

 

 

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1    not allow a reciprocal exemption for a motor vehicle sold
2    and delivered in that state to an Illinois resident but
3    titled in Illinois. The tax collected under this Act on
4    the sale of a motor vehicle in this State to a resident of
5    another state that does not allow a reciprocal exemption
6    shall be imposed at a rate equal to the state's rate of tax
7    on taxable property in the state in which the purchaser is
8    a resident, except that the tax shall not exceed the tax
9    that would otherwise be imposed under this Act. At the
10    time of the sale, the purchaser shall execute a statement,
11    signed under penalty of perjury, of his or her intent to
12    title the vehicle in the state in which the purchaser is a
13    resident within 30 days after the sale and of the fact of
14    the payment to the State of Illinois of tax in an amount
15    equivalent to the state's rate of tax on taxable property
16    in his or her state of residence and shall submit the
17    statement to the appropriate tax collection agency in his
18    or her state of residence. In addition, the retailer must
19    retain a signed copy of the statement in his or her
20    records. Nothing in this item shall be construed to
21    require the removal of the vehicle from this state
22    following the filing of an intent to title the vehicle in
23    the purchaser's state of residence if the purchaser titles
24    the vehicle in his or her state of residence within 30 days
25    after the date of sale. The tax collected under this Act in
26    accordance with this item (25-5) shall be proportionately

 

 

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1    distributed as if the tax were collected at the 6.25%
2    general rate imposed under this Act.
3        (25-7) Beginning on July 1, 2007, no tax is imposed
4    under this Act on the sale of an aircraft, as defined in
5    Section 3 of the Illinois Aeronautics Act, if all of the
6    following conditions are met:
7            (1) the aircraft leaves this State within 15 days
8        after the later of either the issuance of the final
9        billing for the sale of the aircraft, or the
10        authorized approval for return to service, completion
11        of the maintenance record entry, and completion of the
12        test flight and ground test for inspection, as
13        required by 14 C.F.R. 91.407;
14            (2) the aircraft is not based or registered in
15        this State after the sale of the aircraft; and
16            (3) the seller retains in his or her books and
17        records and provides to the Department a signed and
18        dated certification from the purchaser, on a form
19        prescribed by the Department, certifying that the
20        requirements of this item (25-7) are met. The
21        certificate must also include the name and address of
22        the purchaser, the address of the location where the
23        aircraft is to be titled or registered, the address of
24        the primary physical location of the aircraft, and
25        other information that the Department may reasonably
26        require.

 

 

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1        For purposes of this item (25-7):
2        "Based in this State" means hangared, stored, or
3    otherwise used, excluding post-sale customizations as
4    defined in this Section, for 10 or more days in each
5    12-month period immediately following the date of the sale
6    of the aircraft.
7        "Registered in this State" means an aircraft
8    registered with the Department of Transportation,
9    Aeronautics Division, or titled or registered with the
10    Federal Aviation Administration to an address located in
11    this State.
12        This paragraph (25-7) is exempt from the provisions of
13    Section 2-70.
14        (26) Semen used for artificial insemination of
15    livestock for direct agricultural production.
16        (27) Horses, or interests in horses, registered with
17    and meeting the requirements of any of the Arabian Horse
18    Club Registry of America, Appaloosa Horse Club, American
19    Quarter Horse Association, United States Trotting
20    Association, or Jockey Club, as appropriate, used for
21    purposes of breeding or racing for prizes. This item (27)
22    is exempt from the provisions of Section 2-70, and the
23    exemption provided for under this item (27) applies for
24    all periods beginning May 30, 1995, but no claim for
25    credit or refund is allowed on or after January 1, 2008
26    (the effective date of Public Act 95-88) for such taxes

 

 

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1    paid during the period beginning May 30, 2000 and ending
2    on January 1, 2008 (the effective date of Public Act
3    95-88).
4        (28) Computers and communications equipment utilized
5    for any hospital purpose and equipment used in the
6    diagnosis, analysis, or treatment of hospital patients
7    sold to a lessor who leases the equipment, under a lease of
8    one year or longer executed or in effect at the time of the
9    purchase, to a hospital that has been issued an active tax
10    exemption identification number by the Department under
11    Section 1g of this Act.
12        (29) Personal property sold to a lessor who leases the
13